Quinones v. UnitedHealth Group Incorporated et al
Filing
57
ORDER GRANTING DEFENDANTS' MOTION FOR JUDGMENT ON THE PLEADINGS FOR COUNT I (§ 1983) re 32 Motion for Judgment on the Pleadings. Signed by JUDGE LESLIE E. KOBAYASHI on 07/24/2015. (eps )CERTIFICATE O F SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
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Plaintiff,
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vs.
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UnitedHealth Group
Incorporated;
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UnitedHealthcare, Inc.;
UnitedHealthcare Insurance
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)
Co.,
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Defendants.
_____________________________ )
Juan Rios Quinones,
CIVIL NO. 14-00497 LEK-RLP
ORDER GRANTING DEFENDANTS’ MOTION FOR
JUDGMENT ON THE PLEADINGS FOR COUNT I (§ 1983)
Before the Court is Defendants UnitedHealth Group
Incorporated, UnitedHealthcare, Inc., and UnitedHealthcare
Insurance Company’s (collectively “Defendants”) Motion for
Judgment on the Pleadings for Count I (§ 1983) (“§ 1983 Motion”),
filed on April 1, 2015.1
[Dkt. no. 32.]
Plaintiff Juan Rios
Quinones (“Plaintiff”) filed his memorandum in opposition on
June 23, 2015, and Defendants filed their reply on July 2, 2015.
[Dkt. nos. 48, 50.]
1
This matter came on for hearing on July 16,
On that same day, Defendants also filed three other
motions for judgment on the pleadings. [Dkt. nos. 31, 33, 34.]
This Court granted in part and denied in part the first, which
sought dismissal of Plaintiff’s claims insofar as they arose
under the Medicare Act. [Dkt. no. 49.] The other two motions
are set for hearing in August, and October, respectively. See
Entering Order (“EO”), filed 4/3/15 (dkt. no. 37); EO, filed
4/28/15 (dkt. no. 40).
2015.
After careful consideration of the motion, supporting and
opposing memoranda, and the arguments of counsel, Defendants’
§ 1983 Motion is HEREBY GRANTED for the reasons set forth below.
BACKGROUND
The relevant factual and procedural background was set
forth in this Court’s Order Granting in Part and Denying in Part
Defendants’ Motion for Judgment on the Pleadings as to
Plaintiff’s Allegations Relating to Medicare Benefits, filed
June 30, 2015 (“Medicare Act Order”).2
[Dkt. no. 49.]
The Court
only repeats the background that is relevant to the § 1983
Motion.
On October 31, 2014, Plaintiff filed his Complaint for
Declaratory and Injunctive Relief, and for Compensatory and
Punitive Damages (“Complaint”), asserting various federal and
state claims related to Defendants’ year-long delay in
authorizing Plaintiff’s purchase of a replacement Personal
Mobility Device (“PMD”).
In Count I, the sole count at issue in
the instant motion, Plaintiff alleges that Defendants’ Medical
Director, Ronald Fujimoto, and Advanced Technology Projects
Senior Clinical Program Consultant, Jack Sanders, and other
employees were deliberately indifferent to Plaintiff’s immobility
and, acting under color of law, abused their positions of
2
The Medicare Act Order is also available at 2015 WL
3965961.
2
authority in failing to provide Plaintiff’s benefits under
Medicaid.
[Complaint at ¶¶ 150-54.]
Plaintiff requests general,
special, and punitive damages for the purported 42 U.S.C. § 1983
violation, and all other remedies provided by that statute.
[Id.
at pgs. 60 at ¶ E, 61 at ¶¶ M, O.]
STANDARD
Federal Rule of Civil Procedure 12(c) provides: “After
the pleadings are closed – but early enough not to delay trial –
a party may move for judgment on the pleadings.”
“Although
[Ashcroft v.] Iqbal[, 556 U.S. 662, 129 S. Ct. 1937, 173 L. Ed.
2d 868 (2009),] establishes the standard for deciding a Rule
12(b)(6) motion, we have said that Rule 12(c) is ‘functionally
identical’ to Rule 12(b)(6) and that ‘the same standard of
review’ applies to motions brought under either rule.”
Cafasso
v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1054 n.4 (9th Cir.
2011) (citations omitted and internal quotation marks omitted).
On a motion for judgment on the pleadings, the court must “accept
as true all allegations in [the plaintiff’s] complaint and treat
as false those allegations in the answer that contradict [the
plaintiff’s] allegations.”
Cell Therapeutics, Inc. v. Lash Grp.,
Inc., 586 F.3d 1204, 1206 n.2 (9th Cir. 2009) (citation omitted).
“[J]udgment on the pleadings is properly granted when there is no
issue of material fact in dispute, and the moving party is
entitled to judgment as a matter of law[.]”
3
Jackson v. Barnes,
749 F.3d 755, 763 (9th Cir. 2014) (citation and internal
quotation marks omitted).
DISCUSSION
“To state a claim under § 1983, a plaintiff must allege
two essential elements: (1) that a right secured by the
Constitution or laws of the United States was violated, and
(2) that the alleged violation was committed by a person acting
under the color of State law.”
Esparza v. Cnty. of Los Angeles,
527 F. App’x 638, 639 (9th Cir. 2013) (citation and internal
quotation marks omitted).
While Defendants do not concede the
first element, their motion only challenges the second element.
Plaintiff’s allegations supporting state action center
on the contractual relationship between the State of Hawai`i
(“the State”) and Defendants.
The Complaint alleges that the
State: contracts with Defendants; [id. at ¶¶ 18, 62;] provides
over half of the funding for Defendants’ Medicaid QUEST Expanded
Access Program (“QUEST”); [id. at ¶ 21;] and generally oversees
and monitors Defendants’ implementation of QUEST [id. at
¶¶ 22, 60].
It nowhere alleges that the State took any direct
action related to the decision to delay or deny Plaintiff’s PMD
request.
Defendants argue that, a benefits decision by a Health
Maintenance Organization (“HMO”) or MCO (“Managed Care
Organization”), like Defendants, cannot be attributed to the
4
government as state action where the sole connection between the
insurer and the state is contractual.
Motion at 7-15.]
[Mem. in Supp. of § 1983
Plaintiff responds that the state action
inquiry is fact-intensive and, at this early stage in the
litigation, he has alleged facts sufficient to state a plausible
claim.
[Mem. in Opp. at 4-10.]
Defendants reply that, even if
the Court does not rule that benefits decisions by an MCO cannot
categorically be state action, Plaintiff’s allegations are
insufficient to state a claim for state action here.
5-12.]
[Reply at
While the Court acknowledges the relatively deferential
standard for ruling on a motion for judgment on the pleadings,
the Court agrees with Defendants that Plaintiff’s allegations
fall well short of state action.
The Ninth Circuit has described the standards for state
action, and pointed out that the United States Supreme Court has
endorsed numerous “approaches” or tests:
The Supreme Court has instructed that “state
action may be found if, though only if, there is
such a ‘close nexus between the State and the
challenged action’ that seemingly private behavior
‘may be fairly treated as that of the State
itself.’” Brentwood Acad. v. Tenn. Secondary Sch.
Athletic Ass’n, 531 U.S. 288, 295, 121 S. Ct. 924,
148 L. Ed. 2d 807 (2001) (quoting Jackson v.
Metro. Edison Co., 419 U.S. 345, 351, 95 S. Ct.
449, 42 L. Ed. 2d 477 (1974)). Courts have
employed various approaches to determine whether a
person may fairly be considered a state actor.
Lee v. Katz, 276 F.3d 550, 554 (9th Cir. 2002).
“What is fairly attributable is a matter of
normative judgment, and the criteria lack rigid
simplicity. . . . [N]o one fact can function as a
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necessary condition across the board for finding
state action; nor is any set of circumstances
absolutely sufficient, for there may be some
countervailing reason against attributing activity
to the government.” Brentwood Acad., 531 U.S. at
295–96, 121 S. Ct. 924.
“Because of the fact-intensive nature of the
inquiry, courts have developed a variety of
approaches” to assess whether a private party has
acted under color of state law. Lee, 276 F.3d at
554. The Supreme Court has identified at least
seven such approaches. Brentwood Acad., 531 U.S.
at 296, 121 S. Ct. 924. “Satisfaction of any one
test is sufficient to find state action, so long
as no countervailing factor exists.” Kirtley v.
Rainey, 326 F.3d 1088, 1092 (9th Cir. 2003).
Florer v. Congregation Pidyon Shevuyim, N.A., 639 F.3d 916, 924
(9th Cir. 2011) (alterations in Florer) (footnote omitted).
Specifically, those approaches were articulated by the Supreme
Court:
Our cases have identified a host of facts
that can bear on the fairness of such an
attribution. We have, for example, held that a
challenged activity may be state action when it
results from the State’s exercise of “coercive
power,” Blum [v. Yaretsky], 457 U.S. [991,] 1004,
102 S. Ct. 2777 [(1982)], when the State provides
“significant encouragement, either overt or
covert,” ibid., or when a private actor operates
as a “willful participant in joint activity with
the State or its agents,” Lugar [v. Edmondson Oil
Co.], [457 U.S. 922,] 941, 102 S. Ct. 2744
[(1982)] (internal quotation marks omitted). We
have treated a nominally private entity as a state
actor when it is controlled by an “agency of the
State,” Pennsylvania v. Board of Directors of City
Trusts of Philadelphia, 353 U.S. 230, 231, 77 S.
Ct. 806, 1 L. Ed. 2d 792 (1957) (per curiam), when
it has been delegated a public function by the
State, cf., e.g., West v. Atkins, [487 U.S. 42,]
56, 108 S. Ct. 2250 [(1988)]; Edmonson v.
Leesville Concrete Co., 500 U.S. 614, 627–628, 111
6
S. Ct. 2077, 114 L. Ed. 2d 660 (1991), when it is
“entwined with governmental policies,” or when
government is “entwined in [its] management or
control,” Evans v. Newton, 382 U.S. 296, 299, 301,
86 S. Ct. 486, 15 L. Ed. 2d 373 (1966).
Brentwood Acad., 531 U.S. at 296 (some alterations in Brentwood
Acad.).
The Court is not persuaded that there is a per se rule
precluding a finding of state action here.
Defendants argue that
“private insurers administering benefit plans pursuant to a State
or federal contract (under either Medicaid or Medicare)” cannot
be state actors.
See Mem. in Supp. of § 1983 Motion at 7.
While
the out-of-circuit cases that Defendants cite do provide guidance
in applying some of the state action tests, nothing suggests a
per se rule or, that the Ninth Circuit has adopted or even
addressed one.
The only Ninth Circuit case that Defendants cite on
this point, Grijalva v. Shalala, 152 F.3d 1115 (9th Cir. 1998),
offers no precedential support.
In that case, the Ninth Circuit
upheld a district court’s conclusion that an HMO’s denials of
medical services to Medicare beneficiaries constituted state
action.
Id. at 1119-21.
It held that, due to federal regulation
and delegation of Medicare coverage decisions, the HMO and the
federal government were joint participants.
Id. at 1120.
The
court characterized the termination of Medicaid benefits found
not to be state action in Blum v. Yaretsky, as medical judgments,
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and distinguished those independent judgments from the
congressional and regulatory orders that the HMOs faced in
Grijalva.
Id. at 1120-21.
The Ninth Circuit thus concluded that
Medicare’s extensive regulatory scheme made the HMO’s benefits
decisions attributable to the federal government.
The Supreme Court, however, vacated the Ninth Circuit
opinion and remanded the case so that it could apply American
Manufacturers Mutual Insurance Co. v. Sullivan, 526 U.S. 40
(1999).
Shalala v. Grijalva, 526 U.S. 1096 (1999).3
In American
Manufacturers, the Supreme Court held that the medical insurers’
decisions to withhold payments for disputed medical treatment,
pursuant to the Pennsylvania workers’ compensation regime, did
not constitute state action.
Although the Supreme Court’s
vacatuur order in Grijalva did not address the substance of the
Ninth Circuit’s opinion, it suggests, at the very least, that the
Ninth Circuit did not apply the correct standard in reaching its
decision.
Thus, none of the Grijalva opinions support the
position that either the Supreme Court or the Ninth Circuit has
adopted a per se rule; in fact, together Grijalva and American
3
The Ninth Circuit remanded to the district court to apply
American Manufacturers, Grijalva v. Shalala, 185 F.3d 1075 (9th
Cir. 1999), before the case apparently settled. See Ctr. for
Medicare Advocacy, Inc. v. U.S. Dep’t of Health & Human Servs.,
No. 3:10CV645 (MRK), 2011 WL 2119226, at *6 (D. Conn. May 26,
2011) (explaining that the “parties in Grijalva settled before
the district court had an opportunity to reconsider the case in
light of Sullivan” and citing the district court’s Order
Approving Settlement).
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Manufacturers support a fact-specific approach.
The most that
can be distilled from Grijalva is that, in the analogous Medicare
insurance context, American Manufacturers provides an applicable
approach to determining whether a private insurer is engaged in
state action when making individual benefits decisions.4
Based on the foregoing, the Court rejects Defendants’
per se argument, and proceeds to analyze whether Plaintiff’s
allegations sufficiently meet any of the state action approaches.
The parties focus almost exclusively on the so-called
“Governmental nexus test,” see, e.g., Mem. in Opp. at 7-9; Reply
at 6-7, and the Court finds this to be the most appropriate
approach.5
4
Although the Court agrees with Plaintiff that American
Manufacturers is distinguishable on its facts since it dealt with
a comprehensive state workers’ compensation regime, see Mem. in
Opp. at 11-12, the Court also agrees with Defendants that the
legal tests that it applied also apply here, see Reply at 7-8.
The Supreme Court remanded in Grijalva specifically so the Ninth
Circuit would apply American Manufacturers, in the Medicare
benefits decision context.
5
The parties also address the traditional function and
entwinement tests. See, e.g., Mem. in Opp. at 7-8; Reply at 6
n.4. However, the Court finds that these tests do not apply to
this case, and thus cannot provide a basis to prove state action.
See, e.g., Brentwood Acad., 531 U.S. at 298 (finding state action
where “[t]he nominally private character of the Association [was]
overborne by the pervasive entwinement of public institutions and
public officials in its composition and workings”);
Gonzalez-Maldonado v. MMM Healthcare, Inc., 693 F.3d 244, 248
(1st Cir. 2012) (holding that “the public function exception
applies to ‘traditionally exclusively’ public functions” and
“operating an HMO” does not “qualify” (emphasis in GonzalezMaldonado)).
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The Ninth Circuit has explained:
“Under the
governmental nexus test, a private party acts under color of
state law if there is a sufficiently close nexus between the
State and the challenged action of the regulated entity so that
the action of the latter may be fairly treated as that of the
State itself.”
Ohno v. Yasuma, 723 F.3d 984, 996 n.13 (9th Cir.
2013) (citations and internal quotation marks omitted).
In
American Manufacturers, the Supreme Court analyzed and applied
that test:
Our approach to this latter question [of
whether the allegedly unconstitutional conduct is
fairly attributable to the State] begins by
identifying “the specific conduct of which the
plaintiff complains.” Blum v. Yaretsky, 457 U.S.,
at 1004, 102 S. Ct. 2777; see id., at 1003, 102 S.
Ct. 2777 (“Faithful adherence to the ‘state
action’ requirement . . . requires careful
attention to the gravamen of the plaintiff’s
complaint”). . . . Thus, the issue we address, in
accordance with our cases, is whether a private
insurer’s decision to withhold payment for
disputed medical treatment may be fairly
attributable to the State so as to subject
insurers to the constraints of the Fourteenth
Amendment. Our answer to that question is “no.”
In cases involving extensive state regulation
of private activity, we have consistently held
that “[t]he mere fact that a business is subject
to state regulation does not by itself convert its
action into that of the State for purposes of the
Fourteenth Amendment.” Jackson v. Metropolitan
Edison Co., 419 U.S. 345, 350, 95 S. Ct. 449, 42
L. Ed. 2d 477 (1974); see Blum, 457 U.S., at 1004,
102 S. Ct. 2777. Faithful application of the
state-action requirement in these cases ensures
that the prerogative of regulating private
business remains with the States and the
representative branches, not the courts. Thus,
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the private insurers in this case will not be held
to constitutional standards unless “there is a
sufficiently close nexus between the State and the
challenged action of the regulated entity so that
the action of the latter may be fairly treated as
that of the State itself.” Ibid. (internal
quotation marks omitted). Whether such a “close
nexus” exists, our cases state, depends on whether
the State “has exercised coercive power or has
provided such significant encouragement, either
overt or covert, that the choice must in law be
deemed to be that of the State.” Ibid. Action
taken by private entities with the mere approval
or acquiescence of the State is not state action.
Here, respondents do not assert that the
decision to invoke utilization review should be
attributed to the State because the State compels
or is directly involved in that decision.
Obviously the State is not so involved. It
authorizes, but does not require, insurers to
withhold payments for disputed medical treatment.
The decision to withhold payment, like the
decision to transfer Medicaid patients to a lower
level of care in Blum, is made by concededly
private parties, and “turns on . . . judgments
made by private parties” without
“standards . . . established by the State.” Blum,
supra, at 1008, 102 S. Ct. 2777.
Am. Mfrs., 526 U.S. at 51-52 (emphasis and some alterations in
Am. Mfrs.) (some citations omitted).
Applying this test here, the Court finds that the
allegations are insufficient to state a claim for state action.
Following American Manufacturers, the specific conduct that
Plaintiff complains of is the denial and delay in issuing
Plaintiff a replacement PMD.
See id. at 51.
The issue then is
whether Defendants’ decision to deny Plaintiff the PMD “may be
fairly attributable to the State so as to subject [Defendants] to
11
the constraints of the Fourteenth Amendment.”
See id.
Plaintiff
has not alleged facts to show that the State “has exercised
coercive power or has provided such significant encouragement,
either overt or covert, that the choice must in law be deemed to
be that of the State.”
See id. at 52.
Nor has he alleged any
facts to show that the State was involved in any way in the PMD
benefits decision.
At most, he alleges fact that show some
general level of “acquiescence.”
See id.
If contracting, funding, and regulating was sufficient
to create state action, nearly every government contract would
produce the possibility of § 1983 liability against the
government contractor.
Congress did not intend this result, and
such a decision by this Court would conflict with clear Supreme
Court precedent on this point.
See, e.g., Am. Mfrs., 526 U.S. at
52 (“Faithful application of the state-action requirement in
these cases ensures that the prerogative of regulating private
business remains with the States and the representative branches,
not the courts.”); Rendell-Baker v. Kohn, 457 U.S. 830, 841
(1982) (holding that “[a]cts of such private contractors do not
become acts of the government by reason of their significant or
even total engagement in performing public contracts”); Jackson,
419 U.S. at 350 (“The mere fact that a business is subject to
state regulation does not by itself convert its action into that
of the State for purposes of the Fourteenth Amendment.
12
Nor does
the fact that the regulation is extensive and detailed, as in the
case of most public utilities, do so.” (citations and footnote
omitted)).
As a result, this Court CONCLUDES that, even
accepting as true all of the allegations in the Complaint, there
is no issue of material fact in dispute, and Defendants are
entitled to judgment on Plaintiff’s § 1983 claims as a matter of
See, e.g., Jackson, 749 F.3d at 763.
law.
The Court thus GRANTS
the § 1983 Motion and DISMISSES Count I.
At the hearing, Plaintiff’s counsel argued that, from
interviews with various MCO employees, he has evidence that the
State has additional connections with regard to specific Medicaid
benefits decisions.
But these facts are not currently in the
Complaint or before this Court.
These representations, however,
demonstrate the possibility that amendment might not be futile.
Therefore, the dismissal of Count I is WITHOUT PREJUDICE, and
Plaintiff may file a motion for leave to amend pursuant to Fed.
R. Civ. P. 15(a).
See, e.g., Pac. W. Grp., Inc. v. Real Time
Solutions, Inc., 321 F. App’x 566, 569 (9th Cir. 2008) (holding
that in the Rule 12(c) context, leave to amend should be granted
unless amendment would be futile).
The district court will
conduct a more complete futility analysis if Plaintiff chooses to
file such a motion.6
6
Plaintiff also appears to request leave to amend to add
the State as a defendant. See, e.g., Mem. in Opp. at 7 n.3. The
(continued...)
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CONCLUSION
On the basis of the foregoing, Defendants UnitedHealth
Group Incorporated, UnitedHealthcare, Inc., and UnitedHealthcare
Insurance Company’s Motion for Judgment on the Pleadings for
Count I (§ 1983), filed April 1, 2015, is HEREBY GRANTED.
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAII, July 24, 2015.
/s/ Leslie E. Kobayashi
Leslie E. Kobayashi
United States District Judge
JUAN RIOS QUINONES VS. UNITEDHEALTH GROUP INCORPORATED, ET AL;
CIVIL 14-00497 LEK-RLP; ORDER GRANTING DEFENDANTS’ MOTION FOR
JUDGMENT ON THE PLEADINGS FOR COUNT I (§ 1983)
6
(...continued)
district court will consider that request upon a properly filed
motion for leave to file an amended complaint.
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