Omega Hosp., LLC v. United Healthcare Servs., Inc.

• Decision Date: 01 December 2020
• Docket Number: CIVIL ACTION NO. 16-560-JWD-EWD
• Parties: OMEGA HOSPITAL, LLC v. UNITED HEALTHCARE SERVICES, INC., ET AL.
• Court: U.S. District Court — Middle District of Louisiana

OMEGA HOSPITAL, LLC v. UNITED HEALTHCARE SERVICES, INC., ET AL.

CIVIL ACTION NO. 16-560-JWD-EWD

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF LOUISIANA

December 1, 2020

RULING AND ORDER

This matter comes before the Court on Defendants' Motion to Dismiss the Second Amended Complaint and to Strike Portions of the Second Amended Complaint (Doc. 135) ("Third Motion to Dismiss") filed by Defendants United HealthCare Services, Inc. and United Healthcare of Louisiana, Inc. (collectively, "Defendants" or "United"). Plaintiff Omega Hospital, LLC ("Plaintiff" or "Omega") opposes the motion. (Doc. 139.) United has filed a reply. (Doc. 145.) Oral argument is not necessary. The Court has carefully considered the law, the facts in the record, and the arguments and submissions of the parties and is prepared to rule. For the following reasons, United's motion is granted in part and denied in part.

Table of Contents

I. Relevant Factual and Procedural Background ........................................................................ 1

A. The Second Amended Complaint .................................................................................... 1

1. Overview of Plaintiff's Allegations .............................................................................. 1

2. The Alleged Class ......................................................................................................... 4

3. Plaintiff's Four Counts, Jury Demand, and Prayer ....................................................... 5

B. Procedural History ............................................................................................................ 6

1. Ruling on the Original Motion to Dismiss ................................................................... 6

2. Ruling on the Second Motion to Dismiss ..................................................................... 7

3. Ruling on the Motion for Reconsideration ................................................................. 10

4. Limited Discovery ...................................................................................................... 12

5. The Instant Motion ..................................................................................................... 17

II. Motion to Strike .................................................................................................................... 18

A. Parties' Arguments ......................................................................................................... 18

B. Applicable Law .............................................................................................................. 19

C. Analysis .......................................................................................................................... 22

III. Motion to Dismiss for Lack of Standing ............................................................................ 24

A. Legal Standard ................................................................................................................ 24

B. Failure to Produce Assignments ..................................................................................... 25

1. Parties' Arguments ..................................................................................................... 25

2. Applicable Law ........................................................................................................... 27

3. Analysis ...................................................................................................................... 30

C. Lack of Connection to Dates of Service ......................................................................... 33

1. Parties' Arguments ..................................................................................................... 33

2. Analysis ...................................................................................................................... 35

D. Anti-Assignment Provisions .......................................................................................... 36

1. Parties' Arguments ..................................................................................................... 36

2. Anti-Assignment Clauses Generally .......................................................................... 38

3. SPDs and COCs As Plan Documents ......................................................................... 39

4. Closing Guidance ....................................................................................................... 42

E. Claim for Declaratory and Injunctive Relief .................................................................. 44

1. Parties' Arguments ..................................................................................................... 442. Analysis ...................................................................................................................... 46

IV. Motion to Dismiss for Failure to State a Claim ................................................................. 48

A. Legal Standard ................................................................................................................ 48

B. Count One: Procedural Section 502(a)(1)(B) Claims .................................................... 49

1. Parties' Arguments ..................................................................................................... 49

2. Applicable Law ........................................................................................................... 51

3. Analysis ...................................................................................................................... 54

C. Claim for Benefits Under Counts One, Two and Four .................................................. 56

1. Parties' Arguments ..................................................................................................... 56

2. Analysis ...................................................................................................................... 59

D. Breach of Contract Claim ............................................................................................... 68

1. Parties' Arguments ..................................................................................................... 68

2. Analysis ...................................................................................................................... 71

V. Motion to Strike Jury Demand .............................................................................................. 75

VI. Conclusion ......................................................................................................................... 76

I. Relevant Factual and Procedural Background

A. The Second Amended Complaint

1. Overview of Plaintiff's Allegations

This action was brought by Omega against United for alleged violations of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. ("ERISA") and Louisiana state law. (Second Amended and Restated Class Action Complaint for Declaratory Judgment, Injunctive Relief, and Damages ("Second Amended Complaint"), Doc. 130.) ERISA "is '[a]n ambitious statutory scheme' that is 'designed "to protect the interests of participants in employee benefit plans and their beneficiaries" by (1) "requiring the disclosure and reporting to participants and beneficiaries"; (2) "establishing standards of conduct, responsibility, and obligation for fiduciaries of employee benefit plans"; and (3) "providing for appropriate remedies, sanctions, and ready access to the Federal courts." ' " Dialysis Newco, Inc. v. Cmty. Health Sys. Grp. Health Plan, 938 F.3d 246, 248 (5th Cir. 2019) (quoting Tolbert v. RBC Capital Mkts. Corp., 758 F.3d 619, 621 (5th Cir. 2014) (alteration omitted) (quoting 29 U.S.C. § 1001(b))).

Omega is a hospital and surgical center in Metairie, Louisiana that has furnished healthcare services to members of ERISA health benefit plans insured or administered by United. (Id. ¶¶ 1, 19.) Omega is an out-of-network provider, which means it does not have a contract with United to furnish medical services to individuals covered by United Group Health Plans at negotiated rates. (Id. ¶¶ 3-4.)

Plaintiff alleges (though United disputes) that, when Omega provides medical care to United plan participants, these participants assign to Omega the benefits available under their employer health benefit plans. (Id. ¶ 4.) According to the Second Amended Complaint, out-of-network providers like Omega then bill United for the medical services furnished to the patientscovered by a United plan, and United pays the provider any benefits due under the patient's applicable plan. (Id.) In this case, Omega claims to have "derivative standing" to sue on behalf of the plan participants who assigned it claims.

As will be explored below, some of the plan documents contain "anti-assignment" provisions. (Sec. Amend. Compl. ¶ 22, Doc. 130.) Omega alleges that (1) these provisions are illegal, and (2) United waived and/or is estopped from asserting its right under the anti-assignment provisions (a) by reimbursing Omega pursuant to the assignments, thereby indicating that it assented to the assignments; (b) by acting on the assignments by paying patient claims; and (c) by Omega's reasonable reliance on United's conduct in conducting its business. (Id. ¶ 23.)¹

Plaintiff further alleges that, in 2007, United adopted a policy of conducting "post hoc audits of bills for out-of-network providers that it previously paid, often years earlier." (Sec. Amend. Compl. ¶ 7, Doc. 130.) According to the Second Amended Complaint, United claimed its audits discovered that overpayments had been made, so United would engage in "an unlawful form of self-help" by offsetting "totally unrelated funds: fees due to the providers on different patients, usually covered by different employer plans, for whom fees for medical services provided by the out-of-network provider were due." (Id. ¶¶ 7-8.) The post-hoc...