Bay Area Surgical Management LLC v. Aetna Life Insurance

166 F. Supp. 3d 988, 2015 U.S. Dist. LEXIS 176955, 2015 WL 10457212
CourtDistrict Court, N.D. California
DecidedSeptember 21, 2015
DocketCase No. 15-cv-01416-BLF
StatusPublished
Cited by4 cases

This text of 166 F. Supp. 3d 988 (Bay Area Surgical Management LLC v. Aetna Life Insurance) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bay Area Surgical Management LLC v. Aetna Life Insurance, 166 F. Supp. 3d 988, 2015 U.S. Dist. LEXIS 176955, 2015 WL 10457212 (N.D. Cal. 2015).

Opinion

[991]*991ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS WITH LEAVE TO AMEND

[Re: ECF 31, 35]

BETH LABSON FREEMAN, United States District Judge

Plaintiffs Bay Area Surgical Management, LLC, Bay Area Surgical Group, Inc., Forest Surgery Center, L.P., SOAR Surgery Center, LLC, Knowles Surgery Center, LLC, National Ambulatory Surgery Center, LLC, and Los Altos Surgery Center, L.P. bring this action alleging violations of the Sherman Act, intentional interference with prospective economic advantage, intentional interference with actual contractual relations, violations of California’s antitrust statute, the Cartwright Act, and violations of California’s Unfair Competition Law against Defendants E3 Healthcare Management LLC, Alpine Healthcare, LLC, Bascom Surgery Center, L.P., Campus Surgery Center L.P., El Cami-no Ambulatory Surgery Center, LLC, Silicon Valley Surgery Center, L.P., and Waverley Surgery Center, L.P.’s (collectively “E3”), Defendant United Healthcare Services, Inc. and Defendant Aetna Life Insurance Company (collectively “Insurers”). Before the Court are Defendant E3 and Defendant Insurers’ motions to dismiss Plaintiffs’ complaint, pursuant to Fed. R. Civ. P. 12(b)(6). The Court has considered the briefing submitted by the parties and the oral argument presented at the hearing on August 6, 2015. For the reasons discussed below, Defendant E3’s and Defendant Insurers’ motions to dismiss are GRANTED with LEAVE TO AMEND.

I. BACKGROUND

A. General Factual Background

The following factual allegations are taken from Plaintiffs’ Complaint. Plaintiff Bay Area Surgical Management, LLC manages ambulatory surgical centers, including some owned and operated by the other Plaintiffs. Compl. ¶ 3. The remaining six Plaintiffs own and operate ambulatory surgery centers at which outpatient surgeries are performed. Id. ¶¶ 4-9. Defendant Insurers are health insurance companies doing business in California. Id. ¶¶ 10-11. Defendants E3 Healthcare Management, LLC and Alpine Healthcare, LLC manage ambulatory surgery centers in Northern California. Id. ¶¶ 12-13. The remaining five Defendants own and operate ambulatory surgery centers at which outpatient surgeries are performed. ¶¶ 13-17.

Both of the Defendant Insurers have health benefit plans through which their insureds are reimbursed for covered surgical and facility services. Id. ¶22. The amount reimbursed by the health benefit plans depends on whether the services were performed by in-network or out-of-network providers. Id. ¶ 23. In-network service providers agree to a lower reimbursement rate in exchange for participation in Defendant Insurers’ networks. Id. ¶ 23. Insureds who utilize in-network service providers are required only to pay any applicable copayment or coinsurance along with the deductible amount provided in the plan. Id. On the other hand, out-of-network service providers are reimbursed at specific rates delineated in each insureds’ benefit plan. Id. Insureds are therefore responsible for any applicable copayment, coinsurance, and deductible amount as well as the difference charged by the out-of-network service provider and the amount reimbursed by Defendant Insurers. Id.

In early 2010 and continuing thereafter, Plaintiffs allege that Defendants conspired to suppress competition in the ambulatory surgery market in Northern California by [992]*992inducing and persuading physicians and patients not to use Plaintiffs’ ambulatory surgery centers, reducing payments to Plaintiffs’ ambulatory surgery centers, and refusing to offer a reasonable and nondiscriminatory in-network contract to Plaintiffs. Id. ¶¶ 20-21, 32. According to Plaintiffs, Defendants “ ‘engaged in a continuous stream of communications about Plaintiffs with the objective of eliminating, restraining or substantially reducing [P]laintiffs’ ability to compete’ in the ambulatory surgical center market in Northern California.” Id. ¶ 32. Plaintiffs allege that there “have been numerous writings, conversations and meetings among [Defendants] to accomplish this objective.” Id.

As a result of Defendants’ conduct, Plaintiffs allege that ambulatory surgical centers and surgeons have been restricted from functioning in a competitive and open market, the ability of Plaintiffs to attract patients has been severely impacted, and patients have been required to pay coinsurance so that costs to consumers have increased. Id. ¶ 33. Moreover, Plaintiffs allege that Defendant’s conduct wrongfully interfered with actual and prospective contractual relationships between Plaintiff and physicians Dr. Andy Yu, Dr. Peter Yuan, Dr. Julia Kahan, Dr. Norman Kahan, Dr. Samir Sharma, Dr. Jeff Gutman, and Dr. Shahram Gholami. Id. ¶¶ 44, 52.

B. Procedural Background

On March 27, 2015, Plaintiffs filed a complaint against Defendants. ECF 1. On May 22, 2015, Defendant E3 and Defendant Insurers filed motions to dismiss the respective claims against them. ECF 31, 35. Plaintiffs filed oppositions on June 29, 2015, ECF 49, 51 and Defendants filed replies on July 23, 2015. ECF 53, 54. The parties appeared before the Court for oral argument on August 6, 2015. ECF 56.

II. LEGAL STANDARD

A. Rule 12(b)(6)

A motion to dismiss under Rule 12(b)(6) concerns what facts a plaintiff must plead on the face of the complaint. Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a complaint must include “a short and plain statement of the claim showing that the pleader is entitled to relief.” Any complaint that does not meet this requirement can be dismissed pursuant to Rule 12(b)(6). A “short and plain statement” demands that a plaintiff plead “enough facts to state a claim to relief that is plausible on its face,” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), which requires that “the plaintiff plead factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). The Court must “accept factual allegations in the complaint as true and construe the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir.2008).

B. Leave to Amend

Under Rule 15(a), a court should grant leave to amend “when justice so requires,” because “the purpose of Rule 15 ... [is] to facilitate decision on the merits, rather than on the pleadings or technicalities.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir.2000) (en banc). A court may deny leave to amend for several reasons, including “undue delay, bad faith, ... [and] futility of amendment.” Eminence Capital, LLC v. Aspeon, Inc.,

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166 F. Supp. 3d 988, 2015 U.S. Dist. LEXIS 176955, 2015 WL 10457212, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bay-area-surgical-management-llc-v-aetna-life-insurance-cand-2015.