In re Wellpoint, Inc. Out–Of–Network “UCR” Rates Litig., MDL 09–2074 PSG (FFMx).

Decision Date06 September 2012
Docket NumberNo. MDL 09–2074 PSG (FFMx).,MDL 09–2074 PSG (FFMx).
Citation903 F.Supp.2d 880
CourtU.S. District Court — Central District of California


Christopher M. Burke, Kristen Marie Anderson, Scott & Scott LLP, Helen E. Zukin, Kiesel Boucher & Larson LLP, Artin Gholian, Brian S. Kabateck, Joshua H. Haffner, Kabeteck Kellner LLP, Los Angeles, CA, Christopher A. Seeger, Stephen A. Weiss, Diogenes Kekatos, James A. O'Brien, III, Seeger Weiss LLP, Joseph P. Guglielmo, Scott & Scott LLP, D. Brian Hufford, Robert J. Axelrod, Susan J. Weiswasser, Pomerantz Haudek Block Grossman And Gross LLP, Edith M. Kallas, Joe R. Whatley, Jr., Whatley Drake & Kallas LLC, New York, NY, James Robert Hail, John A. Lowther, IV, William James Doyle, II, Doyle Lowther LLP, Penelope Abdiel, Scott & Scott LLP, San Diego, CA, Andrew S. Friedman, Bonnett Fairbourn Friedman And Balint PC, Phoenix, AZ, Elizabeth J. Arleo, Arleo Law Firm PLC, Ramona, CA, Maria L. Weitz, Michael C. Eyerly, Raymond Paul Boucher, Kiesel Boucher Larson LLP, Beverly Hills, CA, Amanda F. Lawrence, Scott & Scott LLP, Colchester, CT, Lisa M. Burger, Mark N. Todzo, Lexington Law Group LLP, San Francisco, CA, W. Tucker Brown, Whatley Drake & Kallas LLC, Birmingham, AL, Martha J. Fessenden, Doffermyre Shields Canfield & Knowles, LLC, Atlanta, GA, for Plaintiffs.

E. Desmond Hogan, Miranda L. Berge, Peter R. Bisio, Craig A. Hoover, Hogan Lovells U.S. LLP, Washington, DC, Neil R. O'Hanlon, Robin J. Samuel, Hogan Lovells LLP, Los Angeles, CA, for Defendants.

Proceedings: (In Chambers) Order Granting in Part and Denying in Part Defendants WellPoint, Inc., United HealthGroup, Inc., and Ingenix, Inc.'s Motions to Dismiss

PHILIP S. GUTIERREZ, District Judge.

Wendy K. Hernandez, Deputy Clerk.

Pending before the Court are Defendants WellPoint, Inc., UnitedHealth Group, Inc., and Ingenix, Inc.'s Motions to Dismiss the Corrected Third Consolidated Amended Multi–District Litigation Complaint (“CTAC”). The Court finds the matters appropriate for decision without oral argument. SeeFed.R.Civ.P. 78; L.R. 7–15. Having read and considered the moving and opposing papers, the Court GRANTS in part and DENIES in part the motions to dismiss.

I. Background

This case concerns insurance subscribers and healthcare providers who claim that the nation's largest healthcare insurer failed to properly reimburse them for covered out-of-network services (“ONS”). Plaintiffs allege that WellPoint—along with UnitedHealth Group (“UHG”) and other Insurer Conspirators—orchestrated a scheme to artificially reduce and set “usual, customary, and reasonable” (“UCR”) schedules for ONS reimbursements using the Ingenix Database, which UHG acquired through a wholly-owned subsidiary in 1998. 1 Subscribers were allegedly promised a “usual, customary, and reasonable” rate of reimbursement for services rendered by non-participating providers, but were underpaid due to “scrubbed” UCR data generated by Ingenix. The Insurer Conspirators who use the Ingenix Database for UCR reimbursement determinations collectively cover approximately 93.5 million privately-insured individuals in the United States. The factual background with respect to WellPoint's ONS coverage, the genesis and criticism of the Ingenix Database, and the procedural history of the present litigation is set forth in the Court's August 11, 2011 Order, 865 F.Supp.2d 1002 (C.D.Cal.2011), granting in part and denying in part Defendants' motion to dismiss the Second Consolidated Amended Complaint (“SAC”). See Dkt. # 243 (hereinafter, the “ August 11 Order).

Since early 2009, subscriber, provider and association plaintiffs have filed lawsuits against WellPoint, its subsidiaries, UHG, and Ingenix challenging WellPoint's use of the Ingenix Database and the adequacy of WellPoint's ONS reimbursements. These actions were consolidated into the current Multi–District Litigation, In re WellPoint, Inc., Out–of–Network “UCR” Rates Litigation, 2:09–ml–02074–PSG–FFM. Following issuance of the August 11 Order, Plaintiffs filed a Third Consolidated Amended Complaint on October 17, 2011, and a Corrected Third Consolidated Amended Complaint (“CTAC”) on October 26, 2011. See Dkt. # 274, 279–1.

Like the SAC, the CTAC states causes of action for (1) violation of Section 1 of the Sherman Act, 15 U.S.C. § 1; (2) unpaid benefits under group plans governed by ERISA, 29 U.S.C. § 1132(a)(1)(B); (3) breach of fiduciary duty under ERISA, 29 U.S.C. § 1132(a)(2); (4) failure to provide full and fair review as required under ERISA, 29 U.S.C. § 1132(a)(3); (5) failure to provide accurate records under ERISA, 29 U.S.C. § 1132(c); (6) violation of RICO based on predicate acts of mail and wire fraud, 18 U.S.C. § 1962(c); (7) violation of RICO for predicate acts of embezzlement, 18 U.S.C. § 1962(c); (8) conspiracy to violate RICO, 18 U.S.C. § 1962(d); (9) breach of contract; (10) breach of the implied covenant of good faith and fair dealing; (11) violation of California's unfair and deceptive practices statutes (“UCL” and “FAL”), Cal. Bus. & Prof. Code §§ 17200, 17500; and (12) violation of California's Cartwright Antitrust Act. See Dkt. # 279–1. Plaintiffs no longer pursue a claim for violation of New York General Business Law (“GBL”) § 349,2 but have added a claim for (13) violation of the UCL's “unlawful” prong predicated on California Health and Safety Code § 1371.4, brought on behalf of Provider Plaintiff Dr. James G. Schwendig, a subclass of California Emergency Room providers, and the California Medical Association (“CMA”) and American Medical Association (“AMA”). See id.

In asserting their various claims, Plaintiffs are divided into several categories. First, the “Subscriber Plaintiffs are Michael Roberts (“Roberts”) (on behalf of himself and as guardian for his daughter, D. Roberts), J.B.W. (a minor by and through his parent and guardian ad litem ), Darryl and Valerie Samsell (the “Samsells”), Mary Cooper (“Cooper”), and Ivette Rivera–Giusti (“Rivera–Giusti”). See id. ¶¶ 24–29. The Subscriber Plaintiffs each allegedly had an insurance policy with WellPoint or one of its subsidiaries, received ONS medical care, were reimbursed at a depressed rate, and incurred “more out-of-pocket expense [than he or she] would have absent the unlawful conduct alleged.” See id.

Second, the “Provider Plaintiffs are as follows: Dr. Stephen D. Henry is a primary care internist, Dr. James G. Schwendig is a trauma surgeon, Dr. James Peck is a clinical psychologist, Dr. Michael Pariser is a licensed psychologist, Dr. Carmen Kavali is a plastic surgeon, Dr. Stephani Higashi is a chiropractic doctor, and the North Peninsula Surgical Center, L.P. (“NPSC”) is an ambulatory surgical center. See id. ¶¶ 30–37. The Provider Plaintiffs allegedly provided ONS to WellPoint subscribers, were assigned the policies to be reimbursed, and received deflated UCR reimbursements. See id. ¶ 80.

Third, the “Association Plaintiffs are the AMA, the CMA, the Medical Association of Georgia (“MAG”), the Connecticut State Medical Society (“CSMS”), the American Podiatric Medical Association (“APMA”), the California Chiropractic Association (“CCA”), and the California Psychological Association (“CPA”). See id. ¶¶ 38–51. The Association Plaintiffs sue Defendants in their individual and representative capacities to redress injuries sustained by them and their members. See id.

On December 22, 2011, WellPoint and the UHG Defendants filed separate motions to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). See Dkt. # 322, 323. Plaintiffs filed an omnibus opposition collectively opposing both motions. See Dkt. # 335. Defendants replied, and the motions are now before the Court.

As a threshold matter, the Court notes Plaintiffs' objection to many of WellPoint and the UHG Defendants' arguments on the grounds that they either were or could have been raised in connection with their motions to dismiss the Second Consolidated Amended Complaint and Defendants have not met the high reconsideration standards. However, the law is clear in this Circuit that an “amended complaint supersedes the original, the latter being treated thereafter as nonexistent.” Forsyth v. Humana, Inc., 114 F.3d 1467, 1474 (9th Cir.1997). Courts in this Circuit therefore have permitted defendants moving to dismiss an amended complaint to make arguments previously made and to raise new arguments that were previously available. See In re Sony Grand WEGA KDF–E A10/A20 Series Rear Projection HDTV Television Litig., 758 F.Supp.2d 1077, 1098 (S.D.Cal.2010) (“When Plaintiffs filed the FACC, it superseded their previous complaint, and Sony was therefore free to move again for dismissal.”); Stamas v. Cnty. of Madera, No. CV F 09–0753 LJO SMS, 2010 WL 289310, at *4 (E.D.Cal. Jan. 15, 2010) ([A]n amended pleading is a new round of pleadings ... [and] is subject to the same challenges as the original (i.e., motion to dismiss, to strike, for more definite statement).”); Migliaccio v. Midland Nat'l Life Ins. Co., No. CV 06–1007 CASMANX, 2007 WL 316873, at *2–3 (C.D.Cal. Jan. 30, 2007) (rejecting plaintiffs' argument that Federal Rule of Civil Procedure 12(g)(2)'s ban on successive Rule 12 motions barred the defendants from raising new arguments or resurrecting arguments considered by the Court in their first motion to dismiss). Moreover, the CTAC contains new allegations relevant to the viability of several of Plaintiffs' causes of action, including allegations that WellPoint reimbursed some Subscriber Plaintiffs using methods other than the Ingenix database. Having chosen to amend their complaint in lieu of proceeding with their remaining claims, the CTAC supersedes the original and Defendants are not held to the reconsideration standards. See Migliaccio, 2007 WL 316873, at *3. With this in mind, the Court turns to the merits of Defendants' motions.

II. Legal Standard

Pursuant to Federal Rule of Civil Procedure 12(b)(6), a defendant may...

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