Nw. Mem'l Healthcare v. Aetna Better Health of Ill., Inc.
| Decision Date | 31 March 2023 |
| Docket Number | 1:21-cv-02054 |
| Parties | NORTHWESTERN MEMORIAL HEALTHCARE Plaintiff, v. AETNA BETTER HEALTH OF ILLINOIS, INC., A CVS HEALTH COMPANY, F.K.A. ILLINICARE HEALTH PLAN, INC., ON BEHALF OF ITSELF AND ITS AFFILIATES, AND DOES 1 THROUGH 25, INCLUSIVE, Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
Northwestern Memorial Healthcare (Plaintiff), through its subsidiaries provided medical care to patients who were beneficiaries of Aetna Better Health of Illinois, Inc., a CVS Health Company F.K.A. Illinicare Health Plan, Inc. (Defendant). R. 1-1 Compl. ¶¶ 1, 11, 12.[1]Plaintiff alleges that after providing treatment to these patients, Defendant failed to pay Plaintiff the usual and customary amount for those services. Id. ¶¶ 15, 29. Plaintiff brings this lawsuit against Defendant asserting claims for breach of implied-in-fact contract (Count I), and in the alternative, quantum meruit (Count II). Compl. Defendant moves to dismiss the Complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. R. 13, Mot. Dismiss. For the reasons that follow, the Motion to Dismiss is denied in part and granted in part.
Plaintiff is a not-for-profit public benefit corporation organized and existing pursuant to the laws of the state of Illinois.[2]Compl. ¶ 3. Defendant is a domestic insurance company incorporated in Illinois with its principal office located in Downers Grove, Illinois. Id. ¶ 4. Plaintiff, through its subsidiaries, Northwestern Memorial Hospital and Central DuPage Hospital Association, provided medical treatment between April 2, 2017 and November 19, 2020 to 58 patients who were members of Defendant's health plans. Id. ¶ 12.
Prior to providing service to the patients, Plaintiff sought authorization for treatment from Defendant. Compl. ¶ 13. Defendant approved the medically necessary services rendered to the patients, gave Plaintiff authorization reference numbers, and approved admission of the patients. Id. While there was no express written contract between Defendant and Plaintiff for payment for the medical treatment rendered to the patients, Defendant did provide Plaintiff written approvals for the specified medical services for the patients. Id. ¶¶ 21, 25. Prior to treatment, as is industry custom and practice, Defendant “impliedly agreed, promissorily impliedly expressed and understood that” Plaintiff would provide care to the patients, submit bills for such care to Defendant, and Defendant would pay the “usual and customary value” to Plaintiff for the services provided to the patients. Id. ¶ 22. Further, over the past five years, Plaintiff has billed multiple claims and Defendant has paid the “usual and customary value” of those claims in similar cases. Id. ¶ 26. Plaintiff's usual and customary charges for the medically necessary services rendered to the patients amounted to $4,928,889.82. Id. ¶ 15. However, after properly billing Defendant for the services provided, Defendant only paid $537,579.69, resulting in an aggregate underpayment of $4,397,310.13. Id. ¶ 29.
At no point in time did Defendant represent to Plaintiff that it would not pay the “usual and customary value.” Compl. ¶ 24. Rather, Defendant knew and understood that Plaintiff rendered such treatment with the expectation of being paid. Id. ¶ 21. Plaintiff alleges that by treating the patients and initiating contact with Defendant as described above, Plaintiff and Defendant entered into an implied-in-fact contract. Id. ¶ 25. To date, Defendant has not paid Plaintiff the full value of the services provided to Defendant's health plan beneficiaries.
Plaintiff subsequently filed a Complaint against Defendant in the Circuit Court of Cook County asserting claims for breach of implied-in-fact contract (Count I), and in the alternative, quantum meruit (Count II). R. 1, Notice of Removal ¶¶ 1, 13. In its Complaint, Plaintiff does not allege that any of the patients to whom it provided service were enrolled in either stand-alone Medicare or Medicaid plans or dual-eligible Medicare-Medicaid plans issued by Defendant. Nonetheless, Defendant removed the suit to federal court on the basis of federal question jurisdiction pursuant to 28 U.S.C. § 1331 and 28 U.S.C. § 1442(a)(1), also known as the Federal Officer Removal Statute. Id. ¶ 10. Defendant now moves to dismiss Plaintiff's Complaint for failure to state a claim. Mot. Dismiss. For the reasons that follow, the Motion to Dismiss for failure to state a claim is denied in part and granted in part.
A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the complaint. Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3D 811, 820 (7th Cir. 2009). To survive a motion to dismiss, a complaint needs only factual allegations, accepted as true, sufficient to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “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.” Id. The allegations “must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. The allegations that are entitled to the assumption of truth are those that are factual, rather than mere legal conclusions. Iqbal, 556 U.S. at 678-79.
Before a court can address the merits of a dispute, it must first determine whether it has subject matter jurisdiction. See Scott Air Force Base Properties, LLC v. Cnty. of St. Clair, Ill., 548 F.3d 516, 520 (7th Cir. 2008). Subject matter jurisdiction is the “first issue in any case.” Miller v. Southwest Airlines Co., 926 F.3d 898, 902 (7th Cir. 2019). And although neither party raises the issue, “[i]t is the responsibility of a court to make an independent evaluation of whether subject matter jurisdiction exists in every case.” Foster v. Hill, 497 F.3d 695, 696-697 (7th Cir. 2007); see also Evergreen Square of Cudahy v. Wisconsin Hous. & Econ. Dev. Auth., 776 F.3d 463, 465 (7th Cir. 2015) (“Parties cannot confer subject-matter jurisdiction by agreement, and federal courts are obligated to inquire into the existence of jurisdiction sua sponte.”) (cleaned up).[3]
By statute, Congress grants federal courts jurisdiction over two types of cases: those that arise under federal law, 28 U.S.C. § 1331, and those where there is diversity of citizenship and an amount-in-controversy requirement is met under § 1332. See Home Depot U.S.A., Inc. v. Jackson, 139 S.Ct. 1743, 1746 (2019). A defendant may remove to federal court any action filed in state court that could have originally been filed in federal court. 28 U.S.C. § 1441(a).
In its Notice of Removal, Defendant asserts that there are three federal laws implicated in this case: (1) the Medicare Act, 42 U.S.C § § 1395w-21 through w-28, as amended by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Public Law 108-173, 117 Stat. 2066 (Dec. 8, 2003); (2) the Medicaid Act, 42 U.S.C. § 1396 et seq.; and (3) 28 U.S.C. § 1442(a)(1). Notice of Removal ¶¶ 11, 18. Defendant maintains that the Court has federal question jurisdiction over this case based on these three statutes. Id. Plaintiff did not file a motion to remand and has not objected to the Court's jurisdiction over this case. For the following reasons, the Court finds that it has jurisdiction over this case based on 28 U.S.C. § 1442(a)(1), and thus, will not analyze the other two statutes.
28 U.S.C. § 1442(a)(1) was passed by Congress to provide a federal forum for officers whose duties under federal law conflict with state law. Ruppel v. CBS Corp., 701 F.3d 1176, 1179 (7th Cir. 2012). The statute was created because of concerns “that unfriendly states will impose state-law liability on federal officers and their agents for actions done under the immediate direction of the national government.” Id. (cleaned up). “Because the federal government can act only through its officers and agents, the removal statute promotes litigating federal defenses (like official immunity) in a federal forum so that the operations of the general government are not arrested at the will of one of the states.” Id. (cleaned up). The statute allows “any officer . . . of the United States or . . . person acting under them to remove actions for or relating to any act under color of such office.” Id. (citing 28 U.S.C. § 1442(a)(1)). “This requirement creates Article III jurisdiction . . . and it represents an exception to the well-pleaded complaint rule, which would ordinarily defeat jurisdiction when the federal question arises outside of the plaintiff's complaint.” Id. Thus, “[u]nder the federal officer removal statute, a removing defendant must show that it is a (1) person (2) acting under the United States, its agencies, or its officers (3) that has been sued for or relating to any act under color of such office, and (4) has a colorable federal defense to the plaintiff's claim.” Woodruff v. Humana Pharmacy Inc., 65 F.Supp.3d 588, 590 (N.D. Ill. 2014) (quoting 28 U.S.C. § 1442(a)).
Defendant maintains that it meets the first factor because it is a corporation, which constitutes a person for purposes of the statute. Notice of Removal ¶ 22 (citing Body Mind Acupuncture v. Humana Health Plan Inc., 2017 WL 653270, at *5 (N.D. W.Va. Feb. 16, 2017)). The Court agrees. Ruppel, 701 F.3d at 1181 () (cleaned up).
Defendant does not address the...
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