Physicians Surgery Center of Chandler v. Cigna Healthcare Incorporated et al, No. 2:2020cv02007 - Document 52 (D. Ariz. 2022)
Court Description: ORDER granting Cigna's Second 38 Motion to Dismiss. Cigna's Motion as to the ERISA derivative claims (Counts I and III) is granted for failure to state a claim, with leave to amend. Cigna's Motion as to Count II is granted for fail ure to state a claim, without leave to amend. Cigna's Motion as to the remaining state-law claims (Counts V, VI, VII, and VIII) is granted and those counts are dismissed without leave to amend. IT IS FINALLY ORDERED that PSCC shall file an amended complaint, if it chooses to do so, by no later than July 15, 2022. Signed by Judge Michael T. Liburdi on 7/1/2022. Signed by Judge Michael T. Liburdi on 7/1/2022. (ESG)
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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Physicians Surgery Center of Chandler, Plaintiff, 10 11 v. 12 Cigna Healthcare Incorporated, et al., 13 No. CV-20-02007-PHX-MTL ORDER Defendants. 14 15 Pending before the Court is the second motion to dismiss filed by Defendants Cigna 16 Healthcare and associated parties (collectively, “Cigna”). Cigna moves to dismiss Plaintiff 17 Physicians Surgery Center of Chandler’s (“PSCC”) first amended complaint. (Doc. 38.) 18 For the following reasons, the Court grants the motion. 19 I. BACKGROUND 20 The Court previously set forth the factual background of this case in its previous 21 Order. (Doc. 27.) In brief, PSCC provides medical care to patients with Cigna insurance 22 plans, even though it is an out-of-network provider. (Doc. 28 ¶¶ 14, 26, 27.) In October 23 2018, PSCC received a letter from Cigna accusing PSCC of failing to bill its Cigna-insured 24 patients their full out-of-network cost share, a practice known as “fee forgiveness.” (Id. ¶¶ 25 40, 41.) PSCC contends it does not engage in fee forgiveness. (Id. ¶ 70.) Ever since Cigna 26 determined that PSCC was engaging in this practice, Cigna has denied all claims submitted 27 by PSCC based on its alleged fee forgiveness policy. (Id. ¶ 43, 47.) PSCC alleges that as 28 of August 31, 2020, “Cigna has improperly withheld approximately $5.6 million dollars” 1 of payment due to PSCC to “create leverage against PSCC.” (Id. ¶ 53.) PSCC filed a 2 complaint in October 2020. (Doc. 1.) 3 On July 23, 2021, the Court entered an Order (Doc. 27) granting in part and denying 4 in part as moot Cigna’s first motion to dismiss PSCC’s complaint. The Court also directed 5 PSCC to file an amended complaint by August 20, 2021, and PSCC timely did so. (Id., 6 Doc. 28.) In its first amended complaint, PSCC asserts three derivate claims arising under 7 ERISA brought on behalf of Cigna’s members: failure to properly pay benefits (Count I); 8 breach of fiduciary duties (Count II); and failure to provide full and fair review (Count III). 9 (Doc. 28.) PSCC also asserts five direct claims in its own capacity: breach of contract 10 (Count IV); breach of the duty of good faith and fair dealing (Count V); unjust enrichment 11 (Count VI); violation of Arizona’s Prompt Pay statute (Count VII); and consumer fraud 12 (Count VIII). (Id.) Cigna moved to dismiss each of PSCC’s claims for relief pursuant to 13 Federal Rule of Civil Procedure 12(b)(6). (Doc. 38 at 1.) 14 II. LEGAL STANDARD 15 To survive a motion to dismiss, a complaint must contain “a short and plain 16 statement of the claim showing that the pleader is entitled to relief” such that the defendant 17 is given “fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl. 18 Corp. v. Twombly, 550 U.S. 545, 555 (2007) (quoting Fed. R. Civ. P. 8(a)(2); Conley v. 19 Gibson, 355 U.S. 41, 47 (1957)). A complaint does not suffice “if it tenders ‘naked 20 assertion[s]’ devoid of ‘further factual enhancement.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 21 (2009) (quoting Twombly, 550 U.S. at 556). Dismissal under Rule 12(b)(6) “can be based 22 on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a 23 cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 24 1988). But the Court should not dismiss a complaint “unless it appears beyond doubt that 25 the plaintiff can prove no set of facts in support of the claim that would entitle it to relief.” 26 Williamson v. Gen. Dynamics Corp., 208 F.3d 1144, 1149 (9th Cir. 2000). 27 In deciding motions to dismiss, the court must accept material allegations in the 28 complaint as true and construe them in the light most favorable to the plaintiff. North Star -2- 1 Int’l v. Arizona Corp. Comm’n, 720 F.2d 578, 580 (9th Cir. 1983). “Indeed, factual 2 challenges to a plaintiff’s complaint have no bearing on the legal sufficiency of the 3 allegations under Rule 12(b)(6).” See Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th 4 Cir. 2001). Additionally, review of a Rule 12(b)(6) motion is “limited to the content of the 5 complaint.” North Star Int’l, 720 F.2d at 581. 6 III. 7 ANALYSIS A. 8 Derivative Claims 1. Plan Term 9 In its prior Order, the Court dismissed three of PSCC’s ERISA claims: failure to 10 properly pay benefits, breach of fiduciary duties, and failure to provide full and fair review. 11 (Doc. 27 at 7–8.) The underpinning of that Order was PSCC’s failure to plead any specific 12 plan language. (Id. at 7.) Without that information, PSCC cannot state a claim for relief 13 because “a plaintiff who brings a claim for benefits under ERISA must identify a specific 14 plan term that confers the benefit in question.” Almont Ambulatory Surgery Ctr., LLC v. 15 UnitedHealth Grp., Inc., 99 F. Supp. 3d 1110, 1155 (C.D. Cal. 2015) (citation and internal 16 quotation marks omitted). PSCC conceded that it had not pleaded specific plan language. 17 (Doc. 27 at 7.) Still, the Court allowed PSCC to amend its complaint to show efforts it had 18 undertaken to obtain the plan language. (Doc. 27 at 17.) 19 In its amended complaint, PSCC provided a number of details about how it has 20 sought the plan documents and also attached emails between PSCC’s counsel and Cigna’s 21 counsel. (Doc. 28 ¶¶ 89–114, Doc. 28-4 at 2–22.) PSCC asserts that Cigna did not provide 22 the plan documents for all 238 patients, but instead only provided summary plan documents 23 for five of the patients. (Id. ¶¶ 89, 100, 114.) Based on these emails, PSCC accuses Cigna 24 of “actively impeding the orderly disposition of this action through patent obfuscation.” 25 (Doc. 41 at 7.) Regardless, PSCC provided a representative plan term from the summary 26 plan documents that it alleges “is contained in each Plan for each Claiming Patient.” (Doc. 27 28 ¶ 10.) 28 Generally, a complaint must allege facts to “raise a right to relief above the -3- 1 speculative level.” Bell Atl. Corp., 550 U.S. at 555. To adequately state a claim under 2 ERISA Section 502(a)(1)(B), “a plaintiff must allege facts that establish the existence of 3 an ERISA plan as well as the provisions of the plan that entitle it to benefits.” Almont 4 Ambulatory Surgery Ctr., LLC v. UnitedHealth Grp., Inc., 99 F. Supp. 3d 1110, 1155 (C.D. 5 Cal. 2015) (citation and internal quotation marks omitted). “Accordingly, a plaintiff who 6 brings a claim for benefits under ERISA must identify a specific plan term that confers the 7 benefit in question.” Id. The Court finds that PSCC has sufficiently identified a specific 8 plan term, but it still fails to state a claim under which relief can be granted. 9 In the amended complaint, PSCC alleges: (1) it provided health care services to 10 Cigna patients as an out-of-network provider (Doc. 28 ¶¶ 14, 15); (2) it timely submitted 11 claims to Defendants for payment (id. ¶¶ 37, 38); (3) Cigna wrongfully asserts that PSCC 12 engaged in fee forgiveness (id. ¶ 41); (4) Cigna told PSCC that it would deny all claims 13 from PSCC until it provided proof of payments by patients to Cigna’s satisfaction (id. ¶ 14 42); and (5) PSCC does not engage in fee forgiveness (id. ¶ 47).1 PSCC also provides this 15 representative plan language, which it claims is contained in each patients’ plan: 23 [I]f Cigna determines that a provider is or has waived, reduced, or forgiven any portion of its charges and/or any portion of copayment, deductible, and/or coinsurance amount(s) you are required to pay for a Covered Service (as shown on the Schedule) without Cigna’s express consent, then Cigna in its sole discretion shall have the right to deny the payment of benefits in connection with the Covered Service, or reduce the benefits in proportion to the amount of the copayment, deductible, and/or coinsurance amounts waived, forgiven or reduced, regardless of whether the provider represents that you remain responsible for any amounts that your plan does not cover. In the exercise of that discretion, Cigna shall have the right to require you to provide proof sufficient to Cigna that you have made your required cost share payment(s) prior to the payment of any benefits by Cigna. 24 (Id. ¶ 45.) Essentially, the fee-forgiveness term gives Cigna “sole discretion” to refuse to 25 pay for services if Cigna determines a provider is engaging in fee forgiveness. (Id.) And, 26 in exercising that discretion, Cigna has the right to require proof that the patient has paid 27 his or her cost share. (Id.) PSCC also alleges that Cigna sent a letter on October 4, 2018 28 1 16 17 18 19 20 21 22 Fee forgiveness is when a provider does not bill its patients for the full out-of-network cost that the patient owes under the plan. -4- 1 alerting PSCC that it had determined PSCC was engaging in fee forgiveness, and it “will 2 continue to deny claims until [PSCC] can establish proof of payments by patients to 3 [Cigna’s] satisfaction.” (Id. ¶¶ 41, 42, Doc. 28-1 at 13–15.) But PSCC never alleges that 4 it made any attempts of proof of payment. (See Doc. 28 ¶¶ 41, 42.) 5 Accepting all of PSCC’s allegations as true, PSCC has failed to state a claim for 6 relief based on the alleged plan term. North Star Int’l, 720 F.2d at 580. The fee forgiveness 7 term allows Cigna to decide whether a provider is engaging in fee forgiveness and then 8 require proof of payment by the patient. (Id. ¶ 45.) The Court must assume, as it alleges, 9 that PSCC was not engaging in fee forgiveness. (Id. ¶ 70.) But even still, Cigna had full 10 discretion under the parties’ contract terms to seek proof-of-payment. (Id. ¶ 45.) PSCC’s 11 complaint is silent about its efforts to provide proof-of-payment. In its letter to PSCC, 12 Cigna explained: “[b]ecause [PSCC] failed to provide the requested documentation 13 supporting that you have collected the applicable cost share and balance amounts from the 14 affected customers that satisfies the terms of the plan language, a refund is required.” (Doc. 15 28-1 at 14.) Thus, regardless of whether or not PSCC was forgiving fees, the term dictates 16 that PSCC provide proof-of-payment. Because it did not allege that it did so, the Court 17 cannot determine that Cigna breached the agreement or failed to pay benefits. 18 Beyond this fee forgiveness term, PSCC asserts no other provision in the ERISA 19 plans that entitle it to payment of benefits. Almont Ambulatory Surgery Ctr., LLC, 99 F. 20 Supp. 3d at 1155; see also Glendale Outpatient Surgery Ctr. v. United Healthcare Servs., 21 Inc., 805 Fed. App’x 530, 531 (9th Cir. 2020) (determining that a plaintiff failed to state a 22 claim for relief because it did not any ERISA “plan terms that specify benefits that the 23 defendants were obligated to pay but failed to pay”). Because of this shortfall, PSCC has 24 failed to state a plausible claim for relief on its Counts I, II, or III. 25 Despite this failure, PSCC has assured the Court that it can allege it submitted 26 documented proof of payment for the medical procedures in the ERISA claims at issue, 27 after it received Cigna’s October 4, 2018 letter. (Doc. 51.) As such, the Court grants leave 28 to amend as explained herein. -5- 1 2. Count II: Fiduciary Duty 2 PSCC’s Count II claims it is entitled to relief under 29 U.S.C. § 1132(A)(3) for 3 breach of fiduciary duty. (Doc. 28 at 25.) In addition to the pleading defect set forth above, 4 Count II suffers from the added defect that it fails to request equitable relief or a remediable 5 wrong. The Court previously dismissed this count because, in addition to failing to plead 6 a specific plan term, PSCC also failed to allege any remediable wrong or stated a claim for 7 equitable relief. (Doc. 27 at 15.) PSCC argues its amended complaint sufficiently requests 8 a form of relief under Count II because it alleged that “Cigna is required to exercise its 9 fiduciary duties . . . and Cigna should be ordered to do so” and “PSCC has suffered injury 10 and is entitled to damages and equitable, injunctive and declaratory relief.” (Doc. 28 11 ¶¶ 145, 147.) 12 Once again, PSCC’s allegations do not specify what kind of relief it seeks. (Doc. 13 27 at 14.) While monetary damages are possible under ERISA § 502(a)(3), PSCC alleges 14 merely that it “has suffered injury and is entitled to damages.” (Doc. 28 ¶ 145.) A claim 15 for breach of fiduciary duty under ERISA requires a plaintiff to allege “both (1) that there 16 is a remediable wrong, i.e., that the plaintiff seeks relief to redress a violation of ERISA or 17 the terms of a plan, and (2) that the relief sought is appropriate equitable relief.” Talbot v. 18 Reliance Standard Life Ins. Co., No. CV-14-00231-PHX-DJH, 2018 WL 10419233, at *19 19 (D. Ariz. Feb. 7, 2018). PSCC’s request fails on both prongs. 20 First, PSCC has not demonstrated what remediable wrong exists for the plan’s 21 subscribers. As the assignee of the patients’ § 502(a)(3) claims, PSCC can only state a 22 claim for relief if those patients have a remediable wrong. 23 Interprise/Sw. Interior & Space Design, Inc., No. 3:20-CV-03077-X, 2021 WL 2376720, 24 at *3 (N.D. Tex. June 10, 2021) (“But [the assignee] fails to demonstrate how the 25 [subscriber] could have brought its claim under section [502](a)(3) as a result of [the 26 fiduciary’s] alleged violation.”). PSCC fails to show how the patients—its assignors— 27 could maintain a claim under § 502(a)(3) against Cigna for a violation of fiduciary duty. 28 Instead, PSCC alleges that “[a]s direct and proximate cause of such breach of fiduciary -6- See, e.g., Caulley v. 1 duties of loyalty and care, PSCC has suffered injury and is entitled to damages[.]” (Doc. 2 28 ¶ 147) (emphasis added). Here, PSCC alleges it has suffered an injury, not the patients, 3 and this allegation is insufficient to state a claim under § 502(a)(3). 4 Second, PSCC’s request for “damages” does not specify an equitable remedy and 5 fails to clarify what form of damages it seeks under § 502(a)(3). As the Court has 6 previously explained, “[w]hen a fiduciary breaches its duty and relief is not otherwise 7 available under the statute, § 502(a)(3) of ERISA provides for individualized equitable 8 relief.” Chappel v. Lab. Corp. of Am., 232 F.3d 719, 727 (9th Cir. 2000). The equitable 9 relief categories under § 502(a)(3) are generally limited “to those categories of relief that 10 were typically available in equity (such as injunction, mandamus, and restitution, but not 11 compensatory damages).” Mertens v. Hewitt Assocs., 508 U.S. 248, 256 (1993). Section 12 502(a)(3) “act[s] as a safety net, offering appropriate equitable relief for injuries caused by 13 violations that § 502 does not elsewhere adequately remedy,” and relief is not available 14 under § 502(a)(3) “where Congress elsewhere provided adequate relief for a beneficiary’s 15 injury.” Varity Corp. v. Howe, 516 U.S. 489, 512, 515 (1996). 16 Here, PSCC’s conclusory request for relief in the form of “damages and equitable, 17 injunctive and declaratory relief” and a general request for the Court to order Cigna to 18 fulfill its fiduciary duties fail to meet these standards. The Court instructed PSCC to revise 19 its pleading to give an “indication of what specific relief” its request for “equitable, 20 injunctive and declaratory relief” would entail. (Doc. 27 at 13.) PSCC failed to do so. 21 PSCC also failed to show that its requested injunctive relief differs from relief available 22 through other avenues. Id. The Court therefore grants Cigna’s motion to dismiss as to 23 Count II for failure to state a claim, without leave to amend. 24 C. 25 PSCC also brings four direct claims rising under state law: breach of contract (Count 26 IV);2 breach of the duty of good faith and fair dealing (Count V); unjust enrichment (Count 27 VI); violation of Arizona’s Prompt Pay statute (Count VII); and consumer fraud (Count 28 2 Direct Claims Cigna does not seek dismissal of PSCC’s Count IV, breach of contract. (See Docs. 38, 44, see also Doc. 41 at 13 n.5.) Accordingly, the Court does not address this claim. -7- 1 VIII). (See Doc. 28.) 2 1. Breach of Duty of Good Faith (Count V) 3 PSCC’s Count V fails because the PSCC does not allege that that the patients have 4 assigned it the right to bring a claim for breach of the duty of good faith and fair dealing. 5 PSCC argues that, as an assignee of the patients’ rights, it stands in the shoes of the assignor 6 and “[t]here can be no sincere dispute that each of the Claiming Patients would have the 7 right to allege a claim for breach of the duty of good faith and fair dealing.” (Doc. 41 at 8 13–14.) 9 “The question of what rights and remedies pass with a given assignment depends 10 upon the intent of the parties.” Pac. Coast Agr. Exp. Ass’n v. Sunkist Growers, Inc., 526 11 F.2d 1196, 1208 (9th Cir. 1975). As “a non-participant health care provider,” PSCC may 12 bring suit only “derivatively, relying on its patients’ assignments of their benefits claims.” 13 Spinedex Physical Therapy USA Inc. v. United Healthcare of Ariz., 770 F.3d 1282, 1289 14 (9th Cir. 2014). 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The assignment provision that each patient signed states: The undersigned hereby appoints and designates [PSCC] as my duly authorized representative, and assigns my ERISA rights and plan benefits as described below. . . . I hereby assign my right to assert and all causes of action for judicial review to [PSCC]. . . . I intend for my personal standing under ERISA’s disclosure and civil enforcement procedures under 29 U.S.C. §§ 1024 and 1132 to be hereby transferred to my assignee, so that is my seek judicial review of denied claims and/or disclosure under 29 U.S.C. § 1132(a)(1)(B); 29 U.S.C. § 1132(a)(1)(A), and/or 29 C.F.R. 2560.503-1. (Doc. 28-1 at 11.) This provision indicates only “that patients intended to assign [to PSCC] only their rights to bring suit for payment of benefits.” Spinedex Physical Therapy USA Inc. v. United Healthcare of Ariz., 770 F.3d 1282, 1292 (9th Cir. 2014). Besides, PSCC’s Count V explicitly states that it “brings this claim with regard to plans that are not subject to ERISA.” (Doc. 28 ¶ 162.) None of the assignment provisions assign PSCC the right to bring non-ERISA claims. (See Doc. 28-1 at 11.) Even in its amended complaint, PSCC fails to allege any other assignment of benefits language that would give it the right to bring this claim. The Court finds that no amendment can cure this deficiency. Accordingly, -8- 1 Count V is dismissed with prejudice. 2 2. Unjust Enrichment (Count VI) 3 PSCC alleges that Cigna has been unjustly enriched because it received each 4 patients’ payment for insurance coverage, “which in turn allowed the Claiming Patients to 5 receive valuable medical care, and then Cigna was spared the cost of payment to PSCC 6 while avoiding the expense of claims appeals.” (Doc. 28 ¶¶ 173, 174.) PSCC alleges this 7 claim “for claims submitted under non-ERISA plans.” (Id. ¶ 173.) This claim suffers from 8 the same assignment of benefits as above. Even assuming that PSCC was assigned the 9 patients’ right to bring non-ERISA claims, PSCC fails to state a claim for relief on 10 Count VI. 11 Under Arizona law, to state a claim for unjust enrichment, the plaintiff bears the 12 burden of proving: (1) the plaintiff conferred a benefit to the defendant; (2) the defendant’s 13 benefit is at plaintiff’s expense; and (3) injustice would result from allowing the defendant 14 to keep the benefit. USLife Title Co. of Ariz. v. Gutkin, 153 Ariz. 349, 354 (1986). 15 Moreover, “the existence of a contract specifically governing the rights and obligations of 16 each party precludes recovery for unjust enrichment.” Id. 17 PSCC’s complaint contemplates a triangle of benefits and detriments that are not 18 grounded in case law. First, PSCC argues that Cigna (1) received the claiming patients’ 19 payment for coverage; (2) the claiming patient paid for coverage for medical procedures; 20 and (3) PSCC has been “unjustly impoverished having provided the valuable services 21 without payment” while Cigna “was spared the cost of payment to PSCC.” (Id. ¶¶ 173, 22 174.) In this setup, PSCC is standing in the shoes of the patients in the first step, but then 23 substitutes itself in the third step. By failing to identify what injustice the claiming patients 24 suffered as the result of Cigna’s actions, this fails to state a claim for relief. 25 PSCC also alleges that it (1) provided services to Cigna’s plan members; (2) Cigna 26 did not pay for those provided services that were valued at $5.6 million; and (3) Cigna 27 retains its plan members’ premiums but refuses to pay PSCC, thus “retaining” the benefit. 28 (Id. ¶¶ 176–179.) This argument fails on the first step. To state a claim for unjust -9- 1 enrichment, the plaintiff must confer a benefit to the defendant, not a third party. See id. 2 Here, PSCC provided a benefit—medical treatment—to the plan members, not the 3 defendant. 4 Plaintiff cites two cases that it claims prove that a provider can bring an unjust 5 enrichment claim against insurance companies. (Doc. 41 at 14.) Neither apply here. Both 6 cases apply Virginia law as to quantum meruit, not the Arizona elements of unjust 7 enrichment.3 Compare Dominion Surgical Specialists, LLC v. Carefirst Blue Cross Blue 8 Shield Ins., Co., No. 119CV01547RDAMSN, 2020 WL 2759252, at *3 (E.D. Va. Feb. 19, 9 2020); and Plastic Surgery Consultants, LLC v. Carefirst Blue Cross Blue Shield Ins. Co., 10 No. 119CV01317RDAIDD, 2020 WL 2744131, at *3 (E.D. Va. Jan. 2, 2020); W. Corr. 11 Grp., Inc. v. Tierney, 208 Ariz. 583, 590 (Ct. App. 2004). Even more unfavorably to 12 PSCC’s position, both cases dismissed the provider’s quantum meruit claim because the 13 complaint was “devoid of any facts that would tend to show that Defendant requested 14 medical services from Plaintiff.” Dominion, 2020 WL 279252, at *4; Carefirst, 2020 WL 15 2744131; at *4. 16 Based on its review of case law, any amendment to this claim would be futile 17 because PSCC cannot allege that it conferred a benefit to Cigna. Lopez v. Smith, 203 F.3d 18 1122, 1127 (9th Cir. 2000) (explaining that leave to amend is futile where “the pleading 19 could not possibly be cured by the allegation of other facts”). Count VI is dismissed with 20 prejudice. 21 3. Prompt Pay Statute (Count VII) 22 PSCC’s Count VII alleges a claim arising under A.R.S. § 20-3102(A), the Arizona 23 Prompt Payment Statute. Section 20-3102 instructs a health care insurer to “adjudicate any 24 clean claim from a contracted or noncontracted health care provider relating to health care 25 insurance coverage within thirty days” absent an agreement to the contrary. A.R.S. § 20- 26 3102(A). PSCC does not argue, and the Court cannot find, any cases where Section 20- 27 Under Arizona law, “quantum meruit is the measure of damages imposed when a party prevails on the equitable claim of unjust enrichment.” Corr. Grp., Inc. v. Tierney, 208 Ariz. 583, 590 (Ct. App. 2004) (internal quotations omitted). 3 28 - 10 - 1 3102 provided a private right of action. (See Doc. 41 at 14–15.) PSCC reasons that “the 2 Arizona Legislature must have intended to include a private right of action to enforce an 3 insurer’s compliance with the statute.” (Id. at 15.) No authority indicates that Section 20- 4 3102 provides a private right of action, and PSCC fails to provide any. PSCC’s argument 5 also fails to persuade the Court that Arizona law would infer a private right of action here. 6 Accordingly, this Count VII is dismissed with prejudice. 7 4. PSCC’s Count VIII asserts a claim for violation of Arizona’s Consumer Fraud Act 8 9 Consumer Fraud (Count VIII) (“CFA”), A.R.S. § 44-1521. (Doc. 28 at 30.) The CFA statute provides: 10 The act, use or employment by any person of any deception, deceptive act or practice, fraud, false pretense, false promise, misrepresentation, or concealment, suppression or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise whether or not any person has in fact been misled, deceived or damaged thereby, is declared to be an unlawful practice. 11 12 13 14 15 A.R.S. § 44-1522(A). Allegations of fraud are subjected to a heightened pleading standard 16 under Rule 9(b), which requires that “a party [alleging fraud] must state with particularity 17 the circumstances constituting fraud.” Fed. R. Civ. P. 9(b). To satisfy this requirement, a 18 plaintiff must include “the who, what, when, where, and how” of the fraud. Vess v. Ciba- 19 Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (internal quotations and citations 20 omitted). 21 The CFA is inapplicable to the facts of this case. The CFA contemplates an 22 “omission of any material fact . . . in connection with the sale or advertisement of any 23 merchandise[.]” A.R.S. § 44-1522(A). PSCC alleges that fraud arose from Cigna’s 24 preapproval of medical care, then refusal to compensate PSCC for that care. (Doc. 28 25 ¶ 189.) 26 merchandise.” Id. (emphasis added). Finding no persuasive case law applying the CFA in 27 the manner that PSCC advocates, the Court dismisses this claim. 28 /// But this approval is unconnected “with the sale or advertisement of [ ] - 11 - 1 D. 2 PSCC does not seek leave to amend. (See Doc. 41.) Nevertheless, Rule 15(a)(2) of 3 the Federal Rules of Civil Procedure provides that “[t]he court should freely give leave [to 4 amend a pleading] when justice so requires.” Fed. R. Civ. P. 15(a)(2). “The power to grant 5 leave to amend . . . is entrusted to the discretion of the district court, which ‘determines the 6 propriety of a motion to amend by ascertaining the presence of any of four factors: bad 7 faith, undue delay, prejudice to the opposing party, and/or futility.’” Serra v. Lappin, 600 8 F.3d 1191, 1200 (9th Cir. 2010) (quotation omitted). District courts properly deny leave 9 to amend if the proposed amendment would be futile or the amended complaint would be 10 subject to dismissal. Saul v. United States, 928 F.2d 829, 843 (9th Cir. 1991). “[A] 11 proposed amendment is futile only if no set of facts can be proved under the amendment 12 to the pleadings that would constitute a valid and sufficient claim.” Miller v. Rykoff-Sexton, 13 Inc., 845 F.2d 209, 214 (9th Cir. 1988). Leave to Amend 14 Amendment would not be futile here as to Counts I and III only. Cigna argued that, 15 based on the terms of the October 4, 2018 letter, and the fee forgiveness provision, “it 16 would deny Plaintiff’s claims for services provided to Cigna plan members until ‘you can 17 establish proof of payment by your patient’ of applicable cost share and balance amounts 18 ‘by providing documented proof of payment for the medical procedure(s) at issue.’” (Doc. 19 41 at 6, 7.) PSCC contends it can amend its complaint to include allegations that it did 20 submit proof-of-payment for the patients at issue after receiving the October 4, 2018 letter, 21 yet Cigna, after receiving the proof that fee forgiveness was not happening, still did not 22 make payments. (Doc. 51.) The remaining counts are dismissed with prejudice because 23 the Court finds amendment would be futile. 24 IV. CONCLUSION 25 For the reasons set forth above, 26 IT IS ORDERED granting Cigna’s Second Motion to Dismiss. (Doc. 38.) 27 28 1. Cigna’s Motion as to the ERISA derivative claims (Counts I and III) is granted for failure to state a claim, with leave to amend. - 12 - 1 2 3 4 5 6 7 2. Cigna’s Motion as to Count II is granted for failure to state a claim, without leave to amend. 3. Cigna’s Motion as to the remaining state-law claims (Counts V, VI, VII, and VIII) is granted and those counts are dismissed without leave to amend. IT IS FINALLY ORDERED that PSCC shall file an amended complaint, if it chooses to do so, by no later than July 15, 2022. Dated this 1st day of July, 2022. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 13 -
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