LD v. United Behavioral Health

Background

LD, DB, BW, RH, and CJ brought a proposed class action against United Behavioral Health and Viant, Inc. The plaintiffs alleged that they had health plans administered by United that covered out-of-network mental-health and substance-use treatment at usual, customary, or reasonable rates. They received intensive outpatient program services from Summit Estate, an out-of-network provider, and signed agreements making them responsible for amounts United did not pay.

The plaintiffs alleged that United represented that the services would be reimbursed at the usual, customary, and reasonable rate, but instead hired Viant to negotiate lower payments. They alleged that United paid the negotiated amounts and that they were left responsible for balance bills. Their complaint asserted claims under the Employee Retirement Income Security Act (ERISA) for unpaid benefits, plan-term violations, disclosure violations, breach of fiduciary duties, failure to provide a full and fair review, and equitable relief. It also asserted claims under the Racketeer Influenced and Corrupt Organizations Act (RICO) against both defendants.

Legal standard

The defendants moved to dismiss all claims under Federal Rule of Civil Procedure 12(b)(6), which asks whether the complaint alleges enough facts to state a legally plausible claim. They also argued that the plaintiffs lacked standing to bring the RICO claim. On a motion to dismiss, the court generally accepts the complaint’s factual allegations as true, but it need not accept allegations contradicted by documents incorporated into the complaint.

ERISA claims

The court dismissed the two claims seeking benefits under ERISA section 502(a)(1)(B). The plaintiffs alleged that their plans required United to reimburse Summit Estate at the usual, customary, and reasonable rate, with that rate allegedly equal to all of Summit Estate’s billed charges. But they did not identify the specific plan terms requiring those payments. Without those terms, the complaint did not support a reasonable inference that United breached the plans.

The court dismissed the ERISA disclosure claim under section 502(c)(1). Such a claim can be brought only against a plan administrator. The plaintiffs did not allege facts showing that United was designated as the plan administrator or otherwise qualified as one under ERISA. The court also found that the plaintiffs did not allege that they had requested the plan documents covered by the disclosure provisions. Their theories that United’s documents and explanations of benefits were inaccurate, or that United had to disclose its reimbursement methodology, likewise were not adequately supported.

The court dismissed the breach-of-fiduciary-duty claim because it depended on the assertion that United’s reimbursement decisions were unauthorized by the plan documents. The plaintiffs had not adequately alleged any breach of the plan terms or documents.

The court also dismissed the claim alleging a violation of ERISA’s full-and-fair-review requirement. The plaintiffs alleged that their explanations of benefits did not tell them about the reimbursement decisions or their right to appeal. The court considered those explanations because the complaint relied on them and found that they stated the amounts United would pay, the amounts plaintiffs would owe Summit Estate, and that plaintiffs could appeal. The court also found no cited authority requiring the explanations to use the specific words “adverse benefit determination.”

Finally, the court dismissed the two claims seeking equitable relief under ERISA section 502(a)(3). The plaintiffs had not adequately alleged an ERISA violation or a need to enforce an ERISA provision or plan term. They also had not shown that the basis for their claims and the remedies they sought—including payment, disgorgement, and reprocessing—were equitable rather than legal.

RICO claims

The court dismissed the RICO section 1962(c) claim. A civil RICO claim under that provision requires allegations of conduct involving an enterprise through a pattern of racketeering activity. The court found that the complaint did not adequately allege that United and Viant shared the required common purpose, rather than simply carrying out a contractual business relationship. It also did not adequately allege that either defendant directed the affairs of an enterprise instead of conducting its own affairs.

The court further found that the complaint did not adequately allege a pattern of racketeering. The alleged federal health offenses were not offenses listed as RICO predicate offenses. Although mail fraud and wire fraud can qualify, the plaintiffs did not provide the specific details required for fraud claims, such as when and where the communications occurred, what they said, and who made them. The court also found that the explanations of benefits contradicted some allegations about appeal rights and did not establish the required fraud.

To the extent the complaint asserted a RICO-conspiracy claim, the court dismissed it because a RICO conspiracy claim cannot proceed without an adequately pleaded underlying RICO violation. The court also found that the plaintiffs had not adequately pleaded RICO standing. They alleged that they relied on plan documents stating that covered out-of-network claims would be paid at the usual, customary, and reasonable rate, but they had not identified plan provisions making that representation. The complaint therefore did not support the required connection between the alleged fraud and their injuries.

Disposition

The court granted defendants’ motions to dismiss all claims, with leave to amend. The plaintiffs could file an amended complaint within 30 days after the order was filed, and the defendants could respond within 30 days after the amended complaint was filed. The order terminated docket numbers 33 and 34.