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California Spine and Neurosurgery Institute v. United Healthcare Insurance Co.

United States District Court, N.D. California, San Jose Division

September 17, 2019

CALIFORNIA SPINE AND NEUROSURGERY INSTITUTE, Plaintiff,
v.
UNITED HEALTHCARE INSURANCE COMPANY, et al., Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS WITH LEAVE TO AMEND Re: Dkt. Nos. 7, 13

          LUCY H. KOH UNITED STATES DISTRICT JUDGE

         Plaintiff California Spine and Neurosurgery Institute (“Plaintiff”) sues Defendant United Healthcare Insurance Company (“Defendant”) and Does 1 through 25 for causes of action arising from Defendant's alleged under-payment of claims for reimbursement submitted by Plaintiff after Plaintiff provided medically necessary spinal procedures and treatment to patients who were insured by Defendant. ECF No. 1-1 Ex. C ¶¶ 8-67 (First Amended Complaint or “FAC”). Before the Court is Defendant's motion to dismiss. ECF No. 7. Having considered the parties' submissions, the relevant law, and the record in this case, the Court GRANTS in part and DENIES in part Defendant's motion to dismiss with leave to amend.

         I. BACKGROUND

         A. Factual Background

         Plaintiff is a “medical facility dedicated to the care and treatment of spine injuries and/or conditions” located in Campbell, California. FAC ¶¶ 1, 8. In March 2018 and July 2018, Plaintiff rendered “medically necessary” “spine surgeries” to three patients-D.B., L.M., and M.B.- whose health insurance benefits were sponsored and administered by Defendant.[1] Id. ¶¶ 12, 20, 25, 30, 36, 41. All three patients worked for the same employer and were “beneficiar[ies] of a health plan . . . administered” by Defendant. Id. ¶¶ 11, 24, 35. All patients owned an identification card from Defendant that was presented to medical providers in order to obtain medical care. Id. Defendant instructed patients to present an identification card “to assure medical providers that they would be paid for medical care . . . at a percentage of the usual and customary value for such care.” Id. Furthermore, patients' employer published a summary of the benefits of patients' medical plans and noted that the plans paid 70% of eligible expenses for care from out-of-network providers.[2] Id. ¶¶ 12, 25, 36. Plaintiff was an out-of-network provider under the health plans administered by Defendant. Id. ¶ 9.

         D.B., L.M., and M.B. experienced back pain and sought medical services from Plaintiff. Id. ¶¶ 13, 26, 37. For each patient, Plaintiff contacted Defendant to verify medical eligibility benefits, and Defendant's client services representatives “either expressly or impliedly assured” Plaintiff that Defendant “carried the financial responsibility to pay for” all three patients' “anticipated medical care at 70% of the usual and customary value for such care.” Id. ¶¶ 17, 27, 38. For D.B., Plaintiff received an authorization letter in response to Plaintiff's request for coverage of services that determined that the treatment was medically necessary. Id. ¶ 14-16. For patients L.M. and M.B., Defendant's client services representatives allegedly told Plaintiff that “no pre-authorization was required.” Id. ¶¶ 29, 40.

         Based on the existence of an identification card issued by Defendant, the pre-authorization discussions and the authorization letter, and “the express and/or implied resultant assurances” that Plaintiff “would be paid at least 70% of the usual and customary value of its medical services anticipated to be rendered, ” Plaintiff provided treatment to D.B., L.M., and M.B. and submitted claims for payment at the usual and customary rate for such services. Id. ¶¶ 20-21, 30-31, 41-42. Plaintiff alleges, however, that Defendant significantly underpaid Plaintiff and owes $206, 909.66 plus interest and other costs. Id. ¶¶ 21-23, 31-34, 42-45, 67.

         B. Procedural History

         On December 20, 2018, Plaintiff filed suit against UHC of California doing business as UnitedHealthcare of California, Apple Inc., and Does 1 through 25 in the Superior Court of Santa Clara County. ECF No. 1-1 Ex. A. Plaintiff's complaint asserted three causes of action against defendants: breach of implied in fact contract, breach of express contract, and quantum meruit. Id. On February 25, 2019, Plaintiff amended the complaint and replaced UHC of California with United Healthcare Insurance Company. FAC ¶ 5. On April 23, 2019, Plaintiff filed a request for dismissal of Apple Inc. in state court. ECF No. 1-1 Ex. E. On April 30, 2019, Plaintiff also filed a request for dismissal of UHC of California in state court. ECF No. 1-1 Ex. F. United Healthcare Insurance Company was the only remaining named defendant.

         On May 3, 2019, Defendant removed the case to this Court. ECF No. 1. On May 10, 2019, Defendant moved to dismiss all three causes of action. See ECF No. 7 (“Mot.”). Plaintiff opposed the motion to dismiss on July 17, 2019, see ECF No. 19 (“Opp.”), and on July 31, 2019, Defendant filed a Reply, see ECF No. 20 (“Reply”).

         II. LEGAL STANDARD

         A. Motion to Dismiss Under Rule 12(b)(6)

         Rule 8(a)(2) of the Federal Rules of Civil Procedure requires a complaint to include “a short and plain statement of the claim showing that the pleader is entitled to relief.” A complaint that fails to meet this standard may be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6). The United States Supreme Court has held that Rule 8(a) requires a plaintiff to 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 has facial plausibility when the 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). “The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (internal quotation marks omitted). Put another way, “a complaint need not contain ‘detailed factual allegations,' [but] a plaintiff must plead at least enough facts to put the defendant on notice of the claim against it.” Wheeler v. MicroBilt Corp., 700 Fed. App'x 725, 727 (9th Cir. 2017) (quoting Iqbal, 556 U.S. at 678). For purposes of ruling on a Rule 12(b)(6) motion, the Court must “accept factual allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).

         The Court, however, need not “assume the truth of legal conclusions merely because they are cast in the form of factual allegations.” Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir. 2011) (per curiam) (internal quotation marks omitted). Mere “conclusory allegations of law and unwarranted inferences are insufficient ...


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