United States District Court, M.D. Louisiana
JOHN W. deGRAVELLES UNITED STATES DISTRICT JUDGE
matter comes before the Court on Omega Hospital, LLC's
(“Omega” or “Plaintiff”) motion for
reconsideration of the Court's September 11, 2018 ruling
on United Healthcare Services, Inc. and United Healthcare of
Louisiana, Inc.'s (collectively “United” or
“Defendants”) motion to dismiss and motion for
leave of court to amend its complaint. (Doc. 92). The
September 11, 2018 ruling (Doc. 90) on United's motion to
dismiss (Doc. 67) dismissed all remaining claims by Omega
against United for alleged violations of the Employee
Retirement Income Security Act of 1974, 29 U.S.C. §
1001, et seq. (“ERISA”) and Louisiana
state law. United opposes Omega's motion for
reconsideration and motion for leave of court to amend. (Doc.
94). Omega filed a reply. (Doc. 99). After carefully
considering the law and the parties' arguments, the Court
grants Omega's Rule 15(a) motion for leave of court to
amend and denies Omega's Rule 59(e) motion for
Relevant Facts and Procedural History
filed its complaint on August 24, 2016. (Doc. 1). Omega is a
hospital and surgical center that treats patients whose
healthcare benefit plans are insured and/or administered by
United. Omega treats United's insureds on an
out-of-network basis, which means that Omega does not have a
pre-existing provider contract with United. Omega, as the
assignee of a class of its patients, alleged that United
violated ERISA and Louisiana state law in an alleged scheme
for reimbursement and recoupment of alleged overpayments made
by United. (Doc. 1). United responded with a motion to
dismiss under Rule 12(b)(1) and 12(b)(6) on November 1, 2016.
(Doc. 11). United's initial motion to dismiss was opposed
by Omega (Doc. 20), and oral argument was heard on August 10,
2017. (Doc. 35).
ruling on United's initial motion to dismiss was issued
by Judge Brady on September 22, 2017. (Doc. 37). This Court
denied United's motion under Rule 12(b)(1) and found that
Omega had standing to proceed with its claims of violation of
ERISA and state law. Specifically, the Court found that Omega
had sufficiently plead a valid assignment. (Doc. 38 at 4-6).
Under Rule 12(b)(6), the Court found that “Omega's
Complaint lack[ed] necessary specificity and fail[ed] to
provide proper factual support of certain allegations.”
(Doc. 38 at 6-7). The Court allowed Omega time to
“amend its Complaint to allege with specificity the
dates of service and claim numbers at issue with respect to
the identified patients”. (Doc. 38 at 7). United was,
in turn, ordered to provide all plan information within a
designated time period. Omega was then further ordered to
amend its Complaint to “clarify and specify the class
it purports to represent”. (Doc. 38 at 7). Finally,
with regard to Omega's claims pursuant to state law, the
Court dismissed the state law claims brought on behalf of
ERISA-plan participants. The Court also dismissed the state
law claims brought on behalf of non-ERISA plan participants
without prejudice subject to Omega's leave to amend those
allegations. (Doc. 38 at 9).
October 20, 2017, Omega amended its Complaint pursuant to the
Court's Order. (Doc. 41).
a re-assignment of this matter to Judge deGravelles, United
filed its second motion to dismiss. (Doc. 67). United sought
dismissal based on the following grounds: (1) Omega lacked
standing to bring this case; (2) Omega failed to exhaust
administrative remedies; (3) Omega failed to state plausible
ERISA claims; (4) the Court lacked supplemental jurisdiction
over Omega's state law claims; and (5) alternatively,
Omega's state law claims were implausible and the breach
of contract claim was preempted by ERISA. (Doc. 67-1). Omega
opposed the motion and did not seek leave of court to amend
its Complaint a second time. (Doc. 76).
an analysis of Omega's amended Complaint, the arguments
of the parties, and the law, the Court granted United's
second motion to dismiss in part and denied it in part. (Doc.
90). The Court found that: (1) United's anti-assignment
provisions were invalidated by La. Rev. Stat. § 40:2010,
(Doc. 90 at 14), and La. Rev. Stat. § 40:2010 was not
preempted by Gobeille v. Liberty Mutual Ins. Co.,
136 S.Ct. 936 (2016), (Doc. 90 at 18); (2) an assignment may
confer both authorized representative and assignee status to
a provider, such as Omega, (Doc. 90 at 20); (3) Omega lacked
standing to assert any ERISA claims on LL's behalf and
those claims were dismissed without prejudice, (Doc. 90 at
22); (4) Omega lacked derivative standing to assert its
Section 502(a)(3)(A) breach of fiduciary duty claim seeking
prospective relief and Section 502(a)(3)(B) breach of
fiduciary duty claim seeking unjust enrichment due to
United's failure to comply with the terms of the Plans
because the assignment did not contain express reference to
fiduciary duty claims or future rights, (Doc. 90 at 27); (5)
Omega sufficiently alleged that exhaustion should be excused
due to United's failure to provide meaningful access to
administrative remedies, (Doc. 90 at 30); (6) Omega's 29
U.S.C. § 1132(A)(1)(B) claim was dismissed because Omega
did not plausibly plead that it is entitled to benefits
recouped by cross-plan offsetting, (Doc. 90 at 32-33); (7)
Omega's Section 503 claim was dismissed because Omega
alleged that United is the “Plan Administrator”,
not the “Plan”, (Doc. 90 at 35-36); and (8)
Omega's claims of breach of contract and negligent
misrepresentation were dismissed because the Court declined
to exercise supplemental jurisdiction over the remaining
state law claims. (Doc. 90 at 36).
current motion requests that the Court reconsider its ruling
on the following grounds: (1) Omega inartfully plead the
activity engaged in by United and the injury caused by
United's “recoupment scheme”; (2) the Court
accepted United's version of events which was contrary to
Omega's contentions; (3) the United States Supreme Court
decision of Montanile v. Board of Trustees of Nat.
Elevator Industry Health Plan, 136 S.Ct. 651, 193
L.Ed.2d 556 (2016), vindicates Omega's theory for
recovery; and (4) the Court may have erred legally regarding
the express assignment of the claim for breach of fiduciary
duty. (Doc. 92-1 at 2). Additionally, Omega argues that it
amended its Complaint in response to the Court's
September 22, 2017 ruling, which included a specific scope of
amendment. Omega suggests that because the ruling did not
address any issue with Omega's legal theory and did not
order Omega to name the assignments from patients whose
accounts were used as the vehicle for United to recover the
overpayments, Omega did not take the liberty of making such
amendments. Therefore, Omega also moves the Court under Rule
15(a) to grant it leave of court to amend the Complaint to
correct the pleading deficiencies “identified by the
Court”. (Doc. 92-1 at 2).
opposes Omega's motion under Rule 59(e) and under Rule
15(a). (Doc. 94). United argues that Montanile has
“no bearing” on United's offsetting
practices, and offsetting is permissible under ERISA and
upheld by the courts. (Doc. 94 at 3-4). United also argues
that no one is injured when United recoups overpayments;
therefore, Omega's claims are implausible. (Doc. 94 at
4-5). United maintains that Omega has no standing for
fiduciary breach claims. (Doc. 94 at 5-7). Finally, United
opposes Omega's motion to amend its complaint as any
amendment would be futile. (Doc. 94 at 7-10).
filed a reply arguing that: (1) United has mischaracterized
Omega's claims in order to support United's position
that Omega lacks standing. Omega's benefit claim seeks
simply to recover benefits once paid on behalf of its
representative patients but now taken away through a
retroactive benefit redetermination. Omega's assignments
provide derivative standing in the same manner that Omega
could have pursued if United had issued the retroactive
explanation of benefits initially. Omega cites to
Peterson v. Unitedhealth Group, Inc., 242 F.Supp.3d
834 (D.Minn. Mar. 14, 2017), which is almost identical to the
instant matter, but has previously been distinguished by this
Court in its September 11, 2018 ruling. (Doc. 99 at 1-2). (2)
The Fifth Circuit Court of Appeals, in Manuel v. Turner
Industries Group, L.L.C., 905 F.3d 859 (5th Cir. 2018),
recognized Montanile in its decision.
Manuel suggests that United cannot pursue equitable
relief to recoup overpayments absent an ability to trace the
overpaid funds to their source. Omega argues that United
recouped against Omega's general assets and not the
specific traceable funds it allegedly overpaid. Omega urges
the Court to reconsider its prior analysis in light of
Montanile, Manuel, and Estate of Barton
v. ADT Sec. Services Pension Plan, 837 F.3d 1014 (9th
Cir. 2016). (Doc. 99 at 3-6). (3) The Court improperly
construes 29 U.S.C. § 1133 in finding that claims under
this section only apply to the plan, and not to plan
administrators. Omega argues that this is contrary to legal
authority from the Fifth Circuit Court of Appeals. (Doc. 99
at 8). (4) Omega argues five specific amendments that it is
prepared to make that will “easily cure” the
remaining defects, and this amendment is “favored in
the interest of justice”. (Doc. 99 at 7-8 and 10).
Standard for Motion for Reconsideration under Rule
the Federal Rules of Civil Procedure do not formally
recognize the existence of motions for reconsideration
(e.g., Van Skiver v. United States, 952 F.2d 1241,
1243 (10th Cir. 1991)), courts customarily consider such
motions under Rule 60(b) or Rule 59(e). Fuller v. M.G.
Jewelry, 950 F.2d 1437, 1442 (9th Cir. 1991). Rule 59(e)
of the Federal Rules of Civil Procedure allows a party to
move to alter or amend a judgment within twenty-eight (28)
days of its entry. Fed. R. Civ. Proc. 59(e).
courts have considerable discretion in deciding whether to
grant a Rule 59(e) motion. Edward H. Bohlin Co., Inc. v.
Banning Co., Inc., 6 F.3d 350, 355 (5th Cir. 1993). The
factors to be considered in a Rule 59(e) analysis are: (1)
the judgment is based upon a manifest error of fact or law;
(2) newly discovered or previously unavailable evidence
exists; (3) the initial decision was manifestly unjust; (4)
counsel engaged in serious misconduct; and (5) an intervening
change in law alters the appropriate outcome. Livingston
Downs Racing Ass'n, Inc. v. Jefferson Downs Corp.,
259 F.Supp.2d 471, 475-76 (M.D. La. 2002) (citing
Metairie Bank & Trust Co. v. Payne, 2000 WL
979980 (E.D. La. July 17, 2000); Campbell v. St. Tammany
Parish School Bd., 1999 WL 777720 (E.D. La. Sept. 29,
1999)). However, a motion for reconsideration is an
extraordinary remedy and should be used sparingly in the
interest of finality and conservation of judicial resources.
Carroll v. Nakatani, 342 F.3d 943, 945 (9th Cir.
2003). The court should deny a motion for reconsideration
when the movant rehashes legal theories and arguments that
were raised or could have been raised before the entry of the
judgment. See Templet v. HydroChem Inc., 367 F.3d
473, 478-79 (5th Cir. 2004). A motion for reconsideration
does not support old arguments that are reconfigured.
Resolution Trust Corp. v. Holmes, 846 F.Supp. 1310,
1316, n.18 (S.D. Tex. 1994). Mere disagreement with a prior
ruling does not support a Rule 59(e) motion. See e.g.,
Hutchinson v. Staton, 994 F.2d 1076, 1082 (4th Cir.
in the Fifth Circuit are directed to take motions under Rule
59(e) seriously. Two cases note that Rule 59(e) does not
place any particular limitations upon the possible grounds
for relief. Ford v. Elsbury, 32 F.3d 931, 937 (5th
Cir. 1994); Lavespere v. Niagara Mach. & Tool Works,
Inc., 910 F.2d 167, 174 (5th Cir. 1990), cert.
denied, 510 U.S. 859, 114 S.Ct. 171, 126 L.Ed.2d 131
(1993), abrogated on other grounds by Little v. Liquid
Air Corp., 37 F.3d 1069 (5th Cir. 1994)(en
banc). The Court notes the Fifth Circuit's general
principle that “the district court must strike a proper
balance between two competing interests: ‘the need to
bring litigation to an end and the need to render just
decisions.'” Ford v. Elsbury, 32 F.3d at
937 (quoting Lavespere, supra).
Standard for Motion for Leave of Court to Amend under Rule
also seeks leave of Court to amend the Complaint a second
time under Rule 15(a). “The court should freely give
leave when justice so requires”. FRCP 15(a)(2). Omega
highlights that it has only amended its Complaint one prior
time pursuant to the instructions of Judge Brady in the
Court's ruling on United's first motion to dismiss.
The ruling grants Omega leave of court to amend its complaint
a first time to “cure the deficiencies noted by the
Court”. (Doc. 38 at 90). Omega strictly adhered to the
ruling and amended the Complaint solely to “allege with
specificity the dates of service and claim numbers at issue
with respect to the identified patients” and to
“clarify and specify the class it purports to
represent”. (Doc. 38 at 7). With this one limited
amendment in mind, Omega urges the Court to grant it leave to
amend the Complaint in whole to address all deficiencies
under Rule 15(a).
Rule 15(a) standard is “more permissive” than the
standard of Rule 59(e). DeGruy v. Wade, 586
Fed.Appx. 652, 655 (5th Cir. 2014). When a court is faced
with a motion under both Rule 59(e) and Rule 15(a), the Fifth
Circuit has stated that it is proper to analyze the motion
under each rule. Id. While Rule 59(e) motions
“must clearly establish either a manifest error of law
or fact or must present newly discovered evidence, ”
Rosenzweig v. Azurix Corp., 332 F.3d 854, 864 (5th
Cir. 2003), a motion to amend under Rule 15(a)
“permit[s] liberal amendment to facilitate
determination of claims on the merits.” Dussouy v.
Gulf Coast Inv. Corp., 660 F.2d 594, 598 (5th Cir.
1981). Where a district court has entered a judgment on the
pleadings and the plaintiff moves under Rule 59(e) to vacate
the judgment and amend the complaint, the court should also
analyze the motion under the more liberal Rule 15(a)
standard. Rosenzweig, 332 F.3d at 864;
Dussouy, 660 F.2d at 597, n.1; Jumonville v.
Department of Treasury, 50 F.3d 1033, *2 (5th Cir. 1995)
(citing Southern Constructors Group, Inc. v. Dynalectric
Co., 2 F.3d 606, 611 (5th Cir. 1993)).
leave to amend under Rule 15(a) is to be freely given, that
generous standard is tempered by the necessary power of a
district court to manage a case. See Shivangi v. Dean
Witter Reynolds, Inc., 825 F.2d 885, 891 (5th Cir.
1987). In deciding whether to grant leave to amend, the
district court may consider a variety of factors in
exercising its discretion, including undue delay, bad faith
or dilatory motive on the part of the movant, repeated
failures to cure deficiencies by amendments previously
allowed, undue prejudice to the opposing party by virtue of
allowance of the amendment, and futility of the amendment.
Id. at 891; DeGruy, 586 Fed.Appx. at 656.
with these principles in mind that the Court addresses
Omega's motion for reconsideration and for leave of court
to amend its Complaint.
The Parties' Arguments
were two general, over-arching issues for Omega on the
underlying motion to dismiss: (1) standing; and (2) whether
Omega plausibly plead United's “recoupment
scheme” and how/whether it injured the Plaintiffs.
Based on the record that was before the Court at the time of
ruling on United's motion, the matter was dismissed.
(Doc. 90). Omega now comes before this Court urging a
reconsideration of this ruling because, in general, Omega
believes that the Court misunderstood Omega's case as a
whole, resulting in an incorrect ruling. Omega argues that
this misunderstanding arose not only from the Court
subscribing to United's mischaracterization of the
“recoupment scheme”, but also due to Omega's
“inartful pleading” which Omega admits did not
assist the Court in properly considering the motion or the
record before it. (Doc. 92-1 at 2; Doc. 99 at 7). Omega
attempts to better explain its case and allegations,
suggesting that clarity will render a more just result. (Doc.
99 at 8).
of the “Recoupment Scheme”
argues that the ruling on the motion to dismiss stemmed from
a misunderstanding that Omega alleges a breach of fiduciary
duty claim, and, therefore, the customary derivative standing
analysis should be applied. Omega suggests that a proper
understanding of its claims should result in a ...