`Case 2:21-cv-09269 Document1-1 Filed 11/29/21 Page 1of29 Page ID #:4
`
`
`
`
`
`
`
`
`
`EXHIBIT A
`EXHIBIT A
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Case 2:21-cv-09269 Document 1-1 Filed 11/29/21 Page 2 of 29 Page ID #:5
`
`ALAN NESBIT, ESQ. [SBN 310466]
`NESBIT LAW GROUP US LLP
`8383 Wilshire Boulevard Ste 800
`Beverly Hills, California 90211
`Tel: (323) 456-8605
`Fax: (323) 456-8601
`Email: anesbit@nesbitlawgroup.com
`
`Attorney for Plaintiff,
`DEDICATED SLEEP LLC
`
`SUPERIOR COURT OF THE STATE OF CALIFORNIA
`COUNTY OF LOS ANGELES, CENTRAL DISTRICT
`
`DEDICATED SLEEP LLC,
`
`Case No.:
`
`Plaintiff,
`
`v.
`
`CIGNA HEALTH AND LIFE INSURANCE
`COMPANY, CIGNA HEALTHCARE OF
`CALIFORNIA INC, CIGNA HEALTHCARE
`OF ILLINOIS INC and DOES 1 through 20,
`
`Defendants.
`
`COMPLAINT FOR:
`
`1. QUANTUM MERUIT;
`2. BREACH OF CONTRACT;
`3. FRAUDULENT
`MISREPRESENTATION and
`4. DECLARATORY RELIEF
`
`[JURY TRIAL REQUESTED]
`
`Damages: UNLIMITED: Over
`$25,000
`
`Plaintiff, DEDICATED SLEEP LLC (hereinafter referred to as "DS") complains and
`
`alleges, as follows:
`
`1
`
`DEDICATED SLEEP LLC'S COMPLAINT
`
`Electronically FILED by Superior Court of California, County of Los Angeles on 10/25/2021 04:28 PM Sherri R. Carter, Executive Officer/Clerk of Court, by Y. Tarasyuk,Deputy Clerk
`
`Assigned for all purposes to: Stanley Mosk Courthouse, Judicial Officer: Dennis Landin
`
`21STCV39324
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`
`Case 2:21-cv-09269 Document 1-1 Filed 11/29/21 Page 3 of 29 Page ID #:6
`
`
`
`GENERAL ALLEGATIONS
`
`1. DS is, and at all times relevant, was a corporation organized and existing under
`
`the laws of the State of Oregon.
`
`2. DS is, and at all times relevant, was a specialty medicine group, consisting of
`
`sub-contracted licensed medical physicians and licensed dental physicians who provide
`
`healthcare and Durable Medical Equipment (DME) services to patients in need of medical care
`
`for sleep disorders and related cranial facial problems. The licensed medical physicians and
`
`dental physicians include, but are not limited to, California licensed and/or certified medical
`
`professionals and professional entities (hereinafter collectively referred to as “Physicians”).
`
`
`
`3. Physicians provided medical care, services, treatment, and/or procedures and
`
`equipment and services to members, subscribers and insureds of defendants, CIGNA HEALTH
`
`AND LIFE INSURANCE COMPANY, CIGNA HEALTHCARE OF CALIFORNIA INC,
`
`CIGNA HEALTHCARE OF ILLINOIS INC and DOES 1 through 20,, (hereinafter referred to
`
`as "DEFENDANT" or “DEFENDANTS”). In providing such care, services, treatment and/or
`
`procedures, Physicians became contractually entitled to reimbursement, payment and/or
`
`indemnification from DEFENDANTS for those services and supplies rendered.
`
`4. Physicians submitted their claims and billings to DEFENDANTS for payment and
`
`exhausted all administrative appeals as established by DEFENDANTS in an effort to secure
`
`payment of their fees from DEFENDANTS, however, DEFENDANTS have failed and
`
`otherwise refused to provide Physicians full payment or any payment at all.
`
`5. DEFENDANTS are, and at all times relevant, were corporations established in
`
`and/or otherwise licensed to do business in and were doing business in the State of California, as
`
`medical health plan administrators and insurers. DS is informed and believes that
`
`DEFENDANTS are licensed by the DMHC and/or Department of Insurance to transact the
`
`business of insurance in the State of California and DEFENDANTS are, in fact, transacting the
`
`business of administrating medical health plans and/or insurance in the State of California and
`
`are thereby subject to the laws and regulations of the State of California.
`
`6. The true names and capacities, whether individual, corporate, associate, or
`
`
`
`
`
`
`
`2
`
`DEDICATED SLEEP LLC'S COMPLAINT
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`
`Case 2:21-cv-09269 Document 1-1 Filed 11/29/21 Page 4 of 29 Page ID #:7
`
`
`
`otherwise, of DOES 1 through 20, inclusive, are unknown to DS, who therefore sues said
`
`DEFENDANTS by such fictitious names. DS is informed and believes and thereon alleges that
`
`each of the DEFENDANTS designated herein as a DOE is legally responsible in some manner
`
`or to some extent for the events and happenings referred to herein and legally caused injury
`
`and/or damage to DS. DS will seek leave of this Court to amend this Complaint to insert their
`
`true names and capacities in place and stead of the fictitiously named DOES DEFENDANTS
`
`when their names become known.
`
`7. At all times herein mentioned, unless otherwise indicated, DEFENDANTS were the
`
`agents and/or employees of each of the remaining DEFENDANTS and were at all times acting
`
`within the purpose and scope of said agency and employment, and each DEFENDANT has
`
`ratified and approved the acts of his agent. At all times herein mentioned, DEFENDANTS had
`
`actual and/or ostensible authority to act on each other's behalf in certifying or authorizing the
`
`provision of medical services; processing and administering the claims and appeals; pricing the
`
`claims; approving or denying the claims; directing each other as to whether to pay and/or how to
`
`pay claims; issuing remittance advices and explanations of benefits statements; and making
`
`payments to Physician and its Patient.
`
`FACTUAL BACKGROUND
`
`8. This Complaint arises out of DEFENDANTS failure to make payments due and
`
`owing Physicians for medical care, treatment, equipment and procedures provided to numerous
`
`patients1 (who hereinafter are referred to as "Patients"), who were insureds, members,
`
`policyholders, certificate-holders and/or were otherwise covered for health, treatment and
`
`pharmaceutical expenses under one or more policies or certificates of insurance issued and
`
`underwritten by DEFENDANTS.
`
`9. None of the claims and/or causes of action in this Complaint are derivative of the
`
`contractual rights of the Patients. In no way does DS seek to enforce the contractual rights of
`
`the Patients through the Patients’ insurance contracts, policies, certificates of coverage, and/or
`
`
`1 For privacy reasons and to comply with the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), the full names and identifying
`information pertaining to the patients has been withheld. This information will be disclosed to DEFENDANTS upon request.
`
`
`
`
`
`
`
`3
`
`DEDICATED SLEEP LLC'S COMPLAINT
`
`
`
`Case 2:21-cv-09269 Document 1-1 Filed 11/29/21 Page 5 of 29 Page ID #:8
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`any other written insurance agreements between DEFENDANTS and Patients. The claims and
`
`causes of action herein are based solely upon the relationship and contractual interactions
`
`between the Physicians and DEFENDANTS and upon the fact that the Patients were covered by
`
`or administered by DEFENDANTS for the medical care and treatment provided him/her by the
`
`Physicians.
`
`10. DS is informed and believes, and on such information and belief, alleges that
`
`the Patients were insured by DEFENDANTS either as a subscriber to coverage or as a
`
`dependent of a subscriber to coverage under policies and/or certificates of insurance issued and
`
`underwritten by DEFENDANTS. DS is informed and believes that the Patients entered into a
`
`valid insurance agreement with DEFENDANTS for the specific purpose of ensuring that he/she
`
`Patient would have access to medically necessary treatments, care, procedures and surgeries by
`
`medical practitioners like the Physicians and ensuring that DEFENDANTS would administer or
`
`pay for the health care expenses incurred by the Patient.
`
`11. DS is informed and believes, and on such information and belief alleges, that
`
`DEFENDANTS received, and continue to receive, valuable premium payments from the
`
`Patients and/or other consideration from the Patients under the subject policies applicable to the
`
`17
`
`Patients.
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`
`12. At all relevant times, Physicians provided medically necessary and appropriate
`
`services, care, treatment, and/or procedures to Patients who held valid insurance policies or
`
`certificates issued by or administered by DEFENDANTS. A full schedule of the Patients and
`
`treating Physicians (with the Patients’ name redacted) is attached hereto as Exhibit 1.
`
`13. Physicians have a reputation for providing high quality care, treatment, and
`
`procedures. Physicians’ charges for services are on par with the charges of other physicians in
`
`the same general area for the same procedures and/or services. The Physicians' billed charges
`
`are reasonable, usual, and customary and have been paid by DEFENDANTS for the same
`
`services over the last 8 years.
`
`14. The Physicians who provided medical services to Patients were "in-network
`
`
`
`
`
`
`
`4
`
`DEDICATED SLEEP LLC'S COMPLAINT
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`
`Case 2:21-cv-09269 Document 1-1 Filed 11/29/21 Page 6 of 29 Page ID #:9
`
`
`
`providers" who had preferred provider contracts or other contracts with DEFENDANTS at the
`
`time that the subject care was rendered and/or treatments and/or equipment were performed and
`
`provided.
`
`15. It is standard practice in the healthcare industry that when a medical provider enters
`
`into a written preferred provider contract with a health plan such as DEFENDANTS, that
`
`medical provider agrees to accept reimbursement that is discounted from the medical provider's
`
`total billed charges in exchange for the benefits of being a preferred or contracted provider.
`
`Those benefits include an increased volume of business because the health plan provides
`
`financial and other incentives to its members to receive their medical care and treatments from
`
`the contracted provider, such as advertising that the provider is "in network," and allowing the
`
`members to pay lower co-payments and deductibles to obtain care and treatment from a
`
`contracted provider. When health plans such as DEFENDANTS receive claims from in-network
`
`providers, they adjust the total charges submitted by the in-network provider and pay an agreed
`
`upon contract (“capitated”) rate to the in-network provider.
`
`16. Physicians offered and rendered medical services, care, equipment and
`
`treatment, and/or procedures to the Patients, who were members, insureds, or subscribers of
`
`DEFENDANTS, because the services Patients required were reasonable and necessary. For the
`
`Patients’ claims at issue here, the Physicians did in fact provide such medical services, care,
`
`treatment and/or procedures to the Patients. As part of discovery process, relevant Explanation
`
`of Benefits (EOBs) will be provided showing Patients’ name. The relevant CPT codes
`
`contained therein will show that each of these procedures was reasonable and necessary. Due to
`
`HIPAA regulations such information cannot be provided in the absence of a protective order.
`
`Because the medical services, care, treatment, and/or procedures rendered by the Physicians to
`
`the Patients were covered by the contractual relationship, DEFENDANTS were required by
`
`their own contracts to compensate the Physicians at their contracted rates.
`
`17. Medical records pertaining to the medical services, care, treatment, and/or
`
`procedures furnished by Physicians to the Patients were provided to DEFENDANTS by the
`
`Physicians. All information requested by DEFENDANTS relating to the medical services, care,
`
`
`
`
`
`
`
`5
`
`DEDICATED SLEEP LLC'S COMPLAINT
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`
`Case 2:21-cv-09269 Document 1-1 Filed 11/29/21 Page 7 of 29 Page ID #:10
`
`
`
`treatment, and/or procedure provided by the Physicians to the Patients was similarly supplied to
`
`DEFENDANTS by the Physicians.
`
`18. At all relevant times, the Physicians submitted their claims to DEFENDANTS
`
`accompanied with lengthy treatment reports, chart notes, receipts from patients for DME
`
`received and other medical records relating to the care and treatment Physicians rendered to
`
`Patients. No matter whether large or small, all of the Physicians' claims were submitted using
`
`CPT codes, Healthcare Common Procedure Coding System ("HCPCS"), and modifiers, as
`
`necessary.
`
`19. At all relevant times, Physicians expected to be reimbursed by DEFENDANTS at
`
`the lesser of its billed charges or the then contractual rate.
`
`20. Rather than simply pay Physicians the lesser of their billed charges or contractual
`
`rates, DEFENDANTS instead routinely and deliberately failed to reimburse Physicians' claims
`
`at all, forcing Physicians to exhaust time and energy first identifying and then appealing the
`
`improperly reimbursed claims. DEFENDANTS then went further and put all further claims for
`
`treatment from Physicians into a Special Investigations Unit investigation (“SIU”) such that no
`
`further payments were made during the period of the SIU, which remains ongoing, without any
`
`reason for continuing the same.
`
`21. DEFENDANTS have failed and refused to pay any monies, benefits, insurance
`
`proceeds, to the Physicians in connection with the medically necessary services, care, treatment,
`
`equipment and/or procedures rendered to the Patients by the Physicians. Further,
`
`DEFENDANTS have never adequately explained how they calculated, justified, rationalized or
`
`comprised their rejection of claims nor the instigation of an SIU.
`
`22. Often, the refusal to pay the Physicians by DEFENDANTS for the exact same
`
`procedures, treatments, equipment, or services were paid at contractual rates during the same
`
`year and previous years.
`
`23. DEFENDANTS have received claims from the Physicians for a number of years.
`
`As such, DEFENDANTS knew the rates that Physicians charged for various services and indeed
`
`contracted with Physicians to pay those rates. Moreover, DEFENDANTS knew, or should have
`
`
`
`
`
`
`
`6
`
`DEDICATED SLEEP LLC'S COMPLAINT
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`
`Case 2:21-cv-09269 Document 1-1 Filed 11/29/21 Page 8 of 29 Page ID #:11
`
`
`
`known, the amounts charged by other medical providers for medical services, care, and
`
`treatment, since it had received, reviewed and processed, numerous claims prior to processing
`
`the claims at issue in this litigation. It is standard practice in the healthcare industry for medical
`
`providers (whether in-network or not) to submit claims and bills showing the total charges to
`
`health plans such as DEFENDANTS and for DEFENDANTS to price those claims, based either
`
`upon the total charges or the contractual rates offered to network providers.
`
`24. Plaintiffs have also been disparaged by the pervasive under-reimbursement
`
`scheme. When a patient refers to his/her evidence of coverage documents promulgated by
`
`DEFENDANTS, he/she is led to believe that when he/she seeks in-network care their charges
`
`will be paid by DEFENDANTS at the contracted rate. When a patient obtains in-network
`
`treatment from providers such as the Physicians and the provider submits the bill to the insurer,
`
`a patient learns for the first time that he/she will not be fully reimbursed because the doctor's
`
`charges are alleged by DEFENDANTS to somehow breach the contractual arrangement. The
`
`physician-patient relationship is undermined, as the physicians have been branded as charlatans
`
`whose bills are inflated and unreasonable and the patient becomes responsible for the
`
`outstanding bills.
`
`25. At all relevant times, DEFENDANTS harmed Physicians by making improper
`
`determinations that reduced or refused the contractual reimbursement amounts for in-network
`
`providers without valid or compliant data to support such determinations. DEFENDANTS
`
`further harmed the Physicians by refusing to pay legitimate billing for the exact same services,
`
`billed and evidenced in exactly the same way as in previous years and in exactly the same way
`
`as DEFENDANTS purchased rival organization EVICORE continues to bill and have claims
`
`processed. As a result of these actions, the Physicians were financially harmed and forced to
`
`exhaust significant time and resources appealing DEFENDANTS’ unlawful determination
`
`through a process deliberately designed to deny, delay, and impede in-network physician
`
`providers such as Physicians with a significant market share from obtaining their rightful
`
`reimbursement.
`
`26. Upon information and belief, DEFENDANTS used and continue to use flawed
`
`
`
`
`
`
`
`7
`
`DEDICATED SLEEP LLC'S COMPLAINT
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`
`Case 2:21-cv-09269 Document 1-1 Filed 11/29/21 Page 9 of 29 Page ID #:12
`
`
`
`Assessment procedures and data. The improper use of this data has caused both Patients and
`
`Physicians to experience significant losses. Patients are harmed because payers like
`
`DEFENDANTS are not reimbursing in-network services at all, which results in in-network
`
`providers being forced to bill their patient for amounts charged, which exceed the amounts
`
`DEFENDANTS covers. In-network providers like Physicians are harmed because they are not
`
`always able to collect these balances from Patients and are forced to take a loss for their
`
`services. Moreover, because in-network providers are often unaware of the scheme that results
`
`in payers like DEFENDANTS failing to pay appropriate contractual rates, they are either
`
`powerless to appeal any such improper determinations or their efforts to appeal these
`
`determinations are futile. DEFENDANTS, by contrast, benefit from not paying in-network
`
`providers such as Physicians any money at all. Therefore DEFENDANTS have unlawfully
`
`retained money which otherwise belongs to the physicians for the services provided.
`
`DEFENDANTS’ ambiguity regarding its method for processing perfectly legitimate claims
`
`reflects their participation in this deceptive practice.
`
`27. DEFENDANTS’ Explanation of Benefit statements were initially uninformative,
`
`false, and misleading regarding the denial of the claims. Some sections of DEFENDANTS
`
`organization pay in the same way as they previously done over the last 8 years. However
`
`DEFENDANTS SIU investigation for just some of Physicians patients is nonsensical. This
`
`ambiguity has resulted in the inconsistent application of processing to deny Physicians their
`
`lawful reimbursement. Claims processing should be applied consistently by DEFENDANTS,
`
`but instead are selectively used to deny lawful reimbursement to Physicians.
`
`28. The Physicians' explanation of benefits and remittance advices received from
`
`DEFENDANTS often state that their billed charges are refused. However, nowhere on the
`
`explanation of benefit statements, remittance advices, or elsewhere in any other correspondence
`
`sent to the Physicians do DEFENDANTS discuss or identify why.
`
`/ / /
`
`/ / /
`
`/ / /
`
`
`
`
`
`
`
`8
`
`DEDICATED SLEEP LLC'S COMPLAINT
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`
`Case 2:21-cv-09269 Document 1-1 Filed 11/29/21 Page 10 of 29 Page ID #:13
`
`
`
`FIRST CAUSE OF ACTION
`
`FOR QUANTUM MERUIT
`
`(AGAINST ALL DEFENDANTS)
`
`29. Plaintiff incorporates all allegations set forth in the above paragraphs as though
`
`fully set forth herein.
`
`30. Physicians provided procedures, medical treatments, equipment and other medical
`
`medical services to their Patients, thereby benefitting DEFENDANTS and their insured Patients.
`
`31. DEFENDANTS have failed and refused to pay Physicians the appropriate amounts
`
`incurred by Physicians in rendering medical services, care, treatment, equipment, and/or
`
`procedures to Patients and have failed and refused to pay the contracted costs of those services.
`
`32. At all times herein mentioned, DEFENDANTS were required by contract to pay,
`
`agreed rates for the care provided by Physicians to the Patients, who were members or
`
`subscribers of or administered by DEFENDANTS. Alternatively, DS is informed and believes
`
`and thereon alleges that, at all times herein mentioned, and based on the circumstances of the
`
`parties' relationship to one another, the services furnished by Physicians were furnished at the
`
`implied request and/or insistence of the DEFENDANTS on behalf of the Patients.
`
`33. DEFENDANTS are required to reimburse Physicians at a quantum meruit rate for
`
`all services rendered to the Patients. The quantum meruit amount owed by DEFENDANTS to
`
`the Physicians is determined according to the customary charges that would be billed by the
`
`Physicians and/or other physicians in the absence of preferred provider or participating provider
`
`contractual rates. Based upon the Patients’ request that the Physicians render treatment,
`
`surgeries, procedures and medical services to the Patients, and the fact that DEFENDANTS
`
`were benefitted by the provision of such services by the Physicians, an obligation on the part of
`
`DEFENDANTS to make restitution to the Physicians arose.
`
`34. In Regents of the University of California v. Principal Financial Group, 412
`
`F.Supp.2d. 1037, 1042 (N.D. Cal. 2006), the federal trial court held that California law no
`
`longer requires that a defendant be benefitted in order for a quantum meruit claim to lie. In
`
`Earhart v. William Low Company, 25 Cal.3d. 503, 511, 158 Cal.Rptr. 887, 600 P.2d. 1344
`
`
`
`
`
`
`
`9
`
`DEDICATED SLEEP LLC'S COMPLAINT
`
`
`
`Case 2:21-cv-09269 Document 1-1 Filed 11/29/21 Page 11 of 29 Page ID #:14
`
`
`
`(1979), the California Supreme Court abrogated the common law requirement that there be
`
`benefit to the defendant in a quantum meruit claim, noting “that performance of services at
`
`another’s behest may itself constitute ‘benefit’ such that an obligation to make restitution may
`
`arise.” Thus, the fact that Mr. Donner was the direct beneficiary of the medical treatment “does
`
`not bar plaintiff’s claim.” Thus, the fact that DEFENDANTS' neither directly requested the
`
`treatment nor were the direct beneficiary of the treatment is not a bar to a claim for quantum
`
`meruit.
`
`35. The quantum meruit rate for the medical treatment the Physicians provided to
`
`Patients is an amount to be determined at trial. This amount represents the usual, customary and
`
`reasonable cost or charge for the services rendered by the Physicians. The Physicians have
`
`submitted statements to DEFENDANT for these amounts, and have made repeated demands that
`
`they be paid for the medical treatment provided to the Patients at usual, customary, and
`
`reasonable rates.
`
`36. DEFENDANTS have refused to pay, and continue to refuse to pay the Physicians
`
`for the whole of the sums owed to the Physicians for the treatment, equipment, procedures and
`
`medical services provided to the Patients, at usual, customary and reasonable rates.
`
`Accordingly, there is now due and owing an unpaid sum, plus statutory interest.
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`
`SECOND CAUSE OF ACTION
`
`FOR BREACH OF CONTRACT
`
`(AS AGAINST ALL DEFENDANTS)
`
`37. Plaintiff incorporates all allegations set forth in the above paragraphs as though
`
`fully set forth herein.
`
`38. DS is informed and believes and thereon alleges that, at all relevant times
`
`herein, that Physicians and DEFENDANTS had entered into a Contract for the provision of in-
`
`network medical services. A copy of the Contract is attached hereto and marked Exhibit 2.
`
`39. DS is informed and believes that clause 3.1 of the Contract clearly defines the
`
`
`
`
`
`
`
`10
`
`DEDICATED SLEEP LLC'S COMPLAINT
`
`
`
`Case 2:21-cv-09269 Document 1-1 Filed 11/29/21 Page 12 of 29 Page ID #:15
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`DEFENDANTS obligations for payment for the specific purposes of (1) ensuring that the
`
`Patients would have access to medically necessary treatments at healthcare facilities, and (2)
`
`ensuring that DEFENDANTS would pay for the healthcare expenses incurred by the Patients.
`
`40. DEFENDANTS knew or reasonably should have known that its insureds would
`
`seek medical treatment from the Physicians.
`
`41. DS is informed and believes that DEFENDANTS received and continue to
`
`receive valuable premium payments from the Patients under the relevant policies of insurance.
`
`42. Since Physicians agreed to treat the Patients for medically necessary treatment.
`
`DEFENDANTS, according to contract, were required to pay Physicians at the agreed rate for
`
`services rendered
`
`43. In consideration for the Physicians' agreement to treat the Patients, DEFENDANTS
`
`agreed to reimburse the Physicians for the expenses incurred by the Patients in the course of
`
`being treated and undergoing surgeries and/or procedures rendered by the Physicians and agreed
`
`to pay the Physicians a contracted rate for those services.
`
`44. The Physicians provided medical treatment to the Patients. DEFENDANTS have
`
`Failed and refused to pay, and continue to refuse to pay, the Physicians for the whole of the
`
`sums owed to the Physicians at appropriate rates for the medically necessary treatment,
`
`equipment and services provided to the Patients.
`
`45. As a result of the foregoing breach, the Physicians have been damaged by
`
`DEFENDANTS in the sum of $2,568,759.69. This is the total amount in respect of services
`
`billed that have not been paid. A schedule of matters is attached as Exhibit 1. Accordingly, there
`
`is now due and owing an unpaid sum, plus statutory interest thereon.
`
`23
`
`
`
`46.
`
`Furthermore, as a result of failure to pay for such an extended period, Plaintiff has
`
`24
`
`25
`
`26
`
`27
`
`lost approximately $1,577,000 of business (in addition to the amount not paid for services
`
`rendered) due to work that otherwise would have been carried out but has not been due to
`
`repeated nonpayment. This is calculated at an average of $83,000 per month since payments
`
`stopped in April 2020, namely 19 months to date and continuing at $83,000.
`
`28
`
`/ / /
`
`
`
`
`
`
`
`
`
`
`11
`
`DEDICATED SLEEP LLC'S COMPLAINT
`
`
`
`Case 2:21-cv-09269 Document 1-1 Filed 11/29/21 Page 13 of 29 Page ID #:16
`
`
`
`
`
`THIRD CAUSE OF ACTION
`
`FOR FRAUDULENT MISREPRESENTATION
`
`(AGAINST ALL DEFENDANTS)
`
`47.
`
`Plaintiff incorporates by reference each and every allegation contained in each
`
`paragraph above as though set forth at length.
`
`
`
`48.
`
`Plaintiff is informed and believes and thereon alleges that they were harmed because
`
`DEFENDANTS intentionally made a false representation that they would pay for covered services
`
`in the same way as they had done the previous 8 years. They intentionally made a false
`
`representation that they would pay for Plaintiff’s services provided to their insureds and members.
`
`They intentionally made a false representation that they would pay what was owed on receipt of
`
`billing and records. The contract was signed in February 2020 and the denial of payments began
`
`in April 2020 only 2 months later, despite 8 years of prior performance using exactly the same
`
`services and methodology.
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`
`
`49.
`
`The reality is that DEFENDANTS based on information and belief knew that these
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`representations were false. Prior to starting the contract, DEFENDANTS had already put in place
`
`arrangements with EVICORE to provide exactly the same services as Plaintiff. DEFENDANTS
`
`allowed EVICORE to bill for and thereafter be paid for exactly the same services as contracted
`
`between Plaintiff and Defendant as covered services. At the same time DEFENDANTS began a
`
`false investigation, which included automatically stopping payments for all the same services
`
`carried out and billed by Defendant. This was done in a cynical attempt to decrease Plaintiff’s
`
`market share and increase Evicore’s market share. They made these representations with the clear
`
`intention that Plaintiff would rely upon them to provide DEFENDANT’S members and insureds
`
`services and in particular to stop payments for DME that Plaintiff had paid for, ensuring the most
`
`difficult financial impact from failing to pay for services.
`
`25
`
`
`
`50.
`
`Plaintiff did reasonably rely on these representations and entered into the contract
`
`26
`
`and have subsequently been harmed.
`
`27
`
`/ / /
`
`28
`
`/ / /
`
`
`
`
`
`
`
`
`
`
`12
`
`DEDICATED SLEEP LLC'S COMPLAINT
`
`
`
`Case 2:21-cv-09269 Document 1-1 Filed 11/29/21 Page 14 of 29 Page ID #:17
`
`
`
`
`
`51. Due to DEFENDANTS misrepresentations and falsehoods Plaintiff has received
`
`significantly lower income from the bills in this scheme than could ever have been anticipated.
`
`The specific amount is to be determined at Trial.
`
`.
`
`52.
`
`Plaintiff’s reliance on DEFENDANTS’ representations was the substantial factor in
`
`the subsequent lack of payments at all.
`
`
`
`53.
`
`In performing the acts alleged herein, Defendants acted fraudulently, maliciously,
`
`and oppressively, all within the meaning of Civil Code §3294, hereby justifying an award of
`
`punitive and exemplary damages in the amount of $25,000,000.
`
`FOURTH CAUSE OF ACTION
`
`FOR DECLARATORY RELIEF
`
`(AGAINST ALL DEFENDANTS)
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`
`
`54.
`
`Plaintiff incorporates by reference each and every allegation contained in each
`
`13
`
`paragraph above as though set forth at length.
`
`14
`
`
`
`55. An actual controversy and dispute now exists between DS and DEFENDANTS, in
`
`15
`
`16
`
`17
`
`18
`
`that (i) DS contends that DEFENDANTS are responsible for making payments to DS for the
`
`medical services that DS rendered to the patients at issue in DS’s Complaint and (ii)
`
`DEFENDANTS contend that it has properly denied payment for the medical services rendered by
`
`DS at issue in DS’s Complaint.
`
`19
`
`
`
`56. As a direct and proximate result of the above-described dispute between the parties,
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`
`and to resolve such dispute, DS requests an order for this Court declaring that DS’s carried out
`
`the services, and must be paid for the medical services at issue in DS’s Complaint at the
`
`contractually agreed rate and that no further such payments should be denied.
`
`
`
`PRAYER FOR RELIEF
`
`WHEREFORE, Plaintiff, DEDICATED SLEEP LLC prays for judgment against
`
`DEFENDANTS as follows:
`
`1. For compensatory damages in the sum of $4,145,759.69, plus statutory interest;
`
`2. For punitive damages in the sum of $25,000,000;
`
`
`
`
`
`
`
`13
`
`DEDICATED SLEEP LLC'S COMPLAINT
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`
`Case 2:21-cv-09269 Document 1-1 Filed 11/29/21 Page 15 of 29 Page ID #:18
`
`3. For costs of suit herein; and
`
`4. For such other and further relief the Court as deems just and appropriate.
`
`
`
`
`
`DATED: October 25, 2021
`
`Respectfully submitted,
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`By: ________________________
`
`
`
`
`
`ALAN NESBIT
`Attorney for Plaintiff
`DEDICATED SLEEP LLC.
`
`
`
`
`
`14
`
`DEDICATED SLEEP LLC'S COMPLAINT
`
`
`
`Case 2:21-cv-09269 Document 1-1 Filed 11/29/21 Page 16 of 29 Page ID #:19
`
`Plaintiff, DEDICATED SLEEP LLC. hereby demands a jury trial as provided by law.
`
`DEMAND FOR JURY TRIAL
`
`
`
`
`
`
`
`DATED: October 25, 2021
`
`
`
`Respectfully submitted,
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`By: ________________________
`
`
`
`
`
`ALAN NESBIT
`Attorney for Plaintiff
`DEDICATED SLEEP LLC.
`
`15
`
`DEMAND FOR JURY TRIAL
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`
`
`
`Case 2