Summit Estate, Inc. v. UnitedHealthcare Insurance Company
- Yvonne Rogers
- 4:19-cv-06724
- U.S. District Court · Northern District of California
- 16
In Summit Estate v. UnitedHealthcare, Judge Rogers granted in part and denied in part United’s pleadings motion, allowing amendment of affected claims.
Summit Estate may amend the state-law claims affected by the ruling; United Healthcare Insurance Company’s motion was granted as to some claims and denied as to others. The Employee Retirement Income Security Act claim was not addressed in this order.
What happened
Summit Estate, Inc. sued UnitedHealthcare Insurance Company over alleged underpayment for substance-abuse-treatment services. Summit Estate said United represented that it would pay the usual, reasonable, and customary rate but paid less instead. The complaint included contract, fraud-related, promissory-estoppel, injunctive-relief, quantum-meruit, California Unfair Competition Law, and Employee Retirement Income Security Act claims.
The court found that the state-law claims were not preempted by the Employee Retirement Income Security Act at the pleading stage. It denied the motion as to the express- and implied-contract claims, promissory estoppel, and the Unfair Competition Law claim. It granted the motion as to the fraud-related claims and quantum meruit, and granted it as to injunctive relief to the extent that claim was based exclusively on the California Knox-Keene Act. The court granted leave to amend the claims affected by its ruling.
Judge Yvonne Gonzalez Rogers issued the order on September 10, 2020. Summit Estate could file an amended complaint within 30 days addressing the identified deficiencies, and United could respond within 30 days after that filing.
The detailed version
- Summit Estate, Inc. v. UnitedHealthcare Insurance Company · No. 4:19-cv-06724
- Yvonne Rogers
- Sept. 10, 2020
Background
Summit Estate, Inc. provided substance-abuse-treatment services to patients whose health-insurance policies were administered, underwritten, or issued by UnitedHealthcare Insurance Company. Summit Estate alleged that it contacted United to verify benefits and was told that the policies covered the services and that United would pay the usual, reasonable, and customary rate, or UCR. Summit Estate alleged that it relied on those representations, provided the services, and then received substantially less than the represented UCR payment. It also alleged that patients assigned insurance benefits and powers of attorney to it.
The operative complaint asserted claims for breach of contract, breach of implied contract, intentional misrepresentation, negligent misrepresentation, fraudulent concealment, negligent non-disclosure, promissory estoppel, prohibitory injunctive relief, quantum meruit, a claim under California’s Unfair Competition Law, and a claim under the Employee Retirement Income Security Act of 1974. United moved for judgment on the pleadings as to all state-law claims, arguing that the claims were preempted by the Employee Retirement Income Security Act or, alternatively, were inadequately pleaded.
Court’s analysis and rulings
The court held that the state-law claims were not preempted under the Employee Retirement Income Security Act’s conflict-preemption provision. At the pleading stage, Summit Estate’s allegations could be understood as asserting that United separately represented that it would pay the UCR, apart from confirming what the patients’ insurance plans covered. The court therefore concluded that the claims did not necessarily depend on the existence or terms of an Employee Retirement Income Security Act plan.
Contract claims
The court denied United’s motion for judgment on the pleadings as to Summit Estate’s express- and implied-contract claims. Summit Estate alleged that United represented it would pay the UCR and that Summit Estate provided the services in reliance on that representation. The court found those allegations sufficient at the pleading stage to infer that United expressed an intent to be bound.
Fraud-related claims
The court granted United’s motion for judgment on the pleadings as to intentional misrepresentation, negligent misrepresentation, fraudulent concealment, and negligent non-disclosure. Because Summit Estate conceded that these claims were based on allegedly fraudulent conduct, the allegations had to meet Federal Rule of Civil Procedure 9(b), which requires fraud to be pleaded with particularity, including the who, what, when, where, and how. The court found that Summit Estate had not provided enough specific information about the allegedly fraudulent communications.
Promissory estoppel
The court denied United’s motion as to promissory estoppel. It found that Summit Estate adequately alleged a promise because the complaint could be read to allege that United promised to pay the UCR, not merely that it confirmed coverage. The allegations of a promise, reliance, and injury were sufficient at the pleading stage.
Injunctive relief
The court granted United’s motion as to Summit Estate’s claim for prohibitory injunctive relief to the extent the claim was based exclusively on alleged violations of the California Knox-Keene Act. The court held that the Act does not provide a private right of action allowing entities such as Summit Estate to seek relief directly under that Act. The court noted, however, that a private party may seek injunctive relief based on alleged Knox-Keene violations through a California Unfair Competition Law claim.
Quantum meruit
The court granted United’s motion as to quantum meruit. Quantum meruit is an equitable claim seeking the reasonable value of services provided at the defendant’s request. The court found that the complaint did not allege facts suggesting that United itself requested Summit Estate to provide the services. The court nevertheless granted leave to amend that claim.
Unfair Competition Law claim
The court denied United’s motion as to Summit Estate’s California Unfair Competition Law claim. It rejected United’s argument that Summit Estate lacked standing because it had received assignments from patients. The court found that Summit Estate alleged its own injury: receiving less payment from United than United allegedly represented it would pay. The court also declined to dismiss the request for injunctive relief merely because Summit Estate sought legal remedies as well. It concluded that the Unfair Competition Law permits remedies to be pleaded as cumulative or alternative remedies at the pleading stage.
Disposition
The court granted in part and denied in part United’s motion for judgment on the pleadings, with leave to amend. Summit Estate could file an amended complaint within 30 days addressing the deficiencies in the state-law claims for which the motion was granted. United could respond within 30 days after the amended complaint was filed. The order terminated Docket Number 22. The opinion does not state a disposition of Summit Estate’s Employee Retirement Income Security Act claim because United’s motion addressed the state-law claims.
Read the full 16-page opinion on CourtListener, the free public archive maintained by the Free Law Project.