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Pain Management Specialists v. Blue Shield of California Life & Health Insurance Co.

United States District Court, C.D. California

February 9, 2015

PAIN MANAGEMENT SPECIALISTS; GALILEO SURGERY CENTER, LP., CYPRESS AMBULATORY SURGERY CENTER, L.P., Plaintiffs,
v.
BLUE SHIELD OF CALIFORNIA LIFE & HEALTH INSURANCE COMPANY, a California corporation, Defendant.

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS [Dkt. No. 17]

DEAN D. PREGERSON, District Judge.

Presently before the court is Defendant Blue Shield of California's Motion to Dismiss. Having considered the submissions of the parties, the court grants the motion and adopts the following order.

I. Background

Plaintiffs are all outpatient surgical centers located in San Luis Obispo county. (First Amended Complaint ("FAC") ¶¶ 2-4.)[1] Defendants administered a medical insurance plans that covered one of Plaintiffs' patients, S.S. (FAC ¶¶ 1, 8). The insurance plan was subject to the Employee Retirement Income Security Act of 1974 ("ERISA"). (Id. ¶ 7-8). Patient S.S. assigned his benefits under the plans to Plaintiffs. (Id. ¶ 13.)

Plaintiffs provided medical services to S.S. after confirming with Defendants that Defendants would pay for the procedures. (FAC ¶¶ 16, 20.) Plaintiffs were not, however, "out-of-network" providers. (Id. ¶ 18.) Though Plaintiffs understood that the procedures would be covered, Defendants "were vague" as to the amount that would be paid. (Id. ¶ 17.)

Plaintiffs are unaware of the terms of the plans, but allege that Defendants refused to pay the amounts required by plans. (Id. ¶ 22.) Since 2008, Defendants have paid only $3, 914.44 of the $180, 400.00 requested by Plaintiffs. (Id. ¶ 5.)

The First Amended Complaint alleges causes of action for (1) wrongful denial of benefits under ERISA § 502(A)(1)(B) and (2) promissory estoppel. Defendants now move to dismiss.

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. Wrongful Denial of Benefits

Plaintiffs' ERISA claim is predicated upon S.S.' assignment of his rights under the plans to Plaintiffs. The plans, however, all contain non-assignability clauses. The plans state, "Coverage or any Benefits of this Plan may not be assigned.... If the [patient] receives Services from a Non-Preferred Provider, payment will be made directly to the [patient], and the [patient] is responsible for payment to the Non-Preferred Provider. The [patient] or the provider of Service may not request that the payment be made directly to the provider of Service." (Defendants' Request for Judicial Notice, Ex. A at 68, Ex. B at 66, Ex. C at 67.)

Plaintiffs' opposition contends that non-assignability provisions in health care plans are prohibited under California law. (Opp. at 5.) The Ninth Circuit, however, has explictly held that such provisions are enforceable. "ERISA welfare plan payments are not assignable in the face of an express non-assignment clause in the plan." Davidowitz v. Delta Dental Plan of California, Inc., 946 F.2d 1476, 1481. Plaintiffs do not address, let alone distinguish, this binding precedent. See also, Desert Valley Hospital, Inc. v. Wal-Mart Stores, Inc., Nos. EDCV 11-1584 VAP, EDCV 11-1585 VAP, 2012 WL 833000 at *3 (C.D. Cal. Mar. 9, 2012) ("[P]atients could assign their Plain benefits... as long as the plan lacked a valid clause forbidding its members from making such assignments. ") (emphasis ...


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