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9 Advanced Reimbursement Solutions LLC, et No. CV-19-05395-PHX-DJH al., Plaintiffs, 11 v. 12 Aetna Life Insurance Company, et al., 13 Defendants. 14 15 Pending before the Court is Plaintiffs/Counterdefendants Arrowhead Outpatient 16 Treatment Center, LLC, Lakeshore Interventional Treatment Center, LLC, Mesa 17 Outpatient Treatment Center, LLC, Tempe Interventional Treatment Center, LLC, Tempe 18 Outpatient Treatment Center, LLC, and West Valley OTC, LLC; and Valley Pain Centers, 19 LLC, Valley Pain Centers of Peoria, LLC, and Valley Pain Centers of Arizona, LLC 20 (collectively, “the OTCs”) Motions for Leave to Amend the Amended Complaint filed by 21 Advanced Reimbursement Solutions, LLC (“ARS”) at Doc 527. (Docs. 550, 551). 22 I. Background 23 In its previous Order, the Court found ARS lacked standing to bring the claims 24 against Aetna because the Patient Plaintiffs did not assign their claims to ARS, but rather 25 to the OTCs.1 (Doc. 519 at 9). The Court thus granted Aetna’s Motion to Dismiss for lack 26 of subject-matter jurisdiction and granted ARS’ request for “leave to amend its complaint
27 1 The Court will adhere to the findings of Judge Rayes’ prior Orders. See United States v. Alexander, 106 F.3d 874, 876 (9th Cir. 1997) (Under the “law of the case” doctrine, “a 28 court is generally precluded from reconsidering an issue that has already been decided by the same court, or a higher court in the identical case.”). 1 to add the OTCs as plaintiffs.” (Doc. 519 at 9). ARS then filed an Amended Complaint 2 that added the OTCs as Plaintiffs. (Doc. 527 at 3). The OTCs now seek leave to amend 3 the Amended Complaint. (Docs. 550, 551). 4 Aetna argues the motions to amend are futile because joinder of real parties in 5 interest cannot cure the Court’s lack of subject matter jurisdiction. (Doc. 574 at 8). The 6 OTCs argue the Court’s previous Order determined ARS lacked prudential standing—not 7 Article III standing—and thus can be cured by adding the OTCs as plaintiffs under Rule 8 17. (Doc. 608 at 4). The OTCs further argue the Court’s previous Order already decided 9 the issue of adding the OTCs as the real parties in interest and that Aetna is asking this 10 Court to reconsider a prior ruling. (Doc. 619 at 5). 11 II. Discussion 12 Two issues are before the Court: (1) whether Federal Rule of Civil Procedure 13 17(a)(3) permits ARS to substitute the OTCs as the real parties in interest and (2) whether 14 the OTCs should be granted leave to amend the Amended Complaint. 15 1. ARS’ Substitution of the OTCs under Fed. R. Civ. P. 17(a)(3) 16 As an initial matter, the Court already considered and ruled on whether the OTCs 17 could be joined as real parties in interest. Indeed, the Court found “[a]dding the OTCs as 18 plaintiffs does not appear to be a futile exercise; even Aetna agrees that if the Patient 19 Plaintiffs validly assigned their interests to the OTCs, the OTCs would be the real parties 20 in interest.” (Doc. 519 at 9). The Court explicitly noted that Aetna did not object to adding 21 the OTCs as the real parties. “And Aetna does not claim it would be prejudiced by ARS’s 22 proposed amendment. In fact, Aetna fails to meaningfully address ARS’s request at all, 23 arguing instead that ‘[w]hether ARS could have brought claims on behalf of the OTC[s] is 24 of no import because it did not do so.’” (Id. at 10). However, even if the Court considered 25 Aetna’s belated objection, ample precedent supports the Court’s decision to allow ARS to 26 amend its complaint to add the OTCs as real parties in interest. 27 “An action must be prosecuted in the name of the real party in interest.” Fed. R. Civ. 28 P. 17(a)(1). But “[t]he court may not dismiss an action for failure to prosecute in the name 1 of the real party in interest until, after an objection, a reasonable time has been allowed for 2 the real party in interest to ratify, join, or be substituted into the action. After ratification, 3 joinder, or substitution, the action proceeds as if it had been originally commenced by the 4 real party in interest.” Fed. R. Civ. P. 17(a)(3). 5 A plaintiff lacks prudential standing if he is not asserting his “own legal interests as 6 the real party in interest.” Dunmore v. United States, 358 F.3d 1107, 1112 (9th Cir. 2004). 7 Lack of prudential standing “does not rob the court of subject matter jurisdiction, but rather 8 can be remedied under [Rule 17(a)(3)].” Kulberg v. Washington Mut. Bank, 2011 WL 9 13356113, at *2 (S.D. Cal. June 20, 2011) (“Though Plaintiff lacks standing to bring this 10 lawsuit, dismissal for noncompliance with Rule 17(a) is not appropriate because Plaintiff 11 has not yet had the opportunity to cure his standing defect.”). 12 In Fund Liquidation Holdings LLC v. Bank of Am. Corp., the court addressed the 13 question of whether the original plaintiff possessed Article III standing when the case was 14 initiated, and, if not, whether the added plaintiff was nevertheless able to join the action 15 through Rule 17. The court concluded that, “while the [original plaintiff] lacked standing 16 at the time the case was commenced, Article III was nonetheless satisfied because the 17 [added plaintiff], the real party in interest, has had standing at all relevant times and may 18 step into the [original plaintiffs] shoes without initiating a new action from scratch.” Fund 19 Liquidation Holdings LLC v. Bank of Am. Corp., 991 F.3d 370, 375 (2d Cir. 2021), cert. 20 denied, 142 S. Ct. 757, 211 L. Ed. 2d 475 (2022). 21 Here, the Court found ARS did not have standing because if “the Patient Plaintiffs 22 validly assigned their claims to the OTCs . . . the OTCs would be the proper parties to bring 23 this lawsuit.” (Doc. 519 at 9). The proper remedy, therefore, was to permit ARS to add 24 the OTCs as the real parties in interest. See Fund Liquidation Holdings LLC, 991 F.3d at 25 386 (“Article III is satisfied so long as a party with standing to prosecute the specific claim 26 in question exists at the time the pleading is filed. If that party (the real party in interest) is 27 not named in the complaint, then it must ratify, join, or be substituted into the action within 28 a reasonable time. Only if the real party in interest either fails to materialize or lacks 1 standing itself should the case be dismissed for want of subject-matter jurisdiction.”) 2 2. Leave to Amend the Amended Complaint 3 The only remaining issue is whether the OTCs should be granted leave to amend 4 the Amended Complaint. 5 When assessing the propriety of a motion for leave to amend, the court considers 6 factors such as: “(1) bad faith, (2) undue delay, (3) prejudice to the opposing party, (4) 7 futility of amendment; and (5) whether plaintiff has previously amended his complaint.” 8 Allen v. City of Beverly Hills, 911 F.2d 367, 373 (9th Cir. 1990). “Generally, this 9 determination should be performed with all inferences in favor of granting the motion.” 10 Griggs v. Pace Am. Grp., Inc., 170 F.3d 877, 880 (9th Cir. 1999).
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9 Advanced Reimbursement Solutions LLC, et No. CV-19-05395-PHX-DJH al., Plaintiffs, 11 v. 12 Aetna Life Insurance Company, et al., 13 Defendants. 14 15 Pending before the Court is Plaintiffs/Counterdefendants Arrowhead Outpatient 16 Treatment Center, LLC, Lakeshore Interventional Treatment Center, LLC, Mesa 17 Outpatient Treatment Center, LLC, Tempe Interventional Treatment Center, LLC, Tempe 18 Outpatient Treatment Center, LLC, and West Valley OTC, LLC; and Valley Pain Centers, 19 LLC, Valley Pain Centers of Peoria, LLC, and Valley Pain Centers of Arizona, LLC 20 (collectively, “the OTCs”) Motions for Leave to Amend the Amended Complaint filed by 21 Advanced Reimbursement Solutions, LLC (“ARS”) at Doc 527. (Docs. 550, 551). 22 I. Background 23 In its previous Order, the Court found ARS lacked standing to bring the claims 24 against Aetna because the Patient Plaintiffs did not assign their claims to ARS, but rather 25 to the OTCs.1 (Doc. 519 at 9). The Court thus granted Aetna’s Motion to Dismiss for lack 26 of subject-matter jurisdiction and granted ARS’ request for “leave to amend its complaint
27 1 The Court will adhere to the findings of Judge Rayes’ prior Orders. See United States v. Alexander, 106 F.3d 874, 876 (9th Cir. 1997) (Under the “law of the case” doctrine, “a 28 court is generally precluded from reconsidering an issue that has already been decided by the same court, or a higher court in the identical case.”). 1 to add the OTCs as plaintiffs.” (Doc. 519 at 9). ARS then filed an Amended Complaint 2 that added the OTCs as Plaintiffs. (Doc. 527 at 3). The OTCs now seek leave to amend 3 the Amended Complaint. (Docs. 550, 551). 4 Aetna argues the motions to amend are futile because joinder of real parties in 5 interest cannot cure the Court’s lack of subject matter jurisdiction. (Doc. 574 at 8). The 6 OTCs argue the Court’s previous Order determined ARS lacked prudential standing—not 7 Article III standing—and thus can be cured by adding the OTCs as plaintiffs under Rule 8 17. (Doc. 608 at 4). The OTCs further argue the Court’s previous Order already decided 9 the issue of adding the OTCs as the real parties in interest and that Aetna is asking this 10 Court to reconsider a prior ruling. (Doc. 619 at 5). 11 II. Discussion 12 Two issues are before the Court: (1) whether Federal Rule of Civil Procedure 13 17(a)(3) permits ARS to substitute the OTCs as the real parties in interest and (2) whether 14 the OTCs should be granted leave to amend the Amended Complaint. 15 1. ARS’ Substitution of the OTCs under Fed. R. Civ. P. 17(a)(3) 16 As an initial matter, the Court already considered and ruled on whether the OTCs 17 could be joined as real parties in interest. Indeed, the Court found “[a]dding the OTCs as 18 plaintiffs does not appear to be a futile exercise; even Aetna agrees that if the Patient 19 Plaintiffs validly assigned their interests to the OTCs, the OTCs would be the real parties 20 in interest.” (Doc. 519 at 9). The Court explicitly noted that Aetna did not object to adding 21 the OTCs as the real parties. “And Aetna does not claim it would be prejudiced by ARS’s 22 proposed amendment. In fact, Aetna fails to meaningfully address ARS’s request at all, 23 arguing instead that ‘[w]hether ARS could have brought claims on behalf of the OTC[s] is 24 of no import because it did not do so.’” (Id. at 10). However, even if the Court considered 25 Aetna’s belated objection, ample precedent supports the Court’s decision to allow ARS to 26 amend its complaint to add the OTCs as real parties in interest. 27 “An action must be prosecuted in the name of the real party in interest.” Fed. R. Civ. 28 P. 17(a)(1). But “[t]he court may not dismiss an action for failure to prosecute in the name 1 of the real party in interest until, after an objection, a reasonable time has been allowed for 2 the real party in interest to ratify, join, or be substituted into the action. After ratification, 3 joinder, or substitution, the action proceeds as if it had been originally commenced by the 4 real party in interest.” Fed. R. Civ. P. 17(a)(3). 5 A plaintiff lacks prudential standing if he is not asserting his “own legal interests as 6 the real party in interest.” Dunmore v. United States, 358 F.3d 1107, 1112 (9th Cir. 2004). 7 Lack of prudential standing “does not rob the court of subject matter jurisdiction, but rather 8 can be remedied under [Rule 17(a)(3)].” Kulberg v. Washington Mut. Bank, 2011 WL 9 13356113, at *2 (S.D. Cal. June 20, 2011) (“Though Plaintiff lacks standing to bring this 10 lawsuit, dismissal for noncompliance with Rule 17(a) is not appropriate because Plaintiff 11 has not yet had the opportunity to cure his standing defect.”). 12 In Fund Liquidation Holdings LLC v. Bank of Am. Corp., the court addressed the 13 question of whether the original plaintiff possessed Article III standing when the case was 14 initiated, and, if not, whether the added plaintiff was nevertheless able to join the action 15 through Rule 17. The court concluded that, “while the [original plaintiff] lacked standing 16 at the time the case was commenced, Article III was nonetheless satisfied because the 17 [added plaintiff], the real party in interest, has had standing at all relevant times and may 18 step into the [original plaintiffs] shoes without initiating a new action from scratch.” Fund 19 Liquidation Holdings LLC v. Bank of Am. Corp., 991 F.3d 370, 375 (2d Cir. 2021), cert. 20 denied, 142 S. Ct. 757, 211 L. Ed. 2d 475 (2022). 21 Here, the Court found ARS did not have standing because if “the Patient Plaintiffs 22 validly assigned their claims to the OTCs . . . the OTCs would be the proper parties to bring 23 this lawsuit.” (Doc. 519 at 9). The proper remedy, therefore, was to permit ARS to add 24 the OTCs as the real parties in interest. See Fund Liquidation Holdings LLC, 991 F.3d at 25 386 (“Article III is satisfied so long as a party with standing to prosecute the specific claim 26 in question exists at the time the pleading is filed. If that party (the real party in interest) is 27 not named in the complaint, then it must ratify, join, or be substituted into the action within 28 a reasonable time. Only if the real party in interest either fails to materialize or lacks 1 standing itself should the case be dismissed for want of subject-matter jurisdiction.”) 2 2. Leave to Amend the Amended Complaint 3 The only remaining issue is whether the OTCs should be granted leave to amend 4 the Amended Complaint. 5 When assessing the propriety of a motion for leave to amend, the court considers 6 factors such as: “(1) bad faith, (2) undue delay, (3) prejudice to the opposing party, (4) 7 futility of amendment; and (5) whether plaintiff has previously amended his complaint.” 8 Allen v. City of Beverly Hills, 911 F.2d 367, 373 (9th Cir. 1990). “Generally, this 9 determination should be performed with all inferences in favor of granting the motion.” 10 Griggs v. Pace Am. Grp., Inc., 170 F.3d 877, 880 (9th Cir. 1999). 11 Aetna has presented no arguments in its Response apart from arguing that further 12 amendment would be futile because ARS should not have been allowed to file the 13 Amended Complaint because adding the OTCs does not cure the Court’s lack of subject 14 matter jurisdiction. (Doc. 574 at 6–12). The Court, however, has already found that adding 15 the OTCs was not futile.2 The Court further finds the OTCs have not previously amended 16 its complaint. There is no evidence of bad faith or undue delay. Finally, Aetna does not 17 claim it would be prejudiced by allowing the OTCs to amend its complaint.3 18 Given Aetna raised no further arguments, and the OTCs brought the motion to 19 amend because of the purported pleading deficiencies in the Amended Complaint raised 20 by Aetna during the parties meet and confer, the Court will grant the Motions. (Doc. 550 21 at 6). The parties agreed, and the Court deems it appropriate, to submit a single, omnibus 22 First Amended Complaint, which will incorporate the shared and independent allegations. 23 (Doc. 550 at 2 n.2). 24 Accordingly,
25 2 Although Aetna continues to raise the question of subject matter jurisdiction, this issue is not fully briefed. If Aetna contends the Patient Plaintiffs did not validly assign their claims 26 to the OTCs, then Aetna may raise the issue of subject matter jurisdiction in subsequent motions. This Court, however, will follow suit with the previous Order and allow the OTCs 27 to be added as plaintiffs.
28 3 The Court also notes Aetna has been granted three opportunities to amend its counterclaims against the counter defendants. (Doc. 544). 1 IT IS HEREBY ORDERED that both Arrowhead OTCs and Valley Pain’s 2|| Motions for Leave to Amend the Amended Complaint (Docs. 550, 551) are granted. 3 IT IS FURTHER ORDERED that the parties shall file a single, omnibus First Amended Complaint which includes all shared and independent allegations and claims no later than 30 days from the date of this Order. 6 Dated this 21st day of June, 2022. 7 8 Do we ? norable'Dian¢g/. Hunfetewa 10 United States District Fudge 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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