Arapahoe Surgery Center, LLC et al v. CIGNA Healthcare, Inc. et al
ORDER that Counterclaim Defendants Motion to Dismiss Counterclaims ECF No. 43 is GRANTED IN PART and DENIED IN PART; The Motion is GRANTED as to Counterclaim Plaintiffs claims under RICO, COCCA, Colorado Criminal Code § 18- 4-405, and ERISA § 502(a) for restitution and declaratory relief, as well as state law claims for fraud, aiding and abetting fraud, negligent misrepresentation, and aiding and abetting misrepresentation, and those claims are DISMISSED; The Motion is DENIED as to Counterclaim Plaintiffs claims for injunctive relief under ERISA § 502(a), declaratory relief under Colorado Criminal Code § 18-13-119, and state law claims for unjust enrichment and tortious interference with contract, and those claims remain pending, by Judge William J. Martinez on 3/6/2015.(evana, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 13-cv-3422-WJM-CBS
ARAPAHOE SURGERY CENTER, LLC,
CHERRY CREEK SURGERY CENTER, LLC,
HAMPDEN SURGERY CENTER, LLC,
KISSING CAMELS SURGERY CENTER,
SURGCENTER OF BEL AIR, LLC, and
WESTMINSTER SURGERY CENTER, LLC,
Plaintiffs / Counterclaim Defendants,
CIGNA HEALTHCARE, INC.,
CONNECTICUT GENERAL LIFE INSURANCE COMPANY,
CIGNA HEALTHCARE - MID-ATLANTIC, INC., and
CIGNA HEALTHCARE OF COLORADO, INC.,
Defendants / Counterclaim Plaintiffs.
ORDER GRANTING IN PART AND DENYING IN PART
COUNTERCLAIM DEFENDANTS’ MOTION TO DISMISS
Plaintiffs Arapahoe Surgery Center, LLC, Cherry Creek Surgery Center, LLC,
Hampden Surgery Center, LLC, Kissing Camels Surgery Center, LLC, SurgCenter of
Bel Air, LLC (“SurgCenter”), and Westminster Surgery Center, LLC (collectively the
“ASCs”) are ambulatory surgery centers bringing this antitrust action against
Defendants Cigna Healthcare, Inc., Connecticut General Life Insurance Co., Cigna
Healthcare–Mid-Atlantic, Inc., and Cigna Healthcare of Colorado, Inc. (collectively
“Cigna”).1 (Second Am. Compl. (“SAC”) (ECF No. 60) at 62-64.) Cigna has asserted
The instant Motion seeks dismissal of the antitrust claims in the Second Amended
Complaint brought by only four of the six Plaintiffs (Arapahoe Surgery Center, Cherry Creek
Surgery Center, Hampden Surgery Center, and Kissing Camels Surgery Center) against only
three of the four Defendants (Cigna Healthcare, Connecticut General Life Insurance Co., and
Counterclaims under the Employee Retirement Income Security Act (“ERISA”) § 502(a),
29 U.S.C. § 1132(a); the Racketeer Influenced and Corrupt Organizations Act (“RICO”),
18 U.S.C. § 1962(c); the Colorado Organized Crime Control Act (“COCCA”), Colo. Rev.
Stat. § 18-17-104; abuse of health insurance, Colo. Rev. Stat. § 18-13-119; civil theft,
Colo. Rev. Stat. § 18-4-405; and state law claims2 for fraud, aiding and abetting fraud,
negligent misrepresentation, aiding and abetting negligent misrepresentation, unjust
enrichment, and tortious interference with contract. (ECF No. 17.) Before the Court is
the Counterclaim Defendants’ Motion to Dismiss Counterclaims (“Motion”). (ECF No.
43.) For the reasons set forth below, the Motion is granted in part and denied in part.
I. LEGAL STANDARD
Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss a
claim in a complaint for “failure to state a claim upon which relief can be granted.” The
12(b)(6) standard requires the Court to “assume the truth of the plaintiff’s well-pleaded
factual allegations and view them in the light most favorable to the plaintiff.” Ridge at
Red Hawk, LLC v. Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007). In ruling on such
a motion, the dispositive inquiry is “whether the complaint contains ‘enough facts to
Cigna Healthcare of Colorado). (SAC pp. 2, 62-63.) However, the Motion is filed by all four
Defendants, and all six Plaintiffs responded to it. (See ECF Nos. 61 & 63.) Therefore, for the
purposes of this Order, the Court will use the terms “Plaintiffs” and “Defendants” when referring
to the parties’ positions on the Motion even where not all Plaintiffs or Defendants are implicated
in the underlying claims.
Cigna’s state law claims against SurgCenter and Westminster Surgery Center are
brought under Maryland law, as both are Maryland limited liability companies operating in
Maryland, while its state law claims against the remaining ASCs are brought under Colorado
law, as they are all Colorado entities. (ECF No. 17 ¶¶ 16-21, 218, 225, 233, 240, 248, 254.)
Each of Cigna’s state law claims asserts that the ASCs’ conduct gives rise to a claim under
both Maryland and Colorado law. (Id. ¶¶ 218, 225, 233, 240, 248, 254.)
state a claim to relief that is plausible on its face.’” Id. (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). Granting a motion to dismiss “is a harsh remedy
which must be cautiously studied, not only to effectuate the spirit of the liberal rules of
pleading but also to protect the interests of justice.” Dias v. City & Cnty. of Denver, 567
F.3d 1169, 1178 (10th Cir. 2009) (quotation marks omitted). “Thus, ‘a well-pleaded
complaint may proceed even if it strikes a savvy judge that actual proof of those facts is
improbable, and that a recovery is very remote and unlikely.’” Id. (quoting Twombly,
550 U.S. at 556).
The relevant allegations, as pled by Cigna, are as follows.
Cigna insures and administers employee health insurance benefit plans. (ECF
No. 17 ¶ 27.) While Cigna offers some fully-insured plans which it funds itself, the
majority of Cigna-administered plans are funded by the employers who sponsor them,
while Cigna serves as claims administrator. (Id. ¶¶ 28-29.) The ASCs are ambulatory
surgery centers providing medical services, and are all considered out-of-network
facilities under Cigna’s insurance plans. (See id. ¶ 2.)
Under Cigna’s plans, if a patient receives services from an in-network medical
provider, the plan pays the provider the rate determined under the provider’s contract
with Cigna, while the patient pays any applicable co-payment, co-insurance, or
deductible as specified in the plan. (Id. ¶ 36.) As part of the contract governing innetwork providers, those providers agree not to bill patients for any difference between
the charges they bill to the plan and the plan’s reimbursement amounts. (Id. ¶ 38.) If a
patient receives services from an out-of-network provider, the provider may set its own
rates for its services, which are generally higher than in-network contract rates, and the
provider may bill the patient for any amount of those charges that the plan does not
reimburse. (Id. ¶ 39.) Cigna limits its plans’ reimbursement to out-of-network providers
to a specified “Maximum Reimbursable Charge,” and will not reimburse any charge that
is greater than the provider’s “normal charge” for that service. (Id. ¶ 47.) Patients using
out-of-network providers are required to pay co-insurance, which is a percentage of the
amount covered by the plan for that service, as a cost-sharing incentive for patients to
use in-network providers. (Id. ¶¶ 41-42.) Cigna-administered plans do not cover
charges from medical providers if the patient is not billed or required to pay their
applicable cost-sharing responsibility. (Id. ¶¶ 45-46.)
Cigna alleges that the ASCs operated a “fee-forgiving” or “dual-pricing” scheme
in which the ASCs promised patients that they would receive medical services at innetwork rates in order to induce them to use the ASCs’ facilities. (Id. ¶¶ 62-63, 68-71.)
The ASCs estimated in-network rates based on Medicare rates, which were much lower
than the “inflated” rates the ASCs later submitted to Cigna for reimbursement, and
waived the patients’ co-insurance payments, billing them small amounts or nothing at
all. (Id.) Cigna asserts that the charges the ASCs submitted were “phantom charges,”
because the ASCs never intended to collect those amounts from the patients. (Id. ¶
71.) While the ASCs disclosed to Cigna on their claim forms that “[t]he insured’s
portion of this bill has been reduced in amount so the patient’s responsibility for the
deductible and copay amount is billed at in network rates,” they did not disclose how the
charges were computed or that the ASCs did not charge the patients the amounts later
submitted to Cigna. (Id. ¶ 77.)
Cigna alleges that, in reliance on the “phantom rates” in the ASCs claims, they
misled and induced Cigna into overpaying reimbursements for medical services that
should have been excluded from plan coverage because the “phantom rates” were not
the ASCs’ “normal charge” for that service. (Id. ¶¶ 47, 73.) Cigna also alleges that the
ASCs’ billing practices induced patients to breach the terms of their plans. (Id. ¶ 261.)
On April 11, 2014, the ASCs filed the instant Motion. (ECF No. 43.) Cigna filed
a Response (ECF No. 45), and the ASCs filed a Reply (ECF No. 47).
The ASCs’ Motion seeks dismissal of all of Cigna’s Counterclaims, arguing that
Cigna lacks standing to assert its Counterclaims, and that Cigna has insufficiently pled
each of its claims under Rule 12(b)(6). (ECF No. 43.) The Court will discuss each
argument in turn.
The Motion first asserts that Cigna lacks standing to pursue any of its
Counterclaims, because any injury suffered from the alleged overpayments was
suffered by the entity funding the plan. (ECF No. 43 at 1.) Because Cigna admits that
the majority of its plans are funded by the employers who sponsor them, not by Cigna,
the ASCs argue that Cigna has suffered no “injury in fact” when Cigna serves only as
the plans’ administrator. (Id.)
In response, Cigna notes that it fully funds some of its plans, and thus has
directly suffered an injury from overpayments as to those plans. (ECF No. 45 at 4.) As
to the employer-funded plans, Cigna argues that it is explicitly authorized under the
plans’ terms to recover overpayments on the plans’ behalf, and that as to its ERISA
claim, ERISA explicitly authorizes a fiduciary to recover benefits paid by the plan. (Id.)
In Reply, the ASCs concede Cigna’s argument under ERISA, but argue that Cigna
lacks standing to assert its RICO and state law claims because an injury or damages is
an element of each of those claims. (ECF No. 47 at 1.)
The ASCs’ Reply essentially converts its standing argument to an argument
aimed at the injury or damages element of each claim. At least as to the minority of
plans that Cigna funds itself, Cigna has asserted that it directly suffered an injury by
overpaying reimbursements to the ASCs. This satisfies the minimal requirement of a
“concrete and particularized” injury sufficient to confer standing on Cigna to bring its
claims. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). Accordingly, the
Court rejects the ASCs’ argument that the Counterclaims should be dismissed based
on lack of standing, and denies the Motion in that respect.
ERISA § 502(a)
Cigna’s ERISA claim asserts that the ASCs are liable to pay restitution to Cigna
in the amount of the overpayments Cigna made, in contravention of the terms of its
plans, based on the inflated charges in the ASCs’ claims. (ECF No. 17 at 40-41.)
Cigna also seeks declaratory relief and a permanent injunction requiring the ASCs to
submit to Cigna only the amounts that the ASCs actually charge the patients and to
exclude any additional amount from their future claims. (Id. ¶ 199.)
ERISA § 502(a) authorizes a civil action “by a participant, beneficiary, or fiduciary
(A) to enjoin any act or practice which violates . . . the terms of the plan, or (B) to obtain
other appropriate equitable relief (i) to redress such violations or (ii) to enforce any
provisions of . . . the terms of the plan.” 29 U.S.C. § 1132(a)(3). A plan administrator
may maintain such an action for restitution if it “seek[s] to recover funds (1) that are
specifically identifiable, (2) that belong in good conscience to the plan, and (3) that are
within the possession and control of the defendant beneficiary”. Admin. Comm. of
Wal-Mart Assocs. Health & Welfare Plan v. Willard, 393 F.3d 1119, 1122 (10th Cir.
2004) (citing Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 209-21
(2002); Bombardier Aerospace Emp. Welfare Benefits Plan v. Ferrer, Poirot &
Wansbrough, 354 F.3d 348, 356 (5th Cir. 2003)).
Here, Cigna claims that the overpayments it seeks to recover are specifically
identifiable, that those overpaid funds belong in good conscience to the plans, and that
they are in the possession of the ASCs. (ECF No. 45 at 9-10.) In response, the ASCs
argue that the funds are not specifically identifiable merely by being designated
“overpayments”. (ECF No. 47 at 8.) The Court agrees.
In the cases Cigna cites in support of its argument the “specifically identifiable”
funds were either in separate accounts or were paid by specified third-party payors.
See Sereboff v. Mid Atl. Med. Servs., Inc., 547 U.S. 356, 363-64 (2006) (separate f und,
distinct from general assets, defined as “recoveries from a third party”); Dillard’s Inc. v.
Liberty Life Assurance Co. of Boston, 456 F.3d 894, 901 (8th Cir. 2006) (overpayments
resulting from payments of benefits by Social Security Administration); Admin. Comm.
of Wal-Mart Assocs., 393 F.3d at 1122 (funds in trust account, later deposited in court
registry). In contrast, Cigna has not alleged that the overpayments here are located in
a separate fund, that they were paid by any third party, or that they are otherwise
distinct from the ASCs’ general assets. Accordingly, the Court finds that the
overpayments sought by Cigna are not in a specifically identifiable fund, and thus are
not properly the subject of a § 502(a)(3) claim. Therefore, the Motion is granted as to
Cigna’s ERISA § 502 claim seeking restitution.
However, Cigna’s § 502 claim also seeks a declaratory judgment that Cigna may
offset future reimbursements to the ASCs in the amount of the overpayments, and an
injunction to prevent the ASCs from submitting claims in amounts greater than any
amount the patient is not required to pay. (ECF No. 17 ¶¶ 198-99.) The ASCs’ Motion
generally asserts that Cigna is merely attempting to recast its legal claims as equitable,
but makes no specific arguments that such claims are not cognizable under § 502(a).
(ECF No. 43 at 10-11.)
As for Cigna’s request for declaratory relief, the Court agrees with the ASCs that
it merely couches the restitution claim in the form of a declaration that it may obtain said
restitution through offsetting future claims reimbursements. Such re-framing does not
change the nature of the relief sought, which falls outside the scope of § 502(a)
because the amounts requested are not specifically identifiable funds. Thus, the Court
agrees with the ASCs that Cigna’s attempt to recast its request for monetary relief as
declaratory relief is unavailing. (Id. at 10-11 (citing persuasive authority from S.D.N.Y.,
D.N.J., and N.D. Tex.).)
As for Cigna’s claim for injunctive relief, the Court finds that it is distinct from
Cigna’s claims for monetary relief. Rather than seeking an injunction to require
repayment of the overpaid amounts, Cigna seeks an injunction to require the ASCs to
limit their future reimbursement claims to the amounts charged to the patients, rather
than including waived co-insurance amounts or other “phantom” charges. (ECF No. 17
at 199.) This is not merely monetary relief couched in the language of an injunction,
and the ASCs have cited no other basis for dismissing this claim. Accordingly, the
Motion has failed to demonstrate that Cigna’s ERISA § 502(a) claim must be dismissed
insofar as it seeks injunctive relief.
RICO and COCCA
Cigna brings claims under both RICO and COCCA, the Colorado analogue to
RICO, alleging that SurgCenter entered into separate enterprises with each of the
ASCs and, through these enterprises’ billing schemes, committed acts of mail and wire
fraud constituting a pattern of racketeering activity. (ECF No. 17 at 41-44, 57-60.)
COCCA was patterned after RICO, and while not identical, the two statutes “are
similar and are generally construed according to similar principles.” L-3 Commc’ns
Corp. v. Jaxon Eng’g & Maint., Inc., 863 F. Supp. 2d 1066, 1076 (D. Colo. 2012) (citing
Tara Woods Ltd. P’ship v. Fannie Mae, 731 F. Supp. 2d 1103, 1125 (D. Colo. 2010);
Bixler v. Foster, 596 F.3d 751, 761 (10th Cir. 2010)); People v. Hoover, 165 P.3d 784,
798 (Colo. App. 2006) (“Absent a prior interpretation by our state courts, federal case
law construing [RICO] is instructive because COCCA was modeled after the federal
act.”). “The elements of a civil RICO claim are (1) investment in, control of, or conduct
of (2) an enterprise (3) through a pattern (4) of racketeering activity. ‘Racketeering
activity’ is defined in 18 U.S.C. § 1961(1)(B) as any ‘act which is indictable’ under
federal law and specifically includes mail fraud, wire fraud and racketeering. These
underlying acts are ‘referred to as predicate acts, because they form the basis for
liability under RICO.’” Tal v. Hogan, 453 F.3d 1244, 1261-62 (10th Cir. 2006) (internal
The ASCs raise three arguments in their Motion that the RICO and COCCA
claims should be dismissed: (1) Cigna has failed to plausibly plead the predicate acts of
mail and wire fraud because no misrepresentation was made; (2) Cigna has failed to
allege injury from the ASCs’ conduct; and (3) Cigna has failed to sufficiently allege an
enterprise. (ECF No. 43 at 2-10.) As the Court finds the first argument dispositive, it
will begin with that analysis.
“The elements of federal mail fraud as defined in 18 U.S.C. § 1341 are (1) a
scheme or artifice to defraud or obtain property by means of false or fraudulent
pretenses, representations, or promises, (2) an intent to defraud, and (3) use of the
mails to execute the scheme.” United States v. Welch, 327 F.3d 1081, 1104 (10th Cir.
2003). “The particularity requirement of Rule 9(b), Federal Rules of Civil Procedure,
applies to claims of mail and wire fraud.” Tal, 453 F.3d at 1263 (citing Robbins v.
Wilkie, 300 F.3d 1208, 1211 (10th Cir. 2002)). “Thus, a complaint alleging fraud must
set forth the time, place and contents of the false representation, the identity of the
party making the false statements and the consequences thereof.” Id. (internal
quotation marks and brackets omitted).
The ASCs argue in their Motion that Cigna has failed to plead any
misrepresentation because Cigna admits that the material aspects of the challenged
billing practices were disclosed, specifically, the ASCs’ reduction of a patient’s bill and
deductible or co-pay amount in order to approximate in-network rates, and the fact that
the in-network rate the ASCs proposed was an estimate. (ECF No. 43 at 2-6.) Indeed,
Cigna notes in its Counterclaims that “the ASCs noted in their claim forms that ‘[t]he
insured’s portion of this bill has been reduced in amount so the patient’s responsibility
for the deductible and copay amount is billed at in network rates’ . . . .” (ECF No. 17 ¶
77.) Cigna contends, however, that this disclosure did not reveal or explain “how their
charges were computed or disclose that the ASCs had not charged their patients for
the same amounts that [they] submitted to Cigna for reimbursement.” (Id.) Cigna
repeatedly refers to the amounts in the ASCs’ claims as “phantom charges” because
they are much greater than the amounts quoted to patients. (Id. ¶¶ 46, 55, 71.) While
Cigna also alleges that the ASCs misrepresented to patients that they could use innetwork benefits at the ASCs’ facilities, Cigna does not allege that its RICO and
COCCA claims are based on such misrepresentations. Instead, it alleges that the
ASCs used such tactics to conceal the nature of the inflated charges. (See id. ¶¶ 208,
The Court has reviewed Cigna’s allegations in its Counterclaims and finds that it
has failed to plausibly plead that the ASCs misrepresented their billing practices. In
admitting that the ASCs disclosed that they reduced the patient’s portion of the bill and
made the patient responsible for only an in-network deductible and co-pay amount,
Cigna concedes that it was provided information from which it should have known that
the ASCs were reducing the amount billed to patients and that they were attempting to
approximate in-network rates. Given this disclosure, which appeared in the ASCs’
claim forms, the Court finds it implausible that Cigna was misled into believing that the
patient was charged the same amount that the ASCs billed to Cigna, because Cigna
was aware that the ASCs’ claims were higher than in-network rates. Cigna has not
alleged any other theory under which the Court could find that the ASCs made
misrepresentations constituting fraud. Cigna also fails to explain how the ASCs’ failure
to disclose how the in-network estimate was computed was at all material in inducing
Cigna to overpay the claims.
Because the Court finds that Cigna has not plausibly pled misrepresentations
constituting predicate acts under RICO, the Court finds that Cigna’s allegations fail to
allege a pattern of racketeering activity, and therefore fail to state a RICO claim. See
18 U.S.C. § 1961(5) (a “pattern of racketeering activity” is defined as “at least two acts
of racketeering activity”). As COCCA also requires a showing of a pattern of
racketeering activity, Cigna’s COCCA claim also fails. See Colo. Rev. Stat. § 18-17103(3) (“‘pattern of racketeering activity’ means engaging in at least two acts of
racketeering activity”). Accordingly, the Motion is granted as to the RICO and COCCA
claims, and the Court need not consider the ASCs’ other arg uments that those claims
should be dismissed.
Finally, because Cigna admits that the ASCs disclosed their practice of
attempting to approximate in-network rates and decreasing patient responsibility, the
Court finds that any attempt to amend this claim would be futile. Brereton v. Bountiful
City Corp., 434 F.3d 1213, 1219 (10th Cir. 2006) (district court “m ay dismiss without
granting leave to amend when it would be futile to allow the plaintiff an opportunity to
amend his complaint”). Therefore, the Court declines to grant leave to amend the
RICO and COCCA claims.
State Law Claims
Cigna brings state law claims for fraud, aiding and abetting fraud, negligent
misrepresentation, aiding and abetting negligent misrepresentation, unjust enrichment,
and tortious interference with contract. (ECF No. 17 at 44-53.) The ASCs’ Motion
raises the following arguments against these claims: (1) the state law tort claims are
preempted by ERISA; (2) the fraud, negligent misrepresentation, and aiding and
abetting claims fail because Cigna has failed to allege misrepresentation; (3) Cigna fails
to allege any unjust enrichment; and (4) Cigna’s tortious interference claim is barred by
the economic loss rule and fails to state a claim for interference. (ECF No. 43 at 1114.) The Court will discuss each argument in turn.
“ERISA includes expansive pre-emption provisions . . . to ensure that employee
benefit plan regulation would be exclusively a federal concern.” Aetna Health Inc. v.
Davila, 542 U.S. 200, 208 (2004) (citing 29 U.S.C. § 1144) (internal quotation marks
omitted). There are two aspects of ERISA preemption: (1) ‘conflict preemption’ and (2)
remedial or ‘complete preemption.’ ERISA’s express conflict preemption provision
states, ‘[ERISA] shall supersede any and all State laws insofar as they may now or
hereafter relate to any [ERISA] plan.’” David P. Coldesina, D.D.S. v. Estate of Simper,
407 F.3d 1126, 1135-36 (10th Cir. 2005) (quoting 29 U.S.C. § 1144(a) (emphasis
added)). “However, recognizing that ‘relates to’ cannot reasonably be applied to its
logical conclusion, the [Tenth Circuit] has clarified that this language must be applied
with the objectives of ERISA and the effect of the state law in mind.” Id. at 1136.
If a party could have brought his claim under ERISA § 502(a), “and where there
is no other independent legal duty that is implicated by a defendant’s actions, then the
[party]’s cause of action is completely pre-empted by ERISA § 502(a).” Aetna Health,
542 U.S. at 210. The ASCs’ Motion does not establish that Cigna could have brought
any of its state law claims under ERISA § 502(a), or that those claims are based solely
on duties created by ERISA or the plan rather than common-law duties not to commit
fraud or other torts. Thus, the Court finds that these claims are not completely
preempted, and must evaluate whether conflict preemption applies.
The Tenth Circuit “has identified four causes of action that ‘relate to’ a benefit
plan for purposes of ERISA preemption.” Woodworker’s Supply, Inc. v. Principal Mut.
Life Ins. Co., 170 F.3d 985, 990 (10th Cir. 1999).
They involve (1) laws regulating the type of benefits or terms
of ERISA plans; (2) laws creating reporting, disclosure,
funding or vesting requirements for such plans; (3) laws
providing rules for calculating the amount of benefits to be
paid under such plans; and (4) laws and common-law rules
providing remedies for misconduct growing out of the
administration of such plans.
Id. “Claims that solely impact a plan economically . . . [and c]laims that do not ‘affect
the relations among the principal ERISA entities, the employer, the plan, the plan
fiduciaries and the beneficiaries’ are not preempted.’” David P. Coldesina, 407 F.3d at
1136 (quoting Woodworker’s Supply, 170 F.3d at 990). Notably, “the availability of a
remedy under ERISA is not relevant to the preemption analysis.” Id. at 1139.
The ASCs argue that all of Cigna’s state law claims are dependent on
interpretation of the plans at issue, and that therefore those claims are preempted by
ERISA. (ECF No. 43 at 11-12.) This argument attempts to place Cigna’s state law
claims under the fourth of the Woodworker’s Supply categories: “common-law rules
providing remedies for misconduct growing out of the administration of such plans.”
170 F.3d at 990. Cigna disputes whether its state law claims “grow out of” its plans.
See id.; (ECF No. 45 at 12.) Even assuming that the state law claims arise from
Cigna’s plans, however, the ASCs have not explained how those claims go beyond
“solely impact[ing] a plan economically” and instead “affect the relations among the
principal ERISA entities,” as medical providers are not one of these principal entities.
See David P. Coldesina, 407 F.3d at 1136.
The Court finds that Cigna’s state law claims are not preempted by ERISA
because the claims at issue are based on whether the ASCs made material
misrepresentations, and whether those alleged misrepresentations caused the ASCs to
be unjustly enriched or caused interference with the plans. Because the ASCs are not
“principal ERISA entities”, no relations between such entities are affected by the claims.
The mere fact that the plan is associated with the claims, or that the plan is factually
tied to the alleged tortious conduct, does not make them “relate[d] to” ERISA so as to
trigger conflict preemption under this circuit’s precedent. Id. at 1136 (finding claim of
negligent supervision by insurance company over plan advisor not preempted because
it related to agency relationship not covered by ERISA); Woodworker’s Supply, 170
F.3d at 990-92 (finding claim of fraudulent inducement to join plan not preempted
because relations among principal ERISA entities are not affected and claim is not
within scope of ERISA, citing cases).
Accordingly, the Court rejects the ASCs’ argument that the state law claims must
be dismissed as preempted by ERISA, and the Motion is denied as to that argument.
The ASCs next argue that Cigna’s claims for fraud, aiding and abetting fraud,
negligent misrepresentation, and aiding and abetting negligent misrepresentation all fail
because Cigna has failed to plead any misrepresentation. (Id. at 12-13.) The ASCs
argue that such misrepresentations are essential elements of each of these claims
under both Colorado and Maryland law. (Id.)
The Court has discussed Cigna’s allegations of misrepresentations in analyzing
the RICO and COCCA claims, and found that Cigna failed to plausibly plead that the
ASCs misrepresented their billing practices. As such misrepresentations were the
basis for these claims, the Court agrees with the ASCs and finds that Cigna has failed
to state claims for fraud, aiding and abetting fraud, negligent misrepresentation, and
aiding and abetting negligent misrepresentation. Accordingly, the Court grants the
Motion as to those claims, and they are dismissed.
The ASCs argue that Cigna has failed to state a claim for unjust enrichment
because it admits that the ASCs provided services to the patients for which they sought
reimbursement, and thus were not unjustly enriched. (ECF No. 43 at 13.) In response,
Cigna contends that its claim does not allege that the ASCs were given a benefit
without providing any service at all, but rather that the ASCs were overpaid because the
reimbursement vastly exceeded the value of the service provided. (ECF No. 45 at 13.)
The Court finds that Cigna sufficiently alleges unjust enrichment, as such a claim
need only allege that the defendant knowingly received a benefit at the plaintiff’s
expense that it would be unjust for the defendant to retain. See Lewis v. Lewis, 189
P.3d 1134, 1141 (Colo. 2008); Hill v. Cross Country Settlements, LLC, 936 A.2d 343,
351 (Md. 2007). Therefore, Cigna has stated a claim for unjust enrichment, and the
Motion is denied as to that claim.
Tortious Interference with Contract
Cigna’s tortious interference claim alleges that the ASCs’ billing practices
interfered with the contracts between Cigna and the patients whom it insured through its
plans. (ECF No. 17 at 51-53.) The ASCs argue that this claim is barred by the
economic loss rule, and that in any event, Cigna has failed to allege that the ASCs’
conduct caused any interference or breach of these contracts. (ECF No. 43 at 13-14.)
The economic loss rule bars tort claims arising from express or implied
contractual duties, where no independent legal duty is breached. Town of Alma v.
AZCO, 10 P.3d 1256, 1264 (Colo. 2000); U.S. Gypsum Co. v. Mayor & City Council of
Baltimore, 647 A.2d 405, 410 (Md. 1994). Here, the ASCs assert that “the plan is the
only possible source of duty” that would require them to refrain from using their billing
practices. (ECF No. 43 at 13.) This argument is easily rejected, as no party has
alleged that the ASCs were party to any Cigna plan contract out of which a legal duty
could have arisen. Instead, Cigna’s claim for tortious interference with contract is
based on the ASCs’ alleged attempts to circumvent the plan’s network system, which
harmed Cigna’s relationships with its plan members. This claim is not based on any
breach of contractual duty. Therefore, the Court finds that the economic loss rule does
not bar this claim.
The ASCs next argue that Cigna has failed to allege all the elements of a claim
for tortious interference. (Id. at 13-14.) A tortious interference claim has five elements
under both Colorado and Maryland law: “(1) existence of a contract between plaintiff
and a third party; (2) defendant’s knowledge of that contract; (3) defendant’s intentional
interference with that contract; (4) breach of that contract by the third party; and (5)
resulting damages to the plaintiff.” Fowler v. Printers II, Inc., 598 A.2d 794, 802 (Md.
Ct. Spec. App. 1991); Colo. Nat’l Bank of Denver v. Friedman, 846 P.2d 159, 170 (Colo.
1993) (“The tortious conduct occurs when the defendant, not a party to the contract,
induces the third party to breach the contract, or interferes with the third party's
performance of the contract.”).
The ASCs argue that Cigna has failed to allege any breach of the plan or any
damages from that breach. (ECF No. 43 at 14.) This argument ignores Cigna’s explicit
allegation that the ASCs misrepresented the terms of the plans to patients, and that
“[b]y these actions, the ASCs, at the direction of and in coordination with SurgCenter,
induced the members to breach the terms of their plans.” (ECF No. 17 ¶¶ 260-61.)
Cigna also alleges that “SurgCenter and the ASCs’ tortious interference has caused
damages to Cigna by causing it to make overpayments to the ASCs and has caused
harm to the relationship between Cigna and its members.” (Id. ¶ 263.) Although the
“harm to the relationship” is unspecified, Cigna’s allegation that its overpayments
resulted from the ASCs’ alleged interference is sufficient to assert damages.
Therefore, the Court finds that Cigna has alleged that the ASCs’ conduct caused
both a breach of the plan and damages resulting from the breach. As the ASCs have
not identified any other basis on which to dismiss the tortious interference with contract
claim, the Motion is denied as to that claim.
Abuse of Health Insurance: Colorado Criminal Code § 18-13-119
Cigna seeks declaratory relief under Colorado Criminal Code § 18-13-119, which
states in relevant part as follows:
Health care providers - abuse of health insurance
(1) The general assembly hereby finds, determines, and
(a) Business practices that have the effect of eliminating the
need for actual payment by the recipient of health care of
required copayments and deductibles in health benefit plans
interfere with contractual obligations entered into between
the insured and the insurer relating to such payments;
(2) Therefore, the general assembly declares that such business
practices are illegal and that violation thereof or the advertising
thereof shall be grounds for disciplinary actions. . . .
(3) Except as otherwise provided in subsections (5), (6),
and (8) of this section, if the effect is to eliminate the need
for payment by the patient of any required deductible or
copayment applicable in the patient’s health benef it plan, a
person who provides health care commits abuse of health
insurance if the person knowingly:
(a) Accepts from any third-party payor, as payment in full for
services rendered, the amount the third-party payor covers; or
(b) Submits a fee to a third-party payor which is higher than the fee he
has agreed to accept from the insured patient with the understanding of
waiving the required deductible or copayment.
(4) Abuse of health insurance is a class 1 petty offense.
Cigna seeks a declaration that the ASCs’ billing practices violated § 18-13-119, and that
therefore Cigna is entitled to recover any amounts illegally obtained through such
violation. (ECF No. 17 ¶¶ 269-70.)
In the Motion, the ASCs argue that their billing practices as alleged by Cigna do
not violate § 18-13-119 because they reduce, but do not eliminate, a patient’s need for
payment. (ECF No. 43 at 14-15.) However, the Counterclaims explicitly allege that the
ASCs bill patients “little or nothing”. (ECF No. 17 ¶¶ 1, 62.) This constitutes an
allegation that, at least in some cases, the ASCs “eliminated the need for actual
payment” by the patient, and then accepted Cigna’s reimbursement as payment in full.
See Colo. Rev. Stat. § 18-13-119(3). The ASCs’ Motion fails to cite any other basis for
dismissal of this claim.
Accordingly, the Court finds that Cigna has stated a claim for declaratory relief as
to Colorado Criminal Code § 18-13-119, and the Motion is denied as to that claim .
Civil Theft: Colorado Criminal Code § 18-4-405
Cigna’s civil theft claim asserts that the ASCs’ billing practices resulted in
knowing misrepresentations in the claims submitted to Cigna, as a result of which Cigna
paid more than $12.5 million to the ASCs that did not belong to them. (ECF No. 17 at
55-56.) As a result, Cigna brings a claim under Colorado Criminal Code § 18-4-405,
“Rights in stolen property”, which permits the owner of property obtained by theft to
maintain a civil action against the taker of that property. “Theft” is defined in the
Colorado Criminal Code as “knowingly obtain[ing], retain[ing], or exercis[ing] control
over anything of value of another without authorization or by threat or deception . . . .”
Colo. Rev. Stat. § 18-4-401.
The ASCs argue that, although Cigna’s civil theft claim is based on the allegation
that the amounts of the claims the ASCs submitted to Cigna constituted deception, no
deception can be shown because the material elements of those billing practices were
disclosed. (ECF No. 43 at 15.) The Court has found that the ASCs had disclosed to
Cigna their practice of billing patients in such a way as to approximate in-network rates,
and that Cigna has not pled any material misrepresentation. Accordingly, the Court
agrees that Cigna has not pled conduct constituting theft, and therefore its civil theft
claim under Colorado Criminal Code § 18-4-405 is dismissed.
For the reasons set forth above, the Court ORDERS as follows:
Counterclaim Defendants’ Motion to Dismiss Counterclaims (ECF No. 43) is
GRANTED IN PART and DENIED IN PART;
The Motion is GRANTED as to Counterclaim Plaintiffs’ claims under RICO,
COCCA, Colorado Criminal Code § 18-4-405, and ERISA § 502(a) f or restitution
and declaratory relief, as well as state law claims for fraud, aiding and abetting
fraud, negligent misrepresentation, and aiding and abetting misrepresentation,
and those claims are DISMISSED;
The Motion is DENIED as to Counterclaim Plaintiffs’ claims for injunctive relief
under ERISA § 502(a), declaratory relief under Colorado Criminal Code § 18-13119, and state law claims for unjust enrichment and tortious interference with
contract, and those claims remain pending.
Dated this 6th day of March, 2015.
BY THE COURT:
William J. Martínez
United States District Judge
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