REED O'CONNOR, District Judge.
Before the Court are Defendants Blue Cross of California, Anthem Health Plans, Inc., Community Insurance Company, Anthem Health Plans of Kentucky, Inc., Anthem Blue Cross Life and Health Insurance Company, Anthem Health Plans of Virginia, Inc., Blue Cross and Blue Shield of Georgia, Inc., and Anthem Insurance Companies, Inc.'s (collectively "Anthem Defendants") Motion to Dismiss Plaintiffs' First Amended Complaint and Brief in Support (ECF Nos. 43, 43-1), filed September 7, 2012; Plaintiffs Innova Hospital San Antonio, L.P. and Victory Medical Center Houston, L.P.'s (collectively "Plaintiffs") Response in Opposition to Anthem Defendants' Motion to Dismiss and Brief in Support (ECF Nos. 96, 98), filed October 29, 2012; and Anthem Defendants' Reply (ECF No. 105), filed November 12, 2012.
After reviewing the motions and the applicable law, the Court finds Anthem Defendants' Motion to Dismiss (ECF No. 43), BCBS Defendants' Motion to Dismiss (ECF No. 48); BCBS Tennessee's Motion to Dismiss (ECF No. 53); and BCBS Kansas's Motion to Dismiss (ECF No. 106) should be and are hereby
Plaintiffs are Texas limited partnerships that provide medical services in the fields of spinal, bariatric, and orthopedic medicine in San Antonio and Houston, Texas. Pls.' 1st Am. Compl. ¶¶ 1-2, ECF No. 35. Plaintiffs filed this lawsuit against thirty-three "plan administrators in the Blue Cross Blue Shield family of insurance companies" (collectively "Defendants") who insured patients that received medical services from Plaintiffs. Id. ¶¶ 3-34, 36-37. Plaintiffs assert that they conducted an initial intake interview with the patients prior to rendering medical services and contacted Defendants "to verify that the patients were covered under the Defendants' health benefit plans" and "to verify that the services ... were covered under the insureds' various plans." Id. ¶ 37. Plaintiffs allege Defendants verified the services were covered under the various plans before Plaintiffs provided any medical services. Id. Plaintiffs also allege that Plaintiffs required all patients to execute an assignment of benefits form before medical services were provided. Id. ¶ 38.
Plaintiffs allege they submitted claims to the Defendants for payment and billed their "usual and customary charges" after the medical services were provided. Id. ¶ 39. Plaintiffs assert that they provided the medical services in good faith, in part based on the representations by Defendants during the verification process. Id. Plaintiffs allege, however, that Defendants "often either wholly denied Plaintiffs' claims for payment or unilaterally reduced the amount of payment to an unacceptable and unsustainable level." Id. Accordingly, Plaintiffs filed the instant lawsuit "for the underpayment and/or non-payment of reimbursement amounts pursuant to the terms of various health benefit plans administered by Defendants." Id. ¶ 41.
Plaintiffs' First Amended Complaint asserts four causes of action against the Defendants.
Federal Rule of Civil Procedure 8(a) requires a plaintiff's pleading to include "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). "[T]he pleading standard Rule 8 announces does not require `detailed factual allegations,' but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)); see also Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 232 (5th Cir. 2009) ("[A] complaint ... must provide the plaintiff's grounds for entitlement to relief — including factual allegations that when assumed to be true raise a right to relief above the speculative level.") (internal quotation marks and citations omitted). If a plaintiff fails to satisfy Rule 8(a), the defendant may file a motion to dismiss the claims under Federal Rule of Civil Procedure 12(b)(6) for "failure to state a claim upon which relief may be granted." Fed. R.Civ.P. 12(b)(6).
To defeat a motion to dismiss pursuant to Rule 12(b)(6), a plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570, 127 S.Ct. 1955. "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 663, 129 S.Ct. 1937 (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955). "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." Id. (quoting Twombly, 550 U.S. at 556, 127 S.Ct. 1955). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the compliant has alleged — but it has not `show[n]' — `that the pleader is entitled to relief.'" Id. at 679, 129 S.Ct. 1937 (quoting Fed.R.Civ.P. 8(a)).
Anthem Defendants assert that Plaintiffs' First Amended Complaint is "devoid of any factual basis with which to support its contentions."
Plaintiffs' ERISA and breach of contract claims are based on their alleged status as assignees of the rights of the patients that received medical services from Plaintiffs. See Pls.' 1st Am. Compl. ¶¶ 47, 62, ECF No. 35. While the Anthem Defendants do not dispute that an insured may assign rights under a health insurance plan to a medical provider, see Reply 5, ECF No. 105, Anthem Defendants assert Plaintiffs failed to adequately show that they have standing to assert the rights of the patients
A medical provider cannot enforce the terms of a healthcare plan on its own account, Christus Health Gulf Coast v. Aetna, Inc., 347 S.W.3d 726, 734 (Tex. App.-Houston [14th Dist.] 2011), aff'd, 397 S.W.3d 651 (Tex.2013), but a provider may have standing to sue derivatively to enforce an ERISA plan beneficiary's claim through a valid assignment. N. Cypress Med. Ctr. Operating Co. v. CIGNA Healthcare, 782 F.Supp.2d 294, 300 (S.D.Tex. 2011); see also Tango Transp. v. Healthcare Fin. Servs. LLC, 322 F.3d 888, 891-92 (5th Cir.2003). A provider may maintain a breach of contract claim if it establishes that the defendant was "a party to an enforceable contract with ... a party who assigned its cause of action to the plaintiff." First-Citizens Bank & Trust Co. v. Greater Austin Area Telecomms. Network, 318 S.W.3d 560, 566 (Tex.App.-Austin 2010, no pet.) (internal quotation marks and citation omitted). Accordingly, "[t]o state a basis to recover under ERISA or for breach of an insurance policy, [a medical provider] must plead that the patients covered under the plan or policy assigned their rights to [the provider]." Electrostim Med. Servs., Inc. v. Health Care Serv. Corp., 962 F.Supp.2d 887, 905, 2013 WL 3980582, at *14 (S.D.Tex.2013) (citing Franco v. Conn. Gen. Life Ins. Co., 818 F.Supp.2d 792, 811 (D.N.J.2011); Christus Health Gulf Coast, 347 S.W.3d at 734).
Accepting as true all of Plaintiffs' allegations, the Court finds that Plaintiffs adequately alleged standing as an assignee of the ERISA and non-ERISA plans. N. Cypress Med. Ctr., 782 F.Supp.2d at 301. Plaintiffs allege they required all patients to "execute an assignment of benefits form prior to receiving healthcare services," and that Plaintiffs received an assignment of benefits from the patients. Pls.' 1st Am. Compl. ¶¶ 38, 47-49, 62, ECF No. 35. Plaintiffs also allege that they had the right to enforce the terms of the plans and recover the benefits due under the plans. Id. ¶¶ 47-51, 62. Compare Encompass Office Solutions, Inc. v. Conn. Gen. Life Ins. Co., No. 3:11-cv-02487-L, 2012 WL 3030376, at *4 (N.D.Tex. July 25, 2012) (holding allegations in complaint alleging "[plaintiff] possesses ... Assignments of Benefits from each patient on behalf of whom [plaintiff] asserts claims herein" were sufficient to establish standing based on assignment), and N. Cypress Med. Ctr., 782 F.Supp.2d at 301-02 (finding provider adequately pleaded valid assignment where complaint alleged provider "obtains an Assignment of Benefits and Rights that makes [provider] a beneficiary of the ERISA plan and the non-ERISA contracts"), with Electrostim Med. Servs., 962 F.Supp.2d at 905, 2013 WL 3980582, at *14 (noting provider failed to plead valid assignment where complaint "contain[ed] no assignment allegations"). Therefore, the Court finds Plaintiffs sufficiently pleaded standing based on an assignment of rights.
Plaintiffs first cause of action is brought under Section 502(a) of ERISA "to recover benefits due[,] ... to enforce the rights[,]... [and] to clarify the rights to future benefits ... under the terms of the [ERISA-governed plans]...." Pls.' 1st Am. Compl. ¶¶ 47-49, ECF No. 35. Plaintiffs assert Anthem Defendants are liable for breaching ERISA-governed plans by failing to make payments as required under the terms of the plans. Id. ¶¶ 51-52. Anthem Defendants argue Plaintiffs' ERISA claim should be dismissed because Plaintiffs fail to identify plan language that shows Plaintiffs are entitled to additional benefits under the plans. See Br. Supp. Mot. Dismiss 13, ECF No. 43-1.
Under Section 502(a), a participant or beneficiary in an ERISA-governed plan may bring a civil action "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). Section 502(a) is "relatively straightforward":
Aetna Health Inc. v. Davila, 542 U.S. 200, 210, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004) (quoting Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989)) (internal quotation marks omitted); see also Heimeshoff v. Hartford Life & Acc. Ins. Co., ___ U.S. ___, 134 S.Ct. 604, 612, 187 L.Ed.2d 529 (2013) ("[W]e have recognized the particular importance of enforcing plan terms as written in [Section] 502(a)(1)(B) claims.") (citing CIGNA Corp. v. Amara, ___ U.S. ___, 131 S.Ct. 1866, 1876-77, 179 L.Ed.2d 843 (2011)).
The phrase "terms of the plan" is "[w]orthy of emphasis" because parties derive rights to benefits from the plan, Aaron v. Leday, No. 4:13-cv-01716, 2013 WL 5936623, at *2 (S.D.Tex. Nov. 5, 2013) (citing Firestone Tire & Rubber Co., 489 U.S. at 113, 109 S.Ct. 948; Schadler v. Anthem Life Ins. Co., 147 F.3d 388, 394 (5th Cir. 1998)), and Section 502(a) only authorizes enforcement of the "terms of the plan." Koehler v. Aetna Health Inc., 683 F.3d 182, 189 (5th Cir.2012) (citing CIGNA Corp., 131 S.Ct. at 1878) (internal quotation marks omitted); see also Lone Star OB/GYN Assocs. v. Aetna Health Inc., 579 F.3d 525, 529 n. 3 (5th Cir.2009) ("A healthcare provider suing on the basis of assignment of ERISA rights, benefits or claims from a plan member must proceed under the procedures established by [Section] 502(a), as the provider is seeking to enforce the terms of the plan.") (internal citation omitted). Accordingly, to assert a claim for benefits under ERISA, a plaintiff must "identify a specific plan term that confers the benefits in question." Paragon Office Servs., LLC v. UnitedHealthcare Ins. Co., No. 3:11-cv-2205-D, 2012 WL 5868249, at *2 (N.D.Tex. Nov. 20, 2012) (Fitzwater, C.J.) (citing Stewart v. Nat'l Educ. Ass'n, 404 F.Supp.2d 122, 130 (D.D.C.2005), aff'd, 471 F.3d 169 (D.C.Cir. 2006)) (internal quotation marks omitted); see also Ctr. for Reconstructive Breast
Plaintiffs generally allege that Anthem Defendants failed "to make payments of benefits to [Plaintiffs] ... as required under the terms of the [ERISA-governed] plans," Pls.' 1st Am. Compl. ¶ 51, ECF No. 35, and argue the Claim Schedule "gives more than sufficient detail... of each patient claim." Br. Supp. Resp. Opp'n Mot. Dismiss 15, ECF No. 98; see also Pls.' 1st Am. Compl. ¶¶ 47-53, ECF No. 35. Plaintiffs acknowledge that Section 502(a) allows a beneficiary to seek provision of "benefits promised to him under the terms of the plan," Br. Supp. Resp. Opp'n Mot. Dismiss 16, and seek "to recover benefits due ... under the terms of the plans" and "to enforce the rights ... under the terms of the plans," Pls.' 1st Am. Compl. ¶¶ 47-48, ECF No. 35. Plaintiffs do not, however, identify the terms of the plans that were allegedly breached.
Furthermore, the Claim Schedule provides information about patient claims and charges, but does not provide facts about the benefits due under the terms of the plans or provide factual allegations about the terms of the plans to show that Anthem Defendants breached the plans. See Pls.' 1st Am. Compl. Exs. 1-2 (Claim Schedule), ECF Nos. 35-1, 35-2. Plaintiffs' general allegations that Anthem Defendants did not reimburse the amounts
The First Amended Complaint and Claim Schedule allege Anthem Defendants failed to pay reimbursements required by the plans and that Plaintiffs are entitled to additional payment under the plans, but do not identify facts about Plaintiffs' rights under the plans or how Anthem Defendants violated the plans. Plaintiffs fail to allege facts that allow the Court to reasonably infer that Anthem Defendants violated the terms of the plans and that Plaintiffs are entitled to recover benefits, enforce their rights, or clarify their rights to future benefits "under the terms of the plan[s]." 29 U.S.C. § 1132(a)(1)(B). Accordingly, the Court finds that Plaintiffs fail to state a claim under ERISA.
Plaintiffs second cause of action alleges Anthem Defendants breached the health benefits plans not governed by ERISA by failing to pay the reimbursement rate "required by the contracts." Pls.' 1st Am. Compl. ¶¶ 62-63, ECF No. 35. Anthem Defendants argue Plaintiffs' conclusory allegations that Anthem Defendants breached unidentified terms of the plans are insufficient to state a claim. See Br. Supp. Mot. Dismiss 15-16, ECF No. 43-1. Plaintiffs counter that the pleadings provide sufficient notice and state that they are not required to outline all the elements of their claim. Br. Supp. Resp. Opp'n Mot. Dismiss 17-19, ECF No. 98 (quoting Walker v. S. Cent. Bell Tel. Co., 904 F.2d 275, 277 (5th Cir.1990)).
To establish a breach of contract cause of action, a plaintiff must show "(1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of contract by the defendant; and (4) damages suffered by the plaintiff as a result of the breach." Beauty Mfg. Solutions Corp. v. Ashland, Inc., 848 F.Supp.2d 663, 667 (N.D.Tex. 2012) (Fish, J.) (citing Mullins v. TestAmerica, Inc., 564 F.3d 386, 418 (5th Cir. 2009); Aguiar v. Segal, 167 S.W.3d 443, 450 (Tex.App.-Houston [14th Dist] 2005, pet. denied)). Anthem Defendants argue Plaintiffs failed to plead facts showing performance was tendered and failed to identify provisions that were breached. See Br. Supp. Mot. Dismiss 15-16, ECF No. 43-1.
"A breach of contract ... only occurs when a party fails or refuses to perform an act that it expressly promised to do." Gonzales v. Columbia Hosp. at Med. City Dall. Subsidiary LP, 207 F.Supp.2d 570, 575 (N.D.Tex.2002) (Solis, J.) (citing Methodist Hosps. of Dall. v. Corporate Communicators, Inc., 806 S.W.2d 879, 882 (Tex.App.-Dallas 1991, writ denied)). To plead a breach of contract claim, a plaintiff must identify a specific provision of the contract that was allegedly breached. See, e.g., Watson v. Citimortgage, Inc., 814 F.Supp.2d 726, 732 (E.D.Tex.2011); Motten v. Chase Home Fin., 831 F.Supp.2d 988, 1003-04 (S.D.Tex. 2011); Encompass Office Solutions, 775 F.Supp.2d at 953-54; Am. Realty Trust, Inc. v. Travelers Cas. & Sur. Co. of Am., 362 F.Supp.2d 744, 753 (N.D.Tex.2005) (Godbey, J.); see also Bayway Servs., Inc. v. Ameri-Build Constr., L.C., 106 S.W.3d 156, 160 (Tex.App.-Houston [1st Dist.] 2003, no pet.) ("A petition in an action based on a contract must contain a short
Plaintiffs allege Anthem Defendants were "required to abide by the terms and conditions of the contracts ... [and] materially breached the terms of the contracts" by paying reimbursements that were "substantially less ... than what [wa]s actually owed" under the plans. Pls.' 1st Am. Compl. ¶¶ 45, 63, ECF No. 35. Plaintiffs are not required to outline all the elements of the claim, but Plaintiffs must provide enough factual allegations to draw the reasonable inference that the elements exist. See Patrick v. Wal-Mart, Inc.-Store No. 155, 681 F.3d 614, 617 (5th Cir.2012); Constantine v. Am. Airlines Pension Benefit Plan, 162 F.Supp.2d 552, 554 (N.D.Tex.2001) (Mahon, J.); see also Wilson v. Birnberg, 667 F.3d 591, 595 (5th Cir.2012) ("[P]laintiffs must allege facts that support the elements of the cause of action in order to make out a valid claim.") (internal quotation marks and citation omitted); Torch Liquidating Trust ex rel. Bridge Assocs. L.L.C. v. Stockstill, 561 F.3d 377, 384 (5th Cir.2009) ("[T]he complaint must contain either direct allegations or permit properly drawn inferences to support every material point necessary to sustain recovery....") (internal quotation marks and citations omitted).
Plaintiffs failed to allege enough facts about the terms of the plans to raise their right to relief above the speculative level. Bell Atl. Corp. v. Twombly, 550 U.S. at 555, 127 S.Ct. 1955. Plaintiffs do not identify what provisions were breached or provide factual allegations about the terms of the plans. Plaintiffs' claim is based on their conclusion that Anthem Defendants failed to pay the reimbursement rate "required by the contracts" or the "contractually agreed upon amounts," but Plaintiffs do not allege what rates were required or contractually agreed upon by the parties. Pls.' 1st Am. Compl. ¶ 63, ECF No. 35. Compare Hurd v. BAC Home Loans Servicing, LP, 880 F.Supp.2d 747, 759 (N.D.Tex.2012) (Lynn, J.) (finding plaintiff stated plausible claim where complaint discussed specific contract provisions allegedly breached), Watson, 814 F.Supp.2d at 732 (stating plaintiffs sufficiently alleged breach of contract claim where complaint alleged defendant failed to abide by specific contractual provision), Hoffman v. L & M Arts, 774 F.Supp.2d 826, 836-37 (N.D.Tex.2011) (Fitzwater, C.J.) (finding plaintiff alleged plausible claim where she identified "particular provision in question" and "particular acts or omissions" that breached contract), and Encompass Office Solutions, 775 F.Supp.2d at 953-54 (finding plaintiff "identified plan provisions in... a [sufficient] manner" and alleged "enough facts about plan provisions to make its breach of contract claim plausible"), with Electrostim Med. Servs., Inc. v. Health Care Serv. Corp., 962 F.Supp.2d at 902, 2013 WL 3980582, at *11 (finding plaintiff failed to allege plausible basis for relief where complaint "contain[ed] no factual allegations that the denials were improper or incorrect"), Motten, 831 F.Supp.2d at 1003-04 (noting plaintiffs failed to specify "key terms" of contracts and "what and how they were breached"), Hoffman, 774 F.Supp.2d at 837 (noting plaintiff failed to plead a plausible claim because she did not allege "specific act or omission of [defendant] that failed to comply with its obligations"), and Am. Realty Trust, 362 F.Supp.2d at 753 (dismissing complaint that neither attached nor referenced disputed contract; finding complaint did not give "adequate notice as to the nature and scope of the breach of contract claim").
Plaintiffs rely on the Claim Schedule attached to their First Amended Complaint
Plaintiffs' allegations that they did not receive the reimbursements owed under the plans and their general conclusion that "the acts and omissions on part of [Anthem] Defendants noted hereinabove constitute breaches of contract" are not sufficient to state a claim for relief. See Pls.' 1st Am. Compl. ¶ 62, ECF No. 35; see also Whiddon v. Chase Home Fin., LLC, 666 F.Supp.2d 681, 692 (E.D.Tex.2009) ("[C]onclusory statement that `the actions and/or omissions of Defendants described herein above constitute a breach of contract' does not suffice to meet the pleading requirements of Rule 8(a)."). Plaintiffs' allegations do not contain enough facts about the terms of the non-ERISA plans to allow the Court to reasonably infer that Anthem Defendants breached these plans. Accordingly, the Court finds that Plaintiffs have failed to state a claim for breach of contract.
Plaintiffs also allege Anthem Defendants negligently misrepresented that the patients and medical services were covered under the health benefit plans. Pls.' 1st Am. Compl. ¶¶ 37, 65, ECF No. 35. Plaintiffs assert that they justifiably relied on these representations and that they suffered damages as a result of their reliance. Id. ¶¶ 65-66. To establish a cause of action for negligent misrepresentation, a plaintiff must plead:
Miller v. CitiMortgage, Inc., 970 F.Supp.2d 568, 585, 2013 WL 4766808, at *11 (N.D.Tex.2013); Ostrovitz & Gwinn, LLC v. First Specialty Ins. Co., 393 S.W.3d 379, 397 (Tex.App.-Dallas 2012, no pet.). "[T]he `false information' contemplated in a negligent misrepresentation case must be a misstatement of an existing fact rather than a promise of future conduct." Scherer v. Angell, 253 S.W.3d 777, 781 (Tex.App.-Amarillo 2007, no pet.) (internal citations omitted). Anthem Defendants argue Plaintiffs failed to plead facts showing Anthem Defendants supplied false information or that Anthem Defendants failed to exercise reasonable care or competence in obtaining or communicating the
Plaintiffs again contend that they are not required to outline each element of their claim and argue the Claim Schedule "sets out additional details involving each and every instance of a misrepresentation." Br. Supp. Resp. Opp'n Mot. Dismiss 20-21, ECF No. 98. Rule 8(a) does not require detailed factual allegations, but Plaintiffs must offer more than "labels and conclusions," and must plead enough facts to raise Plaintiffs' right to relief above the speculative level. Jebaco, Inc. v. Harrah's Operating Co., Inc., 587 F.3d 314, 318 (5th Cir.2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. at 555, 127 S.Ct. 1955); see also Jones v. Hous. Cmty. Coll. Sys., 816 F.Supp.2d 418, 424 (S.D.Tex.2011) ("Rule 8 ... requires a showing, rather than a blanket assertion, of entitlement to relief.") (internal quotation marks and citations omitted). Accordingly, to make out a valid claim for negligent misrepresentation, Plaintiffs must allege specific facts that support the elements of the claim.
The Court finds that Plaintiffs' allegations, taken as true, do not allege enough facts to state a claim for relief that is plausible on its face. Plaintiffs allege Anthem Defendants represented that the patients and the medical services were covered under the health benefit plans before Plaintiffs provided the services. Pls. 1st Am. Compl. ¶¶ 37, 65, ECF No. 35. These allegations are sufficient to show that Anthem Defendants made a representation in the course of its business. Plaintiffs' allegations, however, do not allow the Court to draw the reasonable inference that Anthem Defendants supplied false information for the guidance of others and did not exercise reasonable care or competence in obtaining or communicating the information.
In pleading its negligent misrepresentation claim, Plaintiffs merely recite the elements of the cause of action:
Plaintiffs' pleadings contain no factual allegations to support their claim that Anthem
Other than the assertion that Anthem Defendants "wholly denied Plaintiffs' claims for payment or unilaterally reduced the amount of payment" after they "verified" that the patients and services were "covered," Plaintiffs do not provide factual allegations concerning what information was supplied to Plaintiffs or how the information was false, especially in light of Plaintiffs' assertion that they charged their usual and customary rates for the services. See Pls.' 1st Am. Compl. ¶¶ 37, 39, ECF No. 35. Plaintiffs must allege facts that permit the Court to infer more than the "mere possibility" that Anthem Defendants supplied false information. Harold H. Huggins Realty, Inc. v. FNC, Inc., 634 F.3d 787, 796 (5th Cir.2011). The First Amended Complaint and Claim Schedule are also devoid of factual allegations concerning how Anthem Defendants provided the information to Plaintiffs and whether they exercised reasonable care in communicating the information.
Plaintiffs' conclusory allegations and formulaic recitation of the elements of a claim for negligent misrepresentation does not raise Plaintiffs' right to relief above the speculative level. See Twombly, 550 U.S. at 555, 557, 127 S.Ct. 1955. Without further factual enhancement the Court cannot reasonably infer that Anthem Defendants supplied false information for the guidance of Plaintiffs and that Anthem Defendants failed to exercise reasonable care in obtaining or communicating the information. See Raj v. La. State Univ., 714 F.3d 322, 330 (5th Cir.2013). Accordingly, the Court finds that Plaintiffs failed to plead sufficient facts to state a claim for negligent misrepresentation.
Plaintiffs' claim for promissory estoppel is similarly conclusory and devoid of well-pleaded factual allegations. To establish a cause of action for promissory estoppel, a plaintiff must show: (1) a promise; (2) foreseeability by the promisor that the promisee would rely on the promise; (3) substantial reliance by the promisee to his detriment; and (4) a definite finding that injustice can be avoided only by enforcement of the promise. Zenor v. El Paso Healthcare Sys., Ltd., 176 F.3d 847, 864 (5th Cir.1999); G.D. Holdings, Inc. v. H.D.H. Land & Timber, L.P., 407 S.W.3d 856, 861 (Tex.App.-Tyler 2013, no pet.). Plaintiffs allege Anthem Defendants represented that they would pay Plaintiffs for services rendered to the patients, but breached these promises "by failing to pay and/or underpaying" on Plaintiffs' claims. Pls. 1st Am. Compl. ¶¶ 37, 68, ECF No. 35. Plaintiffs allege they reasonably and substantially relied on these representations to their detriment and their reliance was foreseeable to Anthem Defendants. Id. ¶ 68. Plaintiffs also allege "injustice can be avoided only [by] enforcing the [Anthem] Defendants' promises and representations," and note that the Claim Schedule illustrates their claims and damages sought. Id.
Anthem Defendants argue Plaintiffs failed to identify: (1) how reliance by Plaintiffs was foreseeable to Anthem Defendants, (2) how actual reliance by Plaintiffs was reasonable, and (3) why injustice can be avoided only by enforcement of the alleged promise. Br. Supp. Mot. Dismiss 17, ECF No. 43-1. Plaintiffs again rely on the assertion that they are not required to outline each element of the claim and contend that the Claim Schedule sufficiently alleges facts to support the claim. See Br.
Anthem Defendants assert that Plaintiffs' "repeated failure to cure deficiencies by amendments ... is a proper basis for this Court to deny Plaintiffs leave to amend." Anthem Defs.' Mot. Dismiss 19, ECF No. 43-1 (citing Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962)). Plaintiffs contend, however, that Federal Rule of Civil Procedure 15(a)'s liberal standard requires the Court to grant leave to amend "when justice so requires." Pls.' Br. Supp. Resp. Opp'n Anthem Defs.' Mot. Dismiss 27, ECF No. 98. Accordingly, Plaintiffs request leave to amend their First Amended Complaint to address any claims dismissed by the Court.
"Under Rule 15(a), `leave to amend shall be freely given when justice so requires,' and should be granted absent some justification for refusal." United States ex rel. Willard v. Humana Health Plan of Tex. Inc., 336 F.3d 375, 386 (5th Cir.2003) (citing Foman, 371 U.S. at 181-82, 83 S.Ct. 227); see also Smith v. EMC Corp., 393 F.3d 590, 595 (5th Cir.2004) (noting Rule 15(a) "evinces a bias in favor of granting leave to amend") (internal quotation marks and citations omitted). To determine whether to grant leave to amend, the Court considers five factors: (1) undue delay, (2) bad faith or dilatory motive, (3) repeated failure to cure deficiencies by previous amendments, (4) undue prejudice to the opposing party, and (5) futility of the amendment. Smith, 393 F.3d at 595 (citing Foman, 371 U.S. at 182, 83 S.Ct. 227; Rosenzweig v. Azurix Corp., 332 F.3d 854, 864 (5th Cir.2003)). Courts should afford a claimant an opportunity to amend a complaint "[i]f it appears that a more carefully drafted pleading might state a claim upon which relief could be granted." Kennard v. Indianapolis Life Ins. Co., 420 F.Supp.2d 601, 608 (N.D.Tex. 2006) (Fish, C.J.). Compare U.S. ex rel. Dekort v. Integrated Coast Guard Sys., 705 F.Supp.2d 519, 558 n. 18 (N.D.Tex. 2010) (O'Connor, J.) (denying leave to amend where "further amendment would be futile"), with Whiddon v. Chase Home Fin., LLC, 666 F.Supp.2d at 693 (granting leave to amend because "it does not appear that [plaintiff's] ... claims are patently frivolous or that an amendment could not cure their defects").
It appears that Plaintiffs may be able to state a claim upon which relief could be granted, and the Court notes that none of the above-mentioned five factors are present in this case. Accordingly, the Court finds it appropriate to allow Plaintiffs
BCBS Alabama filed a Motion to Compel Arbitration and for Dismissal of Certain Claims (ECF No. 49), addressing Plaintiff Victory Medical Center Houston, L.P.'s ("Victory)" claims relating to a patient, "SB," who is covered under a plan issued by BCBS Alabama.
The Federal Arbitration Act ("FAA") states that a written agreement "to submit to arbitration an existing controversy arising out of such a contract ... shall be valid, irrevocable, and enforceable...." 9 U.S.C. § 2. Section 2 evidences a "liberal federal policy favoring arbitration agreements," AT & T Mobility LLC v. Concepcion, ___ U.S. ___, 131 S.Ct. 1740, 1745, 179 L.Ed.2d 742 (2011), and "any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." The Rice Co., S.A. v. Precious Flowers Ltd., 523 F.3d 528, 534 (5th Cir. 2008) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983)). The FAA allows a party "aggrieved by the alleged failure, neglect or refusal" of an opposing party to arbitrate under a written arbitration agreement to enforce the agreement by filing a motion to compel arbitration. 9 U.S.C. § 4. The FAA "leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed." Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985) (citing 9 U.S.C. §§ 3, 4).
Courts conduct a two-step inquiry to determine whether a party should be compelled to arbitrate. JP Morgan Chase & Co. v. Conegie ex rel. Lee, 492 F.3d 596, 598 (5th Cir.2007). First, courts must determine whether the parties agreed to arbitrate the dispute by considering: "(1) whether there is a valid agreement to arbitrate between the parties; and (2) whether the dispute in question falls within the scope of that arbitration agreement." Id.
BCBS Alabama asserts that on or around October 12, 2011, SB received medical services from Victory and the total charge for the services was $13,362.60. Mot. Compel 3, ECF No. 49. BCBS Alabama paid Victory $7,634.15. Id. BCBS Alabama contends Victory's breach of contract, negligent misrepresentation, and promissory estoppel claims against BCBS Alabama relating to SB are subject to a binding arbitration provision in SB's plan. Id. at 4.
The Court must first determine whether there is a valid agreement to arbitrate. BCBS Alabama must establish that an arbitration agreement exists. ASW Allstate Painting & Constr. Co. v. Lexington Ins. Co., 188 F.3d 307, 311 (5th Cir.1999). To determine whether an agreement to arbitrate exists, courts apply ordinary state-law contract principles. Will-Drill Res., 352 F.3d at 214 (internal quotation marks and citations omitted). "Under Texas law, a valid contract requires an offer, acceptance, mutual assent, execution and delivery of the contract with the intent that it be mutual and binding, and consideration."
BCBS Alabama withheld SB's application from its motion because the application contained patient-identifying information, but provided Victory with a copy of SB's application. See Mot. Compel 5 n. 6, 10, ECF No. 49. BCBS Alabama attached a form application to its motion and an affidavit from its Direct Billing Manager stating that the form application is a "true and correct copy of a form application for coverage" under the Classic Contract that was "in use at the time SB applied for coverage and identical to the form completed by SB." Mot. Compel Ex. 1 (Oliver Aff.), App. at 3, ECF No. 49-1. BCBS Alabama also attached "a true and correct copy of the [Classic Contract] contract booklet, issued to SB subsequent to the inception of coverage...." Id. BCBS Alabama subsequently submitted an unredacted copy of SB's application to the Court that contains SB's signature. See Sealed Appl. 5, ECF No. 134; see also id. at 2 ("Attached to this affidavit is a record from [BCBS Alabama] consisting of ... an Individual Blue Application for Health Coverage signed by S.B. [that is] kept by [BCBS Alabama] in the regular course of business.").
The signature block on SB's application states: "I acknowledge by my signature that I have read and understand the front and back of this application and agree to
"[A] written arbitration agreement is prima facie valid and must be enforced unless the opposing party ... alleges and proves that the arbitration clause itself was a product of fraud, coercion, or such grounds as exist at law or in equity for the revocation of the contract." Freudensprung v. Offshore Tech. Servs., Inc., 379 F.3d 327, 341 (5th Cir.2004) (internal quotation marks and citations omitted); see also Overstreet v. Contigroup Cos., 462 F.3d 409, 412 (5th Cir.2006) (noting party resisting arbitration "shoulders the burden of proving that the dispute is not arbitrable") (citing Am. Heritage Life Ins. Co. v. Lang, 321 F.3d 533, 539 (5th Cir.2003)). Victory has failed to present evidence to rebut BCBS Alabama's contention that a valid agreement exists. Compare Am. Heritage Life Ins. Co. v. Lang, 321 F.3d 533, 537-39 (5th Cir.2003) (finding sufficient evidence to indicate arbitration agreements were invalid where party opposing arbitration was illiterate and contended he did not know he was signing arbitration agreements and defendant failed to inform the man what he was signing), and Prevot v. Phillips Petroleum Co., 133 F.Supp.2d 937, 940 (S.D.Tex.2001) (finding substantial evidence arbitration agreements were unconscionable where plaintiffs could not read English and documents were not translated for them, and superiors told them to quickly sign documents to get back to work), with Jones v. Halliburton Co., 625 F.Supp.2d 339, 344-45 (S.D.Tex.2008) (finding arbitration provision valid because employee signed and initialed agreement and arbitration provisions and presented no argument that she was unaware she was signing an arbitration agreement); see also Scurtu v. Int'l Student Exch., 523 F.Supp.2d 1313, 1319-21 (S.D.Ala.2007).
BCBS Alabama has made the prima facie showing necessary to compel arbitration and Victory has not offered any evidence to establish that the SB's arbitration provision is unenforceable. See Overstreet, 462 F.3d at 412; Hafer v. Vanderbilt Mortg. & Fin., Inc., 793 F.Supp.2d 987, 994 (S.D.Tex.2011). Accordingly, the Court finds that a valid agreement to arbitrate exists.
Finding that a valid agreement exists, the Court must next determine whether Victory's claims regarding services provided to SB fall within the scope of the arbitration agreement. JP Morgan Chase & Co. v. Conegie ex rel. Lee, 492 F.3d at 598. SB's plan contained an arbitration provision that was intended to settle "any disagreement" between the parties. Mot. Compel Ex. 2 (Form Appl.), App. at 5, ECF No. 49-2. "In consideration of coverage under the plan and payment of premiums," SB and BCBS Alabama agreed that their arbitration agreement, which was "intended to have the broadest scope permissible by law," covered:
Mot. Compel Ex. 3 (Contract Booklet), App. at 47, ECF No. 49-3.
Victory's only argument against compelling arbitration of its breach of contract claim is its assertion that BCBS Alabama failed to provide evidence of a valid agreement between the parties. See Br. Supp. Resp. Opp'n Mot. Compel 6-7, ECF No. 74. Victory seeks to recover for the "underpayment ... of reimbursement amounts pursuant to the terms" of SB's plan and alleges BCBS Alabama "materially breached the terms" of the plan by "refusing to pay [Victory] the contractually agreed upon amounts...." Pls.' 1st Am. Compl. ¶¶ 41, 62-63, ECF No. 35. Victory alleges SB assigned "all right, title and interest" in benefits "due under the [plan]." Id. ¶ 62. BCBS Alabama's contract booklet explains that the arbitration agreement applies to "any claim that arises out of or relates to the plan." Mot. Compel Ex. 3 (Contract Booklet), App. at 47, ECF No. 49-3 (emphasis omitted). Accordingly, the Court finds that Victory's breach of contract claim is within the scope of the arbitration agreement.
Victory contends that its claims for negligent misrepresentation and promissory estoppel are claims against BCBS Alabama for representations and promises made directly to Victory, and not brought by Victory as an assignee of SB's benefits. See Br. Supp. Resp. Opp'n Mot. Compel 7, ECF No. 74. Therefore, Victory asserts that these claims do not arise out of or relate to the plan and do not fall within the scope of the agreement. Id. at 8-10.
To determine whether a dispute falls within the scope of an arbitration agreement, courts must determine whether the arbitration clause is "broad" or "narrow." Jureczki v. Banc One Tex., N.A., 252 F.Supp.2d 368, 374 (S.D.Tex. 2003) (citing Hornbeck Offshore Corp. v. Coastal Carriers Corp., 981 F.2d 752, 754 (5th Cir.1993)). Arbitration provisions that expressly encompass disputes "related to" the agreement containing the provision are construed broadly. I.D.E.A. Corp. v. WC & R Interests, Inc., 545 F.Supp.2d 600, 606 (W.D.Tex.2008) (citing Pennzoil Exploration & Prod. Co. v. Ramco Energy Ltd., 139 F.3d 1061, 1067 (5th Cir.1998)); see also Jureczki, 252 F.Supp.2d at 374-75 (discussing examples of "broad clauses" and "narrow clauses"). Broad arbitration clauses are "not limited to claims that literally `arise under the contract,' but rather embrace[] all disputes between the parties having a significant relationship to the contract." I.D.E.A. Corp., 545 F.Supp.2d at 606 (quoting Pennzoil Exploration, 139 F.3d at 1067) (internal quotation marks omitted). Furthermore, "[i]n determining whether the dispute falls within the scope of the arbitration agreement, `ambiguities... [are] resolved in favor of arbitration.'" Fleetwood Enters., Inc. v. Gaskamp, 280 F.3d 1069, 1073 (5th Cir. 2002) (quoting Volt Info. Scis., Inc. v. Bd. of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 475, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989)); see also Sherer v. Green Tree Serv. LLC, 548 F.3d 379, 381 (5th Cir. 2008); Positive Software Solutions, Inc. v. New Century Mortg. Corp., 259 F.Supp.2d 531, 538 (N.D.Tex.2003) (Godbey, J.).
Here, Victory's negligent misrepresentation claim is based on BCBS Alabama's representations that the patients "were covered under healthcare plans and
District courts must stay a suit containing issues that are referable to arbitration under a written agreement to arbitrate until the arbitration "has been had in accordance with the terms of the agreement." 9 U.S.C. § 3. The statute, however, is not intended to limit dismissal of a case in the proper circumstances. Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir.1992). Courts may dismiss a case if "retaining jurisdiction and staying the action will serve no purpose." Jureczki v. Banc One Tex., N.A., 252 F.Supp.2d at 380 (quoting Dean Witter, 975 F.2d at 1164) (internal quotation marks omitted); see also SR Int'l Business Ins. Co. Ltd. v. Energy Future Holdings Corp., 539 F.Supp.2d 871, 878 (N.D.Tex.2008) (Lindsay, J.). The Fifth Circuit has found that dismissal of a suit is appropriate "`when all of the issues raised in the district court must be submitted to arbitration.'" Dean Witter, 975 F.2d at 1164.
BCBS Alabama contends that Victory's claims against BCBS Alabama relating to SB's plan should be dismissed because all of the claims are subject to the arbitration agreement. Mot. Compel 8, ECF No. 49. Victory argues that dismissal is improper because (1) Victory maintains causes of action against BCBS Alabama relating to SB that are not subject to the arbitration agreement, (2) Victory maintains causes of action against BCBS Alabama for other patients, and (3) Victory maintains causes of action against other named Defendants that are unrelated to the arbitration agreement. Br. Supp. Resp. Opp'n Mot. Compel 11, ECF No. 74. Having found that Victory's causes of action against BCBS Alabama relating to SB's plan are subject to a valid arbitration agreement, the Court finds that Victory's first objection lacks
Victory contends that not all of the issues raised in this case are subject to the arbitration agreement because Victory maintains causes of action outside of those related to SB's plan. See id. It may be appropriate, however, to dismiss all of the claims subject to a valid arbitration agreement if the claims relate to specific parties subject to the agreement and retaining jurisdiction serves no useful purpose. See, e.g., In re Titanium Dioxide Antitrust Litig., 962 F.Supp.2d 840, 856, 2013 WL 4516472, at *12 (D.Md.2013) (dismissing claims of class members that were subject to enforceable arbitration clauses finding "no useful purpose will be served by staying the pertinent proceedings pending arbitration"); Prevot v. Phillips Petroleum Co., 133 F.Supp.2d 937, 940-41 (S.D.Tex. 2001) (compelling plaintiff that failed to respond to defendant's motion to compel to arbitrate after finding arbitration agreements were unconscionable as to five other plaintiffs; determining it was unnecessary to stay the claims brought by the five plaintiffs during arbitration of one plaintiff's claims). Here, all of Victory's claims against BCBS Alabama relating to SB are arbitrable and Victory has not identified a reason for the Court to maintain jurisdiction over these claims, and therefore, a stay of the action is unwarranted. See Digital Generation, Inc. v. Boring, 869 F.Supp.2d 761, 784 (N.D.Tex.2012) (Lindsay, J.). Accordingly, the Court finds that dismissing Victory's claims against BCBS Alabama relating to SB's plan is appropriate.
Defendant Capital filed a Motion to Dismiss for Lack of Personal Jurisdiction Pursuant to Rule 12(b)(2), and Alternatively, Motion to Dismiss for Improper Venue Pursuant to Rule 12(b)(3), and Alternatively, Motion to Dismiss for Failure to State a Claim Pursuant to Rule 12(b)(6) (ECF No. 52), filed October 1, 2012.
"When a nonresident defendant presents a motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing the district court's jurisdiction over the nonresident." Rolls-Royce Corp. v. Heros, Inc., 576 F.Supp.2d 765, 773 (N.D.Tex.2008) (Fitzwater, C.J.) (quoting Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir.1985)) (internal quotation marks omitted). A plaintiff need only make a prima facie case that personal jurisdiction exists when the court considers a motion to dismiss for lack of jurisdiction without holding an evidentiary hearing or in the absence of jurisdictional discovery. See Quick Techs., Inc. v. Sage Grp. PLC, 313 F.3d 338, 343-44 (5th Cir. 2002); WesternGeco L.L.C. v. Ion Geophysical Corp., 776 F.Supp.2d 342, 353 (S.D.Tex.2011). The court must accept jurisdictional allegations in the complaint as true, but the court need not credit conclusory allegations, even if uncontroverted. Panda Brandywine Corp. v. Potomac Elec. Power Co., 253 F.3d 865, 868-69 (5th Cir.2001) (per curiam). When determining whether personal jurisdiction exists, courts may consider "the contents of the record at the time of the motion, including affidavits." Paz v. Brush Engineered Materials, Inc., 445 F.3d 809, 812 (5th Cir.2006) (internal quotation marks and citations omitted); see also First Fitness Int'l, Inc. v. Thomas, 533 F.Supp.2d 651, 655 (N.D.Tex.2008) (Godbey, J.).
"A federal district court sitting in diversity may exercise personal jurisdiction over a nonresident defendant if (1) the long-arm statute of the forum state confers personal jurisdiction over that defendant; and (2) exercise of such jurisdiction by the forum state is consistent with due process under the United States Constitution." Latshaw v. Johnston, 167 F.3d 208, 211 (5th Cir.1999) (footnote omitted). Texas's long-arm statute extends to the limits of federal due process; therefore, the Court need only consider whether the exercise of jurisdiction would be consistent with the Due Process Clause of the Fourteenth Amendment. TGI Friday's Inc. v. Great Nw. Rests., Inc., 652 F.Supp.2d 750, 756 (N.D.Tex.2009) (Fitzwater, C.J.); see also Latshaw, 167 F.3d at 211 ("As the Texas long-arm statute extends to the limits of federal due process, these two steps conflate.") (footnotes omitted).
The exercise of personal jurisdiction comports with due process when "first, the defendant has the requisite minimum contacts with the forum state and second, requiring the defendant to submit to jurisdiction in the forum state would not infringe on `traditional notions of fair play and substantial justice.'" E.g., Companion Prop. & Cas. Ins. Co. v. Palermo, 723 F.3d 557, 559 (5th Cir.2013) (internal citations omitted). A nonresident defendant has such minimum contacts if he "purposefully availed himself of the benefits and protections of the forum state ... such that he should reasonably anticipate being haled into court in the forum state." Latshaw, 167 F.3d at 211 (footnotes and internal quotation marks omitted).
These minimum contacts give rise to either general or specific personal jurisdiction. See TGI Friday's, 652 F.Supp.2d at 756 (citing Mink v. AAAA Dev. LLC, 190 F.3d 333, 335 (5th Cir. 1999)). For general jurisdiction, a plaintiff must establish that the defendant's contacts with the forum state are "so `continuous and systematic' as to render them essentially at home." Goodyear Dunlop Tires Operations, S.A. v. Brown, ___ U.S. ___, 131 S.Ct. 2846, 2851, 180 L.Ed.2d 796 (2011). "Specific jurisdiction exists when the defendant has purposefully directed his activities at residents of the forum ... and the litigation results from alleged injuries that arise out of or relate to those
If the plaintiff establishes that the nonresident defendant has the requisite minimum contacts, courts must determine whether the exercise of jurisdiction over the defendant satisfies traditional notions of fair play and substantial justice. See Companion Prop. & Cas., 723 F.3d at 559 (citing Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 105, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987)). To determine whether the exercise of jurisdiction satisfies traditional notions of fair play and substantial justice, courts balance "the burden on the defendant having to litigate in the forum; the forum state's interest in the lawsuit; the plaintiff's interests in convenient and effective relief; the judicial system's interest in efficient resolution of controversies; and the states's shared interest in furthering fundamental social policies." Wien Air Alaska, Inc. v. Brandt, 195 F.3d 208, 215 (5th Cir.1999) (internal citations omitted); see also TGI Friday's, 652 F.Supp.2d at 756 (quoting Berry v. Lee, 428 F.Supp.2d 546, 557 (N.D.Tex. 2006) (Fitzwater, J.)).
To establish general jurisdiction, a nonresident defendant's contacts with the forum state "must be substantial; random, fortuitous, or attenuated contacts are not sufficient." Choice Healthcare, Inc. v. Kaiser Found. Health Plan of Colo., 615 F.3d 364, 368 (5th Cir.2010) (internal citation omitted). This "continuous and systematic contacts test" is difficult to meet and requires "extensive contacts" between a defendant and a forum. Johnston v. Multidata Sys. Int'l Corp., 523 F.3d 602, 609 (5th Cir.2008) (internal quotation marks and citation omitted). A nonresident defendant's contacts must "demonstrate a business presence in Texas," and the Fifth Circuit has emphasized the distinction between "doing business with Texas ... [and] doing business in Texas." Access Telecom, Inc. v. MCI Telecomms. Corp., 197 F.3d 694, 717 (5th Cir.1999); see also Jackson v. Tanfoglio Giuseppe, S.R.L., 615 F.3d 579, 584 (5th Cir.2010); Johnston, 523 F.3d at 611; Am. Univ. Sys., Inc. v. Am. Univ., 858 F.Supp.2d 705, 713 (N.D.Tex.2012) (Lindsay, J.).
Plaintiffs must plead sufficient jurisdictional facts to make a prima facie showing that Capital has continuous and systematic contacts with Texas. See Oblio Telecom, Inc. v. Patel, 711 F.Supp.2d 668, 672 (N.D.Tex.2008) (Lindsay, J.) (noting plaintiff bears burden of establishing prima facie case for court's jurisdiction over nonresident defendant); Br. Supp. Resp. Mot. Dismiss 6, ECF No. 80 (same) (citing Johnston, 523 F.3d at 609). The only jurisdictional facts in Plaintiffs' pleadings are the three alleged payments to Plaintiffs on August 25, 2011, June 5, 2012, and June 6, 2012, and Plaintiffs' assertion that Capital is "believed to be doing business in the State of Texas." See Pls.' 1st Am. Compl. ¶ 26, ECF No. 35; Pls.' 1st Am. Compl.
Furthermore, Capital included a sworn declaration from its Vice President for Account Management, Commercial Markets, Therese A. Bretz ("Bretz"), describing Capital's business activities.
Plaintiffs apparently concede that Capital does not have the required business presence in Texas for the Court to exercise general jurisdiction. Rather than contesting or presenting evidence to rebut Capital's assertions, Plaintiffs request that the Court permit jurisdictional discovery to allow Plaintiffs to "meet their jurisdictional burden." Br. Supp. Resp. Mot. Dismiss 8, ECF No. 80; see also Bell Helicopter Textron Inc. v. Am. Eurocopter, LLC, 729 F.Supp.2d 789, 797 (N.D.Tex.2010) (McBryde, J.) (stating plaintiff "apparently concedes" defendant lacked sufficient contacts where plaintiff responded to motion to dismiss by requesting jurisdictional discovery). Accordingly, the Court finds that Plaintiffs' allegations are not sufficient to show Capital maintained continuous and systematic contacts with Texas to support the exercise of general personal jurisdiction.
Courts may exercise specific jurisdiction if a nonresident defendant "purposefully avails himself of the privileges of conducting activities in the forum state" and "the controversy arises out of or is related to the defendant's contacts with the forum state." Choice Healthcare, 615 F.3d at 369 (internal citation omitted). The Fifth Circuit has held that an insurer's payment of a limited number of claims to a medical services provider for treatment of the insurer's members, "based on the unilateral decision of those insureds who sought treatment in [the forum state]," does not qualify as commercial activity purposefully directed at the forum state.
Here, Plaintiffs' claims arise from Capital's three payments to Plaintiffs for medical services provided to Capital's members. See Br. Supp. Mot. Dismiss 10-11, ECF No. 52-1; Pls.' 1st Am. Compl. Ex. A (Claim Schedule), App. at 25, ECF No. 35-1. Plaintiffs' allegations consist of the Claim Schedule showing three claims against Capital, Plaintiffs' assertion that it believes Capital does business in Texas, and its request for jurisdictional discovery to "establish jurisdiction over [Capital]." See Br. Supp. Resp. Mot. Dismiss 8, ECF No. 80; Pls.' 1st Am Compl. ¶ 26, ECF No. 35; Pls.' 1st Am. Compl. Ex. A (Claim Schedule), App. at 25, ECF No. 35-1. Plaintiffs, however, do not plead facts showing that Capital purposefully directed its commercial activities at Texas. See Clemens v. McNamee, 615 F.3d at 379; Choice Healthcare, 615 F.3d at 372. Plaintiffs also do not attempt to rebut Capital's assertions that Plaintiffs' pleadings are devoid of facts to support such a finding. See Br. Supp. Resp. Mot. Dismiss 7-8, ECF No. 80; see also Bell Helicopter Textron, 729 F.Supp.2d at 797-98. Furthermore, nowhere in Plaintiffs' pleadings are there allegations that Capital's contacts with Texas arose from a decision by Capital to direct its commercial activity at Texas rather than Capital's members' independent decisions to travel to Texas to receive medical services. Br. Supp. Mot. Dismiss 12, ECF No. 52-1; Mot. Dismiss Ex. A (Bretz Decl.), App. at 4-5, ECF No. 52-2; see also Burger King Corp., 471 U.S. at 475, 105 S.Ct. 2174; Choice Healthcare, 615 F.3d at 369-70. Capital also provided evidence that it only provides insurance coverage for individuals and groups within Capital's twenty-one county service area in Pennsylvania and does not contract with hospitals or medical facilities in Texas. Mot. Dismiss Ex. A (Bretz Decl.), App. at 4-5, ECF No. 52-2.
Capital also provided evidence that it only provides insurance coverage for individuals and groups within Capital's twenty-one county service area in Pennsylvania and does not contract with hospitals or medical facilities in Texas. Mot. Dismiss Ex. A (Bretz Decl.), App. at 4-5, ECF No. 52-2. Capital asserts that Plaintiffs are non-participating providers without a contract with Capital, and Capital "do[es] not encourage or advise their members to seek treatment from non-participating providers." Id. at 5. Capital also states that any coverage provided to members that seek treatment from non-participating providers "is not intended to expand sales or otherwise develop commercial activity in the forum state" where the non-participating provider is located. Id. Capital also contends that it made the three payments because of Capital's members' "respective decisions to seek care from Plaintiffs ... in Texas." Br. Supp. Mot. Dismiss 12, ECF No. 52-1. Accordingly, the Court finds that it cannot exercise specific personal jurisdiction over Capital.
Plaintiffs assert that the Court should grant Plaintiffs an opportunity to conduct jurisdictional discovery to establish personal jurisdiction over Capital. Br. Supp. Resp. Mot. Dismiss 8, ECF No. 80. Plaintiffs contend that jurisdictional discovery is appropriate if the existing record is "inadequate
Plaintiffs' pleadings are devoid of factual allegations that reasonably suggest that personal jurisdiction exists over Capital. Fielding, 415 F.3d at 429 (quoting Toys "R" Us, Inc. v. Step Two, S.A., 318 F.3d 446, 456 (3d Cir.2003)); see also First Inv. Corp., 703 F.3d at 755 n. 8 (noting party must allege facts "that, if true, would establish jurisdiction" to be entitled to jurisdictional discovery) Fairchild, 946 F.Supp.2d at 578 (denying request for jurisdictional discovery where plaintiff failed to provide "colorable basis for jurisdiction") (internal citation omitted). As noted, the only facts alleged by Plaintiffs are the three payments made in Texas based on Capital's members' decisions to seek medical treatment in Texas. See generally Pls.' 1st Am. Compl., ECF No. 35. Plaintiffs fail to plead any facts to suggest that Capital had continuous and systematic contacts with Texas or purposefully availed itself of the privilege of conducting activities in Texas.
Furthermore, Plaintiffs have not alleged that jurisdictional discovery will support a finding of personal jurisdiction, nor do they contest Capital's assertions regarding personal jurisdiction; rather, Plaintiffs essentially concede that personal jurisdiction does not exist by requesting jurisdictional discovery to allow them to "meet their jurisdictional burden" and "establish jurisdiction over [Capital]." See Br. Supp. Resp. Mot. Dismiss 5-8, ECF No. 80; see also Bell Helicopter Textron, 729 F.Supp.2d at 797. Plaintiffs also do not allege that Capital's motion raises questions of fact concerning personal jurisdiction. See Paolino v. Argyll Equities, L.L.C., 401 F.Supp.2d 712, 723 (W.D.Tex. 2005) (citing Wyatt v. Kaplan, 686 F.2d 276, 283 (5th Cir.1982)) (stating jurisdictional discovery "need not be permitted unless the motion to dismiss raises issues of fact") (internal quotation marks and citations omitted). Accordingly, the Court finds that Plaintiffs have failed to meet their burden of showing that they are entitled to jurisdictional discovery.
Finding that it lacks personal jurisdiction over Capital, the Court need not address Capital's Motion to Dismiss for Improper Venue or Motion to Dismiss for Failure to State a Claim.
Based on the foregoing, it is
It is further
It is further
The Court notes that federal courts in Alabama also consider whether a valid agreement to arbitrate exists and whether the dispute falls within the scope of the agreement when determining whether parties agreed to arbitrate a dispute. See King v. Cintas Corp., 920 F.Supp.2d 1263, 1267 (N.D.Ala.2013). Furthermore, the elements for the formation of a valid contract under Alabama law are similar to those under Texas law. See Cook v. Talladega Coll., 908 F.Supp.2d 1214, 1223 (N.D.Ala.2012) ("[T]he requisite elements of a contract, generally include: an offer and an acceptance, consideration, and mutual assent to terms essential to the formation of a contract.") (quoting Strength v. Ala. Dep't of Fin., 622 So.2d 1283, 1289 (Ala.1993)) (internal quotation marks omitted).
Furthermore, "a business record affidavit... requires only that the affiant have `personal knowledge to testify as custodian of documents' and `personal knowledge as to some of the statements in the affidavit.'" Tex. A & M Research Found. v. Magna Transp., Inc., 338 F.3d 394, 402 (5th Cir. 2003) (quoting FSLIC v. Griffin, 935 F.2d 691, 702 (5th Cir.1991)). Bretz stated that "[t]he statements made in this declaration are based on my personal knowledge and my review of [Capital's] business records." Mot. Dismiss Ex. A (Bretz Decl.), App. at 4, ECF No. 52-2. As Capital's Vice President for Account Management, it is reasonable to infer that Bretz has knowledge of the information contained in her Declaration. See Cutting Underwater Techs. USA, Inc. v. Eni U.S. Operating Co., 671 F.3d 512, 516 (5th Cir.2012) (quoting DIRECTV, Inc. v. Budden, 420 F.3d 521, 530 (5th Cir.2005)) ("Personal knowledge may be demonstrated by showing that the facts stated `reasonably' fall within the `sphere of responsibility' of the affiant as a corporate employee."); see also Diamond Offshore Co. v. Survival Sys. Int'l, Inc., 902 F.Supp.2d 912, 932 (S.D.Tex.2012).
