IV Solutions, Inc. v. Empire HealthChoice Assurance, Inc. et al, No. 2:2017cv05615 - Document 15 (C.D. Cal. 2017)
Court Description: ORDER GRANTING DEFENDANTS MOTION TO DISMISS PLAINTIFFS COMPLAINT 10 by Judge Otis D. Wright, II: The Court DISMISSES Plaintiffs Complaint with prejudice. (MD JS-6. Case Terminated) (lc)
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IV Solutions, Inc. v. Empire HealthChoice Assurance, Inc. et al Doc. 15 JS-6 O 1 2 3 4 5 6 7 8 9 10 11 UNITED STATES DISTRICT COURT 12 CENTRAL DISTRICT OF CALIFORNIA 13 14 IV SOLUTIONS, INC., a California Case No. 2:17-cv-05615-ODW-SK 15 corporation, 16 17 Plaintiff, v. 18 EMPIRE HEALTHCHOICE 19 ASSURANCE, INC., a corporation doing business as Empire Blue Cross Blue Shield; and Does 1 through 10, inclusive, 20 21 22 23 ORDER GRANTING DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT [10] Defendants. I. INTRODUCTION This action arises out of claims for fraud, breach of contract, and open book 24 account related to the administration of medical services. Plaintiff IV Solutions 25 initiated this action in the Los Angeles County Superior Court on June 23, 2017. 26 (Exhibit 1, ECF No. 1-2.) Defendant Empire HealthChoice Assurance, Inc., removed 27 the case to federal court on July 28, 2017. (Notice of Removal, ECF No. 1.) Before 28 the Court now is Defendant’s Motion to Dismiss Plaintiff’s Complaint. (Mot., ECF 1 Dockets.Justia.com 1 No. 10.) For the reasons discussed below, the Court GRANTS Defendant’s Motion 2 and DISMISSES Plaintiff’s Complaint without prejudice.1 II. 3 FACTUAL BACKGROUND2 4 Plaintiff is a home infusion pharmacy that provided medical services to 5 Defendant’s insured, M.M.3 (See generally Compl., Exhibit 1, ECF No. 1-2.) After 6 being diagnosed with hypogammaglobulinemia, Dr. Karo Arzoo, one of Defendant’s 7 in-network physicians, prescribed M.M. an “urgent administration of intravenous 8 immunoglobulin” (“IVIG”). (Id. ¶ 11.) M.M. was referred to Plaintiff because it was 9 the only provider able to promptly administer the IVIG treatments. (Id. ¶ 13.) 10 Plaintiff first provided M.M. IVIG treatments on February 25, 2011, which 11 Defendant subsequently authorized. (Id. ¶¶ 14–15.) According to Plaintiff, on March 12 15, 2011, Defendant again authorized Plaintiff to provide the IVIG treatments for the 13 dates of service March 1, 2011–June 1, 2011. (Id. ¶ 15.) On February 20, 2012, 14 Defendant authorized Plaintiff to treat M.M. for a year—February 25, 2012–February 15 25, 2013. (Id.) Plaintiff alleges that during each authorization Defendant represented 16 that it would pay Plaintiff’s “billed charges for the services administered to M.M.” 17 (Id.) Plaintiff also asserts that on April 16, 2012, Defendant informed Plaintiff that 18 the services provided to M.M. were “covered at 100%.” (Id.) Plaintiff further alleges 19 that in reliance on Defendant’s representations and repeated authorizations, it 20 continued to provide the IVIG treatments to M.M. (Id.) 21 In July 2011, Defendant informed Plaintiff that Plaintiff was “no longer 22 authorized” to provide IVIG treatments to M.M. (Id. ¶ 16.) Nevertheless, Plaintiff 23 continued to provide M.M. the “medically necessary physician-ordered” IVIG 24 25 26 27 28 1 After carefully considering the papers filed in support of, and against, the Motion, the Court deems the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; L.R. 7-15. 2 The Court recites the facts as pleaded in Plaintiff’s Complaint, which the Court is required to accept as true for the purposes of this Motion. Fleming v. Pickard, 581 F.3d 922, 925 (9th Cir. 2009). 3 M.M.’s identify is known to Defendant, and will remain confidential to protect his or her privacy. 2 1 treatments based on their belief that Defendant was unable to find a suitable provider 2 to replace Plaintiff. (Id.) So, Plaintiff continued to provide M.M. the IVIG treatments 3 until September 14, 2012. (Id. ¶ 17.) 4 Plaintiff alleges that Defendant represented on several occasions that it would 5 pay Plaintiff the billed charges. (Id. ¶¶ 18–19.) According to Plaintiff, on February 6 20, 2012, Defendant’s employee, Theresa Bowman, orally represented that Plaintiff 7 was authorized to provide the IVIG treatments to M.M. for the dates of service 8 February 25, 2012–February 24, 2013. 9 Bowman also represented that Plaintiff “would be paid for its services at a rate of 10 100% of [Plaintiff’s] billed charges for such services.” (Id.) Plaintiff argues that 11 Theresa Bowman knew that Defendant “intended not to pay [Plaintiff] it’s billed 12 charges...” and that this knowledge constitutes the “Suppressed Fact” to show 13 Defendant’s fraud. (Compl. ¶ 30.) Plaintiff further alleges that on April 10, 2012, and 14 June 19, 2012, Defendant issued “written retro-authorization[s]” covering the 15 February 25, 2011–January 29, 2012, and February 25, 2012–February 24, 2013, dates 16 of service, respectively. (Id. ¶ 19.) (Id. ¶ 18.) Plaintiff states that Theresa 17 Plaintiff uniformly charges the same for its products and services, and was to be 18 paid at an “in-network level of benefits.” (Id. ¶¶ 21–22.) Plaintiff asserts that because 19 Defendant did not negotiate a discount with Plaintiff, the applicable rate for the 20 services provided to M.M. is the billed charges. (See id. ¶ 23.) Thus, Plaintiff billed 21 Defendant a total of $5,954,020.89 for the services it provided to M.M. (Id. ¶ 25.) To 22 date, Defendant has only paid $103,050.63 of the billed charges, leaving an unpaid 23 balance of $5,850,970.26. (Id.) 24 Beginning in April 2012, in response to Plaintiff’s inquiry regarding the 25 underpayments, Defendant began reviewing Plaintiff’s claims related to the services it 26 provided to M.M. (Compl. ¶ 26.) In a series of communications with Defendant from 27 April 3, 2012–February 4, 2014, Plaintiff repeatedly discussed Defendant’s unpaid 28 balance. (Id.) According to the Complaint, on several occasions Defendant 3 1 communicated to Plaintiff that it was “reviewing” the claims and would provide 2 Plaintiff with a final answer regarding its remaining balance. (Id.) Specifically, 3 Plaintiff alleges that on April 3, 2012, “Linda Hennessy, [Defendant’s] employee, 4 informed Sheina Saeger, [Plaintiff’s employee], that [Defendant] ‘will most likely 5 review the case this week.’” (Compl. ¶ 27(a).) And on April 16, 2012, one of 6 Defendant’s supervisors, “Kimbra,” “confirmed that ‘the services are covered at 7 100%.’” 8 Hounihan, [Defendant’s Employee], informed Sheina Saeger, [Plaintiff’s employee], 9 that she was working on getting the 2012 claims processed that were denied in error.” (Id. ¶ 27(b).) Plaintiff further alleges that in October 2012, “Lynn 10 (Id. ¶ 27(c).) On July 29, 2013, “[Defendant] informed [Plaintiff] that it had 11 ‘repriced’[Plaintiff’s] claims and would be paying additional amounts” to Plaintiff 12 based on the repricing. (Id. ¶ 27(d).) 13 Plaintiff alleges that in September 2013 it received “numerous small payments” 14 from Defendant for the services provided to M.M., but far less than the total amount 15 due. (See id. ¶ 27(e).) So, on February 4, 2014, Plaintiff’s attorney sent a demand 16 letter to Defendant requesting that it pay the remaining billed charges. (Id. ¶ 27(f).) 17 In June 2014, Defendant responded to Plaintiff’s letter and for the first time 18 “unequivocally inform[ed]” Plaintiff that it would not pay the remaining balance due. 19 (Id. ¶ 27(g).) 20 Consequently, Plaintiff filed this action three years later, on June 23, 2017, 21 alleging claims for (1) fraud, (2) breach of contract, and (3) open book account. (See 22 generally Compl.) On September 8, 2017, Defendant filed a Motion to Dismiss, 23 which the parties have fully briefed. (See generally Mot., ECF No. 10-1; ECF Nos. 24 11–12.) In support of its Motion, Defendant request that the Court take judicial notice 25 of the California State Board of Pharmacy’s Decision and Order dated April, 17, 2015. 26 (Exhibit 1, ECF No. 13.) 27 Defendant’s request and the Board of Pharmacy’s decision and order is a publicly (See generally id.) 28 4 As Plaintiff does not oppose 1 available government document not subject to reasonable dispute, the Court grants 2 Defendant’s request. Fed. R. Evid. 201(b).4 III. 3 LEGAL STANDARD 4 A court may dismiss a complaint pursuant to Federal Rule of Civil Procedure 5 12(b)(6) for lack of a cognizable legal theory or insufficient facts pleaded to support 6 an otherwise cognizable legal theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 7 696, 699 (9th Cir. 1988). To survive a motion to dismiss, a complaint need only 8 satisfy the minimal notice pleading requirements of Rule 8(a)(2)—a short and plain 9 statement of the claim. Porter v. Jones, 319 F.3d 483, 494 (9th Cir. 2003). The 10 factual “allegations must be enough to raise a right to relief above the speculative 11 level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). That is, the complaint 12 must “contain sufficient factual matter, accepted as true, to state a claim to relief that 13 is plausible on its face.” 14 quotation marks omitted).5 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal 15 The determination of whether a complaint satisfies the plausibility standard is a 16 “context-specific task that requires the reviewing court to draw on its judicial 17 experience and common sense.” Id. at 679. A court is generally limited to the 18 pleadings and must construe all “factual allegations set forth in the complaint . . . as 19 true and . . . in the light most favorable” to the plaintiff. Lee v. City of Los Angeles, 20 250 F.3d 668, 688 (9th Cir. 2001) (internal quotation marks omitted). But a court 21 need not blindly accept conclusory allegations, unwarranted deductions of fact, and 22 unreasonable inferences. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th 23 Cir. 2001). 24 25 26 27 4 28 The Court is limited to the existence of the documents it takes upon judicial notice, but not the facts contained therein. Lee v. City of Los Angeles, 250 F.3d 668, 690 (9th Cir. 2001). 5 IV. 1 2 A. DISCUSSION Statute of Limitations 3 Defendant argues that Plaintiff’s claims for fraud, breach of contract, and open 4 book account have all expired. (Mot. 1.) A district court may dismiss claims if the 5 running of the statute of limitations is apparent on the face of the complaint and if “the 6 assertions of the complaint, read with the required liberality, would not permit the 7 plaintiff to prove that the statute was tolled.” Cervantes v. Countrywide Home Loans, 8 Inc., 656 F.3d 1034, 1045 (9th Cir. 2011) (quoting Jablon v. Dean Witter & Co., 614 9 F.2d 677, 682 (9th Cir. 1980)). 10 1. Breach of Contract 11 Defendant contends that the allegations that give rise to Plaintiff’s claim for 12 breach of contract are untimely, and thus barred by the statute of limitations. (Mot. 5.) 13 Defendant’s argument rests on its belief that Plaintiff became aware of Defendant’s 14 underpayments as early as April 2012. (Id.; Reply 2, ECF No. 12.) In opposition, 15 Plaintiff argues that the statute of limitations did not begin until June 2014, when 16 Defendant “unequivocally inform[ed] [Plaintiff] for the first time that it would not pay 17 [Plaintiff] the remaining amounts of its billed charges due.” (Compl. ¶ 27(g).) 18 The statute of limitations for a written contract is four years. Cal. Code Civ. P. 19 § 337. A claim for breach of contract “accrues at the time of the breach, which then 20 starts the limitations period running. Cochran v. Cochran, 56 Cal. App. 4th 1115, 21 1120 (1997) (citation omitted). 22 performance, like the contract in this case, “the party is obliged to perform within a 23 reasonable time, and the statute of limitations begins to run when a ‘reasonable time’ 24 has expired without performance.” IV Sols., Inc., v. United HealthCare, No. CV 15- 25 01418 DDP (SSx), 2015 WL 4127823, at *2 (C.D. Cal. July 7, 2015); see also Cal. 26 Civ. Code § 1657. “What constitutes a reasonable time for performance is a question 27 of fact, and depends on the circumstances of each case.” Yue v. Conseco Life Ins. Co., 28 Case No. CV 08-1506 AHM (JTLx), 2008 WL 5158869, at *7 (C.D. Cal. Dec. 8, Where a contract fails to specify a time for 6 1 2008), on reconsideration in part, Case No. CV 08-1506 AHM (JTLx), 2010 WL 2 11509293 (C.D. Cal. Oct. 8, 2010) (internal quotations and citations omitted). 3 Here, Plaintiff alleges that pursuant to an oral contract that was later 4 memorialized in writing, it provided services to Defendant’s insured from February 5 25, 2011, through September 2012. (See Compl. ¶¶ 24, 17.) But, earlier in April 6 2012, Plaintiff became aware of Defendant’s underpayments for its services. (Compl. 7 ¶ 26.) So, in April 2012 Plaintiff “notified Defendant of the shortfall of Defendant’s 8 payments and requested that Defendant remedy that shortfall.” (Id.) After a series of 9 communications between the parties—including a demand letter from Plaintiff’s 10 counsel in February 2014—Defendant finally sent a letter in June 2014 that 11 “unequivocally inform[ed] [Plaintiff] for the first time that it would not pay” Plaintiff 12 for the billed charges. (Compl. ¶ 27(g).) 13 In regard to the determination of whether Plaintiff’s contract claim has expired, 14 neither party focuses on the appropriate inquiry—what was a reasonable amount of 15 time for Defendant to delay payment to Plaintiff for the billed charges.6 Cal. Civ. 16 Code § 1657. Nevertheless, on the face of its Complaint, Plaintiff has not alleged 17 facts demonstrating that it was reasonable for Defendant to delay, and then ultimately 18 deny, payment of $5,850,970.26 for three years after Plaintiff first provided services 19 in 2011. 20 reasonably due under the contract at some time before February 2014—over one year 21 after Plaintiff finished providing its contracted services. Therefore, Plaintiff’s breach 22 of contract claim, which has a four year statute of limitations, is untimely as it expired 23 in February 2017 and this case was not filed until June 23, 2017. 24 25 26 27 28 See Conseco Life Ins. Co., 2008 WL 5158869, at *7. 6 Payment was In its Opposition, Plaintiff argues that the “statute of limitations begins to run when the insurer issues an unequivocal denial of payment in writing.” (Opp’n 6 (citing IV Sols., Inc. v. PacifiCare Life & Health Ins. Co., Case No. 16-07153 SJO (MRWx), 2016 WL 7888009 (C.D. Cal. Dec. 19, 2016)).) The court in that case found that Vishva Dev, M.D., Inc. v. Blue Shield of California Life & Health Insurance Co., 2 Cal. App. 5th 1218 (2016), “stands for the proposition that the statute of limitations begins to run when the insurer issues an unequivocal denial of payment . . . .” However, the Court finds that the facts of this case are distinguishable from Vishva, where here, Plaintiff has filed a claim under ordinary contract law, and not quantum meruit. 7 1 2. Fraud 2 The statute of limitations for a fraud claim is three years. Cal. Civ. Code § 338. 3 “The cause of action . . . is not deemed to have accrued until the discovery, by the 4 aggrieved party, of the facts constituting the fraud or mistake.” Cal. Civ. Code § 338; 5 see also Gutierrez v. Mofid, 39 Cal. 3d 892 (1985) (the statute of limitations period 6 begins to run when the plaintiff has actual or constructive knowledge of the facts 7 essential to her claim for fraud). Plaintiff’s fraud claim is based on its allegations that 8 several of Defendant’s employees “knew that Defendant intended not to pay 9 [Plaintiff] its billed charges . . . and not to make payments to [Plaintiff] in a timely 10 manner (the ‘Suppressed Fact’).” (Compl. ¶ 30.) Plaintiff argues that it did not 11 become aware of the Suppressed Fact until June 2014, when Defendant 12 “unequivocally” informed Plaintiff that it would not pay the billed charges. (Opp’n 13 3.) 14 Here, the Court finds that Plaintiff’s claim for fraud is time barred, as Plaintiff 15 has not alleged on the face of the Complaint sufficient facts that it was unaware of 16 Defendant’s “Suppressed Fact” such as to delay the accrual of its claim until June 17 2014. Plaintiff had, at a minimum, constructive knowledge that Defendant did not 18 intend to make payments to Plaintiff in a timely manner as early as September 2013. 19 This is evidenced by the fact that after a year of communicating with Defendant 20 regarding payment (February 2012–February 2013), Defendant eventually only sent 21 Plaintiff “small payments . . . in amounts far less than the amounts due” in September 22 2013. (Compl. ¶ 27(e).) Moreover, in February 2014, five months after Defendant 23 sent those small payments, and over a year after Plaintiff finished providing its 24 services under its contract with Defendant, Plaintiff’s counsel sent Defendant a letter 25 “demand[ing] that [Defendant] pay the billed charges remaining.” (Id. ¶ 27(g).) 26 Therefore, it can be inferred that at the latest, in February 2014, Plaintiff was aware of 27 the fact that after years of underpayments Defendant did not intend to make payments 28 8 1 to Plaintiff “in a timely manner” or pay its billed charges. Therefore, Plaintiff’s claim 2 for fraud is untimely, having expired in February 2017. 3 3. Open Book Account 4 A claim for open book account expires after four years. Cal. Code Civ. P. § 5 337. “A cause of action for an open book account accrues on ‘the date of the last 6 entry in the book account.’” United Healthcare, 2015 WL 4127823, at *2 (citing In re 7 Roberts Farms Inc., 980 F.2d 1248, 1253 (9th Cir. 1992)). Plaintiff alleges that they 8 “maintained in the regular course of business, an account of debits and credits for 9 service and payments transactions, in a reasonably permanent form” for the services it 10 provided to M.M. (Compl. ¶¶ 50–52.) Plaintiff also alleges that it continued to 11 provide M.M. services until September 14, 2012. (Compl. ¶¶ 17, 24.) So presumably, 12 the last entry in the book account was made sometime in September 2012—when 13 Plaintiff performed the final IVIG treatment—meaning the four year statute of 14 limitations for this claim has expired. 15 4127823, at *2 (finding that “the final entry in [a] book account was presumably made 16 some time shortly after the provision of the final treatment [to the patient] . . . .”). 17 B. See e.g., United Healthcare, 2015 WL Equitable Tolling 18 In Opposition to Defendant’s Motion, Plaintiff asserts that the statute of 19 limitations for its claims was equitably tolled while Defendant reviewed its claims. 20 (Opp’n 8.) “Equitable tolling allows a plaintiff to prevent the statute of limitations 21 from running during a particular period” if the plaintiff establishes “(1) that he has 22 been pursuing his rights diligently, and (2) that some extraordinary circumstance stood 23 in his way.” Henson v. Fidelity Nat’l Fin. Co., No. 2:14-cv-01240-ODW (RZx), 2014 24 WL 1246222, at *5, (C.D. Cal. Mar. 21, 2014) (citing Pace v. DiGuglielmo, 544 U.S. 25 408, 418 (2005). 26 “extraordinary circumstances.” Waldron-Ramsey v. Pacholke, 556 F.3d 1008, 1011 27 (9th Cir. 2009). Moreover, application of equitable tolling is only warranted where 28 the defendant has “induced the plaintiff to delay filing until after the statute of However, equitable tolling is a rarity that only applies in 9 1 limitations has run.” Johnson v. Riverside Healthcare Sys., LP, 534 F.3d 1116, 1127 2 (9th Cir. 2008). 3 Plaintiff has not alleged any facts that plausibly suggest that Defendant’s 4 alleged actions induced Plaintiff to postpone filing this claim until the statute of 5 limitations expired. Iqbal, 556 U.S. 678 (stating that the complaint must “contain 6 sufficient factual matter, accepted as true, to state a claim to relief that is plausible on 7 its face.” (internal quotation marks omitted)). Plaintiff was aware of the facts giving 8 rise to its three claims for several years before it filed this action and before the statute 9 of limitations ran. As such, equitable tolling does not apply in this case. 10 C. Equitable Estoppel 11 Plaintiff contends that Defendant is “equitably estopped from asserting the 12 statute of limitations as a defense” because from April 2014, until June 2014, 13 Defendant “represented” that it was “re-processing” Plaintiff’s claims. (Opp’n 12– 14 13.) “Equitable estoppel . . . may come into play if the defendant takes active steps to 15 prevent the plaintiff from suing in time. . . .” Johnson v. Henderson, 314 F.3d 409, 16 414 (9th Cir. 2002) (finding that “[e]quitable estoppel . . . focuses primarily on the 17 actions taken by the defendant in preventing a plaintiff from filing suit.” (citations and 18 quotations omitted)). To invoke the doctrine requires “active conduct by a defendant, 19 above and beyond the wrongdoing upon which the plaintiff’s claim is filed, to prevent 20 the plaintiff from suing in time.” Id. (citations and quotations omitted). 21 Here, Plaintiff has not alleged sufficient facts that demonstrate that Defendant 22 engaged in conduct “above and beyond” the actions alleged in the Complaint such as 23 to prohibit Plaintiff from initiating this action before the statute of limitations expired 24 for its three claims. Therefore, the Court declines to invoke the doctrine of equitable 25 estoppel in this case. 26 /// 27 /// 28 /// 10 V. 1 CONCLUSION 2 For the reasons discussed above, the Court GRANTS Defendant’s Motion to 3 Dismiss Plaintiff’s Complaint. (ECF No. 10.) Accordingly, the Court DISMISSES 4 Plaintiff’s Complaint with prejudice. 5 6 IT IS SO ORDERED. 7 8 December 15, 2017 9 10 11 ____________________________________ OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11
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