Sky Toxicology, LTD et al v. UnitedHealthcare Insurance Company et al

Filing 45

REPORT AND RECOMMENDATIONS re 11 Defendant's Motion to Dismiss should be GRANTED with respect to Plaintiffs claims for breach of fiduciary duty (Count Two), for denial of full and fair review (Count Three), and for declaratory judgment (Count Seven), and DENIED WITHOUT PREJUDICE in all other respects. Signed by Judge Richard B. Farrer. (rg)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
SKY TOXICOLOGY, LTD., SKY
TOXICOLOGY LAB MANAGEMENT,
LLC, FRONTIER TOXICOLOGY, LTD.,
FT LAB MANAGEMENT LLC, HILL
COUNTRY TOXICOLOGY, LTD.,
ECLIPSE TOXICOLOGY, LTD.,
ECLIPSE LAB MANAGEMENT, LLC,
AXIS DIAGNOSTICS, INC.,
Plaintiffs,
vs.
UNITEDHEALTHCARE INSURANCE
COMPANY, UNITEDHEALTHCARE
OF TEXAS, INC.,
UNITEDHEALTHCARE OF FLORIDA,
INC., UNITEDHEALTHCARE
SERVICES, INC.,
Defendants.

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5-16-CV-01094-FB-RBF

REPORT AND RECOMMENDATION
OF UNITED STATES MAGISTRATE JUDGE
To the Honorable United States District Judge Fred Biery:
This Report and Recommendation concerns Defendants’ Motion to Dismiss Plaintiffs’
First Amended Complaint and alternative request for a more definite statement. Dkt. No. 11. All
pretrial matters in this ERISA litigation, which also involves pendent state law claims, have been
referred to the undersigned for disposition pursuant to Rules CV-72 and 1 to Appendix C of the
Local Rules for the United States District Court for the Western District of Texas. See Dkt. No.
13.1 The undersigned has authority to enter this report and recommendation pursuant to 28
1

This case was originally referred to U.S. Magistrate Judge Henry Bemporad but was
administratively assigned to the undersigned upon Judge Bemporad’s recusal.
1

U.S.C. § 636(b)(1)(B). For the reasons discussed below, the undersigned recommends that
Plaintiffs be ordered to file a more definite statement to cure the standing and Rule 8(a) issues
discussed herein. Defendants’ Motion to Dismiss, Dkt. No. 11, however, should be GRANTED
with respect to Plaintiffs’ claims for breach of fiduciary duty (Count Two) and for denial of full
and fair review (Count Three) as these claims are duplicative of Plaintiffs’ claims for unpaid
benefits and cannot be maintained under binding Fifth Circuit precedent. Plaintiffs’ claim for
declaratory judgment (Count Seven) should also be dismissed as it is redundant of their
substantive claims. United’s Motion to Dismiss, Dkt. No. 11, should be DENIED WITHOUT
PREJUDICE in all other respects.
I.

Factual and Procedural Background
This case arises out of claims for benefits submitted by five separate independent

toxicology labs and their respective three general partners (collectively, the “Labs”) to four
different UnitedHealthcare Insurance entities (collectively, “United”) for toxicology services
rendered to United’s insureds. United provides healthcare insurance to individuals across the
country through plans they administer.2
According to the live Complaint, the Labs provided out-of-network urinalysis testing to
an unspecified number of patients insured by plans administered by United. See Amend. Compl.
¶¶ 19, 38, 40. This urinalysis testing, according to the Labs, was requested “from a variety of
providers,” such as pain management physicians and those at addiction treatment facilities, who
needed to determine, among other things, whether their patients were taking their medication as
prescribed and whether they were using any other drugs that could interact with the prescribed
drugs. Id. ¶¶ 54-57.
2

Some United plans are both administered and fully-funded by United. See Amend. Compl. ¶
33.
2

As out-of-network providers, the Labs did not have contracts with United for
reimbursement at “specified predetermined rates” for medical services provided to United’s
insureds. Id. ¶¶ 37-38. Rather, the Labs set their rates and charged United “using a multiple of
the rates set forth in the Medicare Fee Schedule.” Id. ¶ 39. United’s insureds were then held
responsible for the difference in cost not paid by United under the “terms of its plans with its
members.” Id. ¶¶ 41, 44.
The Labs bring a number of claims against United under various provisions of the
Employment Retirement Income Security Act (“ERISA”), 29 U.S.C. ¶¶ 1001 et seq., the Texas
Insurance Code, and Texas common law. In addition, the Labs seek declaratory judgment that
they are entitled to compensation for all services provided to United’s insureds (Count Seven)
and that United’s allegations of fraud are without merit (Count Eight). The “crux of this
controversy,” according to the Labs, is that United has failed to “properly” pay them “millions of
dollars” on “thousands of claims” submitted on behalf of “thousands of United members” for
allegedly medically necessary testing “[o]ver the course of several years.” Id. ¶¶ 28, 67-72.
United, for its part, has asserted counterclaims against the Labs.
II.

Analysis
The Labs’ Request to Strike United’s Motion. As a preliminary matter, the Labs urge the

Court to strike United’s motion, arguing it is procedurally improper because United filed it after
first filing an answer to the Labs’ original complaint. This argument lacks merit for two reasons.
First, United’s challenge to the Labs’ standing goes to the Court’s subject matter
jurisdiction and can be raised at any time. See Sommers Drug Stores Co. Employee Profit
Sharing Tr. v. Corrigan, 883 F.2d 345, 348 (5th Cir. 1989) (“We have recognized, however, that
standing is essential to the exercise of jurisdiction, and that lack of standing can be raised at any

3

time by a party or by the court.”); see also Mem’l Hermann Health Sys. v. Pennwell Corp. Med.
& Vision Plan, No. CV H-17-2364, 2017 WL 6561165, at *4 (S.D. Tex. Dec. 22, 2017)
(recognizing that although prudential standing is typically a merits-type issue, the Fifth Circuit
treats prudential standing as a jurisdictional limitation on ERISA claims and therefore, a Rule
12(b)(1) motion is the proper procedural vehicle to raise such a challenge). Further, an untimely
motion to dismiss under Rule 12(b)(6) should be considered a motion for judgment on the
pleadings, particularly where—as here3—the defendant previously included in its answer the
defense that is at issue. See, e.g., Jones v. Lopez, 262 F. Supp. 2d 701, 706 (W.D. Tex. 2001);
Smith v. Bank of Am. Corp., No. A-13-CV-193 LY, 2013 WL 12033215, at *4 (W.D. Tex. May
1, 2013), report and recommendation adopted, 2013 WL 12033379 (W.D. Tex. Aug. 5, 2013);
Delhomme v. Caremark Rx Inc., 232 F.R.D. 573, 575 (N.D. Tex. 2005). It makes no practical
difference here whether this is a Rule 12(b)(6) motion or one brought under Rule 12(c). There is
no good reason to deny or strike United’s motion based on mechanical adherence to this
procedural shortcoming. The motion to strike should be denied.
Standing. The Labs have not alleged facts sufficient to establish their standing to pursue
the claims they assert under ERISA. Absent sufficient allegations to show standing, the Court
lacks subject matter jurisdiction to entertain those claims. The Labs should file amended
pleadings to address this deficiency.
The standards governing standing are familiar. As an Article III matter, standing
“requires that an injury be concrete, particularized, and actual or imminent; fairly traceable to the
challenged action; and redressable by a favorable ruling.” Monsanto Co. v. Geertson Seed
Farms, 561 U.S. 139, 149 (2010). “In addition to this ‘constitutional’ standing requirement, a

3

See Answ. & Counterclaims ¶ 150.
4

party must also show that it has ‘prudential’ standing, which ‘encompasses the general
prohibition on a litigant’s raising another person’s legal rights[.]’” Mid-Town Surgical Ctr.,
L.L.P. v. Humana Health Plan of Tex., Inc., 16 F. Supp. 3d 767, 775 (S.D. Tex. 2014) (quoting
Elk Grove Unified Sch. Dist. v. Newdow, 542 U.S. 1, 12 (2004)). “[T]he party invoking federal
jurisdiction bears the burden of establishing its existence.” Steel Co. v. Citizens for a Better
Env’t, 523 U.S. 83, 104 (1998).
“By its terms, standing [to obtain benefits] under ERISA is limited to participants and
beneficiaries.” Spring E.R., LLC v. Aetna Life Ins. Co., No. CIV.A. H-09-2001, 2010 WL
598748, at *2 (S.D. Tex. Feb. 17, 2010); see also 29 U.S.C. § 1132(a)(1). The class including
those permitted to bring an action for non-benefits under Section 502(a)(3) (i.e., for breach of
fiduciary duty) is similarly limited; it includes only one additional category of potential
plaintiffs—fiduciaries of plans. See 29 U.S.C. § 1132(a)(3). Although the Labs do not claim to
be plan fiduciaries, the ERISA standing enquiry does not end here.
“It is well established that a healthcare provider, though not a statutorily designated
ERISA beneficiary, may obtain standing to sue derivatively to enforce an ERISA plan
beneficiary’s claim” by virtue of a validly executed assignment. Harris Methodist Fort Worth v.
Sales Support Servs. Inc. Employee Health Care Plan, 426 F.3d 330, 333-34 (5th Cir. 2005); see
also Tex. Life, Acc. Health & Hosp. Serv. Ins. Guar. Ass’n v. Gaylord Entm’t Co., 105 F.3d 210,
214-15 (5th Cir. 1997); Tango Transp. v. Healthcare Fin. Servs. LLC, 322 F.3d 888, 891-92 (5th
Cir. 2003); Spring, 2010 WL 598748, at *2. “Under this theory, the medical provider stands in
the shoes of the ERISA beneficiary to assert its rights under the plan terms, rather than asserting
some independent legal duty owed directly to the healthcare provider.” Spring, 2010 WL

5

598748, at *2. The Labs premise their ERISA claims (and likely the majority of their nonERISA claims) on such a theory of derivative standing.
Specifically, the Labs allege they “routinely received an assignment of benefits (“AOB”)
from individual insureds to whom [they] provide[] services, placing [them] in the shoes of those
individuals and entitling [the] Lab[s] to all rights, title and benefits extending from the coverage
policies of Defendants’ insureds.” Compl. ¶ 68. To support this assertion the Labs attach several
examples of assignments they “routinely” procure from patients. See Ex. A to Amend Compl.
United does not dispute that such an assignment—validly and timely executed by a
patient—would serve to validly assign that patient’s claims to a party like the Labs in litigation
such as this. But the Labs wish to proceed on the basis that because they “routinely” received
“similar” assignments from patients, it is axiomatic that all claims for any and all insureds here
are supported by fully and properly executed, substantially similar assignments. To adequately
allege standing as assignees for all the relevant insureds, however, the Labs must allege that all
insureds (or at least those on whose behalf they are bringing suit) were required to—and did—
execute assignment-of-benefit forms prior to receiving healthcare services. See Innova Hosp. San
Antonio, L.P. v. Blue Cross & Blue Shield of Georgia, Inc., 995 F. Supp. 2d 587, 599 (N.D. Tex.
2014) (Innova I) (finding plaintiffs’ standing allegations sufficient where they alleged they
required all patients to “execute an assignment of benefits form prior to receiving healthcare
services,” and that they received an assignment of benefits from the patients); see also
Encompass Office Sols., Inc. v. Connecticut Gen. Life Ins. Co., No. 3:11-CV-02487-L, 2012 WL
3030376, at *4 (N.D. Tex. Jul. 25, 2012) (finding plaintiff’s allegations of standing sufficient
where it alleged “Encompass possesses . . . Assignment of Benefits from each patient on behalf
of whom Encompass asserts claims herein.”) (emphasis added); N. Cypress Med. Ctr. Operating

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Co. v. CIGNA Healthcare, 782 F. Supp. 2d 294, 301 (S.D. Tex. 2011), aff’d sub nom., 781 F.3d
182 (5th Cir. 2015) (standing allegations sufficient where plaintiff alleged “[e]ach participant, in
writing, signs his or her rights under his or her health benefits plan to North Cypress” )(emphasis
added).
Accordingly, taking the Labs’ allegations as true, as the Court must in this facial
challenge to jurisdiction, see Paterson v. Weinberger, 644 F.2d 521, 523 (5th Cir. 1981), the
Labs have failed to adequately allege standing.
Rule 8(a) Obligations. The Labs also have not satisfied Rule 8(a). As the Labs describe
this litigation, the “crux of this controversy” is that United failed to “properly” pay the Labs
“millions of dollars” on “thousands of claims” submitted on behalf of “thousands of United
members” for medically necessary urinalysis testing “[o]ver the course of several years.”
Amend. Compl. ¶¶ 28, 67-72. The Labs, however, fail to include facts sufficient to put United on
notice of the thousands of claims submitted over an unspecified period of years that are the
subject of the Labs’ claims. The Labs’ conclusory allegations fall far short of the pleading
requirements.
“[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. Iqbal, 556 U.S. 662, 678 (2009). Put another way, the Labs’ Amended Complaint
fails to provide the details necessary to allow United to defend against the Labs’ sweeping
allegations. The “[Labs] do[] not survive the pleading standard in Rule 12(b)(6) by requiring
[United] to go on a fact-gathering mission of its own to decipher [the Labs’] claims.” Infectious
Disease Doctors, P.A. v. Bluecross Blueshield of Texas, No. 3:13-CV-2920-L, 2014 WL
4262164, at *3 n.2 (N.D. Tex. Aug. 29, 2014) (“IDD I”).

7

Further, because benefits like the ones at issue here are “limited to those specified in the
ERISA plan,” 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) (quotations omitted), district courts in this
circuit routinely require a plaintiff raising a benefits claim under ERISA to provide “enough facts
about an ERISA plan’s provisions to make . . .[the benefits] claim plausible and give the
defendant notice as to which provisions it allegedly breached.” See, e.g., Mission Toxicology,
L.L.C. v. UnitedHealthcare Ins. Co., No. 5:17-CV-1016-DAE, 2018 WL 2222854, at *6 (W.D.
Tex. Apr. 20, 2018) (J. Ezra); Advanced Physicians, S.C. v. Connecticut Gen. Life Ins. Co., No.
3:16-CV-2355-G, 2017 WL 4868180, at *6 (N.D. Tex. Oct. 27, 2017); Paragon, 2012 WL
5868249, at *2; Ctr. for Reconstructive Breast Surgery, LLC v. Blue Cross Blue Shield of
Louisiana, No. CIV.A. 11-806, 2013 WL 5519320, at *1 (E.D. La. Sept. 30, 2013). Although the
Fifth Circuit recently explained that “plaintiffs alleging claims under 29 U.S.C. § 1132(a)(1)(B)
for plan benefits need not necessarily identify the specific language of every plan provision at
issue to survive a motion to dismiss under Rule 12(b)(6),” in that case the plaintiffs still pled
several representative plan provisions. Innova Hosp. San Antonio, Ltd. P’ship v. Blue Cross &
Blue Shield of Georgia, Inc., 892 F.3d 719, 729 (5th Cir. 2018) (emphasis added). They also
provided substantial evidence indicating they were unable to obtain all the plan documents even
after good-faith efforts to do so. Id. Moreover, there were “enough other factual allegations in the
complaint to allow a court ‘to draw the reasonable inference that the defendant [was] liable for
the misconduct alleged.’” Id. (quoting Iqbal, 556 at 678 and Tombly, 550 U.S. at 556). These
types of factual allegations are wholly lacking from the Labs’ Amended Complaint.
The Labs’ Complaint rests on scant assertions that the claims were for “covered services”
or were “medically necessary.” But “Rule 8(a)(2) still requires a ‘showing,’ rather than a blanket

8

assertion, of entitlement to relief.” Twombly, 550 U.S. at 555 n. 3. Accordingly, to state a
plausible claim, the Labs must explain how the plans here defined these key terms (at least on a
representative level) and why the services at issue in this litigation satisfied these definitions.
Moreover, to the extent the claims were underpaid (as opposed to denied), the Labs must explain
how payment should have occurred under the specific terms of the relevant plan(s). And,
contrary to the Labs’ assertions, United’s alleged knowledge of the claims or the plan terms
cannot cure these pleading defects. See Mora v. Albertson’s, L.L.C., No. EP-15-CV-00071-FM,
2015 WL 3447963, at *3 (W.D. Tex. May 28, 2015) (“[F]ederal pleading standards require
complaints to be facially sufficient . . . When a complaint contains insufficient facts to state a
plausible claim to relief, it is irrelevant whether the parties have knowledge of unstated facts that
would cure the defect.”).
For all these reasons, the undersigned finds United’s objections to the sufficiency of the
Labs’ Amended Complaint are well-taken; more is required here to satisfy Rule 8(a). See, e.g.,
Mission Toxicology, 2018 WL 2222854, at *6 (plaintiffs failed to state a claim for unpaid
benefits where, despite listing all 9,756 claims in a claim schedule, plaintiffs failed to provide
information regarding the various plans at issue and which terms within those specific plans
United allegedly violated); Electrostim Med. Servs., Inc. v. Health Care Serv. Corp., No. CV H11-2745, 2017 WL 1710567, at *8 (S.D. Tex. May 3, 2017) (“Each patient’s assigned claim is an
individual breach of contract. Electrostim must plead enough facts, with enough detailed
information, to make these breach-of-contract claims plausible.”). The Labs’ attempts to invoke
their HIPAA obligations to excuse pleading shortcomings fail. Like other litigants, the Labs
should employ the usual, appropriate measures to protect confidential information in litigation,

9

including seeking leave to file such information under seal or pursuant to a qualified protective
order as may be necessary.
Claims for Breach of Fiduciary Duty (Count Two) and Denial of Full and Fair Review
(Count Three). Relying on the Supreme Court’s opinion in Varity Corp. v. Howe, 516 U.S. 489,
512 (1996), and the Fifth Circuit’s subsequent decisions interpreting Varity, United contends that
the Labs’ ERISA claims for breach of fiduciary duty and denial of full and fair review pursuant
to § 502(a)(3) (29 U.S.C. § 1132(a)(3)) must be dismissed because they are duplicative of the
Labs’ claim for unpaid benefits. See Mot. at 7-8. The undersigned agrees.
In Varity, the Supreme Court observed that § 502(a)(3) serves as a “catchall provision”
that “act[s] as a safety net, offering appropriate equitable relief for injuries caused by violations
that [Section] 502 does not elsewhere adequately remedy.” 516 U.S. at 512. The Court further
explained that “we should expect that where Congress elsewhere provided adequate relief for a
beneficiary’s injury, there will likely be no need for further equitable relief, in which case such
relief normally would not be appropriate.” Id. at 515 (quotations omitted).
Until recently, it was an open question in this circuit whether Varity permits plaintiffs to
plead claims in the alternative for unpaid benefits under § 502(a)(1) and for equitable remedies
under § 502(a)(3).4 A recent ruling in Gilmour v. Aetna indicated agreement with the position
allowing pleading these kinds of claims in the alternative. No. SA-17-cv-00510-FB (W.D. Tex.

4

Compare, e.g., Mission Toxicology, 2018 WL 2222854, at *7 (dismissing plaintiffs’ claims for
breach of fiduciary duty because “when a plaintiff asserts a claim to recover benefits under
§ 502(a)(1)(B), it may not simultaneously maintain [a] claim for breach of fiduciary duty under
ERISA”) (quotations omitted) with N. Cypress Med. Ctr. Operating Co. v. CIGNA Healthcare,
782 F. Supp. 2d 294, 309 (S.D. Tex. 2011), aff’d sub nom., 781 F.3d 182 (5th Cir. 2015) (“This
Court agrees with the more expansive approach taken by many courts, which allows plaintiffs to
simultaneously plead claims under several subsections of Section 502(a). This rule allows
plaintiffs time to develop their trial strategy and preserve alternative grounds for relief until a
later stage in the litigation.”) (citations omitted).
10

Arp. 25, 2018), Dkt. No. 33 (“[T]he Court finds at this early stage the Supreme Court case of
CIGNA Corporation v. Amara, 563 U.S. 421 (2011), allows plaintiffs to plead their claims for
unpaid benefits under 29 U.S.C. § 1132(a)(1), and for equitable remedies under 29 U.S.C.
§ 1132(a)(3), in the alternative.”). But several months after entry of that order, the Fifth Circuit
clarified that alternative pleading under § 502(a)(3) is not permissible in circumstances like those
presented here, even in light of Amara and even if a plaintiff does not ultimately prevail on its
§ 502(a)(1) claim. See Innova Hosp. San Antonio, 892 F.3d at 732-34.
The Labs’ claim for breach of fiduciary duty, as stated in Count 2 of its Amended
Complaint, is premised on United’s alleged improper denial or underpayment of claims in
violation of fiduciary duties. Amend. Compl. ¶¶ 82-90. Because the Lab Plaintiffs have an
“adequate mechanism for redress under § 1132(a)(1)(B)”—in fact this claim is specifically pled
by the Lab Plaintiffs in Count One—the District Court should dismiss the Lab Plaintiffs’ claim
for breach of fiduciary duty. See Innova Hosp. San Antonio, 892 F.3d at 734. The same Fifth
Circuit precedent that bars the simultaneous pleading of § 502(a)(1) and a breach of fiduciary
duty claim under § 502(a)(3) also compels dismissal of the Labs’ claim for denial of full and fair
review under § 502(a)(3). See id. Although this claim raises factual allegations beyond the mere
act of denying a claim for benefits, such as United’s alleged failure to make necessary
disclosures pursuant to 29 U.S.C. § 1133, the ultimate harm complained of appears to be part and
parcel to the claims denial themselves, and the Labs do not argue to the contrary.5

5

Because the Labs’ claim for failure to provide full and fair review should be dismissed,
United’s argument that this same claim is not premised on a valid private right of action for
compensatory damages, Mot. at 8, need not be addressed at this time.
11

Violations of Claim Procedures (Count Four). United next takes issue with the Labs’
claim for violation of claim procedures as set forth in 29 C.F.R. § 2560.503-1. Here, the Labs fail
to state a claim for relief that is plausible on its face.
“Under ERISA, the Secretary of Labor is authorized to create regulations that further the
goals of the statute’s provisions.” Williams v. Ass’n De Prevoyance Interentreprises, No. CIV.A.
11-1664, 2012 WL 1752687, at *6 (E.D. La. May 16, 2012) (citing 29 U.S.C. § 1135). “In this
capacity, the Secretary requires plans to establish and maintain reasonable claim procedures for
appeals from adverse benefit determinations.” Id. (citing 29 C.F.R. § 2560.503–1(b)). But in
asserting a claim for violation of ERISA’s claim procedures by way of § 502(a), the Labs fail to
provide any facts explaining which claim procedure regulations United allegedly violated or how
United committed this violation. The Labs instead allege, in conclusory fashion, that United
“engag[ed] in conduct that rendered its claims procedures and appeals process unfair to
subscribers and their assignee(s).” Amend. Compl. § 98. More detail is required. See FernandezMontes v. Allied Pilots Ass’n, 987 F.2d 278, 284 (5th Cir. 1993) (“conclusory allegations or legal
conclusions masquerading as factual conclusions will not suffice to prevent a motion to
dismiss”).
Further, although not argued by United, it appears this claim may be duplicative of the
Labs’ claim for unpaid benefits, as with the Labs’ claims for breach of fiduciary duty and denial
of full and fair review. Accordingly, while the undersigned recommends granting the Labs an
opportunity to replead this claim, given that this issue has not been addressed or briefed by the
parties, the undersigned questions whether this claim is viable. See Innova Hosp. San Antonio,
892 F.3d at 732-34.

12

Declaratory Judgment (Count Seven). By way of Count Seven, the Labs seek a
declaratory judgment “regarding Plaintiffs’ Claim for Affirmative Relief.” Amend Compl. at 21.
Specifically, the Labs seek a declaratory judgment that (1) United has failed to comply with its
own contracts with its insureds; (2) the Labs are entitled to be compensated for services provided
to United’s insureds; (3) United failed to provide meaningful access to administrative remedies
to the Labs and as such are barred from denying those claims; (4) United’s practice in denying
claims was “unlawful and abusive”; and (5) the Labs “maintain all rights and remedies afforded
to them under Texas law.” These claims merely duplicate the Labs’ substantive claims in Counts
One through Six. The Labs fail to offer any reason to hold otherwise. See Resp. at 10-11
(explaining why the request for declaratory relief as set forth in Count Eight, but not Count
Seven, is not redundant of their substantive claims). Accordingly, the District Court should
exercise its discretion and decline to consider the Labs’ request for declaratory relief as set forth
in Count Seven.6
Leave to Amend. For the reasons discussed above, the Labs fail to allege claims with
sufficient specificity to survive a motion to dismiss under Rules 12(b)(1) and 12(b)(6).
Dismissal, however, is a harsh remedy, and the undersigned recognizes that the Labs have yet to

6

See, e.g., Madry v. Fina Oil & Chemical Co., No. 94–10509, 1994 WL 733494, at *2 (5th Cir.
1994) (reversing award of declaratory relief where “[t]he declaratory judgment does not declare
any significant rights not already at issue in the contract dispute.”); Flanagan v. Chesapeake
Expl., LLC, No. 3:15-CV-0222-B, 2015 WL 6736648, at *4 (N.D. Tex. Nov. 4, 2015) (“In the
Federal Rule of Civil Procedure 12(b)(6) context, courts regularly reject declaratory judgment
claims that seek resolution of matters that will already be resolved as part of the claims in the
lawsuit”); Merritt Hawkins & Assocs., LLC v. Gresham, No. 3:13-CV-00312-P, 2014 WL
685557, at *3 (N.D. Tex. Feb. 21, 2014) (“A request for a declaratory judgment need not be
permitted if it adds nothing to the suit”); Burlington Ins. Co. v. Ranger Specialized Glass, Inc.,
No. 4:12-cv-1759, 2012 WL 6569774, at *2 (S.D. Tex. Dec. 17, 2012) (“If a request for a
declaratory judgment adds nothing to an existing lawsuit, it need not be permitted. Courts in the
Fifth Circuit have regularly rejected declaratory judgment claims that seek resolution of matters
that will already be resolved as part of the claims in the lawsuit.”) (citations omitted).
13

file an amended complaint. Because some of these deficiencies may be cured by amendment, the
undersigned recommends that United’s alternate motion for more definite statement be granted.
See, e.g., Miller v. Stanmore, 636 F.2d 986, 990 (5th Cir. 1981) (holding that 28 U.S.C. § 1653,
which permits amendments to cure defective allegations of jurisdiction, should be liberally
construed); Cole v. JEBF Holdings, LLC, No. CIV.A. 14-0298, 2014 WL 6327088, at *3 (E.D.
La. Nov. 13, 2014) (“Short of granting a motion to dismiss, a court may grant a plaintiff leave to
amend his complaint”); Turner v. Pavlicek, No. CIV.A. H-10-00749, 2011 WL 4458757, at *16
(S.D. Tex. Sept. 22, 2011) (“parties may rely on Rule 12(e) as a way to enforce the minimum
requirements of notice pleading”).
III.

Conclusion
For the reasons discussed above, it is recommended that Defendants’ alternate request for

more definite statement be GRANTED. Plaintiffs should be ordered to file an amended
complaint to cure the pleading and jurisdictional deficiencies discussed herein. Defendants’
Motion to Dismiss, Dkt. No. 11, should be GRANTED with respect to Plaintiffs’ claims for
breach of fiduciary duty (Count Two), for denial of full and fair review (Count Three), and for
declaratory judgment (Count Seven), and DENIED WITHOUT PREJUDICE in all other
respects.
Instructions for Service and Notice of Right to Object/Appeal
The United States District Clerk shall serve a copy of this report and recommendation on
all parties by either (1) electronic transmittal to all parties represented by attorneys registered as
a “filing user” with the clerk of court, or (2) by mailing a copy by certified mail, return receipt
requested, to those not registered. Written objections to this report and recommendation must be
filed within fourteen (14) days after being served with a copy of same, unless this time period is

14

modified by the district court. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b). The objecting party
shall file the objections with the clerk of the court, and serve the objections on all other parties. A
party

filing

objections

must

specifically

identify

those

findings,

conclusions,

or

recommendations to which objections are being made and the basis for such objections; the
district court need not consider frivolous, conclusory, or general objections. A party’s failure to
file written objections to the proposed findings, conclusions, and recommendations contained in
this report shall bar the party from a de novo determination by the district court. Thomas v. Arn,
474 U.S. 140, 149-52 (1985); Acuña v. Brown & Root, Inc., 200 F.3d 335, 340 (5th Cir. 2000).
Additionally, failure to timely file written objections to the proposed findings, conclusions, and
recommendations contained in this report and recommendation shall bar the aggrieved party,
except upon grounds of plain error, from attacking on appeal the unobjected-to proposed factual
findings and legal conclusions accepted by the district court. Douglass v. United Servs. Auto.
Ass’n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc).
IT IS SO ORDERED.
SIGNED this 4th day of September, 2018.

RICHARD B. FARRER
UNITED STATES MAGISTRATE JUDGE

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