LD v. United Behavioral Health

Background

LD, DB, BW, RH, and CJ brought a proposed class action against United Behavioral Health (United) and Viant, Inc. The plaintiffs alleged that they had health policies administered by United that provided out-of-network benefits for mental-health and substance-use-disorder treatment at usual, customary, or reasonable rates. They received intensive outpatient program services from Summit Estate, an out-of-network provider, and alleged that United used Viant to negotiate reimbursements below the claimed usual, customary, and reasonable rate. They further alleged that they had to pay the amounts United did not reimburse.

The complaint asserted claims against United under the Employee Retirement Income Security Act of 1974 (ERISA) for underpaid benefits, breach of plan provisions, disclosure violations, breach of fiduciary duties, and failure to provide a full and fair review. It also asserted two claims for equitable relief under ERISA against both defendants. Against United and Viant, the plaintiffs asserted claims under the Racketeer Influenced and Corrupt Organizations Act (RICO), including a claim under Section 1962(c) and, to the extent alleged, a conspiracy claim under Section 1962(d).

Rule 12(b)(6) standard

The defendants moved to dismiss all claims under Federal Rule of Civil Procedure 12(b)(6), arguing that the claims were inadequately pleaded. They also argued that the plaintiffs lacked standing to bring the RICO claims. Under Rule 12(b)(6), a complaint must plead enough facts to make liability reasonably plausible. The court generally accepts the complaint’s factual allegations as true but need not accept allegations contradicted by documents properly considered with the complaint.

ERISA claims

The court dismissed the two claims under ERISA Section 502(a)(1)(B), which permits a plan participant or beneficiary to recover benefits due under a plan. The plaintiffs alleged that United was required to reimburse Summit Estate at the claimed usual, customary, and reasonable rate, with that rate equal to 100 percent of Summit Estate’s billed charges. But they did not identify the plan provisions requiring that reimbursement. Without those provisions, the complaint did not reasonably show that United had breached the plans.

The court also dismissed the ERISA disclosure claim under Section 502(c)(1). Such a claim may be brought only against a plan administrator. The plaintiffs did not allege facts showing that United was designated as the plan administrator or otherwise qualified as one under ERISA. The court further held that the claim failed because the plaintiffs did not allege that they had requested plan documents, did not establish that Section 502(c)(1) authorized a claim challenging the accuracy of the communications at issue, and did not identify an ERISA provision requiring disclosure of United’s reimbursement methodology.

The court dismissed the breach-of-fiduciary-duty claim because it depended on the allegation that United’s reimbursement decisions were unauthorized by the plan documents, but the plaintiffs had not adequately alleged any breach of the plan terms. The court dismissed the full-and-fair-review claim under ERISA Section 1133 to the extent it was based on allegations that the explanation-of-benefits documents failed to state the reimbursement amounts or appeal rights. The court considered those documents because the complaint relied on them, and the documents stated the reimbursement amounts, the amounts owed to Summit Estate, and that the determinations could be appealed. The court also rejected the theory that the documents had to use the specific words “adverse benefit determination,” because the plaintiffs cited no authority requiring that wording.

The court dismissed the two claims for equitable relief under ERISA Section 502(a)(3). The plaintiffs sought payment of amounts allegedly withheld, disgorgement of profits, and reprocessing of the claims. The court concluded that the plaintiffs had not adequately alleged an ERISA violation or a need to enforce an ERISA provision or plan term. It also concluded that the complaint did not show that either the basis for the claims or the requested remedies was equitable rather than legal. The court stated that any amended Section 502(a)(3) claims would need to address both requirements.

RICO claims

The court dismissed the RICO Section 1962(c) claim. That claim required allegations of conduct involving an enterprise through a pattern of racketeering activity. The court held that the complaint did not adequately allege an association-in-fact enterprise because the allegations described a contractual relationship between United and Viant, without facts showing a shared purpose beyond routine commercial dealings. It also held that the plaintiffs did not allege that either defendant directed the affairs of an enterprise rather than carrying out its own affairs under the contract.

The court further held that the alleged “Federal Health offenses” could not serve as RICO predicate acts because they were not among the offenses listed in the RICO statute. Although mail fraud and wire fraud can serve as predicate acts, the plaintiffs did not plead those allegations with the particularity required by Rule 9(b). Specifically, they did not provide sufficient details about the timing, location, contents, or participants in the alleged fraudulent communications, or facts showing that the communications were sent through the relevant mail or wire systems. The court also found that the explanation-of-benefits documents did not support the plaintiffs’ allegations about appeal procedures and did not require the specific disclosures the plaintiffs claimed were missing.

The court dismissed any RICO conspiracy claim under Section 1962(d) because a RICO conspiracy claim cannot proceed without an adequately pleaded substantive RICO violation. The court also addressed RICO standing, which requires a business or property injury proximately caused by a RICO predicate offense. Because the plaintiffs had not identified plan provisions supporting their claimed reimbursement theory and had not adequately alleged reliance on the supposed misrepresentations, the complaint did not reasonably show the required causal connection.

Disposition

The court granted the defendants’ motions to dismiss with leave to amend. The plaintiffs could file an amended complaint within 30 days after the order was filed, and the defendants could respond within 30 days after the amended complaint was filed. The order terminated Docket Numbers 33 and 34. The opinion also states that the court denied the defendants’ request for judicial notice of excerpts from summary plan documents, while considering the explanation-of-benefits documents under the incorporation-by-reference doctrine.