California Spine And Neurosurgery Institute v. JP Morgan Chase & Co.

District Court, N.D. California·Decided December 23, 2019·No. 4:19-cv-03552·Unknown

Opinion

NEUROSURGERY INSTITUTE, Case No. 19-cv-03552-PJH Plaintiff, ORDER GRANTING DEFENDANTS’ v. MOTION FOR JUDGMENT ON THE PLEADINGS WITHOUT PREJUDICE JP MORGAN CHASE & CO., et al., Re: Dkt. No. 20, 22 Defendants.

Defendants JP Morgan Chase (“defendant JPM”) and United Healthcare Insurance Co.’s (“defendant United Healthcare”) (collectively, “defendants”) motion for judgment on the pleadings came on for hearing before this court on December 18, 2019. Plaintiff California Spine and Neurosurgery Institute (“plaintiff”) appeared through its counsel, Anthony Maul. Defendant appeared through their counsel, Jessica Hardy. Having read the papers filed by the parties and carefully considered their arguments and the relevant legal authority, and good cause appearing, the court hereby GRANTS WITHOUT PREJUDICE defendants’ motion for the following reasons. On March 22, 2019, plaintiff filed this action against defendants in Alameda County Superior Court. Dkt. 1-1 (Compl.). In its complaint, plaintiff alleges state law claims for quantum meruit and promissory estoppel in connection with plaintiff’s provision of surgical services to an unidentified insured patient, “BM.” On June 19, 2019, defendants removed the action to this court. Dkt. 1. On At core, defendants argue that plaintiff’s state law claims are expressly preempted by Title 29 U.S.C. § 1144(a). As further explained below, the court’s resolution of this motion turns on whether plaintiff’s state law claims “relate to” the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”), as that phrase is understood under Title 29 U.S.C. § 1144(a). For that reason, the court details the allegations of this otherwise straightforward dispute below. A. The Operative Allegations Plaintiff provides complex surgeries to patients in Mountain View. Compl. ¶ 1. Defendant JPM (the investment bank) sponsors an “employee health insurance plan” that is administered on defendant JPM’s behalf by defendant United Health under an administrative services agreement. Id. ¶ 4. Defendant United Health operates as a managed care company and “insurers [sic] and administers” health insurance policies. Id. ¶ 5. With respect to defendant United Health, plaintiff is an “out of network” provider, which means that plaintiff “has not contracted with [defendant United Health] to participate in its provider network, or to provide services to its insureds at particular reimbursement rates.” Id. ¶ 8. BM is a middle-aged man who received the subject surgical services on his lower back pursuant to defendant JPM’s plan. Id. ¶¶ 6, 7. Plaintiff’s claims “arise from” defendants’ “drastic underpayment for highly complex and skilled surgical services” that plaintiff provided to BM. Id. ¶ 6. On or around August 23, 2018, plaintiff’s staff called defendant United Health “to verify the details of BM’s insurance coverage and benefits.” Id. ¶ 9. According to plaintiff, “[a] representative of [defendant United Health] informed plaintiff’s staff that [defendant United Health’s] payment for covered care rendered to BM by out-of-network providers would be based on ‘usual and customary rates.’” Id. Plaintiff’s staff recorded this information “on an insurance verification form.” Id. Plaintiff alleges that the phrase “usual and customary” is “a term of art in the healthcare and insurance industry” and “refers to the ordinary market rates charged in a providers with similar training and expertise.” Id. ¶ 10. Plaintiff further alleges that the California Department of Managed Health Care has adopted regulations codifying the definition of “reasonable and customary” to have a specific meaning and that defendants are aware of the meaning of “usual and customary” as defined by the California regulations. Id. Plaintiff subsequently alleges that defendant United Health “promised” to pay plaintiff the “usual and customary rates.” Id. ¶ 14. Plaintiff relies upon the parties’ August 23, 2018 phone call as the basis for such alleged promise. Id. ¶ 17. Before performing the subject surgery on BM, plaintiff “sought prior approval of coverage from defendant United Health.” Id. ¶ 11. On or about August 27, 2018, defendant United Health sent plaintiff a letter approving plaintiff’s performance of back surgery on BM. Id. Such approval cited certain service codes as eligible for coverage. Id. Defendants did not reverse their prior approval of coverage. Id. ¶ 14. On September 6, 2018, plaintiff performed surgery on BM. Id. ¶ 12. Plaintiff then billed defendants for its services using the cited service codes and applying plaintiff’s standard rates for such services. Id. In total, plaintiff charged defendants $77,000. Id. Plaintiff alleges that the rates ultimately charged to defendants “reflected the reasonable and customary value of the services at issue” and that plaintiff’s standard rates “are based on payments plaintiff has historically received from other payers, as well as plaintiff’s understanding of the prevailing rates” in Silicon Valley for such services as provided by comparable doctors. Id. ¶ 13. Defendant United Health paid plaintiff only $2,300 for the surgery provided by plaintiff to BM. Id. ¶ 14. Defendant United Health contended that the “allowed amount” for all services provided by plaintiff was “only $6,600, $4,300 of which was chargeable to [BM’s] deductible, copayment or coinsurance.” Id. ¶ 14. Plaintiff alleges that such allowed amounts “are far below even the average rates for such services in plaintiff’s geographic area,” much less the rates of a doctor with the qualifications of the surgeon here. Id. ¶ 15. Plaintiff further alleges that it “would not have performed the services it known defendants would pay an amount so far below usual and customary rates.” Id. Significantly, in its complaint, plaintiff makes no reference to an assignment of any rights, including those under an ERISA plan, by BM to plaintiff. 1. Allegations in Support of Quantum Meruit Claim Defendant United Health “pre-approved coverage” for BM’s surgical services and “explicitly told plaintiff’s staff that reimbursement for such services would be made pursuant to ‘usual and customary’ rates.” Id. ¶ 17. According to plaintiff, such statements by defendant United Health, acting as an agent of defendant JPM, constitute a “clear and unambiguous promise that defendants would pay plaintiff ‘usual and customary’ rates for the surgical services plaintiff provided BM.” Id. In reliance upon such promises, plaintiff provided BM with valuable services. Id. ¶ 18. At the time of the surgery, plaintiff was unaware that such promises were false and reasonably believed them to be true. Id. “Since the promises were made in response to direct inquiries by plaintiff’s staff regarding the patient’s insurance coverage and benefits, it was foreseeable that plaintiff would rely on them.” Id. Significantly, when describing its damages under this claim, plaintiff alleges that “[a]s a direct and proximate result of defendants’ failure to carry out their promises, plaintiff was injured in the amount of $74,700 (minus any applicable deductibles, coinsurance or copayments owed by the patient).” Id. ¶ 19. 2. Allegations in Support of Promissory Estoppel Claim Plaintiff alleges that “[d]efendants contract with participants and beneficiaries of their policies to provide payment for medically necessary healthcare in exchange for the payment of insurance premiums. As a result, plaintiff conferred tangible benefit upon defendants when it rendered highly-skilled medical services to defendants’ insured, BM.” Id. ¶ 23. Plaintiff further adds that it provided defendant these services to BM in response to defendant United Health’s promise to pay “reasonable and customary” rates for services, id. ¶ 24, and that the fai

Free access — add to your briefcase to read the full text and ask questions with AI

California Spine And Neurosurgery Institute v. JP Morgan Chase & Co., (N.D. Cal. 2019).

California Spine And Neurosurgery Institute v. JP Morgan Chase & Co. (California Spine And Neurosurgery Institute v. JP Morgan Chase & Co.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related