Innova Hospital San Antonio LP et al v. Blue Cross and Blue Shield of Georgia, Inc. et al
Filing
138
Memorandum Opinion and Order: It is ORDERED that Anthem Defendants' Motion to Dismiss (ECF No. 43 ), BCBS Defendants' Motion to Dismiss (ECF No. 48 ), BCBS Tennessee's Motion to Dismiss (ECF No. 53 ), and BCBS Kansas's Motion to Dismiss (ECF No. 106 ), should be and are hereby GRANTED. Therefore, Plaintiffs' claims against Anthem Defendants, BCBS Defendants, BCBS Tennessee, and BCBS Kansas are DISMISSED. It is further ORDERED that Plaintiffs shall haveuntil 3/1/201 4, to file an amended complaint. It is further ORDERED that BCBS Alabama's Motion to Compel Arbitration (ECF No. 49 ), should be and is hereby GRANTED. Therefore, Victory Medical Center Houston, L.P.'s claims against BCBS Alabama relating to SB's health benefit plan are hereby DISMISSED. It is further ORDERED that Capital's Motion to Dismiss for Lack of Personal Jurisdiction (ECF No. 52 ), should be and is hereby GRANTED. Therefore, Plaintiffs' claims against Capital BlueCross are hereby DISMISSED. (Ordered by Judge Reed C O'Connor on 2/3/2014) (cea)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
INNOVA HOSPITAL SAN ANTONIO,
L.P. et al.,
Plaintiffs,
v.
BLUE CROSS AND BLUE SHIELD OF
GEORGIA, INC. et al.,
Defendants.
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Civil Action No. 3:12-cv-1607-O
MEMORANDUM OPINION AND ORDER
Before the Court are Defendants Blue Cross of California, Anthem Health Plans, Inc.,
Community Insurance Company, Anthem Health Plans of Kentucky, Inc., Anthem Blue Cross Life
and Health Insurance Company, Anthem Health Plans of Virginia, Inc., Blue Cross and Blue Shield
of Georgia, Inc., and Anthem Insurance Companies, Inc.’s (collectively “Anthem Defendants”)
Motion to Dismiss Plaintiffs’ First Amended Complaint and Brief in Support (ECF Nos. 43, 43-1),
filed September 7, 2012; Plaintiffs Innova Hospital San Antonio, L.P. and Victory Medical Center
Houston, L.P.’s (collectively “Plaintiffs”) Response in Opposition to Anthem Defendants’ Motion
to Dismiss and Brief in Support (ECF Nos. 96, 98), filed October 29, 2012; and Anthem Defendants’
Reply (ECF No. 105), filed November 12, 2012.1
1
Plaintiffs named thirty-three parties as Defendants in this action. See Pls.’ 1st Am. Compl. 2-3,
ECF No. 35. Six other motions to dismiss have been filed by the other Defendants in this action. Defendants
Health Care Service Corporation, Blue Cross Blue Shield of Wyoming, Blue Cross and Blue Shield of South
Carolina, Hawaii Medical Service Association d/b/a Blue Cross and Blue Shield of Hawaii, Blue Cross and
Blue Shield of Rhode Island, BCBSM, Inc. d/b/a Blue Cross and Blue Shield of Minnesota, Regence
BlueShield, Blue Cross and Blue Shield of North Carolina, Blue Cross and Blue Shield of Nebraska, Blue
Cross and Blue Shield of Mississippi, Noridian Mutual Insurance Company, Highmark West Virginia, Inc.,
Also before the Court are Defendant Blue Cross and Blue Shield of Alabama’s (“BCBS
Alabama”) Motion to Compel Arbitration and for Dismissal of Certain Claims and Brief in Support
(ECF No. 49), filed October 1, 2012; Plaintiff Victory Medical Center Houston, L.P.’s (“Victory”)
Response to BCBS Alabama’s Motion to Compel Arbitration and Brief in Support (ECF Nos.
73-74), filed October 22, 2012; and BCBS Alabama’s Reply (ECF No. 99), filed November 5, 2012.
Also before the Court are Defendant Capital BlueCross’s (“Capital”) Motion to Dismiss for Lack
of Personal Jurisdiction Pursuant to Rule 12(b)(2), Alternative Motion to Dismiss for Improper
Venue Pursuant to Rule 12(b)(3), and Alternative Motion to Dismiss for Failure to State a Claim
Pursuant to Rule 12(b)(6) (ECF No. 52), filed October 1, 2012; Plaintiffs’ Response in Opposition
to Capital’s Motion to Dismiss and Brief in Support (ECF Nos. 79-80), filed October 22, 2012; and
Capital’s Reply (ECF No. 102), filed November 5, 2012.2
After reviewing the motions and the applicable law, the Court finds Anthem Defendants’
Motion to Dismiss (ECF No. 43), BCBS Defendants’ Motion to Dismiss (ECF No. 48); BCBS
Tennessee’s Motion to Dismiss (ECF No. 53); and BCBS Kansas’s Motion to Dismiss (ECF No.
106) should be and are hereby GRANTED. The Court also finds BCBS Alabama’s Motion to
Wellmark, Inc. d/b/a Blue Cross and Blue Shield of Iowa, Highmark, Inc. d/b/a Highmark Blue Cross Blue
Shield of Pennsylvania, Premera Blue Cross, Blue Cross and Bleu Shield of Florida, Blue Cross and Blue
Shield of Michigan, Care First of Maryland, Inc., USAble Mutual Insurance Company d/b/a Arkansas Blue
Cross and Blue Shield, Blue Cross and Blue Shield of Alabama, and Louisiana Health Service & Indemnity
Company d/b/a Blue Cross Blue Shield of Louisiana (collectively “BCBS Defendants”) (ECF No. 48); Blue
Cross Blue Shield of Tennessee, Inc. (“BCBS Tennessee”) (ECF No. 53); and Blue Cross and Blue Shield
of Kansas, Inc. (“BCBS Kansas”) (ECF No. 106), filed motions to dismiss asserting arguments similar to
those asserted by the Anthem Defendants. Accordingly, the Court incorporates the foregoing motions in its
analysis of Anthem Defendants’ Motion to Dismiss (ECF No. 43).
2
Capital adopted the arguments made in BCBS Defendants Motion to Dismiss in its alternative
Motion to Dismiss for Failure to State A Claim. See Capital’s Br. Supp. Mot. Dismiss 17, ECF No. 52-1.
2
Compel Arbitration (ECF No. 49) should be and is hereby GRANTED, and Capital’s Motion to
Dismiss (ECF No. 52) should be and is hereby GRANTED.
I.
BACKGROUND
Plaintiffs are Texas limited partnerships that provide medical services in the fields of spinal,
bariatric, and orthopedic medicine in San Antonio and Houston, Texas. Pls.’ 1st Am. Compl. ¶¶ 1-2,
ECF No. 35. Plaintiffs filed this lawsuit against thirty-three “plan administrators in the Blue Cross
Blue Shield family of insurance companies” (collectively “Defendants”) who insured patients that
received medical services from Plaintiffs. Id. ¶¶ 3-34, 36-37. Plaintiffs assert that they conducted
an initial intake interview with the patients prior to rendering medical services and contacted
Defendants “to verify that the patients were covered under the Defendants’ health benefit plans” and
“to verify that the services . . . were covered under the insureds’ various plans.” Id. ¶ 37. Plaintiffs
allege Defendants verified the services were covered under the various plans before Plaintiffs
provided any medical services. Id. Plaintiffs also allege that Plaintiffs required all patients to
execute an assignment of benefits form before medical services were provided. Id. ¶ 38.
Plaintiffs allege they submitted claims to the Defendants for payment and billed their “usual
and customary charges” after the medical services were provided. Id. ¶ 39. Plaintiffs assert that they
provided the medical services in good faith, in part based on the representations by Defendants
during the verification process. Id. Plaintiffs allege, however, that Defendants “often either wholly
denied Plaintiffs’ claims for payment or unilaterally reduced the amount of payment to an
unacceptable and unsustainable level.” Id. Accordingly, Plaintiffs filed the instant lawsuit “for the
underpayment and/or non-payment of reimbursement amounts pursuant to the terms of various
health benefit plans administered by Defendants.” Id. ¶ 41. Plaintiffs attached a claim schedule to
3
their First Amended Complaint (“Claim Schedule”) that provides information about the claims being
asserted. Id.; see also Pls.’ 1st Am. Compl. Exs. 1-2 (Claim Schedule), ECF Nos. 35-1, 35-2.
Plaintiffs’ First Amended Complaint asserts four causes of action against the Defendants.3
First, Plaintiffs allege that Defendants violated the Employee Retirement Income Security Act
(“ERISA”) and Plaintiffs seek to enforce the terms of the various health benefits plans under 29
U.S.C. § 1132(a)(1)(B). Pls.’ 1st Am. Compl. ¶ 47, ECF No. 35. Plaintiffs, however, “lack the
information necessary to determine which of the claims . . . fall within ERISA and shall determine
same during the course of discovery.” Id. ¶ 53 n.1. Second, Plaintiffs assert a cause of action for
breach of contract for the health plans not governed by ERISA and seek recovery of the benefits due
under the contracts. Id. ¶¶ 62-63. Third, Plaintiffs allege Defendants are liable for negligent
misrepresentations made regarding the patients’ coverage under the health care plans. Id. ¶¶ 65-66.
Finally, Plaintiffs bring a cause of action for promissory estoppel for Defendants’ representations
that they would pay Plaintiffs for the services rendered to the patients. Id. ¶ 68.
II.
ANTHEM DEFENDANTS’ MOTION TO DISMISS
A.
Legal Standard
Federal Rule of Civil Procedure 8(a) requires a plaintiff’s pleading to include “a short and
plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2).
“[T]he pleading standard Rule 8 announces does not require ‘detailed factual allegations,’ but it
demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v.
3
Plaintiffs also assert a cause of action for the breach of the health benefit plans governed by the
Federal Employees Health Benefits Program (“FEHBA”). Pls.’ 1st Am. Compl. ¶¶ 54-60, ECF No. 35.
Plaintiffs, however, only assert FEHBA claims against Defendant Health Care Service Corporation
(“HCSC”). See id. ¶¶ 44, 55-59.
4
Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)); see
also Lormand v. US Unwired, Inc., 565 F.3d 228, 232 (5th Cir. 2009) (“[A] complaint . . . must
provide the plaintiff’s grounds for entitlement to relief—including factual allegations that when
assumed to be true raise a right to relief above the speculative level.”) (internal quotation marks and
citations omitted). If a plaintiff fails to satisfy Rule 8(a), the defendant may file a motion to dismiss
the claims under Federal Rule of Civil Procedure 12(b)(6) for “failure to state a claim upon which
relief may be granted.” Fed. R. Civ. P. 12(b)(6).
To defeat a motion to dismiss pursuant to Rule 12(b)(6), a plaintiff must plead “enough facts
to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. “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.” Iqbal, 556 U.S. at 663 (citing
Twombly, 550 U.S. at 556). “The plausibility standard is not akin to a ‘probability requirement,’ but
it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting
Twombly, 550 U.S. at 556). “[W]here the well-pleaded facts do not permit the court to infer more
than the mere possibility of misconduct, the compliant has alleged—but it has not ‘show[n]’—‘that
the pleader is entitled to relief.’” Id. at 679 (quoting Fed. R. Civ. P. 8(a)).
In reviewing a Rule 12(b)(6) motion, the Court must accept all well-pleaded facts in the
complaint as true and view them in the light most favorable to the plaintiff. Sonnier v. State Farm
Mut. Auto. Ins. Co., 509 F.3d 673, 675 (5th Cir. 2007). While legal conclusions can provide “the
framework” of a complaint, they must be supported by factual allegations. Iqbal, 556 U.S. at 679;
see also Gentilello v. Rege, 627 F.3d 540, 544 (5th Cir. 2010). The Court is not bound to accept
legal conclusions as true, and only a complaint that states a plausible claim for relief survives a
5
motion to dismiss. Iqbal, 556 U.S. at 678-79; see also R2 Invs. LDC v. Phillips, 401 F.3d 638, 642
(5th Cir. 2005) (“[W]e will not strain to find inferences favorable to the plaintiffs and we will not
accept conclusory allegations, unwarranted deductions, or legal conclusions.”) (internal quotation
marks and citation omitted). When there are well-pleaded factual allegations, the court assumes their
veracity and then determines whether they plausibly give rise to an entitlement to relief. Iqbal, 556
U.S. at 679. “Generally, a court ruling on a 12(b)(6) motion may rely on the complaint, its proper
attachments, documents incorporated into the complaint by reference, and matters of which a court
may take judicial notice.” Randall D. Wolcott, M.D., P.A. v. Sebelius, 635 F.3d 757, 763 (5th Cir.
2011) (citations and internal quotation marks omitted).
B.
Analysis
Anthem Defendants assert that Plaintiffs’ First Amended Complaint is “devoid of any factual
basis with which to support its contentions.”4 Anthem Defs.’ Br. Supp. Mot. Dismiss 7, ECF No.
43-1. Anthem Defendants argue Plaintiffs’ four causes of action for (1) violations of ERISA,
(2) breach of contract, (3) negligent misrepresentation, and (4) promissory estoppel, should be
dismissed for failure to state a claim for relief pursuant to Rule 12(b)(6). Anthem Defendants also
assert Plaintiffs failed to plead sufficient facts to establish their standing to assert causes of action
for breach of contract and violations of ERISA as assignees. The Court will address each cause of
action, but must first address whether Plaintiffs sufficiently pleaded standing to assert these claims.5
4
As noted, BCBS Defendants’ Motion to Dismiss (ECF No. 48), BCBS Tennessee’s Motion to
Dismiss (ECF No. 53), and BCBS Kansas’s Motion to Dismiss (ECF No. 106) present arguments similar to
those raised in Anthem Defendants’ Motion to Dismiss, and the Court incorporates these motions in its
analysis of Anthem Defendants’ Motion to Dismiss.
5
Anthem Defendants also assert that Plaintiffs’ state law claims for negligent misrepresentation and
promissory estoppel that relate to an ERISA plan are preempted. See Br. Supp. Mot. Dismiss 18, ECF No.
6
1.
Standing to Assert Claims on Behalf of Anthem Defendants’ Members
Plaintiffs’ ERISA and breach of contract claims are based on their alleged status as assignees
of the rights of the patients that received medical services from Plaintiffs. See Pls.’ 1st Am. Compl.
¶¶ 47, 62, ECF No. 35. While the Anthem Defendants do not dispute that an insured may assign
rights under a health insurance plan to a medical provider, see Reply 5, ECF No. 105, Anthem
Defendants assert Plaintiffs failed to adequately show that they have standing to assert the rights of
the patients because Plaintiffs failed to attach the assignments to their complaint or cite language
from the assignments. Br. Supp. Mot. Dismiss 11-12, ECF No. 43-1.
A medical provider cannot enforce the terms of a healthcare plan on its own account,
Christus Health Gulf Coast v. Aetna, Inc., 347 S.W.3d 726, 734 (Tex. App.—Houston [14th Dist.]
2011), aff’d, 397 S.W.3d 651 (Tex. 2013), but a provider may have standing to sue derivatively to
enforce an ERISA plan beneficiary’s claim through a valid assignment. N. Cypress Med. Ctr.
Operating Co. v. CIGNA Healthcare, 782 F. Supp. 2d 294, 300 (S.D. Tex. 2011); see also Tango
Transp. v. Healthcare Fin. Servs. LLC, 322 F.3d 888, 891-92 (5th Cir. 2003). A provider may
maintain a breach of contract claim if it establishes that the defendant was “a party to an enforceable
contract with . . . a party who assigned its cause of action to the plaintiff.” First-Citizens Bank &
Trust Co. v. Greater Austin Area Telecomms. Network, 318 S.W.3d 560, 566 (Tex. App.—Austin
2010, no pet.) (internal quotation marks and citation omitted). Accordingly, “[t]o state a basis to
recover under ERISA or for breach of an insurance policy, [a medical provider] must plead that the
43-1. Plaintiffs argue that the Fifth Circuit has consistently found that claims similar to Plaintiffs’ negligent
misrepresentation and promissory estoppel claims are not preempted by ERISA. See Br. Supp. Resp. Opp’n
Mot. Dismiss 23-24, ECF No. 98. In light of the Court’s finding that Plaintiffs’ First Amended Complaint
fails to state a claim for negligent misrepresentation or promissory estoppel, the Court finds that it is not
necessary at this time to determine whether these claims are preempted.
7
patients covered under the plan or policy assigned their rights to [the provider].” Electrostim Med.
Servs., Inc. v. Health Care Serv. Corp., ___ F. Supp. 2d ___, 2013 WL 3980582, at *14 (S.D. Tex.
Aug. 2, 2013) (citing Franco v. Conn. Gen. Life Ins. Co., 818 F. Supp. 2d 792, 811 (D.N.J. 2011);
Christus Health Gulf Coast, 347 S.W.3d at 734).
Accepting as true all of Plaintiffs’ allegations, the Court finds that Plaintiffs adequately
alleged standing as an assignee of the ERISA and non-ERISA plans. N Cypress Med. Ctr., 782 F.
Supp. 2d at 301. Plaintiffs allege they required all patients to “execute an assignment of benefits
form prior to receiving healthcare services,” and that Plaintiffs received an assignment of benefits
from the patients. Pls.’ 1st Am. Compl. ¶¶ 38, 47-49, 62, ECF No. 35. Plaintiffs also allege that
they had the right to enforce the terms of the plans and recover the benefits due under the plans. Id.
¶¶ 47-51, 62. Compare Encompass Office Solutions, Inc. v. Conn. Gen. Life Ins. Co., No. 3:11-cv02487-L, 2012 WL 3030376, at *4 (N.D. Tex. July 25, 2012) (holding allegations in complaint
alleging “[plaintiff] possesses . . . Assignments of Benefits from each patient on behalf of whom
[plaintiff] asserts claims herein” were sufficient to establish standing based on assignment), and N.
Cypress Med. Ctr., 782 F. Supp. 2d at 301-02 (finding provider adequately pleaded valid assignment
where complaint alleged provider “obtains an Assignment of Benefits and Rights that makes
[provider] a beneficiary of the ERISA plan and the non-ERISA contracts”), with Electrostim Med.
Servs., 2013 WL 3980582, at *14 (noting provider failed to plead valid assignment where complaint
“contain[ed] no assignment allegations”). Therefore, the Court finds Plaintiffs sufficiently pleaded
standing based on an assignment of rights.6
6
BCBS Defendants also argue Plaintiffs failed to allege an “express and knowing assignment of an
ERISA fiduciary breach claim,” as required by the Fifth Circuit in Texas Life, Accident & Hospital Service
Inc. Guaranty Ass’n v. Gaylord Entertainment Co., 105 F.3d 210, 218 (5th Cir. 1997); BCBS Defs.’ Mot.
8
2.
Count I-ERISA
Plaintiffs first cause of action is brought under Section 502(a) of ERISA “to recover benefits
due[,] . . . to enforce the rights[,] . . . [and] to clarify the rights to future benefits . . . under the terms
of the [ERISA-governed plans] . . . .” Pls.’ 1st Am. Compl. ¶¶ 47-49, ECF No. 35. Plaintiffs assert
Anthem Defendants are liable for breaching ERISA-governed plans by failing to make payments as
required under the terms of the plans. Id. ¶¶ 51-52. Anthem Defendants argue Plaintiffs’ ERISA
claim should be dismissed because Plaintiffs fail to identify plan language that shows Plaintiffs are
entitled to additional benefits under the plans. See Br. Supp. Mot. Dismiss 13, ECF No. 43-1.
Under Section 502(a), a participant or beneficiary in an ERISA-governed plan may bring a
civil action “to recover benefits due to him under the terms of his plan, to enforce his rights under
the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.” 29 U.S.C.
§ 1132(a)(1)(B). Section 502(a) is “relatively straightforward”:
If a participant or beneficiary believes that benefits promised to him
under the terms of the plan are not provided, he can bring suit seeking
provision of those benefits. A participant or beneficiary can also
bring suit generically to “enforce his rights” under the plan, or to
clarify any of his rights to future benefits.
Aetna Health Inc. v. Davila, 542 U.S. 200, 210 (2004) (quoting Firestone Tire & Rubber Co. v.
Bruch, 489 U.S. 101, 115 (1989)) (internal quotation marks omitted); see also Heimeshoff v.
Dismiss 10, ECF No. 48. The Fifth Circuit in Gaylord held that “fiduciary duty breach claim[s] . . . are not
assigned by implication or by operation of law. Instead, only an express and knowing assignment of an
ERISA fiduciary breach claim is valid.” Gaylord, 105 F.3d at 218; see also N. Cypress Med. Ctr., 782 F.
Supp. 2d at 302-03. Gaylord concerned a motion for summary judgment where there was no evidence in the
record that there was an express and knowing assignment of fiduciary duty breach claims. Id. at 219. Here,
Plaintiffs do not assert that they were assigned rights by implication or by operation of law; Plaintiffs allege
that all patients were required to execute an assignment and made express and knowing assignments. Pls.’
1st Am. Compl. ¶¶ 38, 47-51, ECF No. 35. Accordingly, the Court finds that Plaintiffs sufficiently pleaded
that they received a valid assignment to establish standing.
9
Hartford Life & Acc. Ins. Co., 134 S. Ct. 604, 612 (2013) (“[W]e have recognized the particular
importance of enforcing plan terms as written in [Section] 502(a)(1)(B) claims.”) (citing CIGNA
Corp. v. Amara, 131 S. Ct. 1866, 1876-77 (2011)).
The phrase “terms of the plan” is “[w]orthy of emphasis” because parties derive rights to
benefits from the plan, Aaron v. Leday, No. 4:13-cv-01716, 2013 WL 5936623, at *2 (S.D. Tex.
Nov. 5, 2013) (citing Firestone Tire & Rubber Co., 489 U.S. at 113; Schadler v. Anthem Life Ins.
Co., 147 F.3d 388, 394 (5th Cir. 1998)), and Section 502(a) only authorizes enforcement of the
“terms of the plan.” Koehler v. Aetna Health Inc., 683 F.3d 182, 189 (5th Cir. 2012) (citing CIGNA
Corp., 131 S. Ct. at1878) (internal quotation marks omitted); see also Lone Star OB/GYN Assocs.
v. Aetna Health Inc., 579 F.3d 525, 529 n.3 (5th Cir. 2009) (“A healthcare provider suing on the
basis of assignment of ERISA rights, benefits or claims from a plan member must proceed under the
procedures established by [Section] 502(a), as the provider is seeking to enforce the terms of the
plan.”) (internal citation omitted). Accordingly, to assert a claim for benefits under ERISA, a
plaintiff must “identify a specific plan term that confers the benefits in question.” Paragon Office
Servs., LLC v. UnitedHealthcare Ins. Co., No. 3:11-cv-2205-D, 2012 WL 5868249, at *2 (N.D. Tex.
Nov. 20, 2012) (Fitzwater, C.J.) (citing Stewart v. Nat’l Educ. Ass’n, 404 F. Supp. 2d 122, 130
(D.D.C. 2005), aff’d, 471 F.3d 169 (D.C. Cir. 2006)) (internal quotation marks omitted); see also
Ctr. for Reconstructive Breast Surgery, LLC v. Blue Cross Blue Shield of La., No. 11-806, 2013 WL
5519320, at *1 (E.D. La. Sept. 30, 2013) (finding plaintiffs must “identify the specific plan terms
allegedly breached and the manner of their breach” for ERISA claims); Afram v. United Food &
Commercial Workers Union & Participating Emp’rs Health & Welfare Fund, ___ F. Supp. 2d ___,
2013 WL 3974096, at *2 (D.D.C. 2013) (stating plaintiff bringing claim under ERISA must “identify
10
a specific plan term that confers the benefit in question”); Electrostim Med. Servs., Inc. v. Health
Care Serv. Corp., 2013 WL 3980582, at *11 (dismissing ERISA cause of action because plaintiff
“failed to identify a plan term that makes its claims eligible for reimbursement”) (internal citations
omitted). A complaint must contain enough facts about a plan’s provisions to make a Section 502(a)
claim plausible and give the defendant notice as to which provisions it allegedly breached.
Encompass Office Solutions, Inc. v. Ingenix, Inc., 775 F. Supp. 2d 938, 969 (E.D. Tex. 2011); see
also Paragon Office Servs., 2012 WL 5868249, at *2 (“The plaintiff must provide the court with
enough factual information to determine whether the services were indeed covered services under
the plan. . . . Without information as to the terms and provisions of the plan . . . the complaint fails
to state a claim upon which relief can be granted.”) (internal quotation marks and citations omitted).
Plaintiffs generally allege that Anthem Defendants failed “to make payments of benefits to
[Plaintiffs] . . . as required under the terms of the [ERISA-governed] plans,” Pls.’ 1st Am. Compl.
¶ 51, ECF No. 35, and argue the Claim Schedule “gives more than sufficient detail . . . of each
patient claim.” Br. Supp. Resp. Opp’n Mot. Dismiss 15, ECF No. 98; see also Pls.’ 1st Am. Compl.
¶¶ 47-53, ECF No. 35. Plaintiffs acknowledge that Section 502(a) allows a beneficiary to seek
provision of “benefits promised to him under the terms of the plan,” Br. Supp. Resp. Opp’n Mot.
Dismiss 16, and seek “to recover benefits due . . . under the terms of the plans” and “to enforce the
rights . . . under the terms of the plans,” Pls.’ 1st Am. Compl. ¶¶ 47-48, ECF No. 35. Plaintiffs do
not, however, identify the terms of the plans that were allegedly breached.7 See Electrostim Med.
7
Plaintiffs also concede that they “lack the information necessary to determine which of the claims
. . . fall within ERISA” and hope to determine this through discovery. Pls.’ 1st Am. Compl. ¶ 53 n.1, ECF
No. 35. Rule 8, however, does not “unlock the doors of discovery for a plaintiff armed with nothing more
than conclusions.” Ashcroft v. Iqbal, 556 U.S. at 678-79; see also Ctr. for Reconstructive Breast Surgery,
2013 WL 5519320, at *1 (“On the most basic level, Plaintiffs fail to distinguish between the patients who
11
Servs., 2013 WL 3980582, at *11; Encompass Office Solutions, 775 F. Supp. 2d at 969; Paragon
Office Servs., 2012 WL 5868249, at *2. The First Amended Complaint provides conclusory
allegations that Anthem Defendants breached the terms of the plans, but lacks factual allegations to
support Plaintiffs’ claims that Anthem Defendants’ payments violated the terms of the plans.
Furthermore, the Claim Schedule provides information about patient claims and charges, but
does not provide facts about the benefits due under the terms of the plans or provide factual
allegations about the terms of the plans to show that Anthem Defendants breached the plans. See
Pls.’ 1st Am. Compl. Exs. 1-2 (Claim Schedule), ECF Nos. 35-1, 35-2. Plaintiffs’ general
allegations that Anthem Defendants did not reimburse the amounts due under the terms of the plans,
without further factual assertions about the plans’ terms, fall short of the plausibility requirement.
See Ashcroft v. Iqbal, 556 U.S. at 678 (“Rule 8 . . . demands more than an unadorned, the-defendantunlawfully-harmed-me accusation. . . . Where a complaint pleads facts that are merely consistent
with a defendant’s liability, it stops short of the line between possibility and plausibility of
entitlement to relief.”) (internal quotation marks omitted).
The First Amended Complaint and Claim Schedule allege Anthem Defendants failed to pay
reimbursements required by the plans and that Plaintiffs are entitled to additional payment under the
plans, but do not identify facts about Plaintiffs’ rights under the plans or how Anthem Defendants
violated the plans. Plaintiffs fail to allege facts that allow the Court to reasonably infer that Anthem
Defendants violated the terms of the plans and that Plaintiffs are entitled to recover benefits, enforce
their rights, or clarify their rights to future benefits “under the terms of the plan[s].” 29 U.S.C.
§ 1132(a)(1)(B). Accordingly, the Court finds that Plaintiffs fail to state a claim under ERISA.
were participants in an ERISA covered plan and those who were not—a crucial distinction.”).
12
3.
Count II-Breach of Contract
Plaintiffs second cause of action alleges Anthem Defendants breached the health benefits
plans not governed by ERISA by failing to pay the reimbursement rate “required by the contracts.”
Pls.’ 1st Am. Compl. ¶¶ 62-63, ECF No. 35. Anthem Defendants argue Plaintiffs’ conclusory
allegations that Anthem Defendants breached unidentified terms of the plans are insufficient to state
a claim. See Br. Supp. Mot. Dismiss 15-16, ECF No. 43-1. Plaintiffs counter that the pleadings
provide sufficient notice and state that they are not required to outline all the elements of their claim.
Br. Supp. Resp. Opp’n Mot. Dismiss 17-19, ECF No. 98 (quoting Walker v. S. Cent. Bell Tel. Co.,
904 F.2d 275, 277 (5th Cir. 1990)).
To establish a breach of contract cause of action, a plaintiff must show “(1) the existence of
a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of contract by
the defendant; and (4) damages suffered by the plaintiff as a result of the breach.” Beauty Mfg.
Solutions Corp. v. Ashland, Inc., 848 F. Supp. 2d 663, 667 (N.D. Tex. 2012) (Fish, J.) (citing Mullins
v. TestAmerica, Inc., 564 F.3d 386, 418 (5th Cir. 2009); Aguiar v. Segal, 167 S.W.3d 443, 450 (Tex.
App.—Houston [14th Dist] 2005, pet. denied)). Anthem Defendants argue Plaintiffs failed to plead
facts showing performance was tendered and failed to identify provisions that were breached. See
Br. Supp. Mot. Dismiss 15-16, ECF No. 43-1.
“A breach of contract . . . only occurs when a party fails or refuses to perform an act that it
expressly promised to do.” Gonzales v. Columbia Hosp. at Med. City Dall. Subsidiary LP, 207 F.
Supp. 2d 570, 575 (N.D. Tex. 2002) (Solis, J.) (citing Methodist Hosps. of Dall. v. Corporate
Communicators, Inc., 806 S.W.2d 879, 882 (Tex. App.—Dallas 1991, writ denied)). To plead a
breach of contract claim, a plaintiff must identify a specific provision of the contract that was
13
allegedly breached. See, e.g., Watson v. Citimortgage, Inc., 814 F. Supp. 2d 726, 732 (E.D. Tex.
2011); Motten v. Chase Home Fin., 831 F. Supp. 2d 988, 1003-04 (S.D. Tex. 2011); Encompass
Office Solutions, 775 F. Supp. 2d at 953-54; Am. Realty Trust, Inc. v. Travelers Cas. & Sur. Co. of
Am., 362 F. Supp. 2d 744, 753 (N.D. Tex. 2005) (Godbey, J.); see also Bayway Sersv., Inc. v.
Ameri-Build Constr., L.C., 106 S.W.3d 156, 160 (Tex. App.—Houston [1st Dist.] 2003, no pet.) (“A
petition in an action based on a contract must contain a short statement of the cause of action
sufficient to give fair notice of the claim involved, including . . . the substance of the contract which
supports the pleader’s right to recover.”) (internal citation omitted).
Plaintiffs allege Anthem Defendants were “required to abide by the terms and conditions of
the contracts . . . [and] materially breached the terms of the contracts” by paying reimbursements that
were “substantially less . . . than what [wa]s actually owed” under the plans. Pls.’ 1st Am. Compl.
¶¶ 45, 63, ECF No. 35. Plaintiffs are not required to outline all the elements of the claim, but
Plaintiffs must provide enough factual allegations to draw the reasonable inference that the elements
exist. See Patrick v. Wal-Mart, Inc.–Store No. 155, 681 F.3d 614, 617 (5th Cir. 2012); Constantine
v. Am. Airlines Pension Benefit Plan, 162 F. Supp. 2d 552, 554 (N.D. Tex. 2001) (Mahon, J.); see
also Wilson v. Birnberg, 667 F.3d 591, 595 (5th Cir. 2012) (“[P]laintiffs must allege facts that
support the elements of the cause of action in order to make out a valid claim.”) (internal quotation
marks and citation omitted); Torch Liquidating Trust ex rel. Bridge Assocs. L.L.C. v. Stockstill, 561
F.3d 377, 384 (5th Cir. 2009) (“[T]he complaint must contain either direct allegations or permit
properly drawn inferences to support every material point necessary to sustain recovery . . . .”)
(internal quotation marks and citations omitted).
Plaintiffs failed to allege enough facts about the terms of the plans to raise their right to relief
14
above the speculative level. Bell Atl. Corp. v. Twombly, 550 U.S. at 555. Plaintiffs do not identify
what provisions were breached or provide factual allegations about the terms of the plans. Plaintiffs’
claim is based on their conclusion that Anthem Defendants failed to pay the reimbursement rate
“required by the contracts” or the “contractually agreed upon amounts,” but Plaintiffs do not allege
what rates were required or contractually agreed upon by the parties. Pls.’ 1st Am. Compl. ¶ 63,
ECF No. 35. Compare Hurd v. BAC Home Loans Servicing, LP, 880 F. Supp. 2d 747, 759 (N.D.
Tex. 2012) (Lynn, J.) (finding plaintiff stated plausible claim where complaint discussed specific
contract provisions allegedly breached), Watson, 814 F. Supp. 2d at 732 (stating plaintiffs
sufficiently alleged breach of contract claim where complaint alleged defendant failed to abide by
specific contractual provision), Hoffman v. L&M Arts, 774 F. Supp. 2d 826, 836-37 (N.D. Tex. 2011)
(Fitzwater, C.J.) (finding plaintiff alleged plausible claim where she identified “particular provision
in question” and “particular acts or omissions” that breached contract), and Encompass Office
Solutions, 775 F. Supp. 2d at 953-54 (finding plaintiff “identified plan provisions in . . . a [sufficient]
manner” and alleged “enough facts about plan provisions to make its breach of contract claim
plausible”), with Electrostim Med. Servs., Inc. v. Health Care Serv. Corp., 2013 WL 3980582, at *11
(finding plaintiff failed to allege plausible basis for relief where complaint “contain[ed] no factual
allegations that the denials were improper or incorrect”), Motten, 831 F. Supp. 2d at 1003-04 (noting
plaintiffs failed to specify “key terms” of contracts and “what and how they were breached”),
Hoffman, 774 F. Supp. 2d at 837 (noting plaintiff failed to plead a plausible claim because she did
not allege “specific act or omission of [defendant] that failed to comply with its obligations”), and
Am. Realty Trust, 362 F. Supp. 2d at 753 (dismissing complaint that neither attached nor referenced
disputed contract; finding complaint did not give “adequate notice as to the nature and scope of the
15
breach of contract claim”).
Plaintiffs rely on the Claim Schedule attached to their First Amended Complaint and assert
the Claim Schedule “sets out each and every non-ERISA contract alleged to have been breached
. . . .” Br. Supp. Resp. Opp’n Mot. Dismiss 19, ECF No. 98. The Claim Schedule, however, does
not contain factual allegations about the terms of the plans or the provisions allegedly breached by
Anthem Defendants. Rather, the Claim Schedule lists nine hundred and ninety-nine claims against
thirty-three defendants and various charges and payments. See Pls.’ 1st Am. Compl. ¶ 41, ECF No.
35; see also Pls.’ 1st Am. Compl. Exs. 1-2 (Claim Schedule), ECF Nos. 35-1, 35-2; Br. Supp. Mot.
Dismiss 8, ECF No. 43-1. The Claim Schedule does not identify the non-ERISA contracts and
Plaintiffs admit they cannot identify these contracts. See Pls.’ 1st Am. Compl. ¶ 53 n.1, ECF No.
35. Furthermore, the Claim Schedule contains no factual allegations regarding what rates were
“contractually agreed upon” or “required by the contracts.”8 Id. ¶ 63.
Plaintiffs’ allegations that they did not receive the reimbursements owed under the plans and
their general conclusion that “the acts and omissions on part of [Anthem] Defendants noted
hereinabove constitute breaches of contract” are not sufficient to state a claim for relief. See Pls.’
1st Am. Compl. ¶ 62, ECF No. 35; see also Whiddon v. Chase Home Fin., LLC, 666 F. Supp. 2d
681, 692 (E.D. Tex. 2009) (“[C]onclusory statement that ‘the actions and/or omissions of Defendants
described herein above constitute a breach of contract’ does not suffice to meet the pleading
requirements of Rule 8(a).”). Plaintiffs’ allegations do not contain enough facts about the terms of
the non-ERISA plans to allow the Court to reasonably infer that Anthem Defendants breached these
8
Plaintiffs acknowledge they billed their “usual and customary charges,” and, therefore, it appears
the Claim Schedule likely reflects these “customary charges,” rather than the rates required by the contracts.
Pls.’ 1st Am. Compl. ¶ 39, ECF No. 35.
16
plans. Accordingly, the Court finds that Plaintiffs have failed to state a claim for breach of contract.
4.
Count III-Negligent Misrepresentation
Plaintiffs also allege Anthem Defendants negligently misrepresented that the patients and
medical services were covered under the health benefit plans. Pls.’ 1st Am. Compl. ¶¶ 37, 65, ECF
No. 35. Plaintiffs assert that they justifiably relied on these representations and that they suffered
damages as a result of their reliance. Id. ¶¶ 65-66. To establish a cause of action for negligent
misrepresentation, a plaintiff must plead:
(1) the defendant made a representation in the course of his business,
or in a transaction in which he has a pecuniary interest; (2) the
defendant supplied false information for the guidance of others in
their business; (3) the defendant did not exercise reasonable care or
competence in obtaining or communicating the information; and (4)
the plaintiff suffered pecuniary loss by justifiably relying on the
representation.
Miller v. CitiMortgage, Inc., ___ F. Supp. 2d ___, 2013 WL 4766808, at *11 (N.D. Tex. 2013);
Ostrovitz & Gwinn, LLC v. First Speciality Ins. Co., 393 S.W.3d 379, 397 (Tex. App.—Dallas 2012,
no pet.). “[T]he ‘false information’ contemplated in a negligent misrepresentation case must be a
misstatement of an existing fact rather than a promise of future conduct.” Scherer v. Angell, 253
S.W.3d 777, 781 (Tex. App.—Amarillo 2007, no pet.) (internal citations omitted). Anthem
Defendants argue Plaintiffs failed to plead facts showing Anthem Defendants supplied false
information or that Anthem Defendants failed to exercise reasonable care or competence in obtaining
or communicating the information. See Br. Supp. Mot. Dismiss 17, ECF No. 43-1.
Plaintiffs again contend that they are not required to outline each element of their claim and
argue the Claim Schedule “sets out additional details involving each and every instance of a
misrepresentation.” Br. Supp. Resp. Opp’n Mot. Dismiss 20-21, ECF No. 98. Rule 8(a) does not
17
require detailed factual allegations, but Plaintiffs must offer more than “labels and conclusions,” and
must plead enough facts to raise Plaintiffs’ right to relief above the speculative level. Jebaco, Inc.
v. Harrah’s Operating Co., Inc., 587 F.3d 314, 318 (5th Cir. 2009) (citing Bell Atl. Corp. v.
Twombly, 550 U.S. at 555); see also Jones v. Hous. Cmty. Coll. Sys., 816 F. Supp. 2d 418, 424 (S.D.
Tex. 2011) (“Rule 8 . . . requires a showing, rather than a blanket assertion, of entitlement to relief.”)
(internal quotation marks and citations omitted). Accordingly, to make out a valid claim for
negligent misrepresentation, Plaintiffs must allege specific facts that support the elements of the
claim.9 Wilson v. Birnberg, 667 F.3d at 595.
The Court finds that Plaintiffs’ allegations, taken as true, do not allege enough facts to state
a claim for relief that is plausible on its face. Plaintiffs allege Anthem Defendants represented that
the patients and the medical services were covered under the health benefit plans before Plaintiffs
provided the services. Pls. 1st Am. Compl. ¶¶ 37, 65, ECF No. 35. These allegations are sufficient
to show that Anthem Defendants made a representation in the course of its business. Plaintiffs’
allegations, however, do not allow the Court to draw the reasonable inference that Anthem
Defendants supplied false information for the guidance of others and did not exercise reasonable care
or competence in obtaining or communicating the information.
In pleading its negligent misrepresentation claim, Plaintiffs merely recite the elements of the
9
Courts within the Fifth Circuit require a plaintiff to allege specific facts that, if proven, would
show the elements of a claim for negligent misrepresentation. See Borneo Energy Sendirian Behad v.
Sustainable Power Corp., 646 F. Supp. 2d 860, 869 (S.D. Tex. 2009); see also Coleman v. Bank of New York
Mellon, ___ F. Supp. 2d ___, 2013 WL 4761111, at *11 (N.D. Tex. 2013) (Lynn, J.) (dismissing negligent
misrepresentation claim where complaint was “conclusory and devoid of any factual content”); In re Grizzly
Mountain Aviation, Inc. v. McTurbine, Inc., 619 F. Supp. 2d 282, 288-89 (S.D. Tex. 2008) (finding plaintiff
sufficiently pleaded negligent misrepresentation claim where complaint specifically alleged all four
elements); In re Enron Corp. Secs., Derivative & ERISA Litig., 284 F. Supp. 2d 511, 646 (S.D. Tex. 2003)
(noting plaintiff adequately alleged “the elements and supporting facts” to state a claim for negligent
misrepresentation).
18
cause of action:
C
C
C
C
“[T]he representations supplied false information for the guidance of
[Plaintiffs] in its business” (¶ 65);
“[Anthem] Defendants did not exercise reasonable care or competence in
obtaining or communicating the information” (Id.);
“Plaintiffs . . . would not have provided such services, but for the
representations made by [Anthem] Defendants . . . . [and] [Plaintiffs] would
show that it justifiably relied upon [Anthem] Defendants’ representations that
were made in the course of its business or in the transaction in which it had
a pecuniary interest” (¶¶ 39, 65);
“[Anthem] Defendants’ negligent misrepresentations have resulted in
damages and harm to the [Plaintiffs]” (¶ 65).
Plaintiffs’ pleadings contain no factual allegations to support their claim that Anthem Defendants
supplied false information and failed to exercise reasonable care in communicating the information.
See Beanal v. Freeport-McMoran, Inc., 197 F.3d 161, 164 (5th Cir. 1999) (“[A] complaint, which
contains a bare bones allegation that a wrong occurred and which does not plead any of the facts
giving rise to the injury, does not provide adequate notice.”).
Other than the assertion that Anthem Defendants “wholly denied Plaintiffs’ claims for
payment or unilaterally reduced the amount of payment” after they “verified” that the patients and
services were “covered,” Plaintiffs do not provide factual allegations concerning what information
was supplied to Plaintiffs or how the information was false, especially in light of Plaintiffs’ assertion
that they charged their usual and customary rates for the services. See Pls.’ 1st Am. Compl. ¶¶ 37,
39, ECF No. 35. Plaintiffs must allege facts that permit the Court to infer more than the “mere
possibility” that Anthem Defendants supplied false information. Harold v. Huggins Realty, Inc. v.
FNC, Inc., 634 F.3d 787, 796 (5th Cir. 2011). The First Amended Complaint and Claim Schedule
are also devoid of factual allegations concerning how Anthem Defendants provided the information
to Plaintiffs and whether they exercised reasonable care in communicating the information.
19
Plaintiffs’ conclusory allegations and formulaic recitation of the elements of a claim for
negligent misrepresentation does not raise Plaintiffs’ right to relief above the speculative level. See
Twombly, 550 U.S. at 555, 557. Without further factual enhancement the Court cannot reasonably
infer that Anthem Defendants supplied false information for the guidance of Plaintiffs and that
Anthem Defendants failed to exercise reasonable care in obtaining or communicating the
information. See Raj v. La. State Univ., 714 F.3d 322, 330 (5th Cir. 2013). Accordingly, the Court
finds that Plaintiffs failed to plead sufficient facts to state a claim for negligent misrepresentation.
5.
Count IV-Promissory Estoppel
Plaintiffs’ claim for promissory estoppel is similarly conclusory and devoid of well-pleaded
factual allegations. To establish a cause of action for promissory estoppel, a plaintiff must show:
(1) a promise; (2) foreseeability by the promisor that the promisee would rely on the promise;
(3) substantial reliance by the promisee to his detriment; and (4) a definite finding that injustice can
be avoided only by enforcement of the promise. Zenor v. El Paso Healthcare Sys., Ltd., 176 F.3d
847, 864 (5th Cir. 1999); G.D. Holdings, Inc. v. H.D.H. Land & Timber, L.P., 407 S.W.3d 856, 861
(Tex. App.—Tyler 2013, no pet.). Plaintiffs allege Anthem Defendants represented that they would
pay Plaintiffs for services rendered to the patients, but breached these promises “by failing to pay
and/or underpaying” on Plaintiffs’ claims. Pls. 1st Am. Compl. ¶¶ 37, 68, ECF No. 35. Plaintiffs
allege they reasonably and substantially relied on these representations to their detriment and their
reliance was foreseeable to Anthem Defendants. Id. ¶ 68. Plaintiffs also allege “injustice can be
avoided only [by] enforcing the [Anthem] Defendants’ promises and representations,” and note that
the Claim Schedule illustrates their claims and damages sought. Id.
Anthem Defendants argue Plaintiffs failed to identify: (1) how reliance by Plaintiffs was
20
foreseeable to Anthem Defendants, (2) how actual reliance by Plaintiffs was reasonable, and (3) why
injustice can be avoided only by enforcement of the alleged promise. Br. Supp. Mot. Dismiss 17,
ECF No. 43-1. Plaintiffs again rely on the assertion that they are not required to outline each
element of the claim and contend that the Claim Schedule sufficiently alleges facts to support the
claim. See Br. Supp. Resp. Opp’n Mot. Dismiss 22, ECF No. 98. Plaintiffs, however, must allege
enough facts that support the elements of the cause of action. See Wilson v. Birnberg, 667 F.3d at
595; Torch Liquidating Trust ex rel. Bridge Assocs. L.L.C. v. Stockstill, 561 F.3d at 384. Plaintiffs’
pleadings contain limited factual allegations regarding the promises made, see Pls.’ 1st Am. Compl.
¶ 37, ECF No. 98, but Plaintiffs’ conclusory allegations merely recite the elements of a promissory
estoppel cause of action and do not allege sufficient facts regarding the remaining elements to raise
their right to relief above the speculative level. See Pls.’ 1st Am. Compl. ¶ 68, ECF No. 35 (“The
Plaintiffs’ reliance was foreseeable by [Anthem] Defendants and injustice can be avoided only [by]
enforcing the . . . promises and representations.”); id. (“Plaintiffs reasonably and substantially relied
on the promises and representations of [Anthem] Defendants to their detriment.”). Accordingly, the
Court finds that Plaintiffs failed to state a claim for promissory estoppel.
6.
Plaintiffs’ Motion for Leave to Amend
Anthem Defendants assert that Plaintiffs’ “repeated failure to cure deficiencies by
amendments . . . is a proper basis for this Court to deny Plaintiffs leave to amend.” Anthem Defs.’
Mot. Dismiss 19, ECF No. 43-1 (citing Foman v. Davis, 371 U.S. 178, 182 (1962)). Plaintiffs
contend, however, that Federal Rule of Civil Procedure 15(a)’s liberal standard requires the Court
to grant leave to amend “when justice so requires.” Pls.’ Br. Supp. Resp. Opp’n Anthem Defs.’ Mot.
Dismiss 27, ECF No. 98. Accordingly, Plaintiffs request leave to amend their First Amended
21
Complaint to address any claims dismissed by the Court.
“Under Rule 15(a), ‘leave to amend shall be freely given when justice so requires,’ and
should be granted absent some justification for refusal.” United States ex rel. Willard v. Humana
Health Plan of Tex. Inc., 336 F.3d 375, 386 (5th Cir. 2003) (citing Foman, 371 U.S. at 181-82); see
also Smith v. EMC Corp., 393 F.3d 590, 595 (5th Cir. 2004) (noting Rule 15(a) “evinces a bias in
favor of granting leave to amend”) (internal quotation marks and citations omitted). To determine
whether to grant leave to amend, the Court considers five factors: (1) undue delay, (2) bad faith or
dilatory motive, (3) repeated failure to cure deficiencies by previous amendments, (4) undue
prejudice to the opposing party, and (5) futility of the amendment. Smith, 393 F.3d at 595 (citing
Foman, 371 U.S. at 182; Rosenzweig v. Azurix Corp., 332 F.3d 854, 864 (5th Cir. 2003)). Courts
should afford a claimant an opportunity to amend a complaint “[i]f it appears that a more carefully
drafted pleading might state a claim upon which relief could be granted.” Kennard v. Indianapolis
Life Ins. Co., 420 F. Supp. 2d 601, 608 (N.D. Tex. 2006) (Fish, C.J.). Compare U.S. ex rel. Dekort
v. Integrated Coast Guard Sys., 705 F. Supp. 2d 519, 558 n.18 (N.D. Tex. 2010) (O’Connor, J.)
(denying leave to amend where “further amendment would be futile”), with Whiddon v. Chase Home
Fin., LLC, 666 F. Supp. 2d at 693 (granting leave to amend because “it does not appear that
[plaintiff’s] . . . claims are patently frivolous or that an amendment could not cure their defects”).
It appears that Plaintiffs may be able to state a claim upon which relief could be granted, and
the Court notes that none of the above-mentioned five factors are present in this case. Accordingly,
the Court finds it appropriate to allow Plaintiffs an opportunity to amend their complaint.
III.
BCBS ALABAMA’S MOTION TO COMPEL
BCBS Alabama filed a Motion to Compel Arbitration and for Dismissal of Certain Claims
22
(ECF No. 49), addressing Plaintiff Victory Medical Center Houston, L.P.’s (“Victory)” claims
relating to a patient, “SB,” who is covered under a plan issued by BCBS Alabama.10 Victory seeks
to recover on its breach of contract claim against BCBS Alabama as an assignee of SB’s rights. See
Pls.’ 1st Am. Compl. ¶¶ 62-63, ECF No. 35. Victory also seeks to recover on its negligent
misrepresentation and promissory estoppel claims against BCBS Alabama for alleged representations
and promises regarding SB’s coverage. See id. ¶¶ 41, 65-66, 68; Victory’s Br. Supp. Resp. BCBS
Alabama’s Mot. Compel 6, ECF No. 74. BCBS Alabama alleges that all of Victory’s claims relating
to SB’s plan are subject to a mandatory arbitration agreement under SB’s Blue Cross Blue Shield
of Alabama Community Non Group Classic Blue Area 2 Contract (“Classic Contract”) and moves
for an order compelling Victory to arbitrate these claims. See Mot. Compel 1-2, ECF No. 49.
A.
Legal Standard
The Federal Arbitration Act (“FAA”) states that a written agreement “to submit to arbitration
an existing controversy arising out of such a contract . . . shall be valid, irrevocable, and enforceable
. . . .” 9 U.S.C. § 2. Section 2 evidences a “liberal federal policy favoring arbitration agreements,”
AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1745 (2011), and “any doubts concerning the
scope of arbitrable issues should be resolved in favor of arbitration.” The Rice Co., S.A. v. Precious
Flowers Ltd., 523 F.3d 528, 534 (5th Cir. 2008) (quoting Moses H. Cone Mem’l Hosp. v. Mercury
Constr. Corp., 460 U.S. 1, 24-25 (1983)). The FAA allows a party “aggrieved by the alleged failure,
10
Pursuant to the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), BCBS
Alabama refers to the individual patient as “SB.” BCBS Alabama Mot. Dismiss 1 n.2, ECF No. 49. BCBS
Alabama joined BCBS Defendants’ Motion to Dismiss (ECF No. 48), but filed the instant motion to
specifically address Victory’s claims that relate to SB’s plan. Id. at 1 n.1. SB’s plan is not subject to ERISA
and Plaintiffs only assert FEHBA claims against HCSC. See id.; Pls.’ 1st Am. Compl. ¶¶ 55-59, ECF No.
35. Accordingly, the only causes of action asserted by Victory against BCBS Alabama relating to SB’s plan
are for breach of contract, negligent misrepresentation, and promissory estoppel.
23
neglect or refusal” of an opposing party to arbitrate under a written arbitration agreement to enforce
the agreement by filing a motion to compel arbitration. 9 U.S.C. § 4. The FAA “leaves no place for
the exercise of discretion by a district court, but instead mandates that district courts shall direct the
parties to proceed to arbitration on issues as to which an arbitration agreement has been signed.”
Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985) (citing 9 U.S.C. §§ 3, 4).
Courts conduct a two-step inquiry to determine whether a party should be compelled to
arbitrate. JP Morgan Chase & Co. v. Conegie ex rel. Lee, 492 F.3d 596, 598 (5th Cir. 2007). First,
courts must determine whether the parties agreed to arbitrate the dispute by considering: “(1)
whether there is a valid agreement to arbitrate between the parties; and (2) whether the dispute in
question falls within the scope of that arbitration agreement.” Id. (quoting Will-Drill Res., Inc. v.
Samson Res. Co., 352 F.3d 211, 214 (5th Cir. 2003)) (internal quotation marks omitted). If the
parties agreed to arbitrate, courts then determine “whether any federal statute or policy renders the
claims nonarbitrable.” JP Morgan Chase, 492 F.3d at 598 (quoting Washington Mut. Fin. v. Bailey,
364 F.3d 260, 263 (5th Cir. 2004)) (internal quotation marks omitted). The parties do not address
the second step of the inquiry and do not point to any “legal constraint external to the parties’
agreement” that forecloses arbitration. See OPE Int’l LP v. Chet Morrison Contractors, Inc., 258
F.3d 443, 446 (5th Cir. 2001) (internal quotation marks and citations omitted). Accordingly, the
Court will focus on whether the parties agreed to arbitrate the dispute.
B.
Analysis
BCBS Alabama asserts that on or around October 12, 2011, SB received medical services
from Victory and the total charge for the services was $13,362.60. Mot. Compel 3, ECF No. 49.
BCBS Alabama paid Victory $7,634.15. Id. BCBS Alabama contends Victory’s breach of contract,
24
negligent misrepresentation, and promissory estoppel claims against BCBS Alabama relating to SB
are subject to a binding arbitration provision in SB’s plan. Id. at 4.
1.
Is There a Valid Agreement to Arbitrate?
The Court must first determine whether there is a valid agreement to arbitrate. BCBS
Alabama must establish that an arbitration agreement exists. ASW Allstate Painting & Constr. Co.
v. Lexington Ins. Co., 188 F.3d 307, 311 (5th Cir. 1999). To determine whether an agreement to
arbitrate exists, courts apply ordinary state-law contract principles. Will-Drill Res., 352 F.3d at 214
(internal quotation marks and citations omitted). “Under Texas law, a valid contract requires an
offer, acceptance, mutual assent, execution and delivery of the contract with the intent that it be
mutual and binding, and consideration.”11 In re Online Travel Co., ___ F. Supp. 2d ___, 2013 WL
2948086, at *2 (N.D. Tex. 2013) (Boyle, J.) (internal citations omitted). Whether a contract has been
formed is determined by the “objective standard of what the parties said and how they acted, not by
their subjective state of mind.” Motten v. Chase Home Fin., 831 F. Supp. 2d at 1003 (internal
11
Victory’s breach of contract, negligent misrepresentation, and promissory estoppel claims against
BCBS Alabama relating to SB’s plan are state law claims and the Court’s jurisdiction is based on diversity.
See Pls.’ 1st Am. Compl. ¶ 35 (citing 28 U.S.C. §§ 1331, 1332). Therefore, Texas choice-of-law rules apply.
See Coghlan v. Wellcraft Marine Corp., 240 F.3d 449, 452 n.2 (5th Cir. 2001). Both parties in their briefing
assume Texas law applies to Victory’s claims against BCBS Alabama, and neither party argues the
application of any other state’s laws. See generally Mot. Compel, ECF No. 49; Br. Supp. Resp. Mot.
Compel, ECF No. 74; Reply, ECF No. 99. The Court assumes, without deciding, that Texas law governs.
See Access Telecom, Inc. v. MCI Telecomms. Corp., 197 F.3d 694, 705 (5th Cir. 1999).
The Court notes that federal courts in Alabama also consider whether a valid agreement to arbitrate
exists and whether the dispute falls within the scope of the agreement when determining whether parties
agreed to arbitrate a dispute. See King v. Cintas Corp., 920 F. Supp. 2d 1263, 1267 (N.D. Ala. 2013).
Furthermore, the elements for the formation of a valid contract under Alabama law are similar to those under
Texas law. See Cook v. Talladega Coll., 908 F. Supp. 2d 1214, 1223 (N.D. Ala. 2012) (“[T]he requisite
elements of a contract, generally include: an offer and an acceptance, consideration, and mutual assent to
terms essential to the formation of a contract.”) (quoting Strength v. Ala. Dep’t of Fin., 622 So.2d 1283, 1289
(Ala. 1993)) (internal quotation marks omitted).
25
citations omitted).
Victory only challenges whether there was mutual assent between SB and BCBS Alabama.12
See Br. Supp. Resp. Mot. Compel 6-7, ECF No. 74. Mutual assent is a required element to the
formation of an enforceable contract. Teitel v. Univ. of Hous. Bd. of Regents, 285 F. Supp. 2d 865,
877 (S.D. Tex. 2002); Baylor Univ. v. Sonnichsen, 221 S.W.3d 632, 635 (Tex. 2007). “Typically,
a party manifests its assent by signing an agreement.” Rachal v. Reitz, 403 S.W.3d 840, 845 (Tex.
2013); see also I.C.E. Contractors, Inc. v. Martin & Cobey Constr. Co., 58 So.3d 723, 725 (Ala.
2010) (“The purpose of a signature on a contract is to show mutual assent.”) (internal quotation
marks and citations omitted).
BCBS Alabama withheld SB’s application from its motion because the application contained
patient-identifying information, but provided Victory with a copy of SB’s application. See Mot.
Compel 5 n.6, 10, ECF No. 49. BCBS Alabama attached a form application to its motion and an
affidavit from its Direct Billing Manager stating that the form application is a “true and correct copy
of a form application for coverage” under the Classic Contract that was “in use at the time SB
12
Victory, as a non-signatory plaintiff, does not allege that it is not bound by the arbitration
provision, and an arbitration clause is enforceable if it is “in writing and signed by the party invoking it.”
Westmoreland v. Sadoux, 299 F.3d 462, 465 (5th Cir. 2002). A non-signatory plaintiff may be compelled
to arbitrate under six theories: (1) incorporation by reference; (2) assumption; (3) agency; (4) alter ego; (5)
equitable estoppel; and (6) third-party beneficiary. In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 739
(Tex. 2005); see also Bridas S.A.P.I.C. v. Gov’t of Turkmenistan, 345 F.3d 347, 356-65 (5th Cir. 2003)
(discussing theories for binding non-signatory to arbitration agreement); Ace Am. Ins. Co. v Huntsman Corp.,
255 F.R.D. 179, 191-208 (S.D. Tex. 2008) (same); Wood v. PennTex Res., L.P., 458 F. Supp. 2d 355, 365-73
(S.D. Tex. 2006) (discussing “whether a party to a contract containing an arbitration clause may enforce that
clause against a nonparty”). Neither party raised this issue and, therefore, the Court will not examine it in
depth. The Court notes, however, that Victory bases its claims on its status as an assignee of the benefits due
under SB’s plan and on BCBS Alabama’s representations regarding the benefits due under SB’s plan. See
generally Pls.’ 1st Am. Compl., ECF No. 35. Furthermore, the arbitration provision in SB’s plan specifically
includes “any claim that involves any relationships that result from or relate in any way to the plan (including
claims involving persons or organizations who are not parties to the plan).” Mot. Compel. Ex. C (Contract
Booklet), App. at 47, ECF No. 49-3.
26
applied for coverage and identical to the form completed by SB.” Mot. Compel Ex. 1 (Oliver Aff.),
App. at 3, ECF No. 49-1. BCBS Alabama also attached “a true and correct copy of the [Classic
Contract] contract booklet, issued to SB subsequent to the inception of coverage . . . .” Id. BCBS
Alabama subsequently submitted an unredacted copy of SB’s application to the Court that contains
SB’s signature. See Sealed Appl. 5, ECF No. 134; see also id. at 2 (“Attached to this affidavit is a
record from [BCBS Alabama] consisting of . . . an Individual Blue Application for Health Coverage
signed by S.B. [that is] kept by [BCBS Alabama] in the regular course of business.”).
The signature block on SB’s application states: “I acknowledge by my signature that I have
read and understand the front and back of this application and agree to binding arbitration as
described on the back of this page.” Id. at 2. The back of the application states that “any
disagreement will be settled by arbitration—not a court” and the insured “agree[s] to settle any
disagreement by arbitration instead of a court trial.” Mot. Compel Ex. 2 (Form Appl.), App. at 5,
ECF No. 49-2. The application also provides that the insured “agree[s] to the arbitration provisions
in the contract” and “voluntarily surrender[s] [the] right to have any disagreement . . . resolved in
court.” Id. The contract booklet states “in consideration of coverage under the plan and payment
of premiums, you (and we) agree that any one or more of the following claims . . . shall be resolved
by final and binding arbitration.” Mot. Compel. Ex. 3 (Contract Booklet), App. at 47, ECF No. 49-3
(emphasis omitted). The arbitration agreement covers, among other disputes, “any claim that arises
out of or relates to the plan,” and “is intended to have the broadest scope permissible by law.” Id.
“[A] written arbitration agreement is prima facie valid and must be enforced unless the
opposing party . . . alleges and proves that the arbitration clause itself was a product of fraud,
coercion, or such grounds as exist at law or in equity for the revocation of the contract.”
27
Freudensprung v. Offshore Tech. Servs., Inc., 379 F.3d 327, 341 (5th Cir. 2004) (internal quotation
marks and citations omitted); see also Overstreet v. Contigroup Cos., 462 F.3d 409, 412 (5th Cir.
2006) (noting party resisting arbitration “shoulders the burden of proving that the dispute is not
arbitrable”) (citing Am. Heritage Life Ins. Co. v. Lang, 321 F.3d 533, 539 (5th Cir. 2003)). Victory
has failed to present evidence to rebut BCBS Alabama’s contention that a valid agreement exists.
Compare Am. Heritage Life Ins. Co. v. Lang, 321 F.3d533, 537-39 (5th Cir. 2003) (finding sufficient
evidence to indicate arbitration agreements were invalid where party opposing arbitration was
illiterate and contended he did not know he was signing arbitration agreements and defendant failed
to inform the man what he was signing), and Prevot v. Phillips Petroleum Co., 133 F. Supp. 2d 937,
940 (S.D. Tex. 2001) (finding substantial evidence arbitration agreements were unconscionable
where plaintiffs could not read English and documents were not translated for them, and superiors
told them to quickly sign documents to get back to work), with Jones v. Halliburton Co., 625 F.
Supp. 2d 339, 344-45 (S.D. Tex. 2008) (finding arbitration provision valid because employee signed
and initialed agreement and arbitration provisions and presented no argument that she was unaware
she was signing an arbitration agreement); see also Scurtu v. Int’l Student Exch., 523 F. Supp. 2d
1313, 1319-21 (S.D. Ala. 2007).
BCBS Alabama has made the prima facie showing necessary to compel arbitration and
Victory has not offered any evidence to establish that the SB’s arbitration provision is unenforceable.
See Overstreet, 462 F.3d at 412; Hafer v. Vanderbilt Mortg. & Fin., Inc., 793 F. Supp. 2d 987, 994
(S.D. Tex. 2011). Accordingly, the Court finds that a valid agreement to arbitrate exists.
2.
Is the Dispute Within the Scope of the Agreement?
Finding that a valid agreement exists, the Court must next determine whether Victory’s
28
claims regarding services provided to SB fall within the scope of the arbitration agreement. JP
Morgan Chase & Co. v. Conegie ex rel. Lee, 492 F.3d at 598. SB’s plan contained an arbitration
provision that was intended to settle “any disagreement” between the parties. Mot. Compel Ex. 2
(Form Appl.), App. at 5, ECF No. 49-2. “In consideration of coverage under the plan and payment
of premiums,” SB and BCBS Alabama agreed that their arbitration agreement, which was “intended
to have the broadest scope permissible by law,” covered:
C
C
C
C
“Any claim that arises out of or relates to the plan;”
“Any claim that involves any relationships that result from or relate in any
way to the plan (including claims involving persons or organizations who are
not parties to the plan);”
“Any claim that alleges any conduct by you or us, regardless of whether
related to the plan;” or
“Any claim that concerns the validity, enforceability, scope, or any other
aspect of this arbitration provision.”
Mot. Compel Ex. 3 (Contract Booklet), App. at 47, ECF No. 49-3.
a.
Breach of Contract
Victory’s only argument against compelling arbitration of its breach of contract claim is its
assertion that BCBS Alabama failed to provide evidence of a valid agreement between the parties.
See Br. Supp. Resp. Opp’n Mot. Compel 6-7, ECF No. 74. Victory seeks to recover for the
“underpayment . . . of reimbursement amounts pursuant to the terms” of SB’s plan and alleges BCBS
Alabama “materially breached the terms” of the plan by “refusing to pay [Victory] the contractually
agreed upon amounts . . . .” Pls.’ 1st Am. Compl. ¶¶ 41, 62-63, ECF No. 35. Victory alleges SB
assigned “all right, title and interest” in benefits “due under the [plan].” Id. ¶ 62. BCBS Alabama’s
contract booklet explains that the arbitration agreement applies to “any claim that arises out of or
relates to the plan.” Mot. Compel Ex. 3 (Contract Booklet), App. at 47, ECF No. 49-3 (emphasis
29
omitted). Accordingly, the Court finds that Victory’s breach of contract claim is within the scope of
the arbitration agreement.
b.
Negligent Misrepresentation and Promissory Estoppel
Victory contends that its claims for negligent misrepresentation and promissory estoppel are
claims against BCBS Alabama for representations and promises made directly to Victory, and not
brought by Victory as an assignee of SB’s benefits. See Br. Supp. Resp. Opp’n Mot. Compel 7, ECF
No. 74. Therefore, Victory asserts that these claims do not arise out of or relate to the plan and do
not fall within the scope of the agreement. Id. at 8-10.
To determine whether a dispute falls within the scope of an arbitration agreement, courts
must determine whether the arbitration clause is “broad” or “narrow.” Jureczki v. Banc One Tex.,
N.A., 252 F. Supp. 2d 368, 374 (S.D. Tex. 2003) (citing Hornbeck Offshore Corp. v. Coastal
Carriers Corp., 981 F.2d 752, 754 (5th Cir. 1993)). Arbitration provisions that expressly encompass
disputes “related to” the agreement containing the provision are construed broadly. I.D.E.A. Corp.
v. WC&R Interests, Inc., 545 F. Supp. 2d 600, 606 (W.D. Tex. 2008) (citing Pennzoil Exploration
& Prod. Co. v. Ramco Energy Ltd., 139 F.3d 1061, 1067 (5th Cir. 1998)); see also Jureczki, 252 F.
Supp. 2d at 374-75 (discussing examples of “broad clauses” and “narrow clauses”). Broad
arbitration clauses are “not limited to claims that literally ‘arise under the contract,’ but rather
embrace[] all disputes between the parties having a significant relationship to the contract.” I.D.E.A.
Corp., 545 F. Supp. 2d at 606 (quoting Pennzoil Exploration, 139 F.3d at 1067) (internal quotation
marks omitted). Furthermore, “[i]n determining whether the dispute falls within the scope of the
arbitration agreement, ‘ambiguities . . . [are] resolved in favor of arbitration.’” Fleetwood Enters.,
Inc. v. Gaskamp, 280 F.3d at1073 (quoting Volt Info. Scis., Inc. v. Bd. of Trustees of Leland Stanford
30
Junior Univ., 489 U.S. 468, 475 (1989)); see also Sherer v. Green Tree Serv. LLC, 548 F.3d 379,
381 (5th Cir. 2008); Positive Software Solutions, Inc. v. New Century Mortg. Corp., 259 F. Supp.
2d 531, 538 (N.D. Tex. 2003) (Godbey, J.).
Here, Victory’s negligent misrepresentation claim is based on BCBS Alabama’s
representations that the patients “were covered under healthcare plans and . . . that the medical
services . . . were likewise covered under the terms of the policies.” Pls.’ 1st Am. Compl. ¶ 65, ECF
No. 35; see also id. ¶ 66 (“[BCBS Alabama] . . . misrepresented the patients[’] coverage under the
healthcare policies.”). Victory’s promissory estoppel claim is based on BCBS Alabama’s failure “to
pay and/or underpaying the claims submitted by [Victory]” after BCBS Alabama represented that
they would pay for services provided to SB.
Id. ¶ 68.
In general, Victory’s negligent
misrepresentation and promissory estoppel claims seek to recover for “underpayment . . . of
reimbursement amounts pursuant to the terms of [SB’s] plan[].” Id. ¶ 41. The arbitration provision
applies to “any claim that arises out of or relates to the plan,” “any claim that involves any
relationships that result from or relate in any way to the plan (including claims involving persons or
organizations who are not parties to the plan,” and “any claim that alleges any conduct by you or us,
regardless of whether related to the plan.” Mot. Compel Ex. 3 (Contract Booklet), App. at 47, ECF
No. 49-3 (emphasis omitted). It is not necessary for these claims to arise out of SB’s plan to be
arbitrable—the claims only need to “relate[] to” SB’s plan, involve a relationship that “result[s] from
or relate[s] to” SB’s plan, or “allege[] any conduct by [BCBS Alabama].” See Pennzoil Exploration,
139 F.3d at 1068; see also Jones v. Halliburton Co., 583 F.3d 228, 235 (5th Cir. 2009) (quoting
Pennzoil, 139 F.3d at 1067) (noting dispute is arbitrable under broad clause if it has “‘a significant
relationship to the contract’”). Victory’s claims clearly arise out of and relate to SB’s plan, involve
31
a relationship between Victory and BCBS Alabama that resulted from and related to the plan, and
allege conduct by BCBS Alabama.
Accordingly, the Court finds that Victory’s negligent
misrepresentation and promissory estoppel claims are within the scope of the arbitration agreement.
3.
Stay or Dismissal
District courts must stay a suit containing issues that are referable to arbitration under a
written agreement to arbitrate until the arbitration “has been had in accordance with the terms of the
agreement.” 9 U.S.C. § 3. The statute, however, is not intended to limit dismissal of a case in the
proper circumstances. Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir. 1992).
Courts may dismiss a case if “retaining jurisdiction and staying the action will serve no purpose.”
Jureczki v. Banc One Tex., N.A., 252 F. Supp. 2d at 380 (quoting Dean Witter, 975 F.2d at 1164)
(internal quotation marks omitted); see also ST Int’l Business Ins. Co. Ltd. v. Energy Future
Holdings Corp., 539 F. Supp. 2d 871, 878 (N.D. Tex. 2008) (Lindsay, J.). The Fifth Circuit has
found that dismissal of a suit is appropriate “‘when all of the issues raised in the district court must
be submitted to arbitration.’” Dean Witter, 975 F.2d at 1164.
BCBS Alabama contends that Victory’s claims against BCBS Alabama relating to SB’s plan
should be dismissed because all of the claims are subject to the arbitration agreement. Mot. Compel
8, ECF No. 49. Victory argues that dismissal is improper because (1) Victory maintains causes of
action against BCBS Alabama relating to SB that are not subject to the arbitration agreement,
(2) Victory maintains causes of action against BCBS Alabama for other patients, and (3) Victory
maintains causes of action against other named Defendants that are unrelated to the arbitration
agreement. Br. Supp. Resp. Opp’n Mot. Compel 11, ECF No. 74. Having found that Victory’s
causes of action against BCBS Alabama relating to SB’s plan are subject to a valid arbitration
32
agreement, the Court finds that Victory’s first objection lacks merit. The Court also finds that
Victory’s other arguments lack merit.
Victory contends that not all of the issues raised in this case are subject to the arbitration
agreement because Victory maintains causes of action outside of those related to SB’s plan. See id.
It may be appropriate, however, to dismiss all of the claims subject to a valid arbitration agreement
if the claims relate to specific parties subject to the agreement and retaining jurisdiction serves no
useful purpose. See, e.g., In re Titanium Dioxide Antitrust Litig., ___ F. Supp. 2d ___, 2013 WL
4516472, at *12 (D. Md. 2013) (dismissing claims of class members that were subject to enforceable
arbitration clauses finding “no useful purpose will be served by staying the pertinent proceedings
pending arbitration”); Prevot v. Phillips Petroleum Co., 133 F. Supp. 2d 937, 940-41 (S.D. Tex.
2001) (compelling plaintiff that failed to respond to defendant’s motion to compel to arbitrate after
finding arbitration agreements were unconscionable as to five other plaintiffs; determining it was
unnecessary to stay the claims brought by the five plaintiffs during arbitration of one plaintiff’s
claims). Here, all of Victory’s claims against BCBS Alabama relating to SB are arbitrable and
Victory has not identified a reason for the Court to maintain jurisdiction over these claims, and
therefore, a stay of the action is unwarranted. See Digital Generation, Inc. v. Boring, 869 F. Supp.
2d 761, 784 (N.D. Tex. 2012) (Lindsay, J.). Accordingly, the Court finds that dismissing Victory’s
claims against BCBS Alabama relating to SB’s plan is appropriate.
IV.
CAPITAL’S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION
Defendant Capital filed a Motion to Dismiss for Lack of Personal Jurisdiction Pursuant to
Rule 12(b)(2), and Alternatively, Motion to Dismiss for Improper Venue Pursuant to Rule 12(b)(3),
and Alternatively, Motion to Dismiss for Failure to State a Claim Pursuant to Rule 12(b)(6) (ECF
33
No. 52), filed October 1, 2012.13 Capital provides medical health insurance coverage to individuals
and groups in twenty-one counties in central Pennsylvania and the Lehigh Valley. Capital’s Mot.
Dismiss Ex. A (Bretz Decl.), App. at 4, ECF No. 52-2. Capital insured three patients that assigned
their rights to benefits under their health benefit plans to Victory and received medical services from
Victory. See Pls.’ 1st Am. Compl. ¶38, ECF No. 35; Pls.’ 1st Am. Compl. Ex. A (Claim Schedule),
App. at 25, ECF No. 35-1. Capital does not contract with Plaintiffs and states that Plaintiffs’ claims
against Capital relate to these three insurance contracts that were contracted and issued in
Pennsylvania. Mot. Dismiss Ex. A (Bretz Decl.), App. at 5, ECF No. 52-2. Plaintiffs allege Capital
is an insurance company “believed to be doing business in the State of Texas.” Pls.’ 1st Am. Compl.
¶ 26, ECF No. 35. Capital, however, contends that it restricts its business to its twenty-one county
service area in Pennsylvania and is thus not subject to the Court’s personal jurisdiction. Mot.
Dismiss 6, ECF No. 52-1. Accordingly, Capital moves to dismiss Plaintiffs’ claims against it for
lack of personal jurisdiction.
A.
Legal Standard
“When a nonresident defendant presents a motion to dismiss for lack of personal jurisdiction,
the plaintiff bears the burden of establishing the district court’s jurisdiction over the nonresident.”
Rolls-Royce Corp. v. Heros, Inc., 576 F. Supp. 2d 765, 773 (N.D. Tex. 2008) (Fitzwater, C.J.)
(quoting Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir. 1985)) (internal quotation marks
omitted). A plaintiff need only make a prima facie case that personal jurisdiction exists when the
13
Capital and Capital Advantage Insurance Company, a wholly-owned subsidiary of Capital,
specially appeared to contest the Court’s personal jurisdiction. Capital’s Mot. Dismiss 1, ECF No. 52.
Capital Advantage Insurance Company issued the contract at issue in this case, but is not a named party. Br.
Supp. Mot. Dismiss 5, ECF No. 52-1; see also Pls.’ 1st Am. Compl. ¶ 26, ECF No. 35. The Court will only
refer to Capital.
34
court considers a motion to dismiss for lack of jurisdiction without holding an evidentiary hearing
or in the absence of jurisdictional discovery. See Quick Techs., Inc. v. Sage Grp. PLC, 313 F.3d 338,
343-44 (5th Cir. 2002); WesternGeco L.L.C. v. Ion Geophysical Corp., 776 F. Supp. 2d 342, 353
(S.D. Tex. 2011). The court must accept jurisdictional allegations in the complaint as true, but the
court need not credit conclusory allegations, even if uncontroverted. Panda Brandywine Corp. v.
Potomac Elec. Power Co., 253 F.3d 865, 868-69 (5th Cir. 2001) (per curiam). When determining
whether personal jurisdiction exists, courts may consider “the contents of the record at the time of
the motion, including affidavits.” Paz v. Brush Engineered Materials, Inc., 445 F.3d 809, 812 (5th
Cir. 2006) (internal quotation marks and citations omitted); see also First Fitness Int’l, Inc. v.
Thomas, 533 F. Supp. 2d 651, 655 (N.D. Tex. 2008) (Godbey, J.).
“A federal district court sitting in diversity may exercise personal jurisdiction over a
nonresident defendant if (1) the long-arm statute of the forum state confers personal jurisdiction over
that defendant; and (2) exercise of such jurisdiction by the forum state is consistent with due process
under the United States Constitution.” Latshaw v. Johnston, 167 F.3d 208, 211 (5th Cir. 1999)
(footnote omitted). Texas’s long-arm statute extends to the limits of federal due process; therefore,
the Court need only consider whether the exercise of jurisdiction would be consistent with the Due
Process Clause of the Fourteenth Amendment. TGI Friday’s Inc. v. Great Nw. Rests., Inc., 652 F.
Supp. 2d 750, 756 (N.D. Tex. 2009) (Fitzwater, C.J.); see also Latshaw, 167 F.3d at 211 (“As the
Texas long-arm statute extends to the limits of federal due process, these two steps conflate.”)
(footnotes omitted).
The exercise of personal jurisdiction comports with due process when “first, the defendant
has the requisite minimum contacts with the forum state and second, requiring the defendant to
35
submit to jurisdiction in the forum state would not infringe on ‘traditional notions of fair play and
substantial justice.’” E.g., Companion Prop. & Cas. Ins. Co. v. Palermo, 723 F.3d 557, 559 (5th Cir.
2013) (internal citations omitted). A nonresident defendant has such minimum contacts if he
“purposefully availed himself of the benefits and protections of the forum state . . . such that he
should reasonably anticipate being haled into court in the forum state.” Latshaw, 167 F.3d at 211
(footnotes and internal quotation marks omitted).
These minimum contacts give rise to either general or specific personal jurisdiction. See TGI
Friday’s, 652 F. Supp. 2d at 756 (citing Mink v. AAAA Dev. LLC, 190 F.3d 333, 335 (5th Cir.
1999)). For general jurisdiction, a plaintiff must establish that the defendant’s contacts with the
forum state are “so ‘continuous and systematic’ as to render them essentially at home.” Goodyear
Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846, 2851 (2011). “Specific jurisdiction exists
when the defendant has purposefully directed his activities at residents of the forum . . . and the
litigation results from alleged injuries that arise out of or relate to those activities.” Clemens v.
McNamee, 615 F.3d 374, 378 (5th Cir. 2010) (internal quotation marks and citations omitted). The
exercise of specific jurisdiction is “confined to adjudication of issues deriving from, or connected
with, the very controversy that establishes jurisdiction.” Goodyear Dunlop, 131 S. Ct. at 2851
(internal quotation marks and citations omitted). Under either type of personal jurisdiction, a court
must find that the defendant “purposefully established ‘minimum contacts’ in the forum [s]tate.”
Seghers v. El Bizri, 513 F. Supp. 2d 694, 701-02 (N.D. Tex. 2007) (Fish, C.J.) (quoting Burger King
Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985)) (internal quotation marks omitted).
If the plaintiff establishes that the nonresident defendant has the requisite minimum contacts,
courts must determine whether the exercise of jurisdiction over the defendant satisfies traditional
36
notions of fair play and substantial justice. See Companion Prop. & Cas., 723 F.3d at 559 (citing
Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 105 (1987)). To determine whether the
exercise of jurisdiction satisfies traditional notions of fair play and substantial justice, courts balance
“the burden on the defendant having to litigate in the forum; the forum state’s interest in the lawsuit;
the plaintiff’s interests in convenient and effective relief; the judicial system’s interest in efficient
resolution of controversies; and the states’s shared interest in furthering fundamental social policies.”
Wien Air Alaska, Inc. v. Brandt, 195 F.3d 208, 215 (5th Cir. 1999) (internal citations omitted); see
also TGI Friday’s, 652 F. Supp. 2d at 756 (quoting Berry v. Lee, 428 F. Supp. 2d 546, 557 (N.D.
Tex. 2006) (Fitzwater, J.)).
B.
Analysis
1.
General Personal Jurisdiction
To establish general jurisdiction, a nonresident defendant’s contacts with the forum state
“must be substantial; random, fortuitous, or attenuated contacts are not sufficient.” Choice
Healthcare, Inc. v. Kaiser Found. Health Plan of Colo., 615 F.3d 364, 368 (5th Cir. 2010) (internal
citation omitted). This “continuous and systematic contacts test” is difficult to meet and requires
“extensive contacts” between a defendant and a forum. Johnston v. Multidata Sys. Int’l Corp., 523
F.3d 602, 609 (5th Cir. 2008) (internal quotation marks and citation omitted). A nonresident
defendant’s contacts must “demonstrate a business presence in Texas,” and the Fifth Circuit has
emphasized the distinction between “doing business with Texas . . . [and] doing business in Texas.”
Access Telecom, Inc. v. MCI Telecomms. Corp., 197 F.3d 694, 717 (5th Cir. 1999); see also Jackson
v. Tanfoglio Giuseppe, S.R.L., 615 F.3d 579, 584 (5th Cir. 2010); Johnston, 523 F.3d at 611; Am.
Univ. Sys., Inc. v. Am. Univ., 858 F. Supp. 2d 705, 713 (N.D. Tex. 2012) (Lindsay, J.).
37
Plaintiffs must plead sufficient jurisdictional facts to make a prima facie showing that Capital
has continuous and systematic contacts with Texas. See Oblio Telecom, Inc. v. Patel, 711 F. Supp.
2d 668, 672 (N.D. Tex. 2008) (Lindsay, J.) (noting plaintiff bears burden of establishing prima facie
case for court’s jurisdiction over nonresident defendant); Br. Supp. Resp. Mot. Dismiss 6, ECF No.
80 (same) (citing Johnston, 523 F.3d at 609). The only jurisdictional facts in Plaintiffs’ pleadings
are the three alleged payments to Plaintiffs on August 25, 2011, June 5, 2012, and June 6, 2012, and
Plaintiffs’ assertion that Capital is “believed to be doing business in the State of Texas.” See Pls.’
1st Am. Compl. ¶ 26, ECF No. 35; Pls.’ 1st Am. Compl. Ex. 1 (Claim Schedule), App. at 25, ECF
No. 35-1. The Fifth Circuit has found general personal jurisdiction lacking in instances where a
defendant’s contacts with the forum state were significantly more substantial than Capital’s. See,
e.g., Choice Healthcare, Inc. v. Kaiser Found. Health Plan of Colo., 615 F.3d at 368 (finding
nonresident defendant that made fifty-three payments over three years in forum state was not subject
to general personal jurisdiction); Cent. Freight Lines, Inc. v. APA Transp. Corp., 322 F.3d 376, 381
(5th Cir. 2003) (finding defendant’s contacts with Texas were “not substantial enough to justify
subjecting [defendant] to suit in . . . Texas,” even though defendant had federal operating authority
in Texas, routinely shipped goods in and out of Texas, and regularly sent salesmen to Texas); Bearry
v. Beech Aircraft Corp., 818 F.2d 370, 373-76 (5th Cir. 1987) (finding court lacked general personal
jurisdiction over nonresident defendant that sold over $250 million of products to customers in
Texas over five years); Am. Bank, F.S.B. ex rel. Am. Premium Fin. v. Auto-Owners Mut. Fire & Cas.
Ins. Co., No. 4:10-cv-331-A, 2010 WL 3784282, at *5-7 (N.D. Tex. Sept. 27, 2010) (McBryde, J.)
(finding court lacked general personal jurisdiction over defendant that was licensed in Texas, issued
and collected premiums on insurance policies in Texas, paid claims in Texas, and hired Texas
38
attorneys); see also Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 411, 415-19
(1984) (finding general personal jurisdiction lacking over nonresident defendant that purchased over
$4 million in parts in six years from Texas company, sent prospective pilots to Texas for training,
and received $5 million drawn upon Texas bank). Plaintiffs do not allege any facts that typically
support general jurisdiction, such as maintaining offices or property in Texas, stationing employees
in Texas, maintaining bank accounts in Texas, or paying Texas taxes. See, e.g., Companion Prop.
& Cas. Ins. Co., 723 F.3d at 560; Choice Healthcare, 615 F.3d at 368; Cent. Freight Lines, 322 F.3d
at 381; Wilson v. Belin, 20 F.3d 644, 650-51 (5th Cir. 1994); Busch v. Viacom Int’l, Inc., 477 F.
Supp. 2d 764, 773 (N.D. Tex. 2007) (Lindsay, J.). Accordingly, Plaintiffs’ allegations fail to meet
their burden of establishing that Capital has the continuous and systematic contacts with Texas
necessary to justify the Court’s exercise of general personal jurisdiction.
Furthermore, Capital included a sworn declaration from its Vice President for Account
Management, Commercial Markets, Therese A. Bretz (“Bretz”), describing Capital’s business
activities.14 See Mot. Dismiss Ex. A (Bretz Decl.), App. at 4-5, ECF No. 52-2. Bretz noted that
14
Plaintiffs assert Bretz’s Declaration is not properly authenticated as a business records affidavit
pursuant to Federal Rule of Evidence 901. Br. Supp. Resp. Mot. Dismiss 7, ECF No. 80. Business records
affidavits are used to authenticate evidence prior to admission. See Fed. R. Civ. P. 901; United States v.
Brown, 553 F.3d 768, 792 (5th Cir. 2008); Sparks v. Reneau Pub. Inc., 245 F.R.D. 583, 587-88 (E.D. Tex.
2007). Bretz’s Declaration is not attempting to authenticate Capital’s business records; Bretz’s Declaration
is a sworn statement that explains her knowledge of Capital’s business.
Furthermore,“a business record affidavit . . . requires only that the affiant have ‘personal knowledge
to testify as custodian of documents’ and ‘personal knowledge as to some of the statements in the affidavit.’”
Tex. A&M Research Found. v. Magna Transp., Inc., 338 F.3d 394, 402 (5th Cir. 2003) (quoting FSLIC v.
Griffin, 935 F.2d 691, 702 (5th Cir. 1991)). Bretz stated that “[t]he statements made in this declaration are
based on my personal knowledge and my review of [Capital’s] business records.” Mot. Dismiss Ex. A (Bretz
Decl.), App. at 4, ECF No. 52-2. As Capital’s Vice President for Account Management, it is reasonable to
infer that Bretz has knowledge of the information contained in her Declaration. See Cutting Underwater
Techs. USA, Inc. v. Eni U.S. Operating Co., 671 F.3d 512, 516 (5th Cir. 2012) (quoting DIRECTV, Inc. v.
Budden, 420 F.3d 521, 530 (5th Cir. 2005)) (“Personal knowledge may be demonstrated by showing that the
39
Capital only provides insurance coverage to people and groups that reside or have their headquarters
within Capital’s twenty-one county service area in Pennsylvania. Id. at 4. Bretz also stated that
Capital (1) does not own property or employ any persons in Texas, (2) does not maintain any bank
accounts or pay taxes in Texas, (3) is not licensed to do business in Texas, and (4) does not solicit
business in Texas. Id. at 5. Bretz asserted that Capital does not contract with Plaintiffs or hospitals
or medical facilities in Texas and states that Plaintiffs are non-participating providers and Capital
does not encourage or advise their members to seek treatment from non-participating providers. Id.
Plaintiffs apparently concede that Capital does not have the required business presence in
Texas for the Court to exercise general jurisdiction. Rather than contesting or presenting evidence
to rebut Capital’s assertions, Plaintiffs request that the Court permit jurisdictional discovery to allow
Plaintiffs to “meet their jurisdictional burden.” Br. Supp. Resp. Mot. Dismiss 8, ECF No. 80; see
also Bell Helicopter Textron Inc. v. Am. Eurocopter, LLC, 729 F. Supp. 2d 789, 797 (N.D. Tex.
2010) (McBryde, J.) (stating plaintiff “apparently concedes” defendant lacked sufficient contacts
where plaintiff responded to motion to dismiss by requesting jurisdictional discovery). Accordingly,
the Court finds that Plaintiffs’ allegations are not sufficient to show Capital maintained continuous
and systematic contacts with Texas to support the exercise of general personal jurisdiction.
2.
Specific Personal Jurisdiction
Courts may exercise specific jurisdiction if a nonresident defendant “purposefully avails
himself of the privileges of conducting activities in the forum state” and “the controversy arises out
of or is related to the defendant’s contacts with the forum state.” Choice Healthcare, 615 F.3d at
facts stated ‘reasonably’ fall within the ‘sphere of responsibility’ of the affiant as a corporate employee.”);
see also Diamond Offshore Co. v. Survival Sys. Int’l, Inc., 902 F. Supp. 2d 912, 932 (S.D. Tex. 2012).
40
369 (internal citation omitted). The Fifth Circuit has held that an insurer’s payment of a limited
number of claims to a medical services provider for treatment of the insurer’s members, “based on
the unilateral decision of those insureds who sought treatment in [the forum state],” does not qualify
as commercial activity purposefully directed at the forum state.15 Id. at 369-70; see also Burger King
Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985); Am. Bank, F.S.B., 2010 WL 3784282, at *4.
Accordingly, payments made after an insurer’s members obtain medical services unrelated to the
insurer’s marketing scheme are not an attempt to purposefully direct commercial activity at the
forum state and do not establish purposeful contact between the nonresident defendant and the forum
state. Choice Healthcare, 615 F.3d at 370, 373-74; see also Freudensprung v. Offshore Tech. Servs.,
Inc., 379 F.3d 327, 344 (5th Cir. 2004) (“[T]he combination of mailing payments to the forum state,
engaging in communications related to the execution and performance of the contract, and the
existence of a contract between the nonresident defendant and a resident of the forum are insufficient
to establish the minimum contacts necessary to support the exercise of specific personal jurisdiction
over the nonresident defendant.”) (internal citations omitted).
Here, Plaintiffs’ claims arise from Capital’s three payments to Plaintiffs for medical services
provided to Capital’s members. See Br. Supp. Mot. Dismiss 10-11, ECF No. 52-1; Pls.’ 1st Am.
Compl. Ex. A (Claim Schedule), App. at 25, ECF No. 35-1. Plaintiffs’ allegations consist of the
15
The Fifth Circuit also found that a non-resident insurer that belonged to a national membership
and received in-state health care provider’s rates offered to members had not purposefully availed itself of
the benefits and privileges of the forum state. Choice Healthcare, 615 F.3d at 371-72 (citing St. Luke’s
Episcopal Hosp. v. La. Health Serv. & Indem. Co., No. 08-1870, 2009 WL 47125 (S.D. Tex. Jan. 6, 2009);
Resolution Trust Corp. v. First of Am. Bank, 796 F. Supp. 1333 (C.D. Cal. 1992)). Specific personal
jurisdiction does not exist where the non-resident insurer does not contract directly with an entity in the
forum state and there is “no [forum state] contract, a contract between the parties, or a substantial connection
to [the forum state].” Id. at 371 (quoting St. Luke’s Episcopal Hosp., 2009 WL 47125, at *9); see also
Resolution Trust Corp., 796 F. Supp. at 1337.
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Claim Schedule showing three claims against Capital, Plaintiffs’ assertion that it believes Capital
does business in Texas, and its request for jurisdictional discovery to “establish jurisdiction over
[Capital].” See Br. Supp. Resp. Mot. Dismiss 8, ECF No. 80; Pls.’ 1st Am Compl. ¶ 26, ECF No.
35; Pls.’ 1st Am. Compl. Ex. A (Claim Schedule), App. at 25, ECF No. 35-1. Plaintiffs, however,
do not plead facts showing that Capital purposefully directed its commercial activities at Texas. See
Clemens v. McNamee, 615 F.3d at 379; Choice Healthcare, 615 F.3d at 372. Plaintiffs also do not
attempt to rebut Capital’s assertions that Plaintiffs’ pleadings are devoid of facts to support such a
finding. See Br. Supp. Resp. Mot. Dismiss 7-8, ECF No. 80; see also Bell Helicopter Textron, 729
F. Supp. 2d at 797-98. Furthermore, nowhere in Plaintiffs’ pleadings are there allegations that
Capital’s contacts with Texas arose from a decision by Capital to direct its commercial activity at
Texas rather than Capital’s members’ independent decisions to travel to Texas to receive medical
services. Br. Supp. Mot. Dismiss 12, ECF No. 52-1; Mot. Dismiss Ex. A (Bretz Decl.), App. at 4-5,
ECF No. 52-2; see also Burger King Corp., 471 U.S. at 475; Choice Healthcare, 615 F.3d at 369-70.
Capital also provided evidence that it only provides insurance coverage for individuals and
groups within Capital’s twenty-one county service area in Pennsylvania and does not contract with
hospitals or medical facilities in Texas. Mot. Dismiss Ex. A (Bretz Decl.), App. at 4-5, ECF No. 522. Capital asserts that Plaintiffs are non-participating providers without a contract with Capital, and
Capital “do[es] not encourage or advise their members to seek treatment from non-participating
providers.” Id. at 5. Capital also states that any coverage provided to members that seek treatment
from non-participating providers “is not intended to expand sales or otherwise develop commercial
activity in the forum state” where the non-participating provider is located. Id. Capital also contends
that it made the three payments because of Capital’s members’ “respective decisions to seek care
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from Plaintiffs . . . in Texas.” Br. Supp. Mot. Dismiss 12, ECF No. 52-1. Accordingly, the Court
finds that it cannot exercise specific personal jurisdiction over Capital.
3.
Limited Jurisdictional Discovery
Plaintiffs assert that the Court should grant Plaintiffs an opportunity to conduct jurisdictional
discovery to establish personal jurisdiction over Capital. Br. Supp. Resp. Mot. Dismiss 8, ECF No.
80. Plaintiffs contend that jurisdictional discovery is appropriate if the existing record is “inadequate
to support personal jurisdictional and the plaintiff demonstrates that it can supplement its
jurisdictional allegations through discovery.” Id. (citing Trintec Indus., Inc. v. Pedre Promotional
Prods., Inc., 395 F.3d 1275, 1283 (Fed. Cir. 2005)). The Fifth Circuit, however, has held that
jurisdictional discovery is only appropriate after a plaintiff has made a preliminary showing of
jurisdiction. See, e.g., First Inv. Corp. of Marshall Islands v. Fujian Mawei Shipbuilding, Ltd., 703
F.3d 742, 755 n.8 (5th Cir. 2012); Fielding v. Hubert Burda Media, Inc., 415 F.3d 419, 429 (5th Cir.
2005); Fairchild v. Barot, 946 F. Supp. 2d 573, 578 (N.D. Tex. 2013) (Lynn, J.); see also Asevedo
v. NBCUniversal Media, LLC, 921 F. Supp. 2d 573, 588 n.41 (E.D. La. 2013) (noting party must
provide basis for court to authorize jurisdictional discovery); Bell Helicopter Textron, 729 F. Supp.
2d at 798 (stating courts need not allow plaintiffs “to conduct a fishing expedition seeking facts to
support a claim of general jurisdiction”) (internal citations omitted).
Plaintiffs’ pleadings are devoid of factual allegations that reasonably suggest that personal
jurisdiction exists over Capital. Fielding, 415 F.3d at 429 (quoting Toys “R” Us, Inc. v. Step Two,
S.A., 318 F.3d 446, 456 (3d Cir. 2003)); see also First Inv. Corp., 703 F.3d at 755 n.8 (noting party
must allege facts “that, if true, would establish jurisdiction” to be entitled to jurisdictional discovery)
Fairchild, 946 F. Supp. 2d at 578 (denying request for jurisdictional discovery where plaintiff failed
43
to provide “colorable basis for jurisdiction”) (internal citation omitted). As noted, the only facts
alleged by Plaintiffs are the three payments made in Texas based on Capital’s members’ decisions
to seek medical treatment in Texas. See generally Pls.’ 1st Am. Compl., ECF No. 35. Plaintiffs fail
to plead any facts to suggest that Capital had continuous and systematic contacts with Texas or
purposefully availed itself of the privilege of conducting activities in Texas.
Furthermore, Plaintiffs have not alleged that jurisdictional discovery will support a finding
of personal jurisdiction, nor do they contest Capital’s assertions regarding personal jurisdiction;
rather, Plaintiffs essentially concede that personal jurisdiction does not exist by requesting
jurisdictional discovery to allow them to “meet their jurisdictional burden” and “establish
jurisdiction over [Capital].” See Br. Supp. Resp. Mot. Dismiss 5-8, ECF No. 80; see also Bell
Helicopter Textron, 729 F. Supp. 2d at 797. Plaintiffs also do not allege that Capital’s motion raises
questions of fact concerning personal jurisdiction. See Paolino v. Argyll Equities, L.L.C., 401 F.
Supp. 2d 712, 723 (W.D. Tex. 2005) (citing Wyatt v. Kaplan, 686 F.2d 276, 283 (5th Cir. 1982))
(stating jurisdictional discovery “need not be permitted unless the motion to dismiss raises issues of
fact”) (internal quotation marks and citations omitted). Accordingly, the Court finds that Plaintiffs
have failed to meet their burden of showing that they are entitled to jurisdictional discovery.
4.
Improper Venue and Failure to State a Claim
Finding that it lacks personal jurisdiction over Capital, the Court need not address Capital’s
Motion to Dismiss for Improper Venue or Motion to Dismiss for Failure to State a Claim.
VIII. CONCLUSION
Based on the foregoing, it is ORDERED that Anthem Defendants’ Motion to Dismiss (ECF
No. 43), BCBS Defendants’ Motion to Dismiss (ECF No. 48), BCBS Tennessee’s Motion to Dismiss
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(ECF No. 53), and BCBS Kansas’s Motion to Dismiss (ECF No. 106), should be and are hereby
GRANTED. Therefore, Plaintiffs’ claims against Anthem Defendants, BCBS Defendants, BCBS
Tennessee, and BCBS Kansas are DISMISSED. It is further ORDERED that Plaintiffs shall have
until March 1, 2014, to file an amended complaint.
It is further ORDERED that BCBS Alabama’s Motion to Compel Arbitration (ECF No. 49),
should be and is hereby GRANTED. Therefore, Victory Medical Center Houston, L.P.’s claims
against BCBS Alabama relating to SB’s health benefit plan are hereby DISMISSED.
It is further ORDERED that Capital’s Motion to Dismiss for Lack of Personal Jurisdiction
(ECF No. 52), should be and is hereby GRANTED. Therefore, Plaintiffs’ claims against Capital
BlueCross are hereby DISMISSED.
SO ORDERED on this 3rd day of February, 2014.
_____________________________________
Reed O’Connor
UNITED STATES DISTRICT JUDGE
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