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Sanjiv Goel M.D., Inc. v. Cigna Healthcare of California, Inc.

United States District Court, C.D. California

October 9, 2019

SANJIV GOEL M.D., INC., Plaintiff,


          Dale S. Fischer United States District Judge.

         Defendants Cigna Healthcare of California, Inc. (Cigna California) and Cigna Health and Life Insurance Company (CHLIC) (collectively, Defendants) removed this case based on diversity and federal question jurisdiction. Dkt. 1 (Notice). Plaintiff Sanjiv Goel M.D., Inc. (Plaintiff) moves for remand. Dkt. 9 (Mot.). Plaintiffs Motion is GRANTED.


         Plaintiff provides emergency medical services. Dkt. 1-1 (Compl.) ¶ 1. After rendering such services to four patients insured by Defendants, Plaintiff submitted claims for reimbursement. Id. ¶ 10. Defendants reimbursed Plaintiff $32, 089.69 for those services but failed to reimburse the remaining $387, 412.23 Plaintiff claims it is owed. Id. ¶ 15.


         A. Diversity Jurisdiction

         Federal courts have diversity jurisdiction where the amount in controversy exceeds $75, 000 and the action is between citizens of different states. 28 U.S.C. §§ 1332, 1441.[1]Defendants do not contest that Cigna California and Plaintiff are both citizens of California, but claim Cigna California was fraudulently joined.[2]

         For purposes of diversity jurisdiction, the Court "may disregard the citizenship of a non-diverse defendant who has been fraudulently joined." Grancare, LLC v. Thrower, 889 F.3d 543, 548 (9th Cir. 2018). A non-diverse defendant is fraudulently joined "[i]f the plaintiff fails to state a cause of action against [the] resident defendant, and the failure is obvious according to the settled rules of the state." Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001) (first alteration in original) (quoting McCabe v. Gen. Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987)). "[T]he test for fraudulent joinder and for failure to state a claim under Rule 12(b)(6) are not equivalent." Grancare, 889 F.3d at 549. Instead, "the standard is similar to the 'wholly insubstantial and frivolous' standard for dismissing claims under Rule 12(b)(1) for lack of federal question jurisdiction." Id. In evaluating a claim of fraudulent joinder, "a federal court must find that a defendant was properly joined and remand the case to state court if there is a 'possibility that a state court would find that the complaint states a cause of action against any of the [non-diverse] defendants.'" Id. (alteration and emphasis in original) (quoting Hunter v. Philip Morris USA, 582 F.3d 1039, 1046 (9th Cir. 2009)). In this inquiry, "the district court must consider . . . whether a deficiency in the complaint can possibly be cured by granting the plaintiff leave to amend." Id. at 550.

         In its Complaint, Plaintiff does not differentiate between CHLIC and Cigna California. See Compl. ¶¶ 2-3 (defining CHLIC and Cigna California as "Cigna" and Cigna and the Doe defendants as "Cigna" or "Defendants"). Plaintiff alleges that CHLIC and Cigna California "coordinate their efforts, utilize the same employees and assets, [and] have actual or ostensible authority to, and do in fact, act through one another, and otherwise function as a united whole." Id. ¶ 3. Plaintiff further alleges that CHLIC and Cigna California market and present themselves to members and providers as "a single unified entity under the 'Cigna' marketing brand name," Id., and "are the alter egos of each other," Mot. at 6; see also Compl. ¶ 8.

         Defendants argue that Cigna California was fraudulently joined because CHLIC, and not Cigna California, "administered or insured medical benefits for the four individuals who received the treatment for which plaintiff alleges it was undercompensated" and "Cigna California was [not] responsible for payment of the contested claims." Dkt. 12 (Opp'n) at 7-8. Defendants also dispute that Cigna California is the alter ego of CHLIC. Id. at 8-9.

         As to the first point, Defendants submitted a declaration from Emily Russell, an operations advisor at CHLIC, asserting that Cigna California "is not the insurer, plan sponsor, plan administrator, or claims administrator" for any of the four patients' health plans. Dkt. 12-3 (Russell Decl.) at ¶¶ 1, 6, 11, 16, 20. Defendants also submitted a declaration from William S. Jameson, Managing Counsel for CHLIC and Cigna California, stating that Cigna California "had no responsibility for processing, adjudicating, or denying the claims for the services as issue in this action." Dkt. 12-2 (Jameson Decl.) ¶¶ 1, 10. Although this evidence may cast doubt on the viability of Plaintiffs claims against Cigna California, "a denial, even a sworn denial, of allegations does not prove their falsity." Grancare, 889 F.3d at 551.

         As to the second point, Jameson declares that neither CHLIC nor Cigna California is "a parent company or subsidiary of the other," "each independently decide[s] what products they will offer" and "utilize[s] a different claims platform and a different claims process," they "do not employ the same personnel, "[3] have "independent boards of directors," and "generate separate financial statements." Jameson Decl. ¶¶ 6-8. These assertions cast doubt on the viability of Plaintiffs alter ego theory, but do not demonstrate that Cigna California could not possibly be liable. "[I]t is conceivable that a corporate family could have formal delineations of responsibilities that are not followed in practice." Jadali v. Cigna Health & Life Ins. Co., 3:19-cv-00996-WHO, 2019 WL 1897481, at *3 (N.D. Cal. Apr. 29, 2019). The Court recognizes that the Complaint as it stands provides minimal factual allegations to support a claim of alter ego liability, but the Court finds such deficiency could be cured through amendment.


         Because Cigna California was not fraudulently joined, diversity jurisdiction did ...

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