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Sobertec LLC v. Unitedhealth Group Inc.

United States District Court, C.D. California

September 5, 2019

Sobertec LLC
UnitedHealth Group, Inc., et al.

          Present:The Honorable James V. Selna, U.S. District Court Judge


         Proceedings: [IN CHAMBERS] Order Regarding Motion to Remand

         Plaintiffs Sobertec LLC (“Sobertec”) and Beachside Recovery LLC (“Beachside”) (together- “Plaintiffs”) filed a motion to remand. (Mot., Dkt. No. 21.) Defendants UnitedHealth Group Incorporated (“UHGI”), United HealthCare Services, Inc. (“UHSI”), United Healthcare Insurance Company (“UHIC”), United Behavioral Health (“UBH”), UnitedHealthcare Service LLC (together- “United”), Optuminsight, Inc., and Optum Services, Inc. (all together- “Defendants”) opposed the motion. (Opp'n, Dkt. No. 28.) Plaintiffs replied. (Reply, Dkt. No. 30.)

         For the following reasons, the Court grants the motion to remand.

         I. Background

         Plaintiffs allege the following. Plaintiffs operate addiction treatment facilities in Orange County, California that are licensed and certified to provide detox, residential inpatient, and intensive outpatient services. (Complaint, Dkt. No. 1-1, Ex. A ¶¶ 53, 54.) UHIC and UHSLLC provide or manage health insurance coverage policies at issue with the other defendants. (Id. ¶ 74.) UBH and Optum are responsible for reviewing, authorizing, processing, and paying claims submitted by Plaintiffs for beneficiaries of UHSI, UHIC, and/or UHSLLC. (Id. ¶ 75.) UBH and Optum are responsible for reviewing and responding to provider appeals and performing so-called audits and investigations of mental health services providers, including Plaintiffs. (Id.) Plaintiffs have been providing addiction treatment services to Defendants' insureds as out-of-network providers since 2012 and 2015, respectively. (Id. ¶ 76.)

         Although no in-network agreement applied, Defendants' insureds sought out Plaintiffs as their providers to render care, and Plaintiffs therefore regularly treated Defendants' insureds and promptly submitted bills to Defendants for payment at Plaintiffs' reasonable and customary rates for those out-of-network services. (Id. ¶ 80.) Consistent with industry norms and custom, when approached by United's insureds, Plaintiffs first called Defendants to verify their members' benefits and confirm those members' eligibility, and obtain basic information about their coverage for the purposes of receiving mental healthcare, such as effective coverage date, deductibles, copays, out-of-pocket maximums, and the plan's rate structure for out-of-network services. (Id. ¶ 81.) During each of these verification calls, Defendants gave Plaintiffs a unique reference number that could be used to identify the specific call. (Id.)

         Before Plaintiffs provided any substantial treatment to a particular member, Plaintiffs would call Defendants again for an initial “pre-authorization” or “pre-certification” to provide care to that member. (Id. ¶ 82.) During this pre-authorization process, Defendants would typically request information about Plaintiffs' facilities to confirm that Plaintiffs are eligible providers. (Id.) Then, Defendants and Plaintiffs would typically discuss the particulars of the member's clinical presentation, needs, and the specific treatments that Plaintiffs identified as necessary for that member. (Id.) In so doing, Plaintiffs would ordinarily provide information obtained from the member, such as the member's mental status, vital signs, current medications, medical history, and other relevant details as requested in order to determine whether the proposed course of treatment was appropriate. (Id.) Based on this clinical discussion, Defendants would then “authorize” Plaintiffs to provide the specific proposed care. (Id.) For any further authorizations, Plaintiffs and Defendants would engage in detailed, further clinical discussions about the member's progress, status, and need for further treatment. (Id. ¶ 83.) Plaintiffs relied on these benefits verifications, authorizations and related representations from Defendants, and this course of dealing generally, consistent with industry custom and practice, in agreeing to provide care to Defendants' insureds. (Id. ¶ 84.)

         Prior to 2016, Plaintiffs and Defendants generally conducted business successfully and efficiently, and without significant incident. (Id. ¶ 85.) Defendants would typically process and pay Plaintiffs' claims fairly and promptly, generally within 30 to 45 business days from the date of Defendants' receipt of those claims. (Id.) Defendants generally paid Plaintiffs in a manner consistent with the information that Defendants conveyed during the process of verifying the members' benefits and generally would not request the submission of medical records with the claims. (Id.)

         Defendants knew that Plaintiffs were treating, and would continue to treat, their insureds. (Id. ¶ 114.) Both Defendants and Plaintiffs knew or had reason to know that the other party would interpret their ongoing relationship and performance as creating a contract under which Defendants agreed to pay Plaintiffs for Plaintiffs' out-of-network services rendered to Defendants' insureds at Plaintiffs' reasonable rate for such services. (Id.) Plaintiffs have performed all duties required under this implied-in-fact contract. (Id. ¶ 115.) Defendants knew that Plaintiffs' services were not being provided to Defendants' insureds free of charge. (Id. ¶ 118.) When Defendants' insureds and enrollees sought addiction treatment from Plaintiffs, Defendants confirmed to Plaintiffs that the treatment was authorized and would be covered. (Id. ¶ 119.) Defendants specifically requested and authorized Plaintiffs' services or otherwise promised, consented pledged, agreed, and committed to pay the reasonable cost of Plaintiffs' services rendered to Defendants' insureds. (Id.) It was only after Plaintiffs rendered the treatment that Defendants refused to compensate Plaintiffs for these services. (Id. ¶ 120.) Defendants also represented to Plaintiffs that their claims and their facilities were under a valid “audit” and that, as a result, Plaintiffs were obligated to submit paperwork and other information, including extensive medical records, which Defendants represented would be received, reviewed, and used to process the claims, satisfy the audit if an 85% “passing rate” was achieved, and that Plaintiffs' compliance and diligent response to such requests would ultimately result in Plaintiffs' removal from the audit and “pre-payment” review. (Id. ¶ 131.) As a result of Defendants' representations concerning coverage and payment and the validity of Defendants' audit and claim review process, Plaintiffs continued rendering services to Defendants' insureds. (Id. ¶ 134.) Plaintiffs provided services to Defendants' insureds at great cost and have not received payment from Defendants for those services. (Id. ¶ 135.)

         Defendants had a duty to fairly and competently receive, review, and process Plaintiffs' claims and supporting information submitted in connection with those claims. (Id. ¶ 146.) Defendants, however, have continually and grossly mishandled Plaintiffs' claims and supporting documentation. (Id. ¶ 147.) Defendants have also failed to timely or accurately respond to Plaintiffs' requests for information. (Id. ¶ 148.)

         On May 14, 2019, Plaintiffs brought suit in California state court against Defendants alleging claims for (1) breach of implied-in-fact contract; (2) quantum meruit; (3) promissory estoppel; (4) fraud and deceit; (5) negligent misrepresentation; (6) negligence; and (7) unfair competition. (Complaint, Dkt. No. 1-1, Ex. A.) On June 17, 2019, Defendants removed the case on the basis of federal question jurisdiction. (Not., Dkt. No. 1.) Plaintiffs now seek remand of the case. (Mot., Dkt. No. 21.)

         II. Legal Standard

         Under 28 U.S.C. § 1441(a), a defendant may remove a civil action from state court to federal court so long as original jurisdiction would lie in the court to which the action is removed. City of Chicago v. Int'l Coll. of Surgeons, 522 U.S. 156, 163 (1997). According to the Ninth Circuit, courts should “strictly construe the removal statute against removal jurisdiction.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). Doubts as to removability should be resolved in favor of remanding the case to the state court. Id. This “‘strong presumption' against removal jurisdiction means that the ...

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