Bay Area Surgical Group, Inc. v. Anthem Blue Cross Life and Health Insurance Company et al

Filing 14

ORDER Granting Motion to Dismiss and Denying Motion to Strike as moot. The April 21, 2011 motion hearing and case management conference are vacated. Signed by Judge Koh on 4/19/2011. (lhklc3, COURT STAFF) (Filed on 4/19/2011)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

United States District Court
For the Northern District of California

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SAN JOSE DIVISION

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BAY AREA SURGICAL GROUP, INC.,
Plaintiff,
v.
ANTHEM BLUE CROSS LIFE & HEALTH
INSUR. CO., ET AL.,
Defendants.

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Case No.: 10-CV-05867-LHK
ORDER GRANTING MOTION TO
DISMISS WITH LEAVE TO AMEND
AND DENYING MOTION TO STRIKE
AS MOOT

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Plaintiff Bay Area Surgical Group, Inc. (“Plaintiff”) brings the instant action against
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Defendants Anthem Blue Cross Life and Health Insurance Company (“Anthem”), Health Care
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Service Corporation Illinois State PAC, NFP, and Blue Cross Blue Shield of Illinois (collectively
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“Defendants”). In brief, Plaintiff alleges that, pursuant to a written assignment agreement, it is
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entitled to receive full payment from Defendants for a surgical procedure it performed on a patient
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as the patient’s assignee. Defendants move to dismiss the complaint for failure to state a claim
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upon which relief may be granted. Defendant Anthem also moves to strike portions of the
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complaint. Although Plaintiff’s oppositions were due no later than March 31, 2011, as of the date
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of this Order, Plaintiff has not filed any oppositions. The Court deems these motions appropriate
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for resolution without oral argument, and vacates the April 21, 2011 motion hearing and case
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management conference. See Civ. L. R. 7-1(b). For the reasons explained below, Defendants’
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Case No.: 10-CV-05867-LHK
ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND AND DENYING MOTION TO STRIKE

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motion to dismiss is GRANTED with leave to amend. Defendant Anthem’s motion to strike is

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DENIED as moot.

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I. BACKGROUND
In the Complaint, Plaintiff describes itself as an ambulatory surgery center that provides

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health care services at its facility in Santa Clara, California. See Compl. ¶ 9. On June 4, 2009, a

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patient of Plaintiff underwent surgery. Plaintiff alleges that the patient was insured by a “health

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benefits agreement” with Defendants. Id. at ¶ 11. Under that agreement, Defendants promised to

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pay for certain costs of health care services incurred by the patient. Id.

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Plaintiff alleges that, on June 4, 2009, the patient executed an “Assignment of Benefits” to

United States District Court
For the Northern District of California

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Plaintiff, which authorized Plaintiff, as the patient’s assignee, to bill the insurance carrier

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(Defendants) directly. Pursuant to the assignment agreement, Plaintiff alleges it submitted a timely

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claim for payment. Id. at ¶ 13. However, according to Plaintiff, Defendants have not made the full

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payment of the outstanding charges.

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Based on these allegations, Plaintiff brings suit for three California state law claims: (1)

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breach of contract; (2) implied covenant of good faith and fair dealing; and (3) common counts.

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Presently before the Court are Defendants’ motion to dismiss for failure to state a claim and motion

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to strike portions of the complaint.

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II. ANALYSIS
Dismissal under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim is

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“proper only where there is no cognizable legal theory or an absence of sufficient facts alleged to

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support a cognizable legal theory.” Shroyer v. New Cingular Wireless Services, Inc., 606 F.3d 658,

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664 (9th Cir. 2010) (quoting Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001)). In considering

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whether the complaint is sufficient to state a claim, the court must accept as true all of the factual

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allegations contained in the complaint. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). While a

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complaint need not allege detailed factual allegations, it “must contain sufficient factual matter,

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accepted as true, to “‘state a claim to relief that is plausible on its face.’” Iqbal, 129 S.Ct. at 1949

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(quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). If the court concludes that the

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complaint should be dismissed, it must then decide whether to grant leave to amend. “[A] district
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Case No.: 10-CV-05867-LHK
ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND AND DENYING MOTION TO STRIKE

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court should grant leave to amend even if no request to amend the pleading was made, unless it

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determines that the pleading could not possibly be cured by the allegation of other facts.” Lopez v.

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Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) (quoting Doe v. United States, 58 F.3d 494, 497 (9th

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Cir. 1995)).

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Defendants move to dismiss on the ground that each of Plaintiff’s state law causes of action

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is preempted by the Employment Retirement Income Security Act of 1974 (“ERISA”), as

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amended, 29 U.S.C. §§ 1001 et seq. Section 1144(a) of ERISA provides that ERISA provisions

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“supersede any and all State laws insofar as they may now or hereafter relate to any employee

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benefit plan . . . .” See 29 U.S.C. § 1144(a). The provisions of ERISA “apply to any employee

United States District Court
For the Northern District of California

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benefit plan if it is established or maintained--(1) by any employer engaged in commerce or in any

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industry or activity affecting commerce; or (2) by any employee organization or organizations

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representing employees engaged in commerce or in any industry or activity affecting commerce; or

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(3) by both.” See 29 U.S.C. § 1003(a).

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Here, Plaintiff seeks to recover payment as the assignee of one of its patients, a patient

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covered by a health insurance policy with Defendants. Although Plaintiff did not attach a copy of

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the health insurance agreement to the Complaint, Defendants submit what they contend is the

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agreement referenced in the Complaint. See Exh. D to Notice of Removal (“Agreement”). The

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Court will consider the Agreement as incorporated by reference into the Complaint. See United

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States v. Ritchie, 342 F.3d 903, 907 (9th Cir. 2003) (“The doctrine of incorporation by reference

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may apply, for example, when a plaintiff’s claim about insurance coverage is based on the contents

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of a coverage plan.”). The Court finds that the Agreement is an “employee benefit plan” as defined

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in Section 1003(a). See, e.g., Agreement at 94 (referencing participant rights and protection under

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ERISA). As the Agreement is covered by ERISA, Plaintiff’s three state law claims based on

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violation of the Agreement are preempted. See Cedars-Sinai Med. Ctr. v. Nal League of

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Postmasters, 497 F.3d 972, 978 (9th Cir. 2007) (recognizing that “ERISA preempts the state claims

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of a provider suing as an assignee of the beneficiary’s rights to benefits under an ERISA plan”);

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see also The Meadows v. Employers Health Ins., 47 F.3d 1006, 1008 (9th Cir. 1995) (affirming

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Case No.: 10-CV-05867-LHK
ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND AND DENYING MOTION TO STRIKE

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“the principle that ERISA preempts the state claims of a provider suing as an assignee of a

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beneficiary’s rights to benefits under an ERISA plan”).1

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III. CONCLUSION

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Accordingly, for good cause shown:

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(1) the motion to dismiss is GRANTED with leave to amend;

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(2) the motion to strike portions of the complaint is DENIED as moot;

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(3) any amended pleading must be filed within twenty-one (21) days of the date this Order.

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Failure to timely amend the complaint will result in dismissal with prejudice; and

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(4) the April 21, 2011 motion hearing and case management conference are VACATED.

United States District Court
For the Northern District of California

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IT IS SO ORDERED.

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Dated: April 19, 2011

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_________________________________
LUCY H. KOH
United States District Judge

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The Court does not reach Defendants’ other grounds for dismissal.
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Case No.: 10-CV-05867-LHK
ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND AND DENYING MOTION TO STRIKE