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RMP Enterprises LLC v. Connecticut General Life Insurance Co.

United States District Court, S.D. Florida

June 13, 2018

RMP ENTERPRISES LLC, d/b/a Ambrosia Treatment Centers, et al., Plaintiffs,



         This Cause is before the Court on Defendants' Motion to Dismiss, DE 17. Plaintiffs responded, DE 29, and Defendants replied, DE 31. For the reasons set forth below, Defendants' Motion to Dismiss is granted and Plaintiffs are given leave to file an Amended Complaint.

         I. BACKGROUND

         Plaintiffs are substance abuse treatment and mental health facilities. DE 1 ¶ 2. Plaintiffs are three LLCs doing business as Ambrosia Treatment Centers. Plaintiff RMP Enterprises, LLC operates a treatment center in Port St. Lucie, FL (“St. Lucie ATC”); Plaintiff Ambrosia of the Palm Beaches, LLC operates a treatment center in West Palm Beach, FL (“West Palm Beach ATC”); and Plaintiff Ambrosia South, LLC operates a treatment center in Singer Island, FL (“Singer Island ATC”). Id. ¶ 45. Plaintiffs “accept[] direct payments from [Defendants] Cigna and the Companies for which Cigna directly acts as the group coverage insurer [and for which Cigna acts as the third-party administrator] as reimbursement for the services it provides to Plan Members and their beneficiaries for medical and mental health services directly related to substance abuse.” Id. ¶¶ 5-6. The Plans for which Cigna directly acts as the group coverage insurer and for which Cigna acts as the third-party administrator are governed by the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq. Plaintiffs allege that Cigna failed to pay them for some claims, paid some claims late, and underpaid some claims. Id. ¶¶ 29-31.

         Plaintiffs also allege that Defendants now seeks to recover funds that they already paid to Plaintiffs. Id. ¶ 33. According to Plaintiffs, Defendants sent a letter to Plaintiffs on September 19, 2014 informing Plaintiffs that Defendants' Special Investigations Unit was conducting an audit of claims filed for services rendered at St. Lucie ATC. Id. ¶ 78. Defendants and Plaintiffs then entered into a series of correspondence in which Defendants requested records as part of their audit and “Plaintiffs timely lodged ERISA appeals challenging the adverse benefit determinations.” Id. ¶ 83. Plaintiffs also allege that Defendants put a “flag” on Plaintiffs' facilities which “prevent[ed] the facilit[ies] from treating Cigna patients for payment.” Id. ¶¶ 81, 86. On September 13, 2016, Plaintiffs received a letter from Defendants seeking a $5, 275, 402.10 refund for overpayments to St. Lucie ATC. Id. ¶ 88. Plaintiffs allege that after conducting this audit of St. Lucie ATC, Defendants requested documents from West Palm Beach ATC and Singer Island ATC in order to conduct an audit of these facilities. Id. ¶¶ 106, 108. Additionally, over a several year period, Plaintiffs allege that they requested various documents from Defendants and that Defendants never provided the requested documents. See e.g., id. ¶ 85.

         Plaintiffs have now brought this Complaint alleging: claims under § 502(a) of ERISA, 29 U.S.C. § 1132(a), for Defendants' Failure to Comply with Plan Terms in Violation of ERISA (Count I); Breach of Fiduciary Duty and Co-fiduciary Liability (Count II); Promissory Estoppel (Count III); Wrongful Claims Determination (Count IV); Failure to Provide Full and Fair Review (Count V); Failure to Provide Requested and Required Documentation (Count VI); Remove Plan Fiduciaries (Count VII); Damages (Count VIII); Attorney's Fees (Count IX); and Punitive/Exemplary Damages (Count X).


         “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). See Fed. R. Civ. P. 8(a)(2) (requiring “a short and plain statement of the claim showing that the pleader is entitled to relief”). Although this pleading standard “does not require ‘detailed factual allegations, ' . . . it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Id. (alteration added) (quoting Twombly, 550 U.S. at 555). Pleadings must contain “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do, ” Twombly, 550 U.S. at 555 (citation omitted), and must provide sufficient facts to “give the defendant fair notice of what the … claim is and the grounds upon which it rests, ” id. Indeed, “only a complaint that states a plausible claim for relief survives a motion to dismiss.” Iqbal, 556 U.S. at 679 (citing Twombly, 550 U.S. at 556). To meet this “plausibility standard, ” a plaintiff must “plead[] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 678 (alteration added) (citing Twombly, 550 U.S. at 556).

         III. ANALYSIS

         Defendants make numerous arguments for why each of Plaintiffs' claims should be dismissed. The Court addresses each argument in turn.

         A. West Palm Beach ATC and Singer Island ATC's Standing

         Defendants argue that West Palm Beach ATC and Singer Island ATC lack standing because Plaintiffs do not allege that they suffered an injury in fact. DE 17 at 4. Article III standing requires a plaintiff to allege “(1) an injury in fact, meaning an injury that is concrete and particularized, and actual or imminent, (2) a causal connection between the injury and the causal conduct, and (3) a likelihood that the injury will be redressed by a favorable decision.” America's Health Ins. Plans v. Hudgens, 742 F.3d 1319, 1327 (11th Cir. 2014) (citations omitted). “The party invoking federal jurisdiction bears the burden of establishing these elements.” Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992).

         Plaintiffs' Complaint does not clearly explain what harm was caused to each Plaintiff. The Court notes that Defendants' initial audit and request for repayment was directed at St. Lucie ATC, DE 1 ¶ 78, and that the later audits were directed at West Palm Beach ATC and Singer Island ATC, id. ¶¶ 106, 108. Despite this one distinction, Plaintiffs' Complaint treats all of the Plaintiffs as one entity and all of the Defendants as one entity. Accordingly, the Court cannot evaluate the Article III standing for West Palm Beach ATC, Singer Island ATC, or even for St. Lucie ATC. Plaintiffs allege generally that they were underpaid, paid late, or not paid for various services rendered to Defendants' insureds. Plaintiffs, however, do not make clear when the alleged underpayments, late payments, and non-payments occurred or which of the Plaintiffs had rendered the services for which they are seeking payment.

         In response to Defendants' argument that Plaintiffs do not allege injury in fact, Plaintiffs argue that “[i]t is well established in the 11th Circuit that a healthcare provider may obtain derivative standing to enforce a beneficiaries claim by virtue of a valid assignment.” DE 29 at 4. Plaintiffs also state that Defendants made written demands for charts from West Palm Beach ATC and Singer Island ATC with the sole purpose to “cause (injury in fact).” Id. at 6. Although it is true that health care providers can obtain derivative standing through a valid assignment, a valid assignment does not remedy the problem of West Palm Beach ATC and Singer Island ATC's constitutional standing. Without clear allegations regarding the harm done to each Plaintiff, the Court cannot evaluate each Plaintiff's standing.

         B. Exhaustion of Administrative Remedies

         Defendants argue that Plaintiffs' ERISA claims (Counts I, II, and V) should be dismissed because Plaintiffs have not exhausted their administrative remedies. “The law is clear in [the Eleventh Circuit] that plaintiffs in ERISA actions must exhaust available administrative remedies before suing in federal court.” Bickley v. Caremark RX, Inc., 461 F.3d 1325, 1328 (11th Cir. 2006) (citation omitted). “In the case of insurance claims, exhaustion of administrative remedies often involves an appeal of a claim denial to the insurer.” Kahane v. UNUM Life Ins. Co. of Am., 563 F.3d 1210, 1214-1215 (11th Cir. 2009). “Exhaustion is excused when resort to administrative remedies would be futile or the remedy inadequate, or where a claimant is denied meaningful access to the administrative review scheme in place. However, bare allegations of futility are no substitute for the clear and positive showing of futility required before suspending the exhaustion requirement.” Guididas v. Cmty. Nat. Bank Corp., No. 8:10-cv-1410, 2010 WL 3788740, at *3 (Sept. 24, 2010) (citations omitted).

         Defendants state that “Plaintiffs allege they have submitted appeals for some unidentified claims. Plaintiffs vaguely refer to ‘Level 1 appeals' and ‘Level 2 appeals, ' but they fail to allege which claims were allegedly appealed, when they were allegedly appealed, and how they were allegedly appealed. Plaintiffs' generalized references to ‘appeals, ' without identifying specific claims, are inadequate.” DE 17 at 7 (citations omitted). Plaintiffs respond that “Cigna alleges that the administrative remedy which must be satisfied is contained in the Plan Benefit and is not the completion of the appeals required by Cigna under their SIU [Special Investigations Unit] audit and recoupment guidelines. . . . Cigna has always represented to Ambrosia, as alleged in the Complaint, that its policies and guidelines for medical necessity is what controls whether or not payment for services will be provided.” DE 29 at 6. To show that they have exhausted administrative appeals, Plaintiff points to email correspondence between them and Defendants regarding the audits which Plaintiffs allege “affirmatively convey[] that any further attempts to appeal claims to Defendants were essentially futile, effectively confirming that Plaintiff had exhausted remedies.” DE 1 ¶ 152.

         The Court agrees with Defendants that Plaintiffs have not met their burden to allege that they either exhausted administrative remedies or that the administrative remedies would be futile. As a threshold issue, the Court cannot discern from the Complaint exactly what claims Defendants denied or what steps Plaintiffs took to appeal those claims. The Complaint contains emails between Plaintiffs and Defendants' Special Investigations Unit regarding Defendants' recoupment demand. See DE 1-19. The Court, however, cannot discern what specific claims Plaintiffs are alleging Defendants underpaid or failed to pay, as the Complaint is devoid of specificity as to when and what claims Defendants did not pay or underpaid. Accordingly, the Court cannot ascertain whether Plaintiffs exhausted administrative remedies as to any adverse benefit determination. The Court also notes that it does not have the Plans at issue in this case, making it impossible for the Court to determine if Plaintiffs exhausted the administrative remedies set forth in the Plans.

         C. Count I

         Defendants argue that, in addition to being dismissed because Plaintiffs failed to demonstrate that they had exhausted administrative remedies, Count I for Defendants' Failure to Comply with Plan Terms in Violation of ERISA should also be dismissed because: (1) Plaintiffs do not identify the specific claims at issue; (2) Plaintiffs do not allege sufficient facts demonstrating benefits due; and (3) Plaintiffs do ...

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