University of Wisconsin Hospitals and Clinics Authority v. Aetna Health and Life Insurance Company et al

Filing 17

OPINION & ORDER granting in part and denying in part 7 Motion to Dismiss; granting 16 Stipulation to Strike Dispositive Motion and Pretrial Deadlines. Signed by District Judge William M. Conley on 1/25/16. (jat)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN

UNIVERSITY OF WISCONSIN
HOSPITALS AND CLINICS AUTHORITY,
Plaintiff,

OPINION & ORDER

v.
15-cv-286-wmc
AETNA HEALTH & LIFE INSURANCE
COMPANY and AETNA HEALTH
INSURANCE COMPANY,
Defendants.

In what has become a familiar refrain in this court of late, plaintiff University of
Wisconsin Hospitals and Clinics Authority asserts breach of contract and related claims
against defendants Aetna Health & Life Insurance Company and Aetna Health Insurance
Company based on defendants’ denial of plaintiff’s claim of payment for medical services
provided to its insured. Defendants removed this action from state court on the basis of
federal question jurisdiction, 28 U.S.C. § 1331, asserting that plaintiff’s state law claims
are completely preempted by the Employee Retirement Income Security Act (“ERISA”),
29 U.S.C. § 1001 et seq. (Not. of Removal (dkt. #1) ¶¶ 6, 11-14.) Plaintiff subsequently
conceded this point, effectively withdrawing its state law claims.1
Before the court is defendants’ motion to dismiss on the basis that plaintiff’s
claims fail as a matter of law under an anti-assignment provision in the ERISA plan at
1

Because UWHCA filed suit in state court before this court issued a series of decisions finding
that its state law claims were preempted by ERISA, the court will not sanction plaintiff. At the
same time, UWHCA remains on notice that continuing to force defendants to remove purported
state law claims completely preempted by ERISA will likely result in sanctions in light of the
unnecessary expenditures of time and resources of the state and federal courts and the opposing
party.

issue. (Dkt. #7.) Since the plan at issue in this case does not contain an anti-assignment
provision, the court will deny defendants’ motion to dismiss, while also warning plaintiff
to consider whether its claims can survive summary judgment in light of this court’s
opinion issued today in Univ. of Wis. Hosp. & Clinics Auth. v. Aetna Health & Life Ins. Co.,
No. 14-cv-779-wmc (W.D. Wis. Jan. 25, 2016) (dkt. #44).

ALLEGATIONS OF FACT2
A. The Parties
Plaintiff University of Wisconsin Hospitals and Clinics Authority is a public entity
created by the State of Wisconsin. UWHCA operates a hospital in Dane County where
Allison R. Fitzgerald received medical treatment.
Defendants Aetna Health & Life Insurance Company and Aetna Health Insurance
Company (collectively “Aetna”) are corporations that provide health insurance coverage
and engage in other insurance-related business.
B. The Policy3
Fitzgerald is a policy holder of a contract for health insurance with Aetna under an
ERISA plan issued by M&M Corporate Services, Inc. UWHCA is seeking to recover
2

In resolving a motion to dismiss under Rule 12(b)(6), the court takes all of the factual
allegations in the amended complaint as true and draws all inferences in plaintiff’s favor.
Killingsworth v. HSBC Bank Nevada, 507 F.3d 614, 618 (7th Cir. 2007).
3

Defendants attached the pertinent policy to their motion to dismiss. (Dkt. #8-1.) Because the
policy was referenced in plaintiff’s complaint and central to its claims, the court may consider it
for purposes of deciding defendants’ motion to dismiss. See Geinosky v. City of Chi., 675 F.3d 743,
745 (7th Cir. 2012) (“A motion under Rule 12(b)(6) can be based only on the complaint itself,
documents attached to the complaint, documents that are critical to the complaint and referred to
in it, and information that is subject to proper judicial notice.”).

2

benefits as an assignee under that policy.

(Compl. (dkt. #1-1) ¶ 33.)

defendants’ motion, the policy contains the following language:

Pertinent to

“Coverage may be

assigned only with the written consent of Aetna.” (Dkt. #8-1 at p.78.) The policy also
provides that “Aetna will directly pay the network provider less any cost sharing required
by you.” (Id. at p.73.)
C. Defendants’ Denial of Plaintiff’s Claim Under the Policy
On or about February 21, 2014, Fitzgerald went to plaintiff’s hospital to receive
treatment for a medical condition. Plaintiff subsequently submitted a bill to Aetna for
reimbursement for the cost of medical treatment. Defendants denied plaintiff’s claim
and declined to pay the bill because of plaintiff’s purported failure to obtain
preauthorization. Plaintiff subsequently submitted several appeals to Aetna, all of which
were unsuccessful.

OPINION
Plaintiff filed claims against defendants in the Wisconsin Circuit Court of Dane
County for state law claims of (1) breach of contract, (2) breach of contract implied in
fact, (3) quasi contract and unjust enrichment, (4) breach of implied covenant of good
faith, and (5) interest under Wis. Stat. § 628.46. Defendants then removed the suit to
the United States District Court, Western District of Wisconsin, on the basis of this
court’s federal question jurisdiction, 28 U.S.C. § 1331.
In the notice of removal and again in the motion to dismiss, defendants contend
that plaintiff’s state law claims are completely preempted by ERISA. (Defs.’ Br. (dkt.
3

#8) 3-4 (citing Aetna Health Inc. v. Davila, 542 U.S. 200, 210 (2004)).) In its response
to defendants’ motion to dismiss, plaintiff concedes this point, agreeing that the lawsuit
should go forward under ERISA.

(Pl.’s Opp’n (dkt. #13) 3.)

See also McDonald v.

Household Int’l, Inc., 425 F.3d 424 (7th Cir. 2005) (instructing district courts to consider
“whether relief is possible under any set of facts that could be established consistent with
the allegations” rather than “whether the complaint points to the appropriate statute”).
Defendants also seek dismissal of plaintiff’s ERISA claim on the basis that “the
Plan’s restrictions on assignments prohibit Plaintiff from pursing these claims,”
characterizing the restriction as an “anti-assignment” one, which is the subject of this
opinion.

(Defs.’ Opening Br. (dkt. #8) 7-8.)4

The relevant assignment provision,

however, does not prohibit assignments.
In another case involving the same parties and same claims, where the court
granted defendants’ motion to dismiss, the plan expressly provided that “coverage and
your rights under this Aetna medical benefits plan may not be assigned.” Univ. of Wis.
Hosp. & Clinics Auth. v. Aetna Health & Life Ins. Co., No. 15-cv-240-wmc, slip op. at *3 (W.D.
Wis. Nov. 3, 2015) (dkt. #11). This is a true anti-assignment provision because it deprives

this court of subject matter jurisdiction, requiring dismissal at the pleading stage. Id. at
*8-9.
Here, an assignment is actually contemplated, albeit only with the consent of
Aetna. Accordingly, the assignment provision, coupled with the provision allowing direct
4

Surprisingly, UWHCA adopts this characterization in its opposition brief. (Pl.’s Opp’n (dkt.
#13) 7 n.2.) Nonetheless, the court will rely on the plain language of the provision rather than
counsel’s characterization of it.

4

payment to the medical care provider, presents a “colorable claim” for benefits that is
sufficient to satisfy subject matter jurisdiction, id. at *7.
Whether Aetna withheld consent (and whether that withholding was proper) is a
merits issue, which the court cannot decide on the pleadings alone. Id. For this reason,
defendants’ motion to dismiss plaintiff’s claim for benefits under ERISA must be denied.
At the same time, plaintiff is cautioned to consider whether it has a viable claim in light
of this court’s decision today on a motion for summary judgment in Univ. of Wis. Hosp. &
Clinics Auth. v. Aetna Health & Life Ins. Co., No. 14-cv-799-wmc (W.D. Wis. Jan. 25,
2016) (dkt. #44), at least without Aetna’s consent or an amendment substituting the
true plaintiff in interest.

ORDER
IT IS ORDERED that:
(1)

Defendants’ motion to dismiss (dkt. #7) is GRANTED IN PART as to
plaintiff’s state law claims, but DENIED IN ALL OTHER RESPECTS.

(2)

The parties’ stipulation to strike dispositive motion and pretrial deadlines
(dkt. #16) is GRANTED. The court will set a scheduling conference to reset
these dates.
Entered this 25th day of January, 2016.
BY THE COURT:
/s/
________________________________________
WILLIAM M. CONLEY
District Judge
5