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Christoph v. AARP, Inc.

United States District Court, E.D. Pennsylvania

September 24, 2019

STEPHEN CHRISTOPH, et al. Plaintiffs
AARP, INC, et al. Defendants




         Plaintiffs Stephen Christoph and Glen Hill (collectively, “Plaintiffs”), individually and on behalf of all others similarly situated, brought this lawsuit against Defendants AARP, Inc., AARP Services Inc., AARP Insurance Plan (together, “AARP”), and UnitedHealthcare Insurance Company and UnitedHealth Group, Inc. (together, “United”) (collectively, with AARP, “Defendants”), and assert five causes of action under Pennsylvania law; to wit: (1) violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), 73 Pa. Cons. Stat. §201-2, et seq.; (2) conversion; (3) unjust enrichment; (4) fraudulent concealment; and (5) fraud. Plaintiffs contend that Defendants deceived them “into paying artificially inflated insurance charges for Medicare supplemental health insurance policies” known as AARP Medigap. Plaintiffs specifically allege that Defendants misrepresented that: (a) AARP Medigap premiums were used exclusively to pay for the costs of insurance when, in fact, 4.95% of the premiums were used to pay AARP an illegal commission; and (b) Defendants pay AARP royalty fees for the use of AARP’s intellectual property when, in fact, the payments are illegal commissions related to the sale of AARP Medigap policies. As remedies, Plaintiffs seek a permanent injunction enjoining Defendants from engaging in the alleged conduct and disgorgement of the amounts by which their insurance premiums have been “artificially inflated” by the unlawful commission/royalties paid to AARP but passed on to insureds as part of their premiums.

         Before this Court is Defendants’ motion to dismiss the complaint for failure to state a claim upon which relief can be granted filed pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6). [ECF 21]. In their motion, Defendants argue, inter alia, that Pennsylvania’s filed rate doctrine precludes the asserted claims because these claims challenge insurance rates that have been submitted to and approved by the governing state regulatory entity. Plaintiffs oppose the motion. [ECF 23]. The issues raised in the motion have been fully briefed and are ripe for consideration.[1] For the reasons stated herein, Defendants’ motion to dismiss is granted.


         When ruling on a motion to dismiss, this Court must accept as true all factual allegations in a plaintiff’s complaint and construe the facts alleged in the light most favorable to the plaintiff. Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009) (citing Ashcroft v. Iqbal, 556 U.S. 662, 677 (2009)). The facts relevant to the disposition of the underlying motion are as follows:[2]

AARP is a 501(c)(4) tax-exempt nonprofit organization that advocates for seniors’ interests; United is a health insurance company. (Compl. at ¶¶ 4, 26-27). United offers a Medigap insurance program to individual AARP members. (Id. at ¶¶ 6, 10, 19-20, 35). In 1997, United and AARP entered into a joint venture agreement entitled the “AARP Health Insurance Agreement.” (Id. at ¶ 41). Under the terms of the Agreement, United pays AARP a 4.95% “commission” or “royalty” for the use of AARP’s intellectual property in connection with its marketing of the insurance program. (Id. at ¶¶ 43-47) (see also Agreement, at §§4.2, 6.1).[3] The commission/royalties are calculated as a percentage of premiums, regardless of whether the coverage was sold through a third-party insurance agent or directly by United. (Compl. at ¶¶ 43-45) (Agreement §§ 6.1, 6.7). Plaintiffs contend that the 4.95% commission/royalties constitute an undisclosed and unlawful commission to an unlicensed insurance entity.
Medigap insurance, including that offered by United, is regulated at both the federal and state levels. United’s rates for its Medigap insurance offerings, specifically those at issue here, were filed with and approved by the Pennsylvania state regulators.[4]
Plaintiff Stephen Christoph enrolled in United’s Medigap Plan C effective January 1, 2017. Plaintiff Glen Hill enrolled in United’s Medigap Plan F effective June 1, 2011. Both Plaintiffs have, at all times, paid the Commissioner-approved rates for their plans.


         When considering a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), the court “must accept all of the complaint’s well-pleaded facts as true but may disregard any legal conclusions.” Fowler, 578 F.3d at 210. The court must determine “whether the facts alleged in the complaint are sufficient to show that the plaintiff has a ‘plausible claim for relief.’” Id. at 211 (quoting Ashcroft, 556 U.S. at 679). The complaint must do more than merely allege the plaintiff’s entitlement to relief; it must “show such an entitlement with its facts.” Id. (citations omitted). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]’-‘that the pleader is entitled to relief.’” Iqbal, 556 U.S. at 679 (quoting Fed.R.Civ.P. 8(a)) (alterations in original). “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.” Id. at 678 (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. To survive a motion to dismiss under Rule 12(b)(6), “a plaintiff must allege facts sufficient to ‘nudge [his] claims across the line from conceivable to plausible.’” Phillips v. Cty. of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (quoting Twombly, 550 U.S. at 570).


         In the underlying motion to dismiss, Defendants primarily argue that Plaintiffs’ claims are barred by Pennsylvania’s filed rate doctrine.[5] “The filed rate doctrine forbids a regulated entity from charging rates for its services other than those properly filed with the appropriate federal regulatory authority.” Milkman v. Am. Travelers Life Ins. Co., 2002 WL 778272 at *14 (Pa. Ct. Com. Pl. April 1, 2002). “The purpose of the filed rate doctrine is to: (1) preserve the regulating agency’s authority to determine the reasonableness of rates; and (2) [e]nsure that the regulated entities charge only those rates that the agency has approved or been made aware of as the law may require.” Id. The filed rate doctrine “bars recovery for injuries, including fraud-related injuries, arising from rates properly filed with the appropriate regulatory agency, ” id. at *14, and “prohibits a party from recovering damages measured by comparing the filed rate and the rate that might have been approved absent the conduct in issue.” Lombardi v. Allstate Ins. Co., 2011 WL 294506, at *7 (W.D. Pa. Jan. 27, 2011) (quoting Milkman, supra, at *14). Even “facially-neutral challenges-i.e., any cause of action that is not worded as a challenge to the rate itself-are barred when an award of damages would, effectively, change the rate paid by the customer-[plaintiff] to one below the filed rate paid by other customers.” Patel v. Specialized Loan Servicing, LLC, 904 F.3d 1314, 1322 (11th Cir. 2018) (alteration in original; internal quotations omitted). In this way, the filed rate doctrine “preserve[s] the exclusive role of . . . agencies in approving rates.” McCray v. Fid. Nat’l Title Ins. Co., 682 F.3d 229, 241 (3d Cir. 2012).

         Under the filed rate doctrine, when a regulated entity must charge only rates “properly filed with the appropriate . . . regulatory authority, ” those rates may not be collaterally challenged through private litigation. Lombardi, 2011 WL 294506, at *7 (quoting Milkman, supra, at *14). When “regulated companies are required by federal or state law to file proposed rates . . . with a regulatory agency, any rate approved by the agency ‘is per se reasonable and unassailable in judicial proceedings brought by ratepayers.’” Steven v. Union Planters Corp., 2000 WL 33128256, at *3 (E.D. Pa. Aug. 22, 2000); see also Patel, 904 F.3d 1314 (applying Pennsylvania’s filed rate doctrine and explaining that ...

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