Opinion
Case No. 6:20-cv-24-Orl-22EJK
2020-06-08
SURGERY CENTER OF VIERA, LLC, Plaintiff, v. UNITEDHEALTHCARE, INC., Defendant.
Ivan J. Tarasuk, Jeffrey Lewis Greyber, Callagy Law, PC, Boca Raton, FL, for Plaintiff. Edward Ugochukwu Ibeh, Akerman LLP, Miami, FL, Gera R. Peoples, Akerman LLP, Irene Bassel Frick, Akerman LLP, Tampa, FL, for Defendant.
Ivan J. Tarasuk, Jeffrey Lewis Greyber, Callagy Law, PC, Boca Raton, FL, for Plaintiff.
Edward Ugochukwu Ibeh, Akerman LLP, Miami, FL, Gera R. Peoples, Akerman LLP, Irene Bassel Frick, Akerman LLP, Tampa, FL, for Defendant.
ORDER
ANNE C. CONWAY, United States District Judge
This cause comes before the Court on Defendant UnitedHealthcare, Inc.’s Motion to Dismiss (Doc. 31) the Amended Complaint of Plaintiff Surgery Center of Viera's ("Surgery Center"). (Doc. 29). Surgery Center filed a Response in Opposition. (Doc. 34). For the reasons below, the Motion will be granted in part and denied in part.
The Court accepts as true the factual allegations in the complaint for purposes of deciding the Motion to Dismiss. See Randall v. Scott , 610 F.3d 701, 705 (11th Cir. 2010).
The dispute in this case arises out of medical services provided to Patient C.R. for treatment of "chronic debilitating neck pain and radiculopathy" for whom alterative, conservative treatment did not resolve his pain. (Doc. 29 ¶ 7). Patient C.R. is covered by UnitedHealthcare Insurance Company's ("United") Group Plan 909155 for employees of Merritt Island Boat Works Inc. (the "Plan"). (Id.). For coverage under the Plan, a Boat Works employee "must see a Network Physician in order to obtain Benefits. Except as specifically described in th[e] Schedule of Benefits, ... [b]enefits are not available for services provided by non-Network providers" with certain exceptions specifically described in the Plan. (Doc. 29-2 at 10). On January 9, 2018, medical personnel at Surgery Center of Viera operated on Patient C.R., after he had received a letter from United on January 4, 2018, stating that the surgical procedure was deemed "medically necessary" and would be covered at the network level because "there was not a doctor, health care professional, or facility in C.R.’s area to provide the services"; Surgery Center construes this communication from United as treating the procedure as "in-network." (Doc. 29 ¶¶ 14, 17). Surgery Center subsequently billed the charges for Patient C.R.’s surgery and medical care to United in the amount of $418,133. (Id. ¶ 9).
Surgery Center alleges that the Plan is "fully insured" and has not named Patient C.R.’s employer as a codefendant. (Doc. 29 ¶ 7 & n.3; Doc. 29-2).
Three months later, on April 5, 2018, United paid a claim for these medical services of only $44,814.06, just over ten percent of the balance due. (Id. at ¶ 12). Surgery Center was not a provider or facility with a formal "in-network provider" agreement with United. However, Surgery Center was "in agreement" with United as part of a "re-pricing contract" with Preferred Medical Claim Solutions ("PMCS") who negotiated as United's affiliate and/or subcontractor to secure discounted rates from providers including Surgery Center; the "re-pricing contract" provided that Surgery Center would receive 80% of its billed charges less the charges for which patients were responsible, with 100% reimbursement for hard costs such as prosthetics and implants. (Id. ¶¶ 10-11). In keeping with the PMCS re-pricing contract, Surgery Center sought reimbursement for 80% of the full amount of the charges of $418,133—in the amount of $351,230.20—less co-pays, deductibles, and co-insurance to be paid by the patient. (Id. at ¶¶ 11, 28). Deducting the amount previously paid by United of $44,814.06, Surgery Center sought the outstanding balance to which it was entitled, calculated at 80%, of $306,416.14. (Id.). United declined to pay the amount sought for various reasons, including because Surgery Center was an "out-of-network" provider, and because certain amounts were in excess of allowable charges particularly in light of the "data isight" figures for comparable available facilities. (Id. ¶¶ 15-16). Following United's denials, Surgery Center appealed United's decision to only pay part of the claim and sought the full claims file for Patient C.R. (Id. ¶¶ 19-27).
Surgery Center alleges that due to the January 4 letter advising "that the surgery would be treated as in-network," it is entitled to the "contracted fee(s) with the provider" as set forth in the PMCS contract. (Doc. 29 ¶ 14 (emphasis added)).
Nearly two years after the surgery, on January 7, 2020, Surgery Center brought a five-count Complaint against United, seeking to compel production of the administrative record under the Employee Retirement Income Security Act ("ERISA") (Count I); seeking to recover damages for breach of contract (Count II); unjust enrichment (Count III); quantum meruit (Count IV), and statutory violations (Count V) for United's failure to pay the full amount Surgery Center argues it is owed for the medical services it provided to Patient C.R. (Doc. 1). Surgery Center alleges jurisdiction under 28 U.S.C. § 1332, based on an amount in controversy in excess of $75,000.00 and diversity of citizenship of the parties, since Surgery Center of Viera, LLC, is a citizen of Florida and UnitedHealthcare, Inc., is a citizen of Minnesota. (Doc. 29 ¶¶ 2-3). On March 6, 2020, United filed its Motion to Dismiss Surgery Center's Complaint. (Doc. 24). In lieu of filing a response to United's Motion to Dismiss, on March 30, 2020, Surgery Center filed its Amended Complaint with one significant substantive change – it recast its ERISA claim in Count I as a claim for United's "breach of contract" of an obligation under the Plan to produce the entire claim file. (Doc. 29 ¶¶ 31-37). The remainder of the Counts in the Amended Complaint remained unchanged. United filed its Motion to Dismiss the Amended Complaint on April 13, 2020 (Doc. 31) and Surgery Center responded in opposition on April 27, 2020. (Doc. 34). The matter is ripe for decision.
See Rolling Greens MHP, LP v. Comcast SCH Holdings LLC , 374 F.3d 1020, 1022 (11th Cir. 2004) (an LLC is a citizen of any state of which a member is a citizen); Hertz Corp. v. Friend , 559 U.S. 77, 130 S.Ct. 1181, 175 L.Ed.2d 1029 (2010) (a corporation is a citizen of its state of incorporation and where it has its principal place of business or "nerve center").
II. LEGAL STANDARD
When deciding a motion to dismiss based on failure to state a claim upon which relief can be granted, the court must accept as true the factual allegations in the complaint and draw all inferences derived from those facts in the light most favorable to the plaintiff. Randall v. Scott , 610 F.3d 701, 705 (11th Cir. 2010). "Generally, under the Federal Rules of Civil Procedure, a complaint need only contain ‘a short and plain statement of the claim showing that the pleader is entitled to relief.’ " Id. (quoting Fed. R. Civ. P. 8(a)(2) ). However, the plaintiff's complaint must provide "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007). "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." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ). Thus, the Court is not required to accept as true a legal conclusion merely because it is labeled a "factual allegation" in the complaint; it must also meet the threshold inquiry of facial plausibility. Id.
III. ANALYSIS
United moves to dismiss all of the counts of Surgery Center's Amended Complaint, arguing that the claim for failure to produce the requested Plan documents and for breach of contract, unjust enrichment, and quantum meruit fail because these claims are preempted by ERISA, and Surgery Center is not a party to the Plan that covered Patient C.R. United further argues that Surgery Center's fifth claim, for violation of Florida statutes governing healthcare reimbursements, must be dismissed because Surgery Center does not meet the statutory criteria.
A. Count I
United moves to dismiss Count I, arguing that Surgery Center was not a beneficiary or participant under the Plan and, thus, it lacks standing to seek enforcement of provisions of the Plan to produce the administrative record. Although Surgery Center alleged a claim under ERISA in the original Complaint for failure to produce the administrative record pursuant to 29 U.S.C. § 1132(c)(1), following United's first Motion to Dismiss, Surgery Center filed an Amended Complaint recasting this claim as one allegedly for "breach of an insurance contract," i.e. , the Plan, for United's refusal to provide the requested Plan documents and claims file. (Doc. 29 ¶¶ 31-32) ("[United] provided health insurance to C.R. under the insurance policy, which is a binding and enforceable insurance contract.... The insurance contract required Defendant's production of the germane documentation/information requested by [Surgery Center].") Thus, Count I is nothing more than Surgery Center's original claim under ERISA to enforce a term in the Plan for copies of administrative documents. (Doc. 31) (contending that Plaintiff has no standing to seek enforcement of Plan terms that reiterate ERISA rights under 29 C.F.R. § 2560.503-1(h)(2) ). United argues that Surgery Center lacks standing to enforce any ERISA statutory provisions or Plan rights—even under the guise of calling it a "breach of contract" claim—based on a putative (but unfiled) "assignment of benefits" from Patient C.R. Simply recasting Surgery Center's claim as one for "breach of a health insurance contract/plan" as the assignee, when the right to be exercised "under the contract" is nothing other than an attempt to obtain documents pursuant to ERISA, will not allow Surgery Center to avoid the ERISA standing issue.
ERISA permits a plan participant or beneficiary to bring a civil action "to recover benefits due to him under the terms of his plan." 29 U.S.C. § 1132(a)(1)(B). "Two categories of persons may sue for benefits under an ERISA plan: plan beneficiaries and plan participants." Griffin v. Suntrust Bank, Inc. , 648 F. App'x 962, 967 (11th Cir. 2016) (unpublished). "Healthcare providers are typically not ‘participants’ or ‘beneficiaries,’ so they lack independent standing, but they may obtain derivative standing through a written assignment from a beneficiary or participant." Id.
Unpublished opinions of the Eleventh Circuit constitute persuasive, and not binding, authority. See 11th Cir. R. 36-2 and I.O.P. 6.
A healthcare provider such as Surgery Center generally "acquire[s] derivative standing to sue under ERISA by obtaining a written assignment" from its patient of the right to payment of medical benefits. See id. (quoting Conn. State Dental Ass'n v. Anthem Health Plans, Inc. , 591 F.3d 1337, 1347 (11th Cir. 2009) ). In this case, Surgery Center is relying on its "assignment of benefits" to argue in effect that, because the Patient C.R. was entitled to the entire claims file under the terms of the Plan, Surgery Center is now entitled to obtain the documents it is demanding under the Plan, including the entire claims file. As United points out, Surgery Center has not filed nor even quoted the language of the putative "assignment of benefits" it allegedly received from Patient C.R. (Doc. 31 at 20). Instead, Surgery Center simply mentions in passing that it "was the authorized representative of C.R. with an assignment of benefits ... for which a proper amount of compensation was/is due and owing." (Doc. 29 ¶ 2) (emphasis added).
The Court assumes arguendo that the Plan in this case allows assignment because United has not raised the issue of a restriction on the assignment of certain rights to healthcare providers. (Doc. 31 at 11 n.6) (noting anti-assignment clauses present in other plans where Surgery Center's claims were dismissed); cf. Griffin , 648 F. App'x at 965 (noting specifically that the plan at issue permitted assignment of benefits to healthcare providers). Several of the previous cases filed by Surgery Center of Viera in the Middle District of Florida were resolved in the early stages of litigation due to the anti-assignment clauses found in the insurance plans. See, e.g., Surgery Center of Viera, LLC v. Unitedhealthcare, Inc. , Case No. 6:19-cv-1628-Orl-78DCI (M.D. Fla. May 14, 2020).
"When addressing a defendant's motion to dismiss for lack of standing, the court evaluates standing based on the facts of the complaint." Lluis v. Bank of Am. , No. 5:13-cv-130-OC-22PRL, 2013 WL 12157852, at *2 (M.D. Fla. Apr. 8, 2013) (citing Shotz v. Cates , 256 F.3d 1077, 1081 (11th Cir. 2001) ). However, the court "may not speculate concerning the existence of standing or piece together support for the plaintiff." Id. Even if Surgery Center had provided the language of Patient C.R.’s "assignment of benefits" in the Amended Complaint, it would not have standing to obtain the Plan documents.
The Eleventh Circuit has held that an assignment of benefits entitling an out-of-network healthcare provider to compensation does not give that provider standing to enforce the other ERISA statutory obligations to produce the summary plan description or documents from the administrative record and claims file. See Griffin , 648 F. App'x at 967 (affirming district court's dismissal of out-of-network doctor's claim seeking statutory penalties for failure to produce the administrative file). This is because ERISA permits only a "participant" or "beneficiary" as defined in § 1132(a)(1)(A) to sue for statutory penalties. Id. (holding that healthcare provider as assignee lacked standing to sue for statutory penalties for the benefit plan's failure to comply with a request for information under ERISA); Rojas v. Cigna Health & Life Ins. Co., 793 F. 3d 253, 258-59 (2d Cir. 2015) (holding that a physician removed from the coverage network for overbilling did not have standing to assert beneficiary claims under ERISA because patients had assigned only the "benefits payable" and did not expressly assign any other patients’ rights); Ward v. Alt. Health Delivery Sys., Inc. , 261 F.3d 624, 627 (6th Cir. 2001) ("The fact that plaintiff [chiropractor] may be entitled to payment from [the HMO] as a result of her clients’ participation in an employee plan does not make her a beneficiary for the purpose of ERISA standing" to assert other claims).
Surgery Center failed to specifically allege in the Amended Complaint that the assignment from Patient C.R. includes the right to obtain plan documents, as opposed to the more typical limited and general assignment of the right to receive benefits payable. Griffin v. Publix Super Markets, Inc. , No. 8:16-cv-01243-T-27AEP, 2016 WL 8999466, at *3 (M.D. Fla. Aug. 2, 2016) (dismissing doctor's claim for statutory penalties under § 1132(c)(1) for plan administrator's failure to produce plan documents because doctor lacked standing under the statute or through an assignment). Accordingly, Count I seeking to compel C.R.’s claims file does not state a claim for which relief can be granted and it will be dismissed with prejudice. Cf. Surgery Center of Viera LLC v. UnitedHealthcare, Inc. , Case No. 6:19-cv-926-Orl-78DCI (M.D. Fla. March 18, 2020) (denying dismissal of breach of contract claim where the patient's written assignment of rights—filed in the court record—included the patient's assignment of "any legal, administrative or contractual claim ... concerning medical expenses ... and the express[ ] and knowing[ ] assign[ment of] any ERISA ... statutory, regulatory, administrative or other legal claim" and defendants failed to present any precedent that "an explicit assignment of such rights is unenforceable").
B. Counts II, III, and IV
United moves to dismiss Surgery Center's state law claims arguing that they are defensively preempted by ERISA. Counts II, III, and IV of Surgery Center's Complaint set forth state law claims for breach of contract, unjust enrichment, and quantum meruit based on United's failure to pay Surgery Center at a specified rate for medical services provided. Surgery Center alleges that United provided health insurance to Patient C.R. and that the governing PMCS contract covered the subject medical services which "should have been paid out." Surgery Center contends that United had a duty to properly investigate the subject medical services and compensate Surgery Center pursuant to the 80% rate provided in the PMCS contract, and that failure to do so was a breach of that contract. Surgery Center further contends that it conferred a direct benefit upon United by providing the patient with medical services and that United has unjustly not paid the proper value of the benefit conferred. Surgery Center similarly argues that it is entitled to reasonable compensation for the services provided and that United's failure to pay would be inequitable.
1. Counts II, III, and IV are not defensively preempted
United moves to dismiss Surgery Center's state law claims arguing that these claims are defensively preempted by the ERISA statute. ERISA is one of the few federal statutes under which two types of preemption may arise: (1) defensive preemption and (2) complete preemption. Connecticut State Dental Ass'n v. Anthem Health Plans, Inc., 591 F.3d 1337, 1343 (11th Cir. 2009). "[D]efensive preemption is a substantive defense to preempted state law claims." Id. (citing Jones v. LMR Int'l, Inc. , 457 F.3d 1174, 1179 (11th Cir. 2006) ). "This type of preemption arises from ERISA's express preemption provision, § 514(a), which preempts any state law claim that ‘relates to’ an ERISA plan." 29 U.S.C. § 1144(a).
In addition to the term "defensive preemption," courts have called this kind of preemption "ERISA preemption," "conflict preemption," "express preemption," and simply "preemption" when addressing whether state law claims are preempted by § 514 of ERISA. For the purposes of this Order, the Court will use the term "defensive preemption," but the different titles do not substantively change the analysis.
United only argued complete preemption was not an issue in the case in contrast to defensive preemption. To the extent Surgery Center argued its claims are "rate of payment" rather than "right of payment" disputes, such analysis does not apply in the context of defensive preemption, as United acknowledges. (See Doc. 31 at 9-12).
ERISA defensively preempts "any and all State laws insofar as they may now or hereafter relate to any employee benefit plan." 29 U.S.C. § 1144(a). State laws include "all laws, decisions, rules, regulations or other State action having the effect of law." 29 U.S.C. § 1144(c)(1). "The statute does not define the term ‘relate to,’ a task necessarily left to the courts for determination in the context of facts that arise in each particular case." United Healthcare Servs., Inc. v. Sanctuary Surgical Ctr., Inc. , 5 F. Supp. 3d 1350, 1361–62 (S.D. Fla. 2014). As the Eleventh Circuit has recognized, "decisions in the ERISA preemption area have been neither consistent nor clear." Morstein v. Nat'l Ins. Servs., Inc. , 93 F.3d 715, 718 (11th Cir. 1996). In Mornstein , the Eleventh Circuit conducted a detailed analysis of ERISA defensive preemption cases from the United States Supreme Court and extended the analysis to similar circuit court cases to create a unified precedent for defensive preemption cases.
As the Eleventh Circuit noted, the Supreme Court has found certain state law claims to be defensively preempted by ERISA. United relies on the Supreme Court decision in Pilot Life Insurance Co. v. Dedeaux , 481 U.S. 41, 57, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987) to argue that state common law contract claims are defensively preempted by ERISA because they inherently "relate to" an ERISA plan. In Pilot Life, the Court held that because all of the common law causes of action brought by the insured employee were based on "alleged improper processing of a claim for benefits under an employee benefit plan," they met the criteria for defensive preemption under § 514(a). Since the Pilot Life decision, however, the Eleventh Circuit has held that some state laws may "affect an ERISA plan in too tenuous, remote, or peripheral a manner to warrant a finding that the law ‘relates to’ the plan." Lordmann Enterprises, Inc. v. Equicor, Inc. , 32 F.3d 1529, 1533 (11th Cir. 1994) (citing Shaw v. Delta Air Lines, Inc. , 463 U.S. 85, 96–97, 103 S.Ct. 2890, 2900, 77 L.Ed.2d 490 (1983) ).
In Lordmann , the Eleventh Circuit joined the Fifth and Tenth Circuits, based on the Supreme Court's interpretation of the ERISA statute, in finding "that state law claims brought by health care providers against plan insurers too tenuously affect ERISA plans to be preempted by the Act." 32 F.3d at 1533 (citing Hospice of Metro Denver, Inc. v. Group Health Ins. , 944 F.2d 752 (10th Cir. 1991) ; Memorial Hosp. Sys. v. Northbrook Life Ins. Co. , 904 F.2d 236 (5th Cir. 1990) ). The court considered the reasoning of the Fifth Circuit's decision in Memorial Hospital, which ultimately held that ERISA did not defensively preempt a healthcare provider's state law misrepresentation claims for two primary reasons:
First, preemption [of third-party provider claims] does not serve Congress's purpose for ERISA. Id. at 245. Congress enacted ERISA to protect the interests of employees and beneficiaries covered by benefit plans. Firestone Tire & Rubber Co. v. Bruch , 489 U.S. 101, 113, 109 S.Ct. 948, 955, 103 L.Ed.2d 80 (1989). Preemption in a third-party health care provider case would defeat rather than promote this goal. The "commercial realities" of the health care industry require that health care providers be able to rely on insurers’ representations as to coverage. Memorial Hosp., 904 F.2d at 246. If ERISA preempts their potential causes of action for misrepresentation, health care providers can no longer rely as freely and must either deny care or raise fees to protect themselves against the risk of noncoverage. In that event, the employees whom Congress sought to protect would find medical treatment more difficult to obtain. Id. Moreover, in this context disputes do not arise between the health care provider and the insurer under an ERISA plan, but "precisely because there is no ERISA plan coverage." Id.
Second, the Memorial Hospital court reasoned that health care providers were parties beyond ERISA's scope. See id. at 248–49. The Supreme Court has held that ERISA does not preempt "run-of-the-mill" claims by non-ERISA entities against ERISA plans, Mackey v. Lanier Collection Agency & Serv., Inc. , 486 U.S. 825, 832–33, 108 S.Ct. 2182, 2186–87, 100 L.Ed.2d 836 (1988), and thus ERISA a fortiori does not preempt claims by health care providers against a plan fiduciary. Memorial Hosp. , 904 F.2d at 249. Moreover, a health care provider's claim against a provider of insurance under the plan affects the relationship between the principal ERISA entities at best only indirectly. Id. at 249. Finally, health care providers were not parties to the ERISA "bargain." Id. at 249. When employers and employees gave up state law causes of action because of ERISA, they received federal causes of action under ERISA in exchange. On the other hand, ERISA does not provide a cause of action for aggrieved health care providers that treat ERISA participants. Id. ; see ERISA § 502(a), 29 U.S.C. § 1132(a) (1988 & Supp. IV 1992).
Lordmann , 32 F.3d at 1533-34 (emphasis added).
The Eleventh Circuit has since reaffirmed the Lordmann decision and other courts have similarly denied motions to dismiss state law claims based on ERISA's defensive preemption section. In Boca Raton Community Hospital, Inc. v. Great-West Healthcare of Florida , a judge in the Southern District of Florida rejected a defensive preemption argument at the summary judgment stage based on the reasoning in Lordmann that "state law claims brought by health care providers against plan insurers have too remote an effect on ERISA plans to be preempted by the Act." No. 06-80750-CIV, 2008 WL 728538, at *6 (S.D. Fla. Mar. 17, 2008). In that case, a hospital entered into an agreement with a third party to secure discounted rates from companies such as the health insurer-defendant. Id. at *1. The hospital became part of a third party's "network" after entering into an agreement for discounted rates, similar to the third-party "repricing contract" Surgery Center alleges in this case. Id. "Under the [a]greement, the [h]ospital agreed to provide health care to people who were members of the PCHS network at pre-set discounted rates, while PCHS agreed to broker the contract to insurers willing to be bound by its terms." Id. That third-party "repricing"-style contract, coupled with the underpayment of claims for medical services provided, was sufficient for the court to find that the state law claims for unpaid benefits, equitable common law claims (quantum meruit , promissory estoppel, quasi-contract), and Florida statutory claims were not defensively preempted by ERISA. Id. at 3-4.
The Eleventh Circuit has noted that "in the context of defensive preemption," it has similarly concluded that "healthcare provider claims for negligent misrepresentation are not preempted." Conn. State Dental , 591 F.3d at 1347 n.7 (citing Lordmann , 32 F.3d at 1533 ).
Other judges in the Middle District of Florida have also followed the reasoning from Lordmann to find that ERISA did not defensively preempt third-party providers’ claims. In Rocky Mountain Holdings, LLC v. Blue Cross and Blue Shield of Florida, Inc. , Judge Fawsett relied on Lordmann in noting that "courts have, with near unanimity, found that independent state law claims of third party healthcare providers are not preempted by ERISA." 6:08-cv-686-Orl-19KRS, 2008 WL 3833236, at *2 (M.D. Fla. Aug. 13, 2008) (citing In Home Health, Inc. v. Prudential Ins. Co. of Am. , 101 F.3d 600, 606 (8th Cir. 1996) ; Meadows v. Employers Health Ins. , 47 F.3d 1006 (9th Cir. 1995) ; Hospice of Metro Denver, Inc. v. Group Health Ins. of Okla., Inc. , 944 F.2d 752 (10th Cir. 1991) ; Mem. Hosp. Sys. v. Northbrook Life Ins. Co. , 904 F.2d 236 (5th Cir. 1990) ). In Rocky Mountain , an ambulance service brought suit against an HMO for failure to reimburse its service at the customary rate. Id. at *1. The court determined that the state law claims as alleged were not defensively preempted:
Although complete preemption—not defensive preemption—was at the heart of the analysis being considered in the motion to remand, defensive preemption was also addressed in the decision as a subsidiary issue.
Just as provider claims do not "relate" to employer health plans under ERISA's express preemption provision, Congress has not shown an intent to replace an entire category of state law provider claims by creating a federal cause of action. In fact, ERISA is silent about the right of providers to assert claims against health plans. Thus, ... the Plaintiffs’ claims fall within the category of claims that the Eleventh Circuit has deemed too tenuously related to ERISA to be preempted in any capacity.
Id.
The Tenth Circuit applied the same logic in Hospice of Metro Denver, Inc. v. Group Health Insurance of Oklahoma Inc. , in which the hospice, after being told its services were covered, brought promissory estoppel and quantum meruit claims against the group healthcare insurance plan for failure to pay for medical services provided to the plan's insured. 944 F.2d 752 (10th Cir. 1991). The Tenth Circuit reversed the district court's finding of defensive preemption under ERISA and dismissal. Id. The appellate court noted that "a preemption decision would shield Blue Cross from liability and leave the Hospice without recourse." Id. at 755. Importantly, the court explained that if the unpaid healthcare provider prevailed, "merely because its damages [calculation] would be based upon the amount of potential plan benefits" available under the group plan, it would "not implicate the administration of the plan" and was not "consequential enough to connect the action with, or relate the action to, the plan" to invoke defensive preemption. Id. (citing the Fifth Circuit's decision in Memorial Hosp. Sys. , 904 F.2d at 247 ).
Additionally, the cases United cites in its Motion to support defensive preemption are distinguishable. In arguing that state law claims for unpaid fees for medical services "relate to" an ERISA plan, such that they are defensively preempted, United relies on Alcalde v. Blue Cross and Blue Shield of Florida, Inc. , 62 F. Supp. 3d 1360 (S.D. Fla. 2014). In Alcalde , an out-of-network dentist alleged that the HMO's failure to pay the full amount for services it had pre-approved and pre-scheduled under the HMO agreement he relied upon in providing care to the HMO's "membership," as defined under the terms of the HMO plan, breached an alleged "oral contract." Id. at 1363. The district court found that the dentist's claims were preempted and "related to" the ERISA plan because the dentist was seeking the preauthorized amounts under the terms of and specifically based on the patients’ participation in the HMO plan; thus, any determination of the amount the HMO owed the dentist "related to" the ERISA plan. Id. at 1365 ; see also La Ley Recovery Sys.-OB, Inc. v. United Healthcare Ins. Co. , 193 So. 3d 16, 17 (Fla. 3d DCA 2016) (state law claims for unpaid medical services were defensively preempted where the out-of-network medical provider proceeded directly under the ERISA plan). In this case, however, Surgery Center is alleging that United's failure to pay for the medical services violates a completely different and non-ERISA agreement – the PMCS repricing agreement – which is a completely separate and distinct agreement from the ERISA plan.
United also cites the Supreme Court decision in Pilot Life to argue that the broad defensive preemption doctrine acts as an affirmative defense to any state law claims which simply "relate to" an ERISA plan. 481 U.S. at 41, 107 S.Ct. 1549. However, in Pilot Life , the Supreme Court found that an employee's common-law breach of contract and tort claims for claims processing issues were defensively preempted under ERISA because his disability claim was covered under the group disability insurance plan. Id. This case, on the other hand, is brought by an out-of-network medical provider, who was not a party to the ERISA plan, and is bringing suit to recover for medical services provided to an insured based on a third-party repricing contract. This is not the kind of case, such as Pilot Life, in which the individual insured is seeking benefits under the group insurance plan, which inherently "relates to" an ERISA plan.
United also relies on the Eleventh Circuit's decision in Butero v. Royal Maccabees Life Insurance Co. , 174 F.3d 1207 (11th Cir. 1999), which can similarly be distinguished from the facts of this case. In Butero , the court found that the state law claims against a life insurance company were defensively preempted by ERISA. Id. at 1215. The deceased employee's estate and his employer sued the life insurance company who belatedly (after the employee died) denied the employer's group life insurance application under an ERISA plan—after initially approving it. Id. The appellate court did not engage in an in-depth defensive preemption analysis but cited to Lordmann and Pilot Life in stating that the employer's claims related to an ERISA plan such that they were defensively preempted. The entire two-sentence paragraph on defensive preemption stated:
Defensive preemption defeats claims that seek relief under state-law causes of action that "relate to" an ERISA plan. 29 U.S.C. § 1144(a) ; Lordmann Enters. v. Equicor, Inc. , 32 F.3d 1529, 1532 (11th Cir. 1994). It has long been settled that claims such as [the employer's] "relate to" an ERISA plan. See Pilot Life Ins. Co. v. Dedeaux , 481 U.S. 41, 47–48, 107 S.Ct. 1549, 1553, 95 L.Ed.2d 39 (1987) (state-law bad faith, breach of contract, and fraud claims are all preempted under § 1144(a) ).
Id. Thus, Butero is clearly distinguishable from the instant facts because Surgery Center is not an individual employee or an employer bringing claims against the insurer "related to" coverage under a (putative or unconsummated) group plan. Rather, Surgery Center is a third-party provider suing for payment for services provided to the insured under a separate "repricing contract."
Applying the reasoning of the numerous circuit and district court decisions discussed above, the state law claims brought in this case are not the types of claims that are defensively preempted. In the cases in which individual employees or physicians brought state law claims to recover for medical services, the plaintiffs were either parties to the ERISA plans or sought to enforce terms of the ERISA plans and, accordingly, Congress created uniform federal causes of action for their recovery under the ERISA statute. In cases such as Surgery Center's, in which the Plaintiff is an out-of-network or "non-participating" healthcare provider and not seeking payment under the Plan, the state law claims do not "relate to" the ERISA plan. Accordingly, United's Motion to Dismiss Surgery Center's state law claims as defensively preempted by ERISA is due to be denied.
2. Counts II, III, and IV state a claim for relief
Turning to the merits of Counts II, III, and IV, United moves to dismiss all three claims for failing to state a claim upon which relief can be granted. Surgery Center alleges that the balance for Patient C.R.’s medical services should have been paid to it pursuant to the re-pricing rates prescribed in the governing contract with PMCS and that United's failure to do so was a breach of the contract. United argues that the PMCS agreement cannot be the basis of a breach of contract action because Surgery Center and PMCS were parties to the contract but United was not.
Under Florida law, to state a claim for breach of contract, a plaintiff must allege "(1) the existence of a contract, (2) a breach of the contract, and (3) damages resulting from the breach." Beck v. Lazard Freres & Co., LLC , 175 F.3d 913, 914 (11th Cir. 1999). Surgery Center has sufficiently pled what is necessary at this juncture to state a claim for breach of contract. In its Amended Complaint, Surgery Center alleges there was an agreement with PMCS prescribing the 80% rate for the listed providers including United, that United did not pay the 80% rate agreed to in the contract, and that it has suffered damages because of the breach. It is sufficient that Surgery Center alleges in the Amended Complaint and references in its Response that United had a contractual relationship with PMCS and that PMCS, as United's "affiliate and/or subcontractor," procured discounted rates from Surgery Center on United's behalf as its agent. These allegations, when read in the light most favorable to Surgery Center, are facially plausible. Surgery Center has alleged facts that allow the Court to draw the reasonable inference that a failure to pay the 80% rate agreed to in the PMCS contract may have been a contractual violation. (See Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ).
Surgery Center argues, in the alternative to its claim for breach of contract, that it conferred a direct benefit upon United by providing Patient C.R. with medical services such that United's failure to pay the 80% balance would unjustly enrich United. United argues that the claims for unjust enrichment and quantum meruit fail as a matter of law because it did not benefit from the medical services provided to Patient C.R. "Florida law prescribes four elements for quantum meruit and unjust enrichment claims." Merle Wood & Assocs., Inc. v. Trinity Yachts, LLC , 714 F.3d 1234, 1237 (11th Cir. 2013) (citing Commerce P'ship 8098 Ltd. P'ship v. Equity Contracting Co., Inc. , 695 So.2d 383, 386 (Fla. 4th DCA 1997) (en banc); see also Babineau v. Fed. Express Corp. , 576 F.3d 1183, 1194 (11th Cir. 2009) ). To state a claim for quantum meruit or unjust enrichment, a plaintiff "must allege (1) the plaintiff conferred a benefit on the defendant, (2) the defendant had knowledge of the benefit, (3) the defendant accepted or retained the benefit conferred, and (4) the circumstances indicate that it would be inequitable for the defendant to retain the benefit without paying fair value for it." Dyer v. Wal-Mart Stores, Inc. , 535 F. App'x 839, 841-842 (11th Cir. 2013) (citing Merle Wood & Assocs. v. Trinity Yachts, LLC , 714 F.3d 1234, 1237 (11th Cir. 2013) ). Under "quantum meruit, services must be performed under circumstances fairly raising a presumption that the parties understood and intended compensation to be paid." Id.
Although United relies on several conflicting district court opinions regarding the issue, "[w]hether healthcare treatment to insureds constitutes a ‘direct’ benefit to the insurance company, or a benefit at all, is unclear, and is a source of disagreement in courts within the Middle District of Florida." Baycare Health Sys., Inc. v. Med. Sav. Ins. , No. 8:07-cv-1222-T-27TGW, 2008 WL 792061, at *9 (M.D. Fla. Mar. 25, 2008) (citations omitted). Other district courts have found that a healthcare provider stated a claim for unjust enrichment where the provider alleged it would be inequitable for the healthcare insurers "to be allowed to collect premiums from their members and subscribers in return for agreeing to properly reimburse providers like [those providing air ambulance services] that render covered medical services without paying the value thereof" to the provider. See, e.g., Reva, Inc. v. Humana Health Benefit Plan of La., Inc. , Case No. 18-20136-Civ, 2018 WL 1701969 (S.D. Fla. Mar. 19, 2018) (denying motion to dismiss claims for air ambulance services provided to insured patients when the facilities treating them lacked the capabilities to render adequate treatment and insurers underpaid reimbursements although the standard charges were published online and publicly available).
Surgery Center has alleged enough at this stage of the litigation to survive the Motion to Dismiss—it provided services that allegedly conferred a benefit, it was not paid the previously-agreed balance due for the services, and that it would be inequitable for Surgery Center to not be paid for the services provided to United's insured. See Virani v. Homefield Fin., Inc. , No. 6:09-CV-511-ORL-22-DAB, 2010 WL 11507411, at *7 (M.D. Fla. May 10, 2010) (Conway, J.) (holding that unjust enrichment claim survived motion to dismiss where the plaintiffs alleged that defendants had been unjustly enriched at the expense of the plaintiffs and that it would be inequitable for defendants to keep the benefits). Thus, Surgery Center has sufficiently alleged its claims for breach of contract, or in the alternative, unjust enrichment and quantum meruit at this stage of the litigation. Dismissal of Counts II, III, and IV is due to be denied.
The extent of the nature of the PMCS agreement and whether it binds the parties currently before the Court, particularly since the role of PMCS as United's agent, "affiliate and/or subcontractor" is unclear, may be raised at the summary judgment stage.
C. Count V
United moves to dismiss Count V of the Amended Complaint which alleges a violation of Chapter 627 of the Florida Statutes. Surgery Center alleges that United failed to properly compensate it for the medical services provided to Patient C.R. as required under § 627.64194 when United underpaid for those services. United argues that Surgery Center has failed to plead that the services it provided to Patient C.R. met the statutory criteria, specifically that (1) the services were provided in a licensed facility as defined in § 627.64194(1)(b) as well one with a United contract; and (2) the patient did not have "an opportunity to select a participating provider."
Section § 627.64194 requires an insurer to reimburse a "nonparticipating provider" for "covered nonemergency services provided to an insured in accordance with the coverage terms of the health insurance policy." See Fla. Stat. § 627.64194(3), (4). United argues that Surgery Center has failed to plead that the nonemergency services it provided met the remaining criteria of the applicable portion of § 627.64194(3), namely, that (a) "the services were performed at a facility which has a contract for the nonemergency services" with United "which the facility would be otherwise obligated to provide under contract with the insurer"; and (b) Patient C.R. "did not have the ability and opportunity to select a participating provider at the facility who is available to treat the insured." See Fla. Stat. § 627.64194(4) (incorporating by reference subsections (3)(a) & (b)). Although Surgery Center specifically alleged in the Amended Complaint that it provided services to Patient C.R. for chronic neck pain, and that the reimbursement from United was not properly reimbursed (Doc. 29 ¶¶ 62, 64), Surgery Center does not dispute that it failed to allege that it was a "facility with a contract" with United or that Patient C.R. "did not have the ability and opportunity to choose a participating provider" at the Surgery Center. Instead, Surgery Center argues that the additional criteria that United points to in § 627.64194(3)(a), (b), do not apply to Surgery Center as the provider and only apply to the covered patient; thus, those conditions do not have to be pleaded in the Amended Complaint. Surgery Center argues that the "plain statutory language" is clear and the Court should not read more into the statute since the statutory language is express.
The pertinent portion of the statute reads:
(3) An insurer is solely liable for payment of fees to a nonparticipating provider of covered nonemergency services provided to an insured in accordance with the coverage terms of the health insurance policy, and such insured is not liable for payment of fees to a nonparticipating provider, other than applicable copayments, coinsurance, and deductibles, for covered nonemergency services that are:
(a) Provided in a facility that has a contract for the nonemergency services with the insurer which the facility would be otherwise obligated to provide under contract with the insurer; and
(b) Provided when the insured does not have the ability and opportunity to choose a participating provider at the facility who is available to treat the insured.
(4) An insurer must reimburse a nonparticipating provider of services under subsections (2) and (3) as specified in s. 641.513(5), reduced only by insured cost share responsibilities as specified in the health insurance policy, within the applicable timeframe provided in s. 627.6131.
Fla. Stat. § 627.64194(3), (4).
The statute defines a "facility" as a "licensed facility as defined in s. 395.002(16) and an urgent care center as defined in s. 395.002." Fla. Stat. § 627.64194(1)(b).
"An insurer must reimburse a nonparticipating provider of services under subsections (2) and (3) as specified in s. 641.513(5), reduced only by insured cost share responsibilities as specified in the health insurance policy." Fla. Stat. § 627.64194(4). Surgery Center does not allege that it provided "emergency" services which is governed by § 627.64194(2) and not applicable here. Under § 641.513(5), the insurer is required to reimburse the nonparticipating provider for services provided to its members in an amount equal to the lesser of: the provider's charges; the usual and customary provider charges for similar services in the community; or the charge mutually agreed to by the provider and the insurer within 60 days of submission of the claim. Fla. Stat. § 641.513(5).
Application of Surgery Center's interpretation of § 627.64194(3) would nullify the distinction between "participating" and "nonparticipating" medical providers and result in subsections (a) and (b) becoming completely superfluous. The statute defines a "[p]articipating provider" as a "preferred" provider with whom the insurer has established a "contract[ ] for reduced rates of payment," § 627.6471(1)(b); and an "exclusive provider" as one with whom the insurer has "entered into a written agreement ... to provide benefits under a health insurance policy" that "conditions the payment of benefits, in whole or in part, on the use of exclusive providers." § 627.6472(1)(c), (d). On the other hand, the statute defines a "[n]onparticipating provider" as any provider who does not fit the definitions of a "preferred" or "exclusive" provider. Thus, if a healthcare insurer was required to provide reimbursement, as Surgery Center argues, to every nonparticipating provider for all nonemergency services provided to all insureds under the statute's provisions, then there would be no point in providers taking steps to become "participating" providers (whether "preferred" or "exclusive") who bargain with the insurer to establish a fee agreement or exclusivity arrangements.
For a nonparticipating provider such as Surgery Center to fall within the ambit of the statute's reimbursement requirement, § 627.64194(4), it would have been required to provide the nonemergency services in "a facility that has a contract for the nonemergency services with the insurer" but provided by the nonparticipating provider because there was no participating provider available at the facility. See § 627.64194(3)(a), (b). Surgery Center's reimbursement claim does not come within the statutory reimbursement provisions of § 627.64194(4) because Surgery Center has not alleged that it had any pre-existing "preferred" or "exclusive" provider contract or agreement directly with United for its facility and services. Surgery Center also has not alleged that the facility was (or employed) a "participating provider" who could not treat Patient C.R. because "one was not available." Count V as currently pleaded fails to state a claim for a violation of Florida Statute § 627.64194 and will be dismissed with prejudice. Based on the foregoing, it is ordered as follows:
Rather, Surgery Center's allegation is that through a "repricing contract," "UHC was in agreement with Preferred Medical Claim Solutions ("PMCS") (as UHC's affiliate and/or subcontractor) to secure discounted rates from providers (like SCV [Surgery Center] ), which were secured" at an 80% reimbursement rate. (Doc. 29 ¶¶ 10-11).
Given the dismissal of Counts One and Five, and the determination that Surgery's Center's claims for breach of contract, unjust enrichment and quantum meruit are not defensively preempted or governed by ERISA or the Plan's requirements, the Court need not reach the issue of whether Surgery Center failed to exhaust administrative remedies under the Plan. (See Doc. 31 at 16-18).
1. For the reasons set forth above, Defendant's Motion to Dismiss (Doc. 31) is GRANTED in part and DENIED in part as follows:
a. Counts I and V of Plaintiff's Amended Complaint are DISMISSED WITH PREJUDICE .
b. Dismissal is denied as to Counts II, III, IV of Plaintiff's Amended Complaint.
2. Defendant is ORDERED to file an answer to Counts II, III, IV of Plaintiff's Amended Complaint within 14 days of the date of this Order.
DONE and ORDERED in Chambers, in Orlando, Florida on June 8, 2020.