Rowe Plastic Surgery of Long Island v. Aetna Life Insurance Company

Background

The plaintiffs sued Aetna after performing bilateral reduction mammaplasty for a patient identified as HC. They alleged that, during a June 23, 2022 telephone call, an Aetna employee said the total allowed amount would be based on 80% of the usual-and-customary amount for covered services. The plaintiffs billed $150,000 and alleged that Aetna paid $1,316.10.

The original complaint asserted breach of contract, unjust enrichment, promissory estoppel, and violation of New York’s Prompt Pay Law. After similar claims in related litigation were rejected, Magistrate Judge Ona T. Wang directed the plaintiffs to explain why this case should not be dismissed and why they should not be barred from amending their complaint. The plaintiffs did not respond by the initial deadline, and Judge Wang recommended dismissal with prejudice.

The plaintiffs later filed a late response and sought leave to amend. Their proposed amended complaint added fraudulent-inducement and conversion claims, dropped the Prompt Pay Law claim, and alleged additional communications about the surgery’s coverage, location, and participants. Judge Wang treated the late filings as a request to reconsider her recommendation and denied reconsideration. She later denied the motion to amend because the plaintiffs had not been diligent and amendment would prejudice Aetna. The plaintiffs objected to the recommendation and reconsideration order, and Judge Cronan extended their deadline to object.

Standard of Review

Judge Cronan treated the objections as timely but concluded that they largely repeated arguments previously made to Judge Wang. He therefore reviewed the challenged decisions for clear error, meaning an obvious mistake. He also stated that, even under the more searching de novo standard, meaning an independent review, the result would be the same.

The court applied Federal Rule of Civil Procedure 12(b)(6), which asks whether a complaint alleges enough facts to state a legally plausible claim for relief. The court also considered whether the proposed amendments would be futile, meaning that they would still fail to state a claim.

Reasons for the Ruling

Breach of contract. The court held that the alleged telephone statement did not describe a sufficiently definite offer. The complaint did not allege that Aetna discussed a specific price or explicitly undertook to pay for the surgery at a particular rate. The other alleged communications concerned matters such as coverage, location, and participants, not a definite payment amount. The original and proposed contract claims therefore failed.

Promissory estoppel. The court held that the alleged statement also was not a clear and unambiguous promise sufficient to support promissory estoppel. The additional communications alleged in the proposed amended complaint did not change that conclusion.

Unjust enrichment. The court held that the plaintiffs did not allege that Aetna received a specific and direct benefit from their services or that the surgery was performed at Aetna’s request. The patient, rather than Aetna, received the direct medical service and requested the surgery. Allegations that Aetna profited by paying less were considered too indirect to support an unjust-enrichment claim.

Fraudulent inducement. The proposed fraudulent-inducement claim was based on the allegation that Aetna lied about the reimbursement rate. The court held that this merely repeated the contract theory rather than alleging fraud independent of the alleged payment obligation, so it failed to state a claim.

Prompt Pay Law and conversion. The plaintiffs did not address the Prompt Pay Law claim in their objections or the conversion claim in the proposed amended complaint. The court deemed both claims abandoned. It added that, even if considered, the claims would fail because the Prompt Pay Law theory depended on an enforceable contract or agreement, and the conversion theory sought payment based only on alleged contractual rights.

Disposition

Judge Cronan adopted Judge Wang’s Report and Recommendation and reconsideration order. The court dismissed the complaint with prejudice for failure to state a claim and without leave to amend. It entered judgment in Aetna’s favor and directed the Clerk of Court to close the case.