Four years after filing a complaint against Anthem Blue Cross and various employee welfare benefit plans (collectively, Defendants) for paying insurance benefits directly to insured patients instead of the Plaintiff assignees, on January 31, 2019, Plaintiffs Dual Diagnosis Treatment Center, Inc., Satya Health of California, Inc., Adeona Healthcare Inc, Sovereign Health of Phoenix, Inc, and Medical Concierge, Inc. (collectively, Plaintiffs) filed a motion in federal court seeking leave to amend Plaintiffs’ complaint in order to “clean up” and clarify Plaintiffs’ allegations. Defendants contend that Plaintiffs’ amended complaint would “fundamentally alter the nature of the case and would require the parties to litigate a discrete universe of issues not embraced by the litigation at any point in the previous four years.” Defendants ask the court to deny Plaintiffs’ motion. The case received national attention due to Anthems’ alleged payment to patients being treated for addiction and mental health problems of more than $1.3 million instead of the facilities providing treatment and is a noteworthy example of patients being placed in the middle of a payment and billing dispute between payors and providers.
Plaintiffs are providers of residential treatment and related services to individuals suffering from substance abuse disorders. Plaintiffs filed an initial complaint on May 8, 2015, alleging Defendants had wrongfully issued payment to beneficiaries rather than to Plaintiffs pursuant to assignments of benefits. Plaintiffs allege this practice ignored assignment of benefits with Blue Cross and employee welfare benefit plan beneficiaries. Plaintiffs were allegedly forced to “attempt to discover what had been paid, and to collect payments from their patients” and, as a result, were unable to collect millions of dollars they were owed. As part of their complaint, Plaintiffs initially named 159 employee welfare benefit plans and 49 Blue Cross entities in effort to recover benefits and damages related to 274 different patients from whom Plaintiffs received assignments.
Since filing their complaint and over the past three years, Defendants have challenged Plaintiffs’ allegations, with Plaintiffs subsequently filing amended complaints to address Defendants’ challenges and/or the court’s rulings. On May 1, 2018, the court issued an order concerning Plaintiffs’ Third Amended Complaint dismissing Plaintiffs’ claim for relief under California Business and Professions Code § 17200, et seq., and allowing Plaintiffs to bring claims against many of the Defendants for ERISA benefits under 29 U.S.C § 1132(a)(1)(B).
Plaintiffs now seek to file a fourth amended complaint that contends that in addition to improperly issued payment to beneficiaries instead of Plaintiffs, Defendants also underpaid several claims to Plaintiffs. Defendants, in their opposition to Plaintiffs’ motion, assert that Plaintiffs are attempting to add claims for breach of contract against certain Defendants, which would involve new state law issues in a case otherwise governed by ERISA. Defendants also note that the parties have engaged in nearly four years’ worth of briefing, discovery, and mediation and that allowing Plaintiffs to file a fourth amended complaint would prejudice Defendants. Plaintiffs’ position is that the fourth amended complaint would not place any undue prejudice on Defendants because these patient claims are already at issue in litigation since the beginning and recovery would “now simply based on a different legal theory.”
The case, Dual Diagnosis Treatment Center, Inc., et al. v. Blue Cross of California, dba Anthem Blue Cross, et al., Case No. 8:15-cv-00736, is currently before the Central District of California. Trial is set for April 7, 2020. Plaintiffs’ Memorandum of Points and Authorities in Support of Motion for Leave to File Fourth Amended Complaint can be found here. Defendants’ opposition to Plaintiffs motion can be found here.
