Fortitude Surgery Center LLC v. Aetna Health Incorporated

Opinion

1 WO 2 3 4 5

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 Plaintiff Fortitude Surgery Center LLC (“Fortitude”) provided medical services to 16 individuals and now seeks to recover payment for those services from defendants Aetna 17 Health, Inc. and Aetna Life Insurance Company (collectively, “Aetna”). Fortitude’s 18 original complaint asserted an Employee Retirement Income Security Act (“ERISA”) 19 claim and seven state-law claims. Aetna sought dismissal of all claims and on May 19, 20 2025, this court dismissed all claims with limited leave to amend. Fortitude filed a first 21 amended complaint and Aetna again moved to dismiss all claims. Aetna’s motion is 22 granted but Fortitude may have one last chance to amend. 23 I. Background 24 Aetna is a health benefits insurer and insurance plan administrator which, Fortitude 25 alleges, provided and/or administered insurance plans for individuals who received 26 services from Fortitude, a surgical center. (Doc. 32 at 2-3.) Fortitude is out-of-network with 27 Aetna, which in practice means Fortitude “submits claims to Aetna at [its] billed charges” 28 rather than using previously-negotiated rates for reimbursement. (Doc. 32 at 4.) Fortitude’s 1 pre-treatment process for verifying patients’ insurance coverage was as follows: Prior to 2 treating an Aetna member, Fortitude contacted Aetna to verify the individual was covered 3 by Aetna and this coverage included outpatient benefits. (Doc. 32 at 6.) Fortitude also 4 verified coverage for the specific treatment “either online via Aetna’s website or through 5 personal communication between Fortitude and Aetna.” (Doc. 32 at 6-7.) When Fortitude 6 directly “sought authorization from Aetna to provide [the specific] treatment” for the 7 claims at issue, Aetna either authorized the treatment or, more often, “informed Fortitude 8 that no preauthorization was necessary.” (Doc. 32 at 8.) Fortitude also “evaluate[d] Aetna’s 9 Clinical Policy Bulletins to verify coverage for the procedure at issue and that procedure’s 10 status as reasonable and necessary.” (Doc. 32 at 7.) 11 Despite its representations coverage would apply to the services Fortitude planned 12 to provide, Aetna “began serially denying payment on the Fortitude bills” without warning 13 (Doc. 32 at 11-12) and without explanation sufficiently detailed for Fortitude to glean the 14 basis for the refusals (and the failed appeals Fortitude typically filed). (Doc. 32 at 17-18.) 15 Fortitude alleges Aetna denied its claims “because Fortitude has common ownership with 16 certain other pain management providers in the Phoenix area which had previously had 17 disputed unpaid claims with Aetna.” (Doc. 32 at 12.) As a condition of receiving care at 18 Fortitude, each patient assigned benefits and rights to Fortitude, including the rights to 19 obtain information regarding coverage and to collect payments Aetna owed the member; 20 the validity of these assignments is uncontested. (Doc. 32 at 8-10; see Doc. 30 at 3.) Based 21 on those assignments, Fortitude filed this suit asserting an ERISA claim on behalf of Aetna 22 members on ERISA plans and state-law claims on behalf of Aetna members on non-ERISA 23 plans. 24 In May 2025, the court dismissed the ERISA claim because Fortitude had not 25 provided specific information supporting it. The court also dismissed the state-law causes 26 of action because Fortitude did not identify any details about the non-ERISA plans and it 27 was unclear whether ERISA preempted these claims. (Doc. 30 at 6.) The court granted 28 Fortitude leave to amend its claims except for a claim under the Arizona Prompt Pay Act, 1 because that statute does not confer a private right of action. (Doc. 30 at 11.) 2 Fortitude has provided little additional information in the first amended complaint 3 (“FAC”), mainly categorizing which claims belong to patients under ERISA plans 4 (“ERISA members”) and which belong to patients under non-ERISA plans (“non-ERISA 5 members”). The ERISA claim again lacks specificity sufficient to survive a motion to 6 dismiss. Though Fortitude added sufficient information to conclude the non-ERISA state- 7 law claims are not in danger of ERISA preemption, the sole federal cause of action is 8 dismissed and the court at this time declines to exercise supplemental jurisdiction over 9 those claims. 10 II. Legal Standard 11 “To survive a motion to dismiss, a complaint must contain sufficient factual matter, 12 accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 13 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) 14 (internal citations omitted)). This is not a “probability requirement,” but a requirement that 15 the factual allegations show “more than a sheer possibility that a defendant has acted 16 unlawfully.” Id. A claim is facially plausible “when the plaintiff pleads factual content that 17 allows the court to draw the reasonable inference that the defendant is liable for the 18 misconduct alleged.” Id. “Determining whether a complaint states a plausible claim for 19 relief will . . . be a context-specific task that requires the reviewing court to draw on its 20 judicial experience and common sense.” Id. 21 III. Discussion 22 Fortitude’s ERISA claim and its state-law claims are dismissed. Though Fortitude 23 has now categorized which unpaid claims belong to Aetna members on ERISA versus non- 24 ERISA plans, Fortitude again failed to identify any particularities of the ERISA plans or 25 which services Fortitude itself rendered, requiring dismissal of the ERISA claim. The state- 26 law claims are pleaded with varying degrees of success—some in particular lack specificity 27 like the ERISA claim—but all are dismissed with leave to amend because the ERISA claim 28 was the sole federal cause of action and absent a viable federal claim, the court declines to 1 exercise supplemental jurisdiction. 2 A. ERISA Claim 3 Fortitude asserts an ERISA claim “to recover benefits due. . . under the terms” of a 4 benefit plan. 29 U.S.C. § 1132(a)(1)(B). This claim is brought on behalf of around 250 5 individuals covered by ERISA healthcare plans.1 Fortitude alleges Aetna is liable for 6 failure to pay ERISA plan benefits and owes Fortitude “the difference between what should 7 have been paid [for services Fortitude rendered to ERISA members] and the amounts that 8 were actually paid, if any, plus applicable interest and attorneys’ fees[.]” (Doc. 32 at 20). 9 A plaintiff alleging an ERISA claim for benefits must “allege ‘the existence of an 10 ERISA plan,’ and identify ‘the provisions of the plan that entitle [him] to benefits.’” Doe 11 v. CVS Pharmacy, Inc., 982 F.3d 1204, 1213 (9th Cir. 2020) (quoting Almont Ambulatory 12 Surgery Ctr., LLC v. UnitedHealth Grp., Inc., 99 F. Supp. 3d 1110, 1155 (C.D. Cal. 2015)); 13 see also Forest Ambulatory Surgical Assocs., L.P. v. United HealthCare Ins. Co., No. 10- 14 CV-04911-EJD, 2011 WL 2748724, at *5 (N.D. Cal. July 13, 2011). To survive a motion 15 to dismiss, claims for ERISA benefits “‘must identify a specific plan term that confers the 16 benefit in question.’” Almont Ambulatory Surgery Ctr., 99 F. Supp. 3d at 1155 (citing 17 Sanctuary Surgical Ctr., Inc. v. UnitedHealth Grp., Inc., 10–81589–CIV, 2013 WL 149356 18

19 1 Fortitude describes “331 individual Aetna Members” total in the case, which appears to be incorrect. (Doc. 32 at 4.) There are 331 relevant claims, 320 of which are for services 20 provided to 250 ERISA Aetna members (on rough estimate) and eleven of which are for 21 services provided to four non-ERISA Aetna members.

22 Aetna argues two of the ERISA claims belong to a member who is on a plan associated 23 with benefits from the federal government. There are special procedures for recovering benefits under such plans, and Aetna argued Fortitude had not complied with those 24 procedures such that dismissal was required. 5 C.F.R. § 890.105. See also Poggio v. United States Off. of Pers. Mgmt., No. 23-55685, 2024 WL 4501067, at *1 (9th Cir. Oct. 16, 2024) 25 (administrative exhaustion required before seeking judicial review). Fortitude did not 26 respond to this argument and Aetna did not address it in its reply. Walsh v. Nevada Dep’t of Hum. Res., 471 F.3d 1033, 1037 (9th Cir. 2006) (a party who “fails to raise [an] issue in 27 response to a defendant’s motion to dismiss . . . has effectively abandoned his claim”). To 28 the extent Fortitude is attempting to sue on behalf of individuals covered by federal plans, those claims are dismissed. 1 (S. D. Fla. Jan. 14, 2013) (simplified)); see also Nazarian v. United Healthcare Servs., Inc., 2 No. 223CV04604RGKMRW, 2023 WL 8125777, at *3 (C.D. Cal. Sept. 19, 2023) (motion 3 to dismiss granted where plaintiffs provided language from some plans at issue but “fail[ed] 4 to identify several of the ERISA plans”). 5 Based on these pleading requirements, the court’s previous order made clear that 6 “[s]hould Fortitude choose to amend, it should at the very least identify the ERISA plans 7 at issue, the plan terms covering the services Fortitude allegedly provided Aetna-members, 8 and the services Fortitude provided to those patients.” (Doc. 30 at 5.) If Fortitude could not 9 obtain the plan information independently, the court instructed that “the complaint must 10 detail its efforts to do so.” (Doc. 30 at 5.) Fortitude largely ignored those instructions. 11 Fortitude’s FAC provides a very limited amount of additional information regarding 12 the plans and treatments at issue. In Ex. A to the FAC, Fortitude lists ERISA members’ 13 identifying information; patients’ claim numbers, insurance policies, and insurance groups; 14 dates of services provided and time of billing; claim amount; and a diagnostic ICD-10 code 15 for each patient.2 (Doc. 32 at 34-40.) Fortitude also attaches a sample policy, though it does 16 not belong to any ERISA member involved in this case. (Doc. 32 at 45.) Fortitude claims 17 it is the same type of plan as that of one ERISA member, J.M., but also mentions this plan 18 may not even be an ERISA plan. (Doc. 32 at 13.) Fortitude also provides information about 19 J.M.’s treatment, Manipulation Under Anesthesia. (Doc. 32 at 181-183.) The sample policy 20 includes language which could require Aetna to cover J.M.’s procedure. (See Doc. 32 at 21 90.) 22 However, Fortitude does not identify the services it provided to any other ERISA 23 member. Fortitude alleges “Aetna has this information [treatment records] on each and 24 every Aetna Member at issue in this dispute,” but even assuming that is true, service 25 provider Fortitude also has this information and provides no explanation for its decision 26 not to include it. (Doc. 32 at 4.) Fortitude seems to misunderstand its own documents as it 27

28 2 In Ex. E, Fortitude provides the same information for patients Aetna identified as non- ERISA Aetna members. 1 argues one of the attachments to the FAC identifies treatment “information for every 2 patient at issue” via “ICD 10 coding for the services rendered.” (Doc. 32 at 4.) That is 3 incorrect. ICD-10 codes are solely diagnostic and do not describe medical services needed 4 or provided. For instance, Ex. A’s ICD-10 code M75.01 refers to adhesive capsulitis of 5 right shoulder, as confirmed in Ex. G; M66.372 refers to spontaneous rupture of flexor 6 tendons. Listing those codes does not identify the treatment Fortitude provided. 7 Fortitude also does not identify any information about the controlling plans for any 8 patient identified in the FAC, alleging no plan language and no discussion of the terms 9 Fortitude alleges were breached. It is not relevant, let alone sufficient, that Fortitude has 10 provided a plan which applies to no ERISA member at issue in this case. Fortitude agrees 11 Doe, 982 F.3d at 1213, provides the applicable pleading standard. (Doc. 38 at 3.) But under 12 Doe, an ERISA plaintiff must “‘identify the provisions of the plan that entitle [him] to 13 benefits.’” Id. (simplified). Fortitude has not met the pleading standard it argues should 14 apply. 15 In the absence of plan-specific information, this court instructed Fortitude to detail 16 steps it took to access plan information; Fortitude did not. In preemptive defense of this 17 failure, Fortitude alleges only Aetna is in possession of members’ policies. (Doc. 32 at 14.) 18 First, this is untrue: every ERISA plan member has access to his or her own plan (or the 19 ability to request plan documents). Second, it is no excuse for Fortitude’s failure to detail 20 any attempt at gaining the information, even if the plans were in Aetna’s sole control. See 21 Physicians Surgery Ctr. of Chandler v. Cigna Healthcare Inc., 550 F. Supp. 3d 799, 808- 22 09 (D. Ariz. 2021) (granting motion to dismiss and holding plaintiff cannot argue 23 inaccessibility without “outlin[ing] its efforts to obtain plan documents”); Sanctuary 24 Surgical Ctr., 2013 WL 149356 at *6 n.4 (holding plaintiff assignee whose request for the 25 administrative record was denied by defendant on privacy grounds still had no excuse for 26 omitting plan information in the complaint where plaintiff could have asked members for 27 a privacy release and requested the record again). 28 The reason Fortitude’s FAC fails to detail steps taken to gain plan information is 1 evident from the briefing on Fortitude’s motion for discovery outside the administrative 2 record: there were no steps to detail. Fortitude did not attempt to access plan information 3 at all until after the FAC and Aetna’s motion to dismiss were filed. (Doc. 43-3 at 5.) This 4 is despite the court instructing Fortitude it needed to include details of plans or identify the 5 steps it took to obtain copies of the plans. It is also despite 29 U.S.C. § 1024(b)(4), which 6 requires plan administrators to provide copies of plan documents on a beneficiary’s request. 7 Because these records must “ensur[e] that the individual participant knows exactly where 8 he stands” regarding his benefits, the records would almost certainly include the plan 9 information Fortitude needed to plead plausible claims. Firestone Tire & Rubber Co. v. 10 Bruch, 489 U.S. 101, 103 (1989). It was therefore well within Fortitude’s ability to access 11 plan information, whether by requesting the administrative record, simply asking Aetna, or 12 taking other steps to obtain the information. For these reasons, Aetna’s motion to dismiss 13 Fortitude’s ERISA cause of action is granted. 14 Nonetheless, Fortitude has moved much closer to successfully pleading its ERISA 15 claim; the FAC now includes a list of ERISA members and the cost of services rendered. 16 The court therefore grants Fortitude one final opportunity to amend its ERISA claim. If 17 Fortitude opts to amend, it must identify the particular services rendered for which it is 18 seeking to recover payment. This information undoubtedly is within Fortitude’s possession 19 so there is no excuse for Fortitude’s failure to do so. Fortitude must also identify the 20 specific plan language which Fortitude alleges confers out-of-network benefits for those 21 particular services. This latter requirement will be possible because, as explained below, 22 Aetna must produce the plans. 23 Based on communications between the parties, Aetna appears willing to provide the 24 relevant plans. Fortitude should have sought the plan information much earlier but Aetna 25 has now had well over a month since notice of Fortitude’s request. Aetna therefore must 26 provide copies of the relevant plans within fourteen days of this order. Production of the 27 plans renders Fortitude’s motion for discovery outside the administrative record 28 1 premature.3 This order does not extinguish Aetna’s right to move for a protective order 2 provided it complies with the procedures outlined in the court’s October 16, 2024, order. 3 (Doc. 12.) 4 Finally, Fortitude’s opposition to the motion to dismiss exceeded the page limits. 5 The court considers that opposition but future non-compliance with page limits will result 6 in the striking of the document. 7 B. State-Law Claims 8 As the Aetna members’ assignee, Fortitude alleges several state-law causes of action 9 relating to unpaid claims for the four non-ERISA Aetna members: breach of contract, 10 breach of the implied covenant of good faith and fair dealing; unjust enrichment; 11 promissory estoppel; negligent misrepresentation; and breach of implied contract. (See 12 Doc. 32 at 20-31.) 13 Some of these claims are obviously flawed. For instance, a provider may not plead 14 unjust enrichment against an insurer when the provider can collect payment from patients, 15 as is the case in Arizona. See Dependable Nurses of Phoenix LLC v. Cigna Healthcare Inc., 16 No. CV-20-01877-PHX-SPL, 2021 WL 9597915, at *6 (D. Ariz. Feb. 2, 2021); see also 17 Abira Med. Lab’ys LLC v. Blue Cross Blue Shield of Ariz. Inc., No. CV-24-01485-PHX- 18 SMB, 2025 WL 1000739, at *8 (D. Ariz. Apr. 3, 2025). It further appears Fortitude’s 19 negligent misrepresentation claim does not include sufficient information about the 20 allegedly-misleading conversations to meet the pleading requirements of Rule 9(b). Fed. 21 R. Civ. P. 9(b); see In re Arizona Theranos, Inc., Litig., 256 F. Supp. 3d 1009, 1032 (D. 22 Ariz. 2017) (negligent misrepresentation claims must generally meet Rule 9(b) 23 particularity standard). And the contract-based causes of action suffer from similar 24 pleading issues to the ERISA claim in that Fortitude has not pleaded the contracts’

25 3 Fortitude’s motion for discovery outside the administrative record appears to conflate 26 information that presumably would be within the administrative record (e.g., the plans) with information outside the administrative record (e.g., information about individuals who 27 conducted administrative review). Discovery may be appropriate outside the administrative 28 record at some point but not until Fortitude has stated a plausible claim for relief under ERISA and requested the administrative record. 1 language or relevant provisions, any particular promised rate of reimbursement, or the 2 services Fortitude rendered and the dates on which it did so. See Hannibal-Fisher v. Grand 3 Canyon Univ., 523 F. Supp. 3d 1087, 1093 (D. Ariz. 2021) (to plead breach of contract, 4 “‘the Court must be able generally to discern at least what material obligation of the 5 contract defendant allegedly breached.’” (simplified)). 6 However, regardless of the claims’ merits, this court has dismissed the sole federal 7 cause of action and Fortitude has not alleged jurisdiction based on diversity of citizenship. 8 A court “may decline to exercise supplemental jurisdiction over a claim under [28 U.S.C 9 § 1367(c)] if the district court has dismissed all claims over which it has original 10 jurisdiction.” Forest Ambulatory Surgical Assocs., 2011 WL 2748724, at *7; see also 11 Reiten v. Blue Cross of Cal., No. 219CV05274ABAFMX, 2020 WL 1032371, at *2 (C.D. 12 Cal. Jan. 23, 2020). This court therefore grants the motion to dismiss the state-law claims 13 with leave to amend. 14 IV. Conclusion 15 Fortitude’s ERISA claim is dismissed because it once again fails to identify the 16 ERISA plans and services at issue or the steps taken to obtain plan information. Fortitude’s 17 state-law claims are dismissed because the only federal cause of action is dismissed, 18 diversity jurisdiction is not alleged, and the court declines to exercise supplemental 19 jurisdiction over the state-law claims. 20 / 21 / 22 / 23 / 24 / 25 / 26 / 27 / 28 / 1 Accordingly, 2 IT IS ORDERED the Motion to Dismiss (Doc. 35) is GRANTED with leave to 3 || amend. 4 IT IS FURTHER ORDERED no later than September 29, 2025, defendant shall 5 || provide the ERISA plans to plaintiff. 6 IT IS FURTHER ORDERED no later than October 13, 2025, plaintiff shall file a || second amended complaint. 8 IT IS FURTHER ORDERED the Motion for Discovery Outside the Administrative || Record (Doc. 39) as to ERISA Claims is DENIED as premature. 10 Dated this 15th day of September, 2025. 11

B AA AMR “EV. OC Et □ Honorable Krissa M. Lanham 14 United States District Judge 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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