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Brown v. Kaiser Foundation Health Plan of Mid-Atlantic States, Inc.

United States District Court, M.D. Pennsylvania

December 27, 2019

ADAM A. BROWN, Plaintiff,


          Hon. John E. Jones III United States District Judge.

         Presently pending before the Court is Defendant Kaiser Foundation Health Plan of the Mid-Atlantic States, Inc.'s Motion to Dismiss Plaintiff's Complaint. (Doc. 15). The matter has been fully briefed, (Docs. 16, 17, 18), and is ripe for disposition. For the reasons that follow, Defendant's motion shall be granted.

         I. BACKGROUND

         In accordance with the standard of review applicable to a motion to dismiss, the following facts are derived from Plaintiff's complaint and viewed in the light most favorable to him.

         Between 2006 and 2016, Plaintiff Adam Brown (“Brown”) lived in Adams County, Pennsylvania but served as a firefighter with the Metropolitan Washington Airports Authority (“MWAA”). (Doc. 1 at ¶ 7). Brown was stationed at Dulles International Airport in northern Virginia. (Id. at ¶ 8). MWAA provided Brown with healthcare coverage through Defendant Kaiser Foundation Health Plan of the Mid-Atlantic States, Inc. (“Kaiser”). (Id. at ¶¶ 9-14). According to Brown, “Kaiser offered this ‘healthcare coverage' . . . understanding that MWAA employees might live outside of Virginia, the District of Columbia, and Maryland (the Service Area), ” (id. at ¶ 14), and “Kaiser explicitly contemplated (both in the Healthcare Contract) and in the Group Evidence of Coverage that Kaiser would pay for its Members' medical services that were provided outside of the Service Area.” (Id. at ¶ 15). Indeed, Brown posits, “Kaiser implicitly contemplated that it would pay for medical services provided in Pennsylvania for its Members.” (Id. at ¶ 16).

         In 2016, Brown was diagnosed with cancer and underwent several months of treatment at Gettysburg Hospital in Adams County. (Id. at ¶¶ 23-27). During this time, Kaiser sent Brown several explanations of benefits letters rejecting payment for Brown's treatment because Gettysburg Hospital and Brown's doctors were not covered under Brown's plan. (Id. at ¶ 28). Shortly thereafter, Kaiser referred Brown to a treatment program in Maryland that was covered by his plan. (Id. at ¶ 29). According to Brown, “[t]reatment in Maryland forced [him] to travel distances for treatment and to travel distances home after the treatment, ” which, in turn, caused him financial hardship. (Id. at ¶ 30). Moreover, Brown asserts that, because Kaiser declined to cover his treatment at Gettysburg Hospital, he “was forced to make payments for his medical care out of his own pocket, ” and “has been unable to pay his Pennsylvania medical providers for medical services that they rendered and for which Kaiser inappropriately refused to make payment.” (Id. at ¶¶ 33-34).

         On July 11, 2019, Brown filed a Complaint against Kaiser in this Court seeking treble damages, costs, and attorneys' fees. (Id.). In Count I, Brown contends that Kaiser violated several subsections of Pennsylvania's Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), 73 P.S. §201-2(4). Specifically, Brown cites, Kaiser represented to him that its healthcare coverage had “characteristics . . . uses . . . benefits or quantities that [it did] not have.” 73 P.S. §201-2(4)(v). Brown asserts that this is evidenced by Kaiser improperly denying payment of benefits, coverage requests, authorizations, and referrals for care. Brown also avers that Kaiser engaged in “other fraudulent or deceptive conduct which creates a likelihood of confusion or of misunderstanding, ” 73 P.S. §201-2(4)(xxi), by, among other things, “improperly and wantonly” denying requests for coverage and appeals of those denials and imposing upon its members an unnecessarily complex and technical appeal/resubmission process. (Id. at ¶¶ 37-64). Moreover, Brown posits, Kaiser knew that Brown was relying upon its agents for fiduciary advice and, despite having knowledge of additional methods by which Kaiser could process Brown's claims which could bring them within its coverage, Kaiser was intentionally deceptive and misleading and failed to disclose those methods to him. (Id. at ¶ 65-69). Finally, Brown contends, Kaiser's conduct was so pervasive that its conduct amounts to “a business practice, ” (id. at ¶ 63), and “corporate culture.” (Id. at ¶ 70). In Count II, Brown avers a bifurcated claim of insurance bad faith against Kaiser under 42 Pa.C.S. § 8371. First, Brown reasons, Kaiser breached its duty to him in bad faith by failing to cover the costs of his treatment. Second, Brown continues, Kaiser committed “a separate and independent act[] of bad faith” by inadequately investigating its denials after he presented new evidence “that Kaiser should have paid coverage for certain benefits.” (Id. at ¶¶ 76-88). In Count III, Brown asserts a claim of intentional misrepresentation against Kaiser based upon the facts that: (1) “Kaiser never made it known to Brown that [it] would be limiting his treatment to certain doctors and facilities, ” (id. at ¶ 90); (2) “Kaiser paid certain doctors and facilities for services rendered in Adams County, Pennsylvania, ” (id. at 91), yet also “denied certain doctors and facilities for services rendered in Adams County, Pennsylvania, ” (id. at 92); and (3) “motivated by Kaiser's self-interest and ill will toward Brown, ” Kaiser deliberately failed to disclose certain material facts and deliberately misrepresented certain other facts “with the intentions that Brown would forego further efforts to have his benefits justly paid.” (Id. at ¶¶ 93-96).

         On October 7, 2019, Kaiser filed the instant motion to dismiss Brown's Complaint, (Doc. 15), and a brief in support thereof on October 21, 2019. (Doc. 16). Brown filed a brief in opposition on November 4, 2019, (Doc. 17), and Kaiser filed a Reply on October 18, 2019. (Doc. 18). The matter has been fully briefed and is ripe for disposition. For the reasons that follow, Kaiser's motion shall be granted.


         In considering a motion to dismiss pursuant to Rule 12(b)(6), courts “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.” Phillips v. Cty. of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) (quoting Pinker v. Roche Holdings, Ltd., 292 F.3d 361, 374 n.7 (3d Cir. 2002)). In resolving a motion to dismiss pursuant to Rule 12(b)(6), a court generally should consider only the allegations in the complaint, as well as “documents that are attached to or submitted with the complaint . . . and any matters incorporated by reference or integral to the claim, items subject to judicial notice, matters of public record, orders, [and] items appearing in the record of the case.” Buck v. Hampton Twp. Sch. Dist., 452 F.3d 256, 260 (3d Cir. 2006). However, “[t]he Court is not obligated to accept as true ‘bald assertions,' Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997) (internal quotation marks omitted), ‘unsupported conclusions and unwarranted inferences,' Schuylkill Energy Res., Inc. v. Pennsylvania Power & Light Co., 113 F.3d 405, 417 (3d Cir. 1997), or allegations that are ‘self-evidently false,' Nami v. Fauver, 82 F.3d 63, 69 (3d Cir. 1996).” Pinnavaia on behalf of Pinnavaia v. Celotex Asbestos Settlement Tr., 271 F.Supp.3d 705, 708 (D. Del. 2017).

         In essence, a Rule 12(b)(6) motion tests the sufficiency of the complaint against the pleading requirement of Federal Rule of Civil Procedure 8(a). Rule 8(a)(2) requires that a complaint contain a short and plain statement of the claim showing that the pleader is entitled to relief, “in order to give the defendant fair notice of what the claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). While a complaint attacked by a Rule 12(b)(6) motion to dismiss need not contain detailed factual allegations, it must contain “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). To survive a motion to dismiss, a civil plaintiff must allege facts that “raise a right to relief above the speculative level . . . .” Victaulic Co. v. Tieman, 499 F.3d 227, 235 (3d Cir. 2007) (quoting Twombly, 550 U.S. at 555). The complaint must indicate that defendant's liability is more than “a sheer possibility.” Iqbal, 556 U.S. at 678.


         In its first issue, Kaiser argues that Count II must be dismissed because Kaiser is a Health Maintenance Organization (“HMO”) which Pennsylvania courts have explicitly found to be exempt from statutory bad faith claims. (Doc. 16 at 7 (citing DiGregorio v. Keystone Health Plan East, 840 A.2d 361, 370 (Pa. Super. Ct. 2003) (“Pennsylvania specifically exempts HMOs . . . from statutory bad faith claims under 42 Pa.C.S. § 8371.”); Nordi v. Keystone Health Plan West Inc., 989 A.2d 376, 382 (Pa. Super. Ct. 2010) (“HMO Act § 1560 insulates [an HMO] from laws like the bad faith statute which ‘relate to insurance corporations engaged in the business of insurance.'”)). Alternatively, Kaiser argues, even if the Court erroneously finds that Kaiser is an insurer-as opposed to an HMO-Brown's failure to attach the insurance contract or his communications with Kaiser regarding his claims is dispositive. That is, according to Kaiser, to assert a claim under 42 Pa.C.S. § 8371, a claimant must demonstrate that the insurer “(1) lacked a reasonable basis for denying benefits and (2) knew or recklessly disregarded its lack of a reasonable basis.” (Doc. 18 at 4 (quoting Atiyeh v. National Fire Ins. Co., 742 F.Supp.2d 591, 598 (E.D. Pa. 2010) (citing Toy v. Metro. Life Ins. Co., 928 A.2d 186, 193 (Pa. 2007))). Here, Kaiser, concludes, because Brown failed to attach or quote the alleged insurance contract or any denial letters related to his claims, he has failed to state a plausible claim for relief and Count II must be dismissed.

         In response, Brown asserts only that “[w]hether Kaiser is an insurer, an HMO, or some other form of legal entity should be a factual analysis to be completed during discovery, ” and that, because he has pleaded in the alternative that Kaiser is an insurer or an HMO, he has pleaded sufficient ...

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