Mid-Town Surgical Ctr., L.L.P. v. Humana Health Plan of Tex., Inc.
| Decision Date | 23 April 2014 |
| Docket Number | Civil Action No. H–13–2620. |
| Citation | 16 F.Supp.3d 767 |
| Parties | MID–TOWN SURGICAL CENTER, L.L.P., Plaintiff, v. HUMANA HEALTH PLAN OF TEXAS, INC., Defendant. |
| Court | U.S. District Court — Southern District of Texas |
William H. Luck, Jr., Attorney At Law, Houston, TX, for Plaintiff.
Michael L. Hood, Michael P. Raab, Haynes and Boone LLP, Houston, TX, for Defendant.
This RICO and ERISA case is before the Court on Defendant Humana Health Plan of Texas, Inc.'s (“Humana” or “Defendant”) Motion to Partially Dismiss First Amended Complaint [Doc. # 15] (“Motion”). Plaintiff Mid–Town Surgical Center, L.L.P.'s (“MSC” or “Plaintiff”) has filed a Response [Doc. # 17], to which Humana replied [Doc. # 18]. Having reviewed the parties' briefing, the applicable legal authorities, and the relevant evidence of record, the Court grants in part and denies in part Humana's Motion.
Plaintiff MSC is a surgery center that performs same-day surgical and pain procedures. Plaintiff's First Amended Complaint [Doc. # 13] (“Complaint”), ¶ 5. Defendant Humana “issues group health benefits plans,” some of which are governed by the Employee Retirement Income Security Act (“ERISA”) and some of which are not. Id., ¶ 6.
MSC and Humana have not entered into a contract governing the payment of benefits for services that MSC renders to members of a healthcare insurance plan issued by Humana. Id. When members of a Humana plan obtain services from MSC, MSC is treated as an “out-of-network provider.” Id. Members pay Humana a “hefty premium” for the ability to access out-of-network providers. Id. Premiums for out-of-network providers are higher because Humana must pay those providers the “usual and customary charges” for those services (rather than a contracted rate). Id., ¶ 7. Humana processes claims made for services by out-of-network providers similarly to claims made for services by providers with whom Humana has contracted, i.e., “in-network providers.” Id., ¶ 6. MSC alleges that “Humana has devised an extremely unclear system of payment methodology which seems to be based on a contracted rate or Medicare rate for the policies that have both in-network and out of network benefits and, therefore, Humana is selling a product which is in reality the same product by Humana has packaged it differently.” Id. MSC claims that members of Humana plans are “punished” for choosing to use out-of-network providers in that Humana makes them “financially responsible for a major percentage of the bill by applying an incorrect methodology of payment.”Id.
MSC alleges that “Humana conspires with [certain] plan administrators for Humana to sell and for the employers to purchase such health care plans for which Humana knows that it will not be paying the usual and customary rate for out of network providers.” Id., ¶ 12. As part of this conspiracy, MSC asserts that plan administrators receive “substantial discounts in their plan premiums.” Id. MSC further asserts that “[t]his conspiracy is designed to ... increase the profit received by Humana while at the same time decreasing the premiums that the employer plan administrators will have to pay.” Id.
During some unspecified time period,1 MSC provided medical services to members of Humana plans (the “Humana Members”).2 Id., ¶ 8. Prior to rendering services, MSC received verification from Humana that the Humana Members were covered by a Humana health plan and pre-certification from Humana that services to be rendered to the Humana Members were covered by a Humana-issued insurance plan. Id. MSC alleges that it would not have provided these services without receiving the verification and pre-certification of the Humana Members' coverage. Id. MSC also alleges that Humana made material representations in a “Benefit Plan Document booklet” it mailed to MSC that it would “fully reimburse the [out-of-network] provider at the usual and customary or an agreed rate.” Id., ¶ 10.
After rendering services to the Humana Members, MSC submitted bills for these services to Humana totaling $1,705,794.00.3 Id., ¶ 9. MSC alleges that Humana should have paid $923,160.70. See id. Humana did not pay that amount. For certain services, Humana paid nothing to MSC; in other cases, Humana paid “substantially less than the billed rates for these services.” Id., ¶ 8. In total, Humana paid MSC $6,619.20 for the services rendered, 0.39% of MSC's billed charges. Id., ¶ 9. Of the additional $916,541.50 that MSC alleges Humana owes, $872,331.30 derived from services rendered to patients covered under ERISA plans and $44,210.20 derived from services rendered to two patients covered under non-ERISA, individual insurance plans. Id. The rates Humana paid are lower than both the rates Humana pays for in-network providers and the Medicare rate. Id., ¶ 10.
MSC administratively appealed Humana's payment determinations and exhausted its administrative remedies. Id., ¶ 15. In response to MSC's appeals, Humana provided MSC with a “pre-formatted letter” which explains Humana's decision using the acronym “MAF,” or “Maximum Allowable Fee.” Id. MSC claims that this term is “not transparent” and is “deceptive.” Id. MSC also alleges that Humana “attempted to force [MSC] to accept this” reduced payment by mailing a “sham form letter” to MSC with regard to each patient's treatment at issue.4 Id., ¶ 13.
MSC commenced this lawsuit on September 6, 2013. Humana moved to dismiss MSC's Original Complaint [Doc. # 7], which the Court denied without prejudice, see Minute Entry Order [Doc. # 12]. MSC filed its First Amended Complaint on December 16, 2013.
“A case is properly dismissed for lack of subject matter jurisdiction when the court lacks the statutory or constitutional power to adjudicate the case.” Krim v. pcOrder.com, Inc., 402 F.3d 489, 494 (5th Cir.2005) (citations omitted). In considering a challenge to subject matter jurisdiction, the district court is “free to weigh the evidence and resolve factual disputes in order to satisfy itself that it has the power to hear the case.”Id. When the court's subject matter jurisdiction is challenged, the party asserting jurisdiction bears the burden of establishing it. See Castro v. United States, 560 F.3d 381, 386 (5th Cir.2009). A motion to dismiss for lack of subject matter jurisdiction should be granted only if it appears certain that the plaintiff cannot prove a plausible set of facts that establish subject matter jurisdiction. Id. The Court must “take the well-pled factual allegations of the complaint as true and view them in the light most favorable to the plaintiff.” Lane v. Halliburton, 529 F.3d 548, 557 (5th Cir.2008).
A motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure is viewed with disfavor and is rarely granted. Turner v. Pleasant, 663 F.3d 770, 775 (5th Cir.2011) (citing Harrington v. State Farm Fire & Cas. Co., 563 F.3d 141, 147 (5th Cir.2009) ). The complaint must be liberally construed in favor of the plaintiff, and all facts pleaded in the complaint must be taken as true. Harrington, 563 F.3d at 147. The complaint must, however, contain sufficient factual allegations, as opposed to legal conclusions, to state a claim for relief that is “plausible on its face.” See Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ; Patrick v. Wal–Mart, Inc., 681 F.3d 614, 617 (5th Cir.2012). When there are well-pleaded factual allegations, a court should presume they are true, even if doubtful, and then determine whether they plausibly give rise to an entitlement to relief. Iqbal, 556 U.S. at 679, 129 S.Ct. 1937. Additionally, regardless of how well-pleaded the factual allegations may be, they must demonstrate that the plaintiff is entitled to relief under a valid legal theory. See Neitzke v. Williams, 490 U.S. 319, 327, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989) ; McCormick v. Stalder, 105 F.3d 1059, 1061 (5th Cir.1997).
MSC asserts eight causes of action against Humana: (1) violation of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961 et seq.; (2) violation of Section 502(a) of ERISA, 29 U.S.C. § 1132(a)(1)(B) ; (3) breach of fiduciary duty under ERISA; (4) failure to afford a full and fair review under ERISA; (5) violation of ERISA's claims processing requirements; (6) breach of contract; (7) promissory estoppel; and (8) negligent misrepresentation. Humana seeks dismissal of each of these claims except for MSC's breach of contract claim.
Humana argues that MSC's RICO, ERISA breach of fiduciary duty, failure to provide full and fair review under ERISA, and violation of ERISA's claims procedures claims must be dismissed for lack of standings.5 Humana argues that MSC lacks standing for each of these claims because the Humana Members' putative claims were not expressly assigned to MSC. The Court agrees.
“Standing under Article III of the Constitution requires that an injury be concrete, particularized, and actual or imminent; fairly traceable to the challenged action; and redressable by a favorable ruling.” Monsanto Co. v. Geertson Seed Farms, 561 U.S. 139, 130 S.Ct. 2743, 2752, 177 L.Ed.2d 461 (2010). In addition to this “constitutional” standing requirement, a party must also show that it has “prudential” standing, which “encompasses the general prohibition on a litigant's raising another person's legal rights, the rule barring adjudication of generalized grievances more appropriately addressed in the representative branches, and the requirement that a plaintiff's complaint fall within the zone of interests protected by the law invoked.”Elk Grove Unified Sch. Dist. v. Newdow, 542 U.S. 1, 12, 124 S.Ct. 2301, ...
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