The opinion of the court was delivered by: VIRGINIA A. Phillips United States District Judge
ORDER GRANTING MOTIONS TO DISMISS
[Motions filed on December 28, 2011]
Plaintiffs Desert Valley Hospital, Inc. ("Desert Valley") and Veritas Health Services, Inc. ("Chino Valley"), to which the Court refers collectively as the "Hospitals," provided medical care for patients insured by Defendant Wal-Mart Stores, Inc. ("Wal-Mart"). To facilitate billing for their services, the Hospitals require patients to assign their health insurance benefits to the Hospitals; the Hospitals can then bill the patients' insurers directly. The Hospitals brought this suit against Wal-Mart, alleging that they treated patients covered by Wal-Mart's Associates' Health and Welfare Plan ("Plan"), and though those patients assigned their health insurance benefits to the Hospitals, the Plan refused to pay the patients' bills in full. Wal-Mart filed Motions to Dismiss both lawsuits, arguing the Hospitals, as the patients' assignees, failed to exhaust the administrative appeals process set forth by the Plan, and therefore may not sue to recover on the alleged underpaid bills. The Court agrees with Wal-Mart, and for the reasons discussed below, GRANTS its Motions to Dismiss, WITHOUT PREJUDICE and VACATES the March 12, 2012, hearing on the Motions.*fn1
The facts of these cases are straightforward. Between December 15, 2008, and December 25, 2010, Desert Valley treated 15 patients covered by the Plan. (Ex. A to First Am. Compl. ("Desert Valley FAC") (Case No. 11-1584, Doc. No. 11).) Between November 3, 2007, and January 6, 2010, Chino Valley treated five such patients. (Ex. A to First Am. Compl. ("Chino Valley FAC") (Case No. 11-1585, Doc. No. 11).) Both of the Hospitals required each of those patients to execute an assignment of health insurance benefits, providing that the Hospitals could seek payment of the patients' benefits directly from their insurers, and that in the event the patients' insurers underpaid the Hospitals, the patients would be liable for the underpayment themselves. (See Desert Valley FAC ¶ 15; Chino Valley FAC ¶ 15.) The Hospitals contend they submitted bills to the Plan for their treatment of these 20 patients, but the Plan did not pay the full amount charged. Notwithstanding the language in the assignment of benefits (that the patients would be liable for the shortfall), the Hospitals filed suit against the Plan to recover the difference between the amount charged and the amount paid.
On August 24, 2011, Chino Valley filed an action against Wal-Mart in the California Superior Court for the County of San Bernardino, seeking relief in quantum meruit and for money due. (See Ex. 1 to Not. of Removal (Case No. 11-1585, Doc. No. 1).) On August 25, 2011, Desert Valley filed an action against Wal-Mart in the California Superior Court for the County of San Bernardino, raising the same claims. (See Ex. 1 to Not. of Removal (Case No. 11-1584, Doc. No. 1).) On October 4, Wal-Mart removed both cases to this Court, because the Hospitals' state law claims were claims for benefits made against an employee welfare benefit plan, see 29 U.S.C. § 1002(1), were therefore preempted by the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001, et seq., and thus fall within this Court's original jurisdiction, see 29 U.S.C. § 1132(e).
On November 7, Chino Valley filed a First Amended Complaint in this Court; Desert Valley's First Amended Complaint followed on November 10. Both sets of amended pleadings assert a single claim, under 29 U.S.C. § 1132(a)(1)(B), "to recover benefits due to [them] under the terms of [the Plan], to enforce [their] rights under the terms of the [P]lan, or to clarify [their] rights to future benefits under the terms of the [P]lan . . . ."
29 U.S.C. § 1132(a)(1)(B).
On December 28, 2011, Wal-Mart filed Motions to Dismiss in both cases (Doc. No. 18), arguing the Hospitals failed to exhaust the Plan's administrative remedies before bringing suit -- a dispositive error. The parties stipulated to a hearing date of March 12, 2012, for both Motions. On January 23, 2012, the Hospitals filed Oppositions (Case No. 11-1584, Doc. No. 20; Case No. 11-1585, Doc. No. 21) in which they contend: (1) they alleged exhaustion, or an exception to exhaustion, sufficiently to survive the Motions to Dismiss; and (2) they provided adequate evidence of exhaustion, beyond the allegations in their pleadings. Wal-Mart filed timely Replies. (See Case No. 11-1584, Doc. No. 22; Case No. 11-1585, Doc. No. 23.)
When, as is the case here, exhaustion of administrative remedies is not a prerequisite to establishing a court's subject-matter jurisdiction, but instead a prudential consideration, a motion to dismiss on the basis of a plaintiff's failure to exhaust is an "unenumerated" motion to dismiss. Payne v. Peninsula Sch. Dist., 653 F.3d 863, 881 (9th Cir. 2011) (en banc). As failure to exhaust is an affirmative defense, the defendant bringing such a motion bears the burden of proving the plaintiff failed to exhaust his or her remedies. See Jones v. Bock, 549 U.S. 199, 216 (2007) ("failure to exhaust is an affirmative defense"); Tovar v. U.S. Postal Serv., 3 F.3d 1271, 1284 (9th Cir. 1993) ("In every civil case, the defendant bears the burden of proof as to each element of an affirmative defense."). In meeting that burden, the defendant may rely on, and a court may consider, evidence beyond the pleadings. Payne, 653 F.3d at 881 (quoting Wyatt v. Terhune, 315 F.3d 1108, 1120 (9th Cir. 2003)). Although the burden of proving exhaustion remains ultimately with the defendant, after the defendant has made a showing of the plaintiff's failure to exhaust, the plaintiff bears the burden of showing either exhaustion or an exception to the rule that exhaustion of administrative remedies is required.
See Sarei v. Rio Tinto, PLC, 550 F.3d 822, 831-32 (9th Cir. 2008) (discussing the framework for evaluating exhaustion ...