United States District Court, N.D. California
ORDER ON DEFENDANT'S MOTION TO DISMISS RE: DKT.
M. RYU, UNITED STATES MAGISTRATE JUDGE
Oxford Health Insurance Inc. (“Oxford”) and
United Healthcare Insurance Company (“UHC”) move
to dismiss Plaintiff California Spine and Neurosurgery
Institute's complaint. [Docket Nos. 11
(“Mot”), 17 (“Reply”).] Plaintiff
timely opposed. [Docket No. 16 (“Opp.”).] The
court held a hearing on September 26, 2019.
considered the parties' submissions and oral arguments,
the court denies the motion to dismiss.
following facts come from Plaintiff's initial
complaint. Plaintiff is a private surgical practice
that provides complex surgical services at El Camino Hospital
in Mountain View. [Docket No. 1-1, Ex. A
(“Compl.”) ¶ 1.] UHC is a managed care
company that administers health insurance policies.
Id. ¶ 5. Oxford is a wholly-owned subsidiary of
UHC. Id. ¶¶ 4-5; Mot. at 6. Plaintiff is
an out-of-network provider in relation to Defendants. Compl.
nonparty patient identified by his initials, R.N., is insured
under a health insurance policy administered by Defendants.
Compl. ¶ 6. R.N. is a middle-aged man who presented to
Plaintiff for treatment of severe neck and bilateral upper
extremity pain. Id. ¶ 7. After conservative
management such as physical therapy and epidural steroid
injections failed to work, Plaintiff advised R.N. that
“neurosurgical intervention was warranted.”
Id. ¶ 7. Plaintiff alleges that on November 21,
2018, its staff contacted UHC by phone to verify the details
of R.N.'s insurance coverage and benefits. Id.
¶ 9. According to Plaintiff, a representative of UHC
informed Plaintiff's staff that “UHC's payment
for covered care rendered to R.N. by out-of-network providers
would be based on ‘usual and customary'
rates.” Id. Plaintiff's staff
recorded this information on a verification form and noted
that a UHC employee named “Cheryl” had supplied
the information. Id.
to performing surgery on R.N., Plaintiff sought approval of
coverage from Oxford. Compl. ¶ 11. On November 29, 2018,
Oxford allegedly sent Plaintiff a letter approving back
surgery for R.N. and included various Current Procedural
Terminology (“CPT”) service codes as eligible for
coverage. Id. Plaintiff's principle physician,
Adebukola Onibokun, M.D., performed the surgery on R.N. on
December 17, 2018. Id. ¶¶ 1, 12. Plaintiff
billed Defendants for the surgery using the same CPT service
codes that Oxford had previously approved. Id. Dr.
Onibokun's charges for the surgery were $147, 000.00,
which Plaintiff alleges are his standard rates for such
services. Id. Defendants paid Plaintiff a total of
$7, 911.24 for the surgery. Id. ¶ 14. Plaintiff
alleges that this amount is “far below even the average
rates for such services in Plaintiff's geographic area,
” and did not amount to the “usual and
customary” (“UCR”) rates Defendants had
promised. Id. ¶¶ 14-15.
now brings claims for relief based on the equitable theories
of promissory estoppel and quantum meruit. Defendants move to
dismiss both claims. Jurisdiction is based on diversity of
LEGAL STANDARD FOR RULE 12(B)(6) MOTIONS
motion to dismiss under Rule 12(b)(6) tests the legal
sufficiency of the claims alleged in the complaint. See
Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480,
1484 (9th Cir. 1995). When reviewing a motion to dismiss for
failure to state a claim, the court must “accept as
true all of the factual allegations contained in the
complaint, ” Erickson v. Pardus, 551 U.S. 89,
94 (2007) (per curiam) (citation omitted), and may dismiss a
claim “only where there is no cognizable legal
theory” or there is an absence of “sufficient
factual matter to state a facially plausible claim to
relief.” Shroyer v. New Cingular Wireless Servs.,
Inc., 622 F.3d 1035, 1041 (9th Cir. 2010) (citing
Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009);
Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001))
(quotation marks omitted). A claim has facial plausibility
when a plaintiff “pleads factual content that allows
the court to draw the reasonable inference that the defendant
is liable for the misconduct alleged.” Iqbal,
556 U.S. at 678 (citation omitted). In other words, the facts
alleged must demonstrate “more than labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do.” Bell Atl. Corp. v.
Twombly, 550 U.S. 554, 555 (2007) (citing Papasan v.
Allain, 478 U.S. 265, 286 (1986)).
general rule, a court may not consider “any material
beyond the pleadings” when ruling on a Rule 12(b)(6)
motion. Lee, 250 F.3d at 688 (citation and quotation
marks omitted). However, “a court may take judicial
notice of ‘matters of public record, '”
id. at 689 (citing Mack v. S. Bay Beer
Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986)), and may
also consider “documents whose contents are alleged in
a complaint and whose authenticity no party questions, but
which are not physically attached to the pleading, ”
without converting a motion to dismiss under Rule 12(b)(6)
into a motion for summary judgment. Branch v.
Tunnell, 14 F.3d 449, 454 (9th Cir. 1994), overruled
on other grounds by Galbraith v. County of Santa Clara,
307 F.3d 1119, 1125-26 (9th Cir. 2002). The court need not
accept as true allegations that contradict facts that may be
judicially noticed. See Mullis v. U.S. Bankr.
Court, 828 F.2d 1385, 1388 (9th Cir. 1987).
estoppel is “a doctrine which employs equitable
principles to satisfy the requirement that consideration must
be given in exchange for the promise sought to be
enforced.” Crane v. Fargo, No. 13-cv-01932
KAW, 2014 WL 1285177, at *4 (N.D. Cal. Mar. 24, 2014)
(quoting Kajima/Ray Wilson v. Los Angeles Cnty. Metro.
Transp. Auth., 23 Cal.4th 305, 310 (2000)) (further
citations omitted). The elements of a promissory estoppel
claim are “(1) a clear and unambiguous promise by the
promisor, and (2) reasonable, foreseeable and detrimental
reliance by the promisee.” Bushell v. JPMorgan
Chase Bank, N.A., 220 Cal.App.4th 915, 929 (2013). In
this case, Plaintiff alleges that Defendants made a promise
to pay for the surgical services Plaintiff provided to R.N.,
as evidenced by the phone verification of member eligibility
and the prior authorization for ...