County of Riverside v. Cigna Health and Life Insurance Company

• Court: District Court, C.D. California
• Decided: June 13, 2025
• Docket: 2:24-cv-10793
• Status: Unknown

Opinion

1 2 3 4 5 6 JS-6 7 8 9 UNITED STATES DISTRICT COURT 10 CENTRAL DISTRICT OF CALIFORNIA 11 COUNTY OF RIVERSIDE, on behalf of Case No. 2:24-CV-10793-SPG-MAR 12 Riverside University Health System, ORDER GRANTING MOTION TO 13 Plaintiff, REMAND [ECF NO. 19] 14 v. 15 CIGNA HEALTH AND LIFE 16 INSURANCE COMPANY; CIGNA 17 HEALTHCARE OF CALIFORNIA, INC.; 18 and DOES 1-10, inclusive, Defendants. 19 20 21 Before the Court is the Motion to Remand Case Back to Los Angeles Superior Court 22 (ECF No. 19 (“Motion”)) filed by Plaintiff County of Riverside (“Plaintiff”). Defendants 23 Cigna Health and Life Insurance Company and Cigna Healthcare of California, Inc. 24 (together, “Defendants”) oppose the Motion. (ECF No. 26 (“Opp.”)). Plaintiff filed their 25 reply. (ECF No. 27 (“Reply”)). The Court has read and considered the matters raised with 26 respect to the Motion and concluded that this matter is suitable for decision without oral 27 argument. See Fed. R. Civ. P. 78(b); C.D. Cal. L.R. 7-15. Having considered the parties’ 28 submissions, the relevant law, and the record in this case, the Court GRANTS the Motion. 1 I. BACKGROUND 2 This is an action brought on behalf of Riverside University Health System (“the 3 Hospital”) seeking to recover from Defendants, which “operate health plans” or are “health 4 insurance provider[s],” an outstanding balance of nearly $1.475 million billed by the 5 Hospital for medical services provided to nine patients insured by Defendants. See 6 generally (ECF No. 1-2 (“Tsui Decl.”) ¶ 4, Ex. A (“Complaint”)). Each of the nine patients 7 received medical care in the Hospital’s emergency department at some time between May 8 28, 2023, and February 2, 2024. (Id. ¶¶ 27–28). After the Hospital rendered medical 9 services to each of the patients, the Hospital submitted claims for each patient to 10 Defendants for reimbursement of the services provided. (Id. ¶ 32). Defendants then issued 11 either partial payments or no payments at all for the services rendered. (Id. ¶¶ 32, 55). 12 Plaintiff thus brought this action to recover the outstanding balance of $1.475 million, 13 bringing one statutory cause of action under California’s Unfair Competition Law 14 (“UCL”), California Business and Professions Code sections 17200, et seq., and four 15 common-law causes of action for breach of implied-in-fact contract, breach of implied-in- 16 law contract, quantum meruit, and restitution based on quasi-contract/unjust enrichment. 17 (Id. ¶¶ 37–80). Plaintiff’s UCL and implied-in-law causes of action are premised on 18 Defendants’ alleged violation of California’s Knox-Keene Act and related administrative 19 regulations, that Plaintiff alleges require Defendants to reimburse the Hospital “at a 20 reasonable and customary value” for emergency medical services rendered to the patients. 21 (Id. ¶¶ 55, 60). 22 Plaintiff filed the action in the California Superior Court for the County of Los 23 Angeles on November 12, 2024. (Id.). On December 13, 2024, Defendants removed the 24 case to federal court on the grounds that this Court has federal question jurisdiction, 25 asserting the Employee Retirement Income Security Act of 1974 (“ERISA”) completely 26 preempts Plaintiff’s claims. See (ECF No. 1 (“NOR”) ¶ 5). On February 24, 2025, Plaintiff 27 challenged removal of the action by filing this Motion, arguing that its claims are not 28 preempted by ERISA and, accordingly, this Court does not have jurisdiction. See (Motion). 1 On March 26, 2025, Defendants filed their Opposition to the Motion. See (Opp.). Plaintiff 2 filed its reply on April 2, 2025. See (Reply). 3 II. LEGAL STANDARD 4 Federal courts are courts of limited jurisdiction, with subject-matter jurisdiction only 5 over matters authorized by the Constitution and Congress. See U.S. Const. art. III, § 2, cl. 6 1; Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). A suit filed in 7 state court may be removed to federal court if the federal court would have had original 8 jurisdiction over the suit. 28 U.S.C. § 1441(a). Federal courts have original jurisdiction 9 where an action presents a federal question under 28 U.S.C. § 1331 or where there is 10 diversity of citizenship under 28 U.S.C. § 1332. “The presence or absence of federal- 11 question jurisdiction is governed by the ‘well-pleaded complaint rule,’ which provides that 12 federal jurisdiction exists only when a federal question is presented on the face of the 13 plaintiff’s properly pleaded complaint.” Caterpillar Inc. v. Williams, 482 U.S. 386, 392 14 (1987). Complete preemption, however, is “an exception to the well-pleaded complaint 15 rule.” Saldana v. Glenhaven Healthcare LLC, 27 F.4th 679, 686 (9th Cir. 2020). This 16 exception, called the “artful-pleading doctrine,” allows removal where “federal law 17 completely preempts a plaintiff’s state law claim.” City of Oakland v. BP PLC, 969 F.3d 18 895, 905 (9th Cir. 2020) (internal quotation marks omitted). A claim purporting to be based 19 on state law may be considered to arise under federal law where “the pre-emptive force of 20 a statute is so extraordinary” in the relevant area of state law that it converts the state law 21 claim “into one stating a federal claim.” Caterpillar, 482 U.S. 393 (internal quotation 22 marks and citation omitted). 23 The party invoking the removal statute bears the burden of establishing that federal 24 subject-matter jurisdiction exists. Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th 25 Cir. 1988). And federal courts are to strictly construe the removal statute against removal 26 jurisdiction and resolve all ambiguities “in favor of remand to state court.” Hunter v. Philip 27 Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009) (citing Gaus v. Miles, Inc., 980 F.2d 564, 28 566 (9th Cir. 1992)). 1 III. DISCUSSION 2 Plaintiff’s Complaint states causes of action under only California law. However, 3 Defendants assert that Plaintiff’s suit falls within the exception to the well-pleaded 4 complaint rule for causes of action that are completely preempted by ERISA. (NOR ¶ 5). 5 Complete preemption under ERISA section 502(a) allows for removal to federal court even 6 if no federal cause of action has been pled because it is “really a jurisdictional rather than 7 a preemption doctrine.” Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d 8 941, 945 (9th Cir. 2009) (internal citation omitted). 9 The Supreme Court has established a two-prong test to determine whether a state 10 law cause of action is completely preempted by ERISA under section 502(a): (1) “if an 11 individual, at some point in time, could have brought his claim under ERISA 12 § 502(a)(1)(B),” and (2) “where there is no other independent legal duty that is implicated 13 by a defendant’s actions, then the individual’s cause of action is completely pre-empted by 14 ERISA § 502(a)(1)(B).” Aetna Health Inc. v. Davila, 542 U.S. 200, 210 (2004). 15 Preemption may only be found if both prongs are met. Marin Gen. Hosp., 581 F.3d at 947. 16 Here, Plaintiff argues that, because neither prong is satisfied, ERISA does not 17 preempt its causes of action and therefore remand of this action is warranted.1 See 18 (Motion). Because the Court finds that Defendants have not carried their burden on the 19 second prong, it declines to address the parties’ arguments on the first prong. 20 Defendants contend the Complaint does not rely on an independent legal duty 21 separate from ERISA because Plaintiff’s causes of action are based on conduct that would 22 not have occurred if not for the underlying ERISA plans. (Opp. at 11). Defendants support 23 this argument by pointing to purported assignments of ERISA plan benefits by the patients

24 1 Plaintiff also argues that express, conflict preemption under section 514(a) of ERISA does 25 not permit removal. (Motion at 14). However, conflict preemption “is an insufficient basis 26 for original federal question jurisdiction under § 1331(a) and removal jurisdiction under § 1441(a).” Marin Gen. Hosp., 581 F.3d at 945. Nor do Defendants base their removal of 27 the action on conflict preemption under section 514(a). See (NOR ¶ 5). Accordingly, the 28 Court declines to address Plaintiff’s express, conflict preemption argument. 1 to the Hospital. See (ECF No. 32-1 (“Ley Decl.”) ¶ 6, Ex. 1). Defendants argue that 2 because Plaintiff has a right to payment under the assignments, Plaintiff’s right to relief 3 could not be independent from the underlying ERISA plans. (Opp. at 6). The existence of 4 these assignments, however, does not change the fact that Plaintiff’s Complaint does not 5 assert a right to relief under the assignments, and instead asserts causes of action premised 6 on the independent legal duties imposed by the Knox-Keene Act and California common 7 law. Thus the Court agrees with Plaintiff that its causes of action “would exist whether or 8 not an ERISA plan existed.” (Motion at 13). 9 The Complaint asserts that Plaintiff’s causes of action “are based on the Hospital’s 10 individual and property rights, in its own individual capacity and are not derivative of the 11 contractual or other rights of Defendants’ members and/or insureds.” (Compl. ¶ 8). In 12 particular, for each of the treated patients, Plaintiff alleges that “the Hospital verified the 13 Patient’s benefits for the services provided and Defendants either approved the care, failed 14 to timely respond, failed to arrange for the [p]atient’s transfer, and/or indicated that no 15 approval was necessary.” (Id. ¶ 29). Plaintiff asserts that, “[b]y these actions, Defendants 16 intended to communicate to the Hospital . . . that Defendants required the Hospital to 17 provide” care for the patients, “and that Defendants would pay for such services based on 18 the Hospital’s reasonable and customary billed charges.” (Id.); see also (id. ¶¶ 39 (alleging 19 that Defendants and the Hospital communicated “via telephone, facsimile and/or 20 [Defendants’] web portal” to create an implied-in-fact contract), 53 (“[t]he Hospital 21 confirmed that the [p]atients were eligible and insured under their health service plans 22 and/or insurance policies” issued by Defendants to create an implied-in-law contract under 23 California statute), 59 (Defendants’ violated the UCL by violating California statutory 24 provisions by not paying or underpaying for services rendered by the Hospital), 69 25 (“Defendants expressly and/or impliedly requested the Hospital to provide the Patients with 26 the medically necessary post-stabilization health care services to the [p]atients” entitling 27 Plaintiff to quantum meruit damages after care rendered), 76 (the Hospital’s care of the 28 patients benefitted Defendants “because the [p]atients were provided with medical care and 1 treatment that Defendants were obligated to provide or arrange for the [p]atients,” 2 establishing a quasi-contract or demonstrating unjust enrichment). Based on this conduct, 3 and not the purported assignments of benefits by patients to the Hospital, the Complaint 4 brings its UCL and breach of implied-in-law contract causes of action under the Knox- 5 Keene Act and its associated regulations. See (Compl. ¶¶ 48–64). The Knox-Keene Act 6 requires “health care service plans” to reimburse medical providers for the reasonable costs 7 of emergency medical services. Cal. Health & Safety Code § 1371.4; Cnty. of Santa Clara 8 v. Superior Ct., 14 Cal. 5th 1034, 1044 (2023) (“[T]he Knox-Keene Act’s statutory and 9 regulatory scheme contemplates that private actions under a quantum meruit theory may 10 be used to recoup appropriate reimbursement for services rendered.”). And Plaintiff’s 11 common law causes of action are based on Plaintiff’s treatment of the patients and 12 Defendants’ alleged acceptance of payment responsibility for such treatment. See (Compl. 13 ¶¶ 37–47, 65–80). 14 Notwithstanding that the Complaint raises no claim for relief based on the purported 15 assignment of ERISA benefits, Defendants in essence argue that because Plaintiff could 16 have brought a cause of action premised on the assignments of ERISA benefits by its 17 patients, it was required to do so. But it is Plaintiff’s “prerogative to choose which claims 18 to pursue.” Emsurgcare v. UnitedHealthcare Ins. Co., 736 F. Supp. 3d 808, 816 (C.D. Cal. 19 2024); see Marin Gen. Hosp., 581 F.3d at 949 (rejecting that, because the hospital “could 20 have brought a suit under § 502(a)(1)(B) for payments owed to the patient by virtue of the 21 terms of the ERISA plan, this is the only suit the Hospital could bring”). Moreover, by 22 asserting Plaintiff’s causes of action are “not derivative of the contractual or other rights of 23 Defendants’ members and/or insureds” (Compl. ¶ 8), the Complaint “explicitly disavows 24 any claim based on the patient[s’] rights to benefits under [the ERISA] plan[s],” Comty. 25 Hosp. of the Monterey Peninsula v. Aetna Life Ins. Co., 2015 WL 138197, at *2 (N.D. Cal. 26 Jan. 9, 2015). 27 Defendants additionally argue that, because the Knox-Keene Act and its associated 28 regulations “expressly require a connection to the ERISA plans for there to be any 1 obligations to reimburse pursuant to the statutes,” any cause of action premised on the 2 Knox-Keene Act is preempted by ERISA. (Opp. at 13). Defendants similarly argue that 3 Plaintiff’s common law causes of action are preempted because they are premised on 4 Defendants’ “conduct” of administering the ERISA plans, such as verification of benefits, 5 prior approvals, and arranging transfers. See (Opp. at 11–12). Even if the Knox-Keene 6 Act and Defendants’ conduct have some connection to ERISA plans, this does not preclude 7 Plaintiff from asserting its right to relief under the Knox-Keene Act and California common 8 law, as opposed to under the underlying ERISA plans. See Comty Hosp., 2015 WL 138197, 9 at *3 (hospital’s claim asserts an independent legal duty when it “depend[s] on the 10 interpretation of state law,” not an “interpretation of any ERISA plans administered by 11 defendants”); California ex rel. Herrera v. Blue Cross of Cal., Inc., 2011 WL 4723758, at 12 *5 (N.D. Cal. Oct. 7, 2011) (state law claims “do not in any way involve the interpretation 13 of any ERISA plan administered by defendants”). 14 The cases cited by Defendants do not support a different result. For example, 15 Cleghorn v. Blue Shield of California, 408 F.3d 1222 (9th Cir. 2005), was brought by a 16 participant and beneficiary of an ERISA plan to recoup costs incurred for an emergency 17 room visit after his insurance company denied coverage for his reimbursement claim. See 18 id. at 1224. Cleghorn, as a plan participant and in contrast to Plaintiff here, was only 19 entitled to reimbursement “because of Blue Shield’s administration of ERISA-regulated 20 benefit plans.” Id. at 1226; see also Leonard v. MetLife Ins. Co., 2013 WL 12210177, at 21 *1 (C.D. Cal. Feb. 25, 2013) (plan participant seeking to recoup costs after being denied 22 long term disability benefits). In Lodi Memorial Hospital Assocation v. Tiger Lines, LLC, 23 2015 WL 5009093 (E.D. Cal. Aug. 20, 2015), defendant was a self-insured medical plan 24 that sought to defeat a remand motion and dismiss a complaint brought by a hospital 25 seeking additional payment for medical services provided to patients. Id. at *1. Unlike the 26 Complaint here, the hospital’s complaint did not raise the right to an independent legal duty 27 for payment under the Knox-Keene Act and did not “identif[y] [an] independent contract, 28 agreement or obligation apart from the obligations under the plan agreement itself” under 1 || which it sought relief. /d. at *5, 6. Similarly, in Samaan v. Anthem Blue Cross Life & 2 || Health Ins. Co., 2021 WL 2792307, (C.D. Cal. Mar. 10, 2021), Plaintiff did not allege that 3 || “any negotiations took place between himself and Defendant which could give rise to legal 4 duties independent of ERISA.” Jd. at *4. The same is true for /n re WellPoint, Inc. Out- 5 ||of-Network UCR Rates Litigation, 903 F. Supp. 2d 880 (C.D. Cal. 2012), where the 6 || Complaint did not allege that a hospital provider “sought and received confirmation” from 7 || an insurance company representative that “services would be covered.” /d. at 930. 8 Accordingly, because the Complaint does not assert a right to relief as an assignee 9 || of benefits under ERISA § 502(a), and instead asserts a right to relief under the independent 10 || legal duties supplied by the Knox-Keene Act and California common law, Defendants thus 11 not carried their burden to demonstrate that Plaintiff's Complaint is completely 12 ||preempted. As such, Defendants have not shown that federal question jurisdiction exists. 13 || IV. CONCLUSION 14 For all the foregoing reasons, the Court GRANTS the Motion and REMANDS this 15 |} action to Los Angeles County Superior Court. The Clerk is directed to close this case. 16 17 IT IS SO ORDERED. 18 19 DATED: June 13, 2025 L--—— 20 ~ HON. SHERILYN PEACE GARNETT 1 UNITED STATES DISTRICT JUDGE 22 23 24 25 26 27 28