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Sleep Tight Diagnostic Center, LLC v. Aetna, Inc.

United States District Court, D. New Jersey

June 27, 2019



          Freda L. Wolfson United States Chief District Judge

         Before the Court is a motion to dismiss filed by Defendants Aetna, Inc., Aetna Health Inc., and Aetna Life Insurance Company (“Aetna” or “Defendants”). Sleep Tight Diagnostic Center (“Sleep Tight” or “Plaintiff”), a provider of sleep study services, brings this suit to recover insurance benefits related to a procedure which it performed on twenty-five patients (the “insureds”) who are insured under employee health insurance plans (the “Plans”), all of which are administered by Aetna, with the exception of one.[1] In the suit, Plaintiff asserts the following state law claims: (Count 1) breach of contract, (Count 2) quantum merit, (Count 3) promissory estoppel, and (Count 4) negligent misrepresentation. In its dismissal motion, Aetna raises the following arguments: Plaintiff's state law claims with respect to nineteen of the insureds are preempted under the Employee Retirement Income Security Act (“ERISA”); Plaintiff lacks standing to seek benefits on behalf of thirteen of the insureds because their Plans contain anti-assignment provisions; and Plaintiff has failed to exhaust its administrative remedies under ERISA. In the alternative, Aetna contends that Plaintiff fails to state a cognizable cause of action. For the reasons expressed herein, Aetna's motion to dismiss is GRANTED in part and DENIED in part as follows: the claims relating to G.J., H.H., J.F., J.W., L.F., M.P., R.B., Ri. M., Rog. M., S.B., T.C., P.D., R.T., and M.T. are dismissed. The Court declines to exercise supplemental jurisdiction over Plaintiff's state law claims concerning A.T., A.Y., and S.L. The Motion is denied as to the claims relating to A.K., A.O., C.A., C.W., J.B., K.B., R.F., and Rob. M.


         Unless otherwise noted, the facts are drawn from Plaintiff's First Amended Complaint (“FAC”) and are assumed to be true for the purpose of this motion. Sleep Tight is an out-of-network provider of sleep study services that is organized, and exists, under the laws of the State of Texas. FAC, at ¶ 1. Aetna, Inc., Aetna Health Inc., and Aetna Life Insurance Company are administrators of all of the Plans but one, and they are based in Pennsylvania, New Jersey, and Connecticut, respectively. Id. at ¶¶ 2-4.

         During February 24, 2016 through August 9, 2016, Sleep Tight performed, in Texas, a polysomnography on each of the insureds, a sleep study that diagnoses sleep disorders.[2] Id. at ¶ 16. The insureds each completed an “Insurance Verification Form” before undergoing that procedure, and identified Aetna as the insurance company which administered their respective Plans. Id. at ¶¶ 17-18. According to Sleep Tight, it then contacted Aetna and confirmed both its eligibility “to be paid” as an out-of-network provider, and the “availability of benefits” for the required treatments for the insureds. Id. at ¶¶ 19-20. Sleep Tight alleges that Aetna also provided information which related to the Plans, in order to verify the amount in benefits payable for services rendered, including: (a) the reimbursement methodology for out-of-network services; (b) the applicable patient cost sharing obligations; and (c) the annual out-of-pocket maximums. Id.

         Despite having allegedly received confirmation, Sleep Tight avers that Aetna neither provided, nor did its representations constitute, “a guaranty of payment” for services rendered. Id. at ¶ 24. Nevertheless, after the insureds executed an assignment of benefits to Sleep Tight, it administered the sleep studies in question and submitted “CMS-1500” claim forms to Aetna. Id. at ¶ 25. The forms specifically referenced the assignment of benefits and, collectively, sought more than $445, 551.00 in payment from Aetna, for services rendered between February 24, 2016 and August 9, 2016. Id. at ¶¶ 24-27. However, in a document titled “Explanation of Payment, ” Aetna denied Sleep Tight's claims, on the basis that: “[t]his provider [Sleep Tight] was not certified/eligible to be paid for this procedure/service on this date of service. Note: Refer to the 835 Healthcare Policy Identification Segment (loop 2100 Service Payment Information REF), if present.” Id. at ¶ 28.

         Sleep Tight sought to reverse Aetna's adverse benefit determinations. More specifically, on May 3, 2016, Sleep Tight allegedly submitted a written appeal directly to Aetna, pursuant to a conversation with Liz, an Aetna customer service representative. Id. at ¶ 30. Then, on June 10, 2016, according to Sleep Tight, it received a letter from James C. Crumlish, Esq., an attorney whose firm represents Aetna, in which he instructed Sleep Tight to direct all further inquires to either himself or his colleague, Colin O'Boyle, Esq. Id. at ¶ 31. Thereafter, on an unspecified date, Sleep Tight's Administrator provided Mr. Crumlish with a copy of its “provisional accreditation” from the American Academy of Sleep Medicine (“AASM”). Id. Moreover, during a conversation with Mr. Crumlish, the administrator expressed her frustration that Mr. Crumlish and his staff had failed to provide a substantive update in connection with the status of Sleep Tight's “reprocessing request.” Id. at ¶¶ 30, 32.

         On August 10, 2016, Mr. Crumlish requested proof of Sleep Tight's continued provisional accreditation with the AASM. Id. at ¶ 33. In addition, Sleep Tight alleges that Mr. Crumlish advised that Sleep Tight's claims “for healthcare covered benefits will be processed for services rendered as of July 8, 2016, subject to the member's relevant coverage conditions and Aetna's coverage policies.” Id. However, because Aetna did not reprocess the disputed claims, Sleep Tight alleges that it sent a letter, through counsel, to Mr. Crumlish on February 7, 2017. Id. at ¶¶ 34-35. The letter specified the amount owed to Sleep Tight, and it requested information from Aetna that pertained to its adverse benefit decisions. Id. at ¶ 35. But, Sleep Tight's efforts allegedly failed to elicit a response from either Mr. Crumlish or his colleagues, and, on April 25, 2017, after a conversation with Mr. Crumlish's paralegal, Sleep Tight resubmitted its earlier correspondence by email. Id. However, that, too, was allegedly ignored. Id.

         On March 14, 2018, Sleep Tight filed the instant action against Aetna, alleging wrongful denial of benefits pursuant to ERISA. On October 4, 2018, Sleep Tight amended its Complaint to assert four common law causes of action under Texas law, including: (1) breach of contract; (2) quantum meruit; (3) promissory estoppel; and (4) negligent misrepresentation. In the instant matter, Aetna moves for dismissal on the basis of preemption, standing, and the failure to exhaust. Alternatively, Aetna argues that Sleep Tight has failed to assert a valid claim under Texas law. Sleep Tight opposes the motion.


         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); 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). Thus, for a complaint to withstand a motion to dismiss under Rule 12(b)(6), the “[f]actual allegations must be enough to raise a right to relief above the speculative level, . . . on the assumption that all the allegations in the complaint are true (even if doubtful in fact) . . .” Twombly, 550 U.S. at 555 (citations omitted).

         The Supreme Court has emphasized that, when assessing the sufficiency of a civil complaint, a court must distinguish factual contentions and “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). When evaluating a motion to dismiss for failure to state a claim, district courts engage in a three-step progression.

         First, the court must “tak[e] note of the elements a plaintiff must plead to state a claim.” Iqbal, 556 U.S. at 662. Second, the court should identify allegations that, “because they are no more than conclusions, are not entitled to the assumption of truth.” Id. at 664. Third, “whe[n] there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief.” Id. This means that the inquiry is normally broken into three parts: (1) identifying the elements of the claim, (2) reviewing the complaint to strike conclusory allegations, and then (3) looking at the well-pleaded components of the complaint and evaluating whether all of the elements identified in part one of the inquiry are sufficiently alleged. Malleus v. George, 641 F.3d 560, 563 (3d Cir.2011). A complaint will be dismissed unless it “contain[s] sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). This “plausibility” determination is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Fowler, 578 F.3d at 211 (citations omitted). “The plausibility standard is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully;” indeed, mere consistency with liability is insufficient. Iqbal, 556 U.S. at 678. Moreover, a plaintiff may not be required to plead every element of a prima facie case, but he must at least make “allegations that raise a reasonable expectation that discovery will reveal evidence of the necessary element.” Fowler, 578 F.3d at 213 (3d Cir.2009).

         The Third Circuit has reiterated that “judging the sufficiency of a pleading is a context-dependent exercise” and “[s]ome claims require more factual explication than others to state a plausible claim for relief.” W. Penn Allegheny Health Sys., Inc. v. UPMC, 627 F.3d 85, 98 (3d Cir. 2010) cert. denied, 565 U.S. 817 (2011). Generally, when determining a motion under Rule 12(b)(6), the court may only consider the complaint and its attached exhibits. However, while “a district court may not consider matters extraneous to the pleadings, a document integral to or explicitly relied upon in the complaint may be considered without converting the motion to dismiss into one for summary judgment.” Angstadt v. Midd-West Sch. Dist., 377 F.3d 338, 342 (3d Cir. 2004) (citation omitted); see also In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997).


         In the instant action, Aetna moves for dismissal on the basis of four separate grounds. First, Aetna argues that Sleep Tight's state law claims relating to the nineteen ERISA-governed Plans are expressly preempted under the statute. Second, Aetna contends that Plaintiff lacks standing to pursue benefits under the thirteen Plans which include anti-assignment provisions. Third, Aetna maintains that Plaintiff has failed to exhaust its administrative remedies before filing this suit. Lastly, even if Plaintiff's common law causes of action ...

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