Duff v. Centene Corp.

• Decision Date: 04 October 2021
• Docket Number: Case No. 1:19-cv-750
• Citation: 565 F.Supp.3d 1004
• Parties: Misty DUFF, et al., Plaintiffs, v. CENTENE CORPORATION, et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

565 F.Supp.3d 1004

Misty DUFF, et al., Plaintiffs,

v.CENTENE CORPORATION, et al., Defendants.

Case No. 1:19-cv-750

United States District Court, S.D. Ohio, Western Division.

Signed October 4, 2021

Janet Gilligan Abaray, Melanie Sue Bailey, Jessica L. Powell, Burg Simpson Eldredge Hersh & Jardine, P.C., Cincinnati, OH, for Plaintiffs.

Meng Jia Yang, Pro Hac Vice, Steven M. Cady, Pro Hac Vice, William R. Murray, Pro Hac Vice, Brendan V. Sullivan, Pro Hac Vice, Williams & Connolly LLP, Washington, DC, Robert P. Johnson, Thompson Hine LLP, Cincinnati, OH, for Defendants.

OPINION AND ORDER

DOUGLAS R. COLE, UNITED STATES DISTRICT JUDGE

This matter comes before the Court on Defendants’ Motion to Dismiss (Doc. 10). For the reasons explained below, the Court GRANTS IN PART and DENIES IN PART Defendants’ Motion. Specifically, the Court GRANTS the Motion as to Count IV of the Complaint as it applies to Defendant Buckeye Community Health Plan. The Court DENIES the Motion in all other respects.

BACKGROUND

For purposes of a motion to dismiss, the Court accepts as true the factual allegations in the Complaint. Thus, the Court reports, and relies on, those allegations here, but with the disclaimer that these facts are not yet established, and may never be.

This putative class action arises out of a dispute over the existence, scope, and handling of a health insurance policy held by plaintiffs Misty Duff, Duff's minor daughter, R.D., Kathryn Zinn, David Swank, Chrissy Cox, and Cox's minor daughter, A.C. (collectively, "Plaintiffs"). Plaintiffs all purchased (or had purchased on their behalf) insurance products from Defendant Buckeye Community Health Plan, Inc. ("Buckeye"), a wholly-owned subsidiary of Defendant Centene Corporation ("Centene").¹ (Compl., Doc. 1, #3).² Plaintiffs refer to these insurance products in the Complaint by the label "Ambetter," which Defendants concede is how the policies are sometimes marketed. (Mem. in Supp. of Mot. to Dismiss, Doc. 10, #72, n.1). Centene offered these insurance products, and Plaintiffs purchased them, through the Affordable Care Act's ("ACA's") Health Insurance Marketplace. (Compl., Doc. 1, #3). Because Centene is a "qualified health plan issuer" under the ACA, ACA regulations require Centene to maintain "a network that is sufficient in number and types of providers ... to assure that all services will be accessible without unreasonable delay." (Id. at #5 (quoting 45 C.F.R. § 156.230(a)(2) )). Similar Ohio insurance regulations require Centene to "ensure that the format and content of a provider directory of a health benefit plan is sufficiently complete and clear to avoid deception or the capacity or tendency to mislead or deceive." (Id. at #6–7 (quoting Ohio Admin. Code § 3901-8-16 )).

Plaintiffs further allege that, because Defendants offered the Ambetter plans on the Marketplace, Defendants have received from the Secretary of Health and Human Services certain payments as "reimbursement for the cost sharing reductions they make for their qualified insureds." (Id. at #5). Also, under the regulations, Plaintiffs received an "Evidence of Coverage" document, which they allege is a binding contract. (Id. at # 29). In this document, Centene lays out several policyholder "rights," including the right to "a current list of network providers," "a right to receive the benefits for which [the policyholders] have coverage," and "[a]dequate access to qualified medical practitioners and treatment." (Id. at #30).

Plaintiffs allege that Centene's website makes various laudatory (but false) representations about the Ambetter products. For example, Plaintiffs allege that the website represents Ambetter plans as "Qualified Health Plan[s]" available "in the Health Insurance Marketplace," and states that the Ambetter plans are "designed to deliver high quality, locally-based healthcare services." (Id. at #8). The website represents that Ambetter contracts with a "full range" of practitioners, assuring policyholders that "providers of all types are available within a certain geographic mileage or driving time" from their homes. (Id. at #9). Centene represents on the website that it "regularly review[s] the provider network", and brochures advertise that Ambetter's "most up to date list of in-network providers is available on its website." (Id. ). Plaintiffs stress that the advertising material makes clear that the providers, that is, doctors and facilities, listed in the online directory were "in-network."

But Plaintiffs allege that they and other putative class members were misled by Centene's website and brochures. According to Plaintiffs, "Ambetter policy holders report purchasing Ambetter plans because ... their health care providers were ... listed on Ambetter's online directory" (and, therefore, in-network). (Id. at #10). But "policy holders report later discovering that their providers were, despite being listed in the online directory, in fact out-of-network." (Id. ). At least one named plaintiff, Duff, alleges that she specifically relied on the website's provider directory, and in particular the presence of her preferred rheumatologist on that directory, in selecting Ambetter. (Id. at #14–15). After her first visit with that rheumatologist, though, she received a statement from Ambetter denying payment because he was an "out-of-network provider," notwithstanding his appearance on the directory. (Id. at #15). Plaintiff Duff asserts that she "would not have purchased" Ambetter had she known her rheumatologist was not in-network. (Id. ).

Indeed, Plaintiffs allege that this directory, which Centene references in advertising materials and maintains on its website, contains hundreds of facilities and providers who do not, in fact, accept Ambetter insurance. (Id. at #10). Plaintiffs further allege that embellishing the directory in this way is part of Centene's business model, and that Centene "intentionally keeps an inadequate provider network and misrepresents" the extent of the network. (Id. at #11). Centene then denies the claims of policyholders who visit these listed providers and thereby "boost[s] profits." (Id. ).

Plaintiffs also allege that Buckeye denies otherwise valid claims for "dubious" reasons, like coding errors, purported duplicate claims, and "failure to get preauthorization when, in fact, preauthorization was obtained." (Id. at #22). The Complaint supplies an example of the latter. In January 2019, Cincinnati Children's Hospital submitted and received preauthorization from Buckeye for R.D. (a minor) to undergo a certain outpatient procedure. (Id. at #16). After the procedure, however, Buckeye denied the claim notwithstanding the preauthorization, stating that the providers were out of network. (Id. at #16–17).

Again, in February of 2019, R.D. allegedly received preauthorization from Buckeye for a transthoracic echocardiogram

. (Id. at #13). Some weeks later, Buckeye told Plaintiff Duff, R.D.’s mother, that it denied the claim because the physician's office coded the claim incorrectly by mistakenly inputting R.D.’s sister's information on the claim. (Id. ). Plaintiff Duff allegedly confirmed with the physician's office, though, that the claim had been properly coded, and additionally claims that this physician had never seen R.D.’s sister. (Id. ). Thus, it would have been "impossible" for the office to have input the sister's information. (Id. ).

Likewise, Plaintiff David Swank alleges that Buckeye provided preauthorization for him to obtain bilateral foot orthotics (i.e. , one for each foot). (Id. ). After he received the orthotics, however, Buckeye refused to pay as to one of the orthotics because it was a "duplicate claim." (Id. ).

In 2018, Plaintiff Cox searched Ambetter's directory to find a pediatric rheumatologist for minor plaintiff A.C., only to find "no in-network pediatric rheumatologists listed within the state of Ohio." (Id. at #21). Instead, she received a referral to a pediatric rheumatologist from A.C.’s gastroenterologist, who then saw A.C. (Id. at #21–22). Buckeye thereafter denied the claim as out of network. (Id. ). Plaintiff Cox responded by appealing the denial "because there were no in-network pediatric rheumatologists within a hundred-mile radius of their home," but Buckeye denied the appeal and Cox had to pay for this visit out-of-pocket. (Id. ).

Plaintiff Cox asserts that she has been forced to pay for other procedures and medicines out-of-pocket because of delays in the preauthorization process. (Id. at #22). Preauthorization can take "between three days and one month ..., even when submitted for urgent review." (Id. ). This delay, Cox alleges, has put her in a difficult position, because sometimes A.C. is prescribed medication that she needs "now. " (Id. ). Thus, Cox must choose whether to pay out-of-pocket for A.C.’s medicine (which has cost "as much as $1,500") or wait for Ambetter's decision "at the expense of A.C.’s health." (Id. ). She further alleges that, even when she seeks preauthorization, it is usually "denied with little or no explanation." (Id. ).

Based on these facts (and others), Plaintiffs filed this putative class action lawsuit, asserting four claims: (1) a breach of contract; (2) a breach of the duty of good faith and fair dealing; (3) fraud/negligent misrepresentation; and (4) unjust enrichment. (Id. at #29–37). Defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. They press first an argument that applies to the Complaint in its entirety and then alternatively assert that each individual claim suffers from various fatal infirmities, as well. (See generally Doc. 10).

The matter is now fully briefed and before the Court.

LEGAL STANDARD

At the motion to dismiss stage, a complaint must "state[ ] a claim for relief that is plausible, when measured against the elements" of a claim. Darby v. Childvine, Inc. , 964 F.3d 440, 444 (6th Cir. 2020) (citing Binno v. Am. Bar Ass'n , 826 F.3d 338, 345–46 (6th...