775 F. Supp. 2d 938
E.D. Tex.2011Background
- Encompass sues Ingenix, UnitedHealth and related entities over reimbursement for services provided to United's insureds in physician offices.
- Encompass collects assignments of benefits from patients, seeking to recover payments for out-of-network outpatient procedures and related supplies.
- Defendants halted many reimbursements starting June 2009 and demanded a refund for previously paid claims, claiming misrepresentation that Encompass operated as an ASC.
- Encompass alleges it did not misrepresent itself as an ASC and that bills were properly submitted with SU modifier reflecting the location; United contends Encompass twice billed for the same services.
- SAC asserts various state and federal claims including ERISA-related issues, and seeks declaratory relief and damages.
- Defendants move to dismiss under Rule 12(b)(1) and 12(b)(6); court must resolve standing, ERISA preemption, and the accordingly pleaded state-law and ERISA claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing via assignments | Encompass has derivative standing from patient assignments to sue for benefits. | Assignments do not expressly grant the right to sue; lack of standing to represent patients. | Encompass has standing to sue via derivative assignments. |
| ERISA preemption of state-law claims | Some state-law claims are not preempted; others can be recast as §502(a) claims. | Most state-law claims fall within ERISA §502(a) preemption and should be dismissed. | Not all state-law claims are preempted; some not preempted (negligent misrepresentation, fraud, defamation, etc.), others preempted with leave to amend as §502(a) claims; §1132(a)(3) claim dismissed as duplicative. |
| Breach of contract and pleading sufficiency | Breach of ERISA and non-ERISA contract provisions alleged with specific plan terms. | Plaintiff failed to identify specific contract provisions. | Breach of contract claim survives; sufficient plan-provision pleading at this stage. |
| Fraud and negligent misrepresentation pleading | United misrepresented coverage; claims plead with Rule 9(b) standards where intertwined with fraud. | Fraud claim lacks knowledge/mindset pleading; negligent misrepresentation insufficiently pled. | Fraud claim dismissed; negligent misrepresentation survives in part and may be amended to cure deficiencies. |
| DTPA and Texas Insurance Code pre-suit notice and standing | DTPA/Insurance Code claims arise from misrepresentations in plan communications; assignments may support standing. | Pre-suit notice required; DTPA standing lacking; claims may be preempted. | Pre-suit notice issues abated; DTPA claim dismissed for lack of standing; preemption and standing addressed with leave to amend in parts. |
Key Cases Cited
- Conn. State Dental v. Anthem Health Plans, 591 F.3d 1337 (11th Cir. 2010) (assignment of right to payment suffices for standing to sue under ERISA-related claims)
- Davila, 542 U.S. 200 (U.S. 2004) (two-part test for complete preemption under §502(a) (Davila test))
- Musmeci v. Schwegmann Giant Super Markets, Inc., 332 F.3d 339 (5th Cir. 2003) (proper defendant for §1132(a)(1)(B) includes entities with benefit determinations/plan administration control)
- Metro. Life Ins. Co. v. Taylor, 481 U.S. 58 (U.S. 1987) (complete preemption concept and scope of ERISA preemption)
- P.P.G. Industries, Inc. v. JMB/Houston Ctrs. Partners Ltd. P'ship, 146 S.W.3d 79 (Tex. 2004) (DTPA claims generally non-assignable)