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IHC Health Service Inc. v. Central States Southeast And Southwest Areas Health And Welfare Fund

United States District Court, D. Utah

August 7, 2018

IHC HEALTH SERVICE, INC. dba MCKAY-DEE HOSPITAL, Plaintiff,
v.
CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS HEALTH AND WELFARE FUND, Defendant.

          MEMORANDUM DECISION AND ORDER GRANTING MOTION TO DISMISS

          Jill N. Parrish United States District Court Judge

         Before the court is a Motion to Dismiss for Failure to State a Claim (ECF No. 6), filed February 14, 2018. For the reasons below, that motion is granted. However, the court will leave the case open for fourteen days should the plaintiff wish to amend the complaint.

         I. INTRODUCTION

         Plaintiff IHC Health Services, Inc. (“IHC”) brings three claims under the Employment Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq.: (1) recovery of plan benefits, (2) breach of fiduciary duties, and (3) failure to produce plan documents upon written request. Defendant Central States, Southeast and Southwest Areas Health and Welfare Fund (“Central States”) moves to dismiss all three claims. IHC concedes that the second and third claims should be dismissed-the second claim as duplicative and the third claim as barred by the statute of limitations. Accordingly, the court need only address the first claim.

         II. STANDARD OF REVIEW

         A defendant may move to dismiss a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure when the plaintiff has failed to state a claim upon which relief can be granted. In resolving a Rule 12(b)(6) motion, the court does not weigh potential evidence that the parties might present at trial. Rather, it must “assess whether the plaintiff's complaint alone is legally sufficient to state a claim for which relief may be granted.” Dubbs v. Head Start, Inc., 336 F.3d 1194, 1201 (10th Cir. 2003) (citation omitted).

         “A court reviewing the sufficiency of a complaint presumes all of [the] plaintiff's factual allegations are true and construes them in the light most favorable to the plaintiff.” Hall v. Bellmon, 935 F.2d 1106, 1109 (10th Cir. 1991). Legal conclusions “are not entitled to the assumption of truth” but “must be supported by factual allegations.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). Although detailed factual allegations are not required, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Id. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is plausible when the plaintiff has pleaded “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

         III. STATEMENT OF FACTS

         IHC operates several hospitals in the mountain west, including one in Ogden, Utah. In December 2014, IHC provided an unspecified medical treatment to a patient at the Ogden hospital. The patient was a participant in a health insurance plan funded by Central States. However, the procedure was considered “out of network” under the patient's plan.

         On November 26, 2014, Central States sent the patient an exemption letter permitting the patient to receive treatment at an out-of-network provider. It appears the letter was in response to a request from the patient, who wished to receive treatment from a doctor he had seen previously. The exemption letter from Central States stated that the out-of-network treatment would be paid at “85% of the reasonable and customary” fees.

         The patient received treatment on December 29, 2014, approximately one month after the exemption letter was received. Around this time, the patient assigned the associated claim to IHC. Billed charges for the treatment totaled $27, 586.48. Initially, Central States denied the claim because “treatment was provided out of network and Billed Charges exceeded usual, customary, and reasonable costs.” However, Central States eventually issued a payment for $9, 991.96-or thirty-six percent of the total amount billed for the treatment.

         IHC appealed the partial denial of benefits twice, and both times Central States denied the appeals. Central States' only explanation was that, according to its pricing agency, the amount of $9, 991.95 was the maximum benefit allowable for the services rendered. In denying the second appeal, Central States further explained that the amount paid represented the maximum benefit allowable because IHC was unwilling to negotiate claim adjustments with the pricing agency. On December 29, 2017, IHC filed a complaint in this district.

         IV. DISCUSSION

         Central States moves to dismiss IHC's claim for recovery of plan benefits for failure to state a claim under Rule 12(b)(6). Specifically, Central States argues that to state a claim under § 502(a)(1)(B) of ERISA, IHC must specify a term of the plan that gives rise to the benefits due. IHC responds that such specificity is not required to meet the pleading standard established by the Supreme Court. IHC also points to the exemption Central States sent to the patient as grounds for its claim. Consequently, the court first addresses whether IHC must specify a term of the plan in its complaint to satisfy the pleading standard. Then the court addresses whether the ...


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