Saloojas, Inc. v. CIGNA Healthcare of California, Inc.

Background

Saloojas, Inc. provides COVID-19 diagnostic testing services and brought a proposed class action against Cigna Healthcare of California, Inc. Saloojas alleged that Cigna failed to reimburse it properly for testing provided to patients, including by requesting extensive medical records and denying reimbursement claims. The complaint asserted six claims: violations of Section 6001 of the Families First Coronavirus Response Act (FFCRA) and Section 3202 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act); a claim under Section 502(a)(1)(B) of the Employee Retirement Income Security Act (ERISA); a claim under the Racketeer Influenced and Corrupt Organizations Act (RICO); promissory estoppel; injunctive relief; and violations of California’s Unfair Competition Law (UCL).

Cigna moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not adequately state a legally recognizable claim. The court vacated the scheduled hearing and resolved the motion without oral argument.

Court’s Analysis

FFCRA and CARES Act claim. The court dismissed Claim I without leave to amend. It held that Section 3202 of the CARES Act does not create an express or implied private cause of action for testing providers. Although Section 3202 creates a reimbursement right for certain out-of-network providers, its text provides enforcement authority to the Secretary of Health and Human Services to penalize providers that fail to post cash prices; it does not provide a private enforcement remedy against insurers that allegedly fail to pay. The court reached the same conclusion regarding Section 6001 of the FFCRA, which provides for enforcement by federal agency officials but does not indicate that providers may sue privately. Because amendment could not cure the absence of a private cause of action, the court dismissed this claim without leave to amend.

ERISA claim. The court dismissed Claim II with leave to amend. Under Section 502(a)(1)(B) of ERISA, a provider generally cannot sue on its own behalf to recover benefits under a patient’s plan. The provider must allege a valid assignment of the patient’s rights. Saloojas alleged only that many patients executed assignment-of-benefits documents, without stating which rights were assigned or providing the assignment language. The court declined to consider assignment language attached to Saloojas’s opposition because Saloojas had not shown that the document could properly be considered on a motion to dismiss. The court also rejected Saloojas’s argument that the FFCRA or CARES Act eliminated ERISA’s assignment requirement. Because amendment might cure the pleading defect, the claim was dismissed with leave to amend.

RICO claim. The court dismissed Claim III with leave to amend because Saloojas did not plead the alleged predicate acts of mail fraud, wire fraud, and embezzlement with the particularity required by Federal Rule of Civil Procedure 9(b). The rule requires a fraud claim to identify details such as the time, place, and specific content of the alleged false statements and the participants in the alleged misrepresentation. Saloojas alleged generally that Cigna repeatedly used the mail and electronic communications in an improper records-request scheme, but did not identify the specific fraudulent conduct, explain which statements in attached claim documents were false, or adequately allege that Cigna misappropriated plan funds. The court found that amendment might not be futile.

Promissory estoppel. The court dismissed Claim IV with leave to amend. Under California law, promissory estoppel requires a clear and unambiguous promise, reasonable and foreseeable reliance, and injury caused by that reliance. The court found that Saloojas’s allegations that Cigna’s conduct indicated COVID-19 testing would be covered, or that Cigna’s past payments implied continued payments, did not identify a clear and unambiguous promise. The court allowed amendment to allege any specific promise Cigna made.

Injunctive relief. The court dismissed Claim V with prejudice, using the court’s stated disposition, because injunctive relief is a remedy rather than an independent cause of action.

California UCL claim. The court dismissed Claim VI with leave to amend. Because Saloojas’s UCL allegations were based on an alleged unified course of fraudulent conduct, Rule 9(b)’s heightened pleading requirement applied. The court found that Saloojas did not provide the required details about who committed the alleged misconduct, what was said or done, and when, where, and how it occurred. The court concluded that amendment was not clearly futile.

Disposition

Judge Charles Breyer granted Cigna’s motion to dismiss. Claim I, alleging violations of the FFCRA and CARES Act, and Claim V, seeking injunctive relief, were dismissed without leave to amend. Claims II through IV and Claim VI—ERISA, RICO, promissory estoppel, and California UCL—were dismissed with leave to amend. The order permitted Saloojas to file an amended complaint within 21 days.