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Rhonda Espy v. Blue Cross

March 20, 2013


The opinion of the court was delivered by: Honorable Larry Alan Burns United States District Judge


Although this case is not designated as a related case, the complaint, allegations, and theories are extremely similar to two other complaints filed by pro se litigants and involving payments claimed by Ambulatory Care Surgery Center ("ACSC"). The other cases are Finn v. United Healthcare Insurance Company, 12cv296-LAB (WVG); Espy v. United Healthcare Insurance Company, 12cv694-LAB (WVG); and Luebe v. UMR, 12cv696-LAB (WVG). The first amended complaints in those cases are being dismissed without prejudice, except for state-law claims for negligent misrepresentation and promissory estoppel, which are being dismissed with prejudice as preempted. For similar reasons, the complaint in this case is subject to dismissal.

The FAC alleges that Defendant Independence Blue Cross ("Blue Cross") told Plaintiff Rhonda Espy a particular procedure would be covered, up to 50% of reasonable and customary fees. The clinic, Ambulatory Care Surgery Center ("ACSC") confirmed this, and was also told that payment would be subject to a $5,000 deductible charge and a $10,000 stop loss. Luebe had the procedure and was billed $53,530.00, but UMR paid only $740.28. There is some dispute about who was liable for the remainder, however. In its motion to dismiss, Blue Cross cites exhibits to the FAC, and argues Espy assigned her benefits to ACSC. The Court has reviewed the documents, but it isn't obvious how they show Espy has assigned her benefits. Assuming she has assigned them, she no longer has standing to sue for them, of course.

The FAC alleges UMR is the claims administrator under an employer-sponsored health benefit plan, which is subject to ERISA. The FAC seeks relief under ERISA, § 502(a)(1)(b) (29 U.S.C. § 1132(a)(1)(b)), and also under state-law theories of negligent misrepresentation and promissory estoppel.

Blue Cross has moved to dismiss, arguing the FAC fails to state a claim, and Espy's state-law claims for negligent misrepresentation and promissory estoppel are preempted and fail to state a claim. The motion also asks the Court to strike Espy's requests for attorney's fees and a jury trial.

Standard for Motion to Dismiss

A Rule 12(b)(6) motion to dismiss tests the sufficiency of the complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). In ruling on a motion to dismiss, the Court accepts all allegations of material fact in the complaint as true and construes them in the light most favorable to the non-moving party. Cedars--Sinai Medical Center v. National League of Postmasters of U.S., 497 F.3d 972, 975 (9th Cir. 2007).

To avoid dismissal, the complaint must "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests" and its factual allegations must "raise the right to relief above a speculative level." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). The complaint must contain enough factual allegations that, if accepted as true, would state a claim for relief that is "plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

Espy cites the old "no set of facts" standard announced in Conley v. Gibson, 355 U.S. 41, 45--46 (1957), but the Supreme Court expressly repudiated that standard in Twombly.

While the scope of review on a motion to dismiss for failure to state a claim is ordinarily limited to the contents of the complaint as well as any "documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading, may be considered in ruling on a Rule 12(b)(6) motion to dismiss." Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994), overruled on other grounds by Galbraith v. County of Santa Clara, 307 F.3d 1119 (9th Cir. 2002). The court may treat such a document as "part of the complaint, and thus may assume that its contents are true for purposes of a motion to dismiss under Rule 12(b)(6)." United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003).


What Level of Benefit the Plan Provided For

The FAC doesn't quote the plan document or any other binding document, but the motion to dismiss does. It cites the plan's Benefit Booklet-Certificate, which is alleged to be one of the plan documents.*fn1 In her opposition, Espy ignores the booklet. She doesn't challenge its authenticity; she just fails to address it at all. Instead, she focuses on the plan document, which is attached to the motion to dismiss. (Docket no. 10-4 at 21.)*fn2 The plan document doesn't say what Espy's opposition seems to believe it says, however. She alleges it obligates Blue Cross to pay a contracted-for "percentage of Provider's Reasonable Charge," but this isn't what the cited pages say. The plan language is in fact far more general and gives the insurer a good deal more discretion and leeway than Espy argues it does. Espy then changes her tack and argues the provision is vague and does not give anyone reasonable notice of what the insurer will pay. She then urges the Court to adopt her own interpretation of the plan language, i.e., that Blue Cross must "actually pay a reasonable, customary and widely accepted rate for medical services . . . ." (Opp'n at 4:5--8.)

The booklet Blue Cross cites explains what a covered expense means. ACSC, it is undisputed was a non-preferred provider that had no agreement with Blue Cross. The definition of "covered expense" applicable to it ...

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