“Before the Court is Defendants Cigna Healthcare Inc., Cigna Health and Life Insurance Co., Connecticut General Life Insurance Co., and Cigna Healthcare of Arizona’s (collectively, “Cigna”) Motion to Dismiss.

In October 2018, PSCC received a letter from Cigna that it had “conducted an internal audit and determined that PSCC had damaged Cigna in an amount of $777, 482.41 by allegedly engaging in ‘fee forgiveness.’” . . . by not consistently billing Cigna subscribers their full out-of-network cost share responsibility . . . and/or balance amounts.” The letter also noted that “a flag has been placed that will deny claims” until Cigna “can verify that the affected customers have paid their applicable cost share and balance amounts per their benefit agreement, ” and “Cigna will continue to deny claims until [PSCC] can establish proof of payments by patients to [Cigna’s] satisfaction.

Physicians Surgery Center of Chandler v. Cigna Healthcare Inc. (D. Ariz. 2021)

This provider reimbursement case outlines typical defenses to provider claims in the context of a motion to dismiss. The court’s opinion illustrates the essential requirements for a health care provider to navigate these defenses. In fact, any claimant would likely benefit from a review of these points in seeking judicial review of denied benefit claims.

Failure to Plead Specific Plan Language

First, Cigna argued that the plaintiff’s derivative claims fail because it did not plead specific plan language. The plaintiff must allege plan language stating its entitltment to benefits under ERISA § 502(a)(1)(B). Thus, the court observed that:

. . . a Ninth Circuit panel recently affirmed a district court’s finding that a plaintiff failed to state a claim because it did not “identify: (i) any ERISA plan . . .; or (ii) any plan terms that specify benefits that the defendants were obligated to pay but failed to pay.” Glendale Outpatient Surgery Ctr. v. United Healthcare Servs., Inc., 805 Fed. App’x 530, 531 (9th Cir. 2020).

The plaintiff invoked a Fifth Circuit case, Innova Hospital San Antonio, Ltd. Partnership v. Blue Cross, 892 F.3d 719 (5th Cir. 2018) wherein the court held that ERISA plaintiffs “should not be held to an excessively burdensome pleading standard that requires them to identify particular plan provisions in ERISA contexts when it may be extremely difficult for them to access such plan provisions.” The district court did not find that case compelling, however, since the plaintiff had not “outlined its efforts to obtain plan documents from Cigna.”

Therefore, the court dismissed these claims without prejudice, stating “if Cigna does not provide any plan, “the Court will permit these allegations to be made ‘on information and belief.’…”

Failure to Exhaust Administrative Remedies

Next, Cigna argued that, even if the plaintiff alleged the plan language, the plaintiff did not exhaust the administrative remedies under the ERISA plans at issue. In general, “before ERISA participants or beneficiaries can bring suit to recover plan benefits, they must exhaust a plan’s internal claims procedure.” Mack v. Kuckenmeister, 619 F.3d 1010, 1020 (9th Cir. 2010). Cigna argued the complaint should be dismissed for failure to plead exhaustion of administrative remedies.”

The district court rejected this argument, stating:

“[T]he Court rejects Cigna’s contention that PSCC must plead exhaustion in its Complaint. See Rivera v. Peri & Sons Farms, Inc., 735 F.3d 892, 902 (9th Cir. 2013) (noting that plaintiffs “ordinarily need not plead on the subject of an anticipated affirmative defense”) (internal quotation marks omitted). This Court, therefore, agrees with several other courts that the appropriate time to address exhaustion issues is at the summary judgment stage. See Albino, 747 F.3d at 1171; see also Russell v. CVS Caremark Corp., No. CV-16-00284-PHX-PGR, 2017 WL 1090677, at *3-4 (D. Ariz. Mar. 23, 2017).

Anti-Assignment Provision Argument

The defendant’s next ground for dismissal stemmed from alleged plan language that barred assignment of benefits to providers. Cigna argued that these provisions precluded PSCC from suing as an alleged assignee of “those Cigna plan members whose plan includes an anti-assignment provision.”

This argument failed to gain any traction since “anti-assignment language will generally not defeat standing at the motion to dismiss stage.” (See, NAMDY Consulting, Inc. v. Anthem Blue Cross Life & Health Ins. Co., No. 18-CV-03243-SJO (MRWx), 2019 WL 1034320, at *4 (C.D. Cal. Jan. 15, 2019)).

It would be inappropriate here to address an anti-assignment argument because this Court does not have access to these provisions and such an analysis would hinge on the interpretation of each provision. See Almont Ambulatory Surgery Ctr., LLC, 99 F.Supp.3d at 1150-51. Most importantly, because “Cigna did not request the Court to dismiss specific ERISA claims based on anti-assignment provisions, ” the Court need not address the efficacy of this argument now.[6] (Doc. 24 at 6.)…

Duplicate Remedies Argument

Cigna also attempted to have the plaintiff’s (a)(3) claims dismissed as duplicative. A claimant may not bring a claim for denial of benefits under § 502(3) when a claim under § 502(1)(B) will afford adequate relief.” Castillo v. Metro. Life Ins. Co., 970 F.3d 1224, 1229 (9th Cir. 2020). The district court declined to accept this argument, preferring to see the matter as pleading in the alternative.

The Ninth Circuit has clarified that claims under § 502(a)(1)(B) and § 502(a)(3), however, “may proceed simultaneously so long as there is no double recovery.” Moyle v. Liberty Mut. Ret. Benefit Plan, 823 F.3d 948, 961 (9th Cir. 2016) (as amended); see also Castillo, 970 F.3d at 1229. As highlighted in Moyle, this approach comports with the Federal Rules of Civil Procedure, which requires that “[a] pleading that states a claim for relief must contain . . . a demand for the relief sought, which may include relief in the alternative or different types of relief.” Fed.R.Civ.P. 8(a)(3).

Note: If plan documents are unavailable, this opinion suggests that the plaintiff should plead “on information and belief” and set forth allegations as to efforts made to obtain the plan documents.

“If PSCC seeks refuge in Innova’s “exception” to that pleading requirement, it must detail its efforts to obtain such documents in an amended complaint.”

Leave To Amend – The Court gave the plaintiff a roadmap for its amended complaint:

“[A] proposed amendment is futile only if no set of facts can be proved under the amendment to the pleadings that would constitute a valid and sufficient claim.” Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988).

Here, amendment would not be futile. PSCC can amend its complaint to include its efforts to obtain access to the plan documents at issue. If PSCC obtains only some, but not all, of the plans at issue, pleading that representative plan language would help it state a plausible claim for relief. On the other hand, if Cigna does not provide any plan, “the Court will permit these allegations to be made ‘on information and belief’” Almont Ambulatory Surgery Ctr, LLC, 99 F.Supp.3d at 1159. As the Court noted above, PSCC can also further allege information that it has since provided Cigna in a spreadsheet but failed to include in its Complaint. As for Count Two specifically, PSCC can bolster its allegations as to what remediable wrong exists and clarify its equitable relief, including “damages.” The Court therefore grants PSCC’s request for leave to amend.