Paragon Office Services LLC et al v. UnitedHealthGroup, Inc. et al

Filing 101

MEMORANDUM OPINION AND ORDER denying #85 MOTION for Reconsideration re #35 Memorandum Opinion and Order, filed by Ambulatory Health Systems LLC, Office Surgery Support Services LLC, Paragon Ambulatory Physician Services, LLC, Paragon Office Services LLC. (Ordered by Chief Judge Sidney A Fitzwater on 10/2/2013) (Chief Judge Sidney A Fitzwater)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
PARAGON OFFICE SERVICES, LLC,
et al.,

§
§
§
Plaintiffs,
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§ Civil Action No. 3:11-CV-2205-D
VS.
§
§
UNITEDHEALTHCARE INSURANCE §
COMPANY, INC., et al.,
§
§
Defendants. §
MEMORANDUM OPINION
AND ORDER
Plaintiffs Paragon Office Services, LLC, Paragon Ambulatory Physician Services, PA,
Office Surgery Support Services, LLC, and Ambulatory Health Systems, LLC move the
court pursuant to Fed. R. Civ. P. 60(b)(1)-(3) and (6) to reconsider its decision in Paragon
Office Services, LLC v. UnitedHealthGroup, Inc., 2012 WL 1019953 (N.D. Tex. Mar. 27,
2012) (Fitzwater, C.J.) (“Paragon I”), denying their motion to remand. Concluding that
plaintiffs have failed to show their entitlement to relief, the court denies the motion.
I
The background facts and procedural history of this case are set out in prior opinions
and need not be repeated at length.1 The court will instead recount the background facts and

1

See Paragon I, 2012 WL 1019953, at *1; Paragon Office Servs., LLC v.
UnitedHealthcare Ins. Co., 2012 WL 4442368, at *1 (N.D. Tex. Sept. 26, 2012) (Fitzwater,
C.J.); Paragon Office Servs., LLC v. UnitedHealthcare Ins. Co., 2012 WL 5868249 (N.D.
Tex. Nov. 20, 2012) (Fitzwater, C.J.).

procedural history that are pertinent to this decision.
Plaintiffs filed this lawsuit in state court, alleging that defendants UnitedHealthcare
Insurance Co., Inc., UnitedHealthcare of Texas, Inc., UnitedHealthcare Benefits of Texas,
Inc., and Ingenix, Inc. (collectively, “United”) improperly denied their claims for payment.
United removed the suit to this court based on federal-question jurisdiction, contending that
plaintiffs were seeking payment under plans governed by ERISA.2 The court denied
plaintiffs’ motion to remand, see Paragon I, 2012 WL 1019953, at *1, and it later denied
their motion to sever and remand the state-law claims, see Paragon Office Services, LLC v.
UnitedHealthcare Insurance Co., 2012 WL 4442368, at *1 (N.D. Tex. Sept. 26, 2012)
(Fitzwater, C.J.).3
Plaintiffs maintain that United has only recently “revealed the real reason why it
refused to pay [plaintiffs], and that reason does not require interpretation of an ERISA plan.”
Ps. Mot. Reconsider 4. They posit that United denied their claims based on United’s internal
policies, “not any ERISA plan terms.” Id. at 5. United responds that plaintiffs’ evidence is
“not new,” Ds. Resp. 10, and that the company policies that plaintiffs cite are actually
“incorporated into each of the [ERISA-governed] plans at issue,” id. at 11.

2

Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq.

3

The court opted to exercise supplemental jurisdiction over plaintiffs’ state-law claims
regarding the non-ERISA plans. See Paragon I, 2012 WL 1019953, at *9.
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II
This court and others in this circuit have treated motions such as plaintiffs’—filed
more than 30 days after the court’s prior remand decision was entered or served—as motions
seeking relief under Rule 60(b). See, e.g., Tran v. Kaiser Found. Health Plan of Tex., 2001
WL 1082418, at *1 (N.D. Tex. Sept. 7, 2001) (Solis, J.) (“Because Plaintiffs’ Motion to
Reconsider was not filed until 30 days after entry of this Court’s Order denying remand, the
Court treats it as a motion under [Rule 60(b)].”); Palmer v. Liberty Mut. Ins. Co., 2011 WL
284495, at *2 (S.D. Miss. Jan. 25, 2011) (“Since [plaintiff] filed the Second Motion to
Remand over three months after the court entered the Order Denying Remand, [plaintiff’s]
only recourse is a motion for relief under [Rule 60(b)].”). Under Rule 60(b)(1)-(3), a district
court can grant relief from a final judgment for “(1) mistake, inadvertence, surprise, or
excusable neglect; (2) newly discovered evidence that, with reasonable diligence, could not
have been discovered in time to move for a new trial under Rule 59(b); [or] (3) fraud
(whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an
opposing party[.]” Under Rule 60(b)(6), the court can set aside a judgment for “any other
reason that justifies relief.”
“It has long been established that as a precondition to relief under Rule 60(b), the
movant must provide the district court with reason to believe that vacating the judgment will
not be an empty exercise or a futile gesture.” Murray v. District of Columbia, 52 F.3d 353,
355 (D.C. Cir. 1995) (citing Pease v. Pakhoed Corp., 980 F.2d 995, 998 (5th Cir. 1993), and
the decisions of five other federal circuit courts); see also Lepkowski v. U.S. Dep’t of
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Treasury, 804 F.2d 1310, 1322 (D.C. Cir. 1986) (stating that movant must “demonstrat[e]
. . . a good claim or defense in order to avoid needless protraction of the litigation”); United
States v. One 1978 Piper Navajo PA-31, Aircraft, 748 F.2d 316, 320 (5th Cir. 1984)
(affirming denial of Rule 60(b) motion because movant “failed to advance a meritorious
defense”). If the movant cannot meet this burden, the Rule 60(b) motion will be denied.
III
A
Plaintiffs allege that they recently discovered new evidence showing that United
denied their claims based on internal policies, not based on an ERISA-governed plan. Thus
plaintiffs seek to show that United’s denial of their claims were in fact “based on an
independent relationship between [plaintiffs] and [United].” Ps. Mot. 8 (emphasis in
original).
As the court noted in Paragon I, ERISA § 502(a)(1)(B) completely preempts
beneficiary claims “if (1) the ‘individual, at some point in time, could have brought his claim
under ERISA § 502(a)(1)(B),’ and (2) ‘where there is no other independent legal duty that
is implicated by a defendant’s actions.’” Paragon I, 2012 WL 1019953, at *3 (quoting Aetna
Health Inc. v. Davila, 542 U.S. 200, 210 (2004)). The court held that, “although plaintiffs
frame their claim in terms of a breach of an implied contract claim, it is completely
preempted if the right to payment nonetheless turns on the terms of an ERISA benefit plan
and not an independent obligation.” Id. at *7. And the court concluded that “the record
show[ed] that the out-of-network plaintiffs [did] not have a provider agreement with United,
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and these plaintiffs [were] seeking to recover plan benefits.” Id. at *8.
Even accepting the allegations of plaintiffs’ motion as true, plaintiffs have failed to
establish that there is a basis for the court to revisit its determination in Paragon I that there
was no independent obligation between the parties. That determination rested on the weight
of all the evidence presented to the court, not merely on United’s denial letters to plaintiffs.4
Were the court to reconsider this determination excluding the denial letters as evidence, the
court would come to the same conclusion.
Because plaintiffs’ allegations do not undermine the court’s previous determination
based on the weight of all the evidence, the existence and derivation of United’s internal
policies do not support a different result. Whether the internal policies that plaintiffs cite
interpret the terms of the ERISA-governed plan, or merely assist United in administering it,
in order for plaintiffs to recover from United, they “must do so as assignees of United plan
benefits, and they must establish a right to recover under the relevant ERISA plans.” Id.; cf.
Ambulatory Infusion Therapy Specialists, Inc. v. Aetna Life Ins. Co., 2006 WL 1663752, at
*8 (S.D. Tex. June 13, 2006) (stating that claim in question ultimately “depend[ed] on, and

4

The court noted in Paragon I that “United ha[d] introduced evidence that plaintiffs’
right to coverage [was] dependent on the terms of the ERISA plans because the equipment
charges were denied due to the ‘terms of the Plans.’” Paragon I, 2012 WL 1019953, at *8
n.13. This evidence was not the only basis for the court’s conclusion that plaintiffs’ claims
were based on ERISA-governed plans. The court also relied, inter alia, on the non-existence
of an out-of-network provider agreement, plaintiffs’ concerted effort to collect thousands of
assignments of ERISA beneficiaries’ claims, the provisions of the various ERISA plans
themselves, explanation of benefits documents, and the correspondence between the parties.
See id. at *4-8.
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derive[d] from . . . ERISA Plan terms”).
The court therefore holds that plaintiffs have failed to meet the precondition of
showing that they have the functional equivalent of a meritorious “claim or defense” under
Rule 60(b). Lepkowski, 804 F.2d at 1314. To the extent plaintiffs’ motion is based on Rule
60(b), the motion is denied.
B
For the reasons stated in Paragon I, the court also holds that it has federal-question
subject matter jurisdiction under ERISA. See Paragon I, 2012 WL 1019953 at *4-9. To the
extent plaintiffs’ motion is not based on Rule 60(b), but rests on the court’s duty “to examine
[its] jurisdiction ‘at every stage of the litigation,’” Enochs v. Lampasas County, 641 F.3d
155, 161 (5th Cir. 2011) (quoting Carnegie-Mellon University v. Cohill, 484 U.S. 343, 350
(1988)), the motion is denied.
*

*

*

Plaintiffs’ motion to reconsider remand is denied.
SO ORDERED.
October 2, 2013.
_________________________________
SIDNEY A. FITZWATER
CHIEF JUDGE

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