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Cole v. American Specialty Health Network, Inc.

United States District Court, M.D. Tennessee, Nashville Division

April 16, 2015



TODD J. CAMPBELL, District Judge.

Pending before the Court are motions to dismiss filed by Cigna Corporation, Inc. ("Cigna") (Docket No. 28) and by American Specialty Health Network, Inc. ("ASH") (Docket No. 31). For the reasons stated herein, the Court will grant the motion in part and deny it in part. Specifically, the Court will deny the motions as to Plaintiffs' contract of adhesion claim and grant them as to the remainder of Plaintiffs' claims.


Cigna is a healthcare company that administers healthcare benefits plans for its clients, many of which are employers who provide health benefits to their employees through self-funded plans. As part of its role in administering plans, Cigna contracts with individual healthcare providers to treat plan members such that those providers become "in-network" providers who agree to charge members based on a pre-determined fee schedule. In contrast, "out-of-network" providers do not have a contractual relationship with Cigna and thus do not have agreed-upon rates with Cigna. However, those providers can still be compensated for treating patients covered by Cigna-administered plans.

Cigna also contracts with entities that provide healthcare services, including entities that provide access to their own networks of contracted healthcare professionals, administer payments to healthcare professionals for claims submitted to Cigna, and evaluate claims for medical necessity and/or appropriateness. In 2010, Cigna contracted with ASH to serve these functions with respect to Cigna's chiropractic claims in Tennessee. Some of the plaintiffs were existing in-network providers with Cigna at the time that Cigna contracted with ASH, though at least one plaintiff was not yet in-network. On November 11, 2010, ASH sent a letter to Cigna's in-network chiropractors informing them that effective March 1, 2011, "[t]o continue participation in the CIGNA network for these customers, you will need to contract directly with us at ASH Networks by submitting a credentialing application, Provider Services Agreement, and CIGNA Election to Participate documents to ASH by February 11, 2011." Docket No. 32-1 to 32-5 ("Recruitment Letter"). The Recruitment Letter also stated, "If ASH Networks does not receive the completed credentialing documents on or before the February 11, 2011 deadline termination proceedings will begin in accordance with your CIGNA agreement and applicable state law."[2] Plaintiffs allege that they were advised that their existing Cigna agreement would remain in effect but be "suspended" as it pertained to Cigna's managed-care medical-benefit plans for chiropractic services for the duration of Cigna's contract with ASH.

The crux of Plaintiffs' Complaint is that they signed the three-page Election to Participate before receiving the 82-page contract referred to in the Recruitment Letter as the "Provider Services Agreement" ("PSA"). Plaintiffs allege that they were not aware that the Election to Participate did not represent the entirety of their agreement with ASH, that they had no ability to negotiate the terms of the PSA, and that they object to some of the terms of the PSA. Defendants represent that the November 11, 2010 Recruitment Letter included a CD with all the documentation needed to enroll with ASH and remain in-network providers with Cigna, including the Election to Participate and the PSA. Defendants argue that the letter demonstrates that Plaintiffs had the PSA before they executed the Election to Participate. The Recruitment Letter states the following details about the nature of what is contained on the compact disc:

The enclosed ASH Networks Contracting Kit compact disc provides detailed information on the completion of the documents that need to be returned to ASH Networks to begin your credentialing process and remain participating in the CIGNA network. The Contracting Kit CD also includes the ASH Networker provider Operations Manual and the Payor Summaries and Fee Schedule of other ASH Network clients in your state, payor Summaries and Fee Schedules for the CIGNA program are included as a hard copy in this packet for your review.

Plaintiffs dispute that the CD was attached to the Recruitment Letter and allege that they did not have the PSA until after executing the Election to Participate. At least one Plaintiff was not an in-network provider and so alleges that he did not receive the Recruitment Letter or the PSA at all before signing the Election to Participate.

In addition to their complaints about the lack of disclosure of the terms of the PSA before the signing of the Elections to Participate, Plaintiffs also complain about alleged problems with the implementation of the PSA, including that Defendants failed to properly pay claims as required by the contract, failed to pay claims in a timely fashion, failed to pay claims pursuant to contractual terms, improperly assessed fees and penalties, improperly applied a "Tier System, " and failed to pay required interest as required by statute for late claims. On October 20, 2014, Plaintiffs filed this action asserting the following claims: (1) breach of contract/unjust enrichment; (2) contract of adhesion; (3) fraud/tortious misrepresentation; (4) wrongful trover and conversion; (5) constructive trust; (6) negligence; (7) negligence per se; (8) accounting. Federal jurisdiction is based on the diverse citizenship of the parties.

II. Standard of Review

For purposes of a motion to dismiss, the Court must take all of the factual allegations in the complaint as true. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. Id. 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. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice. Id. When 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. Id. at 1950. A legal conclusion couched as a factual allegation need not be accepted as true on a motion to dismiss, nor are recitations of the elements of a cause of action sufficient. Fritz v. Charter Township of Comstock, 592 F.3d 718, 722 (6th Cir. 2010).

III. Legal Analysis

A. ERISA Preemption

Defendants' first argument is that Plaintiffs' claims for breach of contract/unjust enrichment, wrongful trover/conversion, constructive trust, negligence, negligence per se, and accounting are preempted by the Employment Retirement Income Security Act ("ERISA"), 29 U.S.C. ยง 1111 et seq. because these claims allege that Cigna improperly calculated and/or denied benefits pursuant to the applicable benefit plans. Defendants assert that, to the extent that these plans are governed by ERISA, the ...

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