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Nationwide DME, LLC v. Cigna Health & Life Insurance Co.

United States District Court, D. Arizona

September 30, 2015

Nationwide DME, LLC, Plaintiff,
v.
Cigna Health and Life Insurance Company, et al., Defendants

Page 1080

          For Nationwide DME LLC, on behalf of, Lyndsay McDaniel, on behalf of, Theodore Roy, on behalf of, Amber King, on behalf of, Brian Miller, on behalf of, Maria Ramirez, on behalf of, Susan Boudrealt, Plaintiff: Joseph A Creitz, Lisa Sharon Serebin, LEAD ATTORNEYS, Creitz & Serebin LLP, San Francisco, CA; Julio Medina Zapata, LEAD ATTORNEY, Zapata Law PLLC, Phoenix, AZ.

         For Cigna Health & Life Insurance Company, Connecticut General Life Insurance Company, Defendants: Ishra Khalifa Solieman, John C West, Robert Matthew Kort, LEAD ATTORNEYS, Brownstein Hyatt Farber Schreck LLP - Phoenix, AZ, Phoenix, AZ.

Page 1081

         ORDER

         Honorable Steven P. Logan, United States District Judge.

         Before the Court is Defendants' Motion to Dismiss (Doc. 32). The motion is fully briefed and, for the reasons that follow, will be denied.

         I. Background

         Plaintiff Nationwide DME, LLC (" Nationwide" ) is a supplier of durable medical equipment, in particular " prescription therapeutic programmable computerized pump[s] and related equipment." (Doc. 30 ¶ 8.)[1] These devices " are used to supply medically therapeutic compression, heat, and/or cold to various parts of the human body." (Doc. 30 ¶ 8.) Each type of pump is assigned a unique " Healthcare Common

Page 1082

Procedure Coding System" (" HCPCS" ) code. The HCPCS codes are used by equipment providers when billing patients. (Doc. 30 ¶ ¶ 9-10.)

         Nationwide alleges that its standard practice upon receiving a patient's prescription for a pump is to contact the patient's insurer or claims administrator and inquire whether the patient's health plan provides coverage, under the relevant HCPCS Code, for the type of pump prescribed. If the patient's health plan requires preauthorization for a pump, Nationwide seeks that preauthorization. Only once coverage is confirmed and any necessary preauthorization is obtained does Nationwide provide the patient with a pump. In connection with providing a pump, Nationwide obtains a written assignment of any benefits the patient may be eligible for under his or her health plan. After obtaining the assignment and providing the pump, Nationwide bills the patient's insurer or claims administrator. (Doc. 30 ¶ ¶ 12-16.)

         At issue here, is the application of Nationwide's standard practice in the case of thirty-seven individuals. (Doc. 30 ¶ 5.) These individuals allegedly participated in different group health plans,[2] all administered by Defendants Cigna Health and Life Insurance Company and Connecticut General Life Insurance Company (collectively " Cigna" ). In administering the plans, Cigna was responsible for making decisions regarding benefit eligibility. For each of the thirty-seven individuals, Nationwide contacted Cigna by telephone to determine whether payment would be provided for a pump.[3] For most of the patients, Cigna confirmed that it would pay for all three HCPCS codes. For some patients, however, Cigna stated it would only pay for certain HCPCS codes. Nationwide also discussed with Cigna representatives whether the patient's health plan required preauthorization. If required, Nationwide obtained that preauthorization. Nationwide then provided the thirty-seven individuals with pumps and billed Cigna. (Doc. 30 ¶ ¶ 13-17.)

         Cigna initially denied almost all of the thirty-seven individuals' claims. For the denied claims, Nationwide pursued the administrative appeals process and Cigna reversed itself on some of the claims. In doing so, Cigna admitted that representations made to Nationwide during phone calls " constituted promises to pay benefits." (Doc. 30 ¶ 17.) Thus, Cigna paid a small subset of claims. Eventually, however, Cigna realized there was ongoing confusion between what its phone representatives were telling Nationwide and what Cigna believed was actually covered by the various health plans. Consequently,

Page 1083

Cigna sent a letter regarding one patient's claim. (Doc. 30 ¶ 20; 49-50.) The letter explained the patient's claim was being paid " because the Cigna representative made an error" when stating " no precertification was required." However, Cigna would " not consider for payment any additional claims from [Nationwide]" under two HCPCS codes. (Doc. 30 ¶ 20; 49-50.) The letter also stated Nationwide could never " rely on any communications [with] a Cigna call representative" because those representatives " do not have the authority to bind Cigna to pay" claims. (Doc. 30 ¶ 20.)

         Consequently, Nationwide filed a First Amended Complaint in January 2015 (Doc. 30), bringing four causes of action.[4] In the first and second causes of action (Doc. 30 ¶ ¶ 21-35), Nationwide asserts state law claims for breach of contract and " promissory estoppel/breach of promise," based on allegations that Cigna made statements constituting " promises to pay Plaintiff its usual, reasonable, and customary charges for providing... durable medical equipment." (Doc. 30 ¶ 22.) Nationwide brings these claims on its own behalf, alleging that a contract existed between it and Cigna whereby Cigna agreed to pay for the pumps. In the third and fourth causes of action, Nationwide brings federal claims under ERISA, see infra. Unlike its state law claims, Nationwide asserts the ERISA claims as the assignee of the individuals covered by the health plans. First, Nationwide brings an ERISA claim for benefits under the terms of the various health plans. (Doc. 30 ¶ ¶ 36-46.) Second, Nationwide brings an ERISA claim for " estoppel and breaches of fiduciary duty." (Doc. 30 ¶ ¶ 47-56.) This latter claim asserts two distinct theories. Under the estoppel theory, Nationwide claims it relied on Cigna's verbal representations and Cigna should be estopped from refusing payment. Under the breach of fiduciary duty theory, Nationwide claims Cigna breached its fiduciary duty by providing inaccurate information and interpreting identical plan language as sometimes covering the pumps, while at other times not.

         Cigna moves to dismiss Nationwide's two state law claims pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure on the basis that they are preempted by federal law.

         II. ...


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