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Avutox, LLC v. Cigna Health and Life Insurance Co.

United States District Court, E.D. North Carolina, Western Division

December 6, 2017

AVUTOX, LLC, Plaintiff,



         This cause comes before the Court on defendants' motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Plaintiff has responded, defendants have replied, and a hearing on the matter was held before the undersigned on November 9, 2017, at Raleigh, North Carolina. In this posture, the motion is ripe for ruling. For the reasons that follow, defendants' motion to dismiss is granted.


         Plaintiff filed this action under the Employee Retirement Income Security Act of 1974 as amended, 29 U.S.C. § 1001, et seq. (ERISA) and the state law of North Carolina. Plaintiff is a specialized toxicology laboratory that offers urine drug testing and monitoring services; patients who have been prescribed pain medication are referred by their physicians to plaintiff for testing and monitoring services. Plaintiff provides drug testing and monitoring services to many patients who are Cigna insureds, but plaintiff is not an in-network provider with Cigna. Plaintiff thus requires each Cigna insured patient to sign a form which provides the following in a consent/insurance release provision:

I understand my signature requests that payment of authorized insurance or Medicare benefits be made on my behalf to AvuTox for the urine drug testing services furnished to me by the physician. I acknowledge that AvuTox may be an out of network facility with my insurance provider. I authorize any holder of medical information about me to release to the insurance company or to CMS (Centers for Medicare and Medicaid Services), and its agents any information needed to determine these benefits or the benefits payable to related services. This assignment will remain in effect until revoked by me in writing.

Cmp. Ex. B.

         Plaintiff alleges that on or about August 31, 2015, it received a letter from Cigna questioning plaintiffs billings practices and the medical necessity of the services rendered by plaintiff to Cigna insureds. Cigna stated that it had made erroneous benefit payments to plaintiff on the claims of various Cigna insureds in the amount of $2, 727, 118.08 and demanded repayment. Plaintiff further alleges that Cigna falsely accused it of engaging in fee-forgiveness programs and otherwise waiving the copayments, deductibles, or coinsurance obligations of Cigna insureds. Cigna allegedly informed plaintiff that in order to receive payment for any future medical services rendered to a Cigna insured, the insured would have to pay his or her cost share obligation prior to Cigna processing or paying a claim submitted by plaintiff.

         Plaintiff alleges that since the August 2015 letter, Cigna has repeatedly refused to provide to plaintiff requested documentation or to process valid claims for payment for plaintiffs services to Cigna insureds. Cigna informed plaintiff that, in order to have any claim processed, the Cigna insured would now be required to pay plaintiff up front for the entire cost of service prior to plaintiff submitting a claim; plaintiff further alleges that this representation was false as Cigna has failed to process a valid claim for services rendered to a Cigna insured after full-prepayment by the insured. Plaintiff alleges that, as of the date of the complaint, Cigna has improperly or unlawfully withheld a total of at least $2, 467, 490.34 for services rendered by plaintiff to Cigna insureds. Plaintiff further alleges that Cigna has failed to provide plaintiff with a full and fair review of adverse benefit determinations.

         Plaintiff filed this action to address defendants' repeated and deliberate failure to process and make payments to plaintiff on claims for services rendered to Cigna insureds. Plaintiff brings the following claims under ERISA: a claim under § 502(a)(1)(B) for benefits due, a claim for failure to comply with federal claims regulations under 29 U.S.C. § 1132, a claim for failure to provide plan and claims documentation under 29 U.S.C. § 1132(c)(1), a claim for declaratory and injunctive relief, and a claim for attorneys' fees. Plaintiff has further alleged state law claims under North Carolina law for breach of contract, unjust enrichment, unfair and deceptive trade practices.


         Defendants have moved to dismiss plaintiffs complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Defendants argue that plaintiff lacks standing to bring its ERISA claims; has failed to state a plausible claim for relief under ERISA because it has not identified any services rendered to Cigna members, not linked any members to any specific employee benefit plan, nor alleged any facts which support that any of the plans covered any of the services at issue; and that plaintiff has failed to exhaust its administrative remedies. Defendants further contend that plaintiff has failed to state a claim under North Carolina law.

         Rule 8 of the Federal Rules of Civil Procedure "requires only a short and plain statement of the claim showing that the pleader is entitled to relief and which provides "the defendant fair notice of what the claim is and the grounds upon which it rests." Erickson v. Pardus, 551 U.S. 89, 93 (2007) (internal quotations, alterations, and citations omitted). A Rule 12(b)(6) motion tests the legal sufficiency of the complaint. Papasan v. Allain, 478 U.S. 265, 283 (1986). When acting on a motion to dismiss under Rule 12(b)(6), "the court should accept as true all well-pleaded allegations and should view the complaint in a light most favorable to the plaintiff." Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir.1993). A complaint must allege enough facts to state a claim for relief that is facially plausible. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). Facial plausibility means that the facts pled "allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged, " and mere recitals of the elements of a cause of action supported by conclusory statements do not suffice. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A complaint must be dismissed if the factual allegations do not nudge the plaintiffs claims "across the line from conceivable to plausible." Twombly, 550 U.S. at 570.

         "ERISA comprehensively regulates, among other things, employee welfare benefit plans that, 'through the purchase of insurance or otherwise, ' provide medical, surgical, or hospital care, or benefits in the event of sickness, accident, disability, or death." Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 44 (1987) (quoting 29 U.S.C. § 1002(1)). The policy behind ERISA's enactment was to "induc[e] employers to offer benefits by assuring a predictable set of liabilities, under uniform standards of primary conduct and a uniform regime of ultimate remedial orders and awards when a violation has occurred." Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 379 (2002). To this end, only plan participants, beneficiaries, and fiduciaries are granted a private cause of action under ERISA. Franchise Tax Bd. of State of Cal. v. Constr. Laborers Vacation Tr. for S. California, 463 U.S. 1, 27 (1983); see also Rojas v. Cigna Health & Life Ins. Co., 793 F.3d 253, 256 (2d Cir. 2015).

         A beneficiary is defined by ERISA as a person designated by a participant or the terms of the employee benefit plan who is or may become entitled to a benefit under the plan. 29 U.S.C. § 1002(8). "'Beneficiary, ' as it is used in ERISA, does not without more encompass healthcare providers." Rojas, 793 F.3d at 257; see also Hobbs v. Blue Cross Blue Shield of Alabama, 276 F.3d 1236, 1241 (11th Cir. 2001) (healthcare providers generally not considered beneficiaries or participants for purposes of ERISA). Accordingly, plaintiff, a healthcare provider, may not directly file suit against defendants under ERISA as a beneficiary. Spinedex Physical Therapy USA Inc. v. United ...

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