Fortitude Surgery Center LLC v. Aetna Health Incorporated

• Court: District Court, D. Arizona
• Decided: May 19, 2025
• Docket: 2:24-cv-02650
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 Fortitude Surgery Center LLC, No. CV-24-02650-PHX-KML

10 Plaintiff, ORDER

11 v.

12 Aetna Health Incorporated, et al.,

13 Defendants. 14 15 Fortitude Surgery Center LLC provided medical services to unidentified individuals 16 and now seeks to recover payment for those services from Aetna Health, Inc. and Aetna 17 Life Insurance Company (collectively, “Aetna”). Fortitude asserts an Employee 18 Retirement Income Security Act (“ERISA”) claim and seven state-law claims against 19 Aetna. Aetna seeks dismissal of all claims. Because Fortitude failed to identify the ERISA 20 health plans at issue, its ERISA claim is dismissed. Fortitude also failed to identify the non- 21 ERISA health plans at issue, so most of its state-law claims fail on that basis. The motion 22 to dismiss is granted with limited leave to amend. 23 I. Background 24 The complaint provides few meaningful details regarding the basis for Fortitude’s 25 claims. Instead, it consists of vague and conclusory allegations regarding interactions 26 between Fortitude and Aetna. According to the complaint, Fortitude is a surgery center that 27 provides medical services to individuals, including patients for whom Aetna is an insurer 28 and administrator of health benefits plans. (Doc. 1 at 2.) Fortitude is out-of-network with 1 Aetna, meaning it does not have negotiated rates, and instead “submits claims to Aetna at 2 [its] billed charges.” (Doc. 1 at 4.) Before agreeing to treat an Aetna member, Fortitude 3 contacted Aetna to verify the individual was covered by Aetna and confirm the individual’s 4 health plan provided out-of-network benefits for the type of treatment Fortitude would 5 provide. (Doc. 1 at 5.) Aetna informed Fortitude that the individual was covered and had 6 out-of-network benefits for the type of treatment sought. (Doc. 1 at 5.) Aetna also 7 authorized Fortitude to provide treatment or informed Fortitude that no authorization was 8 necessary. (Doc. 1 at 6.) 9 Despite its representations to Fortitude, Aetna “began serially denying payment” of 10 Fortitude’s claims. (Doc. 1 at 9.) Fortitude alleges Aetna’s motivation for denying the 11 claims was that Fortitude had “common ownership with certain other pain management 12 providers in the Phoenix area which had previously . . . disputed unpaid claims with Aetna.” 13 (Doc. 1 at 9–10.) Based on those denials, Fortitude filed this suit asserting ERISA and 14 state-law claims against Aetna on behalf of an unknown number of Aetna members. (See 15 Doc. 1 at 13–26.) 16 Even viewed in the light most favorable to Fortitude, the complaint lacks sufficient 17 detail to survive a motion to dismiss. In effect, Fortitude alleges it provided unidentified 18 services to unidentified individuals who were covered by unidentified ERISA or non- 19 ERISA health plans, and Aetna’s failure to reimburse Fortitude violated the unidentified 20 terms of those plans. These vague allegations are insufficient to survive a motion to 21 dismiss. 22 II. Legal Standard 23 “To survive a motion to dismiss, a complaint must contain sufficient factual matter, 24 accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 25 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) 26 (internal citations omitted)). This is not a “probability requirement,” but a requirement that 27 the factual allegations show “more than a sheer possibility that a defendant has acted 28 unlawfully.” Id. A claim is facially plausible “when the plaintiff pleads factual content that 1 allows the court to draw the reasonable inference that the defendant is liable for the 2 misconduct alleged.” Id. “[D]etermining whether a complaint states a plausible claim is 3 context specific, requiring the reviewing court to draw on its experience and common 4 sense.” Id. at 663–64. 5 III. Discussion 6 Fortitude’s ERISA claim and most of its state-law claims are dismissed because 7 Fortitude failed to identify the ERISA and non-ERISA health plans at issue. Its Arizona 8 Prompt Pay Act claim is dismissed because the statute does not provide a private right of 9 action. 10 A. ERISA Claim 11 Fortitude asserts a single ERISA claim “to recover benefits due . . . under the terms” 12 of a benefit plan. 29 U.S.C. § 1132(a)(1)(B). This claim is brought on behalf of an 13 unidentified number of individuals covered by an ERISA-governed plan. Fortitude alleges 14 Aetna is liable for its failure to pay ERISA plan benefits and owes Fortitude “the difference 15 between what should have been paid [for Fortitude patients’ treatment] and the amounts 16 that were actually paid, if any, plus applicable interest and attorneys’ fees[.]” (Doc. 1 at 17 14–15.) 18 In general, a plaintiff alleging an ERISA claim for benefits “must allege ‘the 19 existence of an ERISA plan,’ and identify ‘the provisions of the plan that entitle [him] to 20 benefits.’”1 Doe v. CVS Pharmacy, Inc., 982 F.3d 1204, 1213 (9th Cir. 2020) (quoting 21 Almont Ambulatory Surgery Ctr., LLC v. UnitedHealth Grp., Inc., 99 F. Supp. 3d 1110, 22 1155 (C.D. Cal. 2015)). Fortitude has not pleaded any details about the purported ERISA 23 plans, the patients, services, or claims at issue. (See Doc. 1.) Instead, it generally alleges 24 “[p]eople who receive their health insurance through a private employment-based benefit

25 1 Fortitude alleges the individuals who received care assigned their benefits to Fortitude (Doc. 1 at 6) and Aetna does not challenge the validity of those assignments. See S. Coast 26 Specialty Surgery Ctr., Inc. v. Blue Cross of California, 90 F.4th 953, 958 (9th Cir. 2024) (“ERISA . . . permits the assignment of health and welfare benefits to a healthcare provider, 27 and it allows such a provider to bring derivative claims on behalf of its patients.”). But as an assignee, Fortitude merely “stands in the shoes of the assignor[s]” and is subject to the 28 same pleading requirements the patients themselves would face. Misic v. Bldg. Serv. Emps. Health & Welfare Tr., 789 F.2d 1374, 1378 n.4 (9th Cir. 1986). 1 plan are typically participants or beneficiaries of plans governed by ERISA[ ]” and it 2 “believes that Aetna is the ERISA plan administrator and ERISA fiduciary for the ERISA 3 claims at issue in this Complaint.” (Doc. 1 at 10.) Those allegations do not provide enough 4 specificity about the services rendered to Aetna-insured individuals, their plans, their plan’s 5 benefits, or Fortitude’s efforts to obtain that information to survive this motion to dismiss. 6 An assignee of ERISA benefits seeking to recover those benefits must at least 7 identify the ERISA plans and services at issue. That is particularly true when an assignee 8 is attempting to assert many claims involving different individuals in a single suit. In 9 Glendale Outpatient Surgery Center v. United Healthcare Services, Inc., the Ninth Circuit 10 encountered a similar attempt by an assignee to pursue a variety of claims. 805 F. App’x 11 530 (9th Cir. 2020). The court affirmed dismissal of the ERISA claim because the 12 complaint did not identify “(i) any ERISA plan, apart from vague references to anonymous 13 patients who allegedly assigned rights to [the plaintiff]; or (ii) any plan terms that specify 14 benefits that the defendants were obligated to pay but failed to pay.” Id. at 531. Those 15 “deficiencies [were] exacerbated” by the plaintiff’s “decision to lump 44 separate events— 16 presumably involving distinct ERISA plans, coverage provisions, medical procedures, and 17 insurer communications—into a single set of generalized allegations.” Id. The same type 18 of analysis applies here. 19 Fortitude’s complaint consists only of “generalized allegations” regarding 20 unidentified individuals. Id. Fortitude points to eight allegations in its complaint as 21 providing the requisite specificity. (See Doc. 24 at 9–10.) Those allegations boil down to 22 Fortitude’s assertions that it verified coverage with Aetna before providing services, 23 provided services, billed Aetna, and then Aetna refused to pay. But those allegations do 24 not identify any specific ERISA plan. Nor do they identify plan terms covering the services 25 Fortitude allegedly provided, or even what services Fortitude provided. While Fortitude 26 was not required to “recite every relevant term of every relevant plan,” it needed to “do 27 more than broadly allege . . . [a] generalized obligation” for Aetna to provide payment. 28 ABC Servs. Grp., Inc. v. Aetna Health & Life Ins. Co., No. 22-55631, 2023 WL 6532648, 1 at *1 (9th Cir. Oct. 6, 2023). 2 Fortitude attempts to salvage its complaint by attaching exhibits to its response 3 which it claims shows its counsel “produced a list of each claim in dispute that 4 includes . . . for each claim in dispute: the patient’s name, claim number, insurance policy 5 number, insurance group number, dates of service, and the amount of each claim in 6 dispute.” (Doc. 24 at 9 n.1 (citing Docs. 24-1, 24-2. 24-3).) These exhibits cannot be 7 considered because they are not incorporated by reference into the complaint. See Turner 8 v. Nuance Commc’ns, Inc., 735 F. Supp. 3d 1169, 1179 (N.D. Cal. 2024) (incorporation by 9 reference allows certain documents to be considered as if they are part of the complaint 10 and is appropriate when “the plaintiff refers extensively to the document or the document 11 forms the basis of the plaintiff’s claim”) (simplified). And even if the court were to consider 12 Fortitude’s exhibits, the necessary substantive information is not included. The exhibits 13 merely contain a declaration by Fortitude’s counsel that he “served a list of the disputed 14 claims at issue . . . to Aetna via secure file transfer,” a receipt of that supposed file transfer, 15 and a receipt of Aetna’s supposed download of that file transfer. (See Docs. 24-1 at 1, 24- 16 2, 24-3.) Fortitude does not cite any authority that allows a plaintiff to file a vague 17 complaint and then a few months later send defense counsel the crucial information 18 underlying its claims as a way to salvage it. To survive a motion to dismiss, Fortitude must 19 provide the requisite details in its complaint. 20 Fortitude’s ERISA claim is dismissed with leave to amend. Should Fortitude choose 21 to amend, it should at the very least identify the ERISA plans at issue, the plan terms 22 covering the services Fortitude allegedly provided Aetna-members, and the services 23 Fortitude provided to those patients. And if it cannot obtain the plan information 24 independently, the complaint must detail its efforts to do so. See Physicians Surgery Center 25 of Chandler v. Cigna Healthcare Inc. (“Physicians Surgery Center I”), 550 F. Supp. 3d 26 799, 808–09 (D. Ariz. 2021). 27 B. State-Law Claims 28 Fortitude asserts seven state-law causes of action, six of which are for “claims 1 governed by state law and do[ ] not apply to any Unpaid Claims associated with health 2 insurance plans governed by ERISA.”2 (Doc. 1 at 15, 16, 18, 19, 21, 24). Similar to the 3 problems with Fortitude’s ERISA claim, Fortitude has pleaded no facts identifying the non- 4 ERISA plans at issue, the individuals covered by those plans, or the services for which 5 Fortitude seeks payment. (See Doc. 1.) 6 Fortitude has not complied with Fed. R. Civ. P. 8(a)’s requirement to provide “a 7 short and plain statement” of its six state-law claims showing it is “entitled to relief” 8 because it has not given any details on the non-ERISA plans at issue. Details are essential 9 because of the prevalence of ERISA-governed plans combined with ERISA’s preemptive 10 reach. Disputes regarding healthcare benefits routinely involve ERISA plans. Cf. 11 California Div. of Lab. Standards Enf’t v. Dillingham Const., N.A., Inc., 519 U.S. 316, 327 12 n.5 (1997) (citing authority that “88% of non-elderly Americans have private health care 13 insurance through [ERISA] plans”). And ERISA “preempts state law claims that relate to” 14 any ERISA-governed plan. Farr v. U.S. W. Commc’ns, Inc., 151 F.3d 908, 913 (9th Cir. 15 1998). That “preemption provision is expansive.” Howard Jarvis Taxpayers Ass’n v. 16 California Secure Choice Ret. Sav. Program, 997 F.3d 848, 856 (9th Cir. 2021). The 17 likelihood that ERISA applies and the broad reach of ERISA preemption have prompted 18 courts to require meaningful factual allegations regarding state-law claims. 19 “Where, as here, plaintiffs assert state-law claims that depend on the terms of certain 20 healthcare plans, but plaintiffs do not allege any factual matter giving rise to the inference 21 that such healthcare plans are not governed by ERISA, the state-law claims are subject to 22 dismissal on the ground that they are preempted by ERISA.” Pac. Recovery Sols. v. United 23 Behav. Health, No. 4:20-CV-02249 YGR, 2021 WL 1222519, at *4 (N.D. Cal. Apr. 1, 24 2021) (citing cases). A plaintiff cannot simply “refer[ ] to non-ERISA plans without 25 specific allegations identifying a particular non-ERISA plan at issue” for its state-law 26 claims to survive. Omega Hospital, LLC v. United Healthcare Services, Inc., No. 16- 27 2 These claims are for breach of contract, breach of the implied covenant of good faith and 28 fair dealing, unjust enrichment, promissory estoppel, negligent misrepresentation, and breach of implied contract. (Doc. 1 at 15–26.) 1 00560-JJB-EWD, 2017 WL 4228756, at *4 (M.D. La. Sept. 22, 2017) (dismissing state- 2 law claims of “non-ERISA plan participants” as preempted by ERISA on that ground); see 3 also Biohealth Med. Lab’y, Inc. v. Connecticut Gen. Life Ins. Co., No. 1:15-CV-23075- 4 KMM, 2016 WL 375012, at *5 (S.D. Fla. Feb. 1, 2016), aff’d in part, vacated in part on 5 other grounds sub nom. BioHealth Med. Lab’y, Inc. v. Cigna Health & Life Ins. Co., 706 6 F. App’x 521 (11th Cir. 2017) (same). 7 Fortitude cites allegations in its response that it contends provide factual support for 8 the existence of non-ERISA plans (see Doc. 24 at 10–11)—which would therefore prevent 9 its state-law claims from being preempted—but it does not provide anything more than 10 conclusory allegations that there are non-ERISA plans at issue. See Iqbal, 556 U.S. at 678 11 (“Threadbare recitals of the elements of a cause of action, supported by mere conclusory 12 statements, do not suffice” to survive a motion to dismiss). Fortitude again tries to counter 13 Aetna’s assertion “that it is unable to identify the plans at issue” by citing the information 14 it sent Aetna months after filing suit. (Doc. 24 at 11 n.2.) But those exhibits are not 15 incorporated by reference for the same reason discussed previously and even if they were, 16 they do not provide the information Fortitude claims to have sent Aetna: they only show 17 Fortitude sent Aetna the information and that Aetna downloaded it. (See Docs. 24-2, 24- 18 3.) That is insufficient to survive a motion to dismiss. The previously-mentioned six state- 19 law claims are therefore dismissed.3 20 Fortitude’s seventh state-law claim arises under A.R.S. § 20-3102, part of Arizona’s 21 Prompt Pay Act. (Doc. 1 at 23–24.) To the extent this claim is based on claims handling 22 connected to ERISA-governed plans, it would likely be preempted. See Farr, 151 F.3d at 23 913. 24 Aetna argues that even if there are non-ERISA plans at issue, the Prompt Pay Act 25 does not authorize a private right of action. Indeed, the statute does not explicitly confer a 26 private right of action. See A.R.S. § 20-3102; see also Physicians Surgery Center of 27 Chandler v. Cigna Healthcare Inc. (“Physicians Surgery Center II”), 609 F. Supp. 3d 930,

28 3 If Fortitude chooses to amend these claims, it should be cognizant of Aetna’s individual arguments for why each claim was inadequately pleaded. (See Doc. 21 at 14–23.) 1 940 (D. Ariz. 2022) (“No authority indicates Section 20-3102 provides a private right of 2 action” and “the Court cannot find[ ] any . . .”). Arizona courts “have implied the 3 existence” of a private right of action “when doing so is consistent with ‘the context of the 4 statutes, the language used, the subject matter, the effects and consequences, and the spirit 5 and purpose of the law.” McNamara v. Citizens Protecting Tax Payers, 337 P.3d 557, 559 6 (Ariz. Ct. App. 2014) (quoting Transamerica Fin. Corp. v. Superior Ct., 761 P.2d 1019, 7 1020 (Ariz. 1988)). Arizona courts do not always evaluate each factor when conducting 8 this analysis, see id. at 559–61, and the factors are meant to be “a tool of statutory 9 construction designed to discern legislative intent, not [as] a license for the judicial branch 10 to read into a statute something that might be perceived as better effectuating a statute’s 11 spirit and purpose.” Id. at 559. To that end, Arizona courts only imply a private right of 12 action in “rare circumstances.” Conroy v. Gottfried, No. 1 CA-CV 20-0619, 2021 WL 13 4439145, at *2 (Ariz. Ct. App. Sept. 28, 2021). 14 Using the factors provided by Arizona courts, several indicators point to the lack of 15 a private right of action under A.R.S. § 20-3102. 16 For one, Title 20 of the Arizona Revised Statutes is required to be enforced by the 17 director of the Department of Insurance (“DOI”). A.R.S. § 20-142(A); A.R.S. § 20-102(1). 18 The director is given explicit authority to refer violations of Title 20 to the attorney general 19 who “shall bring and prosecute” actions for those violations. A.R.S. § 20-152(A)–(B). Cf. 20 Transamerica, 761 P.2d at 1021 (finding the legislature “contemplated private actions” 21 because the legislature had failed “to expressly empower the superintendent” to adjudicate 22 related claims). Thus, the context of Title 20’s enforcement power suggests A.R.S. § 20- 23 3102 likely does not grant a private right of action. 24 The statute’s language itself does not grant or prohibit a private right of action. It 25 rests some enforcement responsibility with the director of the DOI who “may examine the 26 health insurer” when the director “finds a significant number of grievances [against them] 27 that have not been resolved”—but does not mention a private right of action. A.R.S. § 20- 28 3102(G). Other sections of Title 20 explicitly grant a private right of action, such as when 1 a health insurer enrollee is “aggrieved by an arbitration decision regarding a disputed 2 surprise out-of-network bill,” A.R.S. § 20-3119, and others explicitly state they do not 3 create “any new private right or cause of action.” A.R.S. § 20-120(E)(3). Fortitude argues 4 the legislature would have explicitly said it was precluding a right of action under A.R.S. 5 § 20-3102 like it did in A.R.S. § 20-120(E)(3) if that were the case. (Doc. 24 at 17 n.4.) 6 But because portions of Title 20 explicitly grant a private right of action and others 7 explicitly preclude one, A.R.S. § 20-3102’s silence does not help determine if it provides 8 a private right of action. 9 Fortitude also argues the “spirit and purpose” of the law—which the Arizona Court 10 of Appeals has “generally found . . . to be a strong factor suggesting a legislative intent to 11 provide a private right of action”—indicates the legislature intended to create a private 12 right of action in A.R.S. § 20-3102. Burns v. City of Tucson, 432 P.3d 953, 957 (Ariz. Ct. 13 App. 2018), as amended (Nov. 27, 2018). As to that factor, the Arizona Supreme Court 14 held one statute that “inure[d] to the benefit of an individual” indicated “a private right of 15 action [wa]s contemplated by the legislature for enforcement of this individual right, even 16 though other sections . . . provide[d] for administrative action for enforcement of its 17 regulatory scheme.” Transamerica, 761 P.2d at 1021. Other Arizona cases too have found 18 or declined to find private rights of action based on who the statute was intended to benefit. 19 See Chavez v. Brewer 214 P.3d 397, 406 (Ariz. Ct. App. 2009) (finding implied right of 20 action for individuals who were “not ‘incidental’ beneficiaries of the statutes but members 21 of ‘the class for whose especial benefit’ the statutes were adopted” and distinguishing 22 Lancaster v. Arizona Board of Regents, 694 P.2d 281, 287 (Ariz. Ct. App. 1984), because 23 those plaintiffs would only “benefit incidentally”); see also McCarthy v. Scottsdale Unified 24 Sch. Dist. No. 48, 409 F. Supp. 3d 789, 820 (D. Ariz. 2019) (“Arizona courts have declined 25 to find an implied right of action where third persons are only incidental beneficiaries of 26 the statutory enactment.”) (citing cases). 27 So, to help determine the statute’s spirit and purpose—which will aid in determining 28 whether it grants a private right of action—Arizona courts must look at who the intended 1 beneficiaries of the statute are. 2 According to the legislative history of the bill that became A.R.S. § 20-3102, 3 healthcare enrollees are the intended beneficiaries of the statute. See Arizona State Senate, 4 Minutes of Committee on Financial Institutions and Retirement, 44th Leg., 2d Reg. Sess. 5 (Feb. 23, 2000) [hereinafter “Senate Committee Minutes”] (the statute “will provide a great 6 deal of accountability to ensure that [healthcare] enrollees get the benefit of their bargain”); 7 Arizona House of Representatives, Minutes of Committee on Commerce, 44th Leg., 2d 8 Reg. Sess. (Jan. 26, 2000) [hereinafter “House Committee Minutes”] (“the goals behind 9 the legislation, . . . are that health care consumers receive the coverage that they purchased 10 with a minimum amount of aggravation”). But the legislative history also makes clear that 11 the DOI, not private citizens, are meant to enforce the statute. See Senate Committee 12 Minutes (“All these new obligations are placed within Title 20, and the [DOI] will be 13 obligated to enforce them.”). The DOI even foresaw “the potential for significant demands 14 on the department” in part because there is no provision requiring “internal remedies be 15 exhausted before turning to the department for pursuit of . . . claims.” Senate Committee 16 Minutes. During an Arizona House of Representatives Committee meeting, the bill was 17 opposed on the grounds that “unless this piece of legislation has the right to sue clause to 18 add more ‘teeth’ to the bill, this legislation [will] not be enforced,” signaling the bill did 19 not grant a private right of action. House Committee Minutes. So, healthcare enrollees are 20 the intended beneficiaries of A.R.S. § 20-3102, but the legislative history suggest the 21 legislature intended the DOI to enforce its provisions. 22 Arizona’s statutory interpretation factors therefore reinforce another Arizona 23 district judge’s conclusion that A.R.S. § 20-3102 does not grant a private right of action. 24 See Physicians Surgery Center II, 609 F. Supp 3d at 940. Fortitude’s claim under the 25 Arizona Prompt Pay statute is therefore dismissed with prejudice. 26 IV. Conclusion 27 Fortitude’s ERISA claim is dismissed because it fails to identify the ERISA plans 28 at issue. Most of Fortitude’s state-law claims are dismissed with leave to amend because || they fail to identify the non-ERISA plans at issue. Its Arizona Prompt Pay Act claim is 2|| dismissed with prejudice because the statute does not confer a private right of action. 3 || Fortitude is granted leave to amend all claims except the Arizona Prompt Pay Act claim. 4 Accordingly, 5 IT IS ORDERED the Motion to Dismiss (Doc. 21) is GRANTED with limited □□ leave to amend. Plaintiff may amend all claims except for the claim under the Arizona 7\| Prompt Pay Act. 8 IT IS FURTHER ORDERED no later than June 2, 2025, plaintiff shall file an || amended complaint. The Clerk of Court is directed to enter a judgment of dismissal with 10 || prejudice in the event no amended complaint is filed. 11 IT IS FURTHER ORDERED the Motion to Withdraw (Doc. 29) is GRANTED. Attorneys Anthony Argiropoulos, William Gibson, Thomas Kane, Scheherazade Wasty, 13 || and Marguerite McGowan Stringer of Epstein Becker & Green, P.C., are withdrawn as counsel of record in this matter for Plaintiff Fortitude Surgery Center, LLC. 15 Dated this 19th day of May, 2025. 16 17 Vy, op a | 18 ahh AE Honorable Krissa M. Lanham 19 United States District Judge 20 21 22 23 24 25 26 27 28

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