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The Plastic Surgery Center, P.A. v. Cigna Health and Life Insurance Co.

United States District Court, D. New Jersey

April 30, 2019



          Freda L. Wolfson, United States District Judge

         In this action, Plaintiff The Plastic Surgery Center, P.A. (“Plaintiff” or “TPSC”), as the assignee of an employee of Sunrise Senior Living (“Sunrise”), seeks to recover the costs of plastic surgery services provided by TPSC to the Sunrise employee, from an employee health benefit plan (the “Plan”) sponsored by Sunrise and governed by the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001, et seq. Plaintiff has also asserted various contractual and quasi contractual claims under New Jersey state law, which pertain to the plastic surgery services rendered to the employee of Sunrise. Defendants Multiplan, Inc. (“Multiplan”), Cigna Health and Life Insurance Company, (“Cigna”), and Sunrise (collectively, “Defendants”) originally moved for partial dismissal of Plaintiff's Third Amended Complaint (the “TAC”). In response, Plaintiff opposed the Motions and filed a Cross Motion for leave to file a proposed Fourth Amended Complaint (“FAC”). Now, Defendants challenge Counts Three through Six of the proposed FAC pursuant to Federal Rule of Civil Procedure 15(a)(2), on the basis of futility.[1] For the reasons set forth herein, Plaintiff's Cross-Motion to file the proposed Fourth Amended Complaint is DENIED as to Counts Three through Six. In that regard, the only claims remaining in the proposed FAC are the following: (1) wrongful denial of benefits under ERISA against Cigna, Sunrise, and the Plan in Count One; and (2) the breach of contract claim against Cigna in Count Two. Plaintiff is directed to file its FAC within 15 days from the date of Order accompanying this Opinion, consistent with this Opinion.


         The following facts are taken from TPSC's proposed Fourth Amended Complaint (“FAC”) and are presumed to be true for the purpose of this motion. TPSC, a professional association incorporated under the laws of New Jersey, operates as a licensed medical practice which specializes in plastic and reconstructive surgery. FAC, ¶ 1. K.D., to whom TPSC rendered medical services, is employed by Sunrise and is a participant or beneficiary of the Plan. Id. at ¶ 10. K.D. assigned her rights under the Plan to TPSC. Id. at ¶ 44. Sunrise, the sponsor and administrator of the Plan, as defined under ERISA, delegated to Cigna, inter alia, “the discretionary authority to interpret and apply [P]lan terms and to make factual determinations in connection with its review of claims under the [P]lan.” Id. at ¶¶ 18, 28. “Cigna also served as the de facto Plan Administrator by virtue of Sunrise's complete delegation of the Plan Administrator's duties to Cigna.” Id. at ¶ 27.

         On July 23, 2015, TPSC performed bilateral breast reconstruction services on K.D (the “Medical Services”).[2] Id. at ¶¶ 10, 37. TPSC alleges that, although it billed $184, 962 for the Medical Services, Cigna, on the behalf of Sunrise, rendered payment only in the amount of $1, 975.04 to TPSC. Id. at ¶¶ 39-40.

         Prior to the date of the Medical Services, TPSC alleges that it contracted with Multiplan, a third party which maintains a network of medical providers, to become a member of the Multiplan Network (the “TPSC-Multiplan Agreement”). Id. at ¶¶ 22, 24. Under that Agreement, TPSC asserts that it must be reimbursed in the amount of 85% of its billed charges, less any applicable co-payments, deductibles, and co-insurance (the “Multiplan Rate”). According to TPSC, as part of Cigna's administrative duties in connection with the Plan, Cigna also contracted with Multiplan prior to the date of the Medical Services, in order to receive the following services: “utilize the Multiplan Network for the benefit of members, participants, beneficiaries, or insureds under policies or benefit plans administered by Cigna” (the “Cigna-Multiplan Agreement”). Id. at ¶¶ 29. TPSC alleges that, pursuant to the Cigna-Multiplan Agreement, Cigna was required to pay TPSC the Multiplan Rate (85%), in connection with the Medical Services, i.e., $157, 217.70. Id. at ¶ 47.

         According to TPSC, prior to the date of the Medical Services, Cigna issued K.D. an identification card (“I.D. Card”) bearing Multiplan's logo, indicating that Cigna participated in the Multiplan Network and that K.D. was authorized to be treated by members of the Multiplan Network, including TPSC. Id. at ¶¶ 34-35. TPSC alleges that it relied upon the conduct of Multiplan and Cigna, including but not limited to the placement by Cigna of the Multiplan logo on K.D.'s identification card, when deciding whether to perform the Medical Services. Id. at ¶ 36.

         On February 6, 2017, after exhausting all claim appeal procedures and administrative remedies under the Plan, id. at ¶ 46, TPSC filed suit against Cigna in the Superior Court of New Jersey, Law Division, Monmouth County. The initial Complaint asserted claims for breach of contract, breach of an implied-in-fact contract, and unjust enrichment. On March 29, 2017, Cigna removed the case to this Court, pursuant to 28 U.S.C. §§ 1441 and 1446, on the basis of ERISA preemption.

         On May 19, 2017, Plaintiff filed a First Amended Complaint against Cigna, asserting a single claim for wrongful denial of benefits under § 502(a)(1)(B) of ERISA, 29 U.S.C. § 1132(a)(1)(B). On July 27, 2017, Plaintiff filed the SAC, which added Sunrise as a Defendant, and asserted the following five causes of action: (1) breach of contract against Cigna; (2) negligent misrepresentation against Cigna; (3) wrongful denial of benefits under § 502(a)(1)(B) of ERISA against Cigna and Sunrise; (4) violation of § 502(c)(1) of ERISA, on the basis of Cigna and Sunrise's alleged failure to respond to TPSC's request for Plan documents within 30 days; and (5) breach of fiduciary duty, pursuant to § 502(a)(3) of ERISA, against Cigna and Sunrise. On May 31, 2018, I issued an Opinion, dismissing Counts Two, Four, and Five of the SAC, and granted TPSC leave to file a Third Amended Complaint (“TAC”) for the purpose of including Multiplan as a defendant.

         TPSC filed the TAC on June 29, 2018, adding Multiplan as a party to this action, following which Defendants, once again, moved for dismissal. TPSC then cross moved to file a proposed Fourth Amended Complaint (“FAC”) wherein the following causes of action are alleged: (1) wrongful denial of benefits under § 502(a)(1)(B) of ERISA against Cigna, Sunrise, and the Plan; (2) breach of contract against Cigna; (3) breach of implied-in-fact contract against Cigna; (4) breach of contract against Multiplan; (5) violation of TPSC's third party beneficiary rights pursuant to the Cigna-Multiplan Agreement; and (6) unjust enrichment against Multiplan and Cigna.

         In the instant matter, defendant Multiplan challenges Counts Four through Six of the proposed FAC on the basis of futility; on a separate motion, defendants Cigna and Sunrise jointly[3] oppose the amendment of Counts Three, Five, and Six. Defendants do not challenge the inclusion of Counts One and Two in the proposed FAC.



         Fed. R. Civ. P. 15(a)(2) allows a party to amend its pleading by leave of court when justice so requires. Leave to amend pleadings is to be freely given. Fed.R.Civ.P. 15(a)(2); see also Valentine v. Bank of Am., No. 09-262, 2010 U.S. Dist. LEXIS 8546, at *1-2 (D.N.J. Feb. 1, 2010) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)). The decision to grant leave to amend rests within the discretion of the court. Id. (citing Foman, 371 U.S. at 182). Leave to amend may be denied on the basis of: (1) undue delay; (2) bad faith or dilatory motive; (3) undue prejudice to the opposing party; and (4) futility of amendment. See id.

         Courts may properly deny a motion to amend when the amendment would not withstand a motion to dismiss. Id. (citing Massarsky v. General Motors Corp., 706 F.2d 111, 125 (3d Cir. 1983)). With respect to futility, “[it is] clear that an amendment would be futile when ‘the complaint, as amended, would fail to state a claim upon which relief could be granted.'” In re NAHC, Inc. Sec. Litig., 306 F.3d 1314, 1332 (3d Cir. 2002) (quoting In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1434 (3d Cir. 1997)); see also Harrison Beverage Co. v. Dribeck Importers, Inc., 133 F.R.D. 463, 468 (D.N.J. 1990) (reasoning that an amendment is futile if it “is frivolous or advances a claim or defense that is legally insufficient on its face”) (citations and quotations omitted)). As such, “[i]n assessing futility, the district court applies the same standard of legal sufficiency as applies under Rule 12(b)(6).” Burlington, 114 F.3d at 1434 (citing Glassman, 90 F.3d at 623) (citation omitted).

         A court may grant a motion to dismiss if the complaint fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, . . . a plaintiff's obligation to provide the grounds of his entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do[.]” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted); see also Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir.2007) (stating that standard of review for motion to dismiss does not require courts to accept as true “unsupported conclusions and unwarranted inferences” or “legal conclusion[s] couched as factual allegation[s].”) (quotations omitted). Therefore, for a complaint to withstand a motion to dismiss under Rule 12(b)(6), the ...

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