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Innova Hospital San Antonio v. Blue Cross And Blue Shield of Georgia, Inc.

United States Court of Appeals, Fifth Circuit

June 12, 2018

BLUE CROSS AND BLUE SHIELD OF GEORGIA, INCORPORATED, doing business as Anthem Blue Cross and Blue Shield of Georgia; HEALTH CARE SERVICE CORPORATION, a Mutual Legal Reserve Company; BLUE CROSS AND BLUE SHIELD OF ALABAMA; CAREFIRST OF MARYLAND, INCORPORATED, formerly known as Blue Cross and Blue Shield of Maryland, Incorporated; COMMUNITY INSURANCE COMPANY; HIGHMARK, INCORPORATED, doing business as HighMark Blue Cross Blue Shield of Pennsylvania; PREMERA BLUE CROSS; BCBSM, INCORPORATED, doing business as Blue Cross Blue Shield of Minnesota; BLUE CROSS AND BLUE SHIELD OF MICHIGAN; WELLMARK, INCORPORATED, doing business as Blue Cross and Blue Shield of Iowa; BLUE CROSS; BLUE SHIELD OF MISSISSIPPI, a Mutual Insurance Company; ANTHEM HEALTH PLANS OF VIRGINIA, INCORPORATED, doing business as Anthem Blue Cross and Blue Shield of Virginia; LOUISIANA HEALTH SERVICE; INDEMNITY COMPANY, doing business as Blue Cross Blue Shield of Louisiana; BLUECROSS BLUESHIELD OF TENNESSEE, INCORPORATED; USABLE MUTUAL INSURANCE COMPANY, doing business as Arkansas Blue Cross and Blue Shield; BLUE CROSS OF CALIFORNIA, Defendants - Appellees.

          Appeal from the United States District Court for the Northern District of Texas

          Before WIENER, ELROD, and SOUTHWICK, Circuit Judges.


         A hospital in San Antonio brought various claims against insurance companies and third-party plan administrators for violations of ERISA. The district court dismissed all of the hospital's claims except for the claim for attorneys' fees. Because we hold that the hospital sufficiently pleaded its claims for ERISA plan benefits and state-law breach of contract (Claims I and V), we REVERSE the district court's judgment dismissing these claims and REMAND to the district court to consider these two claims, as well as the claim for attorneys' fees (Claim VIII). We AFFIRM the district court's judgment dismissing the hospital's ERISA claims under 29 U.S.C. § 1132(a)(3) (Claims II, III, and VII). We also AFFIRM the district court's judgment denying leave to amend the complaint out of time.


         In 2012, Innova Hospital San Antonio[1] (hereafter, the Hospital) sued multiple insurance companies and third-party plan administrators[2] (hereafter, the Insurers) in Texas state court. The Hospital brought the lawsuit as an assignee of the insurance benefits of the patients treated at its facility. The Hospital's original complaint alleged that the Insurers either failed to pay at all under various health-insurance plans or reduced the payment significantly. One of the Insurers timely removed the case to federal court on the basis of diversity jurisdiction and federal question jurisdiction under the Employee Retirement Income Security Act of 1974 (hereafter, ERISA).

         After one of the Insurers filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted, the Hospital filed an amended complaint. In the amended complaint, the Hospital alleged, among other things, that: (1) it provided medical services to patients covered by benefit plans either entered into or administered by the Insurers; (2) those patients assigned their right of payment of monies under their benefit plans to the Hospital; and (3) the Insurers either failed to reimburse the Hospital for covered claims or reimbursed the Hospital at significantly below the applicable rates. However, the amended complaint did not identify specific plans or specific plan language applicable to each claim. In response, the Insurers moved to dismiss for failure to state a claim, arguing that the Hospital needed to identify the provisions in specific plan documents that the Insurers allegedly breached.

         Prior to and during this time, the Hospital attempted-without success-to obtain the plan documents at issue from the Insurers. Two years before filing the lawsuit, the Hospital had sought to obtain relevant plan provisions from some of the Insurers. In 2012, after filing the lawsuit, the Hospital sent the Insurers requests for production seeking plan documents. Most of the Insurers objected to these requests and refused to produce the plan documents. The Insurers' reasons for objecting included arguments that: (1) current motions to dismiss for failure to state a claim were pending before the district court; (2) at least some of the documents were equally accessible to the Hospital; (3) the requests for production sought private information protected by HIPPA; (4) the requests were unduly burdensome; and (5) the requests sought information beyond what ERISA requires to be disclosed. A few Insurers provided plan documents, but apparently only after the case was administratively closed in early 2013.[3] In late 2013, after the parties were unable to reach a settlement, the case was reopened. The Hospital then sent renewed discovery requests seeking the plan documents at issue. Apparently before the Hospital received any such documents, the district court granted motions to dismiss and gave the Hospital about a month to amend its first amended complaint.

         In response to the Hospital's discovery requests for plan documents, some of the Insurers argued that, pursuant to the order dismissing the first amended complaint, the Hospital had no pending claims and therefore the Insurers were not required to respond to its discovery requests. These Insurers gave no legal reason for their refusal to produce plan documents except the dismissal order. The Hospital did not file a motion to compel or seek to obtain plan documents from patients. Instead, having been unable to obtain plan documents from the Insurers, the Hospital sent an attorney to the Department of Labor in an attempt to obtain the relevant documents. This effort proved unsuccessful. The Hospital's last effort was Internet research. This yielded two plans, which the Hospital alleged contained representative plan language. The Hospital incorporated this language into a second amended complaint.

         The Hospital filed its second amended complaint against sixteen of the insurance companies and third-party plan administrators. The complaint alleged claims relating to medical services provided in 863 separate instances to individual patients with benefit plans governed by either ERISA plans or non-ERISA contracts. The complaint alleged over $58 million in damages.

         Among other things, the second amended complaint alleged that: (1) the Hospital provided health care services to patients insured by the Insurers; (2) the Hospital is an out-of-network provider for the purposes of the claims here; (3)the Hospital verified coverage with the Insurers before providing services; (4)the Hospital received a valid assignment of benefits; (5) the Hospital timely submitted claims to the Insurers for payment; (6) the Insurers uniformly failed to pay the claims according to the terms of the employee welfare benefit plan documents or individual insurance policies; (7) many of the same coverage and payment provisions are used across different health plans; (8) the Insurers must pay out-of-network providers some version of the "reasonable and customary" amount or the "usual, customary, and reasonable" amount; (9) representative plan terms require reimbursement of out-of-network providers at 80% of "reasonable and customary" expenses after the deductible; and (10) the Insurers reimbursed the Hospital at an average rate of 11%. Like the two prior complaints, the second amended complaint did not include the actual plan language from any ERISA plan or non-ERISA contract at issue.

         The Insurers again moved to dismiss for failure to state a claim, arguing that the second amended complaint failed the plausibility pleading standard because the terms of the various benefit plans were essential allegations not included in the complaint. A month after the amended pleading deadline for filing the second amended complaint, a few of the Insurers attached some plans and portions of plans to their renewed motions to dismiss.

         The district court granted the motions to dismiss on the Hospital's claims for plan benefits under ERISA and breach of contract, reasoning that the Hospital's second amended complaint was insufficient because it did not identify the specific plan provisions at issue. In all, the district court granted the Insurers' motions to dismiss on five of the eight claims but denied the motions to dismiss on Claim IV (failure to provide information upon request), Claim VI (negligent misrepresentation), and Claim VIII (attorneys' fees).

         The Hospital filed a motion for leave to amend out of time, attaching to the motion a proposed third amended complaint that-now that more Insurers had produced plan documents post-dismissal-incorporated applicable plan language and spanned 390 pages, excluding attachments. The district court denied this request. The Hospital filed voluntary motions to dismiss the two claims and the part of the attorneys'-fees claim relating to Claim IV that had survived the earlier dismissal order. The district court granted this request. The Hospital then timely appealed.[4] At issue in this appeal are the following claims: Claim I: plan benefits under 29 U.S.C. § 1132(a)(1)(B); Claim II: failure to provide full and fair review under § 1132(a)(3); Claim III: violations of claims procedure under § 1132(a)(3); Claim V: state-law breach of contract; Claim VII: breach of fiduciary duty under § 1132(a)(3); and Claim VIII: attorneys' fees.[5]


         We review a dismissal for failure to state a claim de novo and a denial of leave to amend a complaint for abuse of discretion. Herrmann Holdings Ltd. v. Lucent Techs. Inc., 302 F.3d 552, 557-58 (5th Cir. 2002). Under Federal Rule of Civil Procedure 8, a plaintiff must simply give "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). On a motion to dismiss, we must "accept all well-pleaded facts as true and view those facts in the light most favorable to the plaintiff." Richardson v. Axion Logistics, L.L.C., 780 F.3d 304, 306 (5th Cir. 2015) (quoting Bustos v. Martini Club, Inc., 599 F.3d 458, 461 (5th Cir. 2010)). "Generally, a court ruling on a 12(b)(6) motion may rely on the complaint, its proper attachments, 'documents incorporated into the complaint by reference, and matters of which a court may take judicial notice.'" Wolcott v. Sebelius, 635 F.3d 757, 763 (5th Cir. 2011) (quoting Dorsey v. Portfolio Equities, Inc., 540 F.3d 333, 338 (5th Cir. 2008)).

         To survive a motion to dismiss, a complaint must contain sufficient factual matter which, when taken as true, states "a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. The facts alleged must "be enough to raise a right to relief above the speculative level, " but the complaint may survive a motion to dismiss even if recovery seems "very remote and unlikely." Twombly, 550 U.S. at 555-56 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). Thus, "the complaint must provide more than conclusions, but it 'need not contain detailed factual allegations.'" Turner v. Pleasant, 663 F.3d 770, 775 (5th Cir. 2011) (quoting Colony Ins. Co. v. Peachtree Const., Ltd., 647 F.3d 248, 252 (5th Cir. 2011)).


         A. ERISA Plan Benefits Under 29 U.S.C. § 1132(a)(1)(B)

         Section 502(a)(1)(B) of ERISA provides: "A civil action may be brought . . . by a participant or beneficiary . . . to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan . . . ." 29 U.S.C. § 1132(a)(1)(B); see also Aetna Health Inc. v. Davila, 542 U.S. 200, 210 (2004) (stating that under § 1132(a)(1)(B), "[i]f a participant or beneficiary believes that benefits promised to him under the terms of the plan are not provided, he can bring suit seeking provision of those benefits").

          The Hospital contends that the district court erred in dismissing its second amended complaint for failure to state a claim under § 1132(a)(1)(B). First, the Hospital argues that the district court's requirement that it plead specific plan language to survive a Rule 12(b)(6) motion to dismiss conflicts with the pleading requirements set forth in Twombly and Iqbal. According to the Hospital, the district court created a "heightened pleading standard" by requiring the Hospital to plead information that it did not have and could not access ...

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