Case 5:20-cv-02251-EJD Document 83 Filed 03/29/21 Page 1 of 25
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`SAN JOSE DIVISION
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`PACIFIC RECOVERY SOLUTIONS, et al.,
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`Plaintiffs,
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`v.
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`CIGNA BEHAVIORAL HEALTH, INC., et
`al.,
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`Defendants.
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`Case No. 5:20-cv-02251-EJD
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`ORDER GRANTING DEFENDANTS’
`MOTIONS TO DISMISS
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`Re: Dkt. Nos. 39, 42
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`This case is one of three related cases pending before the Court in which a Cigna entity is
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`alleged to have reneged on its agreement to reimburse mental health provider claims at the usual,
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`customary, and reasonable (“UCR”) rates.1 Presently before the Court are separate motions to
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`dismiss brought by Defendants Cigna Behavioral Health, Inc. (“Cigna”) and Viant, Inc. (“Viant”).
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`Dkt. Nos. 39, 42. Plaintiffs filed oppositions (Dkt. Nos. 50-51) and Defendants filed reply briefs
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`(Dkt. Nos. 52-53). The Court finds it appropriate to take the motions under submission for
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`decision without oral argument pursuant to Civil Local Rule 7-1(b). For the reasons discussed
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`below, the Court will grant Defendants’ motions to dismiss.
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`I.
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`BACKGROUND2
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`Plaintiffs are a group of four out-of-network (“OON”) behavioral health care providers that
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`provide Intensive Outpatient Program treatment (“IOP”) in the United States. Compl. at 4, ¶¶ 67-
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`1 The other cases are Summit Estate, Inc. v. Cigna Health and Life Ins. Co., No. 20-cv-4697 EJD, and
`RJ v. Cigna Behavioral Health, Inc., No. 20-cv-2255 EJD.
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` 2
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` The Background is a brief summary of the allegations in the Corrected Class Action Complaint
`(hereinafter “Complaint”). See Dkt. No. 6.
`Case No.: 5:20-cv-02251-EJD
`ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS
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`Case 5:20-cv-02251-EJD Document 83 Filed 03/29/21 Page 2 of 25
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`70. Pacific Recovery Solutions d/b/a Westwind Recovery (“Westwind”), is a California Limited
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`Liability Company and a duly licensed behavioral health treatment provider with a primary place
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`of business in Los Angeles, CA. Id. ¶ 68. Miriam Hamideh PhD Clinical Psychologist Inc. d/b/a
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`PCI Westlake Centers (“PCI Westlake”), is a California corporation and a duly licensed behavioral
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`health treatment provider with a primary place of business in Westlake Village, CA. Id. ¶ 69.
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`Bridging the Gaps, Inc. (“BTG”), is a Virginia corporation and duly licensed behavioral health
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`treatment provider with a primary place of business in Winchester, VA. Id. ¶ 70. Summit Estate
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`Inc. d/b/a Summit Estate Outpatient, is a California corporation and duly licensed behavioral
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`health treatment provider with a primary place of business in Saratoga, CA 95070. Id. They seek
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`to represent a class of similarly situated providers against Cigna, a Minnesota corporation with its
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`principal place of business in Eden Prairie, MN, and Viant, Inc. (“Viant”), a third-party “repricer”
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`incorporated in Nevada with its principal place of business in Naperville, IL. Id. ¶¶ 1, 18, 71-72.
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`Prior to providing treatment to patients insured by Cigna, Plaintiffs confirmed with Cigna,
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`during an initial Verification of Benefits (“VOB”) call that the patient had active coverage and
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`benefits for OON IOP treatment services. Id. ¶¶ 3, 22, 30. For all the insurance claims at issue,
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`Cigna represented that the claims would be paid at a “percentage of the” UCR rates3, which Cigna
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`would calculate by using either Cigna’s “Maximum Reimbursable Charge” (“MRC”) I or II
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`methodologies. Id. ¶¶ 3, 9-12. Alternatively, Cigna would arrive at the UCR rates “based on rates
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`charged by similar providers in a similar geographic area.” Id. ¶ 12. During the VOB call, none
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`of the Plaintiffs were told by Cigna that their claims could be subject to third-party pricing by
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`Viant. Id. ¶ 36. Rather, Plaintiffs specifically asked and were told that a patient’s claims were not
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`subject to third party repricing. Id. ¶¶ 233-34.
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`3 Elsewhere, Plaintiffs allege that Cigna promised it would “pay rates based upon UCR” (id. ¶ 18);
`communicated and represented that Plaintiffs would be reimbursed at the UCR (id. ¶¶ 22, 99); told
`Plaintiffs that benefits were paid at UCR rates (id. ¶¶ 30, 137); verified that claims will be
`paid/reimbursed at UCR rates (id. ¶¶ 135, 146); represented that it would pay providers at the
`UCR rate (id. ¶157); routinely represented that benefits were available at a UCR rate (id. ¶ 171);
`and represented that benefits were determined based on the UCR rate (id. ¶ 174).
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`Case No.: 5:20-cv-02251-EJD
`ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS
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`Northern District of California
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`United States District Court
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`Case 5:20-cv-02251-EJD Document 83 Filed 03/29/21 Page 3 of 25
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`In reliance upon Cigna’s representations, Plaintiffs agreed to treat Cigna’s insured and
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`timely submitted bills on industry standard forms and in keeping with industry practices. Id. ¶¶ 3,
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`12, 138-40, 142. These claim forms indicated that Plaintiffs are assignees of the member benefits.
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`Id. ¶ 139. Pursuant to contract, patients were responsible for paying Plaintiffs the difference
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`between the amount Plaintiffs billed and the amount Cigna reimbursed. Id. ¶¶ 157, 161, 243.
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`Contrary to Cigna’s representations, Cigna did not pay at the UCR rates. Id. ¶ 18. Instead,
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`Cigna engaged Viant to negotiate reduced reimbursements with IOP treatment providers. Id.
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`Cigna sent claims to Viant via an Electronic Data Interchange (“EDI”), which included a “repriced
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`rate” that represented the maximum that Viant was authorized to negotiate with providers. Id. ¶
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`112. After Viant received the EDI, it sent providers a proposed payment for claims at reduced
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`reimbursement rates. Id. ¶ 114. These reduced reimbursement rates are not derived from a
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`calculation of the UCR rates, notwithstanding Viant’s representations to the contrary. Id. ¶¶ 18,
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`46, 116. Nor are they set based on the insured’s plan terms or language. Id. ¶¶ 43-44. Rather,
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`Plaintiffs allege on information and belief that the reduced reimbursement rates represent the
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`lowest payment amount that a Viant representative convinced a provider to accept and are
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`“arbitrary, capricious[,] and unreasonably low.” Id. ¶¶ 97, 117. At no point have Cigna and Viant
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`disclosed their pricing methodologies. Id. ¶¶ 175, 246. Viant only tells Plaintiffs that pricing is
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`determined by a “proprietary database.” Id. ¶ 254-55.
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`At the time Viant made its offers to Plaintiffs, it also sent a “patient advocacy letter”
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`(“PAD” letter) to the patient, claiming to represent the patient in a negotiation to reduce the billed
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`amount. Id. ¶ 118. Viant, however, does not have patient authorization to negotiate billed charges
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`on behalf of patients. Id. ¶ 235.
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`Cigna then paid the claims at issue at the reduced Viant rate, which often resulted in
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`patients being left to pay for more than ninety percent of their care. Id. ¶ 19. Cigna and Viant
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`allegedly “collude[d] to illegally withhold these [OON] benefits” to avoid paying tens, and
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`sometimes hundreds, of thousands of dollars per patient and to drive [OON] providers out of
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`business. Id. ¶¶ 20, 41. The amounts that should have been paid to health care providers were
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`Case No.: 5:20-cv-02251-EJD
`ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS
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`Northern District of California
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`Case 5:20-cv-02251-EJD Document 83 Filed 03/29/21 Page 4 of 25
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`allegedly unjustly retained and used to pay a “kick-back” to Viant. Id. ¶ 20.
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`Every claim at issue is for IOP behavioral health treatment for which Cigna failed to pay at
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`the UCR rates. Id. ¶¶ 21, 164. Coverage for the underlying medical treatment is not in dispute;
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`only the amount to be paid for the covered treatment is in dispute. Id. ¶ 32. Plaintiffs do not have
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`contractual relationships with Cigna or Viant. Id. ¶¶ 87, 94. Plaintiffs did not agree to the reduced
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`rates arrived at by Viant. Id. ¶¶ 19, 152-53, 241. When Plaintiffs or patients contacted Cigna to
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`dispute or challenge Viant’s reimbursement rates, Cigna refused to handle or process the claim.
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`Id. ¶ 120. Plaintiffs ultimately had no choice but to “balance bill” their patients for the amounts
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`that they were owed as a result of Cigna’s underpayment. Id. ¶ 161. If Plaintiffs did not “balance
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`bill,” Cigna would assert that Plaintiffs waived patient responsibility and therefore, Cigna had no
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`further obligation to pay any additional amounts on claims. Id. ¶ 247-48, 259. For all the claims
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`at issue, Plaintiffs’ patients were unable to pay Cigna’s shortfall. Id. ¶ 181.
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`Westwind has treated more than 10 patients for whom claims for payment of IOP
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`services were repriced by Viant. Id. ¶ 194. Prior to the admission of these patients, Westwind
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`verified the patient had active coverage by contacting Cigna. Id. Cigna’s representative stated
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`that “the patient’s benefits paid 70-90% of UCR for [OON] IOP services until the patients’ out of
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`pocket cost sharing responsibilities had been met.” Id. “Once these amounts, which included the
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`patient’s deductible and con-insurance, were met, Cigna would pay claims at 100% of UCR.” Id.
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`Further, Cigna told Westwind that Viant would not be involved in pricing the patient claims. Id. ¶
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`195. Based upon theses representations, Westwind admitted the patients into IOP treatment. Id. ¶
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`194. “In practically every instance, to assure payment at the maximum amount of 100% of UCR,
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`all patients satisfied their out of pocket cost-sharing responsibilities soon upon admission to
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`treatment, so all claims should have been paid at 100% of UCR.” Id. “Westwind and Cigna
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`understood that UCR rates were traditionally equivalent to 100% of Westwind’s billed charges.”
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`Id. ¶ 196. Viant’s repricing resulted in partial payments that, in sum, averaged only 11% of billed
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`Case No.: 5:20-cv-02251-EJD
`ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS
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`Case 5:20-cv-02251-EJD Document 83 Filed 03/29/21 Page 5 of 25
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`charges. Id. ¶ 197.4 Westwind has not been paid the remaining 89% of the billed amounts owed.
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`Id. Westwind estimates that it has been underpaid by at least $177,317.45. Id. ¶ 198.
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`PCI Westlake has treated more than 9 Cigna patients for whom claims for payment of IOP
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`services were repriced by Viant. Id. ¶ 201. PCI Westlake contacted Cigna prior to admission of
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`these patients and was given the same information as Westwind. Id. ¶¶ 201-03. Viant’s pricing
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`resulted in partial payments that, in sum, averaged only 14% of billed charges. Id. ¶ 204. PCI
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`Westlake has not been paid the remaining 86% of the billed amounts owed. Id. PCI Westlake
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`estimates that it has been underpaid by at least $238,108.22. Id. ¶ 205.
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`BTG has treated more than 21 patients for whom claims for payment of IOP services were
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`repriced by Viant. Id. ¶ 208. BTG contacted Cigna prior to admission of these patients and was
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`given the same information as the other Plaintiffs. Id. ¶¶ 208-10. Viant’s pricing resulted in
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`partial payments that, in sum, averaged only 14% of billed charges. Id. ¶ 211. BTG has not been
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`paid the remaining 86% of the billed amounts owed. Id. BTG estimates that it has been underpaid
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`by at least $736,998.47. Id. ¶ 212.
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`Summit Estate Inc. d/b/a Summit Estate Outpatient has treated more than 10 Cigna patients
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`for whom claims for payment of IOP services were repriced by Viant. Id. ¶ 215. Summit Estate
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`Inc. d/b/a Summit Estate Outpatient contacted Cigna prior to admission of these patients and was
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`given the same information as the other Plaintiffs. Id. ¶¶ 215-17. Viant’s pricing resulted in
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`partial payments that, in sum, averaged only 15% of billed charges. Id. ¶ 218. Summit has not
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`been paid the remaining 85% of the billed amounts owed. Id. Summit Estate Inc. d/b/a Summit
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`Estate Outpatient estimates that it has been underpaid by at least $325,000.00. Id. ¶ 219.5
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`4 Cigna interprets the Complaint as alleging that Cigna underpaid OON claims by not paying them
`at full billed charges. Reply at 1. Plaintiffs deny alleging that Cigna is required to pay 100% of
`providers’ charges and accuse Cigna of mischaracterizing the Complaint. Opp’n to Cigna’s Mot.
`at 1. The allegations in the Complaint speak for themselves. Plaintiffs repeatedly allege that
`Plaintiffs and Cigna “understood that UCR rates were traditionally equivalent to 100% of
`[Plaintiffs’] billed charges.” Id. ¶¶ 196, 203, 210, 217.
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` 5
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` The Complaint alleges that Summit Estate Inc. d/b/a Summit Estate Outpatient has been
`“overpaid” by at least $325,000.00. Id. ¶ 219. The Court assumes that “overpaid” is a
`typographical error.
`Case No.: 5:20-cv-02251-EJD
`ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS
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`Case 5:20-cv-02251-EJD Document 83 Filed 03/29/21 Page 6 of 25
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`Based on the foregoing, Plaintiffs assert the following claims: (1) unfair and unlawful
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`business acts and practices in violation of California Business & Professions Code § 17200
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`(“UCL”) (id. ¶¶ 261-78); (2) intentional misrepresentation and fraudulent inducement (id. ¶¶ 279-
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`94); (3) negligent misrepresentation (id. ¶¶ 295-301); (4) civil conspiracy (id. ¶¶ 302-14): (5)
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`breach of oral and/or implied contract (id. ¶¶ 315-35); (6) promissory estoppel (id. ¶¶ 336- 49); (7)
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`violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) (id. ¶¶ 350-95);
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`and (8) violations of section 1 of the Sherman Act (id. ¶ 396-415). All of the claims are asserted
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`against both Defendants, with the exception of the breach of contract claim, which is asserted only
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`against Cigna.
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`II.
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`LEGAL STANDARDS
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`Federal Rule of Civil Procedure 8(a) requires a plaintiff to plead each claim with sufficient
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`specificity “to give the defendant fair notice of what the . . . claim is and the grounds upon which
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`it rests.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations omitted).
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`A complaint which falls short of the Rule 8(a) standard may be dismissed if it fails to state a claim
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`upon which relief can be granted. Fed. R. Civ. P. 12(b)(6).
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`To survive a Rule 12(b)(6) motion to dismiss, the complaint “must contain sufficient
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`factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v.
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`Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp., 550 U.S. at 570). A claim has facial
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`plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable
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`inference that the defendant is liable for the misconduct alleged. Id.
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`In evaluating the complaint, the court must generally accept as true all “well-pleaded
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`factual allegations.” Iqbal, 556 U.S. at 664. The court must also construe the alleged facts in the
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`light most favorable to the plaintiff. See Retail Prop. Trust v. United Bhd. Of Carpenters &
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`Joiners of Am., 768 F.3d 938, 945 (9th Cir. 2014) (the court must “draw all reasonable inferences
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`in favor of the nonmoving party” for a Rule 12(b)(6) motion). The court, however, “does not have
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`to accept as true conclusory allegations in a complaint or legal claims asserted in the form of
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`factual allegations.” In re Tracht Gut, LLC, 836 F.3d 1146, 1150-51 (9th Cir. 2016) (citing Bell
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`Case No.: 5:20-cv-02251-EJD
`ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS
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`Case 5:20-cv-02251-EJD Document 83 Filed 03/29/21 Page 7 of 25
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`Atl. Corp., 550 U.S. at 555-56); see also Sprewell v. Golden State Warriors, 266 F.3d 979, 988
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`(9th Cir. 2001) (“Nor is the court required to accept as true allegations that are merely conclusory,
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`unwarranted deductions of fact, or unreasonable inferences.”).
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`Claims sounding in fraud are subject to a heightened pleading standard. Fed. R. Civ. P.
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`9(b) (“In alleging fraud or mistake, a party must state with particularity the circumstances
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`constituting fraud or mistake.”); Vess v. Ciba-Geigy Corp., 317 F.3d 1097, 1103-1104 (9th Cir.
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`2003) (recognizing that claims “grounded in fraud” or which “sound in fraud” must meet the Rule
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`9(b) pleading standard, even if fraud is not an element of the claim). The allegations must be
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`“specific enough to give defendants notice of the particular misconduct which is alleged to
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`constitute the fraud charged so that they can defend against the charge and not just deny that they
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`have done anything wrong.” Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985).
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`Dismissal “is proper only where there is no cognizable legal theory or an absence of
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`sufficient facts alleged to support a cognizable legal theory.” Navarro v. Block, 250 F.3d 729, 732
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`(9th Cir. 2001). If claims are dismissed, a court should grant leave to amend unless “the pleading
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`could not possibly be cured by the allegation of other facts.” Cook, Perkiss & Liehe, Inc. v. N.
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`Cal. Collection Serv. Inc., 911 F.2d 242, 247 (9th Cir. 1990).
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`III. DISCUSSION
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`Cigna moves to dismiss the Complaint, asserting that (1) the state law claims are
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`preempted by the Employee Retirement Income Security Act of 1974 (“ERISA”); (2) the state law
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`claims are subject to dismissal under Rule 12(b)(6) because Plaintiffs are not entitled to be paid
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`100% of billed charges; (3) Plaintiffs lack standing to assert a RICO claim, and moreover the
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`claim has not been pled with particularity as required by Federal Rule of Civil Procedure 9(b),
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`including the elements of an association-in-fact and pattern of racketeering; and (4) the Sherman
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`Act claim is subject to dismissal because Plaintiffs lack standing and have not pled sufficient facts
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`to plausibly allege a per se unlawful price-fixing conspiracy. Viant’s arguments are either
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`identical to or substantially overlap Cigna’s arguments.
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`Case No.: 5:20-cv-02251-EJD
`ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS
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`Case 5:20-cv-02251-EJD Document 83 Filed 03/29/21 Page 8 of 25
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`A.
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`State-law Claims
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`Plaintiffs’ state law claims are based on a common core allegation: that Cigna
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`misrepresented during the VOB calls that it would reimburse Plaintiffs for OON IOP services at
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`UCR rates.
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`1.
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`Complete Preemption Under Section 502
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`Defendants contend that all of the state law claims should be dismissed because they are
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`preempted by section 502(a) of ERISA, 29 U.S.C. § 1132(a). The argument is unavailing because
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`despite its preemptive force6, section 502 is “a jurisdictional rather than a preemption doctrine.”
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`Summit Estate, Inc. v. Cigna Healthcare of Cal., Inc., 2017 WL 4517111, at *13 (N.D. Cal. Oct.
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`10, 2017) (quoting Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d 941, 945 (9th
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`Cir. 2009)).7 The Supreme Court created the doctrine of complete preemption under § 502(a) of
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`ERISA as a basis for federal question removal jurisdiction under 28 U.S.C. § 1441(a). Marin Gen.
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`Hosp., 581 F.3d at 945. “If a complaint alleges only state-law claims, and if these claims are
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`entirely encompassed by § 502(a), that complaint is converted from ‘an ordinary state common
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`law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule.’”
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`Id. (quoting Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 65-66 (1987)); see also Yaralian v.
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`Fastovsky, 2016 WL 552675, at *3 (C.D. Cal. Feb. 10, 2016) (“Even where a complaint alleges
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`only state law claims, if these claims are entirely encompassed by ERISA § 502(a), the complaint
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`is converted into a federal claim for purposes of the well-pleaded complaint rule.”). Thus,
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`complete preemption under §1132(a) provides a basis for federal question jurisdiction, not a basis
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`for dismissing Plaintiffs’ claims under Rule 12(b)(6). Summit Estate, Inc., 2017 WL 4517111, at
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`6 Aetna Health Inc. v. Davila, 542 U.S. 200, 209 (2004) (“[A]ny state-law cause of action that
`duplicates, supplements, or supplants the ERISA civil enforcement remedy conflicts with the clear
`congressional intent to make the ERISA remedy exclusive and is therefore pre-empted.”).
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` 7
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` See also Heldt v. Guardian Life Ins. Co. of Am., 2017 WL 980181, at *4 (S.D. Cal. Mar. 13, 2017)
`(“[C]omplete preemption under ERISA § 502 is more of a jurisdictional doctrine, as opposed to
`simply a preemption doctrine.”); Roohibour v. ILWU-PMA Welfare Plan et al., 2020 WL 472921,
`at *7 (C.D. Cal. Jan. 28, 2020) (granting motion to remand because state law claims were not
`preempted under section 502); Orthopedic Specialists of S. Cal. v. ILWU-PMA Welfare Plan, 2013
`WL 4441948, at *3 (C.D. Cal. Feb. 28, 2013) (same).
`Case No.: 5:20-cv-02251-EJD
`ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS
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`Case 5:20-cv-02251-EJD Document 83 Filed 03/29/21 Page 9 of 25
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`*13; see also Pac. Recovery Solutions v. United Behavioral Health, 481 F. Supp. 3d 1011, 1028
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`(N.D. Cal. Aug. 25, 2020).
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`2.
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`Conflict Preemption Under Section 514
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`Defendants next contend that Plaintiffs’ state law claims should be dismissed because they
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`are conflict preempted under section 514(a) of ERISA, 29 U.S.C. § 1144(a). This section provides
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`that ERISA “shall supersede any and all State laws insofar as they may now or hereafter relate to
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`any employee benefit plan.” 29 U.S.C. § 1144(a).8 “Generally speaking, a common law claim
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`‘relates to’ an employee benefit plan governed by ERISA ‘if it has a connection with or reference
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`to such a plan.’” Providence Health Plan v. McDowell, 385 F.3d 1168, 1172 (9th Cir. 2004)
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`(citing New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514
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`U.S. 645, 655-56 (1995)). Thus, there are two categories of state laws that section 1144(a)
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`preempts. First, ERISA preempts a state law if it has a “reference to” ERISA plans. Gobeille v.
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`Liberty Mut. Ins. Co., 136 S.Ct. 936, 943 (2016). “In evaluating whether a common law claim has
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`‘reference to’ a plan governed by ERISA, the focus is whether the claim is premised on the
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`existence of an ERISA plan, and whether the existence of the plan is essential to the claim’s
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`survival. If so, a sufficient ‘reference’ exists to support preemption.” Providence, 385 F.3d at
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`1172. Second, ERISA pre-empts a state law that has an impermissible “connection with” ERISA
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`plans. Id. “In determining whether a claim has a ‘connection with’ an employee benefit plan,
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`courts in this circuit use a relationship test. Specifically, the emphasis is on the genuine impact
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`that the action has on a relationship governed by ERISA, such as the relationship between the plan
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`and a participant.” Id. (citing Abraham v. Norcal Waste Sys., Inc., 265 F.3d 811, 820–21 (9th Cir.
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`2001) and Blue Cross of Cal. v. Anesthesia Care Assocs. Med. Grp., Inc., 187 F.3d 1045, 1052-53
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`(9th Cir. 1999)). The two categories of conflict preemption operate separately. Depot, Inc. v.
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`Caring for Montanans, Inc., 915 F.3d 643, 665 (9th Cir. 2019). Further, “ERISA preemption is
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`8 Complete preemption and conflict preemption are distinct and should not be conflated. Bay Area
`Surgical Mgmt., LLC v. Principal Life Ins. Co., 2012 WL 4058373, at *2 n.2 (N.D. Cal. Sept. 14,
`2012).
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`Case No.: 5:20-cv-02251-EJD
`ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS
` 9
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`Northern District of California
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`United States District Court
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`

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`Case 5:20-cv-02251-EJD Document 83 Filed 03/29/21 Page 10 of 25
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`not limited to state statutes and rules; common law causes of action that ‘relate to’ ERISA plans
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`are also preempted.” Del Castillo v. Cmty. Child Care Council of Santa Clara Cty., Inc., 2018
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`WL 2357698, at *10 (N.D. Cal. May 24, 2018).
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`Here, the Complaint suggests that the state law claims are “related” to ERISA plans.
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`Although Plaintiffs do not explicitly allege that their patients’ insurance plans are ERISA plans,
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`the Complaint refers to ERISA. Compl. ¶¶ 119, 358.9 Plaintiffs allege that “[f]or every claim at
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`issue, the patients possessed active policies of insurance that Cigna sold, underwrote, and/or
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`administered”; that prior to treatment, Plaintiffs confirmed with Cigna that each of the Plaintiffs’
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`patients had active coverage and benefits for OON IOP treatment; and that Cigna represented that
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`the claims at issue would be paid at a percentage of the UCR rate. Id. ¶¶ 2-3. Plaintiffs allege that
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`the parties’ understanding of the UCR rate was based on Cigna’s “published definition.” Id. ¶
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`330; see also id. ¶¶ 10 n.2 (describing MRC I and II reimbursement calculations published on
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`Cigna’s website), 11 n.3 (same).10 Plaintiffs allege that after providing patients’ services, they
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`submitted claim forms to Cigna. Plaintiffs indicated in the claim forms that they are assignees of
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`the patient’s benefits. All of these allegations suggest that Plaintiffs’ state law claims depend on
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`ERISA plans and their terms.
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`Plaintiffs argue that they “do not ask this Court to evaluate ‘UCR’ as a plan term” (Opp’n
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`to Cigna’s Mot. at 6); however, the allegations in the Complaint suggest otherwise, as discussed
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`9 Plaintiffs argue that Cigna “has made no showing that every patient with an underpaid claim had
`an ERISA plan.” Opp’n to Viant’s Mot. at 3. Relatedly, Plaintiffs argue that a “conflict
`preemption argument is entirely inappropriate at this stage of litigation.” Id. at 6. However, the
`Complaint refers to ERISA. When the affirmative defense of preemption is “apparent on the face
`of the complaint,” the complaint may be dismissed for failure to state a claim. Baker v. Chin &
`Hensolt, Inc., 2010 WL 147954, at *8 (N.D. Cal. Jan. 12, 2010).
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`10 Plaintiffs’ Opposition explains how, in their view, the MRC-1 pricing methodology is tied to the
`FAIR Health database and that their bills submitted to Cigna are less than the FAIR Health
`database benchmark amounts. Opp’n to Cigna’s Mot. at 1-3. This explanation is not in the
`Complaint and will not be considered. See Yamauchi v. Cotterman, 84 F. Supp. 3d 993, 1009
`(N.D. Cal. 2015) (“In determining the propriety of a Rule 12(b)(6) dismissal, a court may not look
`beyond the complaint to a plaintiff’s moving papers, such as a memorandum in opposition to a
`defendant’s motion to dismiss.”) (quoting Broam v. Bogan, 320 F.3d 1023, 1026 n.2 (9th Cir.
`2003) (emphasis in original)).
`Case No.: 5:20-cv-02251-EJD
`ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS
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`Case 5:20-cv-02251-EJD Document 83 Filed 03/29/21 Page 11 of 25
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`above. Moreover, Plaintiffs acknowledge in their Opposition brief that Cigna’s plans dictate
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`Cigna’s payment obligations. See Opp’n to Cigna’s Mot. at 6 (“When the Court ultimately orders
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`all [] claims reprocessed for ERISA and non-ERISA plans . . . then plan terms will apply.”) and 8
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`(“Cigna states that the plan terms control its obligation to pay Plaintiffs . . . Plaintiffs do not
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`dispute this.”). Plaintiffs’ state law claims as currently pled are preempted. See Wise v. Verizon
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`Commc’ns, Inc., 600 F.3d 1180, 1191 (9th Cir. 2010) (holding that state law claims predicated on
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`“theories of fraud, misrepresentation, and negligence” are preempted because they “depend on the
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`existence of an ERISA-covered plan to demonstrate that [the plaintiff] suffered damages”); Calif.
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`Spine and Neurosurgery Inst. v. Oxford Health Ins. Inc., 2019 WL 6171040, at *4 (N.D. Cal. Nov.
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`20, 2019) (dismissing claims for promissory estoppel and quantum meruit because they were
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`premised on an ERISA plan).
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`Notwithstanding the references to ERISA, Cigna’s plans and plan terms, Plaintiffs argue
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`that they are entitled to pursue their state law claims, citing Catholic Healthcare West-Bay Area v.
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`Seafarers Health & Benefits Plan, 321 Fed. Appx. 563 (9th Cir. 2008). In Catholic Healthcare,
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`the plaintiff’s complaint did not mention an assignment. Id. at 564. Rather, the complaint
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`asserted claims based on a contract directly between the third-party healthcare provider and
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`ERISA plan and representations between the two parties. Id. In fact, the plaintiff health care
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`provider represented to the Ninth Circuit during oral argument that it was alleging “implied
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`contract formation and misrepresentations that are completely independent of the terms and
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`meaning of an ERISA plan” and “any claims it might have had under [defendant’s] plan either had
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`been resolved or waived and should not be considered in determining the validity of its remaining
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`state law claims.” Id. at 565. Accordingly, the Ninth Circuit concluded that the state law claims
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`were not preempted. Id.
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`The instant action is distinguishable from Catholic Healthcare. As discussed above,
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`Plaintiffs’ Complaint refers to ERISA, as well as to patient plans and plan terms. Plaintiffs
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`indicate that they are assignees of their patients’ benefits. These various allegations suggest that
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`Plaintiffs’ state law claims are not “completely independent” of the terms and meaning of an
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`Case No.: 5:20-cv-02251-EJD
`ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS
` 11
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`Northern District of California
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`United States District Court
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`

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`Case 5:20-cv-02251-EJD Document 83 Filed 03/29/21 Page 12 of 25
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`ERISA plan. Moreover, unlike the plaintiff in Catholic Healthcare, Plaintiffs in the instant action
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`have not represented that any claims Plaintiffs might have had under Cigna’s plan(s) have been
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`resolved or waived. If there were such an allegation in the Complaint, Plaintiffs’ state law claims
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`would clearly be independent of Cigna’s plans and beyond the preemptive force of section 514(a).
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`See Port Medical Wellness, Inc. v. Connecticut Gen. Life Insur. Co., 233 Cal. Rptr. 3d 830, 848
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`(Ct. App. 2018) (observing that section 514(a) preemption does not reach a claim against an
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`ERISA plan if it is “based on an obligation between the plan and the provider separate from the
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`welfare benefit plan itself and does not inquire into entitlement to benefits under the plan.”);
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`Doctors Med. Ctr. of Modesto, Inc. v. The Guardian Life Ins. Co. of Am., 2009 WL 179681 (E.D.
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`Cal. Jan. 26, 2009) (finding no preemption where provider alleged that insurance company had an
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`“independent contractual obligation” to pay for health care services provided to the patient); IV
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`Solutions Inc. v. United Healthcare Services, Inc., 2012 WL 12887401, at *8-9 (C.D. Cal. Nov.
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`19, 2012) (finding no preemption where plaintiff claimed “amount[s] precisely because [they] are
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`not owed under the patient[s’] ERISA plan[s]” but rather under the parties’ independent