Saloojas, Inc. v. Aetna Health of California, Inc.

Background

Saloojas, Inc. operated seven specimen-collection sites for COVID-19 testing and was outside Aetna’s provider network. Saloojas alleged that Aetna incorrectly processed and denied most reimbursement claims for testing provided to people covered by Aetna insurance plans and employer plans administered by Aetna.

Saloojas alleged that Sections 3201 and 3202(a)(2) of the Coronavirus Aid, Relief, and Economic Security Act and Section 6001 of the Families First Coronavirus Response Act required Aetna either to pay the cash price that Saloojas posted online or negotiate a lower rate. Saloojas also alleged that Aetna improperly imposed medical-record requests and other requirements, and assessed copayments and deductibles contrary to the COVID-19 statutes.

The complaint asserted claims under the CARES Act and the Families First Coronavirus Response Act, Section 502(a)(1)(B) of the Employee Retirement Income Security Act, the Racketeer Influenced and Corrupt Organizations Act, promissory estoppel, injunctive relief, and California’s Unfair Competition Law. Aetna moved to dismiss all claims for failure to state a claim.

CARES Act and Families First Coronavirus Response Act

The court held that the CARES Act and the Families First Coronavirus Response Act do not create a private right of action allowing Saloojas to require Aetna to pay Saloojas’s posted cash price. The court granted Aetna’s motion as to this claim and dismissed it without leave to amend because the problem was the legal theory itself.

Employee Retirement Income Security Act

Section 502(a)(1)(B) of the Employee Retirement Income Security Act allows a civil action by a plan participant or beneficiary to recover benefits, enforce plan rights, or clarify future-benefit rights. The court held that a healthcare provider is not ordinarily a participant or beneficiary and therefore cannot sue directly under that provision for payment of its services.

A provider may sue derivatively if a plan beneficiary assigned the beneficiary’s right to reimbursement to the provider. To allege standing based on an assignment, the provider must allege the specific language of the assignment. Saloojas alleged only that many patients had executed assignment-of-benefits documents. It did not identify a specific plan or assignment language.

The court rejected Saloojas’s argument that the CARES Act and the Families First Coronavirus Response Act eliminated the need for an assignment. The court granted the motion to dismiss the ERISA claim without leave to amend as to that legal theory. It dismissed the claim with leave to amend to add factual allegations about an assignment, if Saloojas had a good-faith basis to do so. The court did not address Aetna’s alternative arguments concerning exhaustion or failure to state a claim for benefits or equitable reformation.

RICO

Saloojas alleged that Aetna used mail and wire fraud, an improper record-request scheme, claims and appeals procedures, a disinformation campaign, and alleged misuse of employee-benefit-plan assets as predicate acts for a civil RICO claim. Because the claim was based on alleged fraud, Federal Rule of Civil Procedure 9(b) required Saloojas to plead the circumstances of the alleged fraud with particularity.

The court held that Saloojas’s allegations were conclusory. They did not provide facts supporting a reasonable inference of mail fraud, wire fraud, or embezzlement, or enough detail about the time, place, and manner of each fraudulent act, each defendant’s role, and why a challenged statement or omission was false or misleading. The court granted the motion to dismiss the RICO claim with leave to amend.

Promissory Estoppel

Under California law, promissory estoppel requires a clear and unambiguous promise, reliance, reasonably foreseeable reliance, and injury caused by that reliance. The court held that Saloojas alleged that Aetna represented that COVID-19 testing would be covered but did not allege a clear and unambiguous promise to pay a particular amount. The court granted the motion to dismiss this claim with leave to amend.

Injunctive Relief

The court held that an injunction is a form of relief rather than a separate claim creating liability. It granted the motion to dismiss Saloojas’s separate claim labeled “injunctive relief (non-ERISA)” without leave to amend. The court did not dismiss or strike requests for injunctive relief included in the complaint’s prayer for relief on that basis.

California Unfair Competition Law

Saloojas alleged unlawful, unfair, and fraudulent business practices under California’s Unfair Competition Law. The court explained that relief under that law generally is limited to injunctions and restitution, and that a plaintiff seeking equitable relief for past harm must show that damages are inadequate.

The court held that Saloojas did not allege why reimbursement damages would be inadequate. The complaint focused on Aetna’s alleged failure to reimburse Saloojas for COVID-19 testing. The court also found that, to the extent Saloojas relied on an alleged campaign to mislead the public, the complaint lacked facts supporting that allegation and did not give Aetna fair notice of its basis. The court granted the motion to dismiss the Unfair Competition Law claim with leave to amend.

Disposition

Judge Jacqueline Scott Corley granted Aetna’s motion to dismiss. The CARES Act and Families First Coronavirus Response Act claim and the standalone injunctive-relief claim were dismissed without leave to amend. The ERISA claim was dismissed without leave to amend as to the argument that an assignment was unnecessary, but with leave to amend to add facts concerning assignment. The RICO, promissory-estoppel, and Unfair Competition Law claims were dismissed with leave to amend. Saloojas could file an amended complaint by October 31, 2022.