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

Background

Saloojas, Inc. provides COVID-19 diagnostic testing services. It brought a proposed class action against Cigna Healthcare of California, Inc., alleging that Cigna failed to properly reimburse Saloojas for testing services provided to patients. Saloojas alleged that the federal CARES Act and California Senate Bill 510 required full reimbursement without cost-sharing, prior authorization, or other medical-management requirements.

In an earlier order, the court dismissed Saloojas’s CARES Act and injunctive-relief claims without leave to amend. It allowed Saloojas to amend claims under the Employee Retirement Income Security Act (ERISA), the Racketeer Influenced and Corrupt Organizations Act (RICO), California’s Unfair Competition Law (UCL), and a promissory-estoppel theory. Saloojas then filed an amended complaint asserting four claims: an ERISA claim, a new insurance bad-faith and fraud claim, a UCL claim, and a RICO claim.

Legal standard

Cigna moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally valid claim or does not allege enough facts to make the claim plausible. The court generally treats factual allegations as true at this stage but does not accept unsupported legal conclusions as facts. The court may deny further amendment when the plaintiff has repeatedly failed to fix the same problems or when amendment would be futile.

Court’s analysis

ERISA claim. Saloojas alleged that patients had assigned their benefit claims to it, but it did not identify the specific benefits assigned or provide language showing that patients intended to transfer their ERISA claims. Because the amended complaint repeated the earlier allegation without materially changing it, the court dismissed the ERISA claim without leave to amend.

Insurance bad-faith and fraud claim. The court held that this new claim exceeded the scope of the permission to amend granted in the earlier order, which had allowed amendment of specified claims but had not authorized new claims. The court therefore struck the claim. It also stated that, even if the claim had been properly added, Saloojas could not bring a bad-faith claim based on insurance contracts to which it was not a party, and it had not described the alleged fraudulent conduct with the particularity required by Rule 9(b), which requires specific details about alleged fraud.

California UCL claim. The court found that Saloojas had not materially changed its UCL allegations. Saloojas still did not provide the required details about who engaged in the alleged misconduct, what was done, when and where it occurred, and how it was fraudulent. The court dismissed the UCL claim without leave to amend.

RICO claim. The court concluded that Saloojas had not materially changed its allegations concerning mail fraud, wire fraud, or a pattern of racketeering activity. Saloojas also did not adequately explain how Cigna administered or participated in self-funded health plans giving rise to the alleged RICO violations. The court dismissed the RICO claim without leave to amend. Because it dismissed the claim on those grounds, the court did not address Cigna’s additional arguments concerning other RICO elements.

Disposition

Judge Charles R. Breyer granted Cigna’s motion to dismiss without leave to amend. The order dismissed the ERISA, UCL, and RICO claims without leave to amend and struck the insurance bad-faith and fraud claim.