BCBSM, Inc. v. GS Labs, LLC

Background

The case concerns payment for COVID-19 diagnostic testing. GS Labs alleged that it provided testing to people insured by, or covered under plans administered by, BCBSM, Inc., doing business as Blue Cross and Blue Shield of Minnesota. GS Labs asserted 21 counterclaims seeking reimbursement, additional damages, treble antitrust damages, punitive damages, declaratory relief, and attorneys’ fees and costs.

Blue Cross moved under Federal Rule of Civil Procedure 12(b)(6), which tests whether a pleading states a legally sufficient claim, to dismiss the Amended Counterclaim in its entirety. The court accepted well-pleaded factual allegations as true for purposes of the motion but required GS Labs’ allegations to make its claims plausible rather than merely speculative.

Court’s analysis

The court rejected GS Labs’ claim under section 3202 of the Coronavirus Aid, Relief, and Economic Security Act. It held that section 3202 does not create a private right of action allowing testing providers to sue for unpaid or underpaid testing charges. The court also dismissed the related declaratory-judgment claim because the federal Declaratory Judgment Act could not provide an independent cause of action where the underlying statute supplied no private remedy.

The court dismissed GS Labs’ ordinary breach-of-contract claim because the Blue Cross employee’s email did not plausibly constitute an offer to contract. The email said Blue Cross declined to negotiate rates and would reimburse testing as required by the CARES Act; the court viewed that statement as an intention to comply with the law rather than an offer to form a contract. The court also dismissed claims for unjust enrichment, negligence per se, tortious interference with prospective business relations, and the assignment-based breach-of-contract theory.

The court allowed the promissory-estoppel claim to proceed. GS Labs alleged that Blue Cross promised to pay the cash prices listed on GS Labs’ website, that GS Labs relied on the promise by registering as an out-of-network provider and continuing to provide testing, and that enforcement was necessary to prevent injustice. Although the court described the issue as close, it found the allegations plausible at the pleading stage.

Regarding the Employee Retirement Income Security Act (ERISA), the court held that GS Labs might enforce the CARES Act’s reimbursement requirement through ERISA’s civil-enforcement provision. The court allowed GS Labs’ claim for benefits under 29 U.S.C. § 1132(a)(1)(B) to proceed. It found that GS Labs plausibly alleged that exhaustion of administrative remedies would be futile and declined to dismiss the claim based on Blue Cross’s anti-assignment argument at this stage. The court dismissed, however, GS Labs’ claim for equitable relief under 29 U.S.C. § 1132(a)(3), concluding that the assignments described in the pleading did not give GS Labs the right to seek that relief.

The court dismissed GS Labs’ Lanham Act false-advertising claim because the alleged Blue Cross statements were not plausibly shown to be commercial advertising. The court found that GS Labs did not adequately allege that Blue Cross competed with GS Labs, made the statements to influence customers to buy Blue Cross services, or disseminated the statements sufficiently to the relevant purchasing public. The court dismissed the parallel Minnesota deceptive-trade-practices and consumer-fraud claims for the same reason.

The court dismissed GS Labs’ federal and state antitrust claims. It found that the alleged conspiracy under section 1 of the Sherman Act did not identify any particular co-conspirator and was not plausibly supported by the alleged parallel conduct. It also found that GS Labs did not plausibly define the relevant product or geographic market for its monopolization and attempted-monopolization claims. The court dismissed the tortious-interference-with-contract claim because GS Labs did not plausibly allege independently wrongful conduct or identify which contracts with other Blue Cross affiliates were breached. It dismissed the intended-third-party-beneficiary claim because GS Labs did not identify contract language showing that the contracts were intended to benefit providers.

Finally, the court dismissed the punitive-damages claim. It reasoned that punitive damages were unavailable for the ERISA benefits claim and that GS Labs had not identified Minnesota authority supporting punitive damages for promissory estoppel. The court stated that GS Labs could reassert the punitive-damages claim if it could provide Minnesota authority permitting such a recovery.

Disposition

The court’s order states that Blue Cross’s motion to dismiss was GRANTED IN PART and DENIED IN PART. Counts I, II, VI, and Count IX insofar as it asserted a claim under 29 U.S.C. § 1132(a)(3) were DISMISSED WITH PREJUDICE. Counts III, V, VII, VIII, X, XI, XII, XIII, XIV, XV, XVI, XVII, XVIII, XIX, XX, and XXI were DISMISSED WITHOUT PREJUDICE. The motion was DENIED as to Count IV and Count IX insofar as it asserted a claim under 29 U.S.C. § 1132(a)(1). Judge Eric C. Tostrud signed the order.