Rowe, MD, MHA, LLC v. Aetna Health and Life Insurance Company

Background

Norman Maurice Rowe, M.D., M.H.A., L.L.C. and East Coast Plastic Surgery, P.C. were outside Aetna’s healthcare provider network. They alleged that, before performing a bilateral breast-reduction surgery for an Aetna-insured patient, they called Aetna to ask about reimbursement. According to the complaint, an Aetna employee said that the total allowed amount would be based on 80 percent of the usual, customary, and reasonable rate for covered services.

The providers performed the surgery and billed Aetna $300,000. Aetna paid $3,664.54 to Rowe for services rendered by Norman Rowe, M.D., and $311.61 to East Coast Plastic Surgery for services rendered by Charles Pierce, M.D. The providers alleged that these payments were less than 80 percent of the applicable usual, customary, and reasonable rate and that Aetna had not properly applied industry coding standards.

The complaint asserted claims for breach of contract, unjust enrichment, promissory estoppel, and violation of New York’s Prompt Pay Law. Aetna removed the case to federal court. The magistrate judge later ordered the providers to explain why the case should not be dismissed in light of earlier related decisions and why amendment should be allowed. The providers did not respond by the deadline, although they later filed an untimely response and moved to amend.

Rulings Under Review

Magistrate Judge Ona T. Wang recommended dismissing the complaint with prejudice. She also denied the providers’ request to reconsider that recommendation, treating their late response as a motion for reconsideration rather than accepting it as timely. Later, she denied the providers’ motion for leave to amend, finding a lack of diligence, prejudice to Aetna, and lack of good cause. Judge Rochon reviewed these rulings and adopted the report and recommendation and the reconsideration order.

Because the providers did not specifically object to the report and recommendation, Judge Rochon reviewed it for clear error. The court also reviewed the denial of reconsideration more closely and concluded that the magistrate judge had properly denied it.

Reasons for Dismissal

The court held that the breach-of-contract claim failed because the complaint did not allege enough detail to show that Aetna made an offer. The complaint did not say that the parties discussed the specific services, the surgery’s price, or a specific undertaking by Aetna to pay at a particular rate. The court stated that a general explanation of insurance benefits did not establish an offer to pay for the surgery.

The Prompt Pay Law claim also failed because that law applies to healthcare claims submitted under contracts or agreements, and the providers did not adequately allege such a contract with Aetna.

The promissory-estoppel claim failed because the complaint did not allege a clear and unambiguous promise to pay a particular amount for the surgery or for particular services. The court also rejected the unjust-enrichment claim because the providers did not allege facts showing that Aetna directly benefited from the surgery or requested that the providers perform it.

The court concluded that the proposed amended complaint would not cure these problems. It also found that the proposed fraudulent-inducement claim merely restated the alleged contract dispute and did not identify a qualifying misrepresentation separate from the alleged payment obligation. The proposed conversion claim likewise failed because it was based on the alleged right to receive payment and was not sufficiently different from the contract claim.

Disposition

The court adopted the report and recommendation and the reconsideration order. It dismissed the complaint with prejudice for failure to state a claim, agreed that amendment would be futile, terminated all pending deadlines and motions, and directed the Clerk of Court to close the case.