RJ v. Cigna Behavioral Health, Inc.

Background

RJ brought a proposed class action for her beneficiary son, SJ, who was covered by a Cigna-administered employee benefit plan governed by the Employee Retirement Income Security Act of 1974 (ERISA). SJ received behavioral-health treatment from Summit Estate, Inc. The complaint alleged that Cigna represented that out-of-network benefits would be paid at usual, customary, and reasonable rates and that, after the applicable out-of-pocket maximum was reached, payment would be calculated under the plan’s MRC-1 methodology. It further alleged that Cigna sent the claims to Viant for repricing, resulting in payment of $6,225.12 on $51,175.00 in billed services, with SJ responsible for the balance.

RJ asserted eight claims: a Racketeer Influenced and Corrupt Organizations Act (RICO) claim against Cigna and Viant; two ERISA claims for unpaid benefits and breach of plan provisions against Cigna; an ERISA disclosure claim against Cigna; two ERISA fiduciary-duty claims against Cigna; and two claims for equitable relief against both defendants.

Rulings on the ERISA Claims

The court denied Cigna’s motion to dismiss the second and third claims for benefits. At the pleading stage, RJ sufficiently alleged the existence of an ERISA plan, SJ’s status as a beneficiary, and plan-related allegations supporting payment under the MRC-1 methodology. The court also declined to treat a revised explanation of benefits as proof that Cigna had properly paid the claims.

The court dismissed the fourth claim, which alleged that Cigna failed to provide accurate plan materials and other required information. ERISA’s disclosure duties apply to the designated plan administrator, and the plan identified Intuit as that administrator. The court rejected RJ’s theory that Cigna was a de facto plan administrator. This claim was dismissed without leave to amend.

The court denied Cigna’s motion to dismiss the fifth claim for breach of fiduciary duties of loyalty and due care. Although that claim overlapped with the claims for benefits, the court found it was not merely a repackaging because RJ sought declaratory and injunctive relief and alleged separate conduct, including inaccurate explanations of benefits and failure to disclose the use of Viant for repricing.

The court dismissed the sixth claim alleging failure to provide a full and fair review of an adverse benefit determination. The court concluded that the duty under the cited ERISA provision applies to benefit plans, not Cigna. This claim was dismissed without leave to amend.

The court dismissed the seventh and eighth claims for equitable relief as to both Cigna and Viant. RJ did not address those claims in opposition to Cigna’s motion, and the court found that the allegations against Viant did not clearly distinguish those claims from the other claims or satisfy the basic notice requirement of Federal Rule of Civil Procedure 8. The seventh and eighth claims were dismissed with leave to amend.

RICO Claim

The court dismissed the first claim, the RICO claim against both defendants. It found that the complaint did not plausibly and specifically allege that Cigna and Viant formed an association-in-fact enterprise with a common fraudulent purpose. Their contractual relationship and Viant’s financial incentives, without more, did not establish such an enterprise.

The court also found independent pleading defects in the alleged RICO predicate acts. The complaint did not sufficiently allege mail fraud or wire fraud with the required particularity, including who made the statements, what was said, when and where it was said, and how the communications furthered fraud. It also lacked sufficient facts supporting the required intent to deceive and cheat. The court did not consider a new money-laundering theory raised in briefing because it was not alleged in the complaint.

The first claim was dismissed with leave to amend. The court denied RJ’s request for limited discovery related to the RICO claim, finding that the necessary details were not exclusively within defendants’ knowledge.

Disposition

RJ v. Cigna Behavioral Health, Inc. ended with the court granting in part and denying in part the defendants’ motions to dismiss. The motions were granted as to the first, fourth, sixth, seventh, and eighth claims. The first, seventh, and eighth claims were dismissed with leave to amend; the fourth and sixth claims were dismissed without leave to amend. The motions were denied as to the remaining claims. RJ’s request to add Intuit as a party-defendant was denied without prejudice to filing a separate motion consistent with the Federal Rules of Civil Procedure. Judge Edward J. Davila signed the order.