LD v. United Behavioral Health

Background

LD, DB, BW, RH, and CJ—who used pseudonyms—filed a proposed class action against United Behavioral Health and MultiPlan, Inc. The plaintiffs alleged that United failed to reimburse out-of-network intensive outpatient program services provided by Summit Estate, Inc. at the usual, customary, and reasonable rates required by their insurance plans. They alleged that United used MultiPlan’s Viant database and pricing tool to calculate lower reimbursement amounts, leaving plaintiffs responsible for amounts not paid by United.

The amended complaint asserted claims under the Employee Retirement Income Security Act of 1974, or ERISA, and the Racketeer Influenced and Corrupt Organizations Act, or RICO. The defendants moved under Federal Rule of Civil Procedure 12(b)(6), which asks whether a complaint adequately states a claim, arguing that the claims remained inadequately pleaded and that plaintiffs lacked standing under RICO.

ERISA Claims

The court denied United’s motion to dismiss the two ERISA claims seeking benefits under the terms of the plans. The plaintiffs identified plan language requiring reimbursement based on available data concerning competitive fees in the geographic area, or based on usual, customary, and reasonable rates for DB’s plan. They also alleged that United instead relied on a database and pricing tool that used data not representative of comparable intensive outpatient services and local rates. The court held that these allegations plausibly supported an inference that United paid less than the plans required.

The court also denied the defendants’ motions to dismiss the claim alleging breach of fiduciary duties against United and the requests for equitable relief against United and MultiPlan under ERISA Section 502(a)(3). The court found that the allegations plausibly suggested United used an improper reimbursement method for its financial benefit and failed to disclose that method in explanations of benefits. It also held that plaintiffs sufficiently alleged MultiPlan knowingly participated in United’s alleged breach, even though MultiPlan was not alleged to be an ERISA fiduciary.

The court granted United’s motion to dismiss the ERISA claim under 29 U.S.C. § 1133, which concerns notice and an opportunity to appeal a denied benefit claim, with prejudice. The amended complaint offered only conclusory statements and did not provide facts showing that United failed to provide required procedures, disclosures, or appeal procedures. The court also noted that plaintiffs did not address this dismissal argument in their opposition.

RICO Claims

The court concluded that plaintiffs had adequately alleged RICO standing. It found a direct connection between the alleged scheme—representing that claims would be paid using the required rates while using a different method—and plaintiffs’ alleged injury, which consisted of paying amounts United allegedly should have reimbursed. The court also found that the allegations plausibly showed reliance by Summit Estate during calls verifying benefits, even though plaintiffs themselves did not allege that they directly relied on the representations.

For the RICO claim under Section 1962(c), the court denied United’s motion to dismiss. It held that the amended complaint plausibly alleged an association-in-fact enterprise, meaning an ongoing group of people or entities acting together for a common purpose. The alleged purpose was to use a pricing tool that generated low reimbursement rates and retain the difference between those rates and the amounts plaintiffs alleged should have been paid. The court also found sufficient allegations that United and MultiPlan participated in directing the alleged enterprise and that United’s benefits-verification calls involved fraudulent statements supporting a pattern of mail or wire fraud.

The court granted MultiPlan’s motion to dismiss the Section 1962(c) claim against it, with leave to amend. The court found that plaintiffs had not adequately alleged that MultiPlan engaged in at least two relied-upon acts of mail or wire fraud forming a racketeering pattern. Because the court found that amendment might cure the pleading problem, it allowed plaintiffs to amend.

The court denied the defendants’ motion to dismiss the RICO conspiracy claims under Section 1962(d). It found that plaintiffs adequately pleaded a substantive RICO violation against United and alleged enough facts to support an inference that both defendants agreed to further the alleged scheme.

Disposition

The court granted MultiPlan’s motion to dismiss with leave to amend as to the RICO Section 1962(c) claim against MultiPlan. It granted United’s motion to dismiss the claim under 29 U.S.C. § 1133 with prejudice. It otherwise denied the defendants’ motions to dismiss. Plaintiffs were permitted to file an amended complaint within 28 days of the order, and defendants could respond within 21 days after that filing.