Case 2:20-cv-02007-MTL Document 52 Filed 07/01/22 Page 1 of 13
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`IN THE UNITED STATES DISTRICT COURT
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`FOR THE DISTRICT OF ARIZONA
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`Physicians Surgery Center of Chandler,
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`Plaintiff,
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`v.
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`Cigna Healthcare Incorporated, et al.,
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`Defendants.
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`No. CV-20-02007-PHX-MTL
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`ORDER
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`Pending before the Court is the second motion to dismiss filed by Defendants Cigna
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`Healthcare and associated parties (collectively, “Cigna”). Cigna moves to dismiss Plaintiff
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`Physicians Surgery Center of Chandler’s (“PSCC”) first amended complaint. (Doc. 38.)
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`For the following reasons, the Court grants the motion.
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`I.
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`BACKGROUND
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`The Court previously set forth the factual background of this case in its previous
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`Order. (Doc. 27.) In brief, PSCC provides medical care to patients with Cigna insurance
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`plans, even though it is an out-of-network provider. (Doc. 28 ¶¶ 14, 26, 27.) In October
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`2018, PSCC received a letter from Cigna accusing PSCC of failing to bill its Cigna-insured
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`patients their full out-of-network cost share, a practice known as “fee forgiveness.” (Id. ¶¶
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`40, 41.) PSCC contends it does not engage in fee forgiveness. (Id. ¶ 70.) Ever since Cigna
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`determined that PSCC was engaging in this practice, Cigna has denied all claims submitted
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`by PSCC based on its alleged fee forgiveness policy. (Id. ¶ 43, 47.) PSCC alleges that as
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`of August 31, 2020, “Cigna has improperly withheld approximately $5.6 million dollars”
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`Case 2:20-cv-02007-MTL Document 52 Filed 07/01/22 Page 2 of 13
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`of payment due to PSCC to “create leverage against PSCC.” (Id. ¶ 53.) PSCC filed a
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`complaint in October 2020. (Doc. 1.)
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`On July 23, 2021, the Court entered an Order (Doc. 27) granting in part and denying
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`in part as moot Cigna’s first motion to dismiss PSCC’s complaint. The Court also directed
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`PSCC to file an amended complaint by August 20, 2021, and PSCC timely did so. (Id.,
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`Doc. 28.) In its first amended complaint, PSCC asserts three derivate claims arising under
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`ERISA brought on behalf of Cigna’s members: failure to properly pay benefits (Count I);
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`breach of fiduciary duties (Count II); and failure to provide full and fair review (Count III).
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`(Doc. 28.) PSCC also asserts five direct claims in its own capacity: breach of contract
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`(Count IV); breach of the duty of good faith and fair dealing (Count V); unjust enrichment
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`(Count VI); violation of Arizona’s Prompt Pay statute (Count VII); and consumer fraud
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`(Count VIII). (Id.) Cigna moved to dismiss each of PSCC’s claims for relief pursuant to
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`Federal Rule of Civil Procedure 12(b)(6). (Doc. 38 at 1.)
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`II.
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`LEGAL STANDARD
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`To survive a motion to dismiss, a complaint must contain “a short and plain
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`statement of the claim showing that the pleader is entitled to relief” such that the defendant
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`is given “fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl.
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`Corp. v. Twombly, 550 U.S. 545, 555 (2007) (quoting Fed. R. Civ. P. 8(a)(2); Conley v.
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`Gibson, 355 U.S. 41, 47 (1957)). A complaint does not suffice “if it tenders ‘naked
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`assertion[s]’ devoid of ‘further factual enhancement.’” Ashcroft v. Iqbal, 556 U.S. 662, 678
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`(2009) (quoting Twombly, 550 U.S. at 556). Dismissal under Rule 12(b)(6) “can be based
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`on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a
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`cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir.
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`1988). But the Court should not dismiss a complaint “unless it appears beyond doubt that
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`the plaintiff can prove no set of facts in support of the claim that would entitle it to relief.”
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`Williamson v. Gen. Dynamics Corp., 208 F.3d 1144, 1149 (9th Cir. 2000).
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`In deciding motions to dismiss, the court must accept material allegations in the
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`complaint as true and construe them in the light most favorable to the plaintiff. North Star
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`Case 2:20-cv-02007-MTL Document 52 Filed 07/01/22 Page 3 of 13
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`Int’l v. Arizona Corp. Comm’n, 720 F.2d 578, 580 (9th Cir. 1983). “Indeed, factual
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`challenges to a plaintiff’s complaint have no bearing on the legal sufficiency of the
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`allegations under Rule 12(b)(6).” See Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th
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`Cir. 2001). Additionally, review of a Rule 12(b)(6) motion is “limited to the content of the
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`complaint.” North Star Int’l, 720 F.2d at 581.
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`III. ANALYSIS
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`A.
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`Derivative Claims
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`1.
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`Plan Term
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`In its prior Order, the Court dismissed three of PSCC’s ERISA claims: failure to
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`properly pay benefits, breach of fiduciary duties, and failure to provide full and fair review.
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`(Doc. 27 at 7–8.) The underpinning of that Order was PSCC’s failure to plead any specific
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`plan language. (Id. at 7.) Without that information, PSCC cannot state a claim for relief
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`because “a plaintiff who brings a claim for benefits under ERISA must identify a specific
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`plan term that confers the benefit in question.” Almont Ambulatory Surgery Ctr., LLC v.
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`UnitedHealth Grp., Inc., 99 F. Supp. 3d 1110, 1155 (C.D. Cal. 2015) (citation and internal
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`quotation marks omitted). PSCC conceded that it had not pleaded specific plan language.
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`(Doc. 27 at 7.) Still, the Court allowed PSCC to amend its complaint to show efforts it had
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`undertaken to obtain the plan language. (Doc. 27 at 17.)
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`In its amended complaint, PSCC provided a number of details about how it has
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`sought the plan documents and also attached emails between PSCC’s counsel and Cigna’s
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`counsel. (Doc. 28 ¶¶ 89–114, Doc. 28-4 at 2–22.) PSCC asserts that Cigna did not provide
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`the plan documents for all 238 patients, but instead only provided summary plan documents
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`for five of the patients. (Id. ¶¶ 89, 100, 114.) Based on these emails, PSCC accuses Cigna
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`of “actively impeding the orderly disposition of this action through patent obfuscation.”
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`(Doc. 41 at 7.) Regardless, PSCC provided a representative plan term from the summary
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`plan documents that it alleges “is contained in each Plan for each Claiming Patient.” (Doc.
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`28 ¶ 10.)
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`Generally, a complaint must allege facts to “raise a right to relief above the
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`Case 2:20-cv-02007-MTL Document 52 Filed 07/01/22 Page 4 of 13
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`speculative level.” Bell Atl. Corp., 550 U.S. at 555. To adequately state a claim under
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`ERISA Section 502(a)(1)(B), “a plaintiff must allege facts that establish the existence of
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`an ERISA plan as well as the provisions of the plan that entitle it to benefits.” Almont
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`Ambulatory Surgery Ctr., LLC v. UnitedHealth Grp., Inc., 99 F. Supp. 3d 1110, 1155 (C.D.
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`Cal. 2015) (citation and internal quotation marks omitted). “Accordingly, a plaintiff who
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`brings a claim for benefits under ERISA must identify a specific plan term that confers the
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`benefit in question.” Id. The Court finds that PSCC has sufficiently identified a specific
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`plan term, but it still fails to state a claim under which relief can be granted.
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`In the amended complaint, PSCC alleges: (1) it provided health care services to
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`Cigna patients as an out-of-network provider (Doc. 28 ¶¶ 14, 15); (2) it timely submitted
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`claims to Defendants for payment (id. ¶¶ 37, 38); (3) Cigna wrongfully asserts that PSCC
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`engaged in fee forgiveness (id. ¶ 41); (4) Cigna told PSCC that it would deny all claims
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`from PSCC until it provided proof of payments by patients to Cigna’s satisfaction (id. ¶
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`42); and (5) PSCC does not engage in fee forgiveness (id. ¶ 47).1 PSCC also provides this
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`representative plan language, which it claims is contained in each patients’ plan:
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`[I]f Cigna determines that a provider is or has waived, reduced,
`or forgiven any portion of its charges and/or any portion of
`copayment, deductible, and/or coinsurance amount(s) you are
`required to pay for a Covered Service (as shown on the
`Schedule) without Cigna’s express consent, then Cigna in its
`sole discretion shall have the right to deny the payment of
`benefits in connection with the Covered Service, or reduce the
`benefits in proportion to the amount of the copayment,
`deductible, and/or coinsurance amounts waived, forgiven or
`reduced, regardless of whether the provider represents that you
`remain responsible for any amounts that your plan does not
`cover. In the exercise of that discretion, Cigna shall have the
`right to require you to provide proof sufficient to Cigna that
`you have made your required cost share payment(s) prior to the
`payment of any benefits by Cigna.
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`(Id. ¶ 45.) Essentially, the fee-forgiveness term gives Cigna “sole discretion” to refuse to
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`pay for services if Cigna determines a provider is engaging in fee forgiveness. (Id.) And,
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`in exercising that discretion, Cigna has the right to require proof that the patient has paid
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`his or her cost share. (Id.) PSCC also alleges that Cigna sent a letter on October 4, 2018
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`1 Fee forgiveness is when a provider does not bill its patients for the full out-of-network
`cost that the patient owes under the plan.
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`Case 2:20-cv-02007-MTL Document 52 Filed 07/01/22 Page 5 of 13
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`alerting PSCC that it had determined PSCC was engaging in fee forgiveness, and it “will
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`continue to deny claims until [PSCC] can establish proof of payments by patients to
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`[Cigna’s] satisfaction.” (Id. ¶¶ 41, 42, Doc. 28-1 at 13–15.) But PSCC never alleges that
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`it made any attempts of proof of payment. (See Doc. 28 ¶¶ 41, 42.)
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`Accepting all of PSCC’s allegations as true, PSCC has failed to state a claim for
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`relief based on the alleged plan term. North Star Int’l, 720 F.2d at 580. The fee forgiveness
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`term allows Cigna to decide whether a provider is engaging in fee forgiveness and then
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`require proof of payment by the patient. (Id. ¶ 45.) The Court must assume, as it alleges,
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`that PSCC was not engaging in fee forgiveness. (Id. ¶ 70.) But even still, Cigna had full
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`discretion under the parties’ contract terms to seek proof-of-payment. (Id. ¶ 45.) PSCC’s
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`complaint is silent about its efforts to provide proof-of-payment. In its letter to PSCC,
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`Cigna explained: “[b]ecause [PSCC] failed to provide the requested documentation
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`supporting that you have collected the applicable cost share and balance amounts from the
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`affected customers that satisfies the terms of the plan language, a refund is required.” (Doc.
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`28-1 at 14.) Thus, regardless of whether or not PSCC was forgiving fees, the term dictates
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`that PSCC provide proof-of-payment. Because it did not allege that it did so, the Court
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`cannot determine that Cigna breached the agreement or failed to pay benefits.
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`Beyond this fee forgiveness term, PSCC asserts no other provision in the ERISA
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`plans that entitle it to payment of benefits. Almont Ambulatory Surgery Ctr., LLC, 99 F.
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`Supp. 3d at 1155; see also Glendale Outpatient Surgery Ctr. v. United Healthcare Servs.,
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`Inc., 805 Fed. App’x 530, 531 (9th Cir. 2020) (determining that a plaintiff failed to state a
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`claim for relief because it did not any ERISA “plan terms that specify benefits that the
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`defendants were obligated to pay but failed to pay”). Because of this shortfall, PSCC has
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`failed to state a plausible claim for relief on its Counts I, II, or III.
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`Despite this failure, PSCC has assured the Court that it can allege it submitted
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`documented proof of payment for the medical procedures in the ERISA claims at issue,
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`after it received Cigna’s October 4, 2018 letter. (Doc. 51.) As such, the Court grants leave
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`to amend as explained herein.
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`Case 2:20-cv-02007-MTL Document 52 Filed 07/01/22 Page 6 of 13
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`2.
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`Count II: Fiduciary Duty
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`PSCC’s Count II claims it is entitled to relief under 29 U.S.C. § 1132(A)(3) for
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`breach of fiduciary duty. (Doc. 28 at 25.) In addition to the pleading defect set forth above,
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`Count II suffers from the added defect that it fails to request equitable relief or a remediable
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`wrong. The Court previously dismissed this count because, in addition to failing to plead
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`a specific plan term, PSCC also failed to allege any remediable wrong or stated a claim for
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`equitable relief. (Doc. 27 at 15.) PSCC argues its amended complaint sufficiently requests
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`a form of relief under Count II because it alleged that “Cigna is required to exercise its
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`fiduciary duties . . . and Cigna should be ordered to do so” and “PSCC has suffered injury
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`and is entitled to damages and equitable, injunctive and declaratory relief.” (Doc. 28
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`¶¶ 145, 147.)
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`Once again, PSCC’s allegations do not specify what kind of relief it seeks. (Doc.
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`27 at 14.) While monetary damages are possible under ERISA § 502(a)(3), PSCC alleges
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`merely that it “has suffered injury and is entitled to damages.” (Doc. 28 ¶ 145.) A claim
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`for breach of fiduciary duty under ERISA requires a plaintiff to allege “both (1) that there
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`is a remediable wrong, i.e., that the plaintiff seeks relief to redress a violation of ERISA or
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`the terms of a plan, and (2) that the relief sought is appropriate equitable relief.” Talbot v.
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`Reliance Standard Life Ins. Co., No. CV-14-00231-PHX-DJH, 2018 WL 10419233, at *19
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`(D. Ariz. Feb. 7, 2018). PSCC’s request fails on both prongs.
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`First, PSCC has not demonstrated what remediable wrong exists for the plan’s
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`subscribers. As the assignee of the patients’ § 502(a)(3) claims, PSCC can only state a
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`claim for relief if those patients have a remediable wrong. See, e.g., Caulley v.
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`Interprise/Sw. Interior & Space Design, Inc., No. 3:20-CV-03077-X, 2021 WL 2376720,
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`at *3 (N.D. Tex. June 10, 2021) (“But [the assignee] fails to demonstrate how the
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`[subscriber] could have brought its claim under section [502](a)(3) as a result of [the
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`fiduciary’s] alleged violation.”). PSCC fails to show how the patients—its assignors—
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`could maintain a claim under § 502(a)(3) against Cigna for a violation of fiduciary duty.
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`Instead, PSCC alleges that “[a]s direct and proximate cause of such breach of fiduciary
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`Case 2:20-cv-02007-MTL Document 52 Filed 07/01/22 Page 7 of 13
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`duties of loyalty and care, PSCC has suffered injury and is entitled to damages[.]” (Doc.
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`28 ¶ 147) (emphasis added). Here, PSCC alleges it has suffered an injury, not the patients,
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`and this allegation is insufficient to state a claim under § 502(a)(3).
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`Second, PSCC’s request for “damages” does not specify an equitable remedy and
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`fails to clarify what form of damages it seeks under § 502(a)(3). As the Court has
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`previously explained, “[w]hen a fiduciary breaches its duty and relief is not otherwise
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`available under the statute, § 502(a)(3) of ERISA provides for individualized equitable
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`relief.” Chappel v. Lab. Corp. of Am., 232 F.3d 719, 727 (9th Cir. 2000). The equitable
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`relief categories under § 502(a)(3) are generally limited “to those categories of relief that
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`were typically available in equity (such as injunction, mandamus, and restitution, but not
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`compensatory damages).” Mertens v. Hewitt Assocs., 508 U.S. 248, 256 (1993). Section
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`502(a)(3) “act[s] as a safety net, offering appropriate equitable relief for injuries caused by
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`violations that § 502 does not elsewhere adequately remedy,” and relief is not available
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`under § 502(a)(3) “where Congress elsewhere provided adequate relief for a beneficiary’s
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`injury.” Varity Corp. v. Howe, 516 U.S. 489, 512, 515 (1996).
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`Here, PSCC’s conclusory request for relief in the form of “damages and equitable,
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`injunctive and declaratory relief” and a general request for the Court to order Cigna to
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`fulfill its fiduciary duties fail to meet these standards. The Court instructed PSCC to revise
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`its pleading to give an “indication of what specific relief” its request for “equitable,
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`injunctive and declaratory relief” would entail. (Doc. 27 at 13.) PSCC failed to do so.
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`PSCC also failed to show that its requested injunctive relief differs from relief available
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`through other avenues. Id. The Court therefore grants Cigna’s motion to dismiss as to
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`Count II for failure to state a claim, without leave to amend.
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`C.
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`Direct Claims
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`PSCC also brings four direct claims rising under state law: breach of contract (Count
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`IV);2 breach of the duty of good faith and fair dealing (Count V); unjust enrichment (Count
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`VI); violation of Arizona’s Prompt Pay statute (Count VII); and consumer fraud (Count
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`2 Cigna does not seek dismissal of PSCC’s Count IV, breach of contract. (See Docs. 38,
`44, see also Doc. 41 at 13 n.5.) Accordingly, the Court does not address this claim.
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`Case 2:20-cv-02007-MTL Document 52 Filed 07/01/22 Page 8 of 13
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`VIII). (See Doc. 28.)
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`1.
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`Breach of Duty of Good Faith (Count V)
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`PSCC’s Count V fails because the PSCC does not allege that that the patients have
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`assigned it the right to bring a claim for breach of the duty of good faith and fair dealing.
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`PSCC argues that, as an assignee of the patients’ rights, it stands in the shoes of the assignor
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`and “[t]here can be no sincere dispute that each of the Claiming Patients would have the
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`right to allege a claim for breach of the duty of good faith and fair dealing.” (Doc. 41 at
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`13–14.)
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`“The question of what rights and remedies pass with a given assignment depends
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`upon the intent of the parties.” Pac. Coast Agr. Exp. Ass’n v. Sunkist Growers, Inc., 526
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`F.2d 1196, 1208 (9th Cir. 1975). As “a non-participant health care provider,” PSCC may
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`bring suit only “derivatively, relying on its patients’ assignments of their benefits claims.”
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`Spinedex Physical Therapy USA Inc. v. United Healthcare of Ariz., 770 F.3d 1282, 1289
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`(9th Cir. 2014).
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`The assignment provision that each patient signed states:
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`The undersigned hereby appoints and designates [PSCC] as my
`duly authorized representative, and assigns my ERISA rights
`and plan benefits as described below. . . . I hereby assign my
`right to assert and all causes of action for judicial review to
`[PSCC]. . . . I intend for my personal standing under ERISA’s
`disclosure and civil enforcement procedures under 29 U.S.C.
`§§ 1024 and 1132 to be hereby transferred to my assignee, so
`that is my seek judicial review of denied claims and/or
`disclosure under 29 U.S.C. § 1132(a)(1)(B); 29 U.S.C. §
`1132(a)(1)(A), and/or 29 C.F.R. 2560.503-1.
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`(Doc. 28-1 at 11.) This provision indicates only “that patients intended to assign [to PSCC]
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`only their rights to bring suit for payment of benefits.” Spinedex Physical Therapy USA
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`Inc. v. United Healthcare of Ariz., 770 F.3d 1282, 1292 (9th Cir. 2014). Besides, PSCC’s
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`Count V explicitly states that it “brings this claim with regard to plans that are not subject
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`to ERISA.” (Doc. 28 ¶ 162.) None of the assignment provisions assign PSCC the right to
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`bring non-ERISA claims. (See Doc. 28-1 at 11.) Even in its amended complaint, PSCC
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`fails to allege any other assignment of benefits language that would give it the right to bring
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`this claim. The Court finds that no amendment can cure this deficiency. Accordingly,
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`Case 2:20-cv-02007-MTL Document 52 Filed 07/01/22 Page 9 of 13
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`Count V is dismissed with prejudice.
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`2.
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`Unjust Enrichment (Count VI)
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`PSCC alleges that Cigna has been unjustly enriched because it received each
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`patients’ payment for insurance coverage, “which in turn allowed the Claiming Patients to
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`receive valuable medical care, and then Cigna was spared the cost of payment to PSCC
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`while avoiding the expense of claims appeals.” (Doc. 28 ¶¶ 173, 174.) PSCC alleges this
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`claim “for claims submitted under non-ERISA plans.” (Id. ¶ 173.) This claim suffers from
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`the same assignment of benefits as above. Even assuming that PSCC was assigned the
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`patients’ right to bring non-ERISA claims, PSCC fails to state a claim for relief on
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`Count VI.
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`Under Arizona law, to state a claim for unjust enrichment, the plaintiff bears the
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`burden of proving: (1) the plaintiff conferred a benefit to the defendant; (2) the defendant’s
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`benefit is at plaintiff’s expense; and (3) injustice would result from allowing the defendant
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`to keep the benefit. USLife Title Co. of Ariz. v. Gutkin, 153 Ariz. 349, 354 (1986).
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`Moreover, “the existence of a contract specifically governing the rights and obligations of
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`each party precludes recovery for unjust enrichment.” Id.
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`PSCC’s complaint contemplates a triangle of benefits and detriments that are not
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`grounded in case law. First, PSCC argues that Cigna (1) received the claiming patients’
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`payment for coverage; (2) the claiming patient paid for coverage for medical procedures;
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`and (3) PSCC has been “unjustly impoverished having provided the valuable services
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`without payment” while Cigna “was spared the cost of payment to PSCC.” (Id. ¶¶ 173,
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`174.) In this setup, PSCC is standing in the shoes of the patients in the first step, but then
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`substitutes itself in the third step. By failing to identify what injustice the claiming patients
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`suffered as the result of Cigna’s actions, this fails to state a claim for relief.
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`PSCC also alleges that it (1) provided services to Cigna’s plan members; (2) Cigna
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`did not pay for those provided services that were valued at $5.6 million; and (3) Cigna
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`retains its plan members’ premiums but refuses to pay PSCC, thus “retaining” the benefit.
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`(Id. ¶¶ 176–179.) This argument fails on the first step. To state a claim for unjust
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`Case 2:20-cv-02007-MTL Document 52 Filed 07/01/22 Page 10 of 13
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`enrichment, the plaintiff must confer a benefit to the defendant, not a third party. See id.
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`Here, PSCC provided a benefit—medical treatment—to the plan members, not the
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`defendant.
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`Plaintiff cites two cases that it claims prove that a provider can bring an unjust
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`enrichment claim against insurance companies. (Doc. 41 at 14.) Neither apply here. Both
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`cases apply Virginia law as to quantum meruit, not the Arizona elements of unjust
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`enrichment.3 Compare Dominion Surgical Specialists, LLC v. Carefirst Blue Cross Blue
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`Shield Ins., Co., No. 119CV01547RDAMSN, 2020 WL 2759252, at *3 (E.D. Va. Feb. 19,
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`2020); and Plastic Surgery Consultants, LLC v. Carefirst Blue Cross Blue Shield Ins. Co.,
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`No. 119CV01317RDAIDD, 2020 WL 2744131, at *3 (E.D. Va. Jan. 2, 2020); W. Corr.
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`Grp., Inc. v. Tierney, 208 Ariz. 583, 590 (Ct. App. 2004). Even more unfavorably to
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`PSCC’s position, both cases dismissed the provider’s quantum meruit claim because the
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`complaint was “devoid of any facts that would tend to show that Defendant requested
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`medical services from Plaintiff.” Dominion, 2020 WL 279252, at *4; Carefirst, 2020 WL
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`2744131; at *4.
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`Based on its review of case law, any amendment to this claim would be futile
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`because PSCC cannot allege that it conferred a benefit to Cigna. Lopez v. Smith, 203 F.3d
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`1122, 1127 (9th Cir. 2000) (explaining that leave to amend is futile where “the pleading
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`could not possibly be cured by the allegation of other facts”). Count VI is dismissed with
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`prejudice.
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`3.
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`Prompt Pay Statute (Count VII)
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`PSCC’s Count VII alleges a claim arising under A.R.S. § 20-3102(A), the Arizona
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`Prompt Payment Statute. Section 20-3102 instructs a health care insurer to “adjudicate any
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`clean claim from a contracted or noncontracted health care provider relating to health care
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`insurance coverage within thirty days” absent an agreement to the contrary. A.R.S. § 20-
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`3102(A). PSCC does not argue, and the Court cannot find, any cases where Section 20-
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`3 Under Arizona law, “quantum meruit is the measure of damages imposed when a party
`prevails on the equitable claim of unjust enrichment.” Corr. Grp., Inc. v. Tierney, 208 Ariz.
`583, 590 (Ct. App. 2004) (internal quotations omitted).
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`Case 2:20-cv-02007-MTL Document 52 Filed 07/01/22 Page 11 of 13
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`3102 provided a private right of action. (See Doc. 41 at 14–15.) PSCC reasons that “the
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`Arizona Legislature must have intended to include a private right of action to enforce an
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`insurer’s compliance with the statute.” (Id. at 15.) No authority indicates that Section 20-
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`3102 provides a private right of action, and PSCC fails to provide any. PSCC’s argument
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`also fails to persuade the Court that Arizona law would infer a private right of action here.
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`Accordingly, this Count VII is dismissed with prejudice.
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`4.
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`Consumer Fraud (Count VIII)
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`PSCC’s Count VIII asserts a claim for violation of Arizona’s Consumer Fraud Act
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`(“CFA”), A.R.S. § 44-1521. (Doc. 28 at 30.) The CFA statute provides:
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`The act, use or employment by any person of any
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`deception, deceptive act or practice, fraud, false pretense, false
`promise, misrepresentation, or concealment, suppression or
`omission of any material fact with intent that others rely upon
`such concealment, suppression or omission, in connection with
`the sale or advertisement of any merchandise whether or not
`any person has in fact been misled, deceived or damaged
`thereby, is declared to be an unlawful practice.
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`A.R.S. § 44-1522(A). Allegations of fraud are subjected to a heightened pleading standard
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`under Rule 9(b), which requires that “a party [alleging fraud] must state with particularity
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`the circumstances constituting fraud.” Fed. R. Civ. P. 9(b). To satisfy this requirement, a
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`plaintiff must include “the who, what, when, where, and how” of the fraud. Vess v. Ciba-
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`Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (internal quotations and citations
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`omitted).
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`The CFA is inapplicable to the facts of this case. The CFA contemplates an
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`“omission of any material fact . . . in connection with the sale or advertisement of any
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`merchandise[.]” A.R.S. § 44-1522(A). PSCC alleges that fraud arose from Cigna’s
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`preapproval of medical care, then refusal to compensate PSCC for that care. (Doc. 28
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`¶ 189.) But this approval is unconnected “with the sale or advertisement of [ ]
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`merchandise.” Id. (emphasis added). Finding no persuasive case law applying the CFA in
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`the manner that PSCC advocates, the Court dismisses this claim.
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`///
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`Case 2:20-cv-02007-MTL Document 52 Filed 07/01/22 Page 12 of 13
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`D.
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`Leave to Amend
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`PSCC does not seek leave to amend. (See Doc. 41.) Nevertheless, Rule 15(a)(2) of
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`the Federal Rules of Civil Procedure provides that “[t]he court should freely give leave [to
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`amend a pleading] when justice so requires.” Fed. R. Civ. P. 15(a)(2). “The power to grant
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`leave to amend . . . is entrusted to the discretion of the district court, which ‘determines the
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`propriety of a motion to amend by ascertaining the presence of any of four factors: bad
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`faith, undue delay, prejudice to the opposing party, and/or futility.’” Serra v. Lappin, 600
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`F.3d 1191, 1200 (9th Cir. 2010) (quotation omitted). District courts properly deny leave
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`to amend if the proposed amendment would be futile or the amended complaint would be
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`subject to dismissal. Saul v. United States, 928 F.2d 829, 843 (9th Cir. 1991). “[A]
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`proposed amendment is futile only if no set of facts can be proved under the amendment
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`to the pleadings that would constitute a valid and sufficient claim.” Miller v. Rykoff-Sexton,
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`Inc., 845 F.2d 209, 214 (9th Cir. 1988).
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`Amendment would not be futile here as to Counts I and III only. Cigna argued that,
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`based on the terms of the October 4, 2018 letter, and the fee forgiveness provision, “it
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`would deny Plaintiff’s claims for services provided to Cigna plan members until ‘you can
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`establish proof of payment by your patient’ of applicable cost share and balance amounts
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`‘by providing documented proof of payment for the medical procedure(s) at issue.’” (Doc.
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`41 at 6, 7.) PSCC contends it can amend its complaint to include allegations that it did
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`submit proof-of-payment for the patients at issue after receiving the October 4, 2018 letter,
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`yet Cigna, after receiving the proof that fee forgiveness was not happening, still did not
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`make payments. (Doc. 51.) The remaining counts are dismissed with prejudice because
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`the Court finds amendment would be futile.
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`IV. CONCLUSION
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`For the reasons set forth above,
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`IT IS ORDERED granting Cigna’s Second Motion to Dismiss. (Doc. 38.)
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`1.
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`Cigna’s Motion as to the ERISA derivative claims (Counts I and III)
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`is granted for failure to state a claim, with leave to amend.
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`Case 2:20-cv-02007-MTL Document 52 Filed 07/01/22 Page 13 of 13
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`2.
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`Cigna’s Motion as to Count II is granted for failure to state a claim,
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`without leave to amend.
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`3.
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`Cigna’s Motion as to the remaining state-law claims (Counts V, VI,
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`VII, and VIII) is granted and those counts are dismissed without leave to amend.
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`IT IS FINALLY ORDERED that PSCC shall file an amended complaint, if it
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`chooses to do so, by no later than July 15, 2022.
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`Dated this 1st day of July, 2022.
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