Orrison v. Mayo Clinic

Background

Plaintiff Sherry Orrison is a Mayo Clinic employee residing in Scottsdale, Arizona, and a participant in Mayo's self-funded employee health plan (the Plan) governed by ERISA (the Employee Retirement Income Security Act of 1974). Mayo Clinic served as the Plan Administrator, and MMSI, Inc. — referred to throughout the proceedings as Medica — served as the Claims Administrator.

Orrison's claims stem from her attempts to secure mental health treatment for her teenage son, a Plan beneficiary, beginning in 2019. She alleges that Medica's online provider search tool falsely showed no in-network mental health providers within fifty miles of her Scottsdale home, forcing her to use out-of-network providers for years and incur significant costs. She also alleges that despite repeated requests, neither defendant would explain how non-network provider reimbursement amounts (NNPRAs) were calculated — information she needed to make informed coverage decisions. Additionally, she alleges that the Medica Member Portal and Medica's internal system showed conflicting figures for her deductible and out-of-pocket maximum balances for 2022 and 2023.

Orrison filed a nine-count First Amended Complaint (FAC) asserting: (I) civil RICO (Racketeer Influenced and Corrupt Organizations Act); (II) underpaid benefits under ERISA § 1132(a)(1)(B); (III) failure to provide accurate explanations of benefits (EOBs); (IV) breach of ERISA fiduciary duties; (V) deprivation of a full and fair review under ERISA § 1133; (VI) equitable relief; (VII) violation of the Mental Health Parity and Addiction Equity Act; (VIII) violation of the No Surprises Act; and (IX) additional equitable relief.

Both defendants moved to dismiss all counts under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted.

Legal Standard

To survive a Rule 12(b)(6) motion to dismiss, a complaint must contain enough facts to state a claim for relief that is "plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). Courts accept well-pleaded facts as true but need not accept conclusory statements or legal conclusions dressed up as facts. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

Count I — Civil RICO

The court dismissed Count I without prejudice. Civil RICO requires a plaintiff to allege one or more underlying "predicate" criminal acts listed in 18 U.S.C. § 1961(1). Orrison identified three: mail fraud (18 U.S.C. § 1341), wire fraud (18 U.S.C. § 1343), and "Health Care Offenses" under several other provisions.

The court first held that the "Health Care Offenses" cannot serve as RICO predicates because they are not included in the statutory list at § 1961(1).

As to mail and wire fraud, claims of fraud as RICO predicates must satisfy the heightened pleading standard of Federal Rule of Civil Procedure 9(b), requiring the plaintiff to plead with particularity the "who, what, when, and how" of the alleged fraud. The four elements include: (1) a scheme to defraud; (2) intent to defraud; (3) reasonably foreseeable use of mail or wires; and (4) actual use of mail or wires to further the scheme.

The court found that, once conclusory statements were set aside, the FAC's remaining factual allegations — the inaccurate provider search tool, unexplained EOBs, and conflicting deductible tallies — did not plausibly allege fraudulent intent. The FAC contained no facts permitting an inference that either defendant acted with even reckless disregard for the truth of its representations. The court noted additional concerns about whether the FAC adequately alleged a RICO "enterprise" or a "pattern of racketeering activity," but did not reach those issues given the deficiency in intent allegations.

Count II — Underpaid Benefits Under ERISA § 1132(a)(1)(B)

The court dismissed Count II without prejudice. ERISA's civil enforcement provision, 29 U.S.C. § 1132(a)(1)(B), allows a plan participant to sue to recover benefits owed under the plan's own terms. The Eighth Circuit has held that claims under this provision must allege a violation of the plan's actual terms.

The FAC failed to identify any specific plan term that was violated. Instead, Orrison's allegations focused on misuse of NNPRA pricing methods, failure to comply with state laws, and conduct discouraging out-of-network use — none of which identifies a specific plan provision that was breached.

Count IV — Breach of ERISA Fiduciary Duties

The court denied the motions to dismiss one theory under Count IV, while dismissing two others without prejudice.

The FAC adequately alleges that Orrison repeatedly sought information about how allowed amounts for out-of-network care were calculated, that both defendants refused to provide it, and that the only response she received — that rates were "negotiated on a claim-by-claim basis" and could "fluctuate throughout the year" — was insufficient to allow her to make informed benefit decisions. These allegations survive dismissal.

The court rejected defendants' arguments that the fiduciary breach claim was improperly duplicative of the benefits claim and that ERISA limits disclosure duties to expressly enumerated requirements.

Count V — Deprivation of Full and Fair Review Under ERISA § 1133

The court denied the motion to dismiss Count V. ERISA § 1133 requires plans to provide written specific reasons for benefit denials and afford participants a meaningful opportunity to appeal. Implementing regulations require plans to give claimants reasonable access to all documents relevant to their claims, including documents relied on in making benefit determinations. 29 C.F.R. § 2560.503-1(h)(2)(iii). Courts have held that a plan's failure to explain the basis for allowed amount calculations violates the full and fair review requirement.

Defendants argued Orrison never specifically requested NNPRA pricing information. The court rejected this argument, finding that the FAC detailed numerous instances — including a November 2022 call to Medica customer service and a December 2022 contact with Mayo HR — in which Orrison sought explanations of how benefits and deductibles were calculated, and received no meaningful response. The court also distinguished defendants' reliance on McDonough v. Horizon Blue Cross Blue Shield, noting that case addressed refusal to provide every underlying data point, not refusal to explain the general methodology used — the more limited request Orrison made.

Note: The court observed that the remedy for § 1133 violations is generally limited to a procedural remedy (remand to the plan administrator), not monetary damages.

Count VII — Mental Health Parity and Addiction Equity Act

The court dismissed Count VII without prejudice. The Parity Act prohibits plans from imposing more restrictive treatment limitations on mental health or substance use disorder benefits than on comparable medical or surgical benefits, both in terms of numerical limits (quantitative) and non-numerical restrictions (nonquantitative treatment limitations, or NQTLs).

The FAC alleged only in general terms that defendants violated the Parity Act due to a "disparate number" of in-network mental health providers. It identified no plan provision treating mental health claims differently than medical or surgical claims, and no specific mental health claim that was treated differently. The court found these "threadbare" allegations insufficient under Iqbal. The court also declined to consider additional facts Orrison raised only in her opposition brief, noting that a complaint cannot be amended through briefing.

Count VIII — No Surprises Act

The court partially denied and partially granted the motion on Count VIII. The No Surprises Act (NSA), 29 U.S.C. § 1185i, imposes requirements on group health plans regarding the accuracy of provider information, including: (a)(2) verification processes; (a)(3) response protocols; and (a)(4) maintenance of a publicly accessible database of in-network providers.

Note: The court flagged that available relief under this claim is equitable only (under 29 U.S.C. § 1132(a)(3)) and that the NSA did not take effect until January 1, 2022.

Counts III, VI, and IX — Equitable Relief Claims

The court dismissed Counts III (failure to provide accurate EOBs), VI, and IX (additional equitable relief claims) with prejudice. Orrison failed to respond to defendants' arguments for dismissal of these counts in her opposition brief. The court treated this failure as a waiver of those claims and dismissed them with prejudice — meaning they cannot be refiled.

Summary of Dispositions

- Dismissed with prejudice (cannot be refiled): Counts III, VI, IX - Dismissed without prejudice (may be refiled with additional detail): Counts I, II, VII; portions of Count IV (unauthorized benefit reductions; conflicting deductible tallies); portions of Count VIII (§§ 1185i(a)(2) and (3)) - Allowed to proceed: Portion of Count IV (failure to disclose NNPRA pricing methodology); Count V (full and fair review); Portion of Count VIII (§ 1185i(a)(4) database requirement)