Saloojas, Inc. v. Blue Shield of California Life and Health Insurance Company

Background

Saloojas filed an amended complaint against Blue Shield of California Life and Health Insurance Company. Blue Shield asked the court to dismiss all claims under Rules 12(b)(6) and 12(b)(1) of the Federal Rules of Civil Procedure. Rule 12(b)(6) concerns whether a complaint states a legally sufficient claim, and Rule 12(b)(1) concerns subject-matter jurisdiction. Blue Shield alternatively asked the court to strike portions of the complaint under Rule 12(f).

In an earlier order, the court had dismissed without leave to amend Saloojas’s claims concerning the Families First Coronavirus Response Act and the Coronavirus Aid, Relief, and Economic Security Act, a claim under section 501(a)(1)(B) of the Employee Retirement Income Security Act, and a request for non-Employee Retirement Income Security Act injunctive relief. The court had allowed Saloojas to amend its claims for racketeering, promissory estoppel, and violations of California’s Unfair Competition Law, but it had ordered Saloojas not to add new claims without permission.

The Four Claims

Claim I: Employee Retirement Income Security Act claim. The court struck Claim I because the court had previously dismissed it without leave to amend. The court also stated that the claim remained deficient for the reasons given in its earlier order.

Claim II: Insurance bad faith and fraud. The court struck Claim II because it was a new claim outside the scope of the permission to amend. The court further stated that, even if the claim had been properly added, it would fail to state a claim. As to insurance bad faith, Saloojas did not identify an insurance policy under which it was an insured or show that it had been assigned an insured’s rights. As to fraud, Saloojas did not identify a false representation or plead the circumstances of the alleged fraud with the particularity required by Rule 9(b).

Claim III: California Unfair Competition Law claim. The court dismissed Claim III. For the “unlawful” theory, Saloojas did not plead facts showing that it had listed a cash price for COVID-19 testing on a public website as required by the CARES Act, and it did not support its allegation that Blue Shield failed to provide reasonable reimbursement under California law. For the “unfair” theory, Saloojas repeated general legal standards and referred to earlier allegations without providing additional support. The “fraudulent” theory failed for the same reasons the court gave for Claim II’s fraud allegations.

Claim IV: Racketeering claim. The court dismissed Claim IV under the federal racketeering statute, 18 U.S.C. § 1962(c). The court relied on the reasons stated in its earlier order, including Saloojas’s failure to allege facts supporting a finding that Blue Shield engaged in racketeering activity. The court found that Saloojas had not added enough facts to support a theory based on mail or wire fraud. It also found that Saloojas had not explained how an alleged failure to pay plan benefits constituted embezzlement, theft, or conversion, and had not cited authority supporting that theory.

Ruling

Judge Maxine M. Chesney granted Blue Shield’s motion to dismiss and strike. Claims I and II were stricken, and Claims III and IV were dismissed without further leave to amend.