Connecticut General Life Insurance Company et al v. Southwest Surgery Center, LLC
Filing
47
MEMORANDUM Opinion and Order Signed by the Honorable John Robert Blakey on 10/29/2015. Mailed notice(gel, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
Connecticut General Life Insurance
Company and Cigna Health and Life
Insurance Company,
Plaintiff,
Case No. 14 CV 08777
v.
Southwest Surgery Center, LLC,
d/b/a Center for Minimally Invasive
Surgery,
Judge John Robert Blakey
Defendant.
MEMORANDUM OPINION AND ORDER
Plaintiff Connecticut General Life Insurance Company and Cigna Health and
Life Insurance Company (“Cigna”), a managed care company responsible for
administering health and welfare benefit plans, brings this action against
Southwest Surgery Center, LLC (“CMIS”), an out-of-network health care provider.
Cigna seeks a declaratory judgment that CMIS has engaged in fee-forgiving
practices that have eliminated Cigna’s obligation to pay or otherwise reimburse
CMIS for services provided. Additionally, Cigna asserts claims of recoupment of
overpayments
received
by
CMIS;
fraudulent
misrepresentation;
negligent
misrepresentation; and violation of the Illinois Consumer Fraud and Deceptive
Practices Act. CMIS moved to dismiss the complaint under both Federal Rule of
Civil Procedure 12(b)(1) and Federal Rule of Civil Procedure 12(b)(6) [13]. For the
reasons explained below, that motion is granted in part and denied in part.
I.
Background
Plaintiff Cigna administers health care benefit plans that employers sponsor
to provide health care coverage to employees and their dependents. Complaint ¶ 15.
As part of the administration of these plans, Cigna provides coverage for both “innetwork” and “out-of-network” health care providers. Id. at ¶ 18. Plan members are
incentivized to receive services from in-network providers “because they pay lower
coinsurance, deductibles, and copayments” for those services. Id. at ¶ 4. Members
may opt to receive treatment from out-of-network providers, but those providers
typically charge higher amounts for treating patients. Id. at ¶ 21. Additionally,
Cigna plans “typically provide that members must pay higher deductibles and
coinsurance when they select out-of-network care instead of in-network care.” Id. at
¶ 22.
Some out-of-network providers engage in fee-forgiving schemes, however,
where the providers do not bill patients for deductibles and coinsurance under plan
terms. Id. at ¶ 24. This practice “lowers out-of-pocket expenses for plan members,
but frustrates the plan sponsors’ efforts to control healthcare costs by eliminating
plan members’ incentive to use in-network services.” Id. Cigna’s plans discourage
fee-forgiving practices by: (1) excluding payment for charges that plan members are
not obligated to pay, (2) limiting benefits for covered services to “Maximum
Reimbursable Charge[s],” and (3) affording coverage only for “Covered Expenses.”
Id. at ¶¶ 25-28.
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Here, Cigna claims CMIS engaged in the type of fee-forgiving that the plans
are crafted to avoid. Id. at ¶¶ 29-36. Cigna states that between “at least 2009 and
the present, CMIS promoted itself to Cigna plan members by representing that they
[would] be billed as if CMIS [were] an in-network provider, or by representing that
it [would] accept reimbursement under the plan as full payment, sparing [the
patients] of the need to pay their out-of-network cost shares.” Id. at ¶ 29. CMIS
would then submit “false and misleading” claims, containing “grossly inflated
charges for its surgical services.” Id. Cigna relied on these claims and paid CMIS
based on these allegedly inflated charges. Id. Cigna claims that it has overpaid
CMIS roughly $800,000 in reliance on these misrepresentations. Id. at ¶ 37.
In 2012, Cigna initiated an investigation into CMIS’s billing practices in an
attempt to determine whether CMIS was billing plan members for their portion of
the services rendered. Id. at ¶ 38. Cigna notified CMIS of the audit and informed
CMIS of the cost-share provisions of Cigna’s health benefit plans. Id. at ¶ 43. As a
result of CMIS’ refusal to produce its collection legers or billing policies, Cigna
flagged CMIS’ account, which caused Cigna’s claim system to deny “certain
claims…submitted after August 2012.” Id. at ¶¶ 45-46.
Based on these allegations, Cigna brought suit seeking a declaratory
judgment relating to the claims Cigna has already paid and those Cigna has denied
following the audit. Id. at ¶¶ 49-59.
Cigna also seeks recovery of the alleged
overpayments under the Employee Retirement Income Security Act (ERISA) and
common law theories of unjust enrichment and restitution. Id. at ¶¶ 60-70. Finally,
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Cigna seeks recovery under state law claims of fraud, negligent misrepresentation,
and the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA). Id.
at ¶¶ 71-99.
In response, CMIS seeks to have the complaint dismissed for lack of standing
under Rule 12(b)(1) and for failure to meet the proper pleading requirements of
Rule 12(b)(6).
II.
Legal Standard
Under both Rule 12(b)(1) and Rule 12(b)(6), the Court must construe the
complaint in the light most favorable to the plaintiff, accept as true all well-pleaded
facts and draw all reasonable inferences in its favor. Yeftich v. Navistar, Inc., 722
F.3d 911, 915 (7th Cir. 2013); Long v. Shorebank Dev’t Corp., 182 F. 3d 548, 554
(7th Cir. 1999). Statements of law, however, need not be accepted as true. Yeftich,
722 F.3d at 915.
For a Rule 12(b)(1) motion, the plaintiff bears the burden of establishing that
the jurisdictional requirements have been met. Ctr. for Dermatology & Skin Cancer,
Ltd. v. Burwell, 770 F.3d 586, 589 (7th Cir. 2014). If the jurisdictional facts are
challenged, the plaintiff must support those facts by competent proof. Selcke v. New
England Ins. Co., 2 F.3d 790, 792 (7th Cir. 1993). The standard for a Rule 12(b)(1)
motion differs from that under Rule 12(b)(6) only in that the Court “may properly
look beyond the jurisdictional allegations of the [claim] and view whatever evidence
has been submitted on the issue to determine whether in fact subject matter
4
jurisdiction exists.” Apex Digitial, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 444
(7th Cir. 2009).
To survive a motion under Rule 12(b)(6), the Complaint must “state a claim
to relief that is plausible on its face.” Yeftich, 722 F.3d at 915. “A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the misconduct alleged.” Id.
A well-pleaded complaint may proceed even if it appears that “actual proof of those
facts is improbable, and that a recovery is very remote and unlikely.” Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 556 (2009). Tersely put, supplying “details is not the
function of a complaint.” Alliant Energy Corp. v. Bie, 277 F.3d 916, 920 (7th Cir.
2002). Rule 12(b)(6) does, however, limit this Court’s consideration to “allegations
set forth in the complaint itself, documents that are attached to the complaint,
documents that are central to the complaint and are referred to in it, and
information that is properly subject to judicial notice.” Williamson v. Curran, 714
F.3d 432, 436 (7th Cir. 2013).
III.
Analysis
A. Cigna’s Standing to Bring Its Claims
CMIS asserts two different theories to support its assertion that Cigna lacks
standing to bring the claims alleged. First, CMIS argues that Cigna lacks Article
III standing because Cigna failed to assert that it had been damaged by CMIS’
alleged conduct. Second, CMIS argues that Cigna lacks statutory standing under
ERISA, as it is not acting as an ERISA fiduciary.
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1.
Cigna’s Standing Under Article III
CMIS first argues that Cigna lacks Article III standing because Cigna has
not alleged that it has personally been harmed by CMIS’ actions. CMIS claims that
Cigna’s maximum reimbursement cap prevented Cigna from any harm that may
have been caused by alleged inflated charges. Further, CMIS argues, Cigna was
not actually responsible for paying the billed amounts, as Cigna was only the plan
administrator. To the extent any harm was suffered, it was suffered by the plans
themselves, and not Cigna.
Standing is “‘an essential and unchanging part of the case-or-controversy
requirement of Article III’ of the Constitution.” Perry v. Village of Arlington Heights,
186 F.3d 826, 829 (7th Cir. 1999) (quoting Lujan v. Defenders of Wildlife, 504 U.S.
555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)). “The burden to establish
standing is on the party invoking federal jurisdiction” and the party must show “(i)
an injury in fact, which is an invasion of a legally protected interest that is concrete
and particularized and, thus, actual or imminent, not conjectural or hypothetical;
(ii) a causal relationship between the injury and the challenged conduct, such that
the injury can be fairly traced to the challenged action of the defendant; and (iii) a
likelihood that the injury will be redressed by a favorable decision.” Scanlan v.
Eisenberg, 669 F.3d 838, 841-42 (7th Cir. 2012). The plaintiff must establish that it
has “sustained or is immediately in danger of sustaining some direct injury” to meet
the injury-in-fact requirement. Wis. Right to Life, Inc. v. Schober, 366 F.3d 485, 489
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(7th Cir. 2004) (quoting Tobin for Governor v. Bd. of Elections, 268 F.3d 517, 528
(7th Cir. 2001)). Speculative harm is insufficient. Id.
Here, Cigna alleges that CMIS’ billing practices caused Cigna to suffer an
actual financial injury, resulting in nearly $800,000 of overpayments and additional
expenditures to investigate CMIS’ billing practices. When ruling on a motion to
dismiss for lack of standing, the well-pleaded allegations of the complaint must be
accepted as true. See Warth v. Seldin, 422 U.S. 490, 501 (1975). Here, Cigna alleges
that CMIS was not entitled under the terms of the plan to any compensation for
services since it waived patients’ co-pay requirements. Similarly, in Kennedy v.
Conn. Gen. Life Ins. Co., 924 F.2d 698, 701 (7th Cir. 1991), the plaintiff waived any
patient obligation to pay, intending to collect the entirety of the payment from the
appellee. In Kennedy, the Court determined that under the plan terms, an
agreement relieving the patient from any obligation to pay also relieved the insurer
of its payment obligations. Id. Here, the same type of payment scheme is at issue.
Cigna has alleged that it reimbursed CMIS nearly $800,000 for procedures, which,
under the plan terms, it did not have an obligation to pay since CMIS waived
patient payment obligations. Further, Cigna alleges that it has also devoted time
and resources to an investigation of CMIS’ billing procedures. In short, Cigna has
alleged that it has sustained a direct injury, and thus has met the requirements for
Article III standing.
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2.
Cigna’s Standing Under ERISA § 502(a)(3)
CMIS next argues that the Cigna also lacks statutory standing under ERISA.
CMIS claims that Cigna lacks statutory standing because it is not acting as a
fiduciary under ERISA and has not alleged plan terms imposing duties on CMIS.
Cigna responds that, as plan administrator, it is a fiduciary under ERISA and as
such, it has both statutory and contractual rights to seek recovery.
ERISA § 502(a)(3) allows a fiduciary to bring an action “(A) to enjoin any act
or practice which violates any provision of this title or 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 this title or the terms of the plan.” 29 U.S.C. § 1132(a)(3).
Under ERISA, a person is a “fiduciary with respect to a plan to the extent (i) he
exercises any discretionary authority or discretionary control respecting the
management of such plan or exercises any authority or control respecting the
management or disposition of its assets, (ii) he renders investment advice for a fee
or other compensation, direct or indirect, with respect to any moneys or other
property of such plan, or has any authority or responsibility to do so, or (iii) he has
any discretionary authority or discretionary responsibility in the administration of
such plan.” 29 U.S.C. § 1002(21)(A); see also Varity Corp. v. Howe, 516 U.S. 489, 498
(1996). ERISA’s understanding of a fiduciary is functional, rather than formal,
where the relevant inquiry is into “control and authority over the plan.” Mertens v.
Hewitt Assocs., 508, U.S. 248, 262 (1993). Any “entity with discretionary authority
over benefits determinations” is classified as a plan fiduciary under ERISA’s
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statutory and regulatory scheme. Aetna Health Inc. v. Davila, 542 U.S. 200, 220
(2004).
Here, the complaint alleges that Cigna is given discretionary authority over
the payment of benefits under employer-sponsored benefit plans.
Because an
ERISA fiduciary is a person who exercises any discretionary authority over the
management of a plan, these allegations are sufficient to demonstrate that Cigna is
a fiduciary. Therefore, Cigna has demonstrated that it has statutory standing.
As Cigna has standing under both Article III and ERISA, Cigna has properly
established that this Court has subject matter jurisdiction over the complaint.
B. The Sufficiency of Cigna’s Complaint
CMIS also contends that Cigna’s complaint should be dismissed under Rule
12(b)(6) for failure to state a claim upon which relief may be granted. Addressing
each of Cigna’s arguments in turn, CMIS argues that: (1) recoupment is barred by
both ERISA § 502(a)(3) and Illinois state law and amounts to an adverse benefit
determination; (2) Cigna failed to plead fraud with sufficient particularity; (3)
negligent misrepresentation is barred by the Moorman Doctrine; and (4) Cigna
lacks standing under the Illinois Consumer Fraud and Deceptive Business Practice
Act.
1.
Recopument
Cigna asserts that by performing medical services and submitting claims,
CMIS took an assignment of the patient’s plan benefits, which subjected CMIS to
the plan terms. One of these terms provides that Cigna may recover overpayments
9
made to medical providers “at any time.” Over the course of several years, Cigna
claims that it made overpayments of nearly $800,000 in reliance on the claims
CMIS submitted. Acting as a plan fiduciary, Cigna seeks to recover these
overpayments. CMIS argues that Cigna may only seek injunctive or equitable relief
under ERISA § 502(a)(3) and that Cigna’s recoupment claim is legal in nature.
CMIS contends that Cigna could only seek recoupment if either CMIS was a party
to a plan authorizing recoupment or the funds sought could be traced to a clearly
identifiable account, separate from CMIS’s general assets. Cigna responds that the
plan terms make CMIS a party to the plan, as CMIS was an assignee of each
patient’s plan benefits. Further, Cigna contends that the plan terms do identify a
particular fund, distinct from CMIS’s general assets, from which they seek
recoupment.
ERISA § 502(a)(3) allows a fiduciary to bring a civil action “(A) to enjoin any
act or practice which violates any provision of this title or 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 this title or the terms of the plan.” 29 U.S.C. § 1132(a)(3).
“Congress did not intend to authorize other remedies,” including legal relief. GreatWest Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 209-210 (2002).
Equitable restitution generally seeks “to impose a constructive trust or
equitable lien on ‘particular funds or property in the defendant’s possession.’”
Sereboff v. Mid. Atl. Med. Servs., Inc., 547 U.S. 356, 362 (2006) (quoting Knudson,
534 U.S. at 213). Additionally, “the action generally must seek not to impose
10
personal liability on the defendant, but to restore to the plaintiff particular funds or
property in the defendant’s possession.” Knudson, 534 U.S. at 215 (2002).
In Sereboff, the plaintiffs were injured in an automobile accident, and the
defendant insurance company paid their medical expenses. Sereboff, 547 U.S. at
360. The plaintiffs then received a settlement from several third parties related to
the accident. Id.
The insurance company, invoking a plan provision related to
recovery from third parties, sought recovery of the medical expenses paid. Id. The
Court determined that the plan terms created an equitable lien by agreement, so an
“inability to satisfy the ‘strict tracing rules’ for ‘equitable restitution’ is of no
consequence.” Id. at 365; see also Gutta v. Std. Select Trust Ins. Plans, 530 F.3d 614,
621 (7th Cir. 2008) (holding that the defendant could seek recovery under plan
terms “even if the benefits it paid [the plaintiff] are not specifically traceable to [the
plaintiff’s] current assets because of commingling or dissipation”). Similarly, here,
Cigna has asserted in the complaint that CMIS acted as an assignee of the patients’
benefits and was thus subject to all plan obligations. The plans at issue here, like
the plans in Sereboff, contain recovery provisions that grant Cigna the right to
recover overpayments. As alleged, this plan provision created an “equitable lien by
agreement,” and thus, Cigna does not have to satisfy the strict tracing requirement
to seek recovery at this stage of the proceedings.
CMIS also argues that, even if Cigna may bring a recoupment claim under
ERISA, it has failed to follow the proper administrative procedures to do so.
Namely, CMIS contends that Cigna is seeking an adverse benefits determination,
11
which would trigger ERISA’s internal review requirements. Cigna responds that a
fiduciary’s claim for reimbursement is not classified as an adverse benefit
determination.
ERISA defines an adverse benefit determination as follows:
“[A] denial, reduction, or termination of, or a failure to provide or make
payment (in whole or in part) for, a benefit, including any such denial,
reduction, termination, or failure to provide or make payment that is
based on a determination of a participant’s or beneficiary’s eligibility to
participate in a plan, and including, with respect to group health plans,
a denial, reduction, or termination of, or a failure to provide or make
payment (in whole or in part) for, a benefit resulting from the
application of any utilization review, as well as a failure to cover an
item or service for which benefits are otherwise provided because it is
determined to be experimental or investigational or not medically
necessary or appropriate.”
29 CFR § 2560.503-1(m)(4).
Numerous courts have determined that a fiduciary seeking recovery of
overpayments is not seeking an adverse benefit determination. See, e.g.,
Pennsylvania Chiropractic Association v. Blue Cross Blue Shield Association, 286
F.R.D. 355, 365 (N.D. Ill. 2010). Cigna’s recoupment claim is an attempt to recover
previous payments, not a denial, reduction, or termination of, or failure to make
future payments.
Therefore, it is not an adverse benefit determination, and
ERISA’s administrative procedures need not be followed.
Finally, CMIS argues that Cigna’s non-ERISA claims are barred by Illinois
state law. Citing 215 ILCS 5/368d, CMIS contends that Cigna may not seek
recoupment more than eighteen months after the original payment was made and
that Cigna’s fraud allegations do not save the claim.
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Cigna responds that the
eighteen month limitation does not apply to this case, because they are seeking a
fraud determination.
Under Illinois law, no “recoupment or offset may be requested or withheld
from future payments 18 months or more after the original payment is made, except
in cases in which a court, government administrative agency, other tribunal, or
independent third-party arbitrator makes or has made a formal finding of fraud or
material misrepresentation.” 215 ILCS 5/368d(c)(1). Although a court has yet to
make a formal finding of fraud, Cigna includes allegations of fraud and negligent
misrepresentations in its complaint. At this stage of litigation, these allegations
(which the Court must accept as true) are sufficient to trigger the exception to the
eighteen month statute of limitations. Illinois state law does not bar Cigna from
seeking recoupment of overpayments.
2.
Fraud
Cigna alleges that from 2009 until 2013, CMIS submitted numerous
reimbursement claims that “grossly overstated” CMIS’ actual charges for each
patient’s care. Cigna further alleges that CMIS knew that the submitted claims
contained false information, as CMIS intended to discount or waive patient costs.
Therefore, Cigna alleges, CMIS submitted these claims with the intent to defraud.
Cigna alleges that it reasonably relied on these claims and overpaid CMIS almost
$800,000 in plan benefits. CMIS argues that Cigna has not pled fraud with the
particularity required under Rule 9(b).
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Allegations of fraud must meet heightened pleading standards. Fed. R. Civ.
P. 9(b). Fraud must be “pleaded with particularity—which is to say, ‘the who, what,
when, where, and how.’” Bank of Am. v. Knight, 725 F.3d 815, 818 (7th Cir. 2013)
(quoting DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990)).
Cigna’s
complaint alleges that CMIS (who) submitted fraudulent claims regarding charges
to patients (what) for treatment at its surgical center (where) between 2009 and
2013 (when) seeking reimbursement from Cigna based on “grossly overstated”
charges for services provided (how). Based on the allegations as a whole, Cigna has
sufficiently pled the who, what, when, where, and how necessary to satisfy Rule
9(b)’s pleading standards.
3.
Negligent Misrepresentation
In its negligent misrepresentation claim, Cigna again points to the claims
CMIS submitted, alleging that these claims were submitted in the course of CMIS’
business for the purpose of collecting payments under Cigna’s benefit plans. The
purpose of submitting these claims was to guide Cigna in its business
transactions—primarily, to inform Cigna of the proper amount to reimburse CMIS
for the services provided. When CMIS submitted these claims, Cigna alleges, CMIS
did not disclose the actual amount it intended to collect from the plan members.
Cigna alleges that it relied on the representations contained in the claims and
reimbursed CMIS nearly $800,000 to which CMIS was not entitled. CMIS argues
that Cigna’s negligent misrepresentation claim seeks recovery for pure economic
loss and is thus barred by the Moorman doctrine.
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In Moorman Mfg. Co. v. National Tank Co., 435 N.E.2d 443 (Ill. 1982), the
Illinois Supreme Court held that a plaintiff may not recover economic loss suffered
by “innocent misrepresentations made by [the] defendant.” 435 N.E.2d at 453.
There are a number of exceptions to the Moorman doctrine, however, each “rooted
in the general rule that ‘[w]here a duty arises outside of the contract, the economic
loss doctrine does not prohibit recovery in tort for the negligent breach of that
duty.’” Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 567 (7th Cir. 2012) (quoting
Congregation of the Passion, Holy Cross Province v. Touche Ross & Co., 636 N.E.2d
503, 514 (Ill. 1994)). Economic loss “is recoverable where one intentionally makes
false representations, and where one who is in the business of supplying
information for the guidance of others in their business transactions makes
negligent representations.” Moorman Mfg. Co., 91 Ill.2d at 88-89 (internal citations
omitted). “A ‘precise, case-specific inquiry is required to determine whether’” this
exception applies. Haimberg v. R&M Aviation, Inc., 5 Fed. Appx. 543, 548 (7th Cir.
2001) (quoting Rankow v. First Chicago Corp., 870 F.2d 356, 361 (7th Cir. 1989).
The appropriate inquiry is whether the party “is truly in the business of supplying
information or whether the information is instead provided ‘ancillary to the sale or
in connection with the sale of merchandise or other matter.’” Id. (quoting Fireman’s
Fund Ins. Co. v. SEC Donohue, Inc., 679 N.E.2d 1197, 1201 (1997)).
In Haimberg, the Court relied on an Illinois appellate court decision, Tolan
and Son, Inc. v. KLLM Architects, Inc., 719 N.E.2d 288 (Ill.App.Ct. 1999). “The
Tolan court acknowledged that there was a continuum of business providers,
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ranging from pure information providers, such as lawyers, accountants and
inspectors, to middle ground cases, such as insurance agents and financial advisors,
to tangible product providers, such as manufacturers.” Haimberg, 5 Fed. Appx. at
548 (quoting Tolan, 719 N.E.2d at 296-97). This continuum identifies three
categories of businesses: “(1) businesses that supply only non-informational goods or
services, where any information supplied is incidental to the sale of the product; (2)
businesses that supply information as well as non-informational goods or services;
and (3) businesses that provide a product consisting solely of information.” ABN
AMRO, Inc. v. Capitla Int’l, Ltd., 595 F. Supp. 2d 805, 852 (N.D. Ill. 2008). The
Moorman doctrine bars negligent misrepresentation claims against the first
category of businesses but allows those claims against the third category of
businesses. Id. “Between these two extremes lie the more difficult cases, involving
defendants whose business it is to provide both tangible goods (or other noninformational goods or services) and information. Rankow v. First Chicago Corp.,
870 F.2d 356, 364 (7th Cir. 1989). The Tolan court determined that in cases where
the supplying of information is “central to the business transaction between the
parties” the Moorman doctrine does not bar recovery. Tolan, 719 N.E.2d at 297-98.
Here, based on the allegations in the complaint, CMIS is not primarily in the
business of supplying information. Rather, it is a provider of medical services. As
in Tolan, where the primary business relationship of the parties was to provide
architectural advice and guidance, here CMIS’ primary business relationship with
Cigna is to provide information relating to insurance claims. The entirety of the
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business transaction between Cigna and CMIS depends upon the information
supplied in the claims CMIS submits. Cigna has alleged that it must rely on the
information contained in the submitted claims to make reimbursement decisions;
this reliance indicates that supplying information is central to the business
transaction between CMIS and Cigna. Within the context of its relationship to
Cigna, CMIS is a supplier of information that is expected to be relied upon in
determining proper payment of claims. Therefore, the Moorman doctrine does not
bar Cigna’s negligent misrepresentation claim.
4.
Illinois Consumer Fraud and Deceptive Business Practice Act
Finally, Cigna alleges that CMIS’s “unfair and deceptive billing practices”
violate the Illinois Fraud and Deceptive Business Practice Act (ICFA).
CMIS’
billing practices are deceptive, according to Cigna, because they include charges
that CMIS does not intend to collect (namely, the patient cost shares). Further,
Cigna alleges that CMIS’ fee-forgiving practices are unfair because they give CMIS
an advantage over in-network providers who expect patients to pay cost shares.
Cigna alleges that these practices increase costs to plan sponsors and undermine
Cigna’s ability to offer “robust networks” of in-network providers because feeforgiving schemes eliminate plan members’ incentives to choose in-network
providers.
Cigna alleges that, here specifically, CMIS engaged in deceptive
practices by submitting claims containing overstated charges. Cigna alleges that it
relied on these claims, and overpaid CMIS nearly $800,000 in plan benefits. CMIS
argues that Cigna’s claim under the ICFA should be dismissed, as Cigna had not
17
pled its claim with particularity and has not sufficiently alleged the elements of the
claim. Cigna contends that it has properly sought relief under the ICFA.
When bringing an action under the ICFA, the plaintiff must allege: “(1) a
deceptive act or practice by the defendant; (2) the defendant intended that the
plaintiff rely on the deception; (3) the deceptive act occurred in a course of conduct
involving trade or commerce; (4) actual damage to the plaintiff; and (5) such
damage was proximately caused by the deceptive act.” Phila. Indem. Ins. Co. v. Chi.
Title Ins. Co., 771 F.3d 391, 402 (7th Cir. 2014). “When a plaintiff in federal court
alleges fraud under the ICFA, the heightened pleading standard of Federal Rule of
Civil Procedure 9(b) applies.” Pirelli Armstrong Tire Corp. Retiree Med. Benefits
Trust v. Walgreen Co., 631 F.3d 436, 441 (7th Cir. 2011). When a claim under the
Act “involves two businesses who are not consumers, the proper test is…whether
the alleged conduct involves trade practices addressed to the market generally or
otherwise implicates consumer protection concerns.” Downers Grove Volkswagen,
Inc. v. Wigglesworth Imports, Inc., 546 N.E.2d 33, 41 (Ill. App. Ct. 1989).
Here, as discussed above, Cigna has met the heightened pleading
requirements of Rule 9(b). Cigna has alleged the who, what, where, when and how
of the fraud. But unlike in Downers Grove Volkswagen, where the court held that
the plaintiff sufficiently pled consumer-protection concerns by alleging the
defendant “published false information about [the plaintiff’s] prices for services,”
546 N.E.2d at 41, Cigna here has failed to demonstrate that CMIS’ practices
implicate consumer protection concerns. Cigna has alleged that CMIS has waived
18
patient costs, instead seeking inflated reimbursement from Cigna alone.
In its
complaint, Cigna has alleged that it has suffered harm, but it has not alleged that
CMIS’ actions address consumer protection concerns.
Therefore, Cigna’s ICFA
claim (Count V of the complaint) will be dismissed.
IV.
Conclusion
For the reasons explained above, CMIS’ motion to dismiss [13] is granted in
part and denied in part. The motion is granted as to Count V of the complaint (the
ICFA claim) and denied in all other respects.
Date: October 29, 2015
ENTERED:
____________________________
John Robert Blakey
United States District Judge
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