Aton Ctr., Inc. v. Carefirst of Md., Inc.

• Decision Date: 10 May 2021
• Docket Number: Civil Action No. DKC 20-3170
• Parties: ATON CENTER, INC. v. CAREFIRST OF MARYLAND, INC., et al.
• Court: U.S. District Court — District of Maryland

ATON CENTER, INC. v. CAREFIRST OF MARYLAND, INC., et al.

Civil Action No. DKC 20-3170

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

May 10, 2021

MEMORANDUM OPINION

Presently pending and ready for resolution is Defendants' motion to dismiss Plaintiff's complaint asserting contractual, quasi-contractual, and tort claims, in this complaint over the "rate of payment."¹ (ECF No. 13). The issues have been briefed,and the court now rules, no hearing being deemed necessary. Local Rule 105.6. For the following reasons, the motion to dismiss will be granted, but Plaintiff will be granted leave to amend some of the claims.

I. Background

Unless otherwise noted, the facts outlined here are set forth in the complaint and construed in the light most favorable to Plaintiff. Plaintiff Aton Center, Inc. ("Aton") is a corporation organized under the laws of California and with its principal place of business there, in the City of Encinitas. Aton runs an inpatient residential substance abuse treatment facility. It provided residential treatment care services to patients it believes were covered by the health insurance policies that are provided, sponsored, supplied, underwritten, administered and/or implemented by Defendants CareFirst of Maryland, Inc., Group Hospital and Medical Services, Inc., d/b/a/ CareFirst BlueCross BlueShield, and CareFirst BlueChoice, Inc. (collectively "Defendants," but both parties refer to them as a single entity, "CareFirst," at times). Plaintiff alleges that all three entitiesare Maryland corporations that do business in "Maryland, Virginia[,] Washington D.C. and nationally."²

Plaintiff's claims arise out of the Anthem Blue Card program which allows members to obtain out-of-state healthcare treatment. As part of this program, Plaintiff was directed to verify benefits directly with Defendants. Because Aton was an out-of-network provider for the patients who carried this form of CareFirst insurance, Aton was "careful not to only verify insurance coverage, but also the payment rate." It took "reasonable steps" to verify all this prior to admitting the patients in question, "including calling Defendants at the phone number [they] provided . . . and [being] advised in these verification of benefit (VOB) calls that the policies provided for and Defendants would pay for inpatient treatment, based on the usual, customary and reasonable rate (UCR)."³

The UCR, Plaintiff maintains, is a "certain and well-known term of art, and methodology for determining a payment rate[] in the health care industry." It argues that it only providedtreatment to patients and submitted claims for payment under the Blue Card program based upon "reasonable reliance" on Defendants' "representations that the payment would be based on the UCR prior payment history, authorization and agreement of the Defendants." It specifically includes the "reference numbers" for "seven patients with claims at issue in this action." (See ECF No. 1, at 5). The UCR provided for reimbursement of "44.38% of the billed amounts based on a formula all parties knew applied to the Blue Card claims." By verifying the UCR would be honored and applied to these claims, therefore, Plaintiff argues that it and Defendants had a "meeting of the minds" that this would be the applicable rate paid on all claims under this plan.

Plaintiff alleges that, "[w]ithin the past two years, the Defendants breached their agreement with Plaintiff and/or committed other wrongful acts and omission by refusing to pay Plaintiff the represented and agreed upon[] amount, but rather paid different and significantly lower (and inconsistent) amounts for treatment." Ultimately this resulted in an alleged $238,309.12 of unpaid balance that Plaintiff claims is owed to it by Defendants. It contends that Defendants "had information" regarding these intended, lesser payments at the time of the VOB calls but purposefully withheld that information from Plaintiff. As a result, Plaintiff complains Defendants have caused it "substantial hardship" and that "unconscionable injury" wouldresult if Defendants were not required to pay as per the "payment rate based on the UCR and payment history."

Plaintiff's complaint contains nine separate claims: I) Breach of Contract - Oral Agreement; II) Breach of Contract - Implied Contract; III) Promissory Estoppel; IV) Quantum Meruit, V) Intentional Misrepresentation - (Fraudulent Inducement)), VI) Negligent Misrepresentation; VII) Fraudulent Concealment, VIII) Violation of Unfair Competition Law; and "VIIII" [sic]) Account Stated.

II. Standard of Review

A motion to dismiss under Fed.R.Civ.P. 12(b)(6) tests the sufficiency of the complaint. Presley v. City of Charlottesville, 464 F.3d 480, 483 (4^th Cir. 2006). "[T]he district court must accept as true all well-pleaded allegations and draw all reasonable factual inferences in plaintiff's favor." Mays v. Sprinkle, 992 F.3d 295, 305 (4^th Cir. 2020) (reversing a district court's dismissal of a complaint because "we must accept the well-pleaded facts and draw reasonable inferences in favor of the plaintiff"). In evaluating the complaint, unsupported legal allegations need not be accepted. Revene v. Charles Cty. Comm'rs, 882 F.2d 870, 873 (4^th Cir. 1989). Legal conclusions couched as factual allegations are insufficient, Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), as are conclusory factual allegations devoid of any reference to actual events. United Black Firefighters of Norfolkv. Hirst, 604 F.2d 844, 847 (4^th Cir. 1979); see also Francis v. Giacomelli, 588 F.3d 186, 193 (4^th Cir. 2009). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but it has not 'show[n]' - 'that the pleader is entitled to relief.'" Iqbal, 556 U.S. at 679 (quoting Fed.R.Civ.P. 8(a)(2)). Thus, "[d]etermining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id.

III. Choice of Law

While it may not ultimately matter, the law applicable to each of Plaintiff's claims is difficult, or impossible, to determine from the facts alleged in the complaint. "[F]or contract claims, Maryland applies the law of the state in which the contract was formed ('lex loci contractus'), unless the parties to the contract agreed to be bound by the law of another state." State Auto. Mut. Ins. Comp. v. Lennox, 422 F.Supp.3d 948, 961 (D.Md. 2019) (citing, among others, Cunningham v. Feinberg, 441 Md. 310, 326 (2015)). "For choice-of-law purposes, a contract is made where the last act necessary to make the contract binding occurs." Id. (citing Konover Prop. Tr., Inc. v. WHE Assocs., 142 Md.App. 476, 490 (2002)). The complaint seems to assert that contract was made in Encinitas, California, Plaintiff's place of business.

Defendants argue, however, that the Complaint does not allege facts sufficient to establish where the "last act" to create a binding contract occurred. (ECF No. 13-1, at 3-4). They surmise that Plaintiff's agents were in California for the VOB phone calls but the Complaint is silent about where the CareFirst agents were located, despite generally highlighting Defendants' collective operations in the mid-Atlantic and nationally. Even if one could pinpoint where the parties were at the time of these calls, the complaint does not establish the chronology of any offer or acceptance. Given this ambiguity, Defendants treat the contract claims under both Maryland and California law. (ECF No. 13-1, at 4 & n.1) (citing Fid. & Guar. Life Ins. Co. v. United Advisory Grp., Inc., No. 13-cv-0040-WDQ, 2014 WL 346630, at *4 (D.Md. Jan. 29, 2014)) (finding that the "choice-of-law analysis" may be "deferred" until after discovery given that it is "fact-intensive" and "context specific").

Alternatively, Plaintiff points to Loew v. DAI Glob., LLC, at *4 (D.Md. Sept. 8, 2020), to stand for the proposition that where the last act is "difficult to ascertain," Maryland courts have instead looked to the Second Restatement of Conflict of Laws, which counsels here that California law should apply given the state's "significant relationship to the transaction and parties." (ECFNo. 14, at 4).⁴ Loew, however, merely explained that some Maryland courts have rejected application of lex loci contractus to "true" quasi-contractual claims where the existence of an express contract is disputed or there is no contract at all.⁵ Moreover, it is the impossibility of ascertaining a last act in such a scenario, not the ambiguity of the pleading, that arguably renders the doctrine inapplicable. (ECF No. 17, at 2 n.1).

Allowing the imprecision of Plaintiff's description of the contract's formation to guide the choice-of-law analysis would be improper. Moreover, the more current trend, of the two presented in Loew, is to apply lex loci contractus to contract and quasi-contract claims alike. See RaceRedi Motorsports, LLC v. Dart Machinery, Ltd., 640 F.2upp2d 660, 665-666 (D.Md. 2009) (citing Konover Prop. Tr. Inc. v. WHE Assocs., Inc., 142 Md.App. 476 (Md. 2002)) ("Following the only decision from a Maryland state court on this issue and the weight of authority from other jurisdictions, the Court will apply the rule of lex loci contractus to the unjustenrichment claim."). The location of the last act in forming the purported contract controls the choice-of-law question for Counts I-IV, a fact which remains unknown.

Defendants clarify in reply that when Fid & Guar. Life Ins. "deferred" the choice-of-law question, it called for application of the law of the forum state until the last act ambiguity was resolved, as a default rule. (ECF No. 17, at 2). Indeed, Fid & Guar. Life Ins. did so, but explained that this was because both parties had generally applied Maryland caselaw in their briefs, and because the defendants had failed to cite any Illinois caselaw, despite a defendant's...