1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 SOUTHERN DIVISION 11 ) 12 ) Case No.: SACV 24-00353-CJC (JDEx) SAGEBRUSH LLC D/B/A THE EDGE ) 13 TREATMENT CENTER, ) ) 14 ) ORDER DENYING PLAINTIFF’S Plaintiff, ) MOTION TO REMAND [Dkt. 13] 15 ) v. ) 16 ) ) 17 ) CIGNA HEALTH AND LIFE ) 18 INSURANCE COMPANY and CIGNA ) HEALTHCARE OF CALIFORNIA, ) 19 ) INC., ) 20 ) ) 21 Defendants. ) ) 22
23 I. INTRODUCTION 24
25 In this case, Plaintiff Sagebrush LLC, doing business as The Edge Treatment 26 Center, alleges that Defendants Cigna Health and Life Insurance Company and Cigna 27 Healthcare of California, Inc. failed to fully compensate it for behavioral health services 1 it provided to 24 patients at its outpatient clinic between November 2020 and October 2 2022. (Dkt. 1-3 [Compl.] ¶¶ 9, 11, 12, Ex. 1.) On February 20, 2024, Defendants 3 removed this case from Orange County Superior Court. (Dkt. 1.) Now before the Court 4 is Plaintiff’s motion to remand. (Dkt. 13.) For the following reasons, Plaintiff’s motion 5 is DENIED. 6 7 II. BACKGROUND 8 9 Plaintiff operates an outpatient clinic that provides “services for mental health 10 disorders and substance use disorders.” (Compl. ¶¶ 11–12.) Defendants are a healthcare 11 insurance company. (Dkt. 14-1 ¶ 5.) Plaintiff alleges that between November 2020 and 12 October 2022 it provided behavioral health services to 24 patients who “were, at all 13 relevant times, policyholders of Cigna policies.” (Compl. ¶ 12.) “Before rendering 14 services to [the 24 patients], Sagebrush contacted Cigna and/or its agents via telephone to 15 verify eligibility for insurance coverage and request authorization. Cigna and/or its 16 agents issued authorization to cover the full extent of services provided to [the patients].” 17 (Id. ¶ 13.) Over 95% of the corresponding claims were for services rendered to patients 18 with ERISA governed health benefit plans. (Dkt. 14-1 ¶ 5.) At least some of these 19 patients assigned their benefits to Plaintiff. (Dkt. 19 at 1.) 20 21 Plaintiff billed Defendants for its services and expected reimbursement in the 22 amount of $8,413,910. (Compl. ¶ 14.) Defendants paid Plaintiff $1,146,562.94. (Id. 23 ¶ 15.) Plaintiff submitted written appeals to Defendants, requesting the full billed 24 amount, but Defendants upheld their previous payment determination. (Id. ¶ 17.) Based 25 on the alleged balance of $7,267,347.06, Plaintiff brings five causes of action: breach of 26 implied contract, violations of California’s unfair competition law (“UCL”), unjust 27 enrichment, quantum meruit, and accounts stated. (Id. at 4–11.) 1 III. LEGAL STANDARD 2 3 “‘Federal courts are courts of limited jurisdiction,’ possessing ‘only that power 4 authorized by Constitution and statute.’” Gunn v. Minton, 568 U.S. 251, 256 (2013) 5 (citation omitted). A federal district court has jurisdiction over a civil action removed 6 from state court only if the action could have been brought in the federal court originally. 7 See 28 U.S.C. § 1441(a). Federal courts have original jurisdiction of all civil actions 8 arising under the Constitution, laws, or treaties of the United States. Id. § 1331. Thus, 9 for an action to be removed based on federal question jurisdiction, the complaint must 10 establish either that federal law creates the cause of action or that the plaintiff’s right to 11 relief necessarily depends on the resolution of substantial questions of federal law. See 12 Franchise Tax Bd. of State of Cal. v. Constr. Laborers Vacation Trust for S. Cal., 463 13 U.S. 1, 10-13 (1983). “The ‘strong presumption’ against removal jurisdiction means that 14 the defendant always has the burden of establishing that removal is proper.” Gaus v. 15 Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). “Federal jurisdiction must be rejected if 16 there is any doubt as to the right of removal in the first instance.” Id. “[T]he subject 17 matter jurisdiction of the district court is not a waivable matter and may be raised at 18 anytime by one of the parties, by motion or in the responsive pleadings, or sua sponte by 19 the trial or reviewing court.” Emrich v. Touche Ross & Co., 846 F.2d 1190, 1194 n.2 (9th 20 Cir. 1988). 21 22 IV. DISCUSSION 23 24 Defendants assert that this Court has jurisdiction over this matter because 25 Plaintiff’s claims are preempted by ERISA, giving the Court “jurisdiction over this action 26 under 28 U.S.C § 1331 (federal question jurisdiction) and 28 U.S.C. § 1367 27 (supplemental jurisdiction).” (Dkt. 1 ¶¶ 9–10.) The Court agrees. 1 “Congress enacted ERISA to ‘protect . . . the interests of participants in employee 2 benefit plans and their beneficiaries’ by setting out substantive regulatory requirements 3 for employee benefit plans and to ‘provid[e] for appropriate remedies, sanctions, and 4 ready access to the Federal courts.’” Aetna Health Inc. v. Davila, 52 U.S. 200, 208 5 (2004) (citing 29 U.S.C. § 1001(b)). “Any state law cause of action that duplicates, 6 supplements, or supplants the ERISA civil enforcement remedy conflicts with the clear 7 congressional intent to make the ERISA remedy exclusive and is therefore pre-empted.” 8 Id. at 209. Therefore, while “the existence of a federal defense normally does not create 9 statutory ‘arising under’ jurisdiction,” a claim that “comes within the scope” of ERISA, 10 “even if pleaded in terms of state law, is in reality based on federal law.” Id. at 208. 11 12 Courts apply a two-part test to determine whether a state law cause of action is 13 completely preempted under ERISA. If the plaintiff “at some point in time, could have 14 brought his claim under ERISA § 502(a)(1)(B), and where there is no other independent 15 legal duty that is implicated by a defendant’s actions, then the [plaintiff’s] cause of action 16 is completely pre-empted by ERISA § 502(a)(1)(B).” Id. at 210. 17 18 Davila’s first prong consists of two subparts: (1) whether the plaintiff has standing 19 to sue under ERISA; and (2) whether the plaintiff’s claims fall within the scope of 20 ERISA § 502(a). Filler v. Anthem Blue Cross, 2012 WL 12539994, at *5 (C.D. Cal. Dec. 21 17, 2012). A healthcare provider such as Plaintiff has standing to assert a claim under 22 § 502(a) when a beneficiary has assigned to the provider that individual’s right to benefits 23 under the ERISA plan. Misic v. Bldg. Serv. Emps. Health & Welfare Tr., 789 F.2d 1374, 24 1379 (9th Cir. 1986) (holding healthcare provider, “as assignee of beneficiaries pursuant 25 to assignments valid under ERISA, has standing to assert the claims of his assignors”); 26 Blue Cross of California v. Anesthesia Care Assocs. Med. Grp., Inc., 187 F.3d 1045, 27 1051 (9th Cir. 1999) (“[B]ecause a health care provider-assignee stands in the shoes of 1 benefits due under the plan.”). Plaintiff concedes that it “obtained assignments of 2 benefits from at least one of the at-issue patients.”1 (Dkt. 19 at 1.) The first subpart of 3 the first prong is therefore met.
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 SOUTHERN DIVISION 11 ) 12 ) Case No.: SACV 24-00353-CJC (JDEx) SAGEBRUSH LLC D/B/A THE EDGE ) 13 TREATMENT CENTER, ) ) 14 ) ORDER DENYING PLAINTIFF’S Plaintiff, ) MOTION TO REMAND [Dkt. 13] 15 ) v. ) 16 ) ) 17 ) CIGNA HEALTH AND LIFE ) 18 INSURANCE COMPANY and CIGNA ) HEALTHCARE OF CALIFORNIA, ) 19 ) INC., ) 20 ) ) 21 Defendants. ) ) 22
23 I. INTRODUCTION 24
25 In this case, Plaintiff Sagebrush LLC, doing business as The Edge Treatment 26 Center, alleges that Defendants Cigna Health and Life Insurance Company and Cigna 27 Healthcare of California, Inc. failed to fully compensate it for behavioral health services 1 it provided to 24 patients at its outpatient clinic between November 2020 and October 2 2022. (Dkt. 1-3 [Compl.] ¶¶ 9, 11, 12, Ex. 1.) On February 20, 2024, Defendants 3 removed this case from Orange County Superior Court. (Dkt. 1.) Now before the Court 4 is Plaintiff’s motion to remand. (Dkt. 13.) For the following reasons, Plaintiff’s motion 5 is DENIED. 6 7 II. BACKGROUND 8 9 Plaintiff operates an outpatient clinic that provides “services for mental health 10 disorders and substance use disorders.” (Compl. ¶¶ 11–12.) Defendants are a healthcare 11 insurance company. (Dkt. 14-1 ¶ 5.) Plaintiff alleges that between November 2020 and 12 October 2022 it provided behavioral health services to 24 patients who “were, at all 13 relevant times, policyholders of Cigna policies.” (Compl. ¶ 12.) “Before rendering 14 services to [the 24 patients], Sagebrush contacted Cigna and/or its agents via telephone to 15 verify eligibility for insurance coverage and request authorization. Cigna and/or its 16 agents issued authorization to cover the full extent of services provided to [the patients].” 17 (Id. ¶ 13.) Over 95% of the corresponding claims were for services rendered to patients 18 with ERISA governed health benefit plans. (Dkt. 14-1 ¶ 5.) At least some of these 19 patients assigned their benefits to Plaintiff. (Dkt. 19 at 1.) 20 21 Plaintiff billed Defendants for its services and expected reimbursement in the 22 amount of $8,413,910. (Compl. ¶ 14.) Defendants paid Plaintiff $1,146,562.94. (Id. 23 ¶ 15.) Plaintiff submitted written appeals to Defendants, requesting the full billed 24 amount, but Defendants upheld their previous payment determination. (Id. ¶ 17.) Based 25 on the alleged balance of $7,267,347.06, Plaintiff brings five causes of action: breach of 26 implied contract, violations of California’s unfair competition law (“UCL”), unjust 27 enrichment, quantum meruit, and accounts stated. (Id. at 4–11.) 1 III. LEGAL STANDARD 2 3 “‘Federal courts are courts of limited jurisdiction,’ possessing ‘only that power 4 authorized by Constitution and statute.’” Gunn v. Minton, 568 U.S. 251, 256 (2013) 5 (citation omitted). A federal district court has jurisdiction over a civil action removed 6 from state court only if the action could have been brought in the federal court originally. 7 See 28 U.S.C. § 1441(a). Federal courts have original jurisdiction of all civil actions 8 arising under the Constitution, laws, or treaties of the United States. Id. § 1331. Thus, 9 for an action to be removed based on federal question jurisdiction, the complaint must 10 establish either that federal law creates the cause of action or that the plaintiff’s right to 11 relief necessarily depends on the resolution of substantial questions of federal law. See 12 Franchise Tax Bd. of State of Cal. v. Constr. Laborers Vacation Trust for S. Cal., 463 13 U.S. 1, 10-13 (1983). “The ‘strong presumption’ against removal jurisdiction means that 14 the defendant always has the burden of establishing that removal is proper.” Gaus v. 15 Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). “Federal jurisdiction must be rejected if 16 there is any doubt as to the right of removal in the first instance.” Id. “[T]he subject 17 matter jurisdiction of the district court is not a waivable matter and may be raised at 18 anytime by one of the parties, by motion or in the responsive pleadings, or sua sponte by 19 the trial or reviewing court.” Emrich v. Touche Ross & Co., 846 F.2d 1190, 1194 n.2 (9th 20 Cir. 1988). 21 22 IV. DISCUSSION 23 24 Defendants assert that this Court has jurisdiction over this matter because 25 Plaintiff’s claims are preempted by ERISA, giving the Court “jurisdiction over this action 26 under 28 U.S.C § 1331 (federal question jurisdiction) and 28 U.S.C. § 1367 27 (supplemental jurisdiction).” (Dkt. 1 ¶¶ 9–10.) The Court agrees. 1 “Congress enacted ERISA to ‘protect . . . the interests of participants in employee 2 benefit plans and their beneficiaries’ by setting out substantive regulatory requirements 3 for employee benefit plans and to ‘provid[e] for appropriate remedies, sanctions, and 4 ready access to the Federal courts.’” Aetna Health Inc. v. Davila, 52 U.S. 200, 208 5 (2004) (citing 29 U.S.C. § 1001(b)). “Any state law cause of action that duplicates, 6 supplements, or supplants the ERISA civil enforcement remedy conflicts with the clear 7 congressional intent to make the ERISA remedy exclusive and is therefore pre-empted.” 8 Id. at 209. Therefore, while “the existence of a federal defense normally does not create 9 statutory ‘arising under’ jurisdiction,” a claim that “comes within the scope” of ERISA, 10 “even if pleaded in terms of state law, is in reality based on federal law.” Id. at 208. 11 12 Courts apply a two-part test to determine whether a state law cause of action is 13 completely preempted under ERISA. If the plaintiff “at some point in time, could have 14 brought his claim under ERISA § 502(a)(1)(B), and where there is no other independent 15 legal duty that is implicated by a defendant’s actions, then the [plaintiff’s] cause of action 16 is completely pre-empted by ERISA § 502(a)(1)(B).” Id. at 210. 17 18 Davila’s first prong consists of two subparts: (1) whether the plaintiff has standing 19 to sue under ERISA; and (2) whether the plaintiff’s claims fall within the scope of 20 ERISA § 502(a). Filler v. Anthem Blue Cross, 2012 WL 12539994, at *5 (C.D. Cal. Dec. 21 17, 2012). A healthcare provider such as Plaintiff has standing to assert a claim under 22 § 502(a) when a beneficiary has assigned to the provider that individual’s right to benefits 23 under the ERISA plan. Misic v. Bldg. Serv. Emps. Health & Welfare Tr., 789 F.2d 1374, 24 1379 (9th Cir. 1986) (holding healthcare provider, “as assignee of beneficiaries pursuant 25 to assignments valid under ERISA, has standing to assert the claims of his assignors”); 26 Blue Cross of California v. Anesthesia Care Assocs. Med. Grp., Inc., 187 F.3d 1045, 27 1051 (9th Cir. 1999) (“[B]ecause a health care provider-assignee stands in the shoes of 1 benefits due under the plan.”). Plaintiff concedes that it “obtained assignments of 2 benefits from at least one of the at-issue patients.”1 (Dkt. 19 at 1.) The first subpart of 3 the first prong is therefore met. 4 5 The second subpart is also met because at least some of Plaintiff’s claims fall 6 within the scope of § 502(a) because they, in effect, seek benefits that are owed under an 7 ERISA plan. See Rudel v. Hawai’i Mgmt. All. Ass’n, 937 F.3d 1262, 1271 (9th Cir. 8 2019) (“[I]n substance, [the plaintiff’s] claim was one to recover benefits or to clarify his 9 rights to benefits pursuant to the Plan.”); Filler, 2012 WL 12539994, at *5 (“Because 10 what plaintiffs seek by way of these claims is the benefits they claim are owed to them 11 pursuant to an ERISA-covered benefits plan, these claims can be construed as claims for 12 benefits that could have been brought under section 502(a) at some point in time.”). 13 Thus, Plaintiff could have brought at least some of its claims under ERISA. 14 15 Davila’s second prong requires the Court to determine “whether a claim relies on 16 the violation of a legal duty that arises independently of the plaintiff’s, or their assignor’s, 17 ERISA plan.” Hansen v. Grp. Health Coop., 902 F.3d 1051, 1059 (9th Cir. 2018). When 18 there is no independent legal duty, the claim is preempted. Davila, 52 U.S. at 210. “This 19 question requires a practical, rather than a formalistic, analysis because claimants simply 20 cannot obtain relief by dressing up an ERISA benefits claim in the garb of a state law 21 tort.” Fossen v. Blue Cross & Blue Shield of Montana, Inc., 660 F.3d 1102, 1110–11 (9th 22 Cir. 2011) (cleaned up). Indeed, “distinguishing between pre-empted and non-pre- 23 empted claims based on the particular label affixed to them would elevate form over 24 substance and allow parties to evade the pre-emptive scope of ERISA simply by 25 26 27 1 In its briefing, Plaintiff’s primary argument as to the first Davila prong was that “Plaintiff is not a ‘beneficiary’ who has standing to sue under ERISA.” (Dkt. 17 at 4–5; Dkt. 13 at 11 [same].) Plaintiff 1 relabeling their . . . claims for tortious breach of contract.” Davila, 542 U.S. at 214 2 (cleaned up). 3 4 Defendant argues that at least Plaintiff’s UCL claim does not arise from an 5 independent duty because the claim is entirely dependent on the existence of ERISA- 6 regulated plans. (Dkt. 14 at 11.) The Court agrees. 7 8 Plaintiff alleges that “Defendants have refused to fully reimburse services that 9 were medically necessary,” “using or employing unilateral payment practices,” paying 10 “arbitrary amounts,” and “improperly retaining and withholding . . . funds from providers 11 such as Sagebrush who have provided medically necessary behavioral health services to 12 members.” (Compl. ¶¶ 33, 35–36.) In Cleghorn v. Blue Shield of California, the Ninth 13 Circuit addressed a similar case in which “[t]he only factual basis for relief” was “the 14 refusal of Blue Shield to reimburse [the plaintiff] for the emergency medical care he 15 received.” 408 F.2d 1222, 1226 (9th Cir. 2005). The Ninth Circuit explained that “any 16 duty or liability that Blue Shield had to reimburse him would exist here only because of 17 Blue Shield’s administration of ERISA-regulated benefit plans.” Id. (cleaned up). So too 18 here. In support of its UCL claim, Plaintiff alleges violations of California Health & 19 Safety Code §§ 1371, 1371.35, 1371.36, and 1371.37. (Compl. ¶ 35.) But those statutes 20 do not apply to health insurers like Defendants.2 See Sanjiv Goel, M.D., Inc., 2024 WL 21 1361800, at *5 (“[T]he cited statutes of the Health and Safety Code are part of the Knox- 22 Keene Health Care Act, which is inapplicable to the facts of the present case since Knox- 23 Keene applies only to health care service plans and specialized health care service plan 24 contracts, and not to self-funded plans or health insurance policies.”) (cleaned up). As 25
26 2 Defendants provide, and the Court takes proper judicial notice of, a California Department of 27 Insurance certificate confirming that Defendants are licensed health-care insurers, not a health care service plan. (See generally Dkt. 15); see also Sanjiv Goel, M.D., Inc. v. United Healthcare Servs., Inc., 1 || pleaded, because Plaintiff fails to identify any duty independent of the patients’ benefit 2 ||plans to reimburse at a different rate, ERISA preempts Plaintiff's UCL claim. See, e.g., 3 || Sanjiv Goel, M_D., Inc., 2024 WL 1361800, at *5 (“Plaintiff cannot assert an independent 4 || legal duty outside of ERISA, and the second prong of Davila is satisfied.”); Lodi □□□□□ 5 || Hosp. Ass’n v. Tiger Lines, LLC, 2015 WL 5009093, at *7 (E.D. Cal. Aug. 20, 2015) 6 ||(explaining that ERISA completely preempts similar UCL claims); Leonard v. Metlife 7 Co., 2013 U.S. Dist. LEXIS 200342, at *15 (C.D. Cal. Feb. 25, 2013) (holding UCL 8 ||claim was “dependent on the existence of an ERISA-regulated plan). 9 10 Because ERISA preempts at least Plaintiff's UCL claim, removal was appropriate. 11 || Melamed v. Blue Cross of California, 557 F. App’x 659, 661 (9th Cir. 2014) (holding tha 12 “an individual claim is completely preempted” “the existence of other nonpreempted 13 || claims will not save the case from federal removal jurisdiction”). And because removal 14 ||1s appropriate, there is no basis to award Plaintiff's requested fees. (See Dkt. 13 at 18 15 || [requesting fees because “there was no legal basis to remove the case to federal □□□□□□□□□□ 16 17 ||}V. CONCLUSION 18 19 For the foregoing reasons, Plaintiff's motion to remand is DENIED. 20 21 DATED: May 13, 2024 Ko fr 23 pa 24 CORMAC J. CARNEY 25 UNITED STATES DISTRICT JUDGE 26 27 28