California Spine and Neurosurgery Institute v. United Healthcare Insurance…

Background

California Spine and Neurosurgery Institute sued United Healthcare Insurance Company and unnamed defendants over alleged underpayment of reimbursement claims. The facility alleged that it provided medically necessary spinal procedures to three patients whose health benefits were administered by United Healthcare. According to the complaint, the patients’ plans generally covered 70% of eligible out-of-network expenses.

The facility alleged that it contacted United Healthcare to verify the patients’ eligibility and that United Healthcare representatives gave express or implied assurances that United Healthcare would pay at least 70% of the usual and customary value of the anticipated care. The facility then treated the patients and submitted claims. It alleged that United Healthcare significantly underpaid and owed $206,909.66, plus interest and other costs.

The complaint asserted claims for breach of an implied-in-fact contract, breach of an express contract, and quantum meruit. United Healthcare moved to dismiss all three claims under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not state a legally sufficient claim.

Ruling

The court denied the motion to dismiss the implied-contract and express-contract claims. It granted the motion to dismiss the quantum-meruit claim and granted leave to amend that claim. The order therefore granted in part and denied in part United Healthcare’s motion to dismiss with leave to amend.

Contract claims

The court held that the complaint alleged enough facts to plausibly suggest that either an express contract or an implied contract could have been formed. The alleged assurances that United Healthcare would pay at least 70% of the usual and customary value of the services were more than allegations of coverage verification or treatment authorization alone.

The court also rejected United Healthcare’s argument that the express-contract and implied-contract theories were inconsistent. At the pleading stage, the facility could assert those theories in the alternative, even though it could not ultimately recover twice for the same subject matter.

Quantum-meruit claim

Quantum meruit is a claim seeking the reasonable value of services provided to prevent unjust enrichment. One required element is that the services were provided at the defendant’s request. The court concluded that the complaint did not plausibly allege that United Healthcare specifically requested the spinal procedures.

The complaint alleged that the facility contacted United Healthcare to verify eligibility and seek authorization, and that United Healthcare verified coverage or gave payment assurances. The court concluded that those allegations did not amount to a specific request by United Healthcare for the facility to provide the services. The court nevertheless allowed amendment because additional facts might support the claim.

Disposition

The court granted United Healthcare’s motion to dismiss the quantum-meruit claim with leave to amend. The court denied the motion to dismiss the breach-of-implied-contract and breach-of-express-contract claims. Judge Lucy H. Koh signed the order on September 17, 2019.