United States District Court, D. Utah
IHC HEALTH SERVICE, INC. dba MCKAY-DEE HOSPITAL, Plaintiff,
CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS HEALTH AND WELFARE FUND, Defendant.
MEMORANDUM DECISION AND ORDER DENYING IN PART AND
GRANTING IN PART DEFENDANT'S MOTION TO DISMISS
N. PARRISH UNITED STATES DISTRICT COURT JUDGE
the court is Defendant Central States, Southeast and
Southwest Areas Health and Welfare Fund's (“Central
States”) Motion to Dismiss Plaintiff's First
Amended Complaint for Failure to State a Claim
(“Motion”) (ECF No. 35), filed August 8, 2018.
For the reasons below, the motion is granted in part and
denied in part.
IHC Health Services, Inc. (“IHC”) operates
several hospitals in the mountain west, including the
McKay-Dee Hospital in Ogden, Utah. On December 29, 2014, IHC
provided unspecified medical treatment to a patient,
“K.N., ” at the McKay-Dee Hospital. K.N. was a
participant in a health insurance plan funded by Central
States (the “Plan”). However, the procedure was
considered “out of network” under the Plan.
November 26, 2014, Central States sent K.N. an exemption
letter permitting him 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
received treatment on December 29, 2014, approximately one
month after receiving the exemption letter. Billed charges
for the treatment totaled $27, 589.48. The patient assigned
the associated claim to IHC at the time of treatment.
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, 991.95-or approximately thirty-six percent of
the total amount billed for the treatment. In the Explanation
of Benefits provided to K.N., Central States asserted that
$9, 991.95 is eighty-five percent of the “reasonable
& customary amount” calculated by Central States
pursuant to plan section 11.09 and is therefore the maximum
benefit allowable under the Plan.
the assignee of K.N.'s claim, appealed this
“partial denial of benefits” twice, seeking the
remaining $16, 047.53 billed. Central States denied both
appeals. Central States explained that, according to its
pricing agency, Data iSight, $9, 991.95 was the maximum
benefit allowable for the services rendered because it was
eighty-five percent of the “Reasonable and Customary
charge” for the services. 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 Data iSight. On
December 29, 2017, IHC filed its complaint.
initially brought 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. On February 14,
2018, Central States moved to dismiss all three claims. On
August 8, 2018, this court dismissed the first claim without
prejudice and the second and third claims with prejudice. Or.
Mot. Dismiss, ECF No. 33.
August 15, 2018, IHC filed its First Amended Complaint
(“Amended Complaint”) containing a single claim
for recovery of plan benefits under 29 U.S.C. §
States moves to dismiss IHC's Amended Complaint for
failure to state a claim under Rule 12(b)(6). Specifically,
Central States argues that the Amended Complaint should be
dismissed because 1) IHC failed to bring a claim for
equitable estoppel as invited by the court, 2) its restated
claim for recovery of plan benefits is still deficient, and
3) IHC failed to allege its authority to seek relief against
Central States under a purported assignment of benefits.
Standard of Review
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) (quoting
Miller v. Glanz, 948 F.2d 1562, 1565 (10th
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 ...