5:20-cv-02251
N.D. Cal.Mar 29, 2021Background
- Four out-of-network behavioral-health providers (Plaintiffs) treated Cigna-insured patients after verifying benefits on VOB calls in which Cigna represented claims would be paid based on UCR (via MRC I/II or similar benchmarks).
- Plaintiffs submitted claims as assignees of patient benefits; Cigna routed claims to Viant (a third-party repricer) via EDI, which returned reduced “repriced” offers and sent patients PAD letters claiming to negotiate on their behalf.
- Viant’s offers allegedly were not derived from UCR or plan terms, produced payments averaging ~11–15% of billed charges, left patients with large balance bills, and left providers underpaid by substantial sums.
- Plaintiffs assert state-law claims (UCL, fraudulent/ negligent misrepresentation, promissory estoppel, breach of contract, civil conspiracy), civil RICO, and Section 1 Sherman Act claims; Cigna and Viant moved to dismiss.
- Court granted motions to dismiss: state-law and RICO claims dismissed with leave to amend (state claims preempted as pleaded; RICO for standing and pleading defects); Sherman Act claim dismissed with prejudice (antitrust standing and product/market implausibility).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Plaintiffs’ state-law claims are preempted by ERISA (complete or conflict) | Plaintiffs say claims are independent of plan terms and arise from Cigna’s representations on VOB calls | Defendants say claims depend on ERISA plans/plan terms and therefore are preempted under §514 (and complete preemption for removal) | Claims as pled are conflict-preempted under ERISA §514; dismissal w/ leave to amend (complete-preemption is jurisdictional/removal doctrine) |
| Whether Plaintiffs have RICO standing / proximate cause | Plaintiffs claim injury to business/property from defendants’ scheme to underpay | Defendants say patients are direct victims; providers’ injuries are derivative, speculative, and create risk of duplicative recovery | RICO claim dismissed for lack of standing / proximate cause (plaintiffs are indirect victims) |
| Whether RICO pleaded: association-in-fact, predicate acts, and Rule 9(b) particularity | Plaintiffs allege an enterprise between Cigna and Viant and predicate mail/wire fraud and federal health offenses | Defendants say routine commercial contract insufficient for RICO enterprise; mail/wire fraud not pled with who/what/when/where/how; federal health offenses theory not pleaded | RICO dismissed for failure to plead an association-in-fact and for inadequate predicate-act pleading under Rule 9(b); no discovery ordered to cure that pleading defect |
| Sherman Act §1 (antitrust standing and plausibility) | Plaintiffs allege buyer-side conspiracy to fix reimbursements for OON IOP services | Defendants argue plaintiffs lack antitrust standing (patients are direct victims), no discrete product/market alleged, and no market power | Antitrust claim dismissed with prejudice: plaintiffs lack antitrust standing and cannot plausibly allege a price‑fixing market for insurance benefits/ OON rates |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (pleading must state a plausible claim)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard; draw reasonable inferences for plaintiff)
- Vess v. Ciba-Geigy Corp., 317 F.3d 1097 (fraud-based claims must satisfy Rule 9(b) particularity)
- Aetna Health Inc. v. Davila, 542 U.S. 200 (ERISA preemption of state-law remedies duplicative of ERISA §502)
- Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d 941 (complete-preemption under ERISA §502 is jurisdictional/removal doctrine)
- Providence Health Plan v. McDowell, 385 F.3d 1168 (tests for ERISA §514 conflict preemption: reference to plan vs. connection with plan)
- Boyle v. United States, 556 U.S. 938 (association-in-fact enterprise elements for RICO)
- Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 (elements of a RICO claim)
- United States v. Miller, 953 F.3d 1095 (mail/wire fraud requires intent to deceive and deprive money/property)
- Lancaster Cmty. Hosp. v. Antelope Valley Hosp. Dist., 940 F.2d 397 (RICO fraud pleadings require particularity)
- Amarel v. Connell, 102 F.3d 1494 (factors for antitrust standing)
- In re WellPoint Out-of-Network "UCR" Rates Litig., 903 F. Supp. 2d 880 (healthcare-provider standing and pleading limitations in UCR litigation)