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Richard Clark, On Behalf of Himself and All Other Similarly Situated v. Group Hospitalization and Medical Services

December 7, 2010


The opinion of the court was delivered by: Hon. Roger T. Benitez United States District Judge


[Docket No. 10]


Before the Court is Defendant Group Hospitalization and Medical Services, Inc. d/b/a CareFirst BlueCross BlueShield's ("CareFirst's") Motion to Dismiss both Plaintiff Richard Clark's federal cause of action under ERISA § 502(a)(1)(B) and the state law claim under the Unfair Competition Law, California Business & Professions Code § 17200, et. seq. ("UCL") pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. CareFirst additionally moves to strike Plaintiff's purported class definition under Federal Rule of Civil Procedure 12(f). On April 5, 2010, CareFirst filed this Motion to Dismiss and Motion to Strike. (Docket No. 10.) Plaintiff filed an opposition and CareFirst filed a reply. (Docket No. 14, 15.) For the following reasons, CareFirst's Motion to Dismiss is DENIED as to both the ERISA claim and the UCL claim. CareFirst's Motion to Strike is GRANTED.


This case arises from an alleged denial of benefits pursuant to ERISA § 502(a)(1)(B) and alleged unlawful "balance billing" under California's Unfair Competition Law. (Docket No. 1.)

On August 27, 2007, Plaintiff enrolled himself and his dependant son in a health benefit plan, Group No. 4F51, (the "Plan") through his employer Targus Information Corporation. (Compl. ¶¶ 7, 9, 13, 22.) CareFirst administered the Plan, which is an employee benefit plan as defined under ERISA. (Compl. ¶¶ 4, 9, 19.) Under the Plan, Plaintiff Richard Clark is a "subscriber" or "participant," and his son was a "beneficiary" of the Plan at the time the emergency occurred. (Compl. ¶ 23.)

The Plan's Certificate of Coverage provides a "Description of Covered Services." (Compl. ¶¶ 23-24.) Under the Plan, there are two levels of benefits for services: In-Network and Out-of-Network. (Compl. ¶ 23.) In-Network benefits apply when services are rendered by a Preferred Provider, and in other circumstances as defined in the Plan such as when emergency care services are provided to a subscriber. (Compl. ¶ 24.) The Plan provides as follows for emergency care: "In any case in which covered services are provided to you by and [sic] Health Care Facility or Health Care Practitioner (whether or not a Preferred Provider) . . ., benefits will be available for such services to the same extent as if such Heath Care Facility or Health Care Practitioner were a Preferred Provider." (Compl. quoting Certificate of Coverage, § 1.2, Attachment A) (emphasis added in Complaint.). The Plan states that the subscriber "may be responsible for amounts in excess of the Plan Allowance for these [emergency] services." (Compl. ¶ 24.)

Attachment B to the Certificate of Coverage delineates the "Schedule of Benefits" that provide the appropriate "Plan allowances" for emergency care. (Compl. ¶ 25.) In-Network "Emergency Room Treatment" is covered at "100% of the Allowed Benefit, minus a Member- Copayment of $50 per visit." (Compl. ¶ 27.) For Preferred Providers, "Allowed Benefit" is defined as the lesser of "the actual charge" or "the amount CareFirst allows for the service in effect on the date the service is rendered." (Compl. ¶ 28.)

On September 21, 2008, Plaintiff's son visited his local emergency room at O'Connor Hospital in San Jose, California for treatment of a broken hand. (Compl. ¶ 29.) On October 16, 2008, CareFirst received claims for benefits under the Plan pertaining to hospital room facility charges and physician charges incurred by Emergency Physicians Associates. (Compl. ¶ 30.) The combined fees totaled $2,815.00-$1,722 for the hospital room charge and $1,093 for services provided by Emergency Physicians Associates. (Compl. ¶ 31.) CareFirst paid for the emergency room's facility charge at 100%, less the $50 co-payment, in accordance with the Plan. (Compl. ¶ 32.) Regarding the physician charges, CareFirst paid $246.96 of the remaining $1,093 balance for the services rendered by Emergency Physicians Associates. (Compl. ¶ 33.) CareFirst sent Plaintiff an Explanation of Benefits ("EOB"), explaining the charges were "over [the] plan allowance" for the service, stating: "Payments included with this EOB are reimbursement for covered health services rendered by a non-participating provider [under the terms of the Plan]. It is the member's responsibility to pay the provider for these services." (Compl. ¶ 34.) Subsequently, Plaintiff was billed by Emergency Physicians Associates for the $846.04 remaining balance. (Compl. ¶ 35.)

On or about January 30, 2009, CareFirst received Plaintiff's written appeal for the treatment of the original claim and reimbursement for the physician services. (Compl. ¶ 36.) By letter dated June 4, 2009, CareFirst denied Plaintiff's appeal because "the claim processed correctly according to the terms of your contract emergency services benefit, at 100% of the plan allowance." (Compl. ¶ 37, 38.) In August of 2009, CareFirst received a second letter from Plaintiff appealing the denial of benefits determination. CareFirst has not responded to this second appeal. (Compl. ¶ 39, 40.)

On February 10, 2010, Plaintiff filed the Complaint. The Complaint alleges two causes of action: (1) recovery, enforcement and clarification of benefits under ERISA § 502(a)(1)(B); and (2) unlawful "balance billing" under California's UCL, including a violation of the Knox-Keane Health Care Service Plan Act of 1975, Health & Safety Code §§ 1340, et seq., ("Knox-Keane Act"). (Docket No. 1.)


Under Federal Rule of Civil Procedure 12(b)(6), dismissal for failure to state a claim can be based on either: (1) a lack of a cognizable legal theory; or (2) the absence of sufficient facts to raise a reasonable expectation that discovery will reveal evidence of the cognizable legal theory. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556-557 (2007);Fed. R. Civ. P. 12(b)(6). In considering a motion to dismiss, Plaintiff's allegations must be taken as true and all reasonable inferences from the facts alleged must be drawn in Plaintiff's favor. Id. at 56; see also Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) ("To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its fact.'").In the Supreme Court's decision in Ashcroft v. Iqbal, the Court determined a court may disregard mere legal conclusions and look, instead, to whether factual allegations are specific enough to draw a reasonable inference that the defendant is liable for the misconduct alleged. 129 S.Ct. 1937, 1949-1950 (2009). If a ...

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