Marco Z. v. UnitedHealthcare Ins. Co.
| Decision Date | 04 November 2020 |
| Docket Number | No. SA-20-CV-00351-JKP,SA-20-CV-00351-JKP |
| Parties | MARCO Z., INDIVIDUALLY; Plaintiff, v. UNITEDHEALTHCARE INSURANCE COMPANY, FORMA AUTOMOTIVE, LLC, Defendants. |
| Court | U.S. District Court — Western District of Texas |
Before the Court is Defendants UnitedHealthcare Insurance Company ("UnitedHealthcare") and Forma Automotive's Motion to Dismiss filed pursuant to Federal Rule of Civil Procedure 12(b)(6). Upon consideration of the Motion and Plaintiff Marco Z's Response, the Court concludes the Motion to Dismiss shall be GRANTED WITH LEAVE TO AMEND COMPLAINT.
This case originated in this federal court based upon federal question jurisdiction. Marco Z does not dispute that the health plan at issue is governed by the Employee Retirement Income Security Act of 1974 ("ERISA"). Further, it is undisputed that at the time of the incident forming the basis of this action Marco Z was a beneficiary of the subject ERISA health plan ("the Plan") established and maintained by Forma Automotive and administered by UnitedHealthcare.
Marco Z sustained gastrointestinal medical problems while in Mexico which required surgery and extensive hospitalization from May 12, 2017 to June 24, 2017. Marco Z assigned any insurance benefits he was entitled to receive under the Plan to Hospital Regional Del Rio ("the Hospital"), which is not a network provider under the Plan. As a non-network provider, it has no express contract with UnitedHealthcare establishing payment for medical services provided to beneficiaries of the Plan.
Subsequently, the Hospital, a foreign company, employed Med X, a domestic claims adjustment and billing company, to obtain any medical insurance benefits due Marco Z under the assignment. After some time, UnitedHealthcare declined payment of any benefits, stating as a reason in an Explanation of Benefits Statement (EOB) dated November 20, 2019, "[w]e have not received all the requested information needed to process your claim."
Marco Z filed this action in this federal court asserting causes of action for (1) compelled production of the administrative record and award of penalty pursuant to ERISA, 29 U.S.C § 1024(B), §1132(c)(1) and 29 C.F.R 2575.502c-1; (2) breach of contract as to denial of insurance benefits under the Plan; (3) unjust enrichment; (4) quantum meruit; (5) violation of Texas Insurance Code § 1301.0053 for failure to properly compensate a medical provider; (6) violation of Texas Insurance Code § 541, the Texas Unfair Compensation and Unfair Practice Act, for refusing to pay a claim without conducting a reasonable investigation; and (7) violation of Texas Insurance Code § 542, the Texas Prompt Payment of Claims Act. Marco Z attached to the Complaint a copy of the Plan and correspondence between the parties prior to the EOB letter.
Defendants now move under Federal Rule 12(b)(6) to dismiss all state-law causes of action (claims (2) - (7)) based upon the complete preemption doctrine, conflict preemption doctrine and failure to state a claim upon which relief may be granted. Defendants also move under Federal Rule 12(b)(6) to dismiss the federal cause of action asserted under ERISA (claim (1)) as a matter of law based upon Marco Z's failure to state a claim upon which relief may be granted.
To provide opposing parties fair notice of what the asserted claim is and the grounds upon which it rests, every pleading must contain a short and plain statement of the claim showing the pleader is entitled to relief. Fed.R.Civ.P. 8(a)(2); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); see also Conley v. Gibson, 355 U.S. 41, 47 (1957). To survive a motion to dismiss filed pursuant to Federal Rule 12(b)(6), the complaint must plead "enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The focus is not on whether the plaintiff will ultimately prevail, but whether that party should be permitted to present evidence to support adequately asserted claims. Twombly, 550 U.S. at 563 n.8. Thus, to qualify for dismissal under Rule 12(b)(6), a complaint must, on its face, show a bar to relief. Fed.R.Civ.P. 12(b)(6); Clark v. Amoco Prod. Co., 794 F.2d 967, 970 (5th Cir. 1986). Dismissal "can be based either on a lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Frith v. Guardian Life Ins. Co., 9 F.Supp.2d 734, 737-38 (S.D. Tex. 1998).
A court addressing a motion under Federal Rule 12(b)(6) "must limit itself to the contents of the pleadings, including attachments thereto." Brand Coupon Network, L.L.C. v. Catalina Mktg. Corp., 748 F.3d 631, 635 (5th Cir. 2014). Furthermore, when ruling on a motion to dismiss, courts "construe the complaint in the light most favorable to the plaintiff and draw all reasonable inferences in the plaintiff's favor." Severance v. Patterson, 566 F.3d 490, 501 (5th Cir. 2009).
Defendants argue Marco Z's state-law causes of action are completely preempted by ERISA and, therefore, must be dismissed for failure to state a claim upon which relief may be granted. Because the Hospital is a non-network provider, Defendants contend Marco Z's only right of recovery is based on the terms of the Plan. Thereby, ERISA's preemptive force mandates Marco Z may only assert any right to recovery as an ERISA enforcement action, that is, a right to payment, pursuant to 29 U.S.C § 1132. Because Marco Z does not assert an allowed enforcement action under ERISA § 1132, but only state-law claims, and his state-law claims are completely preempted by ERISA, the Complaint fails to state a claim upon which relief can be granted.
Marco Z responds that Defendants mischaracterize the basis of his complaints as "right of payment" to necessarily place the asserted state-law causes of action under ERISA preemption principles. Rather, Marco Z argues, Defendants gave no coverage-based reasons for denial of his claims for benefits in the final EOB letter, and therefore, the basis of his state-law causes of action is a "rate of payment" dispute. Marco Z argues any causes of action arising from a "rate of payment" dispute created under an ERISA plan are not subject to ERISA complete preemption. Marco Z presents a novel argument that, even though he was paid $0 on his submitted claims, his cause of action is a "rate of payment" claim, in which the rate of payment was 0%, because UnitedHealthcare gave no coverage-based reason for its payment of $0.
Congress may enact legislation to preempt a particular field of law, transforming all claims arising in that field to federal in nature. See Arizona v. United States, 567 U.S. 387, 398 (2012); Wyeth v. Levine, 555 U.S. 555, 565 (2009). Within this power, Congress created an exclusive civilenforcement scheme for employee welfare benefit plans, ERISA, 28 USC § 502, et seq., to provide a uniform regulatory regime. Giles v. NYLCare Health Plans, Inc., 172 F.3d 332, 336 (5th Cir. 1999). To this end, as a safeguard, ERISA contains two separate and procedurally distinct preemption provisions: (1) complete preemption pursuant to 29 U.S.C. § 1132(a); and (2) conflict preemption pursuant to 29 U.S.C. § 1144(a). Giles, 172 F.3d at 336.
The scope of complete and conflict preemption under ERISA are very similar but not exactly the same. See Arana v. Ochsner Health Plan, 338 F.3d 433, 438-40 (5th Cir. 2003); Woods v. Tex. Aggregates, L.L.C., 459 F.3d 600, 602-04 (5th Cir. 2006). Here, it appears the parties conflate the two types of ERISA preemption. First, the parties' primary dispute focuses on the issue whether complete preemption applies to support dismissal of the state law claims under Federal Rule 12(b)(6). Then, Defendants simultaneously argue conflict preemption also applies to support dismissal of the state law claims under Federal Rule 12(b)(6). Marco Z does not specifically respond to the conflict-preemption argument, though presumably, the same rebuttal arguments apply.
Because the parties agree ERISA governs the Plan and is the basis of this Court's original jurisdiction, the Court goes directly into addressing the arguments whether either type of preemption applies. The Court discusses both at length to provide clarity in their distinctions and the parties' conflation of the analysis due each separate and distinct type of preemption.
Federal courts hold federal question jurisdiction over all cases "arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. For a federal court to have "arising under" jurisdiction, or federal question jurisdiction, the plaintiff's federal law claims must appear on the face of the complaint. McKnight v. Dresser, Inc., 676 F.3d 426, 430 (5th Cir. 2012). This isreferred to as the "well-pleaded complaint" rule. Bernhard v. Whitney Nat. Bank, 523 F.3d 546, 551 (5th Cir. 2008). Under the "well-pleaded complaint" rule, if a complaint pleads only state law claims, a federal court does not have federal-question jurisdiction. McKnight, 676 F.3d at 430; Gutierrez v. Flores, 543 F.3d 248, 251-52 (5th Cir. 2008).
Section 502(a) of ERISA imposes complete preemption in the area of law involving employee welfare benefit plans defined therein. Aetna Health, Inc. v. Davila, 542 U.S. 200, 208 (2004); see 29 U.S.C. §1132(a). As such, the complete preemption doctrine creates a narrow exception to the well-pleaded complaint rule in a case that falls within the scope of ERISA. Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987); McKnight, 676 F.3d at 430. Under this narrow exception, state-law causes of action that duplicate or fall within...
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