United States District Court, C.D. California
HEALTH NET LIFE INSURANCE CO.
MORNINGSIDE RECOVERY, LLC ET AL.
PRESENT: THE HONORABLE DAVID O. CARTER, JUDGE
(IN CHAMBERS): ORDER GRANTING IN PART AND DENYING IN PART
PLAINTIFF'S MOTION TO REMAND AND FOR ATTORNEYS' FEES
AND COSTS , AND DENYING AS MOOT DEFENDANTS' MOTION TO
the Court is Plaintiff Health Net Life Insurance
Company's (“Plaintiff”) Motion to Remand and
for Attorneys' Fees and Costs (“Motion”)
(Dkt. 20). The Court finds this matter appropriate for
resolution without oral argument. See Fed. R. Civ.
P. 78; L.R. 7-15. Having reviewed the moving papers submitted
by the parties, the Court GRANTS Plaintiff's Motion to
Remand and DENIES Plaintiff's request for attorneys'
fees and costs. Accordingly, the Court also DENIES AS MOOT
Defendants' Motion to Dismiss (Dkt. 19).
following facts are drawn from Plaintiff's Complaint
(Dkt. 1-2). Between 2013 and 2015, Plaintiff's insurance
payments to out-of-network substance abuse treatment
providers jumped from $251, 000 to $190, 000, 000. Compl.
¶ 4. This is a result, Plaintiff contends, of widespread
insurance fraud conducted by said providers, facilitated by
the lesser regulation to which substance abuse treatment
facilities are subject. Id. ¶¶ 1, 3. The
fraudulent scheme works as follows: First, third-party
“body-brokers” identify potential patients-who
are frequently homeless, unemployed, or experiencing
financial hardship-and refer them, for a kickback, to
substance abuse treatment facilities. Id. ¶ 6.
Second, because these “purchased patients” tend
to be uninsured and ineligible to apply for coverage in the
commercial market, their treatment providers procure
insurance coverage for them using false information.
Id. Third, treatment providers encourage their
newly-insured patients to receive services by paying their
premiums, waiving cost-sharing obligations, providing free
housing and transportation, and giving the patients gift
cards. Id. These inducements effectively reduce the
patients' costs to zero. Id.
fourth, treatment providers overbill their patients'
insurers for the services allegedly rendered, which, if
rendered at all, may not have been medically necessary.
Id. ¶ 7. This is exacerbated by the fact that
out-of-network services are more costly than in-network
options. See Id. ¶ 22-23. Finally, when
treatment providers can no longer bill a patient's
insurer, they discharge the patient and stop paying the
patient's premiums. Id. ¶ 7.
originally filed suit in the Superior Court of California,
County of Orange, on June 17, 2019 (Dkt. 1-2). Plaintiff
brings the following causes of action:
(1) common law fraud;
(2) intentional interference with contractual relations;
(3) violation of the Unfair Competition Law, California
Business and Professional Code sections 17200 et
(4) declaratory relief.
See generally Compl. Defendants removed the action
to this Court on July 8, 2019 (“Notice of
Removal”) (Dkt. 1). Defendants filed a Motion to
Dismiss (Dkt. 19) on July 20, 2019, and Plaintiff filed the
instant Motion to Remand on July 22, 2019. Defendants filed
their Opposition to the Motion (Dkt. 30) on ...