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Trustees on Behalf of the Teamsters Benefit Trust v. Doctors Medical Center of Modesto

September 26, 2003

TRUSTEES ON BEHALF OF THE TEAMSTERS BENEFIT TRUST, PLAINTIFF,
v.
DOCTORS MEDICAL CENTER OF MODESTO, INC., DEFENDANT



The opinion of the court was delivered by: Chen, United States Magistrate Judge.

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS (Docket No. 5)

A hearing was conducted on Defendant's motion to dismiss on August 27, 2003. Matthew Morbello of Beeson, Taylor & Bodine appeared on behalf of Plaintiff and Carrie McLain of Ralph Helton & Associates appeared on behalf of Defendant. Based on the Court's review of the record in this case, as well as the moving papers, accompanying declarations and oral argument, and good cause appearing therefor, the Court GRANTS Defendant's motion to dismiss.

I. FACTUAL BACKGROUND

Plaintiff Trustees on Behalf of the Teamsters Benefit Trust ("Plaintiff Fund") filed this ERISA equitable restitution action against Defendant Doctor's Medical Center of Modesto Inc. ("DMC") for $63,717.05 in overpayment for the five-day inpatient treatment of a participant covered by the Plaintiff Fund during August 2001. DMC is within the Interplan network of health care providers, and Plaintiff Fund's participants who obtain medical services from Interplan providers are entitled to discounted rates established between Interplan and DMC. Complaint ¶ 5. DMC allegedly billed Plaintiff $130,115.40 for "trauma" services performed on Glen Nolan, and was paid $117,103.86, which reflected the 10% discount for trauma services provided for by the contract rate between the parties. Complaint ¶¶ 6-11.

Plaintiff alleges that its auditors later discovered that the Trust had been over-billed for (1) a charge of $7,952.04 for an implant when it should have been billed at the contract rate of the cost of the implant plus 5%; and (2) the patient was billed for 5 days at the trauma rate when actually Mr. Nolan was treated in the trauma center on the first day, meaning that the subsequent four days should have been billed at the lower inpatient rate of $1,177.00 per day. Complaint ¶¶ 13-14. Plaintiff's requests for a refund went unheeded, and the Trustees filed this action in the Northern District for restitution of $63,717.05 plus the amount overbilled from the implant, which Plaintiff has not ascertained. Id.

Both parties consented to proceed before a magistrate judge in July 2003.

II. LEGAL ANALYSIS

A. Standard for Dismissal under Rule 12(b)(1)

Rule 12(b)(1) allows this Court to dismiss a claim for lack of jurisdiction. If a federal court dismisses under Rule 12(b)(1) for lack of subject matter jurisdiction, then there can be no supplemental jurisdiction over any potential state law claims because "dismissal postulates that there was never a valid federal claim. Exercise of jurisdiction ...would therefore violate Article III of the Constitution..." Herman Family Revocable Trust v. Teddy Bear, 254 F.3d 802, 806 (9th Cir.2001) (quoting United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966)).

In a 12(b)(1) motion, the factual allegations in the complaint are assumed to be true. Miranda v. Reno, 238 F.3d 1156, 1157 n. 1 (9th Cir.2001); Orsay v. United States Dept. of Justice, 289 F.3d 1125, 1127 (9th Cir.2002).

B. The Substance of Plaintiff's Remedy is Legal Rather than Equitable

Plaintiff's complaint states that Plaintiff Fund is an employee benefit plan within the meaning of 29 U.S.C. §§ 1002 and 1132(d), and that this Court has jurisdiction under § 1132(a)(3). Complaint ¶ 3. Section 1132(a)(3) states that a civil action may be brought:

[B]y a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this title or the terms of the plan, or (B) to obtain other appropriate equitable relief (I) to redress such violations or (ii) to ...


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