IV Solutions, Inc v. United Healthcare Insurance Company

Filing 26

ORDER by Judge Dean D. Pregerson: granting 15 MOTION to Dismiss Case. Plaintiffs First Amended Complaint is hereby DISMISSED. ( MD JS-6. Case Terminated ) (shb)

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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IV SOLUTIONS, INC.,

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Plaintiff,

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v.

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UNITED HEALTHCARE,

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Defendants.
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Case No. CV 15-01418 DDP (SSx)
ORDER GRANTING DEFENDANT’S MOTION
TO DISMISS
[Dkt. No. 15]

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Presently before the Court is Defendant’s motion to dismiss

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Plaintiff’s First Amended Complaint (“FAC”).

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Having heard oral arguments and considered the parties’

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submissions, the Court adopts the following order.

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I.

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(Dkt. No. 15.)

BACKGROUND
Plaintiff is a supplier of a “blood product called intravenous

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immune globulin (‘IVIG’).”

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alleges it supplied IVIG to a patient referred to as “M.O.” from

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January to July 2006.

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that M.O. was at all times insured by Defendant “and/or” another

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company called “HealthNet.”

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an exhibit to show, that it had previously entered into a contract

(FAC, ¶¶ 9-10, 14-15.)

(Id. at ¶ 9.)

(Id.)

Plaintiff

Plaintiff further alleges

Plaintiff alleges, and provides

with a company called “Coalition America,” which it alleges was

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“acting as United’s designated contracting agent,” to be paid for

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its services at a certain rate.

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That rate, as specified in the document attached to Plaintiff’s

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FAC, was to be the “lesser of 70% billed charges or usual,

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customary, and reasonable charges.”

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alleges it provided services to M.O. under initial authorization

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from insurer HealthNet, only to later be told by HealthNet that in

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fact M.O.’s correct insurer was Defendant United Healthcare.

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at ¶¶ 16-19.)

(Id. at ¶¶ 8, 31; Id., Ex. A.)

(Id., Ex. A.)

Plaintiff

(Id.

Plaintiff alleges that on March 24, 2006, Defendant

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authorized IVIG for M.O.1 and “agreed that IV Solutions would be

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paid its total billed charges.”

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alleges that it “timely submitted its total billed charge claims”

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to Defendant.

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(Id. at ¶¶ 20-23.)

Plaintiff

(Id. at ¶ 24.)

Plaintiff alleges that Defendant failed to timely pay the

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amount owed, instead paying only what it “unilaterally” defined as

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the “usual and customary” rates, based on “geographic profiling”

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and pricing data from its Ingenix pricing service.

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26, 32.)

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(Id. at ¶¶ 25-

Plaintiff alleges that Defendant has “issued many written

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explanations and made many verbal statements” regarding the amount

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it was willing to pay, but that these were misrepresentations

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and/or stalling tactics.

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although Defendant issued “explanations of benefits” and “other

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writings explaining and attempting to justify its processing of

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payments” between July 2006 and April 2011, “[t]o date, United has

(Id. at ¶ 34.)

Plaintiff alleges that

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Plaintiff alleges it memorialized these authorizations in
writing at the time; however, those memorializations are not
attached to the FAC. (FAC, ¶ 21.)
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not issued a complete, full and final denial, or complete

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explanation” of its position on the claims.

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Plaintiff filed this lawsuit in state court in January 2015;

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it was removed to federal court in February 2015. (Dkt. No. 2.)

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Defendant moves to dismiss based on statute of limitations, failure

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to allege the existence of a contract, breach, or damages, and

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failure to state a claim based on an open book account.

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15.)

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II.

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(Dkt. No.

LEGAL STANDARD
In order to survive a motion to dismiss for failure to state a

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claim, a complaint need only include “a short and plain statement

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of the claim showing that the pleader is entitled to relief.”

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Atl. Corp. v. Twombly, 550 U.S. 544, 55 (2007) (quoting Conley v.

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Gibson, 355 U.S. 41, 47 (1957)).

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“sufficient factual matter, accepted as true, to state a claim to

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relief that is plausible on its face.”

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662, 678 (2009) (quoting Twombly, 550 U.S. at 570).

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considering a Rule 12(b)(6) motion, a court must “accept as true

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all allegations of material fact and must construe those facts in

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the light most favorable to the plaintiff.”

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F.3d 443, 447 (9th Cir. 2000).

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III. DISCUSSION

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A.

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Bell

A complaint must include

Ashcroft v. Iqbal, 556 U.S.
When

Resnick v. Hayes, 213

Statute of Limitations
Plaintiff’s claims are subject to statutes of limitations as

follows:

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- Claims for breach of contract and open book account must be

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filed within four years of the time of accrual.2

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Code § 337(1)-(2).

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Cal. Civ. Proc.

- Claims for breach of implied contract, breach of the

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covenant of good faith and fair dealing, and negligent

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misrepresentation must be filed within two years of the time of

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accrual.

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221 Cal. App. 3d 1136, 1144 n.4 (1990); E-Fab, Inc. v. Accountants,

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Inc. Servs., 153 Cal. App. 4th 1308, 1316 (2007).

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Cal. Civ. Proc. Code § 339(1); Love v. Fire Ins. Exch.,

- Claims for fraud, including intentional misrepresentation,

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must be filed within three years of the time of accrual.

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Proc. Code § 338(d).

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Cal. Civ.

Plaintiff alleges that Defendant made misrepresentations, but

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not later than April 2011.

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negligent misrepresentation are time-barred.

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Thus, the claims for intentional and

A cause of action for an open book account accrues on “the

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date of the last entry in the book account.”

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Inc., 980 F.2d 1248, 1253 (9th Cir. 1992).

In re Roberts Farms
Plaintiff alleges that

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Defendant argues that the claim for an open book account is
subject to a two-year statute of limitations to the degree that it
is premised on exactly the same facts as a breach of implied
contract, citing Filmservice Labs., Inc. v. Harvey Bernhard
Enterprises, Inc., 208 Cal. App. 3d 1297, 1307 (1989). But the
holding in Filmservice is likely a narrow one, applying only to
circumstances where the allegation of an “open book account” is
simply a naked attempt to recharacterize an oral agreement as a
book account to get around the statutory time bar. Id. at 1307.
(“[N]o facts have been alleged which give rise to any reasonable
inference that the oral contract was superseded by an open book
account or account stated agreement. The mere existence of two
invoices ... do not evidence such accounts. Those invoices simply
memorialize the oral contract.”). In any event, as will be
discussed below, whether the statute of limitations is two years or
four years, the date of accrual is early enough that Plaintiff’s
claim cannot survive.
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it has maintained its book account “in the regular course of

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business”, (FAC, ¶ 68), and that it provided its final service to

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the patient M.O. on “about July 7, 2006.”

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also alleges that “[a]fter providing the authorized services to

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M.O., IV Solutions timely submitted its total billed charges for

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payment” to Defendant.

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the book account was presumably made some time shortly after the

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provision of the final treatment to M.O.

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would have occurred many years before January 2011, the statute of

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(Id. at ¶ 24.)

(Id. at ¶ 9.)

Plaintiff

Thus, the final entry in

Because that final entry

limitations has run, and the claim is time-barred.
As to the other claims, the time of accrual of the cause of

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action is the time when Defendant’s payment in full was due.

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cause of action for breach of contract accrues at the time of

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breach, which then starts the limitations period running.”

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v. Cochran, 56 Cal. App. 4th 1115, 1120 (1997).

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established that where a contract does not specify a time for

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performance, the party is obliged to perform within a reasonable

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time, and the statute of limitations begins to run when a

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“reasonable time” has expired without performance.

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§ 1657; Caner v. Owners' Realty Co., 33 Cal. App. 479, 481 (1917).

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Although “[w]hat constitutes a ‘reasonable time’ for performance is

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a question of fact,” Consol. World Investments, Inc. v. Lido

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Preferred Ltd., 9 Cal. App. 4th 373, 381 (1992), Plaintiff has pled

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no facts plausibly suggesting that delaying payment for four-and-a-

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half years after the initial demand was made would have been

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reasonable.3

“A

Cochran

It is well-

Cal. Civ. Code

Thus, payment due under a contract, whether express

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“[D]etermining whether a complaint states a plausible claim
(continued...)
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or implied, would have been due some time before (probably well

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before) January 2011, let alone January 2013.

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claims for breach of contract (whether express or implied), filed

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in January 2015, are time-barred absent equitable tolling,

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discussed below.

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B.

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Thus, Plaintiff’s

Equitable Tolling
Plaintiff argues that the statutes of limitations should be

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subject to equitable tolling, because Defendant has never issued an

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unequivocal denial of the claim.

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Defendant, however, argues that

Plaintiff’s own pleadings show that it has.

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Plaintiff relies on Prudential-LMI Com. Ins. v. Superior

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Court, which held that the 12-month statute of limitations imposed

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on claims arising under statutorily-defined fire insurance policies

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should be equitably tolled from the time the insured submitted a

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claim to the insurer to the time the insurer issued a final

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decision on the claim.

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reasoned that equitable tolling “allows the claims process to

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function effectively, instead of requiring the insured to file suit

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before the claim has been investigated and determined by the

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insurer, and that “it protects the reasonable expectations of the

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insured by requiring the insurer to investigate the claim without

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later invoking a technical rule that often results in an unfair

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forfeiture of policy benefits.”

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51 Cal. 3d 674, 687-93 (1990).

The Court

Id. at 692.

However, the Prudential-LMI court specifically limited its
holding to “the first party progressive property loss cases in the

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(...continued)
is context-specific, requiring the reviewing court to draw on its
experience and common sense.” Ashcroft v. Iqbal, 556 U.S. 662,
663-64 (2009).
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context of a homeowner's insurance policy.”

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explicitly rested its decision on the fact that the 12-month

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limitations period in the statutorily-mandated property loss

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contracts was considerably shorter than the period for breach of

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contract claims in other contexts.

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Prudential-LMI, the plaintiff was an insured, suing its insurer on

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an insurance policy.

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Insurance Code, a body of law specifically designed to protected

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insured parties.

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Id. at 679.

Id. at 691.

It also

Finally, in

The court ruled on the provisions of the

Id. at 687-93 (citing and interpreting Cal. Ins.

Code § 2071).
Here, Plaintiff sues for payment under an ordinary contract,

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and the concerns embodied in Prudential-LMI do not apply, or at any

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rate apply with less force.

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passed, either Defendant was in breach (if it paid less than the

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amount owed under the contract) or it was not.

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believed it was owed more, it could have sued right away;

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Defendant’s alleged statements as to how much it was obligated to

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pay, and the allegedly “partial” payments it made, did not affect

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Plaintiff’s right to sue.

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Once a reasonable time for payment had

If Plaintiff

Plaintiff also argues for either tolling, waiver, or estoppel

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because it “reasonably relied on United’s conduct and was induced

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by United to believe the possibility of an amicable settlement

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could be reached.”

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settlement, or ongoing efforts to settle, do not toll the statute

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of limitations – especially where the limitations period is lengthy

(Opp’n at 7.)

But the mere possibility of

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enough to allow for attempts at settlement prior within the

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period.4

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Even if bad faith in negotiations to resolve the problem could

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result in waiver or estoppel, Plaintiff does not allege that

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Defendant made misrepresentations that would have induced Plaintiff

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to give up its right to sue because an amicable settlement was

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close at hand.

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offered the possibility of settlement at all.

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alleges that Defendant made misrepresentations about its claims

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Indeed, Plaintiff does not allege that Defendant

process in order to stonewall.

At most, Plaintiff

(FAC, ¶ 34.)

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Finally, if Plaintiff wanted to negotiate in good faith to

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come to an amicable settlement, but did not want to give up its

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right to sue, it could always have approached Defendant with a

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tolling agreement, effectively stopping the clock on the statute by

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agreement.

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Agribusiness Ins. Co., No. 1:10-CV-02051-AWI, 2013 WL 5519605, at

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*18-19 (E.D. Cal. Oct. 3, 2013) (statute of limitations on contract

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claim not time-barred due, in part, to tolling agreement).

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parties here are sophisticated businesses with access to counsel,

See, e.g., Britz Fertilizers, Inc. v. Nationwide

The

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See Transport Ins. Co. v. TIG Ins. Co., 202 Cal. App. 4th 984
(2012) (expressing doubt that equitable tolling could apply to a
contract claim, “in light of the lengthy statute of limitations
involved”); Lantzy v. Centex Homes, 31 Cal. 4th 363, 380, 73 P.3d
517, 530 (2003) (“Because plaintiffs had three or four years after
discovery, and up to ten years after the project's completion, to
bring their suits for latent construction defects, many of the
concerns that might warrant equitable tolling are ameliorated.
Indeed, were we to conclude that the generous limitations period of
section 337.15 is equitably tolled for repairs, despite the absence
of any specific indication that the 1971 Legislature so intended,
the implication would arise that all statutes of limitations are
similarly tolled or suspended in progress while the parties make
sincere efforts to adjust their differences short of litigation. We
find no such general principle in California law.”).
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and such an agreement was within their reach.

(If Defendant was

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not willing to enter into such an agreement, of course, that would

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have been a strong indication that it was not interested in

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reaching an amicable settlement.)

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Plaintiff’s facts, even if taken as true, do not plausibly

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suggest grounds for equitable tolling or other equitable relief

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from the statute of limitations.

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C.

Other Arguments

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Because the claims in the FAC are time-barred, the Court does

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not consider other arguments raised by the parties in this motion.

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IV.

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CONCLUSION
Plaintiff’s First Amended Complaint is hereby DISMISSED.

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IT IS SO ORDERED.

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Dated: July 7, 2015
DEAN D. PREGERSON
United States District Judge

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