Almont Ambulatory Surgery Ctr., LLC v. UnitedHealth Grp., Inc.

• Decision Date: 12 February 2015
• Docket Number: Case No. CV 14-3053-MWF(VBKx)
• Citation: 121 F.Supp.3d 950
• Parties: Almont Ambulatory Surgery Center, LLC, et al. v. UnitedHealth Group, Inc., et al.
• Court: U.S. District Court — Central District of California

121 F.Supp.3d 950

Almont Ambulatory Surgery Center, LLC, et al.

v.UnitedHealth Group, Inc., et al.

Case No. CV 14-3053-MWF(VBKx)

United States District Court, C.D. California.

Signed February 12, 2015

Daron L. Tooch, Eric David Chan, Bridget A. Gordon, Katherine Markowski Dru, Hooper Lundy and Bookman PC, Bryan David Daly, Charles L. Kreindler, Sheppard Mullin Richtera and Hampton LLP, Los Angeles, CA, for Almont Ambulatory Surgery Center, LLC, et al.

Larry A. Walraven, Nicole Elizabeth Wurscher, Bryan Scott Westerfeld, Walraven and Westerfeld LLP, Aliso Viejo, CA, Andrew J. Holly, Kirsten Schubert, Michael E. Rowe, Michelle S. Grant, Rabea Jamal Zayed, Stephen P. Lucke, Timothy E. Branson, Dorsey and Whitney LLP, Minneapolis, MN, for UnitedHealth Group, Inc., et al.

Proceedings (In Chambers): ORDER GRANTING IN PART AND DENYING IN PART PROVIDER COUNTER-DEFENDANTS' MOTION TO DISMISS THE FIRST AMENDED COUNTERCLAIM AND JOINDER IN COUNTER–DEFENDANTS MICHAEL OMIDI, M.D. AND JULIAN OMIDI'S MOTION TO DISMISS FIRST AMENDED COUNTERCLAIM [48]

MICHAEL W. FITZGERALD, U.S. District Judge

This matter is before the Court on Provider Counter–Defendants' ("Providers") Motion to Dismiss the First Amended Counterclaim and Joinder in Counter–Defendants Michael Omidi, M.D. and Julian Omidi's Motion to Dismiss First Amended Counterclaim (the "Motion"). (Docket No. 48). The Court read and considered the papers on the Motion, and held a hearing on December 10, 2014. For the reasons stated below, the Court GRANTS IN PART and DENIES IN PART the Motion.

I. BACKGROUND

On March 21, 2014, Plaintiffs initiated this action by filing a Complaint in the Los Angeles Superior Court. (Docket No. 1, Notice of Removal, Ex. A). On April 21, 2014, Defendants (collectively, "United") removed this action to this Court. (Id .). The Complaint asserts claims for violation of the California Business and Professions Code section 17200 et seq . (the "UCL"), breach of implied-in-fact contracts, services rendered, estoppel, and declaratory relief. (Id .).

United asserted federal subject matter jurisdiction on the basis that the state law claims alleged in the Complaint are completely preempted by the Employee Retirement Income Security Act ("ERISA"). (Docket No. 1, Notice of Removal ¶¶ 5–17). On May 15, 2014, the Court issued an Order to Show Cause Re: Jurisdiction (the "OSC") (Docket No. 27), to which the parties responded on June 5, 2014 (Docket Nos. 34, 35). The Court then issued an Order Discharging the OSC on June 16, 2014 (Docket No. 38), in which the Court exercised its own judgment and agreed with the parties' reasoning that the Complaint's claim for declaratory relief was completely preempted by ERISA, thereby conferring federal jurisdiction over the action.

On May 15, 2014, United filed a Counterclaim (Docket No. 25), adding several Counterclaim Defendants to the litigation, including Dr. Michael Omidi and Kambiz Benjamin Omidi a.k.a. Julian Omidi. The Providers responded by filing a Motion to Dismiss the Counterclaim on July 7, 2014. (Docket No. 39). However, the parties entered into a stipulation (Docket No. 43) to withdraw pending motions to dismiss the Counterclaim and a pending motion to strike portions of the Counterclaim. The Court granted this stipulation and set deadlines for a First Amended Counterclaim ("FACC"), and answers or motions to dismiss in response thereto. (Docket No. 44).

On September 3, 2014, United filed a FACC. (Docket No. 45). The FACC asserts claims for fraud, violation of the UCL, conspiracy to commit fraud, intentional interference with contractual relationships, restitution under ERISA § 502(a)(3), and declaratory and injunctive relief under ERISA § 502(a)(3). (Docket No. 45). The FACC alleges that Counterclaim Defendants are conspiring to defraud the public and United out of millions of dollars. (FACC ¶ 62). This conspiracy is purportedly hidden through the use of sham/shifting business names. (Id . ¶ 126). The activities underlying the conspiracy are generally alleged to be "various fraudulent practices designed to manipulate United to pay for services that were not medically necessary, never provided, or not covered by the terms of the United Plans." (Id . ¶ 68). The specific malfeasance alleged includes: inducing patients to receive Lap–Band–related treatment through, among other things, improperly waiving copay, coinsurance, deductibles amounts (collectively, "co-pay") (id . ¶ 66); mischaracterizing Lap–Band procedures provided by billing under incorrect CPT codes, hiding services that would not have otherwise been covered, or misrepresenting patients' BMI calculations (id . ¶ 68); and submitting inflated bills to United in an attempt to induce United to allow payment in excess of UCR (id . ¶ 275).

On October 3, 2014, the Providers filed this Motion. On October 31, 2014, United filed an Opposition to Providers' Motion to Dismiss the FACC (the "Opposition"). (Docket No. 65). On November 14, 2014, the Providers filed a Reply in Support of the Motion (the "Reply"). (Docket No. 78).

II. MOTION TO DISMISS

Providers' bring the Motion pursuant to Federal Rules of Civil Procedure 9(b), 12(b)(1) and 12(b)(6).

In ruling on a motion under Federal Rule of Civil Procedure 12(b)(6), the Court follows Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' " Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (citations omitted). " 'All allegations of material fact in the complaint are taken as true and construed in the light most favorable to the plaintiff.' " Williams v. Gerber Prods. Co., 552 F.3d 934, 937 (9th Cir.2008) (quoting Stoner v. Santa Clara County Office of Educ ., 502 F.3d 1116, 1120 (9th Cir.2007) ) (holding that a plaintiff had plausibly stated that a label referring to a product containing no fruit juice as "fruit juice snacks" may be misleading to a reasonable consumer).

Federal Rule of Civil Procedure 9(b) requires that "a party [alleging fraud] must state with particularity the circumstances constituting fraud." To satisfy Rule 9(b), a plaintiff must include "the who, what, when, where, and how" of the fraud. Vess v. Ciba–Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir.2003) (internal quotation marks and citations omitted). "A motion to dismiss a complaint or claim ‘grounded in fraud’ under Rule 9(b) for failure to plead with particularity is the functional equivalent of a motion to dismiss under Rule 12(b)(6) for failure to state a claim." Id. at 1107. As such, dismissals under Rule 9(b) and 12(b)(6)"are treated in the same manner." Id . at 1107–08.

In ruling on a motion under Federal Rule of Civil Procedure 12(b)(1), the Court must determine whether it lacks subject matter jurisdiction over the Complaint or any claims therein. "A jurisdictional challenge under Rule 12(b)(1) may be made either on the face of the pleadings or by presenting extrinsic evidence." Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir.2003) (citing White v. Lee, 227 F.3d 1214, 1242 (9th Cir.2000) ) (evaluating whether a composer had standing to pursue copyright claims against a producer and distributors).

A. Disclosure of Parties in Interest

Although Providers point out that United did not initially supply a thorough Notice of Interested Parties, this oversight has been corrected, as mentioned in the Opposition (Opp. at 2) and reflected in Docket No. 64.

B. United's Standing

1. United's Standing Under ERISA

United asserts two claims pursuant to ERISA § 502(a)(3). (FACC ¶¶ 316–43). Only plan participants, beneficiaries, and fiduciaries are afforded standing to bring an ERISA § 502(a)(3) claim. 29 U.S.C. § 1132(a)(3).

Providers contend that United does not plead relevant terms from the vast majority of plans that provide it with fiduciary status, and that standing here requires a plan-by-plan analysis. (Mot. at 3–4). Moreover, Providers argue that the few allegations that are pleaded are inadequate because United relies on summary plan descriptions ("SPDs") and administrative services agreements ("ASAs") to support its standing as a plan fiduciary, which are insufficient as they are not the operative plan documents. (Id . at 2–6). United, however, argues that it provided examples from plan documents, not SPDs, and ASAs that demonstrate United's fiduciary authority, and, therefore, standing. (Opp. at 2–3).

As mentioned above, ERISA § 502(a)(3) permits a plan fiduciary to bring suit to enjoin activities that violate ERISA or the terms of the plan, or receive appropriate equitable relief to redress violations of or enforce the terms of ERISA or the plan. 29 U.S.C. § 1132(a)(3). "A 'fiduciary' is an entity with 'any discretionary authority' in the 'administration of' an ERISA plan." Saffon v. Wells Fargo & Co. Long Term Disability Plan, 522 F.3d 863, 866 (9th Cir.2008) (citing 29 U.S.C. § 1002(21)(A) ); see also Moore v. Lafayette Life Ins. Co ., 458 F.3d 416, 438 (6th Cir.2006) ("Under ERISA a person is a fiduciary only with respect to those aspects of the plan over which he or she exercises authority or control."). A "person who performs purely ministerial functions ... for an employee benefit plan within a framework of policies, interpretations, rules, practices and procedures made by other persons is not a fiduciary because such person does not have discretionary authority or discretionary control respecting management of the plan...." 29 C.F.R. § 2509.75–8(D–2). However, "an insurer will be found to be an ERISA fiduciary if it has the authority to grant, deny, or review denied claims." Kyle Rys., Inc. v. Pac. Admin. Servs., Inc ., 990 F.2d 513, 518 (9th Cir.1993).

Here, United has alleged that "[f]or all (or virtually all) of the ERISA Plans, one of the United Counterclaimants in this...