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Scripps Health, et al v. Kansas

January 26, 2011

SCRIPPS HEALTH, ET AL.,
PLAINTIFFS,
v.
KANSAS, INC., ET AL.,
DEFENDANTS.



The opinion of the court was delivered by: Hon. Dana M. Sabraw United States District Judge

ORDER (1) DENYING DEFENDANT'S MOTION TO DISMISS AND (2) GRANTING DEFENDANT'S MOTION TO COMPEL ARBITRATION AND BLUE CROSS & BLUE SHIELD OF TO STAY CLAIMS

[Docket Nos. 16, 17]

This case comes before the Court on Defendant's motion to dismiss and motion to compel arbitration and stay claims. Plaintiffs filed an opposition to the motion to dismiss. They do not oppose the motion to compel arbitration. For the reasons set out below, the Court denies the motion to dismiss and grants the motion to compel arbitration and stay claims.

I.

BACKGROUND

On July 25, 2008, a Patient presented at the emergency room at Scripps Memorial Hospital Chula Vista ("Scripps"). The Patient represented that she was insured through Defendant Blue Cross & Blue Shield of Kansas, Inc. ("BCBS"). Scripps verified with a BCBS representative that the Patient was eligible for coverage, and the BCBS representative provided pre-certification for medical services to be provided to the Patient. Scripps admitted the Patient on July 25, 2008, with the understanding that it would be paid for services rendered. Scripps alleges that it provided "extensive, life-saving health care services to the Patient from July 25, 2008 through August 25, 2008, resulting in total billed charges of over $500,000." (Compl. ¶ 28.)

Pursuant to the BlueCard program,*fn1 Scripps filed its claim for reimbursement with the local Blue Cross entity, Blue Cross of California ("BCC"). BCBS denied the claim initially. Scripps appealed that denial, and a Blue Cross representative informed Scripps that the claim would be paid at the discounted rate of $250,083.95. BCBS did not pay the claim, however, asserting that the services provided were excluded according to the BCBS policy. Scripps again appealed the denial of the claim, but BCBS refused to pay. BCBS thereafter agreed to pay for emergency services at the discounted rate, but refused to acknowledge most of the services as emergent.

On August 25, 2010, Scripps and South Bay Surgical Associates Medical Group, Inc. filed a Complaint in San Diego Superior Court against BCBS. Plaintiffs' Complaint alleges claims for breach of contract, breach of implied contract and declaratory relief. Defendant removed Plaintiffs' Complaint to this Court on September 29, 2010. After the Court denied Defendant's motion to transfer venue to the United States District Court for the District of Kansas, Defendant filed the present motions.

II.

DISCUSSION Defendant moves to dismiss each of Plaintiffs' claims. In the event the Court denies the motion to dismiss Plaintiffs' breach of contract claim, Defendant moves to compel arbitration of that claim and for a stay of the remaining claims. Plaintiffs oppose dismissal of any of their claims, and do not oppose the motion to compel arbitration of their breach of contract claim or to stay their remaining claims pending the outcome of the arbitration process.

A. Motion to Dismiss

In two recent opinions, the Supreme Court established a more stringent standard of review for 12(b)(6) motions. See Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). To survive a motion to dismiss under this new standard, "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Iqbal, 129 S.Ct. at 1949 (citing Twombly, 550 U.S. at 570). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly, 550 U.S. at 556).

"Determining whether a complaint states a plausible claim for relief will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 1950 (citing Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir. 2007)). In Iqbal, the Court began this task "by identifying the allegations in the complaint that are not entitled to the assumption of truth." Id. at 1951. It then considered "the factual ...


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