Filed: Sep. 25, 2012
Latest Update: Mar. 26, 2017
Summary: NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _ No. 11-4269 _ ADVANCED REHABILITATION, LLC; IRBY SPINE CARE, PC; SHORE SPINE CENTER & PHYSICAL REHABILITATION, PC on behalf of themselves and others similarly situated, Appellants v. UNITEDHEALTHGROUP, INC.; UNITEDHEATHCARE; UNITEDHEALTHCARE INSURANCE COMPANY OF NEW YORK, INC.; UNITEDHEALTHCARE INSURANCE COMPANY; UNITEDHEALTHCARESERVICE, LLC; OXFORD HEALTH PLANS LLC; OXFORD HEALTH PLANS (NY), INC.; OXFORD HEALTH PLANS (NJ),
Summary: NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _ No. 11-4269 _ ADVANCED REHABILITATION, LLC; IRBY SPINE CARE, PC; SHORE SPINE CENTER & PHYSICAL REHABILITATION, PC on behalf of themselves and others similarly situated, Appellants v. UNITEDHEALTHGROUP, INC.; UNITEDHEATHCARE; UNITEDHEALTHCARE INSURANCE COMPANY OF NEW YORK, INC.; UNITEDHEALTHCARE INSURANCE COMPANY; UNITEDHEALTHCARESERVICE, LLC; OXFORD HEALTH PLANS LLC; OXFORD HEALTH PLANS (NY), INC.; OXFORD HEALTH PLANS (NJ), I..
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 11-4269
____________
ADVANCED REHABILITATION, LLC; IRBY SPINE CARE, PC;
SHORE SPINE CENTER & PHYSICAL REHABILITATION, PC
on behalf of themselves and others similarly situated,
Appellants
v.
UNITEDHEALTHGROUP, INC.; UNITEDHEATHCARE;
UNITEDHEALTHCARE INSURANCE COMPANY OF NEW YORK, INC.;
UNITEDHEALTHCARE INSURANCE COMPANY;
UNITEDHEALTHCARESERVICE, LLC; OXFORD HEALTH PLANS LLC; OXFORD
HEALTH PLANS (NY), INC.; OXFORD HEALTH PLANS (NJ), INC.;
OXFORD HEALTH INSURANCE, INC.
____________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 10-cv-00263)
District Judge: Honorable Dennis M. Cavanaugh
____________
Submitted Under Third Circuit LAR 34.1(a)
September 20, 2012
Before: SLOVITER, RENDELL and HARDIMAN, Circuit Judges.
(Filed: September 25, 2012)
____________
OPINION OF THE COURT
____________
HARDIMAN, Circuit Judge.
Advanced Rehabilitation, LLC, Irby Spine Care, PC, and Shore Spine Center &
Physical Therapy, PC (collectively, Plaintiffs), filed a class action against UnitedHealth
Group, Inc., and its wholly owned subsidiaries operating in New York and New Jersey
(collectively, UnitedHealth). Plaintiffs allege that UnitedHealth violated the Employee
Retirement Income Security Act (ERISA) and state law by refusing to reimburse them for
performing certain medical procedures. The United States District Court for the District
of New Jersey granted UnitedHealth‟s motion to dismiss for failure to state a claim and
denied Plaintiffs‟ subsequent motion seeking both reconsideration and leave to file a
second amended complaint. For the reasons that follow, we will affirm.
I
Because we write for the parties, we recount only the essential facts and procedural
history.
Plaintiffs were healthcare providers who did not participate in UnitedHealth‟s
provider network. This meant they were free to set their own rates, for which their
patients could seek reimbursement pursuant to their own UnitedHealth plans. As a matter
of course, however, patients assigned their insurance benefits to Plaintiffs, who then were
entitled to seek reimbursement from UnitedHealth.
Four health plans are at issue in this case: the Empire Plan, the Verizon Choices
plan, the Port Authority Plan, and the Freedom Plan. Under all four plans, UnitedHealth
2
was to make an initial determination as to whether a procedure was covered. If coverage
was denied, the insured could appeal that determination either internally to UnitedHealth
or to a state-certified entity before filing suit in court.1
All four plans covered only treatment that UnitedHealth deemed “medically
necessary.” While the meaning of “medical necessity” differed slightly under each plan,
it generally required treatment to be (1) necessary to meet the patient‟s needs, (2) not
solely for the patient‟s convenience, (3) the most appropriate level of service that could
safely be supplied, (4) supported by national medical standards, and (5) considered by
medical literature to be a safe and effective method of treating the patient‟s symptoms.
The plans also excluded procedures that UnitedHealth considered experimental,
investigational, or unproven.
The amended complaint at issue on appeal alleges that each Plaintiff performed
manipulation under anesthesia (MUA), a type of manual therapy intended to improve
articular and soft tissue movement. For joints lacking a complete range of motion, a
specially trained physician and an anesthesiologist work together to break up scar tissue
around the joint.
According to the complaint, MUA procedures have been listed for more than thirty
1
The Verizon and Freedom Plans were governed by ERISA, while the Empire and
the Port Authority Plans were not. ERISA provides for a beneficiary to sue for “benefits
due to him under the terms” of an ERISA-governed health plan. 29 U.S.C. § 1132(a).
3
years under a Category I CPT code in the Codebook of Reimbursable Procedures
published by the American Medical Association (AMA). Plaintiffs claim that for a
procedure to be listed under that code, the AMA must determine that the procedure: (1)
“has received approval from the Food and Drug Administration;” (2) “is a distinct service
performed by many physicians . . . across the United States;” and (3) “is well-established
and documented in the peer-reviewed literature in the United States.”
Plaintiffs allege that UnitedHealth routinely denies reimbursement for MUA
because it considers the treatment not “medically necessary.” The complaint cites four
representative cases in which UnitedHealth denied reimbursement for MUA procedures
performed on patients who were covered by a UnitedHealth plan. In each case, one of the
Plaintiffs pursued several levels of appeal but was informed that UnitedHealth was
denying coverage. After exhausting their administrative appeals, Plaintiffs filed suit in
the District Court.
Plaintiffs‟ complaint alleged breach of contract and breach of fiduciary duty under
both ERISA and state law. UnitedHealth moved to dismiss the complaint for failure to
state a claim, and Plaintiffs filed an amended complaint. UnitedHealth again moved to
dismiss.
Although the case had not reached discovery, the District Court requested copies
of UnitedHealth‟s letters denying coverage for MUA procedures. UnitedHealth complied
with that request, and Plaintiffs submitted related documents. The letters demonstrated
4
that Plaintiffs had sought coverage for MUA treatment and that their claims had been
denied based on UnitedHealth‟s determination that MUA was either “experimental” or
not “medically necessary.”
The District Court dismissed the amended complaint. Plaintiffs then moved both
for reconsideration and for leave to file a second amended complaint, but their motion
was denied. Plaintiffs filed a timely notice of appeal.
II2
A complaint may be dismissed for “failure to state a claim upon which relief can
be granted.” Fed. R. Civ. P. 12(b)(6). The court must “„accept all factual allegations as
true, construe the complaint in the light most favorable to the plaintiff, and determine
whether, under any reasonable reading of the complaint, the plaintiff may be entitled to
relief.‟” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (quoting Phillips
v. Cnty. of Allegheny,
515 F.3d 224, 233 (3d Cir. 2008)). Nevertheless, the plaintiff must
provide “more than labels and conclusions, and a formulaic recitation of the elements of a
cause of action will not do.” Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555 (2007)
(citation and internal quotation marks omitted). The plaintiff must allege “enough facts to
state a claim to relief that is plausible on its face.” Id. at 570.
2
The District Court had jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1367. We
have jurisdiction under 28 U.S.C. § 1291. We exercise plenary review over the grant of a
motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Burtch v. Milberg
Factors, Inc., 662 F.3d 212, 220 (3d Cir. 2011).
5
We engage in a three-step analysis to determine the sufficiency of a complaint:
First, the court must “tak[e] note of the elements a plaintiff must plead to state
a claim.” Second, the court should identify allegations that, “because they are
no more than conclusions, are not entitled to the assumption of truth.” Finally,
“where there are well-pleaded factual allegations, a court should assume their
veracity and then determine whether they plausibly give rise to an entitlement
to relief.”
Burtch, 662 F.3d at 221 (quoting Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d
Cir. 2010)).
III
We begin with Plaintiffs‟ challenge to the District Court‟s dismissal of their
amended complaint. Plaintiffs argue that the complaint stated a plausible entitlement to
relief. We disagree.
Under the representative plans, UnitedHealth retained discretion to determine
whether procedures were “medically necessary” or “experimental.” We review these
determinations for abuse of discretion. Viera v. Life Ins. Co. of N. Am., 642 F.3d 407,
413 (3d Cir. 2011). Consequently, we may overturn a plan administrator‟s decision only
“if it is „without reason, unsupported by substantial evidence or erroneous as a matter of
law.‟” Miller v. Am. Airlines, Inc.,
632 F.3d 837, 845 (3d Cir. 2011) (quoting Abnathya v.
Hoffman-La Roche, Inc.,
2 F.3d 40, 45 (3d Cir. 1993)).
In analyzing whether Plaintiffs have pleaded sufficient facts to demonstrate that
UnitedHealth‟s coverage determinations plausibly amounted to an abuse of discretion,
6
we first note that the amended complaint does not explicitly allege that MUA procedures
were “medically necessary” and not “experimental.” According to Plaintiffs, however,
their complaint “rest[s] on the premise that the MUA treatments fit th[e] criteria” of
“medical necessity” because “otherwise, the procedures would not have been covered by
the plans.”3 Plaintiffs‟ Br. 19. In our view, Plaintiffs‟ implicit claim that MUA
treatments are covered by UnitedHealth plans is merely a “naked assertion” that stops
“short of the line between possibility and plausibility of „entitlement to relief.‟”
Twombly, 550 U.S. at 557 (citing DM Research, Inc. v. Coll. of Am. Pathologists, 170
F.3d 53, 56 (1st Cir. 1999)).
Nor does the amended complaint make specific factual allegations from which we
can infer that MUA procedures were covered. Despite the fact that a “medical necessity”
determination requires an individualized assessment based on the specific needs of a
patient, Plaintiffs have alleged no facts to demonstrate that MUA procedures were
“medically necessary” for the particular patients who received them. Plaintiffs have not
even alleged that MUA procedures were beneficial to their patients, let alone necessary to
meet their needs. The amended complaint likewise contains no facts suggesting that
3
As we discuss below, even if Plaintiffs had asserted that the MUA procedures
were “medically necessary,” that would have been insufficient because, whether express
or implied, conclusory allegations without more cannot “unlock the doors of discovery.”
Ashcroft v. Iqbal, 556 U.S. 678–79 (2009). “Threadbare recitals of the elements of a
cause of action, supported by mere conclusory statements, do not suffice.” Id. at 678
(citing Twombly, 550 U.S. at 555).
7
MUA treatment was the most appropriate level of service that could safely be supplied in
the given circumstances.
Similarly, Plaintiffs have failed to allege that MUA procedures were both
consistent with national medical standards and considered by medical literature to be safe
and effective. Plaintiffs cite only the AMA‟s listing of MUA procedures under a
Category 1 CPT code, which Plaintiffs assert “may not be dispositive of the
appropriateness of MUA procedures here, [but] certainly, at a minimum, lends weight to
the plausibility of Plaintiffs‟ claims.” Plaintiffs‟ Br. 18. But a mere CPT code is not
enough to establish a plausible entitlement to relief. Indeed, in its Introduction to the
Codebook, the AMA warns that “[i]nclusion in the . . . codebook does not represent
endorsement . . . of any particular diagnostic or therapeutic procedure.”4 The Introduction
4
Plaintiffs contend that the District Court erred by considering facts like these,
which fall outside the complaint, without converting UnitedHealth‟s motion into a motion
for summary judgment. This argument is unavailing. “As a general matter, a district
court ruling on a motion to dismiss may not consider matters extraneous to the
pleadings.” In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir.
1997) (citing Angelastro v. Prudential-Bache Sec., Inc.,
764 F.2d 939, 944 (3d Cir.
1985)). “However, an exception to the general rule is that a „document integral to or
explicitly relied upon in the complaint‟ may be considered „without converting the motion
[to dismiss] into one for summary judgment.‟” Id. (quoting Shaw v. Digital Equip. Corp.,
82 F.3d 1194, 1220 (1st Cir. 1996)). In this case, the District Court properly considered
both the UnitedHealth plans and the AMA‟s Codebook because they were “integral to”
and “explicitly relied upon” in the complaint. Cf. DiFelice v. Aetna U.S. Healthcare,
346
F.3d 442, 444 n.2 (3d Cir. 2003) (permitting consideration of plan documents where
“DiFelice‟s reference to „medical necessity‟ [was] clearly derived from the terms of the
Plan”). And though the District Court requested UnitedHealth‟s letters denying coverage,
it did not rely on any substantive facts gleaned from those documents.
8
also states that “inclusion or exclusion of a procedure does not imply any health insurance
coverage or reimbursement policy.” And even if a CPT code from just one organization
were enough to suggest that MUA treatment is consistent with national standards,
Plaintiffs have not demonstrated that such treatment plausibly would be considered safe
and effective for treating the individual patients in this case. Without such an
individualized assessment, the complaint is fatally flawed.
Finally, Plaintiffs argue that facts regarding individualized treatment are
unnecessary in this case because UnitedHealth maintained “a company-wide practice by
which all in-house appeals of the denial of claims for MUA‟s [were] routinely rejected
without regard to the merits of the particular individual claims.” Even assuming the
existence of such a policy, however, Plaintiffs‟ allegations fall well short of plausibly
showing that the policy was arbitrary and capricious. Indeed, if MUA procedures were
either “experimental” or not “medically necessary” as defined by the representative plans,
routinely denying coverage for such procedures would have been consistent with the
terms of those plans.
For all of these reasons, the District Court did not err when it granted
UnitedHealth‟s motion to dismiss the amended complaint.
IV
We now turn to Plaintiffs‟ argument that the District Court erred when it denied
their motion for leave to amend. “We review the District Court‟s denial of a . . . motion
9
to amend the complaint for abuse of discretion, but we review the District Court‟s
underlying legal determinations de novo and factual determinations for clear error.”
Burtch, 662 F.3d at 220 (citations omitted).
The District Court did not abuse its discretion in denying Plaintiffs‟ motion
because the proposed complaint would not have demonstrated a plausible entitlement to
relief. Id. at 231 (indicating that futility is a valid reason to deny a motion for leave to file
an amended complaint). Amendment is futile when the “„complaint, as amended, would
fail to state a claim upon which relief could be granted.‟” Great W. Mining & Mineral
Co. v. Fox Rothschild LLP, 615 F.3d 159, 175 (3d Cir. 2010) (quoting In re Merck & Co.
Sec., Derivative, & ERISA Litig.,
493 F.3d 393, 400 (3d Cir. 2007)).
In relevant part, the proposed complaint added only conclusory allegations that
MUA was “medically necessary,” as well as an isolated claim that one medical journal
article from 1999 had found MUA to be “safe and efficacious” in certain contexts. These
additions were inadequate to have withstood another motion from UnitedHealth to
dismiss the complaint. Consequently, the District Court did not abuse its discretion when
it denied Plaintiffs leave to file a second amended complaint.
V
For the reasons stated, we will affirm the District Court‟s orders granting
UnitedHealth‟s motion to dismiss and denying Plaintiffs‟ motion.
10
