Rowe Plastic Surgery of New Jersey v. Aetna Health and Life Insurance Company

Background

The plaintiffs are plastic-surgery practices outside Aetna’s provider network. Aetna reimbursed covered services at an out-of-network rate capped by an “allowed amount,” calculated using either a percentage of the usual, customary, and reasonable rate or a multiple of the Medicare rate.

Before a May 18, 2021 reduction-mammaplasty surgery, one of the plaintiffs’ employees called Aetna to ask about reimbursement. According to the call transcript, an Aetna representative said that outpatient surgery by out-of-network professionals would be reimbursed at 80 percent of the usual, customary, and reasonable rate under the patient’s plan. The call also covered copays, deductibles, and the out-of-pocket maximum, but did not discuss the surgery’s specific services, price, or related services.

The plaintiffs billed Aetna $300,000. Aetna ultimately paid $8,759.71, which the plaintiffs alleged was less than 80 percent of the applicable rate. The amended complaint asserted breach of contract, promissory estoppel, unjust enrichment, and fraudulent inducement.

Motion to Strike

The plaintiffs moved to strike Aetna’s memorandum supporting its motion to dismiss, arguing that it exceeded the applicable word limit and contained improper statements. Judge Rochon denied the motion. The court found that its own word limit was 8,750 words and that Aetna’s 8,678-word memorandum did not exceed that limit. The court also explained that the rule cited by the plaintiffs applies to pleadings, while Aetna’s memorandum was not a pleading, and rejected the plaintiffs’ characterization of the memorandum.

Motion to Dismiss

Aetna moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not allege enough facts to state a plausible legal claim. The court considered the call transcript because the amended complaint relied heavily on the call and the plaintiffs did not dispute the transcript’s authenticity or relevance.

For the breach-of-contract claim, the court held that the complaint and transcript did not contain enough specific details to show an offer. They did not identify the surgery’s specific services or prices, and they did not show that Aetna explicitly undertook a duty to pay a particular amount. The court viewed the representative’s statement as a description of the patient’s coverage and benefit rates, not an offer or promise to pay.

For promissory estoppel, the court held that the plaintiffs had not alleged a clear and unambiguous promise to pay a particular amount for the surgery or its individual services. Verifying insurance benefits was not the same as promising payment.

For unjust enrichment, the court held that the plaintiffs had not alleged facts showing that Aetna directly benefited from the surgery or requested that the plaintiffs perform it. The court found that allegations of an indirect benefit were insufficient.

For fraudulent inducement, the court held that the plaintiffs had merely restated their contract theory. The alleged misrepresentation about the reimbursement rate was not separate from, or collateral to, the alleged contract promise. The plaintiffs therefore failed to state a fraudulent-inducement claim.

Sanctions

Aetna requested attorney’s fees and costs under 28 U.S.C. § 1927 and the court’s inherent authority, arguing that the plaintiffs and their counsel pursued unreasonable and vexatious litigation. The plaintiffs argued that this case was factually distinguishable from an earlier related proceeding and involved different procedures, representations, and patients.

The court denied sanctions. It found that sanctions required clear evidence that the claims were entirely without legal support and were brought in bad faith. Although the plaintiffs had a poor record in similar cases and the Second Circuit’s decision in the earlier related proceeding cast serious doubt on their claims, the court found insufficient evidence of bad faith with the required specificity.

Disposition

The opinion’s discussion states that the court granted Aetna’s motion to dismiss and dismissed the amended complaint in its entirety, with prejudice, for failure to state a claim. It also states that the court denied the plaintiffs’ motion to strike and denied Aetna’s request for sanctions.

The conclusion contains an apparent clerical inconsistency: it says the court “GRANTS Plaintiffs’ motion to dismiss,” even though the opinion’s analysis says Aetna moved to dismiss, the court granted Aetna’s motion, and the amended complaint was dismissed. The conclusion also directs the clerk to terminate the motions at Dockets 57 and 63 and close the case.