Bristol Sl Holdings, Inc. v. Cigna Health & Life Insurance

Opinion

FILED NOT FOR PUBLICATION JAN 14 2022 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRISTOL SL HOLDINGS, INC., a No. 20-56122 California corporation, in its capacity as the owner of the claims for Sure Haven, Inc., a D.C. No. California corporation, 8:19-cv-00709-PSG-ADS

Plaintiff-Appellant, MEMORANDUM* v.

CIGNA HEALTH AND LIFE INSURANCE COMPANY, a Connecticut corporation; CIGNA BEHAVIORAL HEALTH, INC., a Connecticut corporation,

Defendants-Appellees.

Appeal from the United States District Court for the Central District of California Philip S. Gutierrez, Chief District Judge, Presiding

Argued and Submitted October 20, 2021 Pasadena, California

Before: KLEINFELD, R. NELSON, and VANDYKE, Circuit Judges.

This case involves a contract dispute between Sure Haven (and its successor-

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. in-interest Bristol) and Cigna Health Insurance Company. After Cigna refused to

pay Sure Haven for various healthcare services provided to Cigna patients, Sure

Haven filed for bankruptcy and Bristol became the successor-in-interest through a

bankruptcy proceeding.1 Bristol then sued Cigna, and the district court ultimately

ruled for Cigna on all claims.

On appeal, Bristol argues the district court erred by: (1) granting Cigna’s

motion for summary judgment on the breach of contract and promissory estoppel

claims; (2) dismissing Bristol’s ERISA claim;2 (3) dismissing Bristol’s fraudulent

inducement claim; and (4) denying Bristol leave to file a third amended complaint.

We have jurisdiction under 28 U.S.C. § 1291, and affirm in part and deny in part.3

We first conclude that the district court erred in granting Cigna’s motion for

summary judgment on the breach of contract and promissory estoppel claims.

Grants of summary judgment are reviewed de novo, with all facts and inferences

drawn in favor of the non-moving party. Yellow Cab Co. of Sacramento v. Yellow

Cab of Elk Grove, Inc., 419 F.3d 925, 927 (9th Cir. 2005). Here, we conclude that

Bristol introduced sufficient evidence to create a genuine dispute of material fact

1 The facts underlying this dispute are explained in more detail in the related opinion. See infra n.2. 2 Bristol’s appeal regarding derivative standing under ERISA is addressed in the separate opinion filed simultaneously with this memorandum disposition. 3 In so ruling, this court takes no position on whether any or all of Bristol’s state law claims are preempted by ERISA. See 29 U.S.C. § 1144(a).

2 regarding the potential formation of an enforceable contract. In addition to the

hundreds of verification and authorization calls, Bristol introduced evidence of a

prior course of dealing with Cigna, specific and individualized treatment plans, as

well as agreements over specific percentages of UCR rates for the services rendered.

These actions are sufficient for a reasonable factfinder to conclude that an

enforceable contract had been formed under governing California law. See Regents

of Univ. of Cal. v. Principal Fin. Grp., 412 F. Supp. 2d 1037, 1042 (N.D. Cal. 2006).

In reaching the opposite conclusion, the district court relied primarily on two

arguments: (1) a lack of discussion between the two parties over the “usual,

customary, and reasonable rate” (UCR), meaning the percentage of costs that Cigna

would reimburse for Sure Haven’s services, and (2) the automatic disclaimers Cigna

says were played before all or most verification and authorization calls with Sure

Haven. Neither argument justifies the district court’s summary judgment ruling.

First, Bristol did introduce evidence of discussions over UCR, which the district

court improperly ignored. Cigna disputes whether the evidence Bristol introduced

actually relates to UCR, but this factual dispute proves summary judgment was

inappropriate. Second, the district court improperly concluded that the disclaimers

Cigna played before most verification or authorization calls stating that the

information provided “does not guarantee coverage or payment” established an

intent not to form a contract. However, Cigna’s disclaimer could be reasonably

3 interpreted as informing providers like Sure Haven that it must fulfill the required

terms of the deal (such as properly providing the healthcare services) before it could

be guaranteed payment. The parties may have formed a contract, but payment was

not yet “guaranteed” and still contingent on satisfactory performance of the terms of

the contract. See Regents of Univ. of Cal., 412 F. Supp. 2d at 1042. This is sufficient

to hold that summary judgment against Bristol on these claims was improper, and

therefore we reverse. Since both parties linked the promissory estoppel claim with

the implied and oral contract claims, we reverse the dismissal of the promissory

estoppel claim as well.

We affirm the district court’s dismissal of Bristol’s fraudulent inducement

claim. The Federal Rules of Civil Procedure require that “a party must state with

particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b).

Bristol has not done so here, instead alleging only that an unidentified “senior person

at Cigna” secretly decided to stop paying Sure Haven while still authorizing ongoing

treatment for its patients, and numerous Cigna “agents” perpetuated this fraud

through their phone calls with Sure Haven. This high-level and conclusory

allegation is not sufficient to meet the heightened pleading standards required, and

therefore the district court’s dismissal of Bristol’s fraudulent inducement claim is

affirmed.4 See Irving Firemen’s Relief & Ret. Fund v. Uber Techs., 998 F.3d 397,

4 This court takes no position on whether the economic loss rule bars Bristol’s claim.

4 403–04 (9th Cir. 2021).

Finally, we affirm the district court’s decision to deny Bristol’s motion for

leave to file a third amended complaint, which would have added a cause of action

for an open book account. We review a district court’s denial of a motion for leave

to amend a complaint for abuse of discretion, which is particularly broad when the

court has already granted leave to amend. Chodos v. W. Publ’g Co., 292 F.3d 992,

1003 (9th Cir. 2002). Here, the district court had already granted Bristol leave to

amend its compliant twice before, and both times Bristol chose not to add the open

book account cause of action. The district court concluded in part that Bristol should

not be allowed to “assert a cause of action that it should have included when this

case began over a year ago,” and our circuit has previously held this justification

sufficient to uphold the district court’s decision. See id. For this reason, we affirm

the district court’s denial of Bristol’s motion for leave to amend its complaint.

Therefore, Bristol’s appeal is AFFIRMED IN PART and DENIED IN

PART. The case is remanded to the district court for further proceedings consistent

with this opinion.