United States District Court, N.D. California
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO
DISMISS; GRANTING MOTION TO PROCEED UNDER PSEUDONYM RE: DKT.
NOS. 23, 36
HAYWOOD S GILLIAM, JR. United States District Judge.
before the Court are Defendants' motion to dismiss and
Plaintiff's unopposed motion to proceed under a
pseudonym. For the following reasons, the Court
GRANTS IN PART and DENIES IN
PART the motion to dismiss and
GRANTS the motion to proceed under a
Jane Smith enrolled in the UnitedHealthcare Choice Plus
health insurance plan (the “Plan”) in 2018.
See Complaint, Dkt. No. 1 (“Compl.”)
¶¶ 6, 10. The Plan was issued by United HealthCare
Insurance Co. (“UHIC”) and administered by UHIC
and United Behavioral Health (collectively,
“United” or “Defendants”).
Id. ¶¶ 6, 11-12. The Plan was governed by
the Employee Retirement Income Security Act of 1974
(“ERISA”). Id. ¶ 6.
suffered from post-traumatic stress disorder, for which she
had received outpatient psychotherapy from a licensed
clinical social worker since 2016. Id. ¶¶
7-8. Her clinical social worker had “completed
advanced, post-graduate training” and had nearly three
decades of experience. Id. ¶¶ 7-8. The
clinical social worker had a private practice and was
out-of-network with United; in other words, this provider had
“not entered into any contract with United to accept
United's in-network rates.” Id. Instead,
Plaintiff submitted her claims for benefits to United and
United paid her provider according to its reimbursement
schedule. Id. Plaintiff is only disputing the
“amount of benefits United determined to pay for the
covered services” and no one disputes whether the
services were medically necessary or covered by the Plan.
Plan's Certificate of Coverage explained how expenses
would be paid or reimbursed. Id. ¶¶ 16-17.
When an insured obtained services from an out-of-network
provider who had not negotiated rates with United,
“Eligible Expenses are determined based on 110% of the
published rates allowed by the Centers for Medicare and
Medicaid Services (CMS) for Medicare for the same or similar
service within the geographic market.” Id.
¶ 17 (emphasis omitted). However, “[f]or Mental
Health Services and Substance Use Disorder Services the
Eligible Expense will be reduced by 25% for Covered Health
Services provided by a psychologist and by 35% for Covered
Health Services provided by a masters level counselor.”
Id. (emphasis omitted).
to Plaintiff, because this reimbursement formula decreased
the amount paid for mental health and substance use disorder
services provided by psychologists or counselors, it
constituted a “Discriminatory Reimbursement Penalty,
” in violation of ERISA and the Affordable Care Act
(“ACA”). Id. ¶¶ 10, 24. For
example, Plaintiff's provider submitted a claim to United
for $120 for one hour of “psychotherapy for crisis
services and procedures, ” which is designated as CPT
Code 90839. Id. ¶¶ 19-20, 23. But United
paid the provider only $61.86. Id. ¶ 23.
Plaintiff explained the discrepancy as follows:
For instance, the 2018 Centers for Medicare and Medicaid
Services (CMS) fee schedule for CPT Code 90839 in the
metropolitan Philadelphia area indicates rates of $144.20.
Plaintiff's COC stated that, with respect to
out-of-network services, “Eligible Expenses are
determined based on 110% of the published rates allowed by
[CMS] for Medicare for the same or similar services within
the geographic market.” At 110% of the Medicare rate,
Plaintiff's Plan should have covered the service in the
amount of $158.62. However, through applying the
Discriminatory Reimbursement Penalty, United reduced the
covered amount by 35%, and thus, only covered $103.10. Under
Plaintiff's Plan, she was responsible for 40%
coinsurance, so the Plan paid $61.86, or 60% of $103.10.
Id. ¶ 24. Thus, much of the difference between
the amount billed and the amount reimbursed was due to
United's so-called Discriminatory Reimbursement Penalty.
See Id. ¶¶ 23-24.
appealed the reimbursement rates, raising the Parity Act, but
United denied the appeal. Id. ¶¶ 25-27.
Plaintiff filed a second-level appeal, but United denied that
one too. Id. ¶¶ 28-29. United informed
Plaintiff that she had exhausted her internal appeals but had
a right to file a civil action under ERISA. Id.
filed this lawsuit on October 16, 2018, claiming that
United's policy violated the Paul Wellstone and Pete
Domenici Mental Health Parity and Addiction Equity Act of
2008 (“Parity Act”) and the anti-discrimination
mandate within the Affordable Care Act. Compl. ¶¶
4, 10, 31-39. She also alleged that the reimbursement penalty
in the Plan amounted to a conflict of interest and breach of
United's fiduciary duties. Id. ¶¶
asserted four causes of action in her complaint: (1) a claim
for benefits under ERISA, 29 U.S.C. § 1132(a)(1)(B), for
violating the Parity Act, id. ¶¶ 52-56;
(2) a claim for benefits under ERISA, 29 U.S.C. §
1132(a)(1)(B), for violating the ACA, id.
¶¶ 57-61; (3) a claim for injunctive relief under
ERISA, 29 U.S.C. § 1132(a)(3)(A), against Plan practices
that violate the Parity Act and the ACA, id.
¶¶ 62-63; and (4) a claim for appropriate equitable
relief under ERISA, 29 U.S.C. § 1132(a)(3)(B),
id. ¶¶ 64-65.
brought her suit on behalf of herself and a putative class
composed of “all participants or beneficiaries in ERISA
plans whose claim(s) for behavioral health services provided
by out-of-network psychologists or master's level
counselors were subjected to United's Discriminatory
Reimbursement Penalty, excluding plans issued by Oxford
Health Insurance, Inc.” Id. ¶ 45.
filed a consent motion to proceed under a pseudonym and to
seal personally identifying information on November 9, 2018.
See Dkt. No. 23.
moved to dismiss the complaint on December 10, 2018.
See Dkt. No. 36 (“Mot.”). Plaintiff
opposed, Dkt. No. 41 (“Opp.”), and Defendants
replied, Dkt. No. 42 (“Reply”). The Court held a
hearing on the motions on March 21, 2019. See Dkt.
Rule of Civil Procedure 8(a) requires that a complaint
contain “a short and plain statement of the claim
showing that the pleader is entitled to relief[.]” A
defendant may move to dismiss a complaint for failing to
state a claim upon which relief can be granted under Federal
Rule of Civil Procedure 12(b)(6). “Dismissal under Rule
12(b)(6) is appropriate only where the complaint lacks a
cognizable legal theory or sufficient facts to support a
cognizable legal theory.” Mendiondo v. Centinela
Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). To
survive a Rule 12(b)(6) motion, a plaintiff must plead
“enough facts to state a claim to relief that is
plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). A claim is facially
plausible when a plaintiff pleads “factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
reviewing the plausibility of a complaint, courts
“accept factual allegations in the complaint as true
and construe the pleadings in the light most favorable to the
nonmoving party.” Manzarek, 519 F.3d at 1031.
Nonetheless, Courts do not “accept as true allegations
that are merely conclusory, unwarranted deductions of fact,
or unreasonable inferences.” In re Gilead Scis.
Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). And
even where facts are accepted as true, “a plaintiff may
plead [him]self out of court” if he “plead[s]
facts which establish ...