Sanjiv Goel M.D., Inc. v. Cigna Healthcare of California, Inc. et al

Filing 22

ORDER by Judge Dale S. Fischer GRANTING Plaintiff's Motion to Remand (Dkt. 9 ). (MD JS-6. Case Terminated.) (SEE ORDER FOR SPECIFICS). (jp)

JS-6

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

SANJIV GOEL M.D., INC.,
Plaintiff,
v.

19-CV-03356-DSF (PLAx)
Order GRANTING Plaintiff’s
Motion to Remand (Dkt. 9)

CIGNA HEALTHCARE OF
CALIFORNIA, INC., et al.,
Defendants.

Defendants Cigna Healthcare of California, Inc. (Cigna
California) and Cigna Health and Life Insurance Company
(CHLIC) (collectively, Defendants) removed this case based on
diversity and federal question jurisdiction. Dkt. 1 (Notice).
Plaintiff Sanjiv Goel M.D., Inc. (Plaintiff) moves for remand. Dkt.
9 (Mot.). Plaintiff’s Motion is GRANTED.
I. FACTUAL BACKGROUND
Plaintiff provides emergency medical services. Dkt. 1-1
(Compl.) ¶ 1. After rendering such services to four patients
insured by Defendants, Plaintiff submitted claims for
reimbursement. Id. ¶ 10. Defendants reimbursed Plaintiff
$32,089.69 for those services but failed to reimburse the
remaining $387,412.23 Plaintiff claims it is owed. Id. ¶ 15.

II. DISCUSSION
A.

Diversity Jurisdiction

Federal courts have diversity jurisdiction where the amount
in controversy exceeds $75,000 and the action is between citizens
of different states. 28 U.S.C. §§ 1332, 1441. 1 Defendants do not
contest that Cigna California and Plaintiff are both citizens of
California, but claim Cigna California was fraudulently joined. 2
For purposes of diversity jurisdiction, the Court “may
disregard the citizenship of a non-diverse defendant who has been
fraudulently joined.” Grancare, LLC v. Thrower, 889 F.3d 543,
548 (9th Cir. 2018). A non-diverse defendant is fraudulently
joined “[i]f the plaintiff fails to state a cause of action against [the]
resident defendant, and the failure is obvious according to the
settled rules of the state.” Morris v. Princess Cruises, Inc., 236
F.3d 1061, 1067 (9th Cir. 2001) (first alteration in original)
(quoting McCabe v. Gen. Foods Corp., 811 F.2d 1336, 1339 (9th
Cir. 1987)). “[T]he test for fraudulent joinder and for failure to
state a claim under Rule 12(b)(6) are not equivalent.” Grancare,
889 F.3d at 549. Instead, “the standard is similar to the ‘wholly
insubstantial and frivolous’ standard for dismissing claims under
Rule 12(b)(1) for lack of federal question jurisdiction.” Id. In
evaluating a claim of fraudulent joinder, “a federal court must find
that a defendant was properly joined and remand the case to state
court if there is a ‘possibility that a state court would find that the
complaint states a cause of action against any of the [non-diverse]
defendants.’” Id. (alteration and emphasis in original) (quoting
Hunter v. Philip Morris USA, 582 F.3d 1039, 1046 (9th Cir.
2009)). In this inquiry, “the district court must consider . . .
1

The parties do not dispute that the amount in controversy exceeds $75,000.

2

Defendants’ Request for Judicial Notice is denied as moot.

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whether a deficiency in the complaint can possibly be cured by
granting the plaintiff leave to amend.” Id. at 550.
In its Complaint, Plaintiff does not differentiate between
CHLIC and Cigna California. See Compl. ¶¶ 2-3 (defining CHLIC
and Cigna California as “Cigna” and Cigna and the Doe
defendants as “Cigna” or “Defendants”). Plaintiff alleges that
CHLIC and Cigna California “coordinate their efforts, utilize the
same employees and assets, [and] have actual or ostensible
authority to, and do in fact, act through one another, and
otherwise function as a united whole.” Id. ¶ 3. Plaintiff further
alleges that CHLIC and Cigna California market and present
themselves to members and providers as “a single unified entity
under the ‘Cigna’ marketing brand name,” id., and “are the alter
egos of each other,” Mot. at 6; see also Compl. ¶ 8.
Defendants argue that Cigna California was fraudulently
joined because CHLIC, and not Cigna California, “administered or
insured medical benefits for the four individuals who received the
treatment for which plaintiff alleges it was undercompensated”
and “Cigna California was [not] responsible for payment of the
contested claims.” Dkt. 12 (Opp’n) at 7-8. Defendants also
dispute that Cigna California is the alter ego of CHLIC. Id. at 8-9.
As to the first point, Defendants submitted a declaration
from Emily Russell, an operations advisor at CHLIC, asserting
that Cigna California “is not the insurer, plan sponsor, plan
administrator, or claims administrator” for any of the four
patients’ health plans. Dkt. 12-3 (Russell Decl.) at ¶¶ 1, 6, 11, 16,
20. Defendants also submitted a declaration from William S.
Jameson, Managing Counsel for CHLIC and Cigna California,
stating that Cigna California “had no responsibility for processing,
adjudicating, or denying the claims for the services as issue in this
action.” Dkt. 12-2 (Jameson Decl.) ¶¶ 1, 10. Although this
evidence may cast doubt on the viability of Plaintiff’s claims
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against Cigna California, “a denial, even a sworn denial, of
allegations does not prove their falsity.” Grancare, 889 F.3d at
551.
As to the second point, Jameson declares that neither
CHLIC nor Cigna California is “a parent company or subsidiary of
the other,” “each independently decide[s] what products they will
offer” and “utilize[s] a different claims platform and a different
claims process,” they “do not employ the same personnel,”3 have
“independent boards of directors,” and “generate separate
financial statements.” Jameson Decl. ¶¶ 6-8. These assertions
cast doubt on the viability of Plaintiff’s alter ego theory, but do not
demonstrate that Cigna California could not possibly be liable.
“[I]t is conceivable that a corporate family could have formal
delineations of responsibilities that are not followed in practice.”
Jadali v. Cigna Health & Life Ins. Co., 3:19-cv-00996-WHO, 2019
WL 1897481, at *3 (N.D. Cal. Apr. 29, 2019). The Court
recognizes that the Complaint as it stands provides minimal
factual allegations to support a claim of alter ego liability, but the
Court finds such deficiency could be cured through amendment.
Because Cigna California was not fraudulently joined,
diversity jurisdiction did not exist at the time of removal.
B.

Federal Question Jurisdiction

For the Court to have federal question jurisdiction, the claim
must arise under federal law. 28 U.S.C. § 1331. “Ordinarily,
determining whether a particular case arises under federal law
turns on the ‘well-pleaded complaint’ rule.” Aetna Health Inc. v.
Davila, 542 U.S. 200, 207 (2004) (quoting Franchise Tax Bd. of
State of Cal. v. Constr. Laborers Vacation Tr. for S. Cal., 463 U.S.
That is, apparently, apart from Mr. Jameson, who is Managing Counsel for
both companies. Jameson Decl. ¶ 1.

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1, 9-10 (1983)). However, there is an exception to the well-pleaded
complaint rule for federal statutes that completely preempt a
plaintiff’s state law claim. Id. (citing Beneficial Nat. Bank v.
Anderson, 539 U.S. 1, 8 (2003)). Here, Defendants assert that
Plaintiff’s state law claims are completely preempted under
ERISA.
The Supreme Court has established a two-prong test to
determine whether a state law cause of action is completely
preempted by ERISA: (1) “if an individual, at some point in time,
could have brought his claim under” 29 U.S.C. § 1132(a)(1)(B) 4
and “there is no other independent legal duty that is implicated by
defendant’s actions.” Id. at 210. Both prongs must be satisfied for
preemption to apply. Marin Gen. Hosp. v. Modesto & Empire
Traction Co., 581 F.3d 941, 947 (9th Cir. 2009).
1.

Davila’s First Prong

Because Davila’s second prong is clearly not met, the Court
need not analyze the first prong. See Hansen v. Grp. Health
Coop., 902 F.3d 1051, 1059 (9th Cir. 2018).
2.

Davila’s Second Prong

As Defendants concede, state law claims can survive
preemption if they are based on “an extraneous promise that
imposed an obligation on the defendant independent of the terms
of the ERISA plan.” Opp’n at 14. Under Davila’s second prong,
“[t]he relevant inquiry . . . focuses on the origin of the duty, not its
relationship with health plans.” Hansen, 902 F.3d at 1060.

That provision states: “A civil action may be brought . . . by a participant or
beneficiary . . . to recover benefits due to him under the terms of his plan, to
enforce his rights under the terms of the plan, or to clarify his rights to future
benefits under the terms of the plan.”
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Therefore, a duty can be “independent” under Davila even if “it
relies on the existence of a health benefit plan.” See id.5
a.

Statutory Claims (First and Fifth Causes of
Action)

In Davila, plaintiffs asserted claims under a state health
care statute that imposed liability on managed care entities for
damages proximately caused by a failure to exercise ordinary care.
542 U.S. at 212. However, because the statute included a safe
harbor for damages caused by failure to provide uncovered
treatment, “interpretation of the terms of respondents’ benefit
plans forms an essential part of their [state statutory] claim, and
[statutory] liability would exist here only because of petitioners’
administration of ERISA-regulated benefit plans.” Id. at 213. In
other words, liability under the statute depended on whether
coverage was rightfully denied under the plan.
By contrast, the California statute at issue here, as applied
to health care providers, “does impose an independent coverage
requirement, mandating that health plans” reimburse providers
for emergency services provided to stabilize a patient. See
For this reason, Defendants’ reliance on pre-Hansen district court cases that
hold otherwise are misplaced. Opp’n at 16-17 (first citing In re WellPoint,
Inc. Out-of-Network UCR Rates Litig., 903 F. Supp. 2d 880, 930 (C.D. Cal.
2012) (“[A]ny obligation that WellPoint had to pay for emergency services is
entirely dependent on Dr. Schwendig’s patients . . . being enrolled in a
qualifying benefits plan”); then citing Melamed v. Blue Cross of California,
No. CV 11-4540 PSG FFMX, 2011 WL 3585980, at *8 (C.D. Cal. Aug. 16,
2011), aff’d, 557 F. App’x 659 (9th Cir. 2014) (“[A]ny obligation that
Defendants had to pay for emergency services is entirely dependent on
Plaintiffs’ patients . . . being enrolled in a qualifying benefits plan.”)).
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Hansen, 902 F.3d at 1060. Unlike Davila where “the state law
applied only when a benefit plan covered treatment,” the state law
here “applies to how all benefit plans cover” stabilizing emergency
services. See id. “[B]ecause [the statutory duty] does not
piggyback on, and is thus independent of, the specific rights
‘established by the benefit plans[,]’” the second Davila prong is not
met. Id. (quoting Davila, 542 U.S. at 213); see also John Muir
Health v. Cement Masons Health & Welfare Tr. Fund for N.
California, 69 F. Supp. 3d 1010, 1020 (N.D. Cal. 2014) (California
Health and Safety Code § 1371.4(b) “requires payment
irrespective of the enrollee’s plan determination.”). 6
Defendants also assert that this claim is preempted because
§ 1371.4 does not apply to self-funded health care plans, and at
least one of the patients had a self-funded plan, Opp’n at 15; Defs.’
Supp. Br. at 9, and that there is no private right of action to
enforce § 1371.4(b), Opp’n at 16. However, these arguments
present defenses to Plaintiff’s claim that can be raised on
demurrer; they are not relevant to the Court’s preemption
analysis. See Catholic Healthcare W.-Bay Area v. Seafarers
Health & Benefits Plan, 321 F. App’x 563, 565 (9th Cir. 2008)
(“That [defendant] may succeed on the merits does not alter the
fact that [plaintiff’s] Complaint asserts only non-preempted state
law claims.”).
Therefore, the First and Fifth Causes of Action are not
completely preempted by ERISA.

The Court also is not persuaded by Defendants’ argument that Cleghorn v.
Blue Shield of California, 408 F.3d 1222 (9th Cir. 2005) mandates preemption
here.
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b.

Contract-based Claims (Second, Third, Fourth
and Sixth Causes of Action)

As described above, in support of its contract-based claims,
the Complaint alleges independent “oral representations,” an
“implied contract based upon prior dealing,” and implied
“authorization and approval for the medical care and treatment of
their member patients.” Compl. ¶¶ 46, 54, 77. The claims in
Sobertec LLC v. UnitedHealth Grp., Inc., No.
SACV191206JVSMRWX, 2019 WL 4201081, at *1 (C.D. Cal. Sept.
5, 2019) were similar: “Plaintiffs relied on . . . benefits
verifications, authorizations and related representations from
Defendants, and this course of dealing generally, consistent with
industry custom and practice, in agreeing to provide care to
Defendants’ insureds.” The court held that the plaintiffs’ claims
were not preempted because they were “not based on an obligation
under an ERISA plan, but rather on oral representations and
implied contracts, and the state-law relied upon does not apply
only to ERISA plans.”7 Id. at *4. The same is true here.
Defendants’ conclusory assertions that “Cigna’s obligations
were governed only by the relevant ERISA plans and the
applicable law,” Opp. at 14, and “the only reason plaintiff can
In the cases on which Defendants rely, there were no factual allegations
distinct from an ERISA claim. See, e.g., Sarkisyan v. CIGNA Healthcare of
California, Inc., 613 F. Supp. 2d 1199, 1208 (C.D. Cal. 2009) (“Plaintiffs’ only
relevant connection to CIGNA with respect to these three claims is CIGNA’s
partial administration of the Sonic Benefit Plan” and claims turn on whether
“CIGNA’s administration of the Sonic Benefit Plan was unlawful”);
WellPoint, 903 F. Supp. 2d at 930 (“Dr. Schwendig’s UCL claim is based on
the same allegations as his ERISA claim for benefits”); Melamed, 2011 WL
3585980, at *7 (Plaintiff’s claims were based on the “‘usual and customary’
rate of services performed to Defendants’ members as promised in the ERISA
plan.”) (emphasis added)).
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pursue payment from CHLIC is because of the patients’ ERISA
plans,” Defs.’ Supp. Br. at 8, “utterly disregard[] the allegations
and case theory of Plaintiff,” see John Muir, 69 F. Supp. 3d at
1018.8 It is true that the factual allegations that form the basis
for these independent duties are somewhat lacking in detail, but
because there is a “strong presumption against removal
jurisdiction . . . the court resolves all ambiguity in favor of remand
to state court.” Hunter, 582 F.3d at 1042.
Plaintiff has alleged that his claims stem from independent
oral promises, course of dealing, and California statutes. Those
allegations are sufficient to establish a duty independent of
ERISA, and therefore Plaintiff’s state law claims are not
completely preempted. The Court lacks federal question
jurisdiction over Plaintiff’s claims.
C.

Attorney’s Fees

“An order remanding a case may require payment of just costs
and actual expenses, including attorney fees, incurred as a result
of removal.” 28 U.S.C. § 1447(c). “Absent unusual circumstances,
courts may award attorney’s fees under § 1447(c) only where the
removing party lacked an objectively reasonable basis for seeking
removal.” Martin v. Franklin Capital Corp., 546 U.S. 132, 141
(2005). Although unsuccessful, the removal was objectively
reasonable. Plaintiff’s request for fees and costs is DENIED.

Defendant also misstates the Complaint by omitting one of the bases on
which Plaintiff purportedly “concede[d]” its expectation for payment was
based. Opp’n at 15 (omitting “Cigna’s promise to make payments on behalf of
its insured patients”).
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III. CONCLUSION
The motion to remand is GRANTED. The case is REMANDED
to the Superior Court of California, County of Ventura.
IT IS SO ORDERED.
Date: October 9, 2019

___________________________
Dale S. Fischer
United States District Judge

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