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Mountain View Surgical Center v. Cigna Health Corporation

United States District Court, C.D. California

February 9, 2015

MOUNTAIN VIEW SURGICAL CENTER, a California corporation, Plaintiff,
CIGNA HEALTH CORPORATION, a Delaware corporation, Defendant.


DEAN D. PREGERSON, District Judge.

Presently before the court is Defendants Connecticut General Life Insurance Company and CIGNA Health and Life Insurance Company (collectively, "Cigna")'s Motion to Dismiss. Having considered the submissions of the parties and heard oral argument, the court grants the motion in part, denies in part, and adopts the following order.

I. Background

Plaintiff Mountain View Surgical Center ("Mountain View") is a multiple specialty surgery center whose patients include Cigna's insureds. (First Amended Complaint ("FAC") ¶¶ 14-15.) Before providing medical services to Cigna insureds, Plaintiff calls Cigna to confirm that the patient's insurance covers the specific treatment. (FAC ¶ 16.) Cigna authorizes covered treatments and promises to pay Mountain View for providing the medical services. (Id. ¶ 17.) Cigna authorizes treatments over the phone and/or via a confirmation letter sent to Plaintiff. (Id. ¶ 18.)

Mountain View provided medical services valued at $1, 159, 440.20 to forty-one particular patients insured by Cigna. (FAC ¶ 20.) Mountain View alleges that it provided those services based on "CIGNA's promise to make payments on behalf of its insured patients and on CIGNA's prior course of dealing." (Id. ¶ 21.) Though Mountain View submitted claims for reimbursement to Cigna, Cigna did not pay the claims. (Id. ¶¶ 22, 27.) Instead, Cigna accused Mountain View of engaging in fraudulent "fee-forgiveness, " or improper release of patients from their payment obligations. (Id. ¶ 24).

Mountain View then brought this action. The First Amended Complaint alleges causes of action for breach of oral contract, breach of implied contract, fraud, unjust enrichment, and unfair business practices. Cigna now moves to dismiss the First Amended Complaint.

II. Legal Standard

A complaint will survive a motion to dismiss when it contains "sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). When considering a Rule 12(b)(6) motion, a court must "accept as true all allegations of material fact and must construe those facts in the light most favorable to the plaintiff." Resnick v. Hayes, 213 F.3d 443, 447 (9th Cir. 2000). Although a complaint need not include "detailed factual allegations, " it must offer "more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Iqbal, 556 U.S. at 678. Conclusory allegations or allegations that are no more than a statement of a legal conclusion "are not entitled to the assumption of truth." Id. at 679. In other words, a pleading that merely offers "labels and conclusions, " a "formulaic recitation of the elements, " or "naked assertions" will not be sufficient to state a claim upon which relief can be granted. Id. at 678 (citations and internal quotation marks omitted).

"When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement of relief." Id. at 679. Plaintiffs must allege "plausible grounds to infer" that their claims rise "above the speculative level." Twombly, 550 U.S. at 555. "Determining whether a complaint states a plausible claim for relief" is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679.

III. Discussion

A. Breach of Oral Contract

The elements of a breach of contract claim are (1) the existence of a contract, (2) performance or excuse for nonperformance, (3) defendant's breach, and (4) damages. Oasis West Realty, LLC v. Goldman, 51 Cal.4th 811, 821 (2011). A claim for breach of an oral contract requires the same showing. See Rockridge Trust v. Wells Fargo, N.A., 985 F.Supp.2d 1110, 1141 (N.D. Cal. 2013). A valid contract requires capable, consenting parties, a lawful object, and sufficient cause or consideration. Janda v. Madera Community Hosp., 16 F.Supp.2d 1181, 1186 (E.D. Cal. 1998); Cal. Civ. Code § 1550.

Here, Defendant contends that the FAC does not adequately allege that Cigna received consideration for its promise to pay for medical treatments. (Motion at 4.) The California Civil Code defines good consideration as "[a]ny benefit conferred, or agreed to be conferred, upon the promisor, by any other person, to which the promisor is not lawfully entitled, or any prejudice suffered, or agreed to be suffered, by such person, other than such as he is at the time of consent lawfully bound to suffer, as an inducement to the promisor...." Cal. Civ. Code § 1605. The benefit or prejudice must, however, be bargained for in exchange for the promise. Steiner v. Thexton, 48 Cal.4th 411, 421 (2010). In other words, "the benefit or prejudice must have induced the promisor's promise." Id.

Plaintiff responds that it has adequately alleged consideration by alleging that Defendant has "an obligation to reimburse Plaintiff for valuable medical services rendered to patients insured by Defendant, which Defendant authorized orally and promised to reimburse Plaintiff, " and that "Defendant has breached its obligation to reimburse Plaintiff...." (FAC ¶¶ 33, 34.) But in arguing that "Defendant induced Plaintiff to provide medical services to its insured in exchange for reimbursement, " Plaintiff appears to suggest that it was the promisor. ...

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