Pacific Recovery Solutions v. United Behavioral Health, 4:20-cv-02249

Plaintiffs are four out-of-network intensive outpatient program (IOP) providers who allege United Behavioral Health (United) represented during verification-of-benefits calls that it would pay claims at a percentage of the usual, customary, and reasonable (UCR) rate, but instead reimbursed at lower amounts.
Plaintiffs alleged United used a repricing vendor (originally Viant, later MultiPlan) and undisclosed methodology to under-reimburse IOP claims, retaining the difference.
Plaintiffs asserted state-law claims (UCL, fraud/misrepresentation, negligence, conspiracy, breach of oral/implied contract, promissory estoppel); earlier versions of the complaint also asserted RICO and Sherman Act claims that were later dropped.
The Court previously dismissed two earlier complaints, allowing amendment to plead facts showing which claims involved plans not governed by ERISA.
In the Second Amended Complaint (SAC) plaintiffs removed detailed factual allegations and instead made conclusory assertions that some plans are not governed by ERISA.
The Court granted defendants’ motions to dismiss all state-law claims with prejudice because the SAC fails to plausibly allege that the underlying benefit plans fall outside ERISA, and further amendment would be futile.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether state-law claims are preempted by ERISA §514(a)	Plaintiffs contend some underlying plans are not ERISA-governed, so state-law claims survive	Defendants argue claims depend on ERISA-covered plans and thus are preempted	Court held claims are preempted because SAC contains only conclusory assertions that plans are non-ERISA and lacks facts to infer otherwise
Whether the SAC plausibly pleads non-ERISA plans and claim specifics under Rule 12(b)(6)	Plaintiffs argue their allegations suffice to give notice that some claims arise under non-ERISA plans	Defendants argue plaintiffs removed the factual detail required to make non-ERISA status plausible	Court held pleading is inadequate: plaintiffs removed previously alleged specifics and left bare assertions, failing Iqbal/Twombly plausibility standard
Whether further leave to amend is warranted	Plaintiffs previously had leave and could add specifics	Defendants contend plaintiffs already had opportunity and still fail to plead facts	Court held further amendment would be futile and dismissed claims with prejudice

Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading must contain factual content to make claims plausible)
New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645 (1995) (interpretation of ERISA’s preemption "relate to" language)
Providence Health Plan v. McDowell, 385 F.3d 1168 (9th Cir. 2004) (tests for ERISA preemption: reference to plan and connection with ERISA-governed relationship)
Wise v. Verizon Commc'ns, Inc., 600 F.3d 1180 (9th Cir. 2010) (state-law fraud/negligence claims preempted where they depend on ERISA plans for damages)
Johnson v. Dist. 2 Marine Eng’rs Beneficial Ass’n-Associated Mar. Officers, Med. Plan, 857 F.2d 514 (9th Cir. 1988) (affirming dismissal of preempted state-law claims)
Knievel v. ESPN, 393 F.3d 1068 (9th Cir. 2005) (court must accept factual allegations as true at motion to dismiss)
Schneider v. California Dep’t of Corr., 151 F.3d 1194 (9th Cir. 1998) (court may not consider materials beyond the complaint on a Rule 12(b)(6) motion)
Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911 F.2d 242 (9th Cir. 1990) (leave to amend should be granted unless pleading cannot be cured)