Epic Reference Labs v. CIGNA

• Decision Date: 30 September 2021
• Docket Number: 3:19-cv-1326 (SRU)
• Court: U.S. District Court — District of Connecticut
• Parties: EPIC REFERENCE LABS, et al., Plaintiffs, v. CIGNA, et al., Defendants.

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EPIC REFERENCE LABS, et al., Plaintiffs,
v.
CIGNA, et al., Defendants.

No. 3:19-cv-1326 (SRU)

United States District Court, D. Connecticut

September 30, 2021

RULING ON MOTION TO DISMISS

STEFAN R. UNDERHILL Stefan R. Underhill United States District Judge

Three Florida testing centers, Epic Reference Labs, Inc., BioHealth Medical Laboratory, Inc., and PB Laboratories, LLC (collectively, the “Laboratories”), filed the instant case against two insurance companies, Cigna Health and Life Insurance Company and Connecticut General Life Insurance Company (collectively, “Cigna”) in Hartford Superior Court. The lawsuit challenges Cigna's failure to pay at least $32, 074, 089.37 for the Laboratories' testing services.

After Cigna removed the case to this Court on the ground that the claims for relief were entirely preempted by the Employment Retirement Income Security Act (“ERISA”), the Laboratories moved to remand the case to Connecticut state court. Because further information was needed to determine whether subject matter jurisdiction was present, I denied the motion without prejudice. I directed the parties to engage in informal discovery to identify whether the claims for reimbursement at issue were validly assigned to the Laboratories, which would render the claims completely preempted by ERISA.

On November 5, 2020, Cigna filed a status report, noting that the parties had exchanged certain information and further indicating that the Laboratories had received assignments with respect to forty of the claims for reimbursement at issue. In response, the Laboratories noted that they intended to proceed only with the claims for reimbursement for which they did not receive a

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valid assignment. Following a status conference, the Laboratories filed an amended complaint, expressly disclaiming any claims for reimbursement for services provided to beneficiaries of an ERISA plan and only pursuing payment for services to which the Laboratories do not have a valid assignment of benefits from the patient subscriber/beneficiary.

Now before me is the Laboratories' motion to dismiss the amended complaint for failure to state claim. For the reasons that follow, the motion is granted in part and denied in part.

I. Standard of Review

A. Rule 12(b)(6)

A motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) is designed “merely to assess the legal feasibility of a complaint, not to assay the weight of evidence which might be offered in support thereof.”Ryder Energy Distribution Corp. v. Merrill Lynch Commodities, Inc., 748 F.2d 774, 779 (2d Cir. 1984) (quoting Geisler v. Petrocelli, 616 F.2d 636, 639 (2d Cir. 1980)).

When deciding a motion to dismiss pursuant to Rule 12(b)(6), a court must accept the material facts alleged in the complaint as true, draw all reasonable inferences in favor of the plaintiffs, and decide whether it is plausible that plaintiffs have a valid claim for relief.Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007); Leeds v. Meltz, 85 F.3d 51, 53 (2d Cir. 1996).

Under Twombly, “[f]actual allegations must be enough to raise a right to relief above the speculative level, ” and assert a cause of action with enough heft to show entitlement to relief and “enough facts to state a claim to relief that is plausible on its face.”550 U.S. at 555, 570; see also Iqbal, 556 U.S. at 679 (“While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.”). The plausibility standard set forth in Twombly

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and Iqbal obligates a plaintiff to “provide the grounds of his entitlement to relief” through more than “labels and conclusions, and a formulaic recitation of the elements of a cause of action.”Twombly, 550 U.S. at 555 (quotation marks omitted). Plausibility at the pleading stage is nonetheless distinct from probability, and “a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of [the claims] is improbable, and . . . recovery is very remote and unlikely.”Id. at 556 (quotation marks omitted).

II. Background

A. Allegations

The Laboratories are Florida-based health centers that provide medical testing services pursuant to the orders and instructions of medical professionals. Am. Compl., Doc. No. 47, at ¶¶ 9, 11. Since at least 2012, the Laboratories have provided testing services to patients who are “subscribers or beneficiaries of commercial, non-Medicare health plans insured or administered by” Cigna. Id. at ¶ 13. Prior to each test, the Laboratories confirm with Cigna that the services are covered and obtain authorization to provide such services.Id. at ¶¶ 13-14, 21. Thereafter, the Laboratories direct their invoices to Cigna.Id. at ¶ 15.

Despite repeated requests from the Laboratories, Cigna has failed to make timely payments against invoices totaling at least $32, 074, 089.37, all of which remain due.Id. at ¶ 19. Because the Laboratories are out-of-network providers, they do not have an express contract with Cigna governing the provision of their services or the billing and payment thereof.Id. at ¶ 28.

B. Procedural History

The Laboratories brought suit in Connecticut Superior Court on July 25, 2019, propounding four causes of action against Cigna: (1) failure to pay as required by Florida statutes §§ 627.6131, 627.638, 627.64194, 627.662, 641.3154, and 641.3155; (2) breach of implied

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contract/promissory estoppel; (3) quantum meruit; and (4) unjust enrichment. Compl., Doc. No. 2-1, at ¶¶ 51-84.

Cigna removed the case to this court on August 28, 2019. In its notice of removal, Cigna claimed that the case was removeable under federal question jurisdiction because the Laboratories' claims arose under and were therefore completely preempted by ERISA.See Notice of Removal, Doc. No. 1.

A week later, on September 4, 2019, Cigna moved to dismiss the case.See Mot. to Dismiss, Doc. No. 16. On September 27, 2019, the Laboratories moved to remand the case to Connecticut Superior Court, arguing that this Court lacks federal question jurisdiction because the Florida statutory and common law causes of action are not wholly preempted by ERISA.See generally Mot. to Remand, Doc. No. 25.

On August 6, 2020, after the motion to remand was fully briefed, I held a hearing, during which I denied without prejudice both the motion to remand and the motion to dismiss.See Doc. No. 37. In doing so, I explained that I needed additional information to determine whether the court had subject matter jurisdiction and, in particular, to determine whether the Laboratories had a valid assignment of benefits for the claims for reimbursement at issue.See Tr., Doc. No. 38, at 4-5, 7, 13. I therefore directed the parties to engage in informal discovery over the course of sixty days to “determine whether the policies at issue are governed by ERISA and contain claim assignment provisions.”See Order, Doc. No. 37. I advised the plaintiffs to file a renewed motion to remand if subject matter jurisdiction was still in dispute or a status report if the jurisdictional issue had been resolved.Id.

On November 5, 2020, Cigna filed a status report, providing that on September 4, 2020, the Laboratories produced spreadsheets reflecting certain information about the claims for

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reimbursement at issue, including patient names, dates of service, and whether the Laboratories had an assignment of benefits from each patient.SeeDoc. No. 39, at 2. According to Cigna, the spreadsheets included only a member identification number for a limited number of claims for reimbursement and Cigna was only able to search for patients for which such information was provided.Id. Cigna further noted that, on October 5, 2020, it provided the Laboratories with a chart setting forth additional information about the applicable ERISA plans for forty of the patients for whom the Laboratories claimed to have an assignment of benefits. Id.; see alsoDoc. No. 39-2, at 8-11 (Cigna's chart).

On November 17, 2020, the Laboratories replied, indicating that they had demonstrated to Cigna that a “substantial majority” of the claims for reimbursement at issue pertain to services for which they did not receive an assignment of benefits.See Doc. No. 40, at ¶¶ 6, 8. According to the Laboratories, they also informed Cigna that they intended to proceed only with the claims for reimbursement for which there were no valid assignments and requested policy documents for such claims; Cigna, however, refused to provide such information.Id. at ¶¶ 9-10.

I scheduled a conference call for December 21, 2020, during which I again addressed the question of subject matter jurisdiction. At the start, I explained that the defendants appeared to have properly removed the case to federal court, given that the record substantiates that at least some of the claims for reimbursement at issue arise out of assignments that have been provided to the plaintiffs by beneficiaries of the insurers.SeeDoc. No. 45, at 1. I noted further that the complaint, as it currently stands, broadly covers those claims for reimbursement, and therefore denied the motion to remand.Id. I elaborated, however, that if the plaintiffs amend their complaint to exclude the claims for reimbursement for which they have received valid assignments, I may then be in a position to remand pursuant to Mine Workers v. Gibbs, 383 U.S.

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715 (1966), because only state law claims would remain in the case.Id. I granted the plaintiffs' request for twenty-one days within which to file an amended complaint and noted that I expected briefing would then follow on the issue whether I should exercise my discretion to remand.Id.

On January 11, 2021, the plaintiffs filed an amended complaint, expressly stating that the “Laboratories do not assert any assigned or derivative claims in this lawsuit,...