Jerald Friedman, Individually and on Behalf of All Others Similarly Situated, Plaintiff-Appellant,
AARP, Inc.; AARP Services, Inc; AARP Insurance Plan; UnitedHealth Group, Inc.; UnitedHealth Care InsuranceCompany, Defendants-Appellees.
and Submitted October 19, 2016 Pasadena, California
from the United States District Court for the Central
District of California No. 2:14-cv-00034-DDP-PLA, Dean D.
Pregerson, District Judge, Presiding
S. Love (argued) and Susan K. Alexander, Robbins Geller
Rudman & Dowd LLP, San Francisco, California; Kevin K.
Green, Frank J. Janecek, Jr., and Christopher Collins,
Robbins Geller Rudman & Dowd LLP, San Diego, California;
Stuart A. Davidson, Mark J. Dearman, and Christopher C.
Martins, Robbins Geller Rudman & Dowd LLP, Boca Raton,
Florida; Sean K. Collins, Boston, Massachusetts; Michael F.
Ghozland, Ghozland Law Firm, Los Angeles, California; for
D. Boyle (argued) and Meaghan VerGow, O'Melveny &
Myers LLP, Washington, D.C.; Christopher B. Craig, Los
Angeles, California; for Defendants-Appellees UnitedHealth
Group, Inc. and United HealthCare Insurance Company.
Douglas E. Winter, Bryan Cave LLP, Washington, D.C.; Jeffrey
S. Russell and Darci F. Madden, Bryan Cave LLP, St. Louis,
Missouri; for Defendants-Appellees AARP, Inc., AARP Services,
Inc., and AARP Insurance Plan.
Before: Richard C. Tallman, Barrington D. Parker, Jr.
[*] and Morgan
Christen, Circuit Judges.
panel reversed the district court's Fed.R.Civ.P. 12(b)(6)
dismissal of a complaint brought by a plaintiff Medicare
beneficiary who purchased private supplemental health
insurance through a group Medigap policy, alleging that AARP
Insurance Plan transacted insurance without a license in
violation of the California Insurance Code.
Unfair Competition Law ("UCL") broadly prohibits
"unfair competition, " defined as "any
unlawful, unfair or fraudulent business act or
practice." Cal. Bus. & Prof. Code § 17200.
panel held that plaintiff stated a plausible claim at the
motion to dismiss stage that AARP "solicits"
insurance without a license, and, as a consequence, committed
an "unlawful" act in violation of the UCL.
panel also held that plaintiff adequately alleged that
defendants violated the "fraudulent" and
"unfair" prongs of the UCL. The panel concluded
that plaintiff plausibly alleged that members of the public
were likely to be deceived where AARP allegedly misleadingly
told its members that their payment only covered AARP's
expenses and the premium for
UnitedHealth's Medigap coverage, but in reality, the
payments included an imbedded commission which was not an
panel remanded for further proceedings.
PARKER, Circuit Judge:
Jerald Friedman, a Medicare beneficiary, purchased private
supplemental health insurance through a group Medigap policy
held by Defendant AARP Insurance Plan ("AARP"), and
underwritten and sold by Defendant UnitedHealth Care
Insurance Company ("UnitedHealth"). Medigap
policies offer supplemental private health insurance to cover
costs not covered by Medicare. Friedman filed this putative
class action alleging, in essence, that AARP, through its
arrangement with Medigap, transacts insurance without a
license in violation of the California Insurance Code.
Friedman sought relief pursuant to California's Unfair
Competition Law and the common law. The district court
granted Defendants' motion under Rule 12(b)(6) and
dismissed the complaint with prejudice. We reverse.
not-for-profit corporation formerly known as the American
Association of Retired Persons, is a dominant figure in the
market for Medigap health insurance. See Vencor Inc. v.
Nat'l States Ins. Co., 303 F.3d 1024, 1026 (9th Cir.
2002) (describing Medigap health insurance).Approximately
one-third of all Medigap policyholders nationwide are
enrolled in AARP's program, more than three times
AARP's closest competitor. AARP does not itself provide
insurance coverage, nor is it licensed to do so. Rather, it
is the group policyholder for Medigap coverage underwritten
and sold by UnitedHealth, the country's largest health
insurer. In 2011, Friedman purchased UnitedHealth Medigap
coverage through AARP's group policy.
and UnitedHealth's Medigap arrangement is governed by a
1997 joint venture agreement (the "AARP-United
Agreement" or the "Agreement"). The Agreement
requires that individuals wishing to purchase Medigap
coverage from UnitedHealth do so through AARP's group
policy. The Agreement also requires that AARP administer key
aspects of the program, which involves two principal tasks.
AARP solicits its members' enrollment in the Medigap
program. An agreement between AARP and its subsidiary trust,
Defendant AARP Insurance Plan (the "AARP Trust")
contractually obligates AARP to "solicit member
participation in the [Medigap] Plan by direct mail and
otherwise." ER 299. AARP discharges this duty through
television commercials, its website, and other forms of
advertisements. For example, a website owned by Defendant
AARP Services, Inc., a for-profit, wholly-owned subsidiary of
AARP, explained why AARP members should "get an AARP
Medicare Supplement Plan." ER 276. It emphasized that:
(i) AARP Medicare Supplement Plans are the "only
Medicare Supplement plans endorsed by AARP"; (ii) the
plans are "[i]nsured by UnitedHealthcare Insurance
Company, the insurer serving the most Medicare supplement
enrollees nation wide"; and (iii) there is a "94%
Customer Satisfaction Rate of those ...