Almont Ambulatory Surgery Center LLC et al v. UnitedHealth Group Inc et al

Filing 1396

MINUTES (IN CHAMBERS): ORDER GRANTING EMPLOYER AND PLAN DEFENDANTS' OMNIBUS MOTION TO DISMISS PLAINTIFFS' AMENDED COMPLAINT UNDER FED. R. CIV. P. 12(B)(6), AS WELL AS 12(B)(2), (4), AND (5), 20(A) AND 28 U.S.C. 1404(A) #1062 , #1070 , #1071 , #1072 , #1075 , #1077 , #1078 , #1080 , #1081 , #1082 , #1083 , #1084 , #1085 , #1086 , #1088 , #1089 , #1090 , #1091 , #1092 , #1093 , #1094 , #1095 , #1096 , #1097 , #1098 , #1100 , #1101 , #1105 , #1106 , #1107 , #1108 , #1109 , #1110 , #1112 , #1113 , #1114 , #1115 , #1116 , #1117 , #1118 , #1119 , #1121 , #1123 , #1124 , #1128 , #1130 , #1131 , #1132 , #1133 , #1134 , #1135 , #1136 , #1137 , #1138 , #1139 , #1140 , #1141 , #1142 , #1144 , #1145 , #1146 , #1147 , #1149 , #1152 , #1154 , #1155 , #1156 , #1157 , #1159 , #1160 , #1161 , #1162 , #1163 , #1164 , #1165 , #1168 , #1182 , #1203 , #1298 , #1377 , #1378 by Judge Michael W. Fitzgerald: The Omnibus Motion with respect to Count I is GRANTED with leave to amend. The Omnibus Motion as to Counts II, III, V, VI, and VII is GRANTED with leave to amend. The Omnibus Motion as to Count VIII is GRANTED with leave to amend. Finally, the Omnibus Motion as to Count IX is GRANTED with leave to amend. To the extent leave to amend is granted, the Court will issue a subsequent Order (based upon the recommendations of the parties in the statement they will file on 4/10/2015) setting a timeline for the filing of a Second Amended Complaint. See document for details. Court Reporter: Not Reported. (gk)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
Present: The Honorable MICHAEL W. FITZGERALD, U.S. District Judge
Deputy Clerk:
Rita Sanchez

Court Reporter:
Not Reported

Attorneys Present for Plaintiff:
None Present

Attorneys Present for Defendant:
None Present

Proceedings (In Chambers): ORDER GRANTING EMPLOYER AND PLAN
DEFENDANTS’ OMNIBUS MOTION TO DISMISS
PLAINTIFFS’ AMENDED COMPLAINT UNDER
FED. R. CIV. P. 12(B)(6), AS WELL AS 12(B)(2),
(4), AND (5), 20(A) AND 28 U.S.C. § 1404(A) [1062]
[1070] [1071] [1072] [1075] [1077] [1078] [1080]
[1081] [1082] [1083] [1084] [1085] [1086] [1088]
[1089] [1090] [1091] [1092] [1093] [1094] [1095]
[1096] [1097] [1098] [1100] [1101] [1105] [1106]
[1107] [1108] [1109] [1110] [1112] [1113] [1114]
[1115] [1116] [1117] [1118] [1119] [1121] [1123]
[1124] [1128] [1130] [1131] [1132] [1133] [1134]
[1135] [1136] [1137] [1138] [1139] [1140] [1141]
[1142] [1144] [1145] [1146] [1147] [1149] [1152]
[1154] [1155] [1156] [1157] [1159] [1160] [1161]
[1162] [1163] [1164] [1165] [1168] [1182] [1203]
[1298] [1377] [1378]
Before the Court is the Employer and Plan Defendants’ Omnibus Motion to
Dismiss Plaintiffs’ Amended Complaint Under Fed. R. Civ. P. 12(b)(6), as well as
12(b)(2), (4), and (5), 20(A) and 28 U.S.C. § 1404(a). (Docket No. 1062). The Court
notes that this master memorandum simply addresses arguments common to many of
the Employer and Plan Defendants. However, the Court will refer to this document as
the “Omnibus Motion,” and will apply the reasoning expressed herein to the pending
______________________________________________________________________________
CIVIL MINUTES—GENERAL
1

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
motions submitted by individual Employer and Plan Defendants. The Court read and
considered the papers on the Omnibus Motion (as well as Employer and Plan
Defendant Supplemental Memoranda), and held a hearing on April 1, 2015. For the
reasons stated below, the Court GRANTS the Motion.
The Omnibus Motion is GRANTED with leave to amend.
Count I is brought pursuant to 29 U.S.C. § 1132(a)(1)(B) (also referred to as
ERISA § 502(a)(1)(B)) to recover benefits under the terms of the various plans
implicated in this action (in addition to related relief under this provision). The Court
rules that Count I fails to adequately state a claim for benefits under the terms of the
relevant plans. However, it is quite likely that the deficiencies in Count I can easily be
corrected; it is a close call whether the First Amended Complaint (“FAC”) is sufficient.
Therefore, the Omnibus Motion as to this Count is GRANTED with leave to amend.
Count II is brought pursuant to 29 U.S.C. § 1132(a)(2) (ERISA § 502(a)(2)),
alleging various breaches of fiduciary duty and seeking removal of United as a plan
administrator and/or claims administrator for the plans at issue or, alternatively, an
order compelling United to honor the terms of the plans.
Count III is brought pursuant to 29 U.S.C. § 1132(a)(3) (ERISA § 502(a)(3)) for
injunctive and other equitable relief to address Defendants’ purported breaches of
fiduciary duties; among the relief sought in connection with this Count is an order
requiring the Defendants to timely re-process claims and provide a full and fair review
of both past and future claims.
Count V is brought pursuant to 29 U.S.C. § 1132(a)(3) (ERISA § 502(a)(3)) and
seeks plan reformation to correct purported discrimination against morbidly obese
participants.
Count VI is brought pursuant to 29 U.S.C. § 1132(a)(3) (ERISA § 502(a)(3))
and seeks the equitable remedy of surcharge due to purported breaches of fiduciary
duty.
______________________________________________________________________________
CIVIL MINUTES—GENERAL
2

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
Count VII is brought for production of documents pursuant to 29 U.S.C. §§
1024(b), 1104, 1133(2), as well as statutory and injunctive relief pursuant to 29 U.S.C.
§ 1132(c)(1) (ERISA § 502(c)(1)), and equitable relief pursuant to 29 U.S.C.
§1132(a)(3) (ERISA § 502(a)(3)).
As a jurisdictional issue, the Court rules that Plaintiffs’ alleged assignment does
not confer standing for these ERISA Counts. Consequently, the Omnibus Motion as to
Counts II, III, V, VI, and VII is GRANTED with leave to amend. Although the Court
is not convinced that Plaintiffs could plead additional facts to alter this conclusion,
they will be provided an opportunity to do so.
Count IV, based on estoppel, is brought against United only. It is therefore not
addressed in this Order except to help explain the Court’s reasoning in regard to
standing.
The Omnibus Motion as to Count VIII is GRANTED with leave to amend.
Count VIII is brought pursuant to the UCL. This Count purportedly seeks to redress,
inter alia, United’s allegedly discriminatory behavior against members of ERISA
plans, as well as United’s improper payment methods and violations of ERISA. The
Count also seeks redress for misrepresentations United allegedly made to Plaintiffs
regarding payment for claims. The relief sought in connection with this Count is an
injunction enjoining Defendants from engaging in further unfair business practices, as
well as disgorgement of any money that has been acquired from Plaintiffs by virtue of
the unfair practices. However, even if Plaintiffs allegedly suffered their own injuries,
it is clear that they are seeking to recover derivatively on behalf of their assignors in a
way that contravenes the holding of Amalgamated Transit Union, Local 1756 v.
Superior Court (“Amalgamated Transit”), 46 Cal.4th 993, 95 Cal. Rptr. 3d 605
(2009), that such derivative UCL actions must be brought as class actions. In re
WellPoint, Inc. Out-of-Network UCR Rates Litig., 903 F. Supp. 2d 880, 897-98 (C.D.
Cal. 2012).

______________________________________________________________________________
CIVIL MINUTES—GENERAL
3

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
The Omnibus Motion as to Count IX is GRANTED with leave to amend.
Count IX seeks declaratory relief. The Court rules that this Count is completely
preempted by ERISA. As such, this Count is converted into an ERISA Count and will
rise and fall with the asserted ERISA Counts that it duplicates.
In the process of granting the Omnibus Motion, the Court has rejected or
declined to adjudicate particular arguments. For instance, the Court has rejected
arguments that: the Employer Defendants are not proper defendants at this stage in the
litigation for an ERISA benefits Count; particular forum selection clauses mandate
transfer at this time; and joinder is improper.
In general, the Court does not view most plan terms as having been presented in
a way that renders them cognizable at present. The Court is quite sympathetic to
Defendants’ argument that Plaintiffs did not object to presentation of summary plan
descriptions (“SPDs”) when this was discussed in a colloquy with the Court on August
6, 2014. The Court also notes that some of the SPDs here may constitute the terms of
the plans themselves. However, pursuant to the Supreme Court’s decision in CIGNA
Corp. v. Amara, --- U.S. ---, 131 S.Ct. 1866 (2011), the Court does not have power to
consider the SPDs as plan terms without evaluating whether the SPDs constitute the
plan in each instance. The Court further observes that some Defendants arguably have
presented the relevant plan documents for consideration. However, for the reasons
discussed below, it is largely unnecessary at present to rely on these terms.
I.

BACKGROUND

On March 20, 2014, Plaintiffs initiated this action by filing a Complaint (Docket
No. 1). Plaintiffs subsequently filed the FAC on June 16, 2014 (Docket No. 840),
which is the current operative pleading.

______________________________________________________________________________
CIVIL MINUTES—GENERAL
4

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
A.

Parties

Plaintiffs in the present action consist of: (1) thirteen ambulatory surgery centers
that provide Lap-Band surgeries and services; and (2) Independent Medical Services,
Inc., which is a physicians’ medical group. (FAC ¶¶ 15, 48-49).
Defendants include: (1) UnitedHealth Group, Inc., a health insurance company
that allegedly did business in California through its subsidiaries; (2) UnitedHealthcare
Insurance Company; and (3) United HealthCare Services, Inc. (Id. ¶¶ 50-52).
Defendant OptumInsight, Inc. (also called “Optum” or “Ingenix”) is also a whollyowned subsidiary of UnitedHealth, and served as a “Special Investigations Unit” for
the claims at issue. (Id. ¶¶ 53, 915). The FAC refers to these four Defendants
collectively as “United” or the “United Defendants.” (Id. ¶ 54).
The other Defendants are ERISA plans (the “Plan Defendants”) and the
employers (the “Employer Defendants”) who sponsor those ERISA plans. (Id. ¶¶ 58848). The FAC refers to these Defendants, along with “the Administrators of the
ERISA Plans,” as the “ERISA Plan Defendants.” (Id. ¶ 849).
B.

Plaintiffs’ Standing

Plaintiffs allegedly have standing as assignees of their patients’ benefits. (Id. ¶
871). Every patient purportedly signed an “Assignments of Rights and Benefits,”
assigning the patients’ health insurance benefits and an array of related rights to their
providers (i.e., Plaintiffs). (Id. ¶¶ 871-73). The Assignment allegedly authorizes
Plaintiffs to “take all action necessary to pursue benefits claims on the patient’s
behalf.” (Id. ¶ 871).
Plaintiffs believe that Defendants’ plans do not preclude assignment because
during Plaintiffs’ course of dealings with Defendants, “neither United nor Defendants
ever referenced any anti-assignment provisions of any plan, ever refused to
communicate with Plaintiffs based on any such anti-assignment provisions, ever
______________________________________________________________________________
CIVIL MINUTES—GENERAL
5

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
refused to process any of Plaintiffs’ claims based on any such anti-assignment
provisions, or ever refused to pay any of Plaintiffs’ claims based on any such antiassignment provisions.” (Id. ¶ 875). Plaintiffs also allege that, to the extent the plans
have anti-assignment provisions, Defendants have waived the right to assert those
provisions. (Id. ¶ 879).
C.

United Defendants and ERISA Plan Defendants

The FAC alleges that the United Defendants acted as agents for each other and
for the ERISA Plan Defendants with regard to processing the claims at issue for LapBand services, including authorizing, receiving, pricing, and approving those claims.
(Id. ¶ 852).
The FAC alleges that United acted as an administrator for both (1) the fully
funded ERISA plans (i.e., fully insured by United), and (2) the self-funded ERISA
plans. (Id. ¶¶ 856-59). With regard to the fully funded ERISA plans, United is
allegedly responsible for both administering and paying the claims, and is the plan
administrator and an ERISA fiduciary for these plans. (Id. ¶ 856). With regard to selffunded ERISA plans, the plan pays the claims, but the FAC alleges that United
typically administered these plans pursuant to an administrative service agreement.
(Id. ¶¶ 857-858). Pursuant to the administrative service agreement, the self-funded
ERISA plans delegated to United the “authority and responsibility to administer claims
and make final benefits decisions.” (Id. ¶ 857). Among the administrative
responsibilities delegated to United would be “providing plan members with plan
documents, interpreting and applying the plan terms, making coverage and benefits
decisions, handling appeals of coverage and benefits decisions, and providing for
payment in the form of medical reimbursements.” (Id. ¶ 857). Some self-funded
ERISA plans did not specifically designate a plan administrator, but Plaintiffs believe
that United functioned as the de facto plan administrator and was “specifically
designated by the plan sponsor as the Claims Administrator.” (Id. ¶¶ 859- 60). As the
plan administrator and/or claims administrator, United had fiduciary duties under
______________________________________________________________________________
CIVIL MINUTES—GENERAL
6

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
ERISA “to ensure that out-of-network claims are properly priced and paid according to
the terms of the members’ plans.” (Id. ¶ 859).
The FAC alleges that the ERISA Plan Defendants knew or should have known
about United’s unlawful practices, and that by failing to prevent them, they “ratified
and/or participated” in them. (Id. ¶ 880).
D.

Primary Allegations

The cover page of the FAC lists thirteen Counts, but the body of the FAC alleges
only nine Counts. The omitted Counts listed on the cover page are: (1) breach of
implied-in-fact contract—authorized services/no authorization needed services; (2)
breach of implied-in-fact contract—authorized services/no authorization needed—
covenant of good faith and fair dealing; (3) estoppel; and (4) recovery for services
rendered. The nine Counts set forth in the body of the FAC are for: failure to pay
ERISA plan benefits under 29 U.S.C. § 1132(a)(1)(B); enforcement for breach of
fiduciary duty under 29 U.S.C. § 1132(a)(2); enforcement for injunctive and other
appropriate equitable relief, and full and fair review of ERISA claims under 29 U.S.C.
§ 1132(a)(3); estoppel under 29 U.S.C. § 1132(a)(3); reformation of plan terms under
29 U.S.C. § 1132(a)(3); equitable remedy of surcharge/unjust enrichment under 29
U.S.C. § 1132(a)(3); failure to produce documents under 29 U.S.C. §§ 1024(b), 1104,
and 1132(2); violation of the California Business and Professions Code section 17200,
et seq. (the “UCL”); and declaratory relief.
The core allegations in the FAC are that United engaged in a “deliberate, willful,
and concerted effort . . . to indefinitely avoid paying for Lap-Band” surgeries and
related services for patients who were morbidly obese. (Id. ¶¶ 2-3, 20).
Pursuant to the FAC, all of the patients relevant to this action had PPO insurance
allegedly administered by United, which allowed them to select out-of-network health
care providers. (Id. ¶ 4). The plaintiff surgery centers were out-of-network health care
providers, and thus, were “free to charge whatever amounts they deem[ed] appropriate
______________________________________________________________________________
CIVIL MINUTES—GENERAL
7

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
for their services.” (Id. ¶ 863). The FAC alleges that ERISA plans usually provide
that out-of-network providers will be paid at the usual, customary, and reasonable rate
(the “UCR rate”), or a percentage of the UCR rate. (Id. ¶ 864).
United allegedly either authorized Lap-Band-related procedures for these
patients or informed Plaintiffs that no authorization was needed. (Id. ¶ 5). Where
United authorized these procedures, it purportedly informed Plaintiffs “for nearly every
claim” that the cost of the procedure would be reimbursed at the providers’ UCR rates.
(Id. ¶ 22). The patients then allegedly underwent months of pre-operative tests.
(Id. ¶ 5).
The FAC alleges that United initially paid the claims for these services
“according to the terms of the health plans that it administered.” (Id. ¶ 23). However,
in 2010 it purportedly began to substantially underpay and then subsequently stopped
paying claims for a majority of pre-operative tests and the Lap-Band surgeries. (Id. ¶¶
6-7, 23). As a result of United’s alleged failure to pay for these services, the FAC
claims that some patients feared that United would fail to pay for future services.
(Id. ¶¶ 11-12). Accordingly, some patients have purportedly been afraid to have the
Lap-Band surgeries, and some patients who had the surgeries have purportedly been
afraid to conduct necessary follow-up medical procedures. (Id. ¶¶ 11-12). The FAC
also alleges that in the rare instances that Defendants paid Plaintiffs’ claims, “they paid
far less than Plaintiffs’ usual and customary fees.” (Id. ¶ 870).
The FAC alleges that the refusal of United and the defendant employers to pay
for these procedures violates ERISA and constitutes discrimination against morbidly
obese individuals. (Id. ¶ 13).
The FAC alleges that Defendants violated ERISA in numerous ways, including:
(1) providing pretextual excuses for refusing to pay claims, namely that they needed
additional medical records; (2) failing to provide specific reasons for non-payment of
claims (and, in some cases, refusal to process claims) or the plan provisions on which
the denial was based; (3) failing to state explicitly what additional records were needed
______________________________________________________________________________
CIVIL MINUTES—GENERAL
8

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
to perfect the claims; (4) failing to provide all requested plan and other documents used
to deny the claims; and (5) failing to provide a timely decision on Plaintiffs’ claims
(i.e., within 90 days of United Healthcare’s receipt of claim submission). (Id. ¶¶ 8-9,
13, 23-26, 29-30, 882, 884).
Plaintiffs allege that in “almost all instances,” Plaintiffs explicitly demanded that
Defendants produce specific plan documents justifying the denial of payment, but
Defendants refused to do so. (Id. ¶ 31). On information and belief, Plaintiffs also
allege that the terms of the health benefit plans administered by United do not permit it
to deny Plaintiffs’ claims. (Id. ¶ 32). However, United allegedly conveyed fabricated
rationales of denials to Plaintiffs by issuing Explanation of Benefits forms or appeal
denial letters, which contained no actual reasons for denial. (Id. ¶ 882 (listing
rationales for denial)). The FAC alleges that Defendants owe hundreds of millions of
dollars for the services that Plaintiffs provided, and hundreds of millions of dollars in
ERISA penalties. (Id. ¶ 14).
E.

Pending Motions to Dismiss

A Briefing Schedule was issued (Docket No. 929, amended slightly by Docket
No. 1054) establishing an Omnibus motion to dismiss schedule. This Schedule allows
for one master 50-page memorandum to be filed on behalf of the employers and the
plans (collectively referred to as the “Plan Defendants” in the Briefing Schedule) by
lead counsel (Dorsey & Whitney LLP and Walraven & Westerfeld LLP)—the
Omnibus Motion. The Briefing Schedule also permits another memorandum from the
United Defendants—referred to herein as the “United Motion.” Moreover, it allows
for employers/plans to file their own three-page briefs (“Supplemental Memoranda”)
applying the arguments in the other motions to dismiss to their particular
circumstances.
Prior to the Briefing Schedule, a motion to dismiss was filed by Defendants
Aegon USA, LLC and Aegon Companies Flexible Benefits Plan (the “Aegon
Motion”). (Docket No. 489). Another was filed by Defendants Baker Hughes Inc. and
______________________________________________________________________________
CIVIL MINUTES—GENERAL
9

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
Baker Hughes Inc. Welfare Benefits Plan (the “Baker Hughes Motion”). (Docket No.
728). The Court permitted these Motions to remain, notwithstanding the Briefing
Schedule.
In addition to the Aegon and Baker Hughes Motions, the Omnibus Motion
(Docket No. 1062) and United Motion (Docket No. 1061) have been filed, as well as a
number of Supplemental Memoranda from individual Defendants. All of the various
motions to dismiss will collectively be referred to herein as the “Motions.”
Plaintiffs submitted Oppositions to the Omnibus (Docket No. 1201), United
(Docket No. 1202), Aegon (Docket No. 1204), and Baker Hughes (Docket No. 1205)
Motions. The United Defendants filed a Reply (Docket No. 1218), and a Master Reply
(Docket No. 1216) was filed in support of the Omnibus Motion. The Briefing
Schedule also permitted Defendants to file one-page supplements to the Master Reply,
which many have done.
II.

EVIDENTIARY ISSUES
A.

Incorporation by Reference

“Ordinarily, a court may look only at the face of the complaint to decide a
motion to dismiss.” Van Buskirk v. Cable New Network, Inc., 284 F.3d 977, 980 (9th
Cir. 2002). However, “a district court ruling on a motion to dismiss may consider a
document the authenticity of which is not contested, and upon which the plaintiff’s
complaint necessarily relies.” Parrino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir. 1998)
(footnote omitted), superseded by statute on unrelated grounds.
Defendants have submitted various plan-related documents for the Court to
consider in adjudicating the Omnibus Motion. (See, e.g., Declaration of John
Christopher Nowlin (the “Nowlin Declaration”), Exs. A & B (Docket No. 1062-9);
Declaration of Brenda Rodenburgh (the “Rodenburgh Declaration”), Ex. A (Docket
No. 1062-10); Declaration of Bryan Westerfeld (the “Westerfeld Declaration”), Exs. 1______________________________________________________________________________
CIVIL MINUTES—GENERAL
10

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
4 (Docket No. 1062-11); Declaration of Heather M. McCann (the “McCann
Declaration”), Exs. 1-244 (Docket Nos. 1062-12 – 1062-30)). The FAC refers to and
relies on the plans. (See, e.g., FAC ¶ 880 (“Specifically, United manufactured various
pretextual rationales unrelated to the actual benefits available under the plans in order
to unlawfully prolong the claims administration process and ultimately deny Plaintiffs’
claims outright on grounds not justified by the terms of the benefit plans.”)).
Additionally, Plaintiffs have not challenged the authenticity of the plan-related
documents. Plaintiffs do challenge the propriety of relying on the terms of documents
that are not demonstrably reflective of the terms of the plans themselves. (Opp. to
Omnibus Mot. at 12-13). However, as discussed below, the Court will only consider
as determinative those terms that are contained in documents that demonstrably reflect
the terms of the plans during the relevant timeframe for each claim. Accordingly, the
Court can consider such plan-related documents that are germane to adjudication of the
Omnibus Motion under the doctrine of incorporation by reference.
B.

Requests for Judicial Notice

Plaintiffs also submit a Request for Judicial Notice in Support of Opposition to
Defendants’ Motion to Dismiss (the “Request”). (Docket No. 1203). Plaintiffs ask the
Court to take judicial notice of an order issued by another court in this District: Order
Granting Defendants’ Motion to Dismiss, Care First Surgical Center v. ILWU-PMA
Welfare Plan, et al., Case No. CV 14-01480-MMM (AGRx) (C.D. Cal. July 28, 2014)
(the “Care First Order”). (Request, Ex. A (Docket No. 1203-1)). Plaintiffs also ask
the Court to take judicial notice of Form 5500 filings made by Defendant Perkins &
Marie Callender’s, Inc., filed with the United States Department of Labor for the years
2009 through 2013. (Request, Ex. B (Docket No. 1203-2)).
The Court may take judicial notice of a fact “that is not subject to reasonable
dispute because it . . . can be accurately and readily determined from sources whose
accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b)(2). Courts may take
judicial notice of public records, including court records from another case. See United
States v. Howard, 381 F.3d 873, 876 n.1 (9th Cir. 2004) (taking judicial notice of court
______________________________________________________________________________
CIVIL MINUTES—GENERAL
11

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
records in another case). The Care First Order is a court record, and thus, it is taken
from sources whose accuracy cannot reasonably be questioned. Therefore, the Court
may take judicial notice of the Care First Order and does so now. But the Court “can
only take judicial notice of the existence of those matters of public record . . . but not of
the veracity of the arguments and disputed facts contained therein.” United States v. S.
Cal. Edison Co., 300 F. Supp. 2d 964, 974 (E.D. Cal. 2004) (emphasis in original).
With regard to the persuasiveness of the legal reasoning in the Care First Order, the
Court will give it its due weight.
Similarly, as to the public Form 5500 filings, the Court “may take judicial notice
of the existence of certain matters of public record . . . [but] may not take judicial
notice of one party’s opinion of how a matter of public record should be interpreted.”
S. Cal. Edison, 300 F. Supp. 2d at 974. See also In re Unumprovident Corp. Sec.
Litig., 396 F. Supp. 2d 858, 875 (E.D. Tenn. 2005) (taking judicial notice of forms
filed with the SEC, but noting that the court was “only taking judicial notice of the
existence of these documents and the specific statements and/or allegations contained
within the documents,” because “[i]t would be improper for the Court to rely upon
these documents to determine disputed factual issues and by taking judicial notice of
these documents at this time the Court in no way intends to make any determination as
to the truth of any of the facts alleged or otherwise asserted in the documents
themselves”). As such, the Court may take judicial notice of the existence of these
Form 5500 filings, and does so now.
Moreover, Defendants Perkins and Marie Callender’s LLC (“PMC”) and Perkins
Flexible Benefits Plan (the “PMC Plan”) have submitted a Request for Judicial Notice
in Support of Defendants Perkins and Marie Callender’s LLC and Perkins Flexible
Benefits Plan’s Motion to Dismiss Plaintiffs’ Amended Complaint (the “PMC
Request”). (Docket No. 1160). The PMC Request asks this Court to take judicial
notice of: Findings of Fact, Conclusions of Law, and Order under Section 1129 of the
Bankruptcy Code and Rule 3020 of the Bankruptcy Rules Confirming Debtors’ Second
Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code
(PMC Request, Ex. A (Docket No. 1160-1)); and Debtors’ Second Amended Joint Plan
______________________________________________________________________________
CIVIL MINUTES—GENERAL
12

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
of Reorganization under Chapter 11 of the Bankruptcy Code (PMC Request, Ex. B
(Docket No. 1160-2)). For the reasons expressed above, the Court may take judicial
notice of the existence of these documents, and does so now.
Accordingly, the Request and the PMC Request are GRANTED.
III.

MOTION TO DISMISS

Defendants seek to dismiss the ERISA and state law Counts pursuant to Federal
Rules of Civil Procedure 12(b)(6), (4), (5), 20(A) and 28 U.S.C. § 1404(a).
In ruling on a motion under Federal Rule of Civil Procedure 12(b)(6), the Court
follows Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal,
556 U.S. 662 (2009). “To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on
its face.’” Iqbal, 556 U.S. at 678 (citations omitted). “‘All allegations of material fact
in the complaint are taken as true and construed in the light most favorable to the
plaintiff.’” Williams v. Gerber Prods. Co., 552 F.3d 934, 937 (9th Cir. 2008) (quoting
Stoner v. Santa Clara Cnty. Office of Educ., 502 F.3d 1116, 1120 (9th Cir. 2007))
(holding that a plaintiff had plausibly stated that a label referring to a product
containing no fruit juice as “fruit juice snacks” may be misleading to a reasonable
consumer).
“The motions authorized by Federal Rules 12(b)(4) and 12(b)(5) permit the
defendant to challenge departures from the proper procedure for serving the summons
and complaint and the contents of the former for purposes of giving notice of the
action’s commencement.” 5B Charles Alan Wright, Arthur R. Miller, et al., Federal
Practice and Procedure § 1353 (3d ed. rev. 2014) (footnote omitted). “An objection
under Rule 12(b)(4) concerns the form of the process rather than the manner or method
of its service. Technically, therefore, a Rule 12(b)(4) motion is proper only to
challenge noncompliance with the provisions of Rule 4(b) or any applicable provision
incorporated by Rule 4(b) that deals specifically with the content of the summons.” Id.
(footnote omitted). In contrast, Federal Rule of Civil Procedure 12(b)(5) permits
______________________________________________________________________________
CIVIL MINUTES—GENERAL
13

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
dismissal of an action based on insufficient service of process. The line between a
Rule 12(b)(4) and 12(b)(5) motion often becomes blurred in practice, such that
“[s]everal courts that have dealt with this problem simply have treated a combination
of the two motions as a proper procedure.” 5B Charles Alan Wright, Arthur R. Miller,
et al., Federal Practice and Procedure § 1353 (3d ed. rev. 2014) (footnote omitted).
“Once service is challenged, plaintiffs bear the burden of establishing that service was
valid under Rule 4.” Brockmeyer v. May, 383 F.3d 798, 801 (9th Cir. 2004) (citing 4A
Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1083 (3d ed.
2002 & Supp. 2003)). “[S]ervice of process is the means by which a court asserts its
jurisdiction over the person.” SEC v. Ross, 504 F.3d 1130, 1138 (9th Cir. 2007). “[I]n
the absence of proper service of process, the district court has no power to render any
judgment against the defendant’s person or property unless the defendant has
consented to jurisdiction or waived the lack of process.” Id. at 1138-39.
Federal Rule of Civil Procedure 20(a) permits the joinder of claims against
multiple defendants if the claims against each defendant arise out of the same
transaction or occurrence and any question of fact or law is common to all parties.
Fed. R. Civ. P. 20(a). Even if these requirements are met, however, the district court
must evaluate whether allowing joinder would “‘comport with the principles of
fundamental fairness’ or would result in prejudice to either side.” Visendi v. Bank of
Am., N.A., 733 F.3d 863, 870 (9th Cir. 2013) (quoting Coleman v. Quaker Oats Co.,
232 F.3d 1271, 1296 (9th Cir. 2000)) (internal quotation marks omitted). While
“[m]isjoinder of parties is not a ground for dismissing an action,” it is within the
discretion of the district court to “add or drop a party.” Fed. R. Civ. P. 21; see also
Visendi, 733 F.3d at 870 (9th Cir. 2013) (“Standing alone, ‘[m]isjoinder of parties is
not a ground for dismissing an action.’ Fed. R. Civ. P. 21. Rather, ‘the court may at
any time, on just terms, add or drop a party.’ Id.”).
Finally, pursuant to 28 U.S.C. § 1404(a), “[f]or the convenience of parties and
witnesses, in the interest of justice,” an action may be transferred to another “district or
division” where it may have been initially brought or a “district or division to which all
parties have consented.” 28 U.S.C. § 1404(a).
______________________________________________________________________________
CIVIL MINUTES—GENERAL
14

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
A.

Plaintiffs’ Standing for ERISA Counts

Plaintiffs’ First and Seventh Counts can be brought only by a participant or
beneficiary, according to ERISA. See 29 U.S.C. § 1132(a)(1)(B) (providing that a civil
action to recover benefits (i.e., Count I) may be brought by “a participant or
beneficiary”); 29 U.S.C. § 1132(c)(1) (providing that an administrator who fails to
comply with a document request (i.e., Count VII) may be personally liable to “such
participant or beneficiary”). Plaintiffs’ Second Count may be brought “by the
Secretary [of Labor], or by a participant, beneficiary, or fiduciary,” 29 U.S.C. §
1132(a)(2), and Plaintiffs’ Third, Fourth, Fifth, and Sixth Counts may be brought “by a
participant, beneficiary, or fiduciary,” 29 U.S.C. § 1132(a)(3).
Plaintiffs are neither participants nor beneficiaries in the plans, but rather are
health care providers. (FAC ¶¶ 15, 48-49). However, as discussed above, Plaintiffs
claim to have standing for their ERISA Counts by virtue of assignments received from
the relevant patients. (Id. ¶ 871).
Defendants argue that the assignments themselves are invalid, as they are
insufficiently definite:
Initially, all of Plaintiffs’ ERISA claims (including the claim for
benefits under ERISA § 502(a)(1)(B)) must be dismissed because they
have failed to allege they received a proper assignment from their
patients. The assignment that Plaintiffs quote states only that the
patient assigns their rights to “PROVIDERS,” without naming the
providers or otherwise identifying which party obtains the assignment.
Am. Compl. ¶873. Without any allegations demonstrating that these
particular Plaintiffs received assignments from their patients, all of
Plaintiffs’ ERISA claims must be dismissed.

______________________________________________________________________________
CIVIL MINUTES—GENERAL
15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
(Omnibus Mot. at 23). Further, Defendants argue that, even if the assignments are
sufficiently definite, they would not confer “the right to sue for anything other than a
claim for benefits under ERISA § 502(a)(1)(B).” (Id.).
The key question becomes, therefore, whether the alleged assignments provide
Plaintiffs with standing to bring their ERISA Counts.
1. ERISA Benefits Count (Count I)
a. Assignment of Rights to Benefits Under ERISA
A health care provider may have derivative standing to pursue ERISA benefits if
he or she was assigned the right to reimbursement by an ERISA plan beneficiary. See
Misic v. Bldg. Serv. Employees Health & Welfare Trust, 789 F.2d 1374, 1377 (9th Cir.
1986) (per curiam) (concluding that a health care provider had standing to sue in place
of his assignors, pursuant to valid assignments of the right to reimbursement under a
health care plan). See also In re WellPoint, Inc. Out-of-Network UCR Rates Litig.
(“WellPoint II”), 903 F. Supp. 2d 880, 896 (C.D. Cal. 2012) (“The Ninth Circuit has
long recognized that assignments of benefits are sufficient to convey standing on an
assignee to sue a plan directly under § 1132(a)(1)(B).”).
b. Whether Alleged Assignments Confer Standing for ERISA
Benefits Count (Count I)
Although many cases discuss the nuances of assignment breadth, Defendants fail
to cite any authority that explicitly addresses the issue of an allegedly indefinite
assignee. (See Omnibus Mot. at 23).
The “Assignment of Rights and Benefits” Plaintiffs allegedly secured from
“each patient” purportedly provides as follows:
I authorize my insurance company and/or my healthcare contract with
my employer (collectively, the “INSURANCE COMPANY”) to direct
______________________________________________________________________________
CIVIL MINUTES—GENERAL
16

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
all payments for all professional and medical benefits under my
current policy as payment for services rendered directly to
PROVIDER(s) and/or FACILITY(s) providing services or their
designated associates or assignee(s) (collectively “PROVIDERS”). I
assign, whether signing as patient or patient’s agent, all rights and
benefits under my contract with my INSURANCE COMPANY, to
any and all PROVIDERS. I give express right to PROVIDERS to
obtain the insurance and benefits policy booklet, and ALL policy
information from INSURANCE COMPANY, employer or any of
their associates or agents. I also provide express consent and give
full rights to PROVIDERS to appeal on my behalf to INSURANCE
COMPANY or my employer or any of their associates or agents for
any reason. I also authorize the release of any information pertinent to
my case to any insurance company, adjuster, attorney or other party(s)
involved in this case.
I authorize PROVIDERS to initiate complaint(s) to the Insurance
Commissioner or any other agency for any reason on my behalf.
The assignment further permits PROVIDERS to obtain from
INSURANCE COMPANY and employer or any of their agents or
associates all information necessary for the determination of
benefits allowed under the contract and permits the direct
disclosure to PROVIDERS of all information including benefits
provided including benefits & payments made on my behalf,
limits and exclusions of benefits and reasons for denial of benefits
or reduction in charges for services rendered.
The assignment shall allow PROVIDERS to take all action
necessary to obtain the benefits I have, in good faith, been
promised by INSURANCE COMPANY and/or employer on my
behalf. All benefits are to be paid directly to PROVIDERS and
______________________________________________________________________________
CIVIL MINUTES—GENERAL
17

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
mailed directly to 269 S. Beverly Drive, Suite 353, Beverly Hills, CA
90212. A photocopy of this assignment shall be considered as
effective and valid as the original.
I understand that my insurance carrier may disallow certain diagnoses
or services as medically uncovered, medically unnecessary, cosmetic
or excluded. I agree to be responsible for payment of all such services
rendered to the patient.
...
This is a direct assignment of my rights and benefits under this
policy.
(FAC ¶ 873 (emphasis in original)).
In opposing Defendants’ contention that an assignment to “PROVIDERS” is
insufficient to provide Plaintiffs with standing, Plaintiffs allege first that this “nitpick”
does not reflect the fact that the assignment “does not refer to providers in the
abstract,” but rather defines “PROVIDERS” in the context of “any or all healthcare
providers who render medical services to the patient, including ‘their designated
associates or assignee(s).’” (Opp. to Omnibus Mot. at 6 (citing FAC ¶ 873)).
Plaintiffs later discuss how impractical it would be to receive assignments from
patients for specific surgeons and other professionals when patients would receive
services from a number of providers at the surgery centers, at multiple surgical
facilities, and often on different dates. (Id. at 7). Plaintiffs further maintain that such
an assignment is “both permitted and encouraged” by Misic:
Assignment of trust monies to health care providers results in
precisely the benefit the trust is designed to provide and the [ERISA]
statute is designed to protect. Such assignments also protect
beneficiaries by making it unnecessary for health care providers to
______________________________________________________________________________
CIVIL MINUTES—GENERAL
18

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
evaluate the solvency of patients before commencing medical
treatment, and by eliminating the necessity for beneficiaries to pay
potentially large medical bills and await compensation from the plan.
(Id. at 6 (quoting Misic, 789 F.2d at 1377)).
The discussion of the assignment’s context provided by Plaintiffs in the
Opposition to the Omnibus Motion seems to be overreaching, as a strict reading would
open the assignment up to seemingly innumerable providers who had nothing to do
with the transactions at issue here. However, for purposes of adjudicating the Omnibus
Motion, it follows from the allegations in the FAC that the Plaintiffs who performed
the procedures corresponding to the claims at issue (for which the assignments were
allegedly received) were the providers given the right to seek out benefits on the
patient’s behalf, even if the name provided in the assignment is somewhat indefinite in
the abstract.
As it stands, Plaintiffs have provided the text of the assignments that purportedly
gave them various rights. (See FAC ¶¶ 871 (“Prior to receiving treatment, every
patient of the Plaintiffs signs an ‘Assignments of Rights and Benefits’ form agreeing
to, inter alia, assign his or her health insurance benefits, as well as broad array of
related rights, to their providers, who are the Plaintiffs in this case.”), 872 (“Plaintiffs
received an assignment of benefits for every claim at issue in this litigation.”), 873
(“This form, which was titled ‘Assignment of Rights and Benefits,’ contained an
exhaustive list of the rights that each patient conveyed to Plaintiffs.”)). The alleged
assignments mention explicitly that they convey “rights and benefits” under the
relevant insurance policy. While there are certainly areas for more definiteness, the
Court rules that the alleged assignments are sufficiently definite to survive a motion to
dismiss on the issue of standing for Count I (for ERISA benefits pursuant to §
502(a)(1)(B)).
However, the Court does perceive that the “on my behalf” language in the
alleged assignment could create ambiguity. In discussing an argument that an
______________________________________________________________________________
CIVIL MINUTES—GENERAL
19

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
assignment was void on its face because it contained seemingly conflicting language
regarding designation of an assignee and authorized representative, the court in Care
First Surgical Center v. ILWU-PMA Welfare Plan (“Care First II”), Case No. 14-CV01480-MMM (Dec. 26, 2014) noted that, “the interpretation of an assignment clause,
like the interpretation of contract terms generally, is a question of the intent of the
parties and is typically a question of fact for the jury.” Care First II at 18 (quoting
Orion Tire Corp. v. Goodyear Tire & Rubber Co., 268 F.3d 1133, 1138 (9th Cir.
2001). Similarly, Care First II observed that “[i]f from the entire transaction and the
conduct of the parties it clearly appears that the intent of the parties was to pass title to
the chose in action, then an assignment will be held to have taken place.” Id. (quoting
McCown v. Spencer, 8 Cal. App. 3d 216, 225, 87 Cal. Rptr. 213 (1970)).
The purported assignment here does include the following language: “I assign,
whether signing as patient or patient’s agent, all rights and benefits under my contract
with my INSURANCE COMPANY, to any and all PROVIDERS.” (FAC ¶ 873). As
mentioned above, “[t]he Ninth Circuit has long recognized that assignments of benefits
are sufficient to convey standing on an assignee to sue a plan directly under §
1132(a)(1)(B).” WellPoint II, 903 F. Supp. 2d at 896. At this early stage in the
proceedings, the Court rules that the language of the assignment is sufficient to confer
standing for Count I, as the possible ambiguity discussed would seemingly be an
inappropriate issue to resolve at present.
2. Ancillary ERISA Counts
a. Assignability of Right to Pursue Ancillary ERISA Counts
Defendants also contend that, even if the assignment is sufficient to confer
standing for purposes of benefits recovery, it cannot confer standing for the ancillary
ERISA Counts (such as those for statutory penalties, breach of fiduciary duty,
equitable relief). (Omnibus Mot. at 23-25).

______________________________________________________________________________
CIVIL MINUTES—GENERAL
20

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
The Ninth Circuit has not explicitly stated that a beneficiary can assign the rights
to sue for breach of fiduciary duty and recover penalties for non-disclosure under 29
U.S.C. § 1132(c). See Eden Surgical, 420 F. Appx. at 697 (“[A]ssuming (without
deciding) that the right to bring claims under § 1132(c) is free-standing and may be
assigned . . . .”). See also Spinedex Physical Therapy USA Inc. v. United Healthcare of
Arizona, Inc. (“Spinedex”), 770 F.3d 1282, 1292 (9th Cir. 2014) (holding that patients
did not assign their rights to bring claims for breach of fiduciary duty in light of the
wording and context of purported assignment, though not discussing whether rights
might otherwise have been assignable).
However, the Ninth Circuit’s rationale in Misic for concluding that ERISA does
not prohibit the assignment of ERISA benefits extends to the ERISA Counts for breach
of fiduciary duty and non-disclosure. In Misic, the Ninth Circuit’s holding was driven
by its determination that assignment of ERISA benefits would “facilitate the receipt of
health care benefits by beneficiaries.” Simon v. Value Behavioral Health, Inc., 208
F.3d 1073, 1081 (9th Cir. 2000) amended, 234 F.3d 428 (9th Cir. 2000) and overruled
on other grounds by Odom v. Microsoft Corp., 486 F.3d 541 (9th Cir. 2007) (en banc)
(summarizing the reasoning in Misic); see also Misic, 789 F.2d at 1377 (reasoning that
“[h]ealth and welfare benefit trust funds are designed to finance health care,” and the
“[a]ssignment of trust monies to health care providers results in precisely the benefit
the trust is designed to provide and the statute is designed to protect”). As the Care
First Order noted, the assignment of claims for breach of fiduciary duty and nondisclosure would facilitate ERISA’s purposes. Care First Order at 19-20 (concluding
that the assignment of both rights would facilitate ERISA’s purposes). The Court
applies this same logic to all of the ancillary ERISA Counts at issue here.
Additionally, the Fifth Circuit has upheld derivative standing to sue for breach
of fiduciary duties under ERISA. See Texas Life, Acc. Health & Hosp. Serv. Ins. Guar.
Ass’n v. Gaylord Entm’t Co., 105 F.3d 210, 216 (5th Cir. 1997). Notably, in support of
its conclusion, the Fifth Circuit reasoned that derivative standing for a breach of
fiduciary duty claim “does not frustrate ERISA’s purposes,” but rather helps ensure
that funds are available for the plan. Id. at 214-16.
______________________________________________________________________________
CIVIL MINUTES—GENERAL
21

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
In light of the above cases, the Court is persuaded that the rights to pursue
ancillary ERISA Counts, such as those for breach of fiduciary duties and nondisclosure, may be assigned.
b. Whether Alleged Assignments Confer Standing for Ancillary
ERISA Counts
With regard to whether the language in the alleged assignments covers the
ancillary ERISA Counts, “[t]he Court’s task in interpreting the scope of an assignment
is to ‘enforce the intent of the parties.’” Klamath-Lake Pharm. Ass’n v. Klamath Med.
Serv. Bureau, 701 F.2d 1276, 1283 (9th Cir. 1983). “[T]he Ninth Circuit has recently
reiterated that courts must look to the language of an ERISA assignment itself to
determine the scope of the assigned claims.” WellPoint II, 903 F. Supp. 2d 880, 896
(C.D. Cal. 2012) (citing Eden Surgical Ctr. v. B. Braun Med., Inc., 420 Fed. Appx.
696, 697 (9th Cir. 2011)). “Once a claim has been assigned . . . the assignee is the
owner and the assignor generally lacks standing to sue on it.” Id. at 897.
In the Care First Order, the court determined that the assignment at issue was
sufficiently broad to cover claims for benefits, as well as claims for breach of fiduciary
duty by the plan administrator and penalties for non-disclosure. Care First Order at
23. In Care First, the assignment not only discussed “ERISA rights and plan
benefits,” but also states that the assignee “stands in the shoes” of the member, and
explicitly references an assignment of rights to sue for penalties and sue for benefits
under 29 U.S.C. § 1132(a)(1)(B). Id. at 22-23. Similarly, the Care First court found
that the assignment was sufficiently definite to cover claims for breach of fiduciary
duty under 29 U.S.C. § 1132(a)(2) because they granted the provider all of the patients’
“ERISA rights,” including the right to commence “any legal process relating to a claim
submitted on [the patients’] behalf for health insurance benefits” and “all causes of
action for judicial review.” Id. at 23. Pursuant to Misic, and distinguishing the
assignment in WellPoint II, the Care First Order grounded its decision of assignability
regarding rights to sue for benefits, penalties for non-disclosure, and breach of
fiduciary duty in the assignments’ grant of rights to bring claims under civil
______________________________________________________________________________
CIVIL MINUTES—GENERAL
22

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
enforcement provisions of ERISA § 502 and the “stands in the shoes” language. Care
First Order at 24.
While this Court is not bound by the reasoning of Care First Order, it is
instructive to compare the alleged assignments in this case to that in Care First. Here,
the assignment is not as explicit as the one discussed in the Care First Order.
Although it grants “all rights and benefits” under the insurance contract, it does not
specifically make reference to any ERISA provisions, does not mention claims for
breach of fiduciary duty, and does not reference “standing in the shoes” of the patient.
The assignment does, however, mention “direct disclosure to PROVIDERS of all
information including benefits provided including benefits & payments made on my
behalf, limits and exclusions of benefits and reasons for denial of benefits or reduction
in charges for services rendered.” Defendants argue, though, that the “all rights and
benefits under my contract with my INSURANCE COMPANY” and “all action
necessary to obtain the benefits I have, in good faith been, promised” language cuts
against Plaintiffs’ standing on the ancillary ERISA Counts. (Omnibus Reply at 33
(emphasis in original)).
As mentioned briefly above, the Ninth Circuit recently evaluated an assignment
in Spinedex that provided for plan payments to be made directly to the provider
(Spinedex), and noted that such payments would be considered:
[P]ayment toward the total charges for the professional services
rendered. THIS IS A DIRECT ASSIGNMENT OF MY RIGHTS
AND BENEFITS UNDER THIS POLICY. This payment, will not
exceed my indebtedness to the above mentioned assignee, and I have
agreed to pay, in a current manner, any balance of said professional
service charges over and above this insurance payment.
Spinedex, 770 F.3d at 1292. The court reasoned that “[t]he entire focus of the
Assignment is payment for medical services provided by” the relevant provider. Id.
Within this context, the court did not consider the “rights and benefits” language
______________________________________________________________________________
CIVIL MINUTES—GENERAL
23

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
sufficient to confer standing for a fiduciary duty claim. Id. Admittedly, Spinedex was
reviewing a summary judgment decision, but its analysis is instructive despite the
differing procedural postures of that case and this one.
The alleged assignment here purports to convey “all rights and benefits under”
the patient’s contract with his or her insurance company, just as the assignment in
Spinedex did. (FAC ¶ 873 (emphasis removed)). Nowhere is there any mention of a
transfer of rights that can be read to contemplate the right to bring suit to redress
purported breaches of fiduciary duty. In short, “[t]he Assignment nowhere indicates
that, by executing the assignment, patients were assigning to [the providers] rights to
bring claims for breach of fiduciary duty.” Spinedex, 770 F.3d at 1292 (citing Britton
v. Co–op Banking Grp., 4 F.3d 742, 746 (9th Cir. 1993) (“[I]t is essential to an
assignment of a right that the [assignor] manifest an intention to transfer the right to
another person. . . .” (quoting Restatement (Second) of Contracts § 324 (1981))). As
such, the Court rules that Plaintiffs lack standing for their breach of fiduciary duty
Count.
The Court also fails to see a manifestation of intent to assign the right to bring
many of the other ancillary ERISA Counts. For example, Count VII seeks, in large
part, statutory penalties pursuant to § 502(c) for Defendants’ alleged failure to produce
particular documents. The alleged assignment here gives Plaintiffs the “express right
to . . . obtain the insurance and benefits policy booklet, and ALL policy information
from” the insurance company. (FAC ¶ 873 (emphasis removed)). Although the
purported assignment discusses receipt of documents, even this is clearly within the
context of the receipt of benefits under the contract (“[t]he assignment further permits
PROVIDERS to obtain from INSURANCE COMPANY and employer or any of their
agents or associates all information necessary for the determination of benefits
allowed under the contract”) and, moreover, seems only to authorize Plaintiffs to
receive these documents, rather than effecting any transfer of rights. Again, without
such indication that the right to sue for penalties was assigned, the Court rules that
Plaintiffs lack standing to bring Count VII.
______________________________________________________________________________
CIVIL MINUTES—GENERAL
24

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
Similarly, the Court sees no indication that any transfer of rights was effected
with respect to the majority of Plaintiffs’ equitable Counts brought under § 502(a)(3).
Count III seeks equitable relief and Count VI seeks surcharge; both Counts are
premised upon alleged breaches of fiduciary duties. Count V seeks plan reformation,
which essentially asserts what Plaintiffs think the plans ought to say, not what they do
say. The plain text of the alleged assignments provides no indication that the parties
intended a transfer of the right to bring these Counts.
At the hearing, Plaintiffs discussed the fact that, to their knowledge, none of the
individual patient-assignors had brought suit under ERISA §§ 502(a)(2) or (a)(3),
presumably in an effort to demonstrate further that the intent of the assignors was that
their assignment be complete. In WellPoint II, the Court did note that the ERISA
Subscribers brought their own claims under §§ 1132(a)(2) and (a)(3), which it listed as
one factor in its analysis that Plaintiffs’ allegations were insufficient to demonstrate
that the provider plaintiffs were assigned the right to pursue those claims. WellPoint
II, 903 F. Supp. 2d at 897. Admittedly, the Court does not have the same situation
before it, but it nevertheless concludes that the wording of the alleged assignments
themselves is sufficient to support the Court’s ruling.
Finally, Plaintiffs’ § 502(a)(3) estoppel Count (Count IV) presents a more viable
standing argument. Although this Count is brought only against United, the Court
analyzes it here in the context of its other assignment rulings. At the hearing, United
argued that what Plaintiffs are really seeking via this Count is payment outside of the
plan terms (based on purported representations made by United), and, as such, this
does not seek to vindicate rights or benefits under the insurance contracts.
It is true that some allegations point to more of a claim predicated upon what
United allegedly said it would pay Plaintiffs for services (and not contingent on plan
terms). (See FAC ¶ 1043 (“ . . .[T]he United Defendants are estopped from
contending that the services it authorized are not payable due to lack of authorization,
and are estopped from refusing to pay the reasonable and customary value for these
services.”)). However, as discussed below, in the Ninth Circuit, the core of a federal
______________________________________________________________________________
CIVIL MINUTES—GENERAL
25

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
estoppel claim brought in the ERISA context is that the claimant is seeking benefits
based on representations made interpreting purportedly ambiguous plan terms. See
Pisciotta v. Teledyne Indus., Inc., 91 F.3d 1326, 1331 (9th Cir. 1996) (stating that, in
the Ninth Circuit, when the additional prerequisites of plan ambiguity and
representations made involving an oral interpretation of the plan are also alleged, “[a]n
ERISA beneficiary may recover benefits under an equitable estoppel theory upon
establishing a material misrepresentation, reasonable and detrimental reliance upon the
representation and extraordinary circumstances” (citations omitted)). The alleged
assignment here includes mention of the benefits “promised” to a participant: “The
assignment shall allow PROVIDERS to take all action necessary to obtain the benefits
I have, in good faith, been promised by INSURANCE COMPANY and/or employer on
my behalf.” The Court rules that the alleged assignment confers standing for
Plaintiffs’ Count for estoppel pursuant to § 502(a)(3). Of course, to the extent that this
Count ultimately seeks relief that is not based on the plan terms (and an interpretation
of an ambiguous provision therein), it will be unsuccessful under Ninth Circuit
authority for reasons unrelated to standing.
The Court notes that construing this alleged assignment in general presents some
difficulties. It is neither as manifestly all-encompassing as the assignment in Care
First, nor as cursory as those discussed in WellPoint II. Ultimately, however, the
Court considers its decision to be consistent with Spinedex and in keeping with the
intent of the parties, as expressed in the terms of the alleged assignment itself.
3. Anti-Assignment Clauses
Notwithstanding any plausible allegations regarding standing, Plaintiffs may still
lack standing if Defendants can demonstrate that the relevant plans contain valid and
unambiguous anti-assignment provisions: “ERISA welfare plan payments are not
assignable in the face of an express non-assignment clause in the plan.” Davidowitz v.
Delta Dental Plan of Cal., Inc., 946 F.2d 1476, 1481 (9th Cir. 1991).

______________________________________________________________________________
CIVIL MINUTES—GENERAL
26

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
Defendants argue that many plans contain anti-assignment language, such that
“Plaintiffs lack standing to sue for benefits under the terms of [those] plans.”
(Omnibus Mot. at 13). Plaintiffs, however, contend that the anti-assignment clauses
should not be given effect because: estoppel and waiver preclude application of the
provisions; clauses that require consent of the insurer are void under California law, as
are anti-assignment clauses contained in policies regulated by the California
Department of Insurance; United’s counsel cannot take purportedly opposite views
regarding anti-assignment clauses in this case and a related action; some purported
anti-assignment clauses are ineffective to bar provider standing for some or all Counts
in this case; and the United-Represented Defendants have failed to present the actual
plan documents such that the plan terms can be evaluated. (Opp. to Omnibus Mot. at
15-28). As to the last of these contentions, the Court will evaluate the effect of the
documents presented in connection with the Defendants’ arguments against Plaintiffs’
§ 502(a)(1)(B) Count. Regarding the rest of the arguments, the Court takes them in
turn in the following sections.
a. Anti-Assignment Provisions and Estoppel
i.

Estoppel and ERISA Benefits Decisions

As the Care First Order discusses, “[t]he Ninth Circuit has recognized that
estoppel principles can apply to an ERISA beneficiary’s substantive claim for recovery
of benefits.” Care First Order at 27-28 (citing Gabriel v. Alaska Elec. Pension Fund,
755 F.3d 647, 655-58 (9th Cir. 2014) (noting that “appropriate equitable relief”
pursuant to 29 U.S.C. § 1132(a)(3) may include holding the fiduciary “to what it had
promised” (quoting CIGNA Corp. v. Amara, --- U.S. ---, 131 S.Ct. 1866, 1879
(2011))).
However, in order for estoppel to apply to a substantive claim for ERISA
benefits, the Ninth Circuit requires that several elements be pleaded. First, the party
invoking estoppel must demonstrate the traditional elements of estoppel: “(1) the party
to be estopped must know the facts; (2) he must intend that his conduct shall be acted
on or must so act that the party asserting the estoppel has a right to believe it is so
______________________________________________________________________________
CIVIL MINUTES—GENERAL
27

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
intended; (3) the latter must be ignorant of the true facts; and (4) he must rely on the
former’s conduct to his injury.” Gabriel v. Alaska Elec. Pension Fund, 773 F.3d 945,
955 (9th Cir. 2014) (quoting Greany v. W. Farm Bureau Life Ins. Co., 973 F.2d 812,
821 (9th Cir. 1992) (internal quotation marks omitted). In addition, the party asserting
estoppel “must also allege: (1) extraordinary circumstances; (2) ‘that the provisions of
the plan at issue were ambiguous such that reasonable persons could disagree as to
their meaning or effect’; and (3) that the representations made about the plan were an
interpretation of the plan, not an amendment or modification of the plan.” Id. at 957
(quoting Spink v. Lockheed Corp., 125 F.3d 1257, 1262 (9th Cir. 1997)). See also
Pisciotta v. Teledyne Indus., Inc., 91 F.3d 1326, 1331 (9th Cir. 1996) (per curiam)
(explaining that the Ninth Circuit has required an ERISA beneficiary seeking to
recover benefits under a theory of equitable estoppel to plead material
misrepresentation, reasonable and detrimental reliance, and extraordinary
circumstances, as well as the additional prerequisites that the plan terms were
ambiguous and representations were made to the claimant involving an oral
interpretation of the plan).
ii.

Estoppel and Anti-Assignment Clauses in ERISA
Plans

The Ninth Circuit “has not expressly addressed how estoppel applies to the
threshold question of derivative standing.” Care First Order at 28. However, as the
Care First Order points out, “[t]hose courts that have considered the question have
applied estoppel in addressing standing, although, . . . they have not required that
plaintiff make the additional showing the Ninth Circuit mandates in the context of
recovery of benefits.” Id. at 28 (citing Riverview Health Inst. LLC v. Med. Mut. Of
Ohio, 601 F.3d 505, 521-22 (6th Cir. 2010); Hermann Hosp. v. MEBA Med. and
Benefits Plan (“Hermann II”), 959 F.2d 569, 574-75 (5th Cir. 1992), overruled on
other grounds by Access Mediquip, L.L.C. v. UnitedHealthcare Ins. Co., 698 F.3d 229
(5th Cir. 2012) (en banc) (per curiam); Productive MD, LLC v. Aetna Health, Inc., 969
F. Supp. 2d 901, 918-23 (M.D. Tenn. 2013); N. Jersey Brain and Spine Ctr. v. Saint
Peter’s Univ. Hosp., Civil Action No. 13-74 (ES), 2013 WL 5366400, at *7 (D.N.J.
______________________________________________________________________________
CIVIL MINUTES—GENERAL
28

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
Sept. 25, 2013); Gregory Surgical Servs., LLC v. Horizon Blue Cross Blue Shield of
N.J., Inc., Civil Action No. 06-0462 (JAG), 2007 WL 4570323, at *4 (D.N.J. Dec. 26,
2007)).
In Riverview, medical providers seeking to bring derivative claims argued that
under Sprague v. General Motors Corp., 133 F.3d 388 (6th Cir. 1998) (en banc), a plan
was estopped from relying on an anti-assignment provision when it failed to
demonstrate that it affirmatively informed participants and beneficiaries about the
provision or provided documentation of the anti-assignment provision to any of them.
Riverview, 601 F.3d at 521-22. In support of this argument, the providers submitted
affidavits from insureds which stated that they were never advised/informed/told that
their benefits were not assignable; the affidavits did not, however, state that the plan
had failed to make plan documents available. Id. at 522. However, the court rejected
providers’ argument, holding instead that Sprague did not support the providers’
contention, but rather that “Sprague merely says that a party’s reliance can rarely, if
ever, be reasonable or justifiable if such reliance is ‘inconsistent with the clear and
unambiguous plan terms of plan documents available to or furnished to the party.’”
Id. at 522 (emphasis in original) (quoting Sprague, 133 F.3d at 404).
Similarly, in Productive MD, the court held that Aetna was estopped from
asserting that a provider’s (Productive MD) assignment was rendered invalid by
operation of a plan’s anti-assignment clause when “Aetna was on notice that
Productive MD sought payment pursuant to a patient assignment, Productive MD was
not privy to and had no legal right to access the underlying plan terms, Aetna
possessed the underlying plans (and therefore knew their terms), Aetna denied
Productive MD’s technical component claims in whole or in part (purportedly) based
on Aetna’s interpretation and application of the plan terms—for reasons other than
validity of assignment—and, relative to the same underlying tests based on the same
insurance plans, Aetna paid the physicians who sought payment for the professional
component pursuant to assignments from the same patients.” Productive MD, 969 F.
Supp. 2d at 922. Moreover, for a period of time, “Aetna regularly paid Productive
MD’s claims made pursuant to patient assignments.” The court stated that these
______________________________________________________________________________
CIVIL MINUTES—GENERAL
29

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
circumstances led to Productive MD’s reasonable reliance that its assignments were
valid. Id. at 922-23. The court noted that, “[h]ad Aetna challenged Productive MD’s
assignments at any stage . . . Productive MD might have acted differently,” such as by
changing their assignment form to contain language acceptable Aetna, ensuring that
patients gave notice to Aetna when required to do so, or not performing tests “without
having the patients first confirm that they could assign their rights to Productive MD.”
Id. at 923. The Productive MD court found that these circumstances satisfied the fivefactor estoppel test articulated in Sprague:
(1) Aetna’s conduct plausibly amounted to a representation that
Productive MD’s patient assignments were acceptable both generally
and under the specific plan terms; (2) Aetna, in purporting to
administer the underlying policies, was presumptively aware of the
underlying policy terms; (3) Productive MD reasonably construed
Aetna as indicating that Productive MD could continue to receive
payment from Aetna for any medically necessary tests covered by the
applicable insurance plan; (4) to the extent that any policies restricted
or prohibited assignment, Productive MD was not aware—either
actually or constructively—of the underlying plan terms; and (5)
Productive MD reasonably relied upon Aetna's conduct to its potential
detriment in performing tests without demanding payment up front or
requiring its patients to inquire about their right to assign before
receiving tests.
Productive MD, 969 F. Supp. 2d at 923-24.
Finally, in Hermann II, the court held that a plan was estopped from asserting an
anti-assignment provision in its plan agreement when the documentation containing the
anti-assignment clause was never provided to the plaintiff, and it was the plan’s duty to
notify the plaintiff if it intended to rely on the provision, which it did not do. Hermann
II, 959 F.2d at 574. The plaintiff in Hermann II was a hospital that had provided
service to a patient and had received an assignment of rights from this same patient.
______________________________________________________________________________
CIVIL MINUTES—GENERAL
30

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
Id. The hospital called the plan when the patient was first admitted and was informed
by the plan that the patient was covered. Id. The patient was in the hospital for six
months and, during this time, the hospital repeatedly tried to receive payment for the
services provided; the plan, however, repeatedly postponed payment, but asserted that
it was merely “investigating” the claim. Id. The Hermann II court, in effect, imposed
on the plan an affirmative duty to inform the hospital of the anti-assignment clause if it
intended to rely upon it, and found that the plan’s “protracted failure to assert the
clause when [the hospital] requested payment pursuant to a clear and unambiguous
assignment of payments for covered benefits” resulted in the plan being estopped from
asserting the provision. Id. at 574-75.
The Care First Order notes that “Sprague, Riverview, Hermann [II], and
Productive MD all recognize – explicitly or implicitly – that the principle that a
representation that conflicts with the unambiguous terms of a plan agreement will not
support estoppel does not apply in the derivative standing context if the assignee can
show that it did not have, and could not have gained, access to the plan agreements.”
Care First Order at 34.
iii.

Estoppel and Anti-Assignment Clauses in the
Present Case

Plaintiffs argue that “[b]ecause Defendants engaged in a consistent course of
conduct that affirmed the presumptive validity of Plaintiffs’ assignments, and Plaintiffs
relied on this to their detriment, Defendants are estopped from raising any antiassignment clauses to defeat Plaintiffs’ standing.” (Opp. To Omnibus Mot. at 15).
Defendants combat the estoppel argument, inter alia, by asserting that Hermann
II, relied upon by Plaintiffs (and evaluated in the Care First Order), is distinguishable
since it “involve[ed] arguments raised by plans or claims administrators for the first
time in litigation as a reason for the adverse benefits determination.” (Omnibus Reply
at 19 (emphasis in original) (citing Hermann II, 959 F.2d at 574)). Defendants,
therefore, argue that the instant case is distinguishable because Defendants here are not
______________________________________________________________________________
CIVIL MINUTES—GENERAL
31

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
asserting the anti-assignment provisions as a basis for claim denial, but rather invoke
them to “preclude Plaintiffs from obtaining derivative standing to sue for benefits.”
(Id.). As such, Defendants argue, they “are not estopped from asserting the antiassignment clauses merely because they were not raised during the claims adjudication
process.” (Id.).
It is true that Plaintiffs’ allegations include mention of their lack of access to
relevant plan documents, such that they would presumably have been ignorant of the
true facts. (See, e.g., FAC ¶ 1077 (“Plaintiffs have suffered prejudice by Defendants’
[sic] to provide the documents that Plaintiffs requested of them because Plaintiffs were
unable to identify – and are still unable to identify – the specific plan provisions upon
which the Defendants purportedly based their denials. Thus, Plaintiffs are unable to
effectively appeal Defendants’ denials of their claims. Moreover, Plaintiffs lacked
access, and continue to lack access to, documents explaining or justifying United’s
internal claims review procedure, and the time limits applicable to such procedures.”)).
At the hearing, Defendants argued that the FAC fails to allege that Plaintiffs lacked
access to these documents from the patient-assignors, and, therefore, Plaintiffs’
estoppel argument fails. However, reading the FAC in the light most favorable to
Plaintiffs, the Court cannot agree. Although the allegations in the FAC that Plaintiffs
lacked access to or knowledge of the anti-assignment provisions focus more on
Defendants’ alleged behavior, rather than categorical assertions that they did not have
knowledge of the provisions from any source, the Court is reading the FAC as a whole.
The above-cited language sufficiently alleges that Plaintiffs lacked access to the
underlying plan documents. Cf. Care First II at 31 (“Because Care First does not
allege that it did not review the pan [sic] agreements, or that the documents were not
available to it, e.g., through CC and DC, it has not sufficiently pled that it was ignorant
of the true facts and reasonably relied on defendants’ alleged representation that the
plan agreements did not contain anti-assignment provisions.”).
As to the other elements of traditional estoppel, the Court would presume that
United had the relevant knowledge regarding plan terms, as United was allegedly
tasked with claims administration. This presumption is supported by the allegations in
______________________________________________________________________________
CIVIL MINUTES—GENERAL
32

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
the FAC. (See, e.g., FAC ¶ 881 (“Defendants knew full well that the terms of
Plaintiffs’ benefit plans obligated it to pay Plaintiffs for the valuable medical services
they had provided to beneficiaries and participants of those plans. As the claims
administrator, the plans delegated to United the discretion to interpret and apply the
terms of the plans.”)).
Ultimately, however, for the reasons discussed in connection with the waiver
analysis below, the Court is not convinced that the pre-suit claims administration
process involved activity that entitled Plaintiffs to believe that any anti-assignment
provisions in the plans would not be relied upon.
The Court does not, at present, address whether the Ninth Circuit’s additional
requirements for estoppel in the context of ERISA benefits (including the ambiguity
requirement) also apply to estoppel on the anti-assignment issue.
b. Anti-Assignment Provisions and Waiver
i.

Waiver and Anti-Assignment Clauses in ERISA
Plans

“Waiver is often described as the intentional relinquishment of a known right.”
Gordon v. Deloitte & Touche, LLP Grp. Long Term Disability Plan, 749 F.3d 746, 752
(9th Cir. 2014) (citing Intel Corp. v. Hartford Accident & Indem. Co., 952 F.2d 1551,
1559 (9th Cir. 1991)). The Ninth Circuit has previously held that when an insurer
communicates a denial of a claim, it must state a reason for the denial and it will not be
permitted to later rely on alternate reasons not presented in the denial letter. See, e.g.,
Harlick v. Blue Shield of California, 686 F.3d 699, 719 (9th Cir. 2012) (“A plan
administrator may not fail to give a reason for a benefits denial during the
administrative process and then raise that reason for the first time when the denial is
challenged in federal court, unless the plan beneficiary has waived any objection to the
reason being advanced for the first time during the judicial proceeding.”); Mitchell v.
CB Richard Ellis Long Term Disability Plan, 611 F.3d 1192, 1199 n. 2 (9th Cir. 2010)
______________________________________________________________________________
CIVIL MINUTES—GENERAL
33

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
(“The purpose of ERISA’s requirement that plan administrators provide claimants with
the specific reasons for denial is undermined ‘where plan administrators have available
sufficient information to assert a basis for denial of benefits, but choose to hold that
basis in reserve rather than communicate it to the beneficiary.’” (quoting Glista v.
Unum Life Ins. Co. of Am., 378 F.3d 113, 129 (1st Cir. 2004))).
The Ninth Circuit’s recent decision in Spinedex implies that, under certain
circumstances, the right to assert an anti-assignment clause may be waived. Spinedex,
770 F.3d at 1296-97. Other courts that have evaluated the issue have similarly found
waiver to apply in the context of an ERISA anti-assignment provision. See, e.g.,
Lutheran Medical Center of Omaha, Nebraska v. Contractors, Laborers, Teamsters
and Engineers Health and Welfare Plan, 25 F.3d 616, 619-20 (8th Cir. 1994),
abrogated on other grounds by Martin v. Arkansas Blue Cross and Blue Shield, 299
F.3d 966 (8th Cir. 2002) (“Because the Plan’s actual practice is not in conformity with
its strict anti-assignment provision, we conclude that nothing in the contract precludes
a finding that Lutheran and Henderson have standing as assignees.”); N. Jersey Brain
& Spine Ctr. v. Saint Peter’s Univ. Hosp., CIV.A. 13-74 ES, 2013 WL 5366400, at *67 (D.N.J. Sept. 25, 2013) (“The Court finds that Defendant’s involvement with the
reimbursement claims, through BCBS, constitutes a waiver of the anti-assignment
clause.”); Gregory Surgical Servs., LLC v. Horizon Blue Cross Blue Shield of New
Jersey, Inc., No. CIV.A.06-0462(JAG), 2007 WL 4570323, at *3 (D.N.J. Dec. 26,
2007) (“GSS describes a course of dealing between itself and Horizon that allegedly
constitutes a waiver of the anti-assignment provision and estops Horizon from
disavowing GSS’s standing. The conduct includes discussions of patient coverage
under health care policies, direct submission of claim forms, direct reimbursement of
medical costs, and engagement in appeal processes. Horizon contends that its direct
payment of reimbursements to GSS conforms with the terms of the plans at issue and
thus cannot constitute a waiver. Although Horizon’s direct payments to GSS would not
constitute a waiver if authorized under the Horizon plans at issue, the SAC alleges a
course of conduct beyond direct reimbursement for medical services. Indeed, the SAC
describes regular interaction between Horizon and GSS prior to and after claim forms
are submitted, without mention of Horizon’s invocation of the anti-assignment clause.
______________________________________________________________________________
CIVIL MINUTES—GENERAL
34

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
Such actions impede Horizon’s ability to rely on the anti-assignment provision to
challenge GSS’s standing.” (citations omitted)).
ii.

Waiver in the Present Case

Plaintiffs allege waiver as a result of the same conduct that gives rise to their
estoppel contention. (Opp. To Omnibus Mot. at 20 (“The same course of conduct that
causes Defendants to be estopped also results in waiver”)). In the FAC, Plaintiffs
allege that “throughout the entire administrative process for thousands of claims,
neither United nor Defendants . . . ever refused to pay any of Plaintiffs’ claims based
on any such anti-assignment provisions.” (FAC ¶ 875 (emphasis added)).
Defendants, however, contend that standing cannot be waived, and that,
assuming the Ninth Circuit would permit waiver in this ERISA context, Defendants’
assertion of the anti-assignment provisions at this stage is not inconsistent with the
activities alleged to have transpired between the parties to date. (Omnibus Reply at 1921).
Defendants also point out that “waiver is defined as the intentional
relinquishment of a known right.” (Id. at 21 (citing Alocozy v. U.S. Citizenship &
Immig. Srvs., 704 F.3d 795, 797 (9th Cir. 2012))). Plaintiffs contend that the standard
of “knowing intent” for waiver is met in this case, since “[t]he FAC alleges that on
hundreds of discrete occasions, Plaintiffs ‘demonstrated [to United] that they held a
valid assignment of benefits from the patient,’ (FAC ¶ 953, Patients 2, 6; Appendix,
passim), and further, that United confirmed receipt of this assignment from Plaintiffs.
(FAC ¶ 890.).” (Opp. to Omnibus Mot. at 20-21).
1. Waiver of Jurisdictional Requirement
If the anti-assignment provisions bear on a standing requirement that cannot be
waived, then the waiver inquiry could end here. In the Care First Order, the court
evaluated a contention that the right to rely on anti-assignment provisions contained in
plan documents had been waived since the defendants had failed to rely on them
______________________________________________________________________________
CIVIL MINUTES—GENERAL
35

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
during the administrative process. Care First Order at 35. The plan, in turn,
contended that lack of standing to sue cannot be waived (which the court construed as
an assertion that standing is a jurisdictional requirement that cannot be waived) and
that the anti-assignment provisions, in any event, were not waived because they
“concern a party’s standing to sue and are not a substantive basis for denial of a claim.”
Id. at 37, 38-39.
As to the jurisdictional argument, the court rejected the argument that a plan
could never waive its right to assert an anti-assignment provision to defeat a plaintiff’s
claim to have prudential standing as an assignee. Care First Order at 38. In doing so,
the court differentiated between Article III standing and standing under the terms of an
anti-assignment provision, noting that the former pertains to subject matter jurisdiction
(which a party cannot be prevented, in equity, from raising), and the latter is a
prudential matter (which a party can equitably be prevented from raising). Id. at 37-38.
See also Bilyeu v. Morgan Stanley Long Term Disability Plan, 683 F.3d 1083, 1090
(9th Cir. 2012) (“Unlike constitutional standing, which is jurisdictional, we presume
that statutory standing may be waived.”).
Here, Defendants point out that “[d]istrict courts both within and outside of this
Circuit . . . have reasoned that ‘derivative standing has only been recognized in cases
where there is a valid transfer of rights,’ making it ‘doubtful that a plaintiff can acquire
standing by virtue of a defendant’s acquiescence.’” (Omnibus Reply at 20 (citing
Middlesex Surgery Ctr. v. Horizon (“Middlesex”), No. CIV.A. 13-112 SRC, 2013 WL
775536, at *4 (D.N.J. Feb. 28, 2013); Spinedex Physical Therapy, U.S.A., Inc. v.
United Healthcare of Arizona, Inc. (“Spinedex I”), No. CV-08-00457-PHX-ROS, 2012
WL 8169880, at *5 (D. Ariz. Oct. 19, 2012))).
However, as noted by the Care First Order, Spinedex I did not distinguish
between prudential and constitutional standing, which led the Care First court to reject
the argument that a plan could never waive the right to assert an anti-assignment clause
in order to defeat prudential (rather than constitutional) standing. Care First Order at
38. Middlesex does not suffer from this same defect, though it cites no legal authority
______________________________________________________________________________
CIVIL MINUTES—GENERAL
36

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
for its doubts that a plaintiff could acquire standing through a defendant’s
acquiescence. Middlesex, 2013 WL 775536, at *4. Moreover, the “acquiescence” here
is not the absence of an assignment to begin with, but whether the assignment may be
rendered invalid due to a plan provision. The effect might be the same in that a
provider may not be afforded standing for suit, but it does seem to be a somewhat
notable difference in evaluating the propriety of standing as an initial matter. See
LeTourneau Lifelike Orthotics & Prosthetics, Inc. v. Wal-Mart Stores, Inc., 298 F.3d
348, 351 (5th Cir. 2002) (“Standing is jurisdictional. LeTourneau has no direct claim
against the Plan; and, absent a valid assignment of benefits from Nichols, LeTourneau
would have no derivative standing to sue the Plan under ERISA Section 502.”
(footnotes omitted)).
Ultimately, the Court rules that, as a general matter, waiver could be applicable
to the standing issue relevant here. Whether waiver actually applies under the facts of
this case, however, is discussed below.
2. Anti-Assignment Clause as Substantive Basis for
Claim Denial as Opposed to Necessary for Standing
As discussed in the context of estoppel on this same issue:
Plaintiffs argue that the anti-assignment clauses were waived, or that
Defendants are estopped from raising them, because they were not
asserted by United during the claims administration process as a
reason to deny benefits or otherwise. See Pls.’ Opp. at 15-21. . . .
[T]his argument fundamentally misconstrues why the anti-assignment
provisions are relevant. Defendants did not rely (and are not relying
now) on the anti-assignment clauses to determine the appropriate
reimbursement for the claims at issue in this case, or as a reason to
deny benefits due under the terms of the plans. The anti-assignment
clauses are being raised now because they dictate whether a provider______________________________________________________________________________
CIVIL MINUTES—GENERAL
37

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
assignee has standing to sue an ERISA plan where the terms of the
plan forbid such an assignment.
(Omnibus Reply at 15).
In Care First, the court found that Gordon v. Deloitte & Touche, LLP Group
Long Term Disability Plan, 749 F.3d 746 (9th Cir. 2014)—the case the plan asserted as
support for its argument that it had not waived the right to raise anti-assignment
provisions because those provisions concern standing to sue and not a substantive basis
for denial—was unavailing. Care First Order at 38-39. In Gordon, the court found
that an insurer had not waived its right to assert a statute of limitations defense when
that defense was not the basis for the claim denial and the actual basis for the claim
denial had been communicated to the claimant. Gordon, 749 F.3d at 753. In Care
First, in contrast, the complaint contained no allegations regarding whether the
relevant claims were denied as falling outside the plan coverage or due to the antiassignment provisions, and, as such, Gordon’s holding was inapplicable to negate
waiver of a defense that was not raised as a basis for claim denial. Care First Order at
39.
Moreover, the Care First court discussed that, perhaps recognizing the problem
with Gordon (that it pertained to a substantive, communicated reason for denial and a
later-arising statute of limitations argument that the court found had not been waived),
the defendants argued that the anti-assignment provision could not have been the
reason for the claim denial because they had no obligation to make payments to the
plaintiffs in the first place—rather, the plans allowed for payments to be made to
providers purely for the convenience of the plan participants. Care First Order at 39.
However, the court found this “illogical as it necessarily relie[d] on the fact that the
plan agreements contained anti-assignment provisions and implie[d] that the reason for
the plan’s denial of Care First’s claims was that Care First was not entitled to payment
under the plan agreements under those provisions. As noted, the complaint contain[ed]
no allegations concerning the reason for the denial, and the court therefore [could not]
determine the matter in deciding defendants’ motion to dismiss.” Id.
______________________________________________________________________________
CIVIL MINUTES—GENERAL
38

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
Ultimately, the Care First court found that the provider had not adequately
alleged waiver of the defendants’ right to rely on anti-assignment provisions, as the
provider only alleged that after the claims were submitted the plan issued adverse
benefits decisions—there were no allegations that the claims were denied for a reason
other than the provider’s assignee status or that the plan failed to provide a written
explanation of the denial. Care First Order at 40. The Care First court also noted that
the provider did not allege in the complaint that the plan never raised the antiassignment provisions during the administrative process (though the provider did
discuss this in its opposition brief). Id.
Here, the analysis is somewhat complicated by the fact that adverse benefits
determinations were seemingly not always issued, such that the reasons for “denials”
are potentially difficult to gauge for each claim. (See, e.g., FAC ¶ 939 (“In many
cases, Defendants have held Plaintiffs’ claims submissions in limbo without allowing
or denying the claims.”)). Plaintiffs assert that “[w]hen Plaintiffs did receive
[Explanations of Benefits (“EOBs”)] containing adverse benefits decisions from
Defendants, these notices failed to disclose the reasons for the benefits determination
with any specificity, and failed to identify any plan provisions justifying the denial of
benefits.” (Id. ¶ 1028). However, Plaintiffs also discuss Defendants’ allegedly
“pretextual reasons for denial of the claims,” (id. ¶ 954) and that United’s conduct
included “[d]enying claims solely because the patients on whose behalf reimbursement
was sought had allegedly failed to ‘authorize’ Plaintiffs to appeal on their behalf, even
though Plaintiffs always submitted a proper assignment of benefits demonstrating such
authority, and even though Defendants in practice acknowledged that assignment had
occurred by dealing directly with Plaintiffs, rather than with the patients” (id. ¶ 884).
Even in light of these varied allegations, however, there are affirmative
allegations in the FAC that Defendants did not assert the anti-assignment clauses
during the administrative process as a reason for denying claims: “At no time during
the administrative process did Defendants ever state that the specific reason for the
______________________________________________________________________________
CIVIL MINUTES—GENERAL
39

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
adverse benefit determination was due to an anti-assignment provision, nor did they
reference a specific anti-assignment provision in any plan document.” (Id. ¶ 876).
There does seem to be a meaningful distinction between asserting the antiassignment provisions for purposes of claims denial and asserting them in order to
preclude standing for a suit. However, this distinction loses its salience if there has
been activity undertaken in the pre-suit claims procedures that, irrespective of their
relevance to the standing issue at present, should have triggered mention and/or
invocation of these anti-assignment provisions. For example, if payments were made
to Plaintiffs that could only have been made to assignees, this might suggest waiver of
the argument that the plans on whose behalf these payments were made prohibit
assignments.
The question, therefore, becomes whether the pre-suit activity—during which
the anti-assignment provisions were allegedly not mentioned—should have alerted
United to the fact that Plaintiffs were operating as purported assignees, such that the
failure to inform them that they could not do so means this argument might be deemed
waived.
3. Pre-Suit Activity: Authorized Representatives and
Assignees
Defendants argue that, “[e]ven if ERISA permits ‘standing by waiver,’ there is
‘nothing inconsistent’ about Defendants objecting to Plaintiffs’ ERISA standing after
engaging with Plaintiffs in a pre-suit claims review process.” (Omnibus Reply at 20
(citations omitted)). Moreover, Defendants contend that “[a]llegations of prior
payment in connection with a claim for benefits are not . . . inconsistent with
enforcement of anti-assignment clauses, for as Plaintiffs acknowledge, they sought
payment from United as their patients’ ‘authorized representative[s]’ as well as
‘assignees.’” (Omnibus Mot. at 15 (citing FAC ¶¶ 953(B), 977-78)).

______________________________________________________________________________
CIVIL MINUTES—GENERAL
40

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
ERISA regulations provide that “claims procedures for a plan will be deemed to
be reasonable only if . . . [t]he claims procedures do not preclude an authorized
representative of a claimant from acting on behalf of such claimant in pursuing a
benefit claim or appeal of an adverse benefit determination.” 29 C.F.R. § 2560.5031(b)(4) (emphasis added). Defendants assert that they did not waive the right to assert
anti-assignment clauses because:
Under the regulations governing ERISA claim procedures, plans are
prohibited from “preclud[ing] an authorized representative of a
claimant from acting on behalf of such claimant in pursuing a benefit
claim or appeal of an adverse benefit determination.” 29 C.F.R.
§2560.503-1(b)(4). Thus, there can be no “waiver” by allowing an
“authorized representative” to participate in the claims administration
process, and payments to patients’ “authorized representatives” are
still payments to patients themselves and in no way implicate a plan’s
anti-assignment clause. By bringing their claims here, however, as
assignees, Plaintiffs are claiming that they—not the patients—now
have the right to the benefits, and it is this that the plans’ antiassignment provisions prohibit. Total Renal Care of N.C., L.L.C. v.
Fresh Market, Inc., 2008 WL 623494, at *5-7 (M.D.N.C. Mar. 6,
2008) (authorized representatives sue “on behalf of” patients, whereas
assignees file claims “in their own right”).
(Omnibus Mot. at 15 n. 10).
Plaintiffs counter by pointing out that:
Defendants do not deny that they failed to raise the anti-assignment
clauses. Instead, they attempt to argue that they have not waived this
defense because Plaintiffs were merely acting as “authorized
representatives” of the patients, not as assignees. This glib assertion
is not supported by the facts. Defendants do not identify any
______________________________________________________________________________
CIVIL MINUTES—GENERAL
41

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
allegations in the FAC that demonstrate that Plaintiffs were acting
solely as authorized representatives. Nor does anything in the FAC
suggest that Defendants ever informed Plaintiffs that they were not
assignees. To the contrary: the FAC actually demonstrates that
Plaintiffs, proceeding as full assignees, repeatedly raised the issue
of assignments during the administrative process. Even if
Plaintiffs had authorized representative status, that did not deprive
them of their status as assignees. The two represent parallel methods
of proceeding under ERISA. See, e.g., Biomed Pharm., Inc. v. Oxford
Health Plans (N.Y.), Inc., 831 F. Supp. 2d 651, 665 (S.D.N.Y. 2011)
(as assignee, provider “was not required to submit either an
‘authorized representative’ or ‘designated representative form’”).
...
Numerous Defendants suggest that they were entitled to pay providers
directly for “convenience” only, and without waiving their rights to
raise anti-assignment. This makes no sense, because Defendants’
direct payments to Plaintiffs were part of a larger, continuous course
of conduct that affirmed the validity of the assignments. As the Care
First court observed in considering an identical argument, “[t]his
argument is illogical as it necessarily relies on the fact that the plan
agreements contained anti-assignment provisions and implies that the
reason for the plan’s denial [] was that [the provider] was not entitled
to payment under the [anti-assignment] provisions.” RJN Ex. A at
p.39:15-24 (emphasis added). Here, the FAC makes clear that
Defendants never raised anti-assignment.
...
As explained above, even if Plaintiffs were authorized representatives,
that does not mean they were not also assignees. Biomed, 831
F.Supp.2d at 665. More importantly, a patient’s authorized
______________________________________________________________________________
CIVIL MINUTES—GENERAL
42

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
representative is not entitled to direct payment of benefits. Such an
individual is authorized only to “pursu[e] a benefit claim or appeal of
an adverse benefit determination” on behalf of another. 29 C.F.R.
2560.503-1(b)(4); Biomed, 831 F.Supp.2d at 664 (defining
representative as “a person to act on your behalf”).
(Opp. to Omnibus Mot. at 17, 20, 23 (emphasis in original)).
Pursuant to 29 C.F.R. § 2560.503-1(b)(4), and as discussed above, the Court
agrees with Defendants that allowing Plaintiffs to conduct appeals or pursue a benefit
claim decision would not waive the right to assert anti-assignment clauses; ERISA
regulations require that the plans allow an authorized representative to engage in these
activities, and United allowing it should not waive its right to assert anti-assignment
clauses as to something beyond this permissive activity. Moreover, as discussed
above, it does appear that the purported assignments at issue here contain both
language of assignment and language designating relevant providers to be authorized
representatives. As a result, the arguments regarding Defendants’ failure to mention
anti-assignment provisions during the communications between the parties are
unpersuasive, at least to the extent that these communications pertained to the pursuit
and appeal of claims decisions. Perhaps, if the correct procedures were not followed
under any particular plan as to authorized representative designation, and yet United
did not object to communicating with Plaintiffs regarding appeals and the like, waiver
may have been effected as to considering the Plaintiffs authorized representatives for
the corresponding claims. However, that is not what is at issue here.
The issue of receiving payment presents a more complicated question. Plaintiffs
contend that “a patient’s authorized representative is not entitled to direct payment of
benefits,” while Defendants posit that a payment to an “authorized representative” is
still a payment to the patient, such that it does not present the scenario the antiassignment clauses seek to prohibit—namely, providers claiming that they, rather than
the patients, have the right to benefits. Defendants cite to Middlesex for the
proposition that “whether Plaintiffs have the right to submit a claim and pursue an
______________________________________________________________________________
CIVIL MINUTES—GENERAL
43

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
appeal on a patient’s behalf ‘is a separate issue entirely’ from whether Plaintiffs have
the right to sue under ERISA,” and that in having allowed the former, Defendants have
not waived the latter. (Omnibus Reply at 15 (quoting Middlesex, 2013 WL 775536, at
*4)).
Biomed is instructive on some of the distinctions between assignees and
authorized representatives. In Biomed, the defendants cited to the “Frequently Asked
Questions” section of the Department of Labor’s website, which indicates that an
assignment is generally not sufficient to designate the provider as an authorized
representative. See Biomed, 831 F. Supp. 2d at 663 n. 16 (“The ‘Frequently Asked
Questions’ state: B–2: Does an assignment of benefits by a claimant to a health care
provider constitute the designation of an authorized representative? No. An assignment
of benefits by a claimant is generally limited to assignment of the claimant’s right to
receive a benefit payment under the terms of the plan. Typically, assignments are ‘hot
[sic] a grant of authority to act on a claimant’s behalf in pursuing and appealing a
benefit determination under a plan. In addition, the validity of a designation of an
authorized representative will depend on whether the designation has been made in
accordance with the procedures established by the plan, if any.”). Ultimately,
however, the Biomed court concluded that the assignee was capable of pursing appeals
on its own behalf, and therefore was not required to submit an “authorized
representative” or “designated authorized representative form.” Id. at 665.
The assignment at issue in Biomed specified that it assigned to Biomed all of the
patient’s rights, “including the right to sue on [the patient’s] behalf or name, under
policy number [ ] issued by Oxford, to recover damages for services rendered by
Biomed Pharm Inc.” Id. at 654 n. 2. As discussed above, Biomed makes the
distinction between an “authorized representative,” who works on behalf of the patient
with respect to a benefit decision or appeal, and an assignee, who acts on its own
behalf as if it was the assignor. Id. at 664-65. This appears to be precisely the
distinction that Defendants claim would render the assignments objectionable for
purposes of this suit: the scenario is no longer a provider operating as an “authorized
representative” on the patient’s behalf (which United purportedly would be required to
______________________________________________________________________________
CIVIL MINUTES—GENERAL
44

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
allow for appeals purposes under the ERISA regulations, upon a proper showing of
authorization), but rather is the provider operating for its own benefit and in its own
right.
In Spinedex, the Ninth Circuit held that United had not waived its right to assert
a plan’s anti-assignment provision, despite having failed to raise it during the first level
appeal process, when the plan allowed the claims administrator to pay a provider
directly for services rendered. Spinedex, 770 F.3d at 1296-97. The court also
evaluated whether United had “consented to the assignments by sending Explanation
of Benefits (‘EOB’) letters indicating that certain payments had been assigned to
Spinedex.” Id. at 1296. Regarding this latter argument, the court viewed United’s
EOB stating “PAYMENT ASSIGNED TO PROVIDER” “as an exercise of its
discretionary authority” under the terms of the plan “to send payments directly to nonnetwork providers.” Id. The court noted that the relevant plan SPD provided that:
“You may not assign your Benefits under the Plan to a non-Network provider without
our consent. The Claims Administrator may, however, in their discretion, pay a nonNetwork provider directly for services rendered to you.” Id. (emphasis in original)
(internal quotation marks omitted). “Our” was defined as referring to the plan sponsor,
Discount Tire Company. Id. As such, “United did not have authority to consent to
assignment of benefits; only the Plan Sponsor had that authority,” and that “[t]here
[was] no evidence in the record that the Discount Tire Company consented to any
assignment.” Id.
Regarding waiver, the Ninth Circuit discussed Harlick and noted that “an
administrator may not hold in reserve a known or reasonably knowable reason for
denying a claim, and give that reason for the first time when the claimant challenges a
benefits denial in court.” Spinedex, 770 F.3d at 1296. However, on the facts before it,
the court held that “there [was] no evidence that United was aware, or should have
been aware, during the administrative process that [the provider] was acting as its
patients’ assignee. So far as United knew, [the provider] was acting merely as an
authorized representative charged with filing, collecting, or appealing a claim on behalf
of the patient.” Id. at 1297. The court distinguished Hermann II, in which the court
______________________________________________________________________________
CIVIL MINUTES—GENERAL
45

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
held that a plan was estopped from asserting an anti-assignment provision “‘because of
its protracted failure to assert the clause when [the provider] requested payment
pursuant to a clear and unambiguous assignment.’” Id. (quoting Hermann II, 959 F.2d
at 575). Rather, in Spinedex, the court found that the defendants had not “waive[d]
their objection to the assignment in the district court when it became clear, for the first
time, that Spinedex was claiming as an assignee.” Id.
Here, the Court can see that the same might be true for plans that similarly allow
for payments to be made to providers for the convenience of participants (or potentially
others). In such situations, until suit was filed, nothing had occurred that would have
been within the range of conduct the anti-assignment clauses purportedly seek to
prohibit. As such, allowing activity that is consistent with the proper rights of an
“authorized representative” and not inconsistent with the anti-assignment clauses does
not seem as though it should result in a waiver of later conduct that does come within
such prohibitions.
In Care First II, the court evaluated allegations that defendants failed to raise
anti-assignment clauses during the administrative process or cite it as a reason for
claim denial, and therefore had waived the right to assert it in litigation. Care First II
at 34. However, the court rejected this argument, noting that there were no allegations
suggesting that the defendants knew the provider plaintiff was acting as an assignee,
rather than an authorized representative. Id. The Care First II complaint alleged that
the contracted claims administrator (Zenith, not a defendant to the action) had made
representations that assignments were permitted, but the court noted that, as in
Spinedex, this claims administrator had no authority to waive the provision under the
terms of the plan. Id. at 34-35. The language of the relevant plan allowed for direct
payment of benefits to providers, but such payment was not to imply an enforceable
assignment of the benefits. Id. at 35. The complaint did not contain allegations that
the plaintiff “asked defendants whether assignments were permitted.” Id. (emphasis in
original). As such, the court concluded that “[b]ecause there [were] no allegations
suggesting that defendants intentionally relinquished their rights under the antiassignment provision, the first amended complaint fail[ed] adequately to allege waiver
______________________________________________________________________________
CIVIL MINUTES—GENERAL
46

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
by defendants.” Id. Rather, in light of the facts alleged, the court found (consistent
with Spinedex) that so far as the defendants knew, the plaintiff was only acting “‘as an
authorized representative charged with filing, collecting, or appealing a claim on behalf
of the patient.’” Id. (quoting Spinedex, 770 F.3d at 1296).
At the hearing, Plaintiffs argued that the facts alleged in the FAC sufficiently
demonstrate that United was on-notice that Plaintiffs were proceedings as assignees.
In furtherance of this argument, Plaintiffs pointed out that United often challenged
Plaintiffs’ authority to bring appeals and, in response, Plaintiffs allege that they
provided United with their purported assignments. The FAC alleges specific instances
during which the purported assignments were provided to United; the general language
that reflects this submission is as follows: “Subsequently, however, United informed
the Plaintiffs that their appeals were denied due to a lack of patient authorization. This
was even though Plaintiffs had previously demonstrated that they held a valid
assignment of benefits from the patient that authorized Plaintiffs to make appeals on
behalf of the patient.” (See Opp. to Omnibus Mot. at 17 n. 6 (citing FAC ¶ 953,
Patients 1, 2, 6 (subparagraphs (H)); Appendix A, Patients 9-11, 14-16, 26-28, 31 34,
36, 37, 40-42, 44, 46, 51, 54, 56, 58, 63, 64, 66-68, 71, 73, 75, 78, 82, 83, 85, 87, 92,
93, 97, 99, 100, 101, 109, 112, 114, 118, 125, 127, 129, 130, 134, 138, 140, 141, 143,
148, 153, 154, 155, 161, 168, 171-173, 175, 176, 183, 186, 188, 189, 191, 194 198,
201, 207, 208, 214, 217, 220, 225, 227, 230, 233, 234, 240, 246- 249, 251, 253, 260,
264, 265, 267, 269, 270, 272, 274, 276, 278, 281, 286, 290, 296, 300-302, 304, 306,
308, 316-318, 321-323, 326, 332, 333, 335, 337, 344, 348, 350, 351, 353, 355, 358362, 365, 368, 369, 371, 373, 377, 380, 383, 385, 387, 390-392, 400-402, 405, 406,
416, 418, 422 (respective subparagraphs (H)))).
However, even if United’s alleged conduct were sufficient to demonstrate
waiver of a particular plan’s anti-assignment provision, the Court does not read the
allegations in the FAC as demonstrating that United perceived that Plaintiffs intended
to proceed as assignees rather than authorized representatives. The allegations
themselves discuss assignments, but discuss their effect as authorizing Plaintiffs to
make appeals on the patients’ behalf.
______________________________________________________________________________
CIVIL MINUTES—GENERAL
47

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
The allegations in the FAC are insufficient to demonstrate that Defendants
intentionally relinquished any known rights pertaining to the anti-assignment clauses.
c. Consent of Insurer
Plaintiffs contend that assignability is governed by California law, since this is
where the assignments were obtained by Plaintiffs. (Opp. to Omnibus Mot. at 24).
Plaintiffs argue that anti-assignment clauses which require consent of the insurer, as
the “most common variant of anti-assignment clause” at issue in this case does, are
ineffective under California law. (Id. at 23-24 (“It is well established in California that
the right to bring a suit to recover benefits under an insurance policy can be assigned
even where an anti-assignment clause contained in the policy states that assignment is
not valid without the consent of the insurer.”)). Plaintiffs cite to Comunale v. Traders
& General Insurance Co., 50 Cal. 2d 654, 662, 328 P.2d 198 (1958), for this
proposition, and a variety of case law for the proposition that this principle is not
preempted by ERISA. (Id. at 24).
Comunale involved an assignee of an insured suing an automobile insurance
company to recover the portion of a judgment against the insured that was in excess of
his policy limits based on the insurer’s alleged wrongful failure to settle. Comunale,
50 Cal. 2d at 657, 661. The California Supreme Court stated that, in general, “an
action for damages in excess of the policy limits based on an insurer’s wrongful failure
to settle is assignable whether the action is considered as sounding in tort or contract.”
Id. (citing Cal. Civ. Code § 954; Brown v. Guarantee Ins. Co., 155 Cal. App. 2d 679,
693-695 (1957)). As to the Comunale assignment, the insurance company contended
that there was a clause in the policy which rendered an assignment of an interest under
the policy valid only with consent of the insurance company. Id. The California
Supreme Court, however, found that the cause of action at issue could be assigned
because “it is well settled that such a provision does not preclude the transfer of a
cause of action for damages for breach of a contract.” Id. at 661-62 (citing Trubowitch
v. Riverbank Canning Co., 30 Cal.2d 335, 339-340 (1947)). The California Supreme
______________________________________________________________________________
CIVIL MINUTES—GENERAL
48

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
Court also noted that “[t]his rule has been applied to provisions against assignability in
insurance policies similar to the provision involved here.” Id. at 662 (citing Vierneisel
v. Rhode Island Ins. Co., 77 Cal. App. 2d 229, 232 (1946); Pietrantonio v. Travelers
Ins. Co., 282 Mich. 111, 275 N.W. 786, 788 (1937)).
The statement that Plaintiffs cite for support in Comunale does not support the
proposition they allege: namely, that the right to bring a suit to recover benefits under
an insurance policy can be assigned even where an anti-assignment clause contained in
the policy states that assignment is not valid without the consent of the insurer.
Comunale does not mention whether an anti-assignment provision that requires an
insurer’s consent would be ineffective to preclude the transfer of a claim for benefits;
rather, it only bears on this question in the case of a transfer of a cause of action for
damages arising out of breach of contract. None of the citing references for Comunale
address this particular issue. The Court is not convinced, therefore, that the
proposition Plaintiffs proffer is actually a tenet of California law that would be
applicable to anti-assignment clauses in the present case. In light of this conclusion,
the Court will not evaluate whether such a California law would be preempted.
d. California DOI Regulation and California Insurance Code
Section 10133(a)
Plaintiffs contend that anti-assignment clauses in plans governed by the
California Department of Insurance (“DOI”) are ineffective. (Opp. to Omnibus Mot. at
24-25). For this proposition, Plaintiffs cite to California Insurance Code section
10133(a): “‘Upon written consent of the insured first obtained with respect to a
particular claim,’ an insurer covered by the Insurance Code ‘shall pay group insurance
benefits” for ‘hospitalization or medical or surgical aid,’ contingent on certain
conditions.” (Id. at 24 (emphasis in original) (citing Cal. Ins. Code § 10133(a)).
Plaintiffs substantiate the applicability of this provision by arguing that “[m]ost or all
of the 30+ plans in Exhibit B to the Omnibus Brief that have ‘COC,’ or Certificate of
Coverage, as the document type, and that are insured by United, are very likely
governed by the DOI.” (Id. at 25). Plaintiffs also contend that this state statute is not
______________________________________________________________________________
CIVIL MINUTES—GENERAL
49

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
preempted, as it is a general regulation of insurance. (Id. at 24-25 (citing Washington
Physicians Serv. Ass’n v. Gregoire, 147 F.3d 1039, 1045 (9th Cir. 1998), as amended
on denial of reh’g and reh’g en banc (Aug. 24, 1998)).
California Insurance Code section 10133(a) provides:
Upon written consent of the insured first obtained with respect to a
particular claim, any disability insurer shall pay group insurance
benefits contingent upon, or for expenses incurred on account of,
hospitalization or medical or surgical aid to the person or persons
furnishing the hospitalization or medical or surgical aid, or, on and
after January 1, 1994, to the person or persons having paid for the
hospitalization or medical or surgical aid, but the amount of any such
payment shall not exceed the amount of benefit provided by the policy
with respect to the service or billing of the provider of aid, and the
amount of the payments pursuant to one or more assignments shall not
exceed the amount of expenses incurred on account of the
hospitalization or medical or surgical aid. Payments so made shall
discharge the insurer’s obligation with respect to the amount so paid.
Cal. Ins. Code § 10133(a) (emphasis added).
Plaintiffs are not making a definitive allegation that all of the contracts with antiassignment provisions are governed by the DOI and therefore subject to California
Insurance Code section 10133(a); at best, they allege that “[m]ost or all” of the plans
appended to Defendants Omnibus Motion with a COC that are insured by United are
“very likely governed by the DOI.” The Court is under the impression that the parties
are working to remove the fully-insured plans from this litigation, which renders
Plaintiffs’ identification of the relevant sub-set of plans as some portion of those
insured by United somewhat perplexing. Nevertheless, the Court will evaluate whether
the provision might otherwise be applicable in this litigation.
______________________________________________________________________________
CIVIL MINUTES—GENERAL
50

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
Defendants argue that California Insurance Code section 10133(a), by its terms,
only applies to disability insurers, not healthcare insurers. (Omnibus Reply at 23).
Further, Defendants also argue that California Insurance Code section 10133(a) would
not work to preclude them from asserting the anti-assignment clauses in order to defeat
Plaintiffs’ standing; rather, Defendants contend that this code section merely allows for
payment to go to the providers. (Id.).
The Court agrees that the provision, by its terms, does not appear to bar antiassignment clauses. Plaintiffs cite to no authority interpreting this provision in the
manner they urge. As such, the Court need not at present decide whether the provision
would apply to some or all plans at issue, or whether preemption would bar its
application here.
e. Almont No. 14-CV-03053 Counterclaim Position
Plaintiffs claim that United’s counsel cannot argue in this case that the
assignment of benefits are invalid, and yet rely on the assignments in related case No.
14-CV-03053 to pursue “overpayment” claims against Plaintiffs. (Opp. to Omnibus
Mot. at 21-22). They argue that the Court has previously recognized that this issue of
United’s counsel’s potential conflict was a “a close call, given United’s position in the
counterclaim,” but that the Court stated that it was “unclear” whether a conflict existed
then given that information about which plans would assert anti-assignment clauses
was not then before the Court. (Id. at 22 (quoting Docket No. 839 at 12)). However,
Plaintiffs contend that:
That information is now before the Court. United has provided
Plaintiffs with a list of the claims that they seek to recoup, which
makes clear that United seeks to recover every payment ever made to
Plaintiffs. (Chan Decl. ¶ 4-5.) Given the sheer breadth of United’s
counterclaim, it is highly likely that United seeks to recover payments
on behalf of every plan that raises anti-assignment in this case.
______________________________________________________________________________
CIVIL MINUTES—GENERAL
51

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
(Id. at 22 (emphasis added)).
Plaintiffs further contend that:
United’s counsel attempts to claim that its positions are not
inconsistent because Plaintiffs were authorized representatives, not
assignees. (See June 16, 2014 Tr. of Hrg. on Mot. to Disqualify at
10:8-11 (“Even if there’s not an assignment there may have been a
payment [] to the plaintiffs as authorized representatives to direct
payment to them.”) (statement of Mr. Lucke).) United also modified
its FACC so that it alleges that Plaintiffs were authorized
representatives, not assignees. (See FACC ¶¶ 314, 328.) . . . . [E]ven if
Plaintiffs were authorized representatives, that does not mean they
were not also assignees. Biomed, 831 F.Supp.2d at 665. More
importantly, a patient’s authorized representative is not entitled to
direct payment of benefits. Such an individual is authorized only to
“pursu[e] a benefit claim or appeal of an adverse benefit
determination” on behalf of another. 29 C.F.R. 2560.503-1(b)(4);
Biomed, 831 F.Supp.2d at 664 (defining representative as “a person to
act on your behalf”).
(Id. at 22-23).
Defendants counter by arguing that the FACC in No. 14-CV-03053:
[D]oes not rely upon assignments that are invalid due to antiassignment clauses. Rather, the counterclaim asserts that the current
Plaintiffs are required to return any sums negligently paid to them
pursuant to Plan terms, including but not limited to situations where
Plaintiffs submitted claims for benefits under 29 C.F.R. §2560.503-1
pursuant to ‘authorized representative’ forms under [Department of
Labor] regulations, where they had “valid” assignments (i.e., those not
______________________________________________________________________________
CIVIL MINUTES—GENERAL
52

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
prohibited by anti-assignment clauses) under the Plan, or where they
accepted payment from the Plan. In each of those instances (and
potentially others), Plaintiffs are bound by plan terms requiring the
return of overpayments. Thus, the Counterclaim only relies upon
“valid” assignments, and does so only in the alternative to other
arguments and bases for recovery.
(Omnibus Reply at 21).
At present, the Court is not in a position to gauge the actual overlap on this antiassignment issue between the two cases. Although Plaintiffs purport to “match up” the
names of patients United provided in connection with the FACC in No. 14-CV-03053
and find that “at least two of the example patients” from the FACC belong to plans that
assert to have anti-assignment clauses in this case (Enterprise Holdings and AT&T),
this is hardly enough to establish that the relevant plan terms applicable in the two
actions are the same. (Opp. to Omnibus Mot. at 22).
In any event, there seem to be a number of factual issues that bear on what is
being asserted in each case with respect to which plans, dates of service, and the like.
As such, ruling on the propriety of the purportedly conflicting stances is premature at
this time.
f. Continuum of Anti-Assignment Clauses
As to the specific language in the anti-assignment provisions, the Court wishes
to make clear that not all anti-assignment clauses presented would defeat standing at
this early stage in the proceedings. Approximately 145 groups of Defendants (i.e., a
plan sponsor and the corresponding plan(s)) assert anti-assignment arguments, though
these will vary in effect. Plaintiffs make a variety of arguments regarding the limits of
anti-assignment provisions asserted in this case, such as the fact that none of these
provisions prevent the assignment of ancillary ERISA causes of action, “creditor” antiassignment clauses are ineffective against the providers here, and some purported anti______________________________________________________________________________
CIVIL MINUTES—GENERAL
53

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
assignment provisions permit assignment to providers without restriction. (Opp. to
Omnibus Mot. at 25-28).
Regarding the first of these arguments, the Court’s discussion regarding the
scope of the alleged assignments in relation to ancillary ERISA Counts dispenses with
the need for further analysis here. Regarding the other arguments, the Court outlines
general categories of anti-assignment provisions and their relative merits here. As
discussed below, however, all of these evaluations are subject to the threshold
requirement that the anti-assignment provisions proffered by Defendants be manifestly
reflective of the relevant operative plan terms.
So-called “creditor” or “spendthrift” provisions, discussed (though not found
determinative) in the Order adjudicating the Baker Hughes Motion, are unlikely to be
given effect against providers at this stage in the litigation.
Similarly, provisions allowing only for assignment with consent of a designated
entity (be it the plan sponsor or otherwise) are insufficient to defeat standing at this
stage in the proceedings. Defendants have not demonstrated that such consent
exceptions do not apply to Plaintiffs’ alleged assignments. The allegations in the FAC,
read in the light most favorable to Plaintiffs, plausibly allege that Plaintiffs’
assignments were accepted under such exceptions; although many of the activities
alleged in the FAC are not inconsistent with those undertaken by an authorized
representative, nor are they inconsistent with activities undertaken by an assignee.
Given the likely need for extrinsic evidence on this issue, this argument is better suited
to summary judgment. At the hearing, Defendants asked the Court to reconsider this
point in light of Spinedex. However, Spinedex was a review of a summary judgment
decision, which only bolsters the Court’s reasoning on this point.
However, provisions that contain no exclusions or exceptions to the assignment
prohibition, or contain exclusions that are clearly inapplicable in the present case, are
more likely to defeat standing.
______________________________________________________________________________
CIVIL MINUTES—GENERAL
54

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
Finally, Defendants argue that “Plaintiffs do not allege in the Amended
Complaint—or even assert in opposition—that the anti-assignment clauses are
ambiguous, making the anti-assignment provisions valid and enforceable under Ninth
Circuit precedent.” (Omnibus Reply at 14 (footnotes omitted)). In a footnote, they
further contend that “[a]lthough Plaintiffs assert that an ambiguous anti-assignment
clause must be construed against the drafter, Pls.’ Opp. at 21, they do not identify any
ambiguity in the clauses provided in conjunction with Defendants’ Opening Brief.”
(Id. n. 14).
“‘In interpreting the terms of an ERISA plan[,] we examine the plan documents
as a whole and, if unambiguous, we construe them as a matter of law.’” Vaught v.
Scottsdale Healthcare Corp. Health Plan, 546 F.3d 620, 626 (9th Cir. 2008) (quoting
Welch v. Unum Life Ins. Co. of Am., 382 F.3d 1078, 1082 (10th Cir. 2004)). The Ninth
Circuit applies ordinary contract interpretation rules to ERISA plans. It has stated:
We have held that terms in a pension plan should be interpreted in an
ordinary and popular sense as would a [person] of average intelligence
and experience. When disputes arise as to the meaning of one or more
terms, we first look to the explicit language of the agreement to
determine the clear intent of the parties. The intended meaning of
even the most explicit language can, of course, only be understood in
the light of the context that gave rise to its inclusion. An ambiguity
exists when the terms or words of a pension plan are subject to more
than one reasonable interpretation. In fact, only by excluding all
alternative readings as unreasonable may we find that a plan’s
language is plain and unambiguous.
McDaniel v. Chevron Corp., 203 F.3d 1099, 1110 (9th Cir. 2000) (internal quotation
marks and citations omitted). In order to determine that an anti-assignment precludes
standing, therefore, it becomes necessary to determine whether the provisions in
question are unambiguous.
______________________________________________________________________________
CIVIL MINUTES—GENERAL
55

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
The Court recognizes that the anti-assignment language will largely not defeat
standing at this stage (either because the documents submitted are not demonstrably
the operative plan documents, the clauses contain exceptions, and/or the antiassignment language itself does not manifestly cover the scenario presented in this
case). However, due to the deficiencies (discussed below) in Plaintiffs’ prima facie
benefits Count, invocation of anti-assignment clauses will not be required at this stage
of the proceedings in order to defeat the ERISA benefits Count. Moreover, the
estoppel Count is independently deficient for the reasons discussed in the Order
adjudicating the United Motion. These are the only two ERISA Counts for which the
Court has ruled Plaintiffs have standing. Due to the deficiencies in these Counts, the
Court does not evaluate at present whether particular anti-assignment clauses are
ambiguous or might defeat standing for these Counts.
B.

Plaintiffs’ Count Under ERISA § 502(a)(1)(B) (Count I)
1. Employers as Proper Defendants

Defendants dispute the propriety of including employer Defendants in a suit for
benefits, stating: “Under Ninth Circuit law, the proper defendants for a claim for
benefits are the entities with authority to resolve benefit claims (United) or the
responsibility to pay them under the terms of the plan (the Plans).” (Omnibus Mot. at
7 (citing Cyr v. Reliance Standard Life Ins. Co., 642 F.3d 1202, 1206-07 (9th Cir.
2011) (en banc)). Plaintiffs, in turn, argue that the employers are responsible for
payment, quoting the United Motion for the proposition that “[b]ecause nearly all of
the Defendant Plans at issue are ‘self-funded,’ the Employers, not United, are
responsible for the payment of any benefits due.” (Opp. to Omnibus Mot. at 10
(emphasis in original) (quoting United Mot. at 1)).
However, irrespective of payment obligations, the employers appear to be proper
Defendants at this stage of the litigation due to the operation of ERISA law.
Admittedly, it is unclear from the FAC which parties are actually the plan
administrators for any given plan. The FAC alternately alleges that the employers and
______________________________________________________________________________
CIVIL MINUTES—GENERAL
56

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
United served as plan administrator. (See, e.g., FAC ¶ 58 (“Plaintiffs are informed
and believe that Defendant, AARP, is a plan sponsor and plan administrator for the
AARP Employees Welfare Plan.”); ¶ 1067 (“United was in all instances the Claim
Administrator, and in some instances, the designated Plan Administrator, to whom
administrative duties were expressly delegated by the plans, and/or plan sponsors.”)).
Numerous parties contend that their plan documents explicitly designate the employer
as the plan administrator. (See Opp. to United Mot. at 20 n. 6 (“It appears that the
large majority, though not all, of Employers have been designated as the administrators
for their respective Plans.”)). However, at the very least, ERISA designates employers
as the “plan sponsor” “in the case of an employee benefit plan established or
maintained by a single employer.” 29 U.S.C. § 1002(16)(B)(i). Moreover, ERISA
designates the plan sponsor to be the default plan administrator if the plan does not
specifically designate another administrator. 29 U.S.C. § 1002(16)(A)(ii). As such, at
this early stage of the proceedings, with so little clarity as to who the plan
administrators are, the Court cannot discount that the Employer Defendants may be
plan administrators for their respective plans (as alleged in the FAC).
There is out-of-circuit precedent for the notion that a plan administrator may not
be the proper party to a benefits action if the plan administrator does not participate in
benefit decisions; rather, in such a case, the claims administrator that does make such
choices is the proper defendant. See, e.g. Moore v. Lafayette Life Ins. Co., 458 F.3d
416, 438 (6th Cir. 2006) (holding that the claims administrator is the proper defendant
in an action for ERISA benefits and dismissal of the plan administrator was proper
where the claims administrator exercised full authority to adjudicate claims for
benefits).
Within the Ninth Circuit, the rules regarding proper ERISA benefit claim
defendants were previously a bit unclear. However, Spinedex recently provided a bit
of clarity on the issue. In Spinedex, the Ninth Circuit acknowledged the open
questions regarding proper ERISA benefit claim defendants under Cyr, and held that
“proper defendants under § 1132(a)(1)(B) for improper denial of benefits at least
include ERISA plans, formally designated plan administrators, insurers or other
______________________________________________________________________________
CIVIL MINUTES—GENERAL
57

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
entities responsible for payment of benefits, and de facto plan administrators that
improperly deny or cause improper denial of benefits.” Spinedex, 770 F.3d at 1297.
As Spinedex makes clear, formally designated and de facto plan administrators
are proper defendants in an ERISA benefits action. Though the FAC also contains
allegations that United may be a plan administrator or de facto administrator for the
relevant plans, the Court is inclined to rule that it would be improper for the jointlyrepresented Employer Defendants to argue that they are improper defendants for Count
I, brought pursuant to § 1132(a)(1)(B). (See Omnibus Mot. at 36 n. 41 (“Not only does
ERISA §3(16) make the employer the presumptive ‘Plan Administrator,’ the plan
documents reflect that the employers, not United, are the designated ERISA §3(16)
‘Plan Administrator,’ which had the duty to provide documents under ERISA § 104(b).
JR Defs.’ Appendix F. Plaintiffs allege nothing to the contrary, apart from stating that
United was the ‘the designated Plan Administrator and/or the designated Claims
Administrator’—a formulation so vague that it plainly is insufficient to state a claim
that United was in fact the ‘plan administrator’ for any given plan. Am. Compl. ¶
849.”)). Moreover, the operation of ERISA law and allegations in the FAC weigh
against dismissing the remaining Employer Defendants at this time.
Unless the relevant, operative plan documents rule out the possibility that the
Employer Defendants fall into one of the Spinedex designations discussed above, the
Court concludes that they are proper Defendants for Count I at present.
a. Employer Defendants That Purportedly Are Not Plan
Administrators
The Court notes that there are a few Supplemental Memoranda arguing that the
Employer Defendant named is not the relevant plan administrator, such as those
submitted by: the Ensign Defendants (Docket No. 1088); the Medco Defendants
(Docket No. 1078); the Southwest Defendants (Docket No. 1098). However, the
support for these arguments stems from SPDs and/or it is unclear that the documents
submitted (even if they constitute the operative plans) are relevant for each of the
______________________________________________________________________________
CIVIL MINUTES—GENERAL
58

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
claims alleged in the FAC. The Court is not persuaded that it can rely on such
documents to dismiss Counts against these particular entities at this time.
Similarly, the Edison Defendants argue that Edison International is neither the
relevant plan’s sponsor nor its plan administrator; rather, the Edison Defendants assert
that “non-party Southern California Edison Company (‘SCE’) is the plan sponsor” and
“[n]on-party the Southern California Edison Company Benefits Committee
(‘Committee’) is the plan administrator.” (Edison Supp. Memo. (Docket No. 1070) at
1). The relevant patient for the Edison Defendants is Patient 122, and Appendix A to
the FAC (Docket No. 840-3) alleges that services were provided to Patient 122 on May
22, 2009. (FAC, Appendix A at 194). Filed with the Edison Supplemental
Memorandum is the Declaration of Matthew P. Eastus (“Eastus Declaration”), to
which is attached “a true and correct copy of relevant excerpts of the plan document
applicable to Patient 122.” (Eastus Decl. (Docket No. 1070-1) ¶ 4). The plan
document reflects that Edison International is neither the plan administrator nor the
plan sponsor for the relevant plan. (Eastus Decl., Ex. B (Docket No. 1070-1) at
EIX000433, EIX000435, EIX000445, EIX000509).
At the hearing, Plaintiffs indicated that they will replace Edison International
with the proper Defendant in their amended pleading.
b. The Union Pacific Defendants
The Union Pacific Defendants note that the “single employer” framework may
not apply to them as to all purportedly related plans.
At the hearing, Plaintiffs informed the Court that they had settled with the Union
Pacific Defendants. As such, the Court need not weigh the relative merits of
arguments pertaining to these Defendants.

______________________________________________________________________________
CIVIL MINUTES—GENERAL
59

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
2. Stating a Claim for Benefits Under the Terms of the Relevant
Plans
a. Standard of Review and Benefits Determinations
ERISA § 502(a)(1)(B) authorizes participants and beneficiaries of a plan to
bring suit to recover benefits to which they are entitled under the plan. The court will
then review the decision made by the administrator. See Moyle v. Liberty Mut.
Retirement Ben. Plan, 985 F. Supp. 2d 1247, 1262 (S.D. Cal. 2013) (citing Benson v.
Long Term Disability Income Plan for Employees of Xerox, 108 F. Supp. 2d 1074,
1080 (C.D. Cal. 1999)). “The United States Supreme Court has held that a denial of
benefits is reviewed de novo when the plan does not confer discretion on the
administrator ‘to determine eligibility for benefits or construe the terms of the plan.’”
Id. at 1256 (quoting Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)).
“If de novo review applies, no further preliminary analytical steps are required and the
court proceeds to evaluate whether the plan administrator correctly or incorrectly
denied benefits without regard to whether the administrator operated under a conflict
of interest.” Id. (citing Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 963 (9th
Cir. 2006) (en banc)).
If a plan does confer discretion (which it must do unambiguously), then the
applicable standard of review is abuse of discretion. Id. (citing Firestone Tire &
Rubber Co., 489 U.S. at 115)). There is an abuse of discretion if an administrator: “(1)
renders a decision without explanation, (2) construes provisions of the plan in a way
that conflicts with the plain language of the plan, or (3) relies on clearly erroneous
findings of fact.” Boyd v. Bert Bell/Pete Rozelle NFL Players Ret. Plan, 410 F.3d
1173, 1178 (9th Cir. 2005) (citing Bendixen v. Standard Ins. Co., 185 F.3d 939, 944
(9th Cir. 1999)). “A finding is ‘clearly erroneous’ when although there is evidence to
support it, the reviewing [body] on the entire evidence is left with the definite and firm
conviction that a mistake has been committed.” Id. (alteration in original) (quoting
Concrete Pipe and Products of California, Inc. v. Construction Laborers Pension Trust
for Southern California, 508 U.S. 602, 622, 113 S.Ct. 2264, 124 L.Ed.2d 539 (1993)
______________________________________________________________________________
CIVIL MINUTES—GENERAL
60

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
(internal quotation marks omitted). Under an abuse of discretion review, the
administrator’s decision will be upheld “‘if it is based upon a reasonable interpretation
of the plan’s terms and was made in good faith.’” Id. (quoting Estate of Shockley v.
Alyeska Pipeline Serv. Co., 130 F.3d 403, 405 (9th Cir. 1997)).
However, “[i]f a plan gives discretion to an administrator who is operating
under a conflict of interest, that conflict must be weighed as ‘a facto[r] in determining
whether there is an abuse of discretion.’” Moyle, 985 F. Supp. 2d at 1257 (alteration in
original) (quoting Firestone Tire & Rubber Co., 489 U.S. at 115, 109 S.Ct. 948)
(internal quotation marks omitted). “In following the United States Supreme Court,
the Ninth Circuit has held that the ‘[a]buse of discretion review applies to a discretiongranting plan even if the administrator has a conflict of interest.’” Id. (quoting Abatie,
458 F.3d at 956). In such circumstances, “the standard of review is an abuse of
discretion review ‘but a review informed by the nature, extent, and effect on the
decision-making process of any conflict of interest that may appear in the record.’” Id.
(quoting Abatie, 458 F.3d at 967). In contrast, “if an administrator ‘engages in
wholesale and flagrant violation of the procedural requirements of ERISA and thus
acts in utter disregard of the underlying purpose of the plan as well,’ the Court reviews
de novo the administrator’s decision to deny benefits.” Id. (quoting Abatie, 458 F.3d at
971).
Under an abuse of discretion review, the Court evaluates only the administrative
record. Mitchell v. CB Richard Ellis Long Term Disability Plan, 611 F.3d 1192, 1200
(9th Cir. 2010) (citing Abatie, 458 F.3d at 970).
b. Pleading Requirements
“To state a claim [for benefits under ERISA § 502(a)(1)(B)], plaintiff must
allege facts that establish the existence of an ERISA plan as well as the provisions of
the plan that entitle it to benefits. A plan is established if a reasonable person ‘can
ascertain the intended benefits, a class of beneficiaries, the source of financing, and
procedures for receiving benefits.’ Failure to identify the controlling ERISA plans
makes a complaint unclear and ambiguous.” Forest Ambulatory Surgical Associates
______________________________________________________________________________
CIVIL MINUTES—GENERAL
61

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
(“Forest Ambulatory”), L.P. v. United HealthCare Ins. Co., 10-CV-04911-EJD, 2011
WL 2748724, at *5 (N.D. Cal. July 13, 2011) (citations omitted). “Accordingly, ‘[a]
plaintiff who brings a claim for benefits under ERISA must identify a specific plan
term that confers the benefit in question.’” Sanctuary Surgical Ctr., Inc. v.
UnitedHealth Grp., Inc. (“Sanctuary Surgical”), 10-81589-CIV, 2013 WL 149356
(S.D. Fla. Jan. 14, 2013), appeal dismissed (May 15, 2013) (quoting Stewart v.
National Educ. Ass’n, 404 F. Supp. 2d 122, 130 (D.D.C. 2005)).
In Sanctuary Surgical, the court evaluated a case in which 966 derivative ERISA
claims were at issue. The Sanctuary Surgical plaintiffs, out-of-network providers,
sought payment for medical services (manipulation under anesthesia procedures or
“MUAs”) provided to United members. Sanctuary Surgical, 2013 WL 149356, at *1.
The plaintiffs alleged that prior to performing the relevant services, they called United
to “confirm out-of-network coverage for the requested services,” and were purportedly
told during each call that “there was coverage for plaintiffs’ facility fees and for the
procedures involved.” Id. Plaintiffs alleged that “they had no access to any of the
health insurance plans at issue when they placed the pre-authorization calls for
verification of benefits, and therefore ‘had to rely’ on United’s verbal verification of
coverage and promise of payment before rendering treatment.” Id. In testing the
sufficiency of the allegations in the complaint as to the plaintiffs’ claim for benefits,
the court noted that application of the pleading requirements for a benefits claim meant
that “plaintiffs must at least identify the specific plan provisions under which coverage
is conferred with respect to each of the 996 derivative ERISA claims identified in its
complaint, and to allege sufficient facts to plausibly show the services rendered to each
patient were indeed covered under that particular plan.” Id. at * 3 (emphasis removed).
The Sanctuary Surgical court found that this standard had not been met by the
plaintiffs at issue in that case. The plaintiffs cited six exemplar summary plan
descriptions and two certificates of coverage “which arguably encompass[ed] coverage
for the MUA procedures at issue,” and alleged that “none of the six exemplar plans
contain language that specifically excludes MUAs from coverage.” Id. at *3-6.
However, the court found this unavailing, as the plaintiffs had failed to cite to relevant
exclusionary language that would allow the court “to determine whether the MUAs
______________________________________________________________________________
CIVIL MINUTES—GENERAL
62

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
were actually covered services even under the six exemplar summary plan descriptions
which plaintiffs selectively cite[d],” and did not provide any support “for the
speculative allegation, purportedly made ‘upon information and belief,’ that all 300 of
the plans at issue contain[ed] ‘similar’ coverage language.” Id. at *6.
Similarly, in Forest Ambulatory, the court found allegations that “the benefits
agreements on which it seeks relief ‘include employee welfare benefit plans covered
by [ERISA],’ and that ‘[u]nder the terms of the relevant written ERISA plans and
written Assignment Agreements, United Healthcare was obligated to pay [the provider]
the amount of the Claims submitted under the ERISA plans for the procedures
performed by [the provider’s] medical staff for the United Insureds’” too conclusory to
satisfy Iqbal/Twombly pleading standards. Forest Ambulatory, 2011 WL 2748724, at
*5. The court noted that the complaint need not describe a particular plan in detail,
such as by giving policy numbers, but that the allegation had to “raise the existence of
an ERISA plan above [a] speculative level.” Id. (internal quotation marks and citations
omitted). Furthermore, the court found the “alleged violations are insufficient without
reference to the terms of the controlling plans,” and that these failings mandated
dismissal of an ERISA cause of action. Id.
In contrast, the court in Encompass Office Solutions, Inc. v. Ingenix, Inc.
(“Encompass”), 775 F. Supp. 2d 938 (E.D. Tex. 2011) held that relatively general
allegations were sufficient to state a claim for breach of contract and entitlement to
benefits under ERISA. These included allegations that: United’s plans “provide
coverage for both in and out-of-network ‘[s]urgery and related services received on an
outpatient basis at a Hospital or Alternate Facility or in a Physician’s office . . . .
Benefits under this section include: The facility charge and the charge for supplies and
equipment. Physician services for anesthesiologists, pathologists and radiologists’”; the
plaintiff’s patients had PPO or POS benefits that allowed them to “seek medically
necessary benefits, whether in-network or not,” and were entitled to reimbursement for
their claims because the plaintiff “is an out-of-network provider for United, which
assists in performing outpatient surgeries in physician’s offices by providing supplies,
equipment, and nurses—covered services”; that the plaintiff’s claims “should not have
______________________________________________________________________________
CIVIL MINUTES—GENERAL
63

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
been denied as United’s plans provide coverage for the very services [the plaintiff]
performs”; United initially paid but then slowly began to deny the plaintiffs’ claims;
and United made untrue representations regarding its reimbursement percentages.
Encompass, 775 F. Supp. 2d at 953-54, 969.
Similarly, in In re WellPoint, Inc. Out-of-Network UCR Rates Litig. (“WellPoint
I”), 865 F. Supp. 2d 1002 (C.D. Cal. 2011), the defendants argued that a plaintiff who
brings suit for ERISA benefits must specify the plan terms that entitle him to the
benefits, and that the WellPoint I plaintiffs had failed to do so. WellPoint I, 865 F.
Supp. 2d at 1040. The court, however, found that “Plaintiffs [had] sufficiently
identif[ied] specific plan terms promising medical reimbursement benefits for [out-ofnetwork services] at the lesser of the billed charged or the UCR, benefits which were
denied by Defendants.” Id. The court held that the plaintiffs had “identified specific
plan terms conferring reimbursement benefits and [had] alleged sufficient facts
demonstrating how” the defendants had “deprived” the plaintiffs of these full benefits
by providing “flawed and ‘scrub[bed]’ data” to the entity that provided the relevant
out-of-network reimbursement data. Id. at 1016, 1040.
c. Sufficiency of Allegations
As a preliminary matter, Plaintiffs contend that the applicable standard of review
for the benefits “decisions” here is de novo, due to United’s purported conflicts and
ERISA procedural violations. (See FAC ¶¶ 893, 982-85). However, as discussed
below, the pleadings are deficient such that the Court need not even evaluate the
appropriate standard of review.
Defendants rely on Sanctuary Surgical, arguing that the pleading deficiencies in
that case (failure of the plaintiffs to argue the terms of the relevant plans that
demonstrate conditions of coverage) are applicable here. (Omnibus Mot. at 11-13).
Plaintiffs, in turn, contend that “Defendants failed to comply with the ERISA
regulations requiring detailed notice of every reason for the denial of the claim,
including citations to specific provisions of the plan.” (Opp. to Omnibus Mot. at 37).
As such, Plaintiffs reason, Defendants cannot now attempt to argue that Plaintiffs’
______________________________________________________________________________
CIVIL MINUTES—GENERAL
64

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
Count should be dismissed for failure to cite to plan terms, when the fault for Plaintiffs
not having these terms readily available lies with Defendants themselves. (Id. at 3738). Moreover, Plaintiffs distinguish Sanctuary Surgical, classifying that case as an
“outlier,” and noting that “[o]ther courts have recognized . . . that plausible allegations
that merely describe the relevant plan provisions in general terms are more than
sufficient to put defendants on notice as to the benefits sought.” (Id. at 38 (citing
Encompass, 775 F. Supp. 2d at 969; WellPoint I, 865 F. Supp. 2d 1002, 1040-42 (C.D.
Cal. 2011)).
In terms of actual allegations, Plaintiffs cite the fact that they verified that each
patient had valid coverage and received either an authorization or statement that no
authorization was needed; in light of this, Plaintiffs claim that “it would be implausible
to conclude, in light of such representations, that the Plaintiffs’ hundreds of benefits
claims all relate to non-covered patients or procedures.” (Opp. to Omnibus Mot. at 3839 (emphasis in original)). Specifically, Plaintiffs allege in the FAC that:
The patients whose claims are at issue in this lawsuit are all morbidly
obese individuals who are suffering from serious medical problems
associated with their obesity.
All of these patients choose Preferred Provider Organization (“PPO”)
insurance, rather than HMO insurance, through their employers so
that they can receive their medical services from the physicians and
other medical providers of their choice, regardless of whether those
physicians are in-network or out-of-network. United Healthcare, who
administers the PPO insurance for these employers, advertises on its
website that the benefits of its PPO policies include: “The freedom to
choose any doctor for your health care needs.”
All of these patients’ healthcare providers requested that United
Healthcare authorize the patients to undergo the extensive preoperative tests necessary to determine whether they are qualified to
______________________________________________________________________________
CIVIL MINUTES—GENERAL
65

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
receive Lap-Band surgery. United Healthcare ther [sic] provided
authorization for the plaintiffs’ healthcare providers to perform the
procedures, or were informed that no authorization was needed. After
receiving the authorizations, or being informed that no authorization
was necessary, the patients went through months of pre-operative
tests.
...
No provisions in those benefit plans, whether in their Summary
Plan Descriptions (SPDs) and Evidences of Coverage (EOCs),
justified the failure to pay the usual and customary fees for services
charged by outpatient surgical centers such as those managed and
operated by the Plaintiffs, and to instead pay nothing. It was
arbitrary, capricious and improper for United to do so. In fact,
during the insurance verification process for most if not all of the
patients in this case, United represented to Plaintiffs that it would pay
the Plaintiff Providers’ usual and customary fees. Plaintiffs sought
information during this process about potential limitations on the
reimbursement of Plaintiffs fee each time prior to providing services,
and specifically inquired each time prior to providing services as to
how United’s fee provisions would apply to their situation.
Defendants withheld information in response to such requests, and
therefore misled plaintiffs into thinking that the entire Plaintiffs’
usual and customary fees would be paid.
Likewise, no provisions anywhere in those plans justified the failure
to issue a final decision or denial on any of Plaintiffs’ claims. This
was therefore arbitrary, capricious, and a breach of United’s fiduciary
duties to plan participants and fiduciaries. It was also a violation of
regulations promulgated under ERISA by the Department of Labor,
______________________________________________________________________________
CIVIL MINUTES—GENERAL
66

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
which require that claims be adjudicated by the claims administrator
(e.g., United) within 90 days after receipt of the claim.
(FAC ¶¶ 3-5, 867-868 (emphasis added)).
The general allegations in this case closely resemble those in Sanctuary
Surgical. For example, in both cases there are allegations that Plaintiffs telephoned
United and received confirmation of out-of-network coverage for the requested
services, and that Plaintiffs did not have access to the underlying plans and so had to
rely on United’s verbal verification and promise of payment prior to rendering
services. Although the court in Sanctuary Surgical imposed a rather stringent pleading
requirement which the Court is not necessarily adopting, the Court does note the
similarities between the two cases.
Moreover, as Defendants contend, WellPoint I and Encompass are both
distinguishable, as they involve plaintiffs who “alleged specific plan terms or included
specific allegations regarding the plan terms.” (Omnibus Reply at 5). In Encompass,
the plaintiff alleged that certain services that it provided were covered under the
insureds’ plans, and also discussed the benefits allowed under the plans for such
services. Encompass, 775 F. Supp. 2d at 953-54, 969. Similarly, in WellPoint I, the
benefit issues were reimbursement-rate specific, and the allegations as to relevant plan
terms went to that issue. WellPoint I, 865 F. Supp. 2d at 1040.
Here, Plaintiffs may allege that they were provided authorizations and that no
plan terms “justified the failure to pay the usual and customary fees for services
charged by outpatient surgical centers such as those managed and operated by the
Plaintiffs, and to instead pay nothing,” but they do not actually allege that the specific
services they provided to the patients at issue were covered under the terms of the
relevant plans or describe the plan terms that would support such coverage. They do
not plead exemplar language or even make allegations regarding such language that is
then extrapolated to the remaining plans.
______________________________________________________________________________
CIVIL MINUTES—GENERAL
67

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
Furthermore, to the extent that Plaintiffs try to negate their burden to plead plan
terms on the basis of United’s purported failure to provide plan documents,
Defendants’ argument in the Omnibus Reply to the contrary is persuasive:
Plaintiffs cannot plead coverage by alleging that they were told in
phone conversations with United that benefits were available for the
performed procedures. Such allegations, while perhaps relevant to the
estoppel claim that they allege in Count IV (and now seek to stay), are
irrelevant as to whether coverage exists under the terms of the Plans.
See Pls.’ Opp. at 38; see also Sanctuary, 2013 WL 149356, at *1-7
(dismissing claim for benefits based on failure to plead coverage
despite plaintiffs’ assertion that United confirmed coverage during
preauthorization telephone calls). The issue in a claim for benefits
under Section 502(a)(1)(B) is whether the terms of the plan provide
coverage, and assurances allegedly made over the telephone are not
terms of the plan.
(Omnibus Reply at 9).
In short, the Court is inclined to agree that Plaintiffs have failed to meet their
pleading burden for purposes of their § 502(a)(1)(B) Count. The Court notes that this
is a close call under the facts of this case, and further observes that the FAC contains
allegations that bear on their ERISA benefits Count. However, the Court will provide
leave to amend. In the Second Amended Complaint, Plaintiffs will have to plead that
for each plan, the terms of the plan: (1) provide coverage for each of the procedures at
issue in this case; and (2) dictate that these covered services would be paid according
to a specific reimbursement rate (such as the reasonable and customary fees for
services charged by outpatient surgical centers), which must be specified. Plaintiffs
should then allege that Defendants failed to reimburse for the covered services
provided by Plaintiffs according to this reimbursement rate provided in the plans.
Given the allegations in this case regarding absence of access to plan documents, the
Court will permit these allegations to be made “on information and belief.”
______________________________________________________________________________
CIVIL MINUTES—GENERAL
68

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
3. Plaintiffs’ Counts as Barred by Plan Terms
Defendants also argue that Plaintiffs’ Counts are barred by various plan terms,
such as anti-assignment provisions, forum selection clauses, coverage exclusions, and
time limitations. (Omnibus Mot. at 13-17). Plaintiffs contend that the SPDs submitted
with the Motions are not proper representations of the plans’ terms, and therefore
cannot be relied upon as proof that plans contain various provisions. (Opp. to
Omnibus Mot. at 12-13 (“The vast majority of submissions by Plan Defendants consist
of selective excerpts from their Summary Plan Descriptions (SPDs), rather than the
operative plan documents that govern the plans.”) (emphasis in original)).
a. SPDs and Plan Documents
“ERISA requires welfare benefit plans to be established and maintained pursuant
to a written instrument. 29 U.S.C. §§ 1102(a)(1), 1102(b). In addition, an employer
must provide employees with a written Summary Plan Description (‘SPD’) which
describes the employees’ plan. 29 U.S.C. § 1022(a)(1).” Pisciotta, 91 F.3d at 1329.
An SPD is the “statutorily established means of informing participants of the
terms of the plan and its benefits.” Alday v. Container Corp. of Am., 906 F.2d 660,
665 (11th Cir. 1990) (citing 29 U.S.C. §§ 1022(a) and 1102; 29 C.F.R. § 2520.102–2).
The rule in the Ninth Circuit used to be that an SPD is a plan document that ought to
be considered when interpreting an ERISA plan. Bergt v. Ret. Plan for Pilots
Employed by MarkAir, Inc., 293 F.3d 1139, 1143 (9th Cir. 2002) (noting that 29
U.S.C. § 1104(a)(1)(D) requires plan fiduciaries to act “solely ‘in accordance with the
documents and instruments governing the plan,’” “[e]mployers are required to furnish
a copy of the SPD (not the master plan document)” pursuant to 29 U.S.C. § 1022(a)(b), and the SPD is the “‘statutorily established means of informing participants of the
terms of the plan and its benefits,’” and that, therefore, the Ninth Circuit would follow
other courts that have held that the SPD is part of the ERISA plan (citations omitted)).
See also Pisciotta, 91 F.3d at 1330 (granting motion for summary judgment as to an
______________________________________________________________________________
CIVIL MINUTES—GENERAL
69

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
alleged promise when the document purportedly containing it was not an SPD, and
therefore there were no existing plan documents that supported such a promise).
However, the Supreme Court’s decision in Cigna Corporation v. Amara, --- U.S.
---, 131 S.Ct. 1866 (2011) has shifted the landscape. In Amara, the Court clarified that
SPDs make statements “about the plan, but . . . their statements do not themselves
constitute the terms of the plan for purposes of § 502(a)(1)(B).” Id. at 1878 (emphasis
in original). A recent decision by a court in this District discussed the impropriety of
relying on Bergt in light of Amara. See Mull v. Motion Picture Indus. Health Plan, --F. Supp. 3d ---, 2014 WL 4854548 (C.D. Cal. Sept. 30, 2014) (“The Court cannot
follow [the statement that the SPD is a plan document and should be considered when
interpreting an ERISA plan] in Bergt, because it was effectively overruled by Amara’s
holding [that SPDs, by themselves, do not constitute the terms of the plan].”).
In Eugene S. v. Horizon Blue Cross Blue Shield of N.J., 663 F.3d 1124 (10th Cir.
2011), a case involving denial of residential treatment costs under a benefits plan, the
Tenth Circuit applied Amara in deciding whether a plan administrator was entitled to
deferential review under the terms of the relevant plan. Eugene S., 663 F.3d at 1131.
The Eugene S. court viewed Amara as providing one of two propositions under the
facts of that case: “(1) the terms of the SPD are not enforceable when they conflict
with governing plan documents, or (2) the SPD cannot create terms that are not also
authorized by, or reflected in, governing plan documents.” Id. However, the court did
not need to follow either proposition, since it decided that the language of the relevant
SPD was the language of the plan. Id. The court did note, however, that a district
court can only rely on the language of an SPD once it has concluded that the SPD is
part of the underlying plan. Id.
In contrast, in Zalduondo v. Aetna Life insurance Company, 941 F. Supp. 2d
125, 133-34, 136 (D.D.C. 2013), the court evaluated a less clear-cut situation than
Eugene S. Namely, an SPD that was in evidence provided Aetna with discretion, but
the plan documents themselves were not in evidence, and the SPD contained a
disclaimer that it is not the verbatim language of the plan (though it did not “expressly
______________________________________________________________________________
CIVIL MINUTES—GENERAL
70

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
un-incorporate the SPD from the Plan”). Zalduondo, 941 F. Supp. 2d at 133-36. As
such, the court noted that it “may eventually rely on the terms in the SPD . . . but only
after the SPD and the official Plan document are before the Court so that the parties
may argue, and so that the Court may decide, whether the Firestone discretionary
standard of review applies and whether Zalduondo was inappropriately denied benefits
under the terms of the Plan.” Id. at 136 (emphasis in original). The court, accordingly,
denied Aetna’s motion for summary judgment without prejudice and ordered the plan
documents to be produced. Id. See also McCravy v. Metro. Life Ins. Co., 690 F.3d
176, 182 n.5 (4th Cir. 2012) (“We note that, per Amara, ‘summary documents,
important as they are, provide communication with beneficiaries about the plan, but
that their statements do not themselves constitute the terms of the plan. . . .’ 131 S.Ct.
at 1878. The record before us reflects, and the parties at oral argument confirmed, that
only the summary plan document, and not the plan itself, was before the district court
and before us. Because McCravy’s claims and MetLife’s defenses depend upon the
contents of the plan, their resolution on remand will require the actual plan
documents.”).
b. Consideration of SPDs in This Case
Plaintiffs initially mention SPDs as part of a benefit plan. (FAC ¶ 867 (“No
provisions in those benefit plans, whether in their Summary Plan Descriptions (SPDs)
and Evidences of Coverage (EOCs), justified the failure to pay the usual and
customary fees for services charged by outpatient surgical centers such as those
managed and operated by the Plaintiffs, and to instead pay nothing.”)). However,
Plaintiffs later contest the use of SPDs as proper representation of the plans in their
Opposition to the Omnibus Motion: “The vast majority of Defendants submitted
Summary Plan Descriptions (‘SPDs’), which are not operative plan documents and
cannot be relied upon to dismiss Plaintiffs’ claims.” (Opp. to Omnibus Mot. at 2).
Defendants argue in the Omnibus Reply that for health plans, unlike the
retirement plans at issue in Amara, the SPDs “almost always constitute the ‘plan’ itself
(or a portion of it).” (Omnibus Reply at 8). Moreover, Defendants argue that “in a
______________________________________________________________________________
CIVIL MINUTES—GENERAL
71

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
colloquy with the Court at the August 6, 2014, hearing, counsel for Plaintiffs expressly
stated that he had ‘no objection’ to counsel for the Jointly Represented Defendants’
suggestion ‘to have a single affidavit that would collect and collate . . . excerpts . . .
[from the] summary plan descriptions’ for the purpose of ‘authenticating the various
[plan] provisions.’ Sec. Supp. Decl. of Heather M. McCann, Ex. 1 (Hrg. Tr. at 10:312:2 (Aug. 6, 2014)). As discussed at the hearing, submitting 6-10 pages of excerpts of
the relevant provisions of SPDs that often exceed 60-70 pages lessens the burden on
the Court. Id. at 10:11-21.” (Omnibus Reply at 8 (footnote omitted)).
The transcript for the August 6, 2014 hearing does, indeed, appear to support
Defendants’ contention. However, under Amara, the Court does not have power to
consider the SPDs as plan terms without evaluating whether the SPDs are part of the
plan in each instance. While several Defendants posit that SPDs often or even
generally constitute the terms of the relevant plan, the Court has before it no authority
demonstrating that this is always the case, such that consideration of the SPDs would
be acceptable absent confirmation that this is so in each instance.
In light of Amara, statements that SPDs generally constitute the plan terms are
insufficient to demonstrate that any specific SPDs proffered reflect relevant plan
language. If the documents submitted are not manifestly reflective of the operative
plan terms, the Court will not consider them at this time in support of arguments that
any particular plan contains specific language, including anti-assignment clauses,
forum selection clauses, and contractual time limitations.
c. Specific Types of Plan Terms
Separate and apart from which documents may be considered when evaluating
“plan terms,” various types of terms are also at issue. As the effect of anti-assignment
provisions has been previously evaluated, the Court will not reiterate this discussion
here. However, the Court will discuss the effect of forum selection clauses, coverage
exclusions, and time limitations.
______________________________________________________________________________
CIVIL MINUTES—GENERAL
72

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
i.

Forum Selection Clauses

Defendants argue that plans containing forum selection clauses “should be
dismissed because their contracts explicitly govern where a legal dispute must be
resolved, and it is not in this Court.” (Omnibus Mot. at 15). Alternatively, Defendants
request that the cases against these Defendants be transferred “to the appropriate courts
under 28 U.S.C. §1404(a).” (Id. at 15-16).
1. Enforceability of Forum Selection Clauses
For the reasons discussed in the Order adjudicating the Aegon Motion, the Court
rules that forum selection clauses are applicable in ERISA cases such as this.
Moreover, Plaintiffs have failed to demonstrate that enforcing forum selection clauses
would be “unreasonable” in this case, as that term is understood under M/S Bremen v.
Zapata Off–Shore Co., 407 U.S. 1 (1972). Further, Plaintiffs have not demonstrated
why this case should be among the “exceptional” cases in which forum selection
clauses are insufficient to defeat transfer, as discussed in Atlantic Marine Construction
Co. v. U.S. District Court for the Western District of Texas (“Atlantic Marine”), --U.S. ---, 134 S.Ct. 568 (2013). Finally, Plaintiffs arguments regarding lack of notice
are unpersuasive.
However, even resolving all of these threshold issues, the wording of the various
forum selection clauses at issue here will have some bearing on their effect.
2. Permissive and Mandatory Clauses
“The prevailing rule is . . . that where venue is specified with mandatory
language the clause will be enforced.” Docksider, Ltd. v. Sea Tech., Ltd., 875 F.2d
762, 764 (9th Cir. 1989) (citations omitted). “To be mandatory, a clause must contain
language that clearly designates a forum as the exclusive one.” N. Cal. District
Council of Laborers v. Pittsburg-Des Moines Steel Co., 69 F.3d 1034, 1037 (9th Cir.
1995). However, “[w]hen only jurisdiction is specified the clause will generally not be
______________________________________________________________________________
CIVIL MINUTES—GENERAL
73

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
enforced without some further language indicating the parties’ intent to make
jurisdiction exclusive.” Docksider, Ltd., 875 F.2d at 754.
As such, the effect of mandatory and permissive clauses will potentially vary in
this case. The Court evaluates these two lines of analysis below.
3. Effect of Mandatory Forum Selection Clauses
Plaintiffs argue that “Defendants cite no cases suggesting that dismissal for
improper venue under 28 U.S.C. § 1406 is warranted, rather than transfer.” (Opp. to
Omnibus Mot. at 37). Defendants, in turn, contend that:
Contrary to Plaintiffs’ argument . . . the Sixth Circuit considered
whether dismissal or transfer is warranted, and upheld the district
court’s dismissal of the plaintiff’s complaint based on the forum
selection clause. Smith, 2014 WL 5125633, at *8-9. Defendants’
forum selection clauses are valid and should be enforced either by
dismissal under Rule 12(b)(6) or, in the alternative, transferred.”
(Omnibus Reply at 30).
At the outset, the Court notes that the parties seem to disagree as to what may be
the relevant basis for dismissal in light of the forum selection clauses: § 1406 or Rule
12(b)(6). The Omnibus Motion mentions neither § 1406 nor Rule 12(b)(3), both of
which provide for dismissal in the event of improper venue.
In Defendants’ cited case, Smith v. Aegon Companies Pension Plan, 769 F.3d
922 (6th Cir. 2014), the Sixth Circuit found that the district court’s dismissal pursuant
to Rule 12(b)(6), when the plaintiff made no request for a transfer of venue, was not an
abuse of discretion. Smith, 769 F.3d at 933-34. The Smith court noted that Atlantic
Marine rejected the argument that dismissal under Rule 12(b)(3) or 28 U.S.C. §
1406(a) was the appropriate mechanism through which to enforce a forum selection
______________________________________________________________________________
CIVIL MINUTES—GENERAL
74

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
clause (presumably, when the initial venue is otherwise proper under federal statute).
Smith, 769 F.3d at 933-34 (citing Atlantic Marine, 134 S.Ct. at 575). However, the
Smith court also noted that Atlantic Marine had not involved a motion to dismiss
pursuant to Rule 12(b)(6) and the Court had “declined to apply its holding to Rule
12(b)(6) dismissals.” Id. at 934 (citing Atlantic Marine, 134 S.Ct. at 580).
Here, the forum selection clause-based arguments in the Omnibus Motion are
phrased in terms of dismissal or, in the alternative, transfer under § 1404(a). (Omnibus
Mot. at 15-16 (“These plans, referred to as the ‘Forum Selection Clause Plans,’ see JR
Defs.’ Appendix C, should be dismissed because their contracts explicitly govern
where a legal dispute must be resolved, and it is not in this Court. Alternatively, the
Forum Selection Clause Plans move to transfer their respective cases to the appropriate
courts under 28 U.S.C. §1404(a).”)). As such, the scenario before the Court is
somewhat distinguishable from Smith, in which transfer had not been requested. Even
so, when assessing the proper remedy in this case, the Court must evaluate whether
transfer pursuant to § 1404(a) (which is only applicable if the initial venue is proper) or
dismissal pursuant to Rule 12(b)(6) would be appropriate.
a. Transfer and 28 U.S.C. § 1404(a)
“For the convenience of parties and witnesses, in the interest of justice,” an
action may be transferred pursuant to 28 U.S.C. § 1404(a) to another “district or
division” where it may have been initially brought or a “district or division to which all
parties have consented.” 28 U.S.C. § 1404(a). “The burden is on the moving party to
establish that a transfer would allow a case to proceed more conveniently and better
serve the interests of justice.” Amini Innovation Corp. v. JS Imports, Inc., 497 F. Supp.
2d 1093, 1109 (C.D. Cal. 2007). However, a motion to transfer should not merely shift
the inconvenience from the moving party to the opposing party. See Decker Coal Co.
v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986).
Notably, § 1404 allows only for the transfer of an entire “civil action.” 28
U.S.C. § 1404(a) (“For the convenience of parties and witnesses, in the interest of
______________________________________________________________________________
CIVIL MINUTES—GENERAL
75

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
justice, a district court may transfer any civil action to any other district or division
where it might have been brought or to any district or division to which all parties have
consented.”); see also Chrysler Credit Corp. v. Country Chrysler, Inc., 928 F.2d 1509,
1518 (10th Cir. 1991) (“Section 1404(a) only authorizes the transfer of an entire action,
not individual claims.” (citations omitted)). “But where certain claims in an action are
properly severed under Fed.R.Civ.P. 21, two separate actions result; a district court
may transfer one action while retaining jurisdiction over the other.” Chrysler Credit
Corp., 928 F.2d at 1519 (footnote and citations omitted). Therefore, any § 1404(a)
transfer in this action would either be wholesale (a scenario that is clearly not feasible),
or preceded by severance of Counts against particular Defendants.
With this in mind, “[t]he threshold question under Section 1404(a) requires the
court to determine whether the case could have been brought in the forum to which the
transfer is sought.” Roling v. E*Trade Sec., LLC, 756 F. Supp. 2d 1179, 1184 (N.D.
Cal. 2010) (citing 28 U.S.C. § 1404(a); Hatch v. Reliance Ins. Co., 758 F.2d 409, 414
(9th Cir. 1985)). “If venue would be appropriate in the would-be transferee court, then
the court must make an ‘individualized, case-by-case consideration of convenience and
fairness.’” Id. (quoting Jones v. GNC Franchising, Inc., 211 F.3d 495, 498 (9th Cir.
2000)).
“In the typical case not involving a forum-selection clause, a district court
considering a § 1404(a) motion (or a forum non conveniens motion) must evaluate both
the convenience of the parties and various public-interest considerations.” See Atlantic
Marine, 134 S.Ct. at 581 (footnote omitted). “The calculus changes, however, when
the parties’ contract contains a valid forum-selection clause, which ‘represents the
parties’ agreement as to the most proper forum.’” Id. at 581 (quoting Stewart Org.,
Inc. v. Ricoh Corp., 487 U.S. 22, 31 (1988)). The presence of a valid forum selection
clause alters the § 1404(a) analysis in three ways: (1) “the plaintiff’s choice of forum
merits no weight” if the suit was filed in violation of the forum selection clause; (2) the
court “should not consider arguments about the parties’ private interest”; and (3) the
court to which the action is transferred should not apply “the original venue’s choiceof-law rules.” Id. at 581-83. Thus, the presence of a mandatory forum selection
______________________________________________________________________________
CIVIL MINUTES—GENERAL
76

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
clause will render a § 1404(a) transfer analysis more straightforward than it might
otherwise be.
The Court now turns to the first question that determines whether § 1404(a) is
applicable in the present suit: propriety of initial venue.
b. Propriety of Venue in This Court
General venue in diversity and federal question cases is governed by 28 U.S.C.
§ 1391(b). However, ERISA contains its own venue statute. See 29 U.S.C.
§ 1132(e)(2). While venue generally must be proper as to all claims, the doctrine of
“pendent venue” can permit proper venue as to a federal claim to satisfy venue
requirements for closely related claims. See Martensen v. Koch, 942 F. Supp. 2d 983,
998 (N.D. Cal. 2013), on reconsideration in part, No. C-12-05257 JSC, 2013 WL
4734000 (N.D. Cal. Sept. 3, 2013) (“While the Ninth Circuit does not appear to have
addressed the issue, courts in this District have applied the pendent venue doctrine,
which holds that if venue is proper on one claim, the court may find pendent venue for
claims that are closely related. A court may consider the principles of judicial
economy, convenience, avoidance of piecemeal litigation, and fairness to the litigants
in making its decision. These are the same factors the Ninth Circuit has directed courts
to consider when evaluating whether to apply the doctrine of pendent personal
jurisdiction.” (citations omitted)). Moreover, a specific venue provision will control
over a general provision. See, e.g., Pacer Global Logistics, Inc. v. Nat’l Passenger
R.R. Corp., 272 F. Supp. 2d 784, 790-91 (E.D. Wis. 2003) (“To summarize, where a
special venue provision lays venue of a claim in certain specified districts, such
provision controls venue for all claims arising out of the same nucleus of operative
facts. This is so because all such claims may be classified as one cause of action for
purposes of venue. Any claim governed by the general venue statute that is part of the
cause of action may be brought in the district specified by the special venue statute
under the doctrine of pendent venue.” (citations and footnote omitted)). As such, in
light of ERISA’s specific venue provision and the interrelated nature of the Counts at
issue, the Court considers the ERISA venue provision controlling in this case.
______________________________________________________________________________
CIVIL MINUTES—GENERAL
77

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
Pursuant to 29 U.S.C. § 1132(e)(2), an ERISA action “may be brought in the
district where the plan is administered, where the breach took place, or where a
defendant resides or may be found.” 29 U.S.C. § 1132(e)(2). The Ninth Circuit has
recognized that Congress’s inclusion of the word “found” in this statute is indicative of
its intent “to expand, rather than restrict, the range of permissible venue locations” for
ERISA actions. Varsic v. U.S. Dist. Court for Cent. Dist. of California, 607 F.2d 245,
247-48 (9th Cir. 1979). For purposes of this statute, a defendant is “found” in a district
if personal jurisdiction may properly be exercised over the defendant there. Id. at 248.
As such, this inquiry requires an analysis of whether a defendant’s “contacts with the
Central District of California are sufficient to satisfy the ‘minimum contacts’ test for
personal jurisdiction” laid out in International Shoe Co. v. Washington, 326 U.S. 310,
316 (1945). Id. at 248-49.
In the Opposition to the Aegon Motion, Plaintiffs assert that venue is proper here
under § 1132(e)(2) because the benefits were to be received by Plaintiffs in this
District, and “[d]istrict courts hold that the location where the ‘breach’ takes place for
purposes of ERISA venue is where the beneficiary was to receive his benefits.” (Opp.
to Aegon Mot. at 6 (citing Keating v. Whitmore Mfg. Co., 981 F. Supp. 890, 893 (E.D.
Pa. 1997); Wallace v. Am. Petrofina, Inc., 659 F. Supp. 829, 832 (E.D. Tex. 1987);
Helder v. Hitachi Power Tools, USA Ltd., 764 F. Supp. 93, 95 (E.D. Mich. 1991))).
Plaintiffs elaborate that, “[i]n this case, all of the billing for the patients’ medical
services occurred in this judicial district, and thus the injury that Plaintiffs incurred due
to Defendants’ failure to pay occurred here.” (Opp. to Aegon Mot. at 6 (citations
omitted)).
From the FAC, it is clear that “a defendant resides or may be found” in this
District, rendering venue proper here. This ruling dispenses with the arguments raised
in various Supplemental Memoranda that venue is improper in this Court.
The Court further rules that transfer pursuant to § 1404 is preferable to
dismissal.
______________________________________________________________________________
CIVIL MINUTES—GENERAL
78

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
The entities that have advanced forum selection arguments are: the Alcon
Defendants (Omnibus Motion); the CNA Financial Defendants (Omnibus Motion); the
Conmed Defendants (Omnibus Motion); the Aegon Defendants (Docket No. 1066); the
Dr. Pepper Snapple Group, Inc. Defendants (Docket No. 1149-5); the Enterprise
Holdings, Inc. Defendants (Docket No. 1149-6); the OCLC Online Computer Library
Center, Inc. (Docket No. 1149-14); the Payless Shoesource, Inc. Defendants (Docket
Nos. 1107, 1151); the Probuild Holdings, Inc. Defendants (Docket No. 1149-16); and
the Southwest Airlines Co. Defendants (Docket No. 1098).
The Court will evaluate the Payless Defendants’ forum selection clause in
connection with its permissive forum selection clause analysis below.
As to the rest of these Defendants, the supporting documents provided either are
SPDs that the Court cannot rely on in adjudicating the Motions, are not demonstrably
the operative plan documents that control the relevant time periods for the claims to
which they correspond, and/or contain exceptions such that the Court cannot resolve
their applicability at present. In sum, the Court concludes that it cannot rely at present
on any of the proffered documents to transfer Counts against these entities at this time.
4. Effect of Permissive Forum Selection Clauses
The reasoning in Atlantic Marine was driven by the overarching policy of
honoring the parties’ mutual intent to litigate in a designated forum. The Supreme
Court stated that “a valid forum-selection clause . . . ‘represents the parties’ agreement
as to the most proper forum.’” Atlantic Marine, 134 S. Ct. at 581 (quoting Stewart,
487 U.S. at 31). Therefore, “[t]he ‘enforcement of valid forum-selection clauses,
bargained for by the parties, protects their legitimate expectations and furthers vital
interests of the justice system.’” Id. (quoting Stewart, 487 U.S. at 33 (Kennedy, J.,
concurring)).

______________________________________________________________________________
CIVIL MINUTES—GENERAL
79

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
However, where the parties have a permissive forum clause, they arguably have
not actually agreed “as to the most proper forum.” Instead, such parties merely
consented to the jurisdiction of certain courts. “Such consent to jurisdiction . . . does
not mean that the same subject matter cannot be litigated in any other court.” Hunt
Wesson Foods, Inc. v. Supreme Oil Co., 817 F.2d 75, 77 (9th Cir. 1987) (construing a
forum selection clause stating that “[t]he Courts of California, County of Orange, shall
have jurisdiction over the parties in any action at law relating to the subject matter or
interpretation of this contract” as permissive). Accordingly, the Court will conduct a
§ 1404(a) analysis without affording Atlantic Marine’s deference to permissive forum
selection clauses. However, as discussed below, such permissive clauses—while not
controlling—may be weighed as a “significant factor” favoring a transfer under
§ 1404(a).
Among the Defendants objecting to venue on the basis of a forum selection
clause, only one set of arguably relevant, operative plan documents reflects a
permissive forum selection clause: the Payless Shoesource, Inc. Medical Plan. (See
Payless Shoesource, Inc. Supp. Memo. (Docket Nos. 1107-3, 1151 – 1151-2)); Payless
Shoesource, Inc. Reply (Docket No. 1225)). This clause provides as follows:
Subject to the applicable provisions of the Employee Retirement
Income Security Act of 1974 which provide to the contrary, this Plan
shall be administered construed and enforced according to the laws of
the State of Kansas or such other state as may be provided for in an
HMO or other insured arrangement with respect to matters governed
thereby, and in any case, shall be subject to the jurisdiction of courts
situated in Kansas or such other state.
(Docket Nos. 1107-3, 1151-2).
The Court will conduct the following analysis on the presumption that the
transferee venue would be proper. Whether transfer would be warranted, however,
requires further inquiry. The Ninth Circuit has noted that “[a] motion to transfer venue
______________________________________________________________________________
CIVIL MINUTES—GENERAL
80

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
under § 1404(a) requires the court to weigh multiple factors in its determination
whether transfer is appropriate in a particular case.” Jones, 211 F.3d at 498 (footnote
omitted). Examples of the types of factors the court may consider are:
(1) the location where the relevant agreements were negotiated and
executed, (2) the state that is most familiar with the governing law, (3)
the plaintiff’s choice of forum, (4) the respective parties’ contacts
with the forum, (5) the contacts relating to the plaintiff’s cause of
action in the chosen forum, (6) the differences in the costs of litigation
in the two forums, (7) the availability of compulsory process to
compel attendance of unwilling non-party witnesses, and (8) the ease
of access to sources of proof. Additionally, the presence of a forum
selection clause is a “significant factor” in the court’s § 1404(a)
analysis. We also conclude that the relevant public policy of the forum
state, if any, is at least as significant a factor in the § 1404(a)
balancing.
Id. at 498-99 (9th Cir. 2000) (footnotes omitted).
In light of the nature of this case, the Court does not at present have specific
information about the negotiation of each plan, extensive details regarding the
relationship between individual patients and the forum, and the like. However, the
Court will look more generally to the types of considerations articulated by the Ninth
Circuit in Jones.
Looking first to Plaintiffs’ choice of forum, this factor plainly weighs against
transfer.
Regarding knowledge of the governing law, in light of dicta in Atlantic Marine,
stating that “federal judges routinely apply the law of a State other than the State in
which they sit,” 134 S.Ct. at 584, this factor does not particularly aid the Court’s
analysis.
______________________________________________________________________________
CIVIL MINUTES—GENERAL
81

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
As to the location of witnesses and access to sources of proof, Appendix A to the
FAC indicates that the basis for suit against the Aegon Defendants arises from
procedures allegedly performed by Plaintiff IMS for Patient 274. (FAC, Appendix A
at 454). The FAC alleges that Plaintiff IMS is “a California professional corporation
organized and existing under the laws of the State of California, with its principal place
of business in Beverly Hills, California.” (FAC ¶ 49). Although it is unclear where
Patient 274 resides, it certainly appears that there will at least be some witnesses or
proof relevant to IMS (and, presumably, the claims related to Patient 274) located in
this District. While there may also be witnesses or proof relevant to the Payless
Defendants located in Kansas, this seems, at best, to render this factor neutral.
Ultimately, since the relevant procedure, patient, and billing seemingly have
some nexus to this District, the Court is reluctant to make a transfer to a judicial district
with a less manifest connection to the procedure at issue. The Court rules that, on
balance, consideration of the convenience of the parties and witnesses and the interests
of justice weighs against a transfer.
ii.

Coverage Exclusions
1. Failure to Raise During Administrative Process

Plaintiffs assert that “United and the Plan Defendants attempt to raise coverage
base[d] defenses that were not raised during the administrative process. Having
elected to ‘hide the ball’ from the Plaintiffs during the administrative process,
Defendants are precluded from raising these excuses in litigation.” (Opp. to Omnibus
Mot. at 28). Plaintiffs contend that this effectively precludes Defendants from
asserting here that “all conditions for coverage were not met, or whether certain kinds
of procedures (e.g., bariatric surgery) were excluded from coverage entirely.” (Id. at
29-30). For this proposition, Plaintiffs rely in large part on Mitchell v. CB Richard
Ellis Long Term Disability Plan, 611 F.3d 1192, 1196 (9th Cir. 2010) and Harlick v.
______________________________________________________________________________
CIVIL MINUTES—GENERAL
82

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
Blue Shield of California, 686 F.3d 699, 720 (9th Cir. 2012) cert. denied, 133 S. Ct.
1492 (2013).
In Mitchell, the insurer/administrator (MetLife) of a plan raised a “date of onset
coverage” defense for the first time in response to an insured’s district court complaint.
Mitchell, 611 F.3d at 1197. The plan itself contained the requirement that MetLife
provide reasons for claim denials, reference the plan provisions upon which the denial
was based, and also provided for the same requirements on appeal. Id. at 1200. The
Ninth Circuit found that MetLife failed to meet these requirements and did not provide
justification for such a failure, and also that MetLife had had “ample opportunity to
assert this coverage defense, had it believed it meritorious.” Id. The court, therefore,
found that MetLife could not be surprised that it was being required to adhere to the
terms of its own plan, and held that MetLife’s denial of benefits had been an abuse of
discretion. Id. In a footnote, the court states that it need not reach the argument that
MetLife waived the right to assert this coverage defense, and that, in any event, the
court was not persuaded that the district court had erred in concluding that MetLife had
waived its right to assert this defense. Id. at 1199 n.2. The court noted that “[t]he
purpose of ERISA’s requirement that plan administrators provide claimants with the
specific reasons for denial is undermined ‘where plan administrators have available
sufficient information to assert a basis for denial of benefits, but choose to hold that
basis in reserve rather than communicate it to the beneficiary.’” Id. (quoting Glista v.
Unum Life Ins. Co. of Am., 378 F.3d 113, 129 (1st Cir. 2004)).
Similarly, in Harlick, a plan administrator (Blue Shield) did not raise a medical
necessity defense during the administrative process. Harlick, 686 F.3d at 720. The
court found that Blue Cross had forfeited the right to rely on this reason for denial of
benefits. Id. at 719-21. The court noted “[t]he general rule . . . in this circuit and in
others, is that a court will not allow an ERISA plan administrator to assert a reason for
denial of benefits that it had not given during the administrative process.” Id. at 71920. “Requiring that plan administrators provide a participant with specific reasons for
denial enable[s] the claimant to prepare adequately for any further administrative
review, as well as appeal to the federal courts. [A] contrary rule would allow
______________________________________________________________________________
CIVIL MINUTES—GENERAL
83

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
claimants, who are entitled to sue once a claim has been deemed denied, to be
sandbagged by a rationale the plan administrator adduces only after the suit has
commenced.” Id. at 720 (quoting Mitchell, 611 F.3d at 1199 n. 2) (internal quotation
marks omitted).
Here, the analysis is complicated by the fact that the issue of “denials” is far
from straightforward. Claims were allegedly denied for a variety of reasons (which
Plaintiffs claim were pretextual), but at other times, no final benefits decision was
purportedly issued. This does not appear to be a scenario in which an administrator
indisputably had the facts available to it for application of policy exclusions and simply
never did; rather, the FAC is replete with allegations that United repeatedly asked for
supplemental documentation in order to process the claims at issue. (See, e.g., FAC ¶¶
882-84, 953). (See also Omnibus Reply at 12 n. 10 (“Plaintiffs’ allegations
characterizing United’s requests for further information as ‘denials’ are not sufficient
under Twombly given their allegations that United requested additional information to
decide the claims or proof of authority to proceed. And although claims that are not
acted upon may be ‘deemed exhausted’ under 29 C.F.R. §2560.503-1(l), they are not
actual denials, and that fact does not mean that a full and complete record for all of
Plaintiffs’ claims for benefits was adopted, or that United had the information
necessary to issue a final adverse benefits determination. See Jebian v. HewlettPackard Co. Empl. Benefits Org. Income Prot. Plan, 349 F.3d 1098, 1106 (9th Cir.
2003).”))).
When denials were not definitively issued, barring assertion of coverage
exclusions would not advance the purpose underlying the rule that reasons for denial
be provided to the claimant. There would be no “sandbagging” in such an instance,
because the claim was never denied in the first place, and therefore assertion of
rationales for denial now would not present the same worrying pattern of insurers
asserting rationale after rationale for denials.
In instances where claims were actually denied for other “pretextual” reasons
that do not include plan exclusions, the Court is more inclined to apply Harlick and
______________________________________________________________________________
CIVIL MINUTES—GENERAL
84

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
Mitchell, as this would present a more traditional example of the “sandbagging”
scenario.
Regardless, however, the Court’s conclusion regarding Plaintiffs’ failure to
plead a prima facie benefits Count renders it unnecessary at present to evaluate
whether certain exclusions could be properly asserted to defeat such a Count. The
Court notes that exclusion arguments have been raised by approximately 322 groups of
Defendants (i.e., a plan sponsor and the corresponding plan(s)). However, the Court
also observes that these exclusions vary in their terms and effect—for example, some
may categorically preclude procedures at issue here, while others prohibit coverage
from providers such as Plaintiffs. At the hearing, for example, the Medco Defendants
argued that their plan contains exclusions for both surgical and non-surgical treatment
for obesity.
Defendants were asked at the hearing to address the distinctions between
coverage (which is Plaintiffs’ burden to sufficiently allege) and exclusions (which
Defendants bear the burden of demonstrating). Defendants argued that plan terms that
impose conditions before procedures are reimbursable constitute “coverage” issues,
which fall under the Plaintiffs’ pleading burden (i.e., in order to establish “coverage”
under a particular plan for their § 502(a)(1)(B) Count, Plaintiffs must allege that such
conditions were satisfied).
The Court certainly acknowledges that courts may well impose technical and
specific pleading requirements for purposes of allowing a § 502(a)(1)(B) claim to
survive a motion to dismiss. However, the practical realities of this case and the nature
of Plaintiffs’ allegations regarding their lack of access to plan terms counsel adoption
of the approach discussed above. Still, as the Court noted at the hearing, Plaintiffs are
not absolved of their duties under Rule 11. To the extent that the litigation to date has
provided Plaintiffs with information indicating that they cannot in good faith proceed
with particular Counts against specific entities, they risk consequences if they proceed
with such Counts in spite of this information.
______________________________________________________________________________
CIVIL MINUTES—GENERAL
85

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
2. Factual Issues
Plaintiffs also assert that applying coverage limitations and exclusions
implicates questions of fact, such that resolution at this stage is inappropriate. (Opp. to
Omnibus Mot. at 30-32). Defendants counter by arguing that “Plaintiffs cannot avoid
dismissal by alleging that coverage determinations involve ‘fact issues.’ Although
‘fact issues’ might potentially preclude dismissal for certain claims if Plaintiffs had
properly alleged a claim for benefits in the first instance, they have not done so.”
(Omnibus Reply at 5).
Given the Court’s analysis regarding Plaintiffs’ failure to plead a prima facie
Count of entitlement to benefits, it is unnecessary to evaluate at present whether factual
issues applicable to coverage exclusions might preclude dismissal.
iii.

Time Limitations
1. Whether Time Limitations For Bringing Suit
Were Never Triggered Due to Allegedly
Deficient Benefit Decisions

Plaintiffs argue that the time limitations in various plans were never triggered
because United’s letters were too deficient to do so. (Opp. to Omnibus Mot. at 32-34).
Plaintiffs note that “[i]n some cases, the FAC alleges that United simply never issued a
final denial,” but go on to argue that “even where a final denial issued, Defendants
failed to provide proper notice under ERISA explaining why they denied the claim,
how it could be perfected, and how it could be appealed.” (Id. at 32). As such, they
argue that the denials were deficient under 29 C.F.R. § 2560.503-1 and contractual
time limitations never began to run. (Id. at 32-34).
In support of this deficiency argument, Plaintiffs cite to White v. Jacobs
Engineering Group Long Term Disability Plan, 896 F.2d 344 (9th Cir. 1989). There,
the court found that a plan administrator’s benefits termination notice was inadequate
when it failed to adhere to the specificity requirements of 29 C.F.R. § 2560.503-1—the
______________________________________________________________________________
CIVIL MINUTES—GENERAL
86

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
only rationale given for denial was “information” in the plan administrator’s file, the
notice cited no pertinent plan provisions on which the denial was based, and provided
no indication as to what information would be needed in order to perfect the claim. Id.
at 349-50. The Ninth Circuit cited to decisions in other circuits that had found that
similarly conclusory statements, unaccompanied by explanations or reasons for the
denial, were insufficient. Id. Based on the inadequate notice, which failed to outline
the proper steps for an appeal, the Ninth Circuit found that the plan’s 60-day time bar
for appeals—calibrated from written notice of an initial benefits decision—was not
triggered. Id. at 350 (citing Challenger v. Local Union No. 1 of Internat’l Bridge,
Structural, & Ornamental Ironworkers, AFL-CIO, 619 F.2d 645, 648 (7th Cir. 1980)).
The court noted that, otherwise, “[p]lan boards could with impunity deter claimants
from timely appealing by sending vague and inadequate appeal notices, withholding
information claimants need to appeal effectively.” Id. at 351. The court, in finding
that the 60-day appeal time bar was not triggered, also found that administrative
exhaustion had not occurred and ordered the case to be sent back to the plan board to
be heard. Id. at 352. The court also distinguished the remedy sought in White, in
which the claimant sought to avail himself of the plan’s claims review procedure, from
the more “drastic” remedy of a district court’s review on the merits. Id.
Plaintiffs also cite to Chuck v. Hewlett Packard Co., 455 F.3d 1026 (9th Cir.
2006) as confirming the rule established in White. In Chuck, the court evaluated
whether a plan’s deficient adherence to 29 U.S.C. § 1133 and 29 C.F.R. § 2560.503-1
could preclude ERISA’s statutory time bar from triggering. Chuck, 455 F.3d at 1029.
Specifically, the court evaluated whether a plan’s failure to inform a claimant that the
claim had been finally denied or provide information regarding internal appeal rights
could preclude the running of the ERISA statutory limitation to bring suit. Id. at 103233. The court ultimately found that a plan’s violation of ERISA disclosure and review
obligations under 29 U.S.C. § 1133 and 29 C.F.R. § 2560.503-1 was “a highly
significant,” but not “dispositive,” factor weighing against finding that the statutory
(rather than contractual) statute of limitations had begun to run against a claimant
seeking benefits under ERISA. Id. at 1031. The court reasoned that an ERISA cause
of action accrues either when benefits are denied or the insured has reason to know the
______________________________________________________________________________
CIVIL MINUTES—GENERAL
87

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
claim has been denied, and in some cases, despite a plan’s violation of ERISA
provisions, the claimant may independently know that a plan’s denial is final such that
the statutory time limitation to bring suit in federal court could be triggered. Id. at
1033-36. As such, “an investigation of the facts of each case is necessary to determine
whether a plan nevertheless foreclosed a claimant from any reasonable belief that the
plan had not finally decided benefits.” Id. at 1036.
Unlike White, which dealt with a contractual time limitation for administrative
appeals, the Court is primarily concerned at present with contractual time limitations
for bringing a suit for benefits. It stands to reason that a benefits determination which
failed to outline the reasons for denial under a plan would not trigger the relatively
short administrative appeal time limit calibrated from the review of the initial benefits
determination, as was the case in White. Whether the same purportedly deficient
benefits decision should permit a Plaintiff to claim an exception to the administrative
exhaustion requirement (as discussed below) and also potentially avoid time
limitations for bringing suit for judicial review of a benefits determination is less
intuitive. White relied on the reasoning that allowing plans to send vague appeal
notices and withholding information needed for appeals would permit plans to deter
timely claim appeals. However, this reasoning was not geared towards bringing a
timely suit. Judicial review of claim denials is permissible irrespective of traditional
administrative exhaustion when the plan fails to “establish and follow reasonable
claims procedures.” 29 C.F.R. § 2560.503-1(l). Ostensibly, a purportedly deficient
benefits decision would apprise a claimant that reasonable claims procedures were not
being followed, such that administrative remedies would be deemed exhausted and suit
could be brought in a timely manner.
While Chuck does lend the implication that the same reasoning used in White
might be applicable to the limitations periods for bringing suit, Chuck makes the
distinction that White dealt with contractual time limitations while Chuck evaluated
ERISA statutory limitations. On the whole, it seems qualitatively different to claim
that inadequate benefits decisions should preclude a contractual time limit from
running when Plaintiffs did not rely on benefits determinations in bringing suit, but
______________________________________________________________________________
CIVIL MINUTES—GENERAL
88

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
rather seek, in part, to address these purportedly deficient benefit determinations by
way of their suit. This stands in stark contrast to a scenario in which an adverse
benefits decision was inadequate to apprise a claimant of what was needed in order to
properly appeal the decision through the plan’s appeal procedures.
Of course, the plans’ triggering events for time limitations are also important
factors here. Defendants argue that many of the relevant triggering events in this case
are not related to benefits decisions. (See Omnibus Reply at 25-26). If time limitations
are triggered by a final benefits determination, however, then it stands to reason that
allegedly deficient benefits decisions should be insufficient to commence the running
of the limitations period.
In sum, Plaintiffs’ arguments regarding deficient benefit decisions and
contractual time limitations are unpersuasive, except to the extent that any time
limitations are triggered by the date of a final benefits decision. However, in such
situations, to the extent that the receipt of final benefit decisions is alleged in the FAC
(as opposed to requests for additional information or other purportedly nebulous
correspondence), this distinction is not applicable.
2. Whether the Time Limits For Bringing Suit
Were Unreasonable Given United’s Purported
Conduct
Plaintiffs contend that the contractual time limits were unreasonable given
United’s purported delay tactics. (Opp. to Omnibus Mot. at 34-35). In support of this
argument, Plaintiffs cite Heimeshoff v. Hartford Life & Accident Ins. Co., --- U.S. ---,
134 S. Ct. 604, 612-613 (2013), contending that the case “reaffirm[s] that time
limitations may be extended where obstacles exist to normal resolution of a claim.”
(Id. at 34).
In Heimeshoff, the Supreme Court evaluated a suit for ERISA benefits against a
long-term disability insurer. The plan at issue required a participant to bring suit
______________________________________________________________________________
CIVIL MINUTES—GENERAL
89

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
within three years after “proof of loss” is due; however, proof of loss is due prior to the
completion of the plan’s administrative process, such that the administrative
exhaustion requirement effectively shortens the contractual limitations period.
Heimeshoff, 134 S. Ct. at 608. The Court was tasked with determining whether the
contractual limitation was, therefore, enforceable. Id. In deciding that it was
enforceable, the Court discussed that: the limitation was not unreasonably short on its
face, as it would provide approximately one year for claimants to file suit after the
completion of the administrative review; the limitation period did not undermine
ERISA’s two-tiered remedial scheme (comprised of the administrative process and
subsequent judicial review); and there was only insubstantial evidence that the
limitations period would harm diligent participants. Id. at 612-15. The Court
distinguished Occidental Life Insurance Co. of California v. EEOC, 432 U.S. 355
(1997), in which the Court did not enforce a 1-year statute of limitations for Title VII
employment discrimination actions when the EEOC faced a backlog of 18 to24
months. Heimeshoff, 134 S. Ct. at 613. The Court said that, absent evidence of
similar obstacles to bringing a timely § 502(a)(1)(B) claim, the plan’s limitation
provision was reasonable. Id.
As discussed above, the Court also stated that, “even in the rare cases where
internal review prevents participants from bringing § 502(a)(1)(B) actions within the
contractual period, courts are well equipped to apply traditional doctrines that may
nevertheless allow participants to proceed. If the administrator’s conduct causes a
participant to miss the deadline for judicial review, waiver or estoppel may prevent the
administrator from invoking the limitations period as a defense.” Heimeshoff, 134
S.Ct. at 615. Moreover, “[t]o the extent the participant has diligently pursued both
internal review and judicial review but was prevented from filing suit by extraordinary
circumstances, equitable tolling may apply.” Id. (citing Irwin v. Department of
Veterans Affairs, 498 U.S. 89, 95 (1990)).
Here, it is not clear that the Supreme Court’s discussion/distinction of
Occidental would support Plaintiffs. In Occidental, an institutional backlog meant that
there was little chance that claimants could bring claims that were not barred by the
______________________________________________________________________________
CIVIL MINUTES—GENERAL
90

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
statute of limitations. This seems to be more of a fundamental obstacle to timeliness
than United’s alleged dilatory conduct, particularly in light of the fact that Plaintiffs
plead an exception to administrative exhaustion in order to bring the instant suit, and
therefore do not rely on adherence to the administrative process or timelines.
In sum, Plaintiffs’ argument regarding United’s alleged conduct is not
persuasive. The Court does not address at present whether any of the individual time
limitations are per se unreasonable, an issue not raised by Plaintiffs.
3. Waiver/Estoppel and Time Limitations for
Bringing Suit
Plaintiffs also contend that they are “entitled to assert waiver and estoppel” as to
contractual time limitations. (Opp. to Omnibus Mot. at 35). Plaintiffs urge that
“application of these defenses necessarily involve questions of fact that are properly
not before the Court.” (Id.).
As discussed above, the Supreme Court has previously stated that “in the rare
cases where internal review prevents participants from bringing § 502(a)(1)(B) actions
within the contractual limitations period, courts are well equipped to apply traditional
doctrines that may nevertheless allow participants to proceed. If the administrator’s
conduct causes a participant to miss the deadline for judicial review, waiver or estoppel
may prevent the administrator from invoking the limitations period as a defense.”
Heimeshoff, 134 S. Ct. at 615.
The Court will analyze whether these defenses apply in the present action.
a. Estoppel and Time Limitations
“As a general rule, a defendant will be estopped from setting up a statute-oflimitations defense when its own prior representations or conduct have caused the
plaintiff to run afoul of the statute and it is equitable to hold the defendant responsible
for that result.” Gordon, 749 F.3d at 750 (internal quotation marks omitted) (quoting
______________________________________________________________________________
CIVIL MINUTES—GENERAL
91

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
LaMantia v. Voluntary Plan Adm’rs, Inc., 401 F.3d 1114, 1119 (9th Cir. 2005)). The
Ninth Circuit has held that the six-prong test required for recovery of benefits under an
ERISA estoppel theory is not applicable to the invocation of estoppel regarding
timeliness of filing suit pursuant to a statute of limitations. LaMantia, 401 F.3d at
1119-20.
The present case is distinguishable from LaMantia, in which the Ninth Circuit
held that a plan was estopped from asserting either a contractual limitations period or
the ERISA statutory limitations period. LaMantia, 401 F.3d at 1121. In that case, over
the course of several years, the plan administrator “made several representations to [the
claimant] regarding the status of her internal appeal which [the claimant] reasonably
relied upon, and . . . [the claimant’s] reliance caused her prejudice by her failure to file
suit within either limitations period.” Id. at 1120. The plan and regulations in effect at
the time contained a provision that the appeal would be “deemed denied” after the
expiration of a certain period of time (120 days), but the communications between the
parties reflected an understanding that the claimant’s appeal would be placed in
suspension until the plan received further medical records and a final decision on the
merits was rendered. Id. at 1116-20. During the parties’ communications, the plan
“never relied on or even mentioned the contractual limitations period” (even during
communications on the eve of and following its expiration), and “it never considered
[the plaintiff’s] claim to be fully denied until August 24, 2001, when a final decision
on the merits was rendered.” Id. at 1120 (emphasis in original). As such, the plan
could not rely on the expiration of the 120-day “deemed denied” date as the accrual of
the claim for statutes of limitations purposes, and claimant’s suit, filed October 17,
2001, was timely. Id. at 1121.
Here, apart from the argument discussed below regarding a purported failure to
adhere to an affirmative statutory duty to disclose time limitations, it is unclear what
Plaintiffs contend Defendants did or said that would have caused them to run afoul of
any applicable contractual statutes of limitations. The Court sees no allegations akin to
those in LaMantia that United affirmed that the claims were open and under review
pending the occurrence of certain events. It is true that LaMantia and the present case
______________________________________________________________________________
CIVIL MINUTES—GENERAL
92

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
both do involve a situation in which additional records were requested from the
claimants, but LaMantia includes something more: assurances that claims were being
held open so as to negate the timeframe in which they otherwise would have been
“deemed denied.” Indeed, Plaintiffs appear to consider United’s EOBs requesting
additional documentation to be denials (see, e.g., FAC ¶ 953 Patient 4 ¶ (D)), and the
FAC contains no allegations of assurances that the appeals were pending.
Plaintiffs allege dilatory conduct on the part of United, which purportedly
dragged out claim adjudication for months or years. (See, e.g., FAC ¶¶ 1023, 1027).
However, Plaintiffs are plainly aware that administrative exhaustion is not always
necessary to bring suit, given that they plead exceptions to this doctrine, including the
exception for a failure of an administrator to establish or adhere to adequate claims
procedures. In light of 29 C.F.R. § 2560.503-1, Plaintiffs had reason to know if
claims procedures were not being adhered to—and, therefore, whether they could
potentially bring suit—rather quickly. See Heimeshoff, 134 S. Ct. at 613 (“If the plan
fails to meet its own deadlines under these procedures, the participant ‘shall be deemed
to have exhausted the administrative remedies.’ § 2560.503–1(l ). Upon exhaustion of
the internal review process, the participant is entitled to proceed immediately to
judicial review, the second tier of ERISA’s remedial scheme.”).
In short, assuming estoppel might otherwise be applicable in this context, the
Court rules that the use of estoppel to preclude application of contractual time
limitations would be improper in this suit based on the allegations in the FAC.
b. California Insurance Code Section 790.10
and 10 C.C.R. Section 2695.4
Plaintiffs contend that Defendants are estopped from asserting any contractual
time limitations because the deficient adverse benefit decisions never mentioned such
limitations, and that the policies regulated by the California DOI require affirmative
disclosure of such provisions pursuant to Ins. Code section 790.10 and 10 C.C.R.
section 2695.4. (Opp. to Omnibus Mot. at 35-36).
______________________________________________________________________________
CIVIL MINUTES—GENERAL
93

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
The Ninth Circuit has already noted that this regulation is preempted as applied
to self-funded plans by operation of ERISA’s deemer clause, and has declined to
incorporate the disclosure requirements into the federal common law. See Scharff v.
Raytheon Co. Short Term Disability Plan, 581 F.3d 899, 907-08 (9th Cir. 2009). The
Court is under the impression that the parties are working to eliminate or have
eliminated any fully-insured plans from this litigation, leaving only self-insured plans.
As such, Plaintiffs’ reliance on these provisions as providing affirmative disclosure
duties, the violation of which would support estoppel allegations, is unavailing as to
the relevant remaining plans.
c. Waiver and Time Limitations
Plaintiffs contend that “Defendants have waived their rights to raise their
contractual limitation periods because the deficient adverse benefit determinations that
they issued failed to disclose the time limitations upon which Defendants now rely.”
(Opp. to Omnibus Mot. at 35 (emphasis in original) (citing Moyer v. Met. Life. Ins.
Co., 762 F.3d 503, 506-07 (6th Cir. 2014); Solien v. Raytheon Long Term Disability
Plan #590, CV 07-456 TUC DCB, 2008 WL 2323915 (D. Ariz. June 2, 2008))).
In Moyer, the Sixth Circuit held that a claims administrator was obligated to
send notice of a contractual time limitation for judicial review when it sent an adverse
benefits determination letter to an ERISA plan participant. Moyer, 762 F.3d at 505.
Moyer relies on a reading of 29 C.F.R. § 2560.503–1(g)(1)(iv)—requiring that a
benefit determination notification contain “[a] description of the plan’s review
procedures and the time limits applicable to such procedures, including a statement of
the claimant’s right to bring a civil action under section 502(a) of the Act following an
adverse benefit determination on review”—as encompassing a duty to disclose time
limitations related to the right to bring a civil action. Moyer, 762 F.3d at 505. The
Moyer court also cites to decisions in various other circuits that supports the same
interpretation of 29 C.F.R. § 2560.503–1(g)(1)(iv). Id. at 505-506.
______________________________________________________________________________
CIVIL MINUTES—GENERAL
94

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
However, the Ninth Circuit (in a case that precedes Moyer), has found no such
duty. Scharff, 581 F.3d at 907-08. In Scharff, the Ninth Circuit declined to adopt a
“California regulation requiring insurers to inform claimants expressly of statutes of
limitations that may bar their claims” into the federal common law. Id. at 901. There,
the administrator of a self-funded plan sent a final benefits decision that disclosed the
plan participant’s right to bring a civil action under § 502(a), but provided no
information about the one-year contractual time limitation for doing so (triggered by
the denial of the claim appeal). Id. at 902-03. The court saw no requirement in ERISA
that the administrator communicate the contractual time limit to the participant during
their correspondence. Id. at 907-08 (“Plaintiff concedes that the Plan met all
applicable ERISA disclosure requirements and that MetLife was not obligated under
ERISA to inform her of the deadline. She argues, however, that we should impose an
additional ‘duty to inform’ on claims administrators, drawn from a California
insurance regulation. We decline to do so.”).
While Scharff appears to be at odds with Moyer, and despite Scharff’s
recognition of a desire for harmony among the circuits in deciding such ERISA issues,
the Court is bound by Ninth Circuit precedent as it currently stands. As such,
assuming that waiver might otherwise be applicable in this context, United’s purported
failure to disclose (absent a duty that it do so) is not a persuasive reason to bar
application of the contractual time limits here.
4. Additional Types of Time Limitations
As discussed above, the foregoing analysis largely pertains to time limitations
that bear on timely initiation of suit for benefits. To the extent that any initial claim
submission (calibrated from the date of service) is untimely under the terms of the
corresponding plan, the Court would be inclined to rule that Counts pertaining to these
submissions are, likewise, untimely. This is, of course, contingent upon the
requirement that such limitations be contained within relevant, operative plan
documents.
______________________________________________________________________________
CIVIL MINUTES—GENERAL
95

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
Administrative review timelines are discussed below in the context of
administrative exhaustion.
5. Factual Issues and Time Limitations
Finally, Plaintiffs argue that “ambiguities in some of the contractual limitations
create factual issues will arise that cannot be resolved now.” (Opp. to Omnibus Mot. at
36). Defendants counter:
Plaintiffs next claim that ambiguities contained in “some” of the
contractual limitations periods create factual issues that cannot be
resolved on a motion to dismiss. See Pls.’ Opp. at 36. The only
“ambiguity” identified, however, involves the phrase (or variations on
the phrase) “proof of loss.” Id. At the outset, that phrase is not
contained in many of the limitations periods identified by Defendants
and, as a result, does not apply to such plans. See Defs.’ Mem., App’x
E. To the extent, however, that the phrase “proof of loss” appears in a
contractual limitations period, there is nothing ambiguous about its
meaning. Indeed, the Supreme Court addressed a plan provision
requiring “participants to bring suit within three years after ‘proof of
loss’ is due” in Heimeshoff, 134 S. Ct. at 608. Although the phrase
was not defined, neither the Supreme Court, nor the parties,
considered the phrase to be ambiguous. In fact, the Court noted that
the “limitations provision at issue is quite common” and that the “vast
majority of States require certain policies to include 3-year limitations
periods that run from the date proof of loss is due.” Id. at 614-15.
Remarkably, despite the prevalence of the phrase, Plaintiffs do not
cite a single case suggesting that the phrase is ambiguous.
(Omnibus Reply at 29).

______________________________________________________________________________
CIVIL MINUTES—GENERAL
96

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
Regardless, however, the Court’s conclusion regarding Plaintiffs’ failure to
plead a prima facie benefits Count renders it unnecessary at present to evaluate
whether certain time limitations bar this Count against the Employer and Plan
Defendants. To the extent Defendants contend that these limitations bar the additional
Counts against them, the Court notes that the deficiencies in either standing or the
sufficiency of allegations supporting these Counts dispenses with the need to rely on
such time limitations at present.
4. Failure of Plaintiffs’ Counts Due to Improper Claim
Administrator, Failure to Exhaust Administrative Remedies,
Assertion of Claims on Behalf of Non-Party, and Bankruptcy
Finally, United argues that Plaintiffs’ Counts fail because United was not the
claims administrator during the relevant time period, certain Plaintiffs failed to exhaust
their administrative remedies, and Plaintiffs attempt to assert claims on behalf of
“Valley Surgical Center,” which is not a party to the action. (Omnibus Mot. at 17-19).
a. Improper Claims Administrator
Defendants argue that “[t]he only thread common to the claims against the
Employer and Plan Defendants is that United was the third party claims administrator
for the claims at issue, but for certain Defendants, United was not the claims
administrator at the relevant time.” (Id. at 17-18). In turn, “Plaintiffs clarify that they
are not seeking reimbursement through this lawsuit for claims that were not submitted
to, and processed by, United.” (Opp. to Omnibus Mot. at 46). However, Plaintiffs go
on to contest that the inconsistencies raised by Defendants are “not fatal, as the
Appendix does not purport to be a comprehensive list of every medical service for
every patient who is at issue under each plan.” (Id.).
Plaintiffs first note many apparent errors in the dates listed in the FAC, and note
that they only meant to include dates for which United was the claims administrator.
(Id. at 46- 47). Next, Plaintiffs combat the allegations that certain Defendants never
______________________________________________________________________________
CIVIL MINUTES—GENERAL
97

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
used United by citing to claims they have received on behalf of these Defendants, or
entities with somewhat related names, during the relevant time period. (Id. at 47).
i.

Defendants Did Not Use United During Time Periods
Alleged in FAC

As to this first category, Plaintiffs are once again advised that an opposition brief
is an inappropriate vehicle for correcting errors in the FAC; Plaintiffs must go through
the proper procedural channels to correct errors in the operative pleading.
Nevertheless, given the seeming agreement among the parties that the claims listed for
the contested groups are not for the proper time periods and yet were erroneously
included, the Court sees no reason why these claims should not be dismissed. As such,
the Court need not evaluate at present whether the SPDs included in the relevant
declarations would be sufficient to reflect the actual claims administrator for the
various plans during the time periods alleged. The parties to whom this is applicable
are as follows: the ESRI Defendants (Docket No. 1062-9) (Opp. to Omnibus Mot. at
46); the Performance Food Defendants (Docket No. 1062-10) (Opp. to Omnibus Mot.
at 46-47); the Shaw Group Defendants (Docket No. 1145) (Opp. to Omnibus Mot. at
47).
However, the Court cannot agree that such inaccuracies would not generally be
fatal due to the fact that “the Appendix does not purport to be a comprehensive list of
every medical service for every patient who is at issue under each plan.” The FAC is
meant to give the Defendants notice of the allegations against them. As the FAC and
Appendix A allege facts regarding only one patient per Employer and corresponding
Plan Defendant(s), the failure of Plaintiffs to tie such patient and related services to
United renders the allegations against the corresponding Plan and Employer
Defendants completely irrelevant to the activities purportedly at issue in the FAC. In
short, if the allegations made pertaining to a patient have no nexus to United, and yet
are the only allegations included for specific Plan and Employer Defendants, Plaintiffs
have failed to state a claim in relation to those Plan and Employer Defendants (or
United, as pertains to that patient). Dismissal of such Plan and Employer Defendants
______________________________________________________________________________
CIVIL MINUTES—GENERAL
98

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
is appropriate, as is the dismissal of any claims against United pertaining to
participants in these dismissed Plans. If the Plaintiffs wish to re-plead to include claim
lines for which United purportedly served as claims administrator, they must do so
through proper procedural channels. For the moment, however, those parties listed
above (for which Plaintiffs do not dispute that improper time frames have been
alleged) will be dismissed.
In their Supplemental Memorandum (Docket No. 1095), the Red Wing Shoe
Company Defendants argue that UMR, not United, was the claims administrator during
the timeframe relevant to this suit. Support for this argument is provided in the form of
an ASA attached to the Declaration of Michelle S. Lewis (the “Lewis Declaration”).
(Red Wing Shoe Company Supp. Memo., Lewis Declaration (Docket No. 1095) ¶¶ 4, 6
Ex. B (Docket No. 1095)). However, while it is clear that the document appended is
an ASA, it is not clear to which plan it pertains or the responsibilities it allocates. (Id.).
As such, the Court is not convinced that it can rely on this document to dismiss Counts
against these particular entities at this time.
Similarly, additional Defendants argue in their Supplemental Memoranda that
United is not the claims administrator for the time period alleged in the FAC and
Appendix A: the Ensign Defendants (Docket No. 1088); and the Whirlpool Defendants
(Docket No. 1093). However, the support for these arguments stems from documents
on which the Court cannot rely at this time to dismiss Counts against these particular
entities.
ii.

Defendants Never Used United as Claims
Administrator

As to the latter category of purported errors raised in the Omnibus briefing, there
appear to be extrinsic factual issues that will bear on resolution, such that dismissal is
inappropriate at this early stage in the litigation. However, Plaintiffs are advised to
proceed in good faith in pursuing claims for plans that are alleged not to have existed
or not to have used United in the briefing to date.
______________________________________________________________________________
CIVIL MINUTES—GENERAL
99

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
The Defendants to whom this pertains, as listed in the Omnibus briefing, are the
CareFusion Defendants (Docket No. 1149-2) (Opp. to Omnibus Mot. at 47).
The Union Pacific Defendants also raised a similar argument, but, as discussed
above, Plaintiffs have settled with these Defendants.

b. Failure to Exhaust Administrative Remedies
Defendants argue that “[t]he claims against certain Plan and Employer
Defendants should be dismissed because the facts alleged in the Amended Complaint
make clear that certain Plaintiffs failed to exhaust their administrative remedies, as
they must do ‘before bringing suit in federal court.’” (Omnibus Mot. at 18 (citations
omitted)). Defendants elaborate that, “[f]or example, in many instances, Plaintiffs
acknowledge that they failed to respond to requests for information, which
demonstrates a failure to exhaust. In other instances, the Plans may include a final
level of appellate review performed by employees of the alleged sponsor—and
Plaintiffs repeatedly acknowledge that they failed to submit any claims to these
entities.” (Id. (citations omitted)).
Plaintiffs, in turn, argue that the requisite administrative exhaustion under
ERISA has been satisfied because: “Defendants failed to meet their antecedent duty to
issue adequate claim and appeal denials, so Plaintiffs were not required to engage in
further appeals, which, in any case, would be futile.” (Opp. to Omnibus Mot. at 2).
i.

Exhaustion Requirement and Exceptions

As a general rule, prior to bringing an ERISA claim in federal court, a plaintiff
must exhaust administrative remedies under the relevant benefit plan. Diaz v. United
Agr. Emp. Welfare Benefit Plan and Trust, 50 F.3d 1478, 1483 (9th Cir. 1995).
“Although not explicitly set out in the statute, the exhaustion doctrine is consistent
______________________________________________________________________________
CIVIL MINUTES—GENERAL
100

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
with ERISA’s background, structure and legislative history and serves several
important policy considerations, including the reduction of frivolous litigation, the
promotion of consistent treatment of claims, the provision of a nonadversarial method
of claims settlement, the minimization of costs of claim settlement and a proper
reliance on administrative expertise.” Id. (citing Amato v. Bernard, 618 F.2d 559, 56668 (9th Cir. 1980)). “[F]ederal courts have the authority to enforce the exhaustion
requirement in suits under ERISA, and . . . as a matter of sound policy they should
usually do so.” Amato, 618 F.2d at 568.
There is, however, a distinction between claims for relief that only allege
violations of the terms of ERISA statutes (which do not require exhaustion), and
claims for relief that necessitate in inquiry into the parties’ rights and duties under a
plan (which do). See Graphic Commc’ns Union, Dist. Council No. 2, AFL-CIO v.
GCIU-Employer Ret. Ben. Plan, 917 F.2d 1184, 1187 (9th Cir. 1990) (“On the one
hand, ‘[e]xhaustion of internal dispute procedures is not required where the issue is
whether a violation of the terms or provisions of the statute has occurred.’ . . . On the
other hand, exhaustion . . . is ordinarily required where an action seeks ‘a declaration
of the parties’ rights and duties under [a plan].’” (internal quotation marks and citations
omitted)). See also Diaz, 50 F.3d at 1483 (discussing the limits of this distinction).
“Generally, a failure to exhaust will be excused in two limited circumstances—
when resort to administrative remedies would be futile or when the remedy provided is
inadequate. The Department of Labor added another exception to the exhaustion
requirement when it amended the ERISA regulations in 2000 to provide that claimants
are ‘deemed to have exhausted’ their administrative remedies if a plan has failed to
establish or follow claims procedures consistent with the requirements of ERISA. See
29 C.F.R. § 2560.503–1(l ) (the deemed-exhausted provision).” Holmes v. Colorado
Coal. for Homeless Long Term Disability Plan, 762 F.3d 1195, 1204 (10th Cir. 2014)
(footnote and citations omitted); see also Vaught v. Scottsdale Healthcare Corp.
Health Plan, 546 F.3d 620, 626-27 (9th Cir. 2008). Inadequacy of remedies does not
appear to be at issue in this case, but the other two exceptions are.
______________________________________________________________________________
CIVIL MINUTES—GENERAL
101

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
“[T]here is disagreement among the federal courts as to whether a plaintiff must
affirmatively plead exhaustion or if the failure to exhaust is merely a defense.” Forest
Ambulatory Surgical Associates, L.P. v. United HealthCare Ins. Co., 10-CV-04911EJD, 2011 WL 2748724, at *5 (N.D. Cal. July 13, 2011) (footnote omitted). However,
at least one court in the Ninth Circuit has noted that the Supreme Court’s decision in
Jones v. Bock, 549 U.S. 199, 212 (2007), indicates that exhaustion is typically an
affirmative defense under the Federal Rules, and that therefore dismissal due to a
failure to affirmatively allege exhaustion would be improper. Forest Ambulatory
Surgical Associates, L.P., 2011 WL 2748724, at *5.
However, even so, “Courts in this Circuit have placed the burden on a ‘plaintiff
seeking excuse from the exhaustion requirement [to] provide support for [the] excuse’
at the motion to dismiss stage.” WellPoint II, 903 F. Supp. 2d 880, 919. As will be
discussed below, Plaintiffs seem to have satisfied this burden.
1. Futility
While “‘bare assertions of futility’” are insufficient to invoke the futility
exception, WellPoint I, 865 F. Supp. 2d at 1041 (quoting Diaz, 50 F. 3d at 1485), “a
plaintiff can demonstrate futility by pointing to a similarly situated plaintiff who
exhausted administrative remedies to no avail,” id. However, “‘a Plan’s refusal to pay
does not, by itself, show futility.’” Id. (quoting Foster v. Blue Shield of Cal., No. CV
05-03324(DDP), 2009 WL 1586039, at *5 (C.D. Cal June 3, 2009)). Rather, “[t]he
futility exception is narrow—the plan participant ‘must show that it is certain that [her]
claim will be denied on appeal, not merely that [she] doubts that an appeal will result
in a different decision.’” Brown v. J.B. Hunt Transp. Servs., Inc., 586 F.3d 1079, 1085
(8th Cir. 2009) (quoting Zhou v. Guardian Life Ins. Co. of Am., 295 F.3d 677, 680 (7th
Cir. 2002)) (internal quotation marks omitted).
For example, in Diaz, a couple argued that “it would have been ‘futile’ for them
to demand administrative review because both defendants have demonstrated by their
continued refusal to pay that they have no intention of doing so.” Diaz, 50 F.3d at
______________________________________________________________________________
CIVIL MINUTES—GENERAL
102

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
1485. However, the Ninth Circuit rejected this argument and noted its circularity,
since the denial at issue was “pegged entirely to [the couple’s] failure to have pursued
the administrative route.” Id.
2. Failure to Establish or Follow Claims Procedures
Consistent With the Requirements of ERISA
“When an ERISA-governed plan fails to comply with its antecedent duty under
§ 1133 to provide participants with notice and review, aggrieved participants are not
required to exhaust their administrative remedies before filing a lawsuit for benefits
under § 1132(a).” Brown, 586 F.3d at 1085. “One of the purposes of § 1133 is to
provide claimants with sufficient information to prepare adequately for any further
administrative review or for an appeal to the federal courts. To the extent the statute is
ambiguous, § 1133’s disclosure requirements should be construed broadly, because
ERISA is remedial legislation and should be liberally construed to effectuate
Congress’s intent to protect plan participants.” Id. at 1086 (citations omitted).

The administrative process has particular consequences on the plan’s ability to
assert new rationales for claim denial:
Under ERISA, an employee benefit plan must “provide adequate
notice in writing to any participant or beneficiary whose claim for
benefits under the plan has been denied” and must “afford a
reasonable opportunity to any participant whose claim for benefits has
been denied for a full and fair review by the appropriate named
fiduciary of the decision denying the claim.” 29 U.S.C. § 1133; see
also 29 C.F.R. § 2560.503–1(g)(1), (h)(2). Given these statutory and
regulatory requirements, [the Ninth Circuit has] held that an
administrator may not raise a new reason for denying benefits in its
final decision, because that would effectively preclude the participant
“from responding to that rationale for denial at the administrative
level,” and insulate the rationale from administrative review.
______________________________________________________________________________
CIVIL MINUTES—GENERAL
103

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
Gabriel, 773 F.3d at 14(citations omitted).
ii.

Allegations Regarding Exhaustion in FAC

As mentioned above, Plaintiffs allege in their Opposition to the Omnibus Motion
that the requisite administrative exhaustion under ERISA has been satisfied because
“Defendants failed to meet their antecedent duty to issue adequate claim and appeal
denials.” (Opp. To Omnibus Mot. at 2). Plaintiffs also claim that the FAC contains
allegations that they “appealed claim denials for each and every Plan.” (Id. at
41(emphasis in original)). However, the FAC actually alleges that:
Plaintiffs have exhausted all administrative remedies available to
them. They appealed virtually every adverse claim determination
made by United, at least in those cases in which United rendered an
actual adverse benefit decision. Plaintiffs have literally sent out tens
of thousands of appeal letters on unpaid claims. These letters address
each and every one of the reasons for denial provided by United.
(FAC ¶ 936 (first emphasis added)). The FAC also notes that “Plaintiffs’ diligent,
persistent and thorough efforts to appeal have resulted in virtually no additional
payment from United,” and, “[i]n many cases, Defendants have held Plaintiffs’ claims
submissions in limbo without allowing or denying the claims.” (FAC ¶¶ 938-39).
Ultimately, Plaintiffs contend that they expended time and effort appealing adverse
decisions when United rendered decisions, and that United failed to process the claims
in a manner consistent with ERISA, which deprived Plaintiffs of the necessary
information and due process to effectively appeal, rendering Plaintiffs’ obligations to
pursue further remedies exhausted under 29 C.F.R. § 2560.503-1. (FAC ¶ 940).
Based upon the plain language of the FAC, there is at least the implication that
fewer than all claims were actually appealed and exhausted. Although this seems to be
connected to the alleged failure of United to always present a meaningful denial to
______________________________________________________________________________
CIVIL MINUTES—GENERAL
104

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
which a response could be made, the FAC still fails to allege that complete exhaustion
for all claims has been effected under the administrative procedures required by each
plan.
1. Allegations Regarding Futility in the FAC
Even if the FAC does not allege that all claims were actually appealed and
exhausted, if futility is sufficiently alleged, exhaustion may not be necessary.
Defendants argue that “in many instances, Plaintiffs acknowledge that they
failed to respond to requests for information, which demonstrates a failure to exhaust.”
(Omnibus Mot. at 18 (citing FAC ¶ 953, Patient 3(B) & 5(J); Franco v. Am. Gas
Assoc. Lab. Pac. Coast Branch, 902 F.2d 39 (9th Cir. 1990))). However, Plaintiffs
contend that, “[g]iven that Defendants were demonstrably determined not to pay
benefits, no matter what actions were taken by Plaintiffs, additional appeals would
have been futile.” (FAC ¶¶ 939, 981).
Plaintiffs’ contention sounds remarkably similar to the language in Diaz, which
was found insufficient to establish futility. However, in Diaz, the couple received a
claim decision (albeit, not in a language that the couple said they could understand)
from their plan, which had adequate internal procedures in place, and never appealed.
Diaz, 50 F.3d at 1484-86. As such, the couple’s “own delinquency in pursuing an
internal appeal prevented the possibility of an administrative look at the merits, and the
record contains nothing but speculation to suggest that the administrators would have
reached a preconceived result in that respect.” Id. (footnote omitted). This does seem
meaningfully different from the situation alleged here, in which United purportedly
furnished incomplete information regarding claims, did not always render actual
decisions, and therefore did not provide for an adequate opportunity to appeal the
“decisions” administratively.
In any event, the Court construes Plaintiffs’ futility argument as a
mischaracterization of the “failure to observe ERISA regulations” argument, discussed
______________________________________________________________________________
CIVIL MINUTES—GENERAL
105

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
below. In Brown, the Eighth Circuit evaluated a similar situation: “Although couched
in terms of ‘futility,’ the gravamen of [the plaintiff’s] argument in the district court and
this court is simply this: [the insurer’s] failure to comply with its duty under § 1133 to
afford [the plaintiff] ‘a reasonable opportunity ... for a full and fair review’ excuses her
failure to exhaust. More specifically, [the plaintiff] argues [the insurer’s] failure to
respond to her requests for the Administrative Record and other documents absolves
[the plaintiff’s] failure to file a timely written appeal of Prudential’s decision to
discontinue her LTD benefits.” Brown, 586 F.3d at 1085. The Brown court ultimately
found that “[w]hen stripped of its ‘futility’ label,” the plaintiff’s argument was “a
winner.” Id.
2. Allegations Regarding Failure to Observe ERISA
Regulations
Even if futility and exhaustion are not alleged, if there are adequate allegations
that the plan has failed to establish or follow claims procedures consistent with the
requirements of ERISA, failure to exhaust may be excused. “When applying the
Claims Regulations, courts have concluded substantial compliance is sufficient. ‘This
means that technical noncompliance with ERISA procedures will be excused,’
provided ‘full and fair review’ of the decision is possible.” Spinedex Physical
Therapy, U.S.A., Inc. v. United Healthcare of Arizona, Inc., CV-08-00457-PHX-ROS,
2012 WL 8169880 (D. Ariz. Oct. 19, 2012) (quoting Robinson v. Aetna Life Ins. Co.,
443 F.3d 389, 393 (5th Cir. 2006)); see also Chuck, 455 F.3d at 1032 (discussing that
the Ninth Circuit has found substantial compliance with ERISA notification
regulations sufficient to satisfy obligations pursuant to same).
Here, Plaintiffs allege that “the EOBs issued by the Defendants (when they
actually issued EOBs) were nearly devoid of information about the benefit plans, the
reason a claim was being partially or fully denied, and the plan provisions and any
internal rules or guidelines that were being used to deny the claim.” (FAC ¶ 944).
Plaintiffs further allege that “[t]he EOBs issued by Defendants frequently did not . . .
explain that the beneficiary or participant of the plan had the right to appeal; what the
______________________________________________________________________________
CIVIL MINUTES—GENERAL
106

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
plan’s review procedures were; or what the applicable time limits were. Moreover,
they did not describe what information would be required to make a proper appeal, nor
did it explain why such information was necessary. Thus, United’s EOBs were
substantively deficient and failed to comply with any of the key requirements of
Section 2560.503-1(g) of the ERISA regulations.” (Id. ¶ 946).

As discussed above, using the Brown case for guidance, it seems that there are
sufficient allegations in the FAC to suggest a failure on United’s part to observe
ERISA regulations. Although some of these statements encompass fewer than all of
the benefit “determinations,” the conjunction of these paragraphs lends the implication
that either EOBs were not supplied for a claim, or the EOB was deficient under 29
C.F.R. § 2560.503-1.
In sum, the Court rules that (to the extent it is needed) Plaintiffs have
sufficiently pleaded support for their exhaustion excuse to survive a motion to dismiss
for those plans that used United as a claims administrator. Although some plans may
contain specific requirements for claim appeal timelines or the entity to which certain
levels of appeal must be made, United’s alleged role in making claims decisions, when
taken in conjunction with the FAC’s allegations regarding benefit decisions, suggests
that an exception to exhaustion should be recognized here.
When United is demonstrably not a plan’s claims administrator, however, there
are no allegations that connect the purported claims appeal process and deficiencies to
the relevant Defendants. Consequently, for these plans, the Court would agree that
administrative exhaustion (or an exception thereto) has not been alleged. However, as
discussed below, the Court is largely unable to address arguments that United was not
a claims administrator for specific plans at this time; therefore, while the Court notes
this administrative exhaustion issue at present for such plans, it will not affect the
proceedings at this time.

______________________________________________________________________________
CIVIL MINUTES—GENERAL
107

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
c. Valley Surgical Center
Defendants contend that “Plaintiffs have alleged certain claims for payment of
services rendered by ‘Valley Surgical Center,’” and that such claims asserted on behalf
of a non-party cannot stand. (Omnibus Mot. at 19 (citing FAC ¶ 953, Patient 6(A)).
Plaintiffs, in their Opposition to the Omnibus Motion, attempt to “clarify that they are
not presently seeking to recover as to any claims submitted by Valley.” (Opp. to
Omnibus Mot. at 46).
The Court agrees that Plaintiffs cannot assert claims on behalf of Valley
Surgical. As such, any claim lines that purport to do so must be dismissed. Plaintiffs
have already stated that they will dismiss “the only defendants for whom Valley was
the only provider claims [:] Southwest Airlines Co. and its Welfare Benefit Plan.” (Id.
at 46). Plaintiffs, however, have yet to dismiss these parties.
d. Bankruptcy
While not raised in the Omnibus Motion itself, Defendants PMC and the Perkins
Flexible Benefits Plan (the “PMC Plan”) argue in their Supplemental Memorandum
that Plaintiffs’ Counts against them have been discharged by a Joint Plan of
Reorganization entered by a bankruptcy court in 2011. (PMC Supp. Memo. (Docket
No. 1159) at 2-3). Plaintiffs address this argument in their Opposition to the Omnibus
Motion, so the Court will evaluate the merits here.
As stated in the PMC Supplemental Memorandum, “PMC filed for bankruptcy
on June 13, 2011” (see PMC Request, Ex. A at 1), and the bankruptcy court confirmed
PMC’s Joint Plan of Reorganization (“Reorganization Plan”) on November 1, 2011.
(PMC Supp. Memo. at 2, 3 n. 3). The procedures allegedly at issue for PMC and the
PMC Plan are an endoscopy and polysomnography purportedly performed on Patient
278 by Plaintiff IMS on December 26 and December 27, 2010. (FAC, Appendix A at
461). Because “[t]he Reorganization Plan specifies a broad discharge of all known and
unknown Claims and Causes of Action, including Claims that arose before the
______________________________________________________________________________
CIVIL MINUTES—GENERAL
108

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
effective date of the Reorganization Plan” (see PMC Request, Ex. B, Sec. IX(D) at 49),
and since “Patient 278’s claim for benefits easily falls under the definition of ‘Claim’
and was discharged upon the bankruptcy court’s order confirming the Reorganization
Plan,” PMC and the PMC Plan contend that “all causes of action against PMC should
be dismissed.” (PMC Supp. Memo. at 3). PMC and the PMC Plan argue that
“continuing the lawsuit against PMC would be a direct violation of a federal
bankruptcy court order.” (Id.). Further, PMC and the PMC Plan contend that the
Perkins Flexible Benefits Plan should be dismissed because “[a]t the time of Patient
278’s alleged medical procedures, PMC paid out benefits claims not from the Benefits
Plan, but rather from the general assets of PMC.” (Id.).
Plaintiffs, in turn, argue that:
There is insufficient evidence at this stage to permit dismissal of
Perkins and its plan. For instance, Perkins has not demonstrated that
its health care plans were part of the bankruptcy estate. Likewise,
Perkins does not contend that its health plans were wound down as
part of any bankruptcy proceedings. Unlike in a Chapter 7 bankruptcy,
in which health benefit plans must be wound down, an employer’s
benefit plans may continue throughout a Chapter 11 bankruptcy.
Indeed, Perkins’ yearly filings with the Department of Labor from
both before and after the bankruptcy demonstrate that its ERISA
benefits plan has been in continuous existence since January 1, 1990.
(Opp. to Omnibus Mot. at 48 (citing Request, Ex. B)). However, in their Reply, PMC
and the PMC Plan point out that they do “not contend, as Plaintiffs claim, that PMC’s
sponsored health care plan ceased to exist following Chapter 11 reorganization.
Rather, because its health care plan contains no assets other than the general assets of
PMC, Plaintiffs only possible suit for unpaid ERISA benefits is against PMC.” (PMC
Reply (Docket No. 1281) at 2). Moreover, the PMC Reply posits that “Plaintiffs
actually confirm this to be the case in their Opposition, where they ask the Court to
take judicial notice of filings with the Department of Labor that clearly demonstrate
______________________________________________________________________________
CIVIL MINUTES—GENERAL
109

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
PMC’s health plan is funded by the general assets of PMC and that health benefits are
paid out by PMC’s general assets.” (Id. (citing Request, Ex. B at 55, 58, 60, 62)).
At the hearing, the PMC Defendants again argued that the relevant inquiries are
merely the dates of the bankruptcy decision discharging PMC’s pre-confirmation
liability as compared with the date of service for the PMC-related patient here. Given
that the latter precedes the former, the PMC Defendants argued that they should be
dismissed. Plaintiffs stated at the hearing that they are willing to dismiss PMC (the
Employer Defendant), but not the PMC Plan.
While the Court has taken judicial notice of the publicly filed forms discussed
by the parties, it does not at present use these forms to determine the truth of any facts
alleged within them. Thus, while the Court might be inclined to rule that PMC’s
bankruptcy discharges pre-confirmation liability against both it and the PMC Plan, it
cannot at present make such a ruling.
5. Statute of Limitations
In their Supplemental Memorandum, the Whirlpool Defendants contend that the
statute of limitations has expired for an ERISA benefits Count. (Whirlpool Supp.
Memo. (Docket No. 1093) at 4).
“There is no federal statute of limitation applicable to lawsuits seeking benefits
under ERISA.” Gordon, 749 F.3d at 750 (citing Wetzel v. Lou Ehlers Cadillac Grp.
Long Term Disability Ins. Program, 222 F.3d 643, 646 (9th Cir. 2000)). “The Ninth
Circuit has held that California’s four-year statute of limitations for written contracts
applies to ERISA claims for benefits under 29 U.S.C. § 1132(a)(1)(B).” Moyle, 985 F.
Supp. 2d at 1259 (citing Wetzel, 222 F.3d at 648). See also Gordon, 749 F.3d at 750
(citing Wetzel, 222 F.3d at 648).
Though this statute of limitations is determined by reference to state law, the
accrual of an ERISA cause of action is governed by federal law. Gordon, 749 F.3d at
______________________________________________________________________________
CIVIL MINUTES—GENERAL
110

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
750 (citing Wetzel, 222 F.3d at 649). Pursuant to “federal law, ‘an ERISA cause of
action accrues either at the time benefits are actually denied or when the insured has
reason to know that the claim has been denied.’” Id. (quoting Wetzel, 222 F.3d at 649).
“A claimant has reason to know that the claim has been denied where there has been ‘a
clear and continuing repudiation of a claimant’s rights under a plan such that the
claimant could not have reasonably believed but that his benefits had been finally
denied.’” Id. at 750-51 (quoting Chuck, 455 F.3d at 1031).
The Whirlpool Defendants contend that “since services were rendered more than
four years before suit was filed, any possible statute of limitations has run.”
(Whirlpool Supp. Memo. at 4). However, they cite to an improper triggering date for
the commencement of the relevant statute of limitations. The date of service relevant
to the Whirlpool Defendants is January 16, 2010. (FAC, Appendix A at 670). The
FAC alleges that United responded to Plaintiffs’ appeals of the initial claim denials on
October 7, 2011, purportedly stating “that their appeals were denied due to a lack of
patient authorization.” (Id. at 671). Plaintiffs purportedly “called United to inquire
about status on pending claims” on December 11, 2013. (Id.). It is reasonable to
assume that, based on the allegations in the FAC, October 7, 2011 is the earliest date
on which the claims may have even arguably been considered finally denied. The
instant suit (filed March 20, 2014) was brought well within four years from this date.
As such, the Whirlpool Defendants’ timeliness argument fails.
C.

Plaintiffs’ Remaining ERISA Counts Against Employer and Plan
Defendants (Counts II, III, V, VII)

Plaintiffs’ remaining ERISA Counts that implicate the Employer and Plan
Defendants are Counts II, III, V, and VII.
The Court has already determined that Plaintiffs lack standing to bring these
Counts. The Court need not, at present, address the various other arguments raised as
to why they independently fail.
______________________________________________________________________________
CIVIL MINUTES—GENERAL
111

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
D.

Plaintiffs’ UCL Count (Count VIII)

“To have standing under California’s UCL, as amended by California's
Proposition 64, plaintiffs must establish that they (1) suffered an injury in fact and (2)
lost money or property as a result of the unfair competition.” Birdsong v. Apple, Inc.,
590 F.3d 955, 959 (9th Cir. 2009) (citing Cal. Bus. & Prof. Code § 17204; Walker v.
Geico Gen. Ins. Co., 558 F.3d 1025, 1027 (9th Cir. 2009)).
Defendants contend that “[Plaintiffs’] UCL claim makes clear that . . . they seek
to recover derivatively for the injuries allegedly inflicted upon their subscriberpatients, as assignees of their patients’ claims for benefits.” (United Mot. at 12).
However, Plaintiffs allege that they bring their UCL Count “in their own independent
right, and not based upon the Assignment of Benefits Plaintiffs received from their
patients.” (FAC ¶ 1083). The remedy Plaintiffs seek includes “restitution of an
amount to be proved at trial, plus applicable statutory interest, which is the amount that
the Defendants are obligated to pay Plaintiffs for the services Plaintiffs provided to
plan participants and beneficiaries. Plaintiffs further seek an injunction prohibiting
Defendants’ ongoing conduct in using inappropriate methodologies to deny or
underpay Plaintiffs’ claims for medical treatment provided to plan members.
Furthermore, the injunction should force Defendants to correctly price past and future
claims by Plaintiffs by determining UCR based on appropriate UCR data.” (Id. ¶
1089).
In WellPoint II, the court discussed Amalgamated Transit Union, Local 1756 v.
Superior Court (“Amalgamated Transit”), 46 Cal.4th 993, 95 Cal. Rptr. 3d 605
(2009), in which the California Supreme Court held that allowing a noninjured
assignee of a UCL claim to stand in the shoes of the actual injured party would
contravene Proposition 64. WellPoint II, 903 F. Supp. 2d at 898 (citing Amalgamated
Transit, 46 Cal. 4th at 998, 1002). In contrast, Amalgamated Transit stated that such
derivative UCL actions were to be brought as class actions. Id. (citing Amalgamated
Transit, 46 Cal. 4th at 1005). The WellPoint II provider plaintiffs argued that
Amalgamated Transit did not bar their UCL claims based on the assignments, since
______________________________________________________________________________
CIVIL MINUTES—GENERAL
112

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
they suffered their own injury. Id. The WellPoint II court held that the provider
plaintiffs would have been able to bring suit if they had suffered “independent and
direct injuries” in their own right. Id. at 899. However, the Court concluded that “to
allow the Provider Plaintiffs to sue on behalf of the injured subscriber-assignors simply
because they have suffered their own distinct injuries would run counter to
Amalgamated Transit’s pronouncement that all UCL actions seeking to recover for
injuries inflicted on others must be brought as class actions” Id. As such, the court
found it improper to allow the provider plaintiffs to sue on behalf of the assignors. Id.
Here, as in WellPoint II, Plaintiffs argue that Amalgamated Transit does not
apply to them, since they suffered injury in their own right. (Opp. to United Mot. at 56). Even so, the relief they seek for this Count is restitution of the amounts
purportedly owed (which is also the relief sought under ERISA by virtue of the
assignments, and which the assignments purportedly confer the right to pursue on
behalf of the plan participants) and injunctions regarding use of proper UCR
methodologies in pricing the past and future claims of plan participants (also similar to
relief sought pursuant to Plaintiffs’ ERISA benefits Count).
Unlike in WellPoint II, the FAC spells out that Plaintiffs are not seeking to
recover derivatively through their assignments.
At the hearing, Plaintiffs pointed out that they are entitled to plead in the
alternative, and asserted that their UCL Count is just such an alternative basis for relief
(distinct from their Counts brought as assignees under ERISA). However, the
wrongdoing alleged in connection with the UCL Count includes allegations that: “[t]he
United Defendants have illegally discriminated against members of ERISA plans in the
provision of fringe employment benefits on the protected basis of those members’
morbid obesity, in violation of the Americans with Disabilities Act” (FAC ¶ 1085(a));
“[t]he United Defendants used arbitrary, capricious and improper methods to
improperly deny or underpay Plaintiffs’ claims” (id. ¶ 1085(c)); and “[t]he United
Defendants willfully violated numerous provisions of ERISA, as detailed in this
complaint and Appendix A, at least tens of thousands of times, which could subject
______________________________________________________________________________
CIVIL MINUTES—GENERAL
113

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
United Defendants to criminal penalties under 29 U.S.C. § 1131” (id. ¶ 1085(i)).
These are not reflective of a UCL claim brought as an alternative basis of relief seeking
to address “independent and distinct injuries” suffered by Plaintiffs. Although
Plaintiffs do allege that “[t]he United Defendants routinely misrepresented that
Plaintiffs’ claims would be paid, when in fact Defendants had no intention of paying
any of Plaintiffs’ claims” (id. ¶ 1085(d)), and though this might constitute just the sort
of independent injury required to assert a viable UCL claim, this allegation is
intertwined with other purported wrongs that implicate the assignors’ injuries.
In sum, even if Plaintiffs allege that they suffered injury in their own right, this
injury does not remove them from the ambit of Amalgamated Transit based on the
UCL Count as pleaded in the FAC. Plaintiffs have no standing to bring the UCL
Count.
In light of this conclusion, the Court need not address various Defendants’
arguments that their plans contain choice-of-law provisions, precluding application of
California’s UCL as to them in this suit. Similarly, the Court need not address
arguments that the UCL Count is preempted.
E.

Improper Service

Defendants argue that, “in some instances (as detailed in individual submissions
submitted by the Plan Defendants), Plaintiffs have failed to properly serve the Plans.”
(Omnibus Mot. at 40). The Court sees only two groups of Defendants that raise such
improper service issues: the Ensign and Sodexo Defendants. Defendants contend that
“[b]ecause Plaintiffs failed to issue a summons to the Plan Defendants as discussed in
the individual Plan’s supplemental motions, dismissal is appropriate pursuant to both
Rule 12(b)(2), for lack of personal jurisdiction, and Rules 12(b)(4) and (b)(5), for
defective process and service of process.” (Id.). Plaintiffs, in turn, “disagree that
service was improper,” but state that they “are willing to enact service again to resolve
any doubt.” (Opp. to Omnibus Mot. at 48). In this vein, Plaintiffs contend that “[t]he
______________________________________________________________________________
CIVIL MINUTES—GENERAL
114

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
Court should find good cause to extend the time period for service, given that those
parties have actual notice of this lawsuit, and would not be prejudiced.” (Id.).
Federal Rule of Civil Procedure 4 requires that a summons “be directed to the
defendant,” and that, in cases involving multiple defendants, a summons “must be
issued for each defendant to be served.” Fed. R. Civ. P. 4(a)(1)(B), 4(b). “If a
defendant is not served within 120 days after the complaint is filed, the court—on
motion or on its own after notice to the plaintiff—must dismiss the action without
prejudice against that defendant or order that service be made within a specified time.
But if the plaintiff shows good cause for the failure, the court must extend the time for
service for an appropriate period.” Fed. R. Civ. P. 4(m). A showing of good cause
under Rule 4(m) means, “[a]t a minimum . . . ‘excusable neglect,’” and may also
require a showing of the following three factors: “(a) the party to be served personally
received actual notice of the lawsuit; (b) the defendant would suffer no prejudice; and
(c) plaintiff would be severely prejudiced if his complaint were dismissed.” Boudette
v. Barnette, 923 F.2d 754, 756 (9th Cir. 1991) (citing Hart v. United States, 817 F.2d
78, 80–81 (9th Cir. 1987)).
The Ensign Defendants’ Supplemental Memorandum (Docket No. 1088)
contends that Plaintiffs have not served The Ensign Benefit Group Plan. (Ensign
Supp. Memo. at 6). This argument, while not citing to ERISA § 502(d), appears to be
linked to the Ensign Defendants’ contentions that Ensign California is not the plan
administrator for the relevant plan, and United is not the claims administrator, such that
service on Ensign California and United is not sufficient to effect service on the plan.
(Id.). See also 29 U.S.C. § 1132(d) (1) (“An employee benefit plan may sue or be sued
under this subchapter as an entity. Service of summons, subpena, or other legal
process of a court upon a trustee or an administrator of an employee benefit plan in his
capacity as such shall constitute service upon the employee benefit plan.”).
Similarly, the Sodexo Defendants’ Supplemental Memorandum (Docket No.
1138) asserts that “Plaintiffs failed to issue a summons to the Sodexo Medical Plan.”
(Sodexo Supp. Memo. at 2).
______________________________________________________________________________
CIVIL MINUTES—GENERAL
115

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
In light of the fact that the pertinent Defendants appear to have received notice
and the apparent lack of prejudice to Defendants, the Court is inclined to permit
Plaintiffs an opportunity to enact service in a way that addresses objections raised by
Defendants so as to resolve any disagreement on this matter. Service is to be effected
within 10 days of the entry of this Order. The Court notes, however, that the
corrections urged with regard to the Ensign Defendants seemingly require more than
just mere service, as they go to the fundamental propriety of the parties named.
Plaintiffs are advised to proceed accordingly.
F.

Improper Joinder

Defendants argue that “the 422 Employer and Plan Defendants have different
and disparate plan provisions, employment practices, and involvement with Plaintiffs,
and joining them together to litigate their disputes en masse will needlessly disrupt this
Court’s docket . . . , financially burden their health benefits programs, and accomplish
little that cannot already be addressed in a related lawsuit before the Court.” (Omnibus
Mot. at 41). Plaintiffs counter by arguing that joinder is proper since the lawsuit “rises
and falls on a common set of issues of both law and fact as to each plan: namely,
whether United’s indiscriminate denials of Plaintiffs’ claims violated the full and fair
review requirements of ERISA.” (Opp. to Omnibus Mot. at 49).
As mentioned above, Federal Rule of Civil Procedure 20(a) permits joinder if:
(1) the claims against each defendant arise out of the same transaction or occurrence
or, as stated by the Ninth Circuit, the same “series of transactions or occurrences”; and
(2) “there are common questions of law or fact.” Coughlin v. Rogers, 130 F.3d 1348,
1350 (9th Cir. 1997) (citations omitted); Fed. R. Civ. P. 20(a). However, even if these
requirements are met, the district court must evaluate whether allowing joinder would
“‘comport with the principles of fundamental fairness’ or would result in prejudice to
either side.” Visendi v. Bank of Am., N.A., 733 F.3d 863, 870 (9th Cir. 2013) (quoting
Coleman v. Quaker Oats Co., 232 F.3d 1271, 1296 (9th Cir. 2000)) (internal quotation
marks omitted).
______________________________________________________________________________
CIVIL MINUTES—GENERAL
116

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
“Instead of developing one generalized test for ascertaining whether a particular
factual situation constitutes a single transaction or occurrence for purposes of Rule 20,
the courts seem to have adopted a case-by-case approach.” 7 Charles Alan Wright,
Arthur R. Miller, et al., Federal Practice and Procedure § 1653 (3d ed. rev. 2014)
(footnote omitted). “[L]anguage in a number of decisions suggests that the courts are
inclined to find that claims arise out of the same transaction or occurrence when the
likelihood of overlapping proof and duplication in testimony indicates that separate
trials would result in delay, inconvenience, and added expense to the parties and to the
court.” Id. (footnote omitted).
Similarly, as to the “common question” requirement, “Rule 20(a) does not
require that every question of law or fact in the action be common among the parties;
rather, the rule permits party joinder whenever there will be at least one common
question of law or fact.” Id. (footnote omitted).
On the whole, “[t]he transaction and common-question requirements prescribed
by Rule 20(a) are not rigid tests,” but rather “are flexible concepts used by the courts to
implement the purpose of Rule 20 and therefore are to be read as broadly as possible
whenever doing so is likely to promote judicial economy.” Id. (footnote omitted).
1. Multiple Defendants and Transactions
Defendants contend that “Plaintiffs’ claims actually stem—not from the same
transaction or occurrence—but from thousands of independent and unique out-ofnetwork benefit claims.” (Omnibus Mot. at 43). More specifically, Defendants state
that “in order to resolve whether United improperly denied a claim for benefits, the
Court must analyze and apply the governing benefit plan. With the current joinder of
parties, the Court will need to evaluate more than 400 separate plans because each
contract contains different terms and exclusions.” (Id. at 48).

______________________________________________________________________________
CIVIL MINUTES—GENERAL
117

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
While, strictly speaking, each claim line and attendant claims process does
implicate a different “transaction” of sorts, the Court does not believe the FAC should
be read so narrowly. Rather, each discrete claim is part of the larger systematic
behavior alleged in the FAC. When viewed in this sense, the Counts against each
defendant arise out of the same series of transactions or occurrences. See Coughlin,
130 F.3d at 1350 (“Plaintiffs do not allege that their claims arise out of a systematic
pattern of events and, therefore, arise from the same transaction or occurrence.”).
2. Common Questions of Law or Fact
Defendants contend that “[i]n essence, Plaintiffs allege that the Defendants have
(a) failed to pay benefit claims and (b) failed to follow proper claims procedures. Yet
each claim for benefits is associated with a unique benefit plan with distinct terms and
exclusions, as well as a disparate processing history.” (Omnibus Mot. at 47 (footnote
omitted)). Plaintiffs, in turn, argue that “[p]recisely because United gave false reasons
for denying Plaintiffs’ claims and failed to provide the information required by the
ERISA regulations, the Court will not have to examine vastly different ‘processing
histories’ for each of the claims at issue.” (Opp. to Omnibus Mot. at 49).
While the Court acknowledges that resolution of this case will involve specific
issues unique to individual claims or groups of claims, the fact remains that the
primary contentions here relate to whether United and the employers and plans that
used United in an administrative capacity improperly denied claims and committed
systematic violations of ERISA. As such, there are certainly issues of law or fact that
are common to all parties.
3. Interests of Fairness and Economy
Defendants argue that, under Federal Rule of Civil Procedure 21, the Court can
add or drop a party, and that the Court should dismiss the non-United Defendants in
this case in order to avoid the “logistical nightmare” presented by the numerous
differences in facts and legal issues among the over 800 defendants initially named in
the FAC. (Omnibus Mot. at 50). Defendants argue that dismissing these defendants
______________________________________________________________________________
CIVIL MINUTES—GENERAL
118

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
will “serve the interests of fairness and judicial economy” that Rule 20 “is designed to
promote,” and would avoid the need for several “‘mini-trials involving different
evidence and testimony”’ (Id. at 49-50 (quoting On the Cheap, LLC v. Does 1-5011,
280 F.R.D. 500, 503 (N.D. Cal. 2011))).
However, in light of the fact that the claim lines (and, consequently, the plan
terms) implicated will be the same regardless of whether only United or all of the
current Defendants are named, dismissal of the non-United Defendants does not
present quite the streamlining solution posited in the Omnibus Motion for the benefits
Count. Moreover, as to an evaluation of potential prejudice, the Court cannot agree
that allowing joinder would preclude application of defenses unique to each plan. (See
Omnibus Reply at 49 (“[F]orcing a defendant to remain in the case, when it
would be and should be dismissed if sued in a separate action, is contrary to the
interests of fairness and judicial economy). As is evident in this Order, the Court is
taking into consideration specific plan provisions that might require dismissal of Count
against individual Defendants, to the extent such defenses are applicable at present.
The Court cannot say that joinder in this case is so defective as to warrant
dismissal of the non-United Defendants at this time. The Court does not presently
decide whether bifurcation might be proper at a later date.
G.

Declaratory Relief (Count IX)

In a footnote, Defendants argue that “Count IX fails to state a claim because a
declaratory judgment action does not state a claim where there is ‘an adequate remedy
at law.’ Here, because Count IX is ‘duplicative’ of Plaintiffs’ claims in Count I, Count
IX cannot state an independent cause for relief.” (Omnibus Mot. at 6 n. 6 (citations
omitted)).
The Court notes the overlap between Counts I and IX, and rules that Count IX is
completely preempted by ERISA. To the extent it is preempted, the Count is converted
into an ERISA claim, and falls into the analysis above.
______________________________________________________________________________
CIVIL MINUTES—GENERAL
119

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
At the hearing, Plaintiffs submitted on this point.
IV.

CONCLUSION

The Omnibus Motion with respect to Count I is GRANTED with leave to
amend. Successful amendment will require allegations that for each plan, the terms of
the plan: (1) provide coverage for each of the procedures at issue in this case; and (2)
dictate that these covered services would be paid according to a specific
reimbursement rate (such as the reasonable and customary fees for services charged by
outpatient surgical centers), which must be specified. Plaintiffs should then allege that
Defendants failed to reimburse for the covered services provided by Plaintiffs
according to this reimbursement rate provided in the plans. Given the allegations in
this case regarding absence of access to plan documents, the Court will permit these
allegations to be made “on information and belief.”
Similarly, the Omnibus Motion as to Counts II, III, V, VI, and VII is
GRANTED with leave to amend. Plaintiffs’ proffered assignment does not confer
standing to bring these ERISA Counts, and although the Court is not convinced that
Plaintiffs could plead additional facts to alter this conclusion, they will be provided an
opportunity to do so.
The Omnibus Motion as to Count VIII is GRANTED with leave to amend.
Even if Plaintiffs allegedly suffered their own injuries, it is clear that they are seeking
to recover derivatively on behalf of their assignors in a way that contravenes the
holding of Amalgamated Transit that such derivative UCL actions must be brought as
class actions.
Finally, the Omnibus Motion as to Count IX is GRANTED with leave to
amend. This Count is completely preempted by ERISA, and therefore will rise and
fall with the duplicated ERISA Counts.

______________________________________________________________________________
CIVIL MINUTES—GENERAL
120

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No. CV-14-02139-MWF (VBKx)
Date: April 10, 2015
Title:
Almont Ambulatory Surgery Center, LLC, et al. -v- UnitedHealth Group,
Inc., et al.
To the extent leave to amend is granted, the Court will issue a subsequent Order
(based upon the recommendations of the parties in the statement they will file on April
10, 2015) setting a timeline for the filing of a Second Amended Complaint (“SAC”).
IT IS SO ORDERED.

______________________________________________________________________________
CIVIL MINUTES—GENERAL
121