Aetna Life Ins. Co. v. Found. Surgery Affiliates, LLC

358 F. Supp. 3d 426
CourtDistrict Court, E.D. Pennsylvania
DecidedDecember 13, 2018
DocketCIVIL ACTION NO. 13-3101
StatusPublished
Cited by14 cases

This text of 358 F. Supp. 3d 426 (Aetna Life Ins. Co. v. Found. Surgery Affiliates, LLC) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Aetna Life Ins. Co. v. Found. Surgery Affiliates, LLC, 358 F. Supp. 3d 426 (E.D. Pa. 2018).

Opinion

NITZA I. QUIÑONES ALEJANDRO, District Judge.

INTRODUCTION

Presently before this Court is a motion to dismiss for lack of subject matter jurisdiction filed by Defendants Foundation Surgery Management, LLC, and Foundation Surgery Affiliates, LLC (collectively, the "Foundation Defendants"). [ECF 208]. The Foundation Defendants seek the dismissal of the action filed by Plaintiff Aetna Life Insurance Company ("Plaintiff" or "Aetna Life") premised on their contention that this Court must consider the non-diverse citizenships of the purported real parties-in-interest which destroy diversity jurisdiction over this matter. Plaintiff has opposed the motion. [ECF 211].2

Subsequent to the parties' respective briefing on the Foundation Defendants' motion to dismiss, this Court directed Aetna Life to file a detailed list identifying: (1) the name of all self-insureds on behalf of whom Aetna Life seeks damages in this case and the citizenship of each of these entities for jurisdiction purposes; and (2) the names of the Aetna entities which paid the fully insured claims at issue in this case and the citizenship of these entities for jurisdiction purposes. [ECF 216]. The parties were also directed to address whether any claim belonging to any of the entities identified in Aetna Life's list can and/or should be severed from this matter pursuant to Federal Rule of Civil Procedure ("Rule") 21 in order to preserve diversity jurisdiction. [Id. ]. Both parties complied with said Order.

The issues raised in the Court's Order and the Foundation Defendants' motion to dismiss have been fully briefed and are now ripe for adjudication. Pursuant to Rule 21 and for the reasons set forth, Defendant Huntingdon Valley Surgery Center ("Defendant Huntingdon") is dropped from this matter, as are all claims asserted by Aetna Life on behalf of the self-insureds for whom Aetna Life has not provided citizenship. As a result of this Court's ruling, diversity jurisdiction is maintained, and the Foundation Defendants'

*430motion to dismiss for lack of subject matter jurisdiction is denied.

BACKGROUND3

On June 5, 2013, Aetna Life filed its initial complaint against Defendant Huntingdon Valley Surgery Center ("Defendant Huntingdon"), invoking diversity jurisdiction under 28 U.S.C. § 1322(a), as the basis for federal jurisdiction. Aetna Life is a Connecticut corporation with its principal place of business in Connecticut. Defendant Huntingdon is a Pennsylvania limited partnership with twenty-two limited partners in Pennsylvania and/or New Jersey. Thus, Defendant Huntingdon is deemed a citizen of both Pennsylvania and New Jersey. On December 2, 2013, Aetna Life filed an amended complaint (the operative complaint) which added the Foundation Defendants as parties. The Foundation Defendants are deemed citizens of Oklahoma. All parties agree that on the face of the amended complaint, complete diversity exists with respect to the actual entities named as parties to this litigation. However, as will be discussed below, diversity jurisdiction is destroyed if this Court is required to consider the citizenships of the numerous self-insureds on whose behalf Aetna Life asserts many of its claims since some of these self-insureds are citizens of Pennsylvania and/or New Jersey.

According to the amended complaint, Aetna Life is a managed care company offering insurance and administrative services to employer and pension-sponsored health benefit plans and their members nationwide. It also provides administrative services to health plans that are self-funded by employers or other groups. For its "fully insured" plans, Aetna Life administers health benefit claims and bears the financial risk of paying claims. For its "self-insured" plans, Aetna Life pays claims from the employer's own assets and provides third-party administrative services, such as the processing of claims and the recovery of overpayments. In a fully-insured health plan, premiums are paid to an insurance company, like Aetna Life, in exchange for insurance coverage. In turn, the insurer directly pays covered claims. In a self-funded or self-insured health benefit plan, the organization itself assumes the risk of the cost of health care services for its employees, and typically contracts with an entity, like Aetna Life, to provide administrative services. Aetna Life, serving as a plan administrator, oversees and manages the self-funded plans. As the plan administrator, Aetna Life may advance funds to pay claims, but those funds are reimbursed by the plans.

In the amended complaint, Aetna Life alleges that Defendants violated a Pennsylvania anti-kickback statute, committed insurance fraud, and tortiously interfered with contracts between Aetna Life and Defendant Huntingdon's physician-owners. Aetna Life's accusations stem from Defendants' alleged unlawful and fraudulent business policies and practices contrived and implemented by them to the financial detriment of Aetna Life and to its self-insureds. Briefly, Aetna Life contends that Defendants established an "out-of network" scheme to pay kickbacks to physicians to induce their referral of patients to Defendant Huntington4 rather than to less *431costly in-network facilities in the same geographic area. Aetna Life contends that these allegedly fraudulent referrals violate Pennsylvania law and public policy interest in containing healthcare costs; and that Defendants unlawfully inflated healthcare costs payable by Aetna Life and/or its self-insureds when Defendants waived co-payments that Aetna Life's insureds were required to pay for services provided at an out-of-network facility, such as Defendant Huntingdon, without advising Aetna Life of the waiver, while at the same time, billing for the full costs of the provided services.5

Notably, over the course of this litigation, Aetna Life has acknowledged that the majority of the damages that it seeks in this litigation were actually incurred by Aetna Life's self-insureds, rather than by Aetna Life. In addition, some of the damages sought were suffered by other Aetna entities, rather than by Aetna Life.

As noted, an appeal was taken on this matter, and a remand was ordered. See supra note 5. Upon remand, the Foundation Defendants filed the underlying motion to dismiss for lack of subject matter jurisdiction. [ECF 208]. Following the parties' briefing on the Foundation Defendants' motion to dismiss, Aetna Life was ordered to identify for diversity jurisdiction purposes: (1) all of the self-insureds on behalf of whom Plaintiff seeks damages in this case and the citizenship of each of these self-insureds; and (2) the Aetna entities which paid fully insured claims at issue in this case, and the citizenship of each such entity. [ECF 216]. The parties were also ordered to address whether any claim belonging to any of the self-insureds and/or Aetna entities identified could and/or should be severed from this matter. [Id. ].

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358 F. Supp. 3d 426, Counsel Stack Legal Research, https://law.counselstack.com/opinion/aetna-life-ins-co-v-found-surgery-affiliates-llc-paed-2018.