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Darlery Franco, Individually and On Behalf of All Others Similarly v. Connecticut General Life Insurance Co.

January 24, 2012


The opinion of the court was delivered by: Chesler, District Judge


This matter comes before the Court on two motions for judgment on the pleadings, pursuant to Federal Rule of Civil Procedure 12(c), filed separately by the UnitedHealth Group, Incorporated and Ingenix, Inc. (hereinafter, the "United Defendants") [docket entry 652] and by the CIGNA Defendants ("CIGNA") [docket entry 653]. Both motions seek to dismiss the civil conspiracy claim asserted in the Nelson Complaint. This claim survived the Rule 12(b)(6) challenge brought by Defendants, but as the Court expressed in its September 23, 2011 Opinion pertaining to the earlier motions to dismiss, the Court could not consider arguments that had been made by Defendants as to other common law and statutory claims in the Nelson Complaint (in particular, ERISA preemption) but not as to the civil conspiracy claim.

The Court writes only for the parties and will not repeat the extensive background concerning the nature of the dispute it provided in its September 23, 2011 Opinion. The Court refers the reader to that Opinion for a summary of the facts, the identity of the parties and the meaning of various abbreviations the Court adopted and will continue to use in this Opinion. The Court limits the scope of this Opinion to an evaluation of the civil conspiracy claim on the grounds now raised by the United Defendants and by CIGNA to challenge its sufficiency.

The Nelson Plaintiffs have opposed the motions. For the reasons expressed below, the Court will grant the motions for judgment on the pleadings.


I. Legal Standard

Federal Rule of Civil Procedure 12(c) permits a party to move for judgment on the pleadings "after the pleadings are closed -- but early enough not to delay trial." Fed.R.Civ.P. 12(c). Though procedurally it applies later in a case than a Rule 12(b) motion, which may be filed in lieu of a responsive pleading, a motion brought under Rule 12(c) for failure to state a claim upon which relief may be granted is governed by the same standard applicable to Rule 12(b)(6) motions. Turbe v. Gov't of the V.I., 938 F.2d 427, 428 (3d Cir. 1991).

The issue before the Court on a motion challenging the sufficiency of a complaint under Rule 12(b)(6), and thus the issue pertinent to a Rule 12(c) motion, "is not whether plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence in support of the claims." In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1420 (3d Cir. 1997) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). To make that determination, the Court must employ the standard of review articulated by the Supreme Court in Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal. A complaint will survive a motion under Rule 12(b)(6) only if it states "sufficient factual allegations, accepted as true, to 'state a claim for relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atlantic v. Twombly, 550 U.S. 544, 570 (2007)). The pleading standard imposed by Federal Rule of Civil Procedure 8(a) will be met if the complaint "pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly, 550 U.S. at 556.) While the complaint need not demonstrate that a defendant is probably liable for the wrongdoing, allegations that give rise to the mere possibility of unlawful conduct will not do. Iqbal, 129 S.Ct. at 1949; Twombly, 550 U.S. at 557. The Third Circuit, following Twombly and Iqbal, has held that Rule 8(a) "requires not merely a short and plain statement, but instead mandates a statement 'showing that the pleader is entitled to relief.'" Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008). This showing must be made by the facts alleged. Id. As in a Rule 12(b)(6) motion, the Court is limited in its review under Rule 12(c) to a few basic documents: the complaint, exhibits attached to the complaint, matters of public record, and undisputedly authentic documents if the complainant's claims are based upon those documents. See Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993).

II. CIGNA's Motion

CIGNA argues that the civil conspiracy claim is preempted by ERISA § 514(a), which provides that ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan." 29 U.S.C. § 1144(a). ERISA preemption of state law causes of action is well-established. See Aetna Health, Inc. v. Davila, 542 U.S. 200, 209 (2004). The Supreme Court has held that "any state-law cause of action that duplicates, supplements, or supplants the ERISA civil enforcement remedy conflicts with the clear congressional intent to make the ERISA remedy exclusive and is therefore pre-empted." Id. Suits brought by participants or beneficiaries of ERISA plans concerning matters that "relate to" those plans are governed by the cause of action provided by ERISA § 502(a). Id. at 208-09.

The Nelson Plaintiffs base their civil conspiracy claim against CIGNA on the allegation that it conspired with the United Defendants, and others, to defraud subscribers as to their ONET benefits by manipulating the UCR data on which the ONET benefit payment was calculated. Though couched in the language of fraud, the wrongdoing at the heart of the claim against CIGNA is that it took steps designed to pay its subscribers ONET benefits in an amount below what CIGNA should have paid according to the terms of their ERISA plan. The Nelson Complaint alleges, in relevant part, that CIGNA conspired and agreed with Ingenix to defraud CIGNA subscribers by underpaying [ONET] charge[s] based on artificially depressed UCRs.

Defendants discussed and agreed among themselves and their Conspirators that they would work together to cause CIGNA to breach its obligations to provide coverage and/or reimbursement for [ONET] charges . . . (Nelson Compl. ¶¶ 297, 298(c).)

There is no question that the Nelson Plaintiffs' civil conspiracy claim "relates to" their employer-sponsored CIGNA plan. The term "relate to," in the context of ERISA's preemption provision, means that the claim "has a connection with or reference to" an ERISA plan. Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97 (1983). For example, the Supreme Court has preempted a plaintiff's common law causes of action where they were based on the improper processing of a claim for benefits under an employee benefit plan. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47-48 (1987). The Nelson Plaintiffs argue that the civil conspiracy claim merely "involves" an ERISA plan and has too attenuated a connection to the plan to warrant preemption under the "relate to" standard of the statute. See Glaziers and Glassworkers Union Local No. 252 Annuity Fund v. Newbridge Sec., Inc., 93 F.3d 1171, 1185 (3d Cir. 1996) (noting difference between claims that relate to ERISA plans, such as by affecting the administration of benefits, and those that merely involve ERISA plans but do not derive from or impact the plans). According to the Nelson Plaintiffs themselves, however, the fraud at the heart of the alleged conspiracy lies in the improper reduction of ONET reimbursements through use of a flawed database. The logical extension of this theory of liability is that the proper ONET reimbursement would be one which complied with the ERISA plan terms. The connection between the governing ERISA plan and the claim that CIGNA conspired with others to defraud its subscribers regarding benefits owed thereunder is clear.

At bottom, the Nelson Plaintiffs are complaining about the denial of benefits to which they believe they are entitled under their CIGNA plan. Their civil conspiracy claim duplicates the remedy available to the Nelson Plaintiffs against CIGNA under ERISA ยง 502(a). If the Nelson Plaintiffs can demonstrate that CIGNA improperly reduced the ONET benefit it paid them, this provision entitles Plaintiffs to recover unpaid benefits under their CIGNA plan. Casting the alleged wrongdoing as a civil conspiracy does ...

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