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Renaissance Ranch Outpatient Treatment, Inc. v. Golden Rule Insurance Co.

United States District Court, D. Utah, Central Division

June 20, 2017

RENAISSANCE RANCH OUTPATIENT TREATMENT, INC., Plaintiff,
v.
GOLDEN RULE INSURANCE COMPANY, UNITED HEALTHCARE SERVICES, INC., UNITEDHEALTHCARE OF UTAH, INC., and UNITED HEALTHCARE LIFE INSURANCE COMPANY, Defendants.

          MEMORANDUM DECISION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS

          David Nuffer United States District Judge.

         Plaintiff Renaissance Ranch Outpatient Treatment, Inc. (“Renaissance”), as an assignee of many of its patients who were treated for drug and alcohol addictions, sues various insurers for failure to pay claims for treatment.[1] The insurers moved to dismiss many claims as to many patients.[2] This order grants the Motion to Dismiss in large part.

         Contents

         BACKGROUND ............................................................................................................................ 2

Overview of Complaint ....................................................................................................... 2
Motion to Dismiss ............................................................................................................... 3
Overview of Disposition ..................................................................................................... 4
Factual Background ............................................................................................................ 4

         DISCUSSION ................................................................................................................................. 5

Renaissance's state-law causes of action, Claims 1-7, for patients having plans that are governed by ERISA, are preempted by ERISA ............................................................ 7
This court has no jurisdiction of state-law causes of action, Claims 1-7, for patients having plans not governed by ERISA ........................................................................... 8
Claims 8-9 fail to state a claim for Renaissance's patients having plans not subject to ERISA ......................................................................................................................... 10
Claim 8, alleging breach of fiduciary duty under ERISA fails as a matter of law ........... 11
Renaissance sufficiently alleges its standing to sue under ERISA, Claim 9, for its patients having plans governed by ERISA and who it provided a written AOB ..................... 13

         CONCLUSION ............................................................................................................................. 14

         ORDER ......................................................................................................................................... 16

         BACKGROUND

         Overview of Complaint

         Renaissance's Complaint alleges nine causes of action.

         Claims for Relief

         1 - Breach of Contract

          2 - Breach of Implied Covenant of Good Faith

         3 - Unjust Enrichment, Quasi Contract, Quantum Meruit

         4 - Fraud

         5 - Negligent Misrepresentation

         6 - Negligent Misrepresentation

         7 - Declaratory Judgment

         8 - ERISA Breach of Fiduciary Duties

         9 - ERISA Benefits

         Claims 1-7 allege state-law causes of action, [3] while Claims 8-9 are pleaded under the Employment Retirement Income Security Act of 1974 (“ERISA”).[4] The Complaint seeks recovery of the denied benefits claims for 28 of its patients, [5] but in subsequent briefing, Renaissance increased the number of its patients to 36.[6] Patients 1-23 have plans that are governed by ERISA; patients 24-36 have plans that are not governed by ERISA.[7]

         Motion to Dismiss

         Defendants Golden Rule Insurance Company (“Golden Rule”), United Healthcare Services, Inc. (“UHS”), United Healthcare of Utah, Inc. (“UHU”), and United Healthcare Life Insurance Company (“UHLIC”), are referred to collectively “United.” United's Motion to Dismiss argues that Renaissance's state-law causes of action are preempted by ERISA; that these pendent state-law causes of action should be dismissed for lack of subject-matter jurisdiction; that Renaissance lacks standing to sue under the ERISA; and that Renaissance has failed to state a claim under ERISA for breach of fiduciary duty.[8]

         Renaissance responded that its state-law causes of action are not preempted by ERISA because these state-law causes of action apply only to its patients' plans that are not governed by ERISA; that subject-matter jurisdiction over its state-law causes of action exists because these causes of action form part of the same case or controversy as its ERISA causes of action; that it has standing to sue under ERISA as an assignee of its patients; and that it has sufficiently pleaded a cause of action under ERISA for breach of fiduciary duty.[9]

         Overview of Disposition

         United's Motion to Dismiss is GRANTED in part because:

• Renaissance's state-law causes of action, Claims 1 7, are preempted by ERISA for Renaissance's patients having plans that are governed by ERISA;
• subject-matter jurisdiction over Renaissance's state-law causes of action, Claims 1-7, is lacking;
• Renaissance's ERISA causes of action, Claims 8-9, fail to state a claim for Renaissance's patients having plans not subject to ERISA;
• Renaissance failed to establish its standing to sue under ERISA for some patients by failing to show a written assignment of benefits (“AOB”), as would be required to state ERISA claims; and
• Renaissance's cause of action for breach of fiduciary duty under ERISA, Claim 8, fails as a matter of law.

         However, because Renaissance sufficiently pleaded its standing to sue under ERISA for its patients having plans governed by ERISA and who it provided an AOB, the Motion to Dismiss is DENIED in part.

         Factual Background

         Parties' Roles:

         Renaissance is a Utah corporation that provides services as an outpatient substance abuse treatment facility that specializes in treating patients with drug and alcohol addictions.[10] Golden Rule is an Indiana corporation that provides health and welfare benefit plans to individuals, including Utah residents, under the UnitedHealth Group global brand.[11]UHS is a Minnesota corporation, UHLIC is a Wisconsin corporation, and UHU is a Utah corporation, all of which are subsidiaries of the UnitedHealth Group and administer employee health and welfare benefit plans to Utah residents.[12] Renaissance is an out-of-network provider for United.[13]

         Assignments of Benefits:

         Renaissance has a practice of receiving an AOB from each patient it treats.[14] The AOBs gives Renaissance the right to all benefits under its patients' plans.[15] Prior to treating its patients Renaissance verifies, through a third-party medical billing company, whether the patients' plans will cover Renaissance's services.[16]

         Dispute Arises:

         Beginning in the spring of 2015, United began denying all new claims for benefits submitted by Renaissance for the treatment of its patients.[17] In subsequent months, Renaissance attempted to work with United to determine the cause of the denials, but was unsuccessful.[18] Renaissance alleges that, to date, United owes $1, 952, 244.50 in wrongfully denied claims for benefits.[19]

         DISCUSSION

         Dismissal is appropriate under Rule 12(b)(6) of the Federal Rules of Civil Procedure when the complaint, standing alone, is legally insufficient to state a claim on which relief may be granted.[20] When considering a motion to dismiss for failure to state a claim, the thrust of all well-pleaded facts is presumed, but conclusory allegations need not be considered.[21] And the complaint's legal conclusions and opinions are not accepted, even if they are couched as facts.[22]

         Where United's Motion to Dismiss challenges federal subject-matter jurisdiction over causes of action, Renaissance has the burden of establishing jurisdiction.[23] Subject-matter jurisdiction can be established through diversity jurisdiction, [24] federal question jurisdiction, [25]and supplemental jurisdiction.[26] Renaissance must also establish its standing to sue.[27] To aid in the determination of these issues, supplemental briefing was requested from the parties.[28] The supplemental briefing included identification of the patients from which Renaissance received a written AOB, and identification of patients' plans governed by ERISA.[29]

         The review and consideration of these supplemental materials to determine subject-matter jurisdiction and standing does not convert United's Motion to Dismiss into one for summary judgment.[30] “A court has wide discretion to allow affidavits, other documents, and a limited evidentiary hearing to resolve disputed jurisdictional facts under Rule 12(b)(1)” to resolve a factual attack on subject-matter jurisdiction.[31] When ruling on a motion to dismiss an ERISA claim under Rule 12(b)(6), benefits plans and other documents, if they are “referred to in the complaint” and are “central to the plaintiff's claim” may be considered without converting the motion into one for summary judgment.[32]

         Renaissance's state-law causes of action, Claims 1-7, for patients having plans that are governed by ERISA, are preempted by ERISA

         United argues that Claims 1-7 are preempted by ERISA.[33] The Supreme Court has held that Congress intended to make ERISA “exclusively a federal concern.”[34]

When a federal statute wholly displaces the state-law cause of action through complete pre-emption, the state claim can be removed. This is so because when the federal statute completely pre-empts the state-law cause of action, a claim which comes within the scope of that cause of action, even if pleaded in terms of state-law, is in reality based on federal law. ERISA is one of these statutes … Therefore, any state-law cause of action that duplicates, supplements, or supplants the ERISA civil enforcement remedy … is therefore pre-empted.[35]

         Therefore, to the extent that as Renaissance's state-law causes of action, Claims 1-7, seek to recover unpaid benefits under plans that are governed by ERISA, they are preempted by ERISA. The parties' supplemental briefing identified patients 1-23 as having plans governed by ERISA.[36] ...


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