Sagebrush LLC d/b/a The Edge Treatment Center v. Cigna Health and Life Insurance Company and Cigna Healthcare of California, Inc.

Summary

The United States District Court for the Central District of California granted in part Cigna’s motion for judgment on the pleadings in Sagebrush LLC’s reimbursement dispute. The court dismissed the implied-contract and account-stated claims with leave to amend, dismissed the UCL and quantum-meruit claims without leave to amend, and allowed the unjust-enrichment claim to proceed as a quasi-contract claim. The court declined to decide ERISA preemption because the pleadings did not establish that any claims involved ERISA plans.

Holdings

1. The complaint did not adequately plead mutual assent because Cigna's authorization to cover the services did not identify or establish the amount Cigna agreed to pay. The claim was dismissed with leave to amend because proposed allegations that Cigna knew Sagebrush's rates and had previously paid 100 percent of those rates could support an inference of assent to pay the billed rates.
2. The UCL claim was dismissed without leave to amend because Sagebrush sought the same amount for UCL restitution as for actual damages and did not allege or explain why it lacked an adequate remedy at law.
3. Sagebrush sufficiently pleaded unjust enrichment as a quasi-contract claim by alleging that Cigna received a benefit from Sagebrush's services and retained the value of that benefit by paying less than the alleged value of the services.
4. The quantum-meruit claim was dismissed without leave to amend because Sagebrush's theory relied on a regulation that limits reimbursement for non-emergency services to the amount stated in the enrollee's Evidence of Coverage, making recovery based on reasonable and customary rates legally incompatible with the governing law.
5. The account-stated claim was insufficient because the complaint did not provide grounds to infer that Cigna agreed to pay any specific amount, but the claim was dismissed with leave to amend because the proposed amendments could cure that deficiency.
6. The court did not decide ERISA preemption because the pleadings did not establish that any reimbursement claims were governed by an ERISA plan. Cigna could raise the issue at summary judgment if the existence and applicability of an ERISA plan became undisputed.

Questions Presented

1. Whether Sagebrush adequately pleaded a breach of implied contract based on Cigna's authorization of treatment and alleged obligation to pay Sagebrush's billed or customary rates.
2. Whether Sagebrush adequately pleaded a California Unfair Competition Law claim seeking restitution when it sought the same amount as compensatory damages and did not allege an inadequate remedy at law.
3. Whether Sagebrush adequately pleaded unjust enrichment or quasi-contract by alleging that Cigna received and retained a benefit from Sagebrush's services.
4. Whether Sagebrush adequately pleaded quantum meruit when its theory depended on California regulation 28 C.C.R. section 1300.71(a)(3)(B) and the services were non-emergency services subject to section 1300.71(a)(3)(C).
5. Whether Sagebrush adequately pleaded an account stated by alleging an agreement on the amount Cigna owed.
6. Whether the pleadings established ERISA preemption of Sagebrush's claims.

Disposition

other