# Theunissen v. United HealthCare of Louisiana, Inc.

> District Court, E.D. Louisiana · April 12, 2023

URL: https://www.frixlaw.com/law-library/cases/10189264

## Case

- **Court:** District Court, E.D. Louisiana
- **Decided:** April 12, 2023
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

TAYLOR B. THEUNISSEN, CIVIL ACTION
MD, LLC, ET AL.,
Plaintiffs

VERSUS NO. 22-2820

UNITED HEALTHCARE SECTION: “E” (2)
OF LOUISIANA, INC., ET AL.,
Defendants

ORDER AND REASONS
Before the Court is Defendant United Healthcare Insurance Company’s (“UHC”
or “Defendant”) Second Motion to Dismiss (“Motion”).1 The Court has reviewed the
Motion,2 the opposition filed by Taylor B. Theunissen, MD, LLC (“TBT”) and Sadeghi
Center for Plastic Surgery, LLC (“Sadeghi”) (collectively “Plaintiffs”),3 UHC’s reply,4 the
record, and the law, and now issues this Order and Reasons GRANTING Defendant’s
Motion.
BACKGROUND5
“This case is a claim for benefits due . . . based upon adverse benefit
determinations for services rendered” by Plaintiffs.6 At all relevant times, Patient N.T.
was a beneficiary of an Employee Health Benefit Plan (“Plan”) sponsored by Bechtel
Global Corporation and administered by UHC.7 The Plan is governed by the Employee

1 R. Doc. 20. Defendant filed its First Motion to Dismiss on October 21, 2022. R. Doc. 9. On November 9,
2022, the Court granted Plaintiffs leave to file a first amended complaint. R. Doc. 11. On November 14,
2022, Plaintiffs filed a first amended complaint. R. Doc. 12. Accordingly, the Court denied Defendant’s
First Motion to Dismiss as moot on November 17, 2022. R. Doc. 15.
2 R. Doc. 20.
3 R. Doc. 25.
4 R. Doc. 29.
5 The following facts are taken from Plaintiff’s first amended complaint. R. Doc. 12.
6 R. Doc. 12 at p. 2, ¶ 2.
7 Id. at p. 1, ¶ 1. “Because of confidentiality concerns, Plaintiff Providers’ patient is identified solely by her
Retirement Income Security Act of 1974 (“ERISA”).8 Patient N.T. was diagnosed with
left breast cancer and underwent a mastectomy and breast reconstruction.9 On March
23, 2018, Dr. Taylor Theunissen (of Plaintiff Taylor B. Theunissen, MD, LLC)10 and Dr.
Alireza Sadeghi (of Plaintiff Sadeghi Center for Plastic Surgery, LLC),11 working as co-
surgeons, performed a bilateral breast reconstruction with deep inferior epigastric

perforator flaps (“first reconstruction procedure”) on N.T.12 In hiring Plaintiffs, N.T.
executed a document entitled “Assignment of Benefits/Designated Authorized
Representative,” which assigned “to the fullest extent permitted by law and all benefit
and non-benefit rights (including the right to any payments) under” the Policy to
Plaintiffs.13 Dr. Sadeghi is a double board certified plastic surgeon and reconstructive
surgeon who specializes in reconstructive breast surgery for women who have dealt with
breast cancer in the past.14 Dr. Theunissen is a board certified plastic surgeon with
extensive breast reconstruction experience.15
On March 5, 2018, weeks prior to the first reconstruction procedure, Dr.
Theunissen submitted to UHC a pre-authorization request for Patient N.T.’s first
reconstruction procedure, citing to multiple medical codes: S2068, 19380, 19364,

21600, 15002, 15777, 64910, and 64488.16 During a status conference with the Court on
March 30, 2023, the parties confirmed Plaintiffs were out-of-network providers under
the Plan and that the Plan required Plaintiffs to seek prior authorization for the

initials.” Id. at p. 1 n.1.
8 Id. at p. 2, ¶ 7.
9 Id. at p. 4, ¶ 14. Plaintiffs do not allege when Patient N.T. was diagnosed with breast cancer.
10 Id. at p. 2, ¶ 5 n.2.
11 Id.
12 Id. at p. 4, ¶ 15.
13 Id. at p. 3, ¶ 10.
14 Id. at p. 5, ¶ 18.
15 Id. at p. 5, ¶ 19.
16 Id. at p. 6, ¶ 20.
reconstruction procedures.17 The March 5, 2018 pre-authorization request submitted to
UHC explicitly stated two surgeons, Dr. Sadeghi and Dr. Theunissen, would be
performing the first reconstruction procedure.18 On March 9, 2018, UHC sent a letter
(“First Pre-Authorization and Medical Necessity Letter”) to Patient N.T.,19 copying Dr.
Theunissen, stating “we have determined that the treatment is medically necessary.”20

The First Pre-Authorization and Medical Necessity Letter further states “[t]his approval
does not guarantee that the plan will pay for the service” as, inter alia, “[p]ayment of
covered services depends on other plan rules,” “plan benefit language[, and]
eligibility.”21 The First Pre-Authorization and Medical Necessity Letter references the
following procedure codes pertaining to the first reconstruction procedure: 15002,
15777, 19364, 19380, 21600, 64488, 64910, and S2068.22 With the First Pre-
Authorization and Medical Necessity Letter in hand, Plaintiffs proceeded with the first
reconstruction procedure.23
Following the first reconstruction procedure, Sadeghi submitted a claim to UHC
in the amount of $130,000 for the services rendered, under procedure codes S2068-RT-

17 R. Doc. 36 at p. 2.
18 R. Doc. 12 at p. 6, ¶ 20.
19 R. Doc. 20-5. During a status conference with the parties on March 30, 2023, Defendant confirmed the
R. Doc. 20-5 was addressed only to Patient N.T. See R. Doc. 36 at p. 2.
20 R. Doc. 20-5 at p. 1. The United States Court of Appeals for the Fifth Circuit has instructed, “when
considering a Rule 12(b)(6) motion, a court may consider documents outside the complaint when they
are: (1) attached to the motion; (2) referenced in the complaint; and (3) central to the plaintiff’s claims.”
Maloney Gaming Mgmt. v. St. Tammany Parish, 456 Fed.Appx. 336, 340 (5th Cir. 2011). Attached to
UHC’s Motion to Dismiss is the Policy and three pre-authorization communications between Patient N.T.
and UHC. R. Docs. 20-5, 20-6, 20-7, and 20-4. Mabel S. Fairley, a UHC legal specialist, declares under
penalty of perjury that the Policy and pre-authorization communications attached to UHC’s Motion are
true and correct. R. Doc. 20-8. The Policy and pre-authorization communications are referenced in
Plaintiffs’ first amended complaint and central to the claims they assert. R. Doc. 12. Accordingly, the
Court may appropriately consider the Policy and pre-authorization communications even though they fall
outside of the four-corners of the first amended complaint.
21 R. Doc. 20-5 at p. 2. Notably, medical necessity is but one required element for a service to constitute a
“covered health service” under the Plan. See R. Doc. 20-4 at p. 125 (providing that a covered health service
is one that UHC determines is (1) medically necessary; (2) described as a covered health service in the
Policy; (3) provided to a “covered person;” and (4) not otherwise excluded under the Policy).
22 R. Doc. 20-5 at p. 1.
23 R. Doc. 12 at p. 7, ¶ 29.
62 and S2068-LT-62.24 Thereafter, UHC rejected Sadeghi’s claim “based, at least in
part, on the rejection of [procedure code] S2068” and “the clear terms of the Plan.”25
UHC paid Sadeghi nothing.26 Similarly, TBT, following the first reconstruction
procedure, submitted a claim to UHC in the amount of $125,000 for the services
rendered, under unknown procedure codes.27 UHC paid TBT only $1,000.28

After the first reconstruction procedure, a “revision of the breast reconstruction
was required” and, as a result, another surgery was scheduled for August 6, 2018
(“second reconstruction procedure”).29 In a letter dated July 31, 2018 and addressed to
Patient N.T. (“Second Pre-Authorization Letter”), UHC determined the second
reconstruction procedure was “eligible for Outpatient Facility coverage,” but cautioned
that the Plan “may have limits on . . . services . . . cover[ed]” and “[t]his approval does
not guarantee that the plan will pay for the service” because, for example, “[p]ayment of
covered services depends on other plan rules.”30 With respect to the second
reconstruction procedure, UHC stated in correspondence as follows:
During adjudication of out-of-network claims, our system refers to the FH
Benchmark databased and automatically applies the amount reported at
the plan’s selected percentile for your geographic area (called the “geozip”)
for eligible claims. Your plan has chosen to use the 95%th percentile.31

With the Second Pre-Authorization Letter in hand, Plaintiffs proceeded with the second
reconstruction procedure.32 Following the second procedure, Plaintiffs submitted claims

24 Id. at p. 8, ¶¶ 30-32.
25 Id. at. P. 8 ¶¶ 33, 36.
26 Id. at p. 8, ¶ 36.
27 Id. at p. 8, ¶ 37. Plaintiffs do not allege under which procedure codes TBT billed UHC.
28 Id. at p. 9, ¶ 38.
29 Id. at p. 9, ¶ 40.
30 R. Doc. 20-6 at pp. 1-2. During a status conference with the parties on March 30, 2023, Defendant
confirmed the R. Doc. 20-6 was addressed only to Patient N.T. See R. Doc. 36 at p. 2.
31 R. Doc. 12 at p. 9, ¶ 42 (emphasis added).
32 Id. at p. 9, ¶ 39.
to UHC, which UHC “failed to pay.”33
In early 2020, “it was determined that N.T. required a third surgery . . . to
address complications from the prior breast reconstruction procedures.”34 The third
surgery was scheduled for February 17, 2020 (“third reconstruction procedure”).35 On
January 24, 2020, Dr. Theunissen requested authorization from UHC to undertake the

third reconstruction procedure.36 In a letter to Patient N.T. dated February 10, 2020,
UHC determined the third reconstruction procedure was eligible for coverage under the
Plan (“Third Pre-Authorization Letter”).37 Like the first and second pre-authorization
letters, this Letter stated “[t]his approval does not guarantee that the plan will pay for
the service” because, inter alia, “[p]ayment of covered services depends on other plan
rules.”38 The substance of the Third Pre-Authorization Letter “was further confirmed via
a telephone call from Dr. Theunissen’s office.”39 With the Third Pre-Authorization Letter
in hand, Dr. Theunissen undertook the third reconstruction procedure.40 TBT then
submitted a claim to UHC in the amount of $60,000,41 which was rejected.42
In response to UHC’s denial of the claims as submitted by Sadeghi and TBT for
the first, second, and third reconstruction procedures, Plaintiffs, as assignees of Patient

33 Id. at p. 9, ¶ 42. Plaintiffs allege a partial payment was made to TBT. Id. at p. 9, ¶ 43. Plaintiffs do not
allege whether a partial payment was made to Sadeghi.
34 Id. at p. 9, ¶ 45.
35 Id.
36 Id. at p. 9, ¶ 46.
37 R. Doc. 20-7 at p. 1.
38 Id. at p. 2.
39 R. Doc. 12 at p. 10, ¶ 47.
40 Id. at p. 10, ¶ 48.
41 Id.
42 Id. at p. 10, ¶ 49. Connected to the third reconstruction procedure, Plaintiffs further allege UHC
referred the denied claim to its contractor, who made an offer on behalf of UHC that TBT then accepted,
which UHC allegedly reneged on. See id. at pp. 10-11, ¶¶ 50-56. The Court does not explore those factual
allegations here because they form the basis of a separate breach of contract claim, which is not before the
Court. See R. Doc. 36 (clarifying “Plaintiffs are bringing two separate breach of contract claims” and
UHC’s Motion to Dismiss is only with respect to the breach of contract claim and the detrimental reliance
claim related to “pre-authorization communications”).
N.T., submitted both first and second level member appeals to UHC (“member
appeals”).43 UHC denied the appeals.44 Plaintiffs allege the ERISA administrative
exhaustion requirement has been met.45 Plaintiffs allege UHC’s refusals to “make
sufficient payment for N.T.’s claims under the term (sic) of the Plan are ‘adverse benefit
determinations’ under ERISA.”46

Accordingly, Plaintiffs initiated the instant lawsuit on August 23, 2022.47
Plaintiffs bring four claims against UHC in their first amended complaint: (1) an ERISA
claim as N.T.’s assignee; (2) two claims for breach of contract under Louisiana law; and
(3) a claim for detrimental reliance under Louisiana law. “The Louisiana state law
claims asserted . . . are brought by the Plaintiff Providers in their individual capacity and
not under the assignment of benefits from N.T.”48 The ERISA claim has been stayed.49
UHC moves only to dismiss one of Plaintiffs’ state law claims of breach of contract and
Plaintiffs’ detrimental reliance claim, both of which are based on UHC’s
preauthorization communications, on grounds of ERISA preemption.50
With respect to the relevant state law breach of contract claim, Plaintiffs allege
the First Pre-Authorization and Medical Necessity Letter, the Second Pre-Authorization

Letter, and the Third Pre-Authorization Letter (collectively the “Letters”) amount to a
contract between UHC and Plaintiffs, under which UHC agreed the reconstruction

43 R. Doc. 12 at p. 11, ¶ 58.
44 Id. at p. 12, ¶ 61.
45 Id. at p. 12, ¶ 63.UHC does not contest this point for purposes of this Motion. See R. Doc. 20.
46 R. Doc. 12 at p. 12, ¶ 62.
47 R. Doc. 1.
48 R. Doc. 12 at p. 4, ¶ 12.
49 R. Doc. 17 at p. 2 (“WHEREAS, the Parties stipulate and agree that Plaintiffs’ ERISA claim . . . should be
stayed . . . until such time as the District of New Jersey resolves the question of whether a class should be
certified in the Tamburrino case.”).
50 R. Doc. 20. Thus, UHC does not move to dismiss Plaintiffs’ ERISA claim or state law “breach of contract
claim on the basis of the ‘MARS Negotiated Resolution.’” R. Doc. 36 at p. 2 (citing R. Doc. 12 at p. 10, ¶¶
51-53).
procedures were both eligible under the Policy and medically necessary.51 Tracking the
language of the Policy,52 Plaintiffs allege that, by way of the Letters, UHC agreed to pay
Plaintiffs the customary and reasonable compensation for the reconstruction
procedures—a non-specific dollar amount.53 Plaintiffs allege UHC breached the
“agreement” by refusing to pay the reasonable and customary fee for the reconstruction

procedures.54 As a result of that breach, the Plaintiff Providers incurred “damages in an
amount to be shown at the trial of this matter.”55
With respect to the state law detrimental reliance claim, Plaintiffs allege UHC,
“[t]hrough its conduct and/or work, including but not limited to the representation
stated in the [] Letters, . . . represented to the [Plaintiffs] that the [r]econtruction
[p]rocedures were both eligible [under the Policy] and medically necessary, that the
[Plaintiffs] were authorized to undertake the [r]econtruction [p]rocedures and that
[UHC] would pay the reasonable and customary fees for the [r]econtruction
[p]rocedures.”56 Plaintiffs allege they “justifiably relied on those representations by”
UHC57 and “changed their position to their detriment based on said representations by,
inter alia, undertaking the” reconstruction procedures for Patient N.T.58 As a result,

Plaintiffs “have incurred damages in [an] amount to be proven at the trial of this
matter.”59
For purposes of this Motion, UHC does not attack the legal sufficiency of

51 R. Doc. 12 at p. 13, ¶¶ 67-72.
52 See, e.g., R. Doc. 20-4 at p. 70 (“When the provider is a non-Network provider for the primary plan . . . ,
the allowable expense is the reasonable and customary charges allowed by the primary plan.”).
53 R. Doc. 12 at p. 13, ¶ 70.
54 Id. at p. 13, ¶ 72.
55 Id. at p. 14, ¶ 74.
56 Id. at p. 14, ¶ 77.
57 Id. at p. 14, ¶ 78.
58 Id. at p. 14, ¶ 79.
59 Id. at p. 15, ¶ 80.
Plaintiffs’ allegations to support state law causes of action for breach of contract and
detrimental reliance.60 Instead, UHC argues the state law claims of breach of contract
and detrimental reliance based on the Letters must be dismissed because they are
preempted by ERISA.61 Plaintiffs oppose.62
LEGAL STANDARD

Pursuant to Federal Rule of Civil Procedure 12(b)(6), a district court may dismiss
a complaint, or any part of it, for failure to state a claim upon which relief may be
granted if the plaintiff has not set forth factual allegations in support of his claim that
would entitle him to relief.63 “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.’”64 “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.”65 However, the court does not accept as true legal conclusions or
mere conclusory statements,66 and “conclusory allegations or legal conclusions
masquerading as factual conclusions will not suffice to prevent a motion to dismiss.”67
“[T]hreadbare recitals of elements of a cause of action, supported by mere conclusory

statements” or “naked assertion[s] devoid of further factual enhancement” are not

60 R. Doc. 20.
61 R. Doc. 20-1 at p. 4 (preliminary statement). For clarity, when the Court refers to Plaintiffs’ state law
breach of contract and detrimental reliance claims, it is only referring to those claims based on the
Letters. The Court is not referring to Plaintiffs’ separate breach of contract claim based on the “MARS
Negotiated Resolution.” R. Doc. 36 at p. 2 (citing R. Doc. 12 at p. 10, ¶¶ 51-53).
62 R. Doc. 25.
63 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir.
2007).
64 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570).
65 Id.
66 Id.
67 S. Christian Leadership Conf. v. Supreme Court of the State of La., 252 F.3d 781, 786 (5th Cir. 2001)
(citing Fernandez-Montes v. Allied Pilots Ass'n, 987 F.2d 278, 284 (5th Cir. 1993)).
sufficient.68
In summary, “[f]actual allegations must be enough to raise a right to relief above
the speculative level.”69 “[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.”70 “Dismissal is appropriate when the

complaint ‘on its face show[s] a bar to relief.’”71
LAW AND ANALYSIS
I. ERISA completely preempts Plaintiffs’ state law breach of contract
and detrimental reliance claims based on the Letters.

Defendant UHC asks the Court to dismiss Plaintiffs’ state law breach of contract
and detrimental reliance claims based on the Letters under 29 U.S.C. § 1132(a) or 29
U.S.C. § 1144(a) because the claims are either completely preempted or conflict
preempted under ERISA.72 Both complete and conflict preemption may arise under
ERISA.73 Since the applicability of ERISA to this lawsuit is not in dispute, either of the
two paths to ERISA preemption may apply. Because the Court finds Plaintiffs’ state law
claims based on the Letters are completely preempted, it is not necessary to reach
UHC’s conflict preemption arguments.
With respect to complete preemption, a state law claim falls within the scope of
ERISA and is completely preempted “if [1] an individual, at some point in time, could
have brought his claim under ERISA § 502(a)(1)(B), and . . . [2] there is no other

68 Iqbal, 556 U.S. at 663, 678 (citations omitted).
69 Twombly, 550 U.S. at 555.
70 Id. (quoting FED. R. CIV. P. 8(a)(2)).
71 Cutrer v. McMillan, 308 F. App'x 819, 820 (5th Cir. 2009) (per curiam) (unpublished) (quoting Clark v.
Amoco Prod. Co., 794 F.2d 967, 970 (5th Cir. 1986)).
72 R. Doc. 20-1 at pp. 8, 11.
73 Ellis v. Liberty Life Assur. Co. of Boston, 394 F.3d 262, 274–76 (5th Cir. 2004).
independent legal duty that is implicated by a defendant’s actions.”74 Said simply, an
alleged state law claim is completely preempted by ERISA if “the individual is entitled to
such coverage only because of the terms of an ERISA-regulated employee benefit plan,
and . . . no legal duty (state or federal) independent of ERISA or the plan terms is
violated.”75

As is the case here, “[w]hether a third-party health care provider’s claims are
completely preempted by ERISA depends on precisely what rights the provider seeks to
enforce and what duty it alleges has been breached.”76 If the claim is asserted “in a
derivative capacity pursuant to an assignment of [a] patient’s rights,” then “[t]hat kind
of derivative claim is completely preempted by ERISA.”77
But “if a health care provider can assert a right to payment based on some
separate agreement between itself and an ERISA defendant (such as a provider
agreement or an alleged verification of reimbursement prior to providing medical
services), that direct claim [may] not [be] completely preempted by ERISA.”78 In cases
involving an insurer’s alleged verification of reimbursement to a medical provider, the
Fifth Circuit and federal district courts within the Fifth Circuit have recognized a

distinction between “rate of payment” and “right to payment” claims.79 A rate of
payment claim is alleged when a provider is disputing only the amount of payment, the
basic right to payment has already been established, and the remaining dispute only

74 Aetna Health Inc. v. Davila, 542 U.S. 200, 210 (2004).
75 Id.
76 Ctr. for Restorative Breast Surgery, L.L.C. v. Humana Health Ben. Plan of Louisiana, Inc., No. 10-
4346, 2011 WL 1103760, at *2 (E.D. La. Mar. 22, 2011) (Fallon, J.) (citing Conn. State Dental Ass’n v.
Anthem Health Plans, Inc., 591 F.3d 1337, 1346–47 (11th Cir. 2009)).
77 Id. (citing Conn., 591 F.3d at 1347).
78 Id. (emphasis added) (citing Conn., 591 F.3d at 1346–47).
79 See, e.g., Lone Star OB/GYN Assoc. v. Aetna Health Inc., 579 F.3d 525, 532 (5th Cir. 2009); Anderson
v. Ochsner Health Sys., 2012 WL 2116173, at *3 (E.D. La. 6/11/2012) (Africk, J.).
involves obligations derived from a source other than the ERISA-governed plan.80 A
right to payment claim, on the other hand, is alleged when the provider is claiming non-
payment or underpayment because the insurer denied full payment for “medically
necessary” services—a coverage determination usually defined by ERISA plans.81 Right
to payment claims are completely preempted by ERISA,82 while rate of payment claims

may not be.83 Identifying whether a claim is a right to payment versus rate of payment
claim requires judicial discernment.84 This is because any attempt to characterize claims
as eluding the scope of ERISA itself presents a legal rather than a factual conclusion.85 It
is the Court’s function to draw legal conclusions from the facts pled.86 “Merely referring
to labels affixed to claims to distinguish between preempted and non-preempted claims
is not helpful because doing so would elevate form over substance and allow parties to
evade the pre-emptive scope of ERISA.”87
With these precepts in mind, the Court will now turn to the two elements that
must exist for Plaintiffs’ state law claims of breach of contract and detrimental reliance
to be preempted by ERISA: (1) Plaintiffs must have been able to, at some point in time,
bring their state law claims under Section 502(a)(1)(B) of ERISA; and (2) there must be

80 Lone Star OB/GYN Assoc., 579 F.3d at 530-31; see also Long Island Thoracic Surgery, P.C. v. Building
Service 32BJ Health Fund, 2019 WL 7598669 (E.D. NY 9/3/2019).
81 Lone Star OB/GYN Assoc., 579 F.3d at 530-31.
82 This is true if the Plaintiffs have standing to sue under ERISA. If there is no standing, even a right to
payment claim will escape complete preemption.
83 Lone Star OB/GYN Assoc., 579 F.3d at 530-31.
84 Gables Ins. Recovery v. United Healthcare Ins. Co., 2013 WL 9576688 (S.D. Fla. 8/8/2012).
85 Id.;
86 S. Christian Leadership Conf. v. Supreme Court of the State of La., 252 F.3d 781, 786 (5th Cir. 2001)
(citing Fernandez-Montes v. Allied Pilots Ass'n, 987 F.2d 278, 284 (5th Cir. 1993)).
87 De La Pedraja v. UnitedHealthcare of Florida, Inc., 2010 WL 11570680 (S.D. Fla. 8/20/2010); see also
Connecticut State Dental Ass’n v. Anthem Health Plans, Inc., 2009 WL 5126236 (11th Cir. 2009). The
Court finds Omega Hospital v. Aetna Life Insurance Co., an unreported and non-binding case on which
Plaintiffs rely in opposition, unpersuasive because, in that case, the district court merely referred to labels
affixed to the claims by the plaintiff to distinguish between preempted and non-preempted claims. R. Doc.
25 at p. 10; see 2008 WL 4059854 (E.D. La. 8/25/2008) (Africk, J.).
no other independent legal duty implicated by UHC’s actions.”88
A. Plaintiffs’ state law breach of contract and detrimental reliance
claims based on the Letters could have been brought under §
502(a)(1)(B).

In determining whether Plaintiffs’ state law breach of contract and detrimental
reliance claims based on the Letters are completely preempted by ERISA, the Court
must first determine whether Plaintiffs could have brought these claims under ERISA §
502(a)(1)(B). In the Fifth Circuit, this first element of the ERISA preemption analysis is
concerned with determining whether Plaintiffs have standing to sue under ERISA.89
Importantly, ERISA does not preempt “[a] state law claim . . . [that] does not affect the
relations among the principle ERISA entities (the employer, the plan fiduciaries, the
plan, and the beneficiaries).”90 Admittedly, Plaintiffs in this case do not allege they are
participants or beneficiaries of an ERISA plan; thus, they lack independent standing to
assert a claim for recovery under ERISA.91 However, when a participant or beneficiary
assigns her right to receive benefits under an ERISA plan to their medical provider, that
provider may bring a derivative action to enforce an ERISA plan beneficiary’s claim.92
Plaintiffs allege Patient N.T. executed a document entitled “Assignment of
Benefits/Designated Authorized Representative,” which assigned “to the fullest extent
permitted by law and all benefit and non-benefit rights (including the right to any
payments) under” the Policy to Plaintiffs.93 Thus, accepting Plaintiffs’ allegations as

88 Lone Star OB/GYN Assoc. v. Aetna Health Inc., 579 F.3d 525, 529-30 (5th Cir. 2009).
89 Id.; but see Montefiore Medical Center v. Teamsters Local 272, 642 F.3d 321 (2d Cir. 2011) (providing
that this element involves two inquiries: (1) whether the plaintiff is the type of party that can bring a claim
pursuant to § 502(a)(1)(B) and (2) whether the actual claim that plaintiff asserts can be construed as a
colorable claim for benefits pursuant to § 502(a)(1)(B)).
90 Perkins v. Time Ins. Co., 898 F.2d 470, 473 (5th Cir. 1990).
91 R. Doc. 12.
92 Harris Methodist Fort Worth v. Sales Support Servs. Inc. Employee Health Care Plan, 426 F.3d 330,
333-34 (5th Cir. 2005).
93 R. Doc. 12 at p. 3, ¶ 10.
true, they have standing to bring a derivative action under ERISA.
In their opposition to UHC’s Second Motion to Dismiss, Plaintiffs do not
challenge the first prong of the complete preemption analysis under ERISA.94 During a
status conference held on March 30, 2023, “the parties agreed Plaintiffs’ state law
claims could have been brought under ERISA § 502(a)(1)(B).”95 In light of the foregoing,

the Court finds the first element for ERISA preemption is satisfied in this case. The
Court now moves to the more “crucial question . . . [of] whether [Plaintiffs are] in fact
seeking benefits under the terms of the plan, or rights that derive from” an independent
legal duty.96
B. No legal independent state law duty is implicated by UHC’s actions.

To establish complete preemption, the Court also must find that no independent
state law legal duty is implicated by UHC’s actions. A claim implicates an independent
legal duty when a plaintiff may bring the state law claim regardless of the terms of an
ERISA plan.97 If a party is suing “under obligations created by the plan itself, [instead
of] under obligations independent of the plan and the plan member,” the alleged
obligations implicate legal duties that are not entirely independent of ERISA, and thus
are subject to complete preemption.98 Said differently, if UHC’s obligation to pay
Plaintiffs stems from the ERISA Plan as opposed to another independent obligation,
claims arising from the UHC’s alleged breach are right to payment claims, not a rate of
payment claim independent of the Plan,99 and are preempted.100 Rate of payment claims

94 See R. Doc. 25.
95 R. Doc. 36 at p. 2.
96 Lone Star OB/GYN Assoc. v. Aetna Health Inc., 579 F.3d 525, 529 n.3 (5th Cir. 2009).
97 Aetna Health Inc. v. Davila, 542 U.S. 200, 213 (2004).
98 Spring E.R., LLC v. Aetna Life Ins. Co., 2010 WL 598748, at *5 (S.D.Tex. Feb. 17, 2010).
99 See id. at 530–31; Lone Star OB/GYN Assoc. v. Aetna Health Inc., 579 F.3d 525, 532 (5th Cir. 2009);
Anderson v. Ochsner Health Sys., 2012 WL 2116173, at *3 (E.D. La. 6/11/2012) (Africk, J.); see also Long
may not be preempted.101 For clarity, the Court confirms what other courts have
recognized: the rate of payment may still be at issue even when a claim is properly
characterized as a right of payment claim. Some courts have characterized this kind of
right to payment claim as a sort of “hybrid claim[]—challenging both the rate of
payment and the right to payment.” Such “hybrid” right of payment claims “still fall

within the scope of ERISA under the Davilla complete preemption analysis,”102 and are
preempted.
In their first amended complaint, Plaintiffs allege they bring their state law
breach of contract and detrimental reliance claims in their individual capacities and not
under the assignment of benefits from Patient N.T.103 Plaintiffs allege the Letters (the
First Pre-Authorization and Medical Necessity Letter, the Second Pre-Authorization
Letter, and the Third Pre-Authorization Letter) constitute a contract, under which UHC
agreed (1) the first, second, and third reconstruction procedures were eligible for
coverage under the Policy and medically necessary and (2) to pay Plaintiffs the
customary and reasonable compensation for the reconstruction procedures.104 Pointing
to these allegations, in opposition to the instant Motion to Dismiss, Plaintiffs argue UHC

“breached obligations owed to Plaintiff[s] . . . separate from, and independent of,

Island Thoracic Surgery, P.C. v. Building Service 32BJ Health Fund, 2019 WL 7598669 (E.D. NY
9/3/2019).
100 This is true if the Plaintiffs have standing to sue under ERISA. If there is no standing, even a right to
payment claim will escape complete preemption.
101 Lone Star OB/GYN Assoc., 579 F.3d at 530-31.
102 La Ley Recovery Sys-OB, Inc. v. UnitedHealthcare Ins. Co., 2014 WL 5524389, at *3 (S.D. Fla.
10/31/2014). For ease of reference, the Court will refer to Plaintiffs’ state law claims based on Letters as
“right of payment” claims even though the rate of payment also seems to be at issue.
103 R. Doc. 12 at p. 4, ¶ 12. Had they brought their state law claims as the assignee of Patient N.T., the state
law claims would also be completely preempted by ERISA. Hermann Hosp. v. MEBA Medical Benefits
Plan, 845 F.2d 1286, 1290 (5th Cir. 1988).
104 R. Doc. 13 at p. 13, ¶¶ 67-72.
ERISA,”105 meaning their claims are, they argue, only rate of payment claims. To that
end, Plaintiffs also argue “[t]hese claims . . . are not dependent on the specifics of the
applicable plan and do not require review of the plan to resolve.”106 Rather, the only
issue, according to Plaintiffs, is the rate of payment owed, not whether Plaintiffs have a
right to payment.107

The district court in Sadeghi Center for Plastic Surgery, et al. v. Aetna plainly
foreclosed Sadeghi’s and TBT’s ability to argue the preauthorization letters in that case
gave rise to a legal duty independent of the ERISA-governed plans.108 Because the
preauthorization letters were inextricably linked with the ERISA plans, the claims
brought to enforce the plans were truly right of payment claims. In that case, a federal
district court in the United States District Court for the Middle District of Louisiana
held, on summary judgment, that virtually identical breach of contract and detrimental
reliance claims brought by the same two plastic surgeons as in the case at bar were
completely preempted by ERISA.109 There, Dr. Sadeghi and Dr. Theunissen brought a
lawsuit against Aetna, a plan administrator, for underpayment of benefits related to
breast reconstruction surgeries involving multiple surgeons.110 Dr. Sadeghi and Dr.

Theunissen argued the preauthorization letters Aetna sent to them constituted a valid
contract for payment of services.111 The doctors brought Louisiana state law claims of
detrimental reliance and breach of contract in their individual capacities and not as

105 R. Doc. 25 at p. 5.
106 Id. at pp. 12-13.
107 Id. at p. 13.
108 Sadeghi v. Aetna Life Ins. Co., 564 F.Supp.3d 429 (M.D. La. 9/28/2021). It bears mentioning that
Plaintiffs’ opposition includes no discussion of the Sadeghi case, even though the instant Motion to
Dismiss is, rightly so, based almost entirely on the holding in that case.
109 Id. at 472. The Court is cognizant that Sadeghi was decided at the summary judgment stage, while the
case at bar is merely at the motion to dismiss stage of litigation. The Court has looked to Plaintiffs’ factual
allegations in the first amended complaint, accepted those as true, and finds Sadeghi factually analogous.
110 Id. at 433.
111 Id. at 456-57.
assignees of their patients.112 With respect to the second element for complete
preemption under ERISA, i.e., whether there was an independent legal duty implicated
by the defendant’s actions, the district court held the preauthorization letters “d[id] not
constitute a separate contract or agreement” independent of the ERISA benefit plan,
meaning no independent separate legal duty was implicated.113 Accordingly, the district

court found the plaintiffs’ state law claims were not rate of payment claims, but rather
were right to payment claims.114 To aid in its determination of whether a
preauthorization letter implicated an “independent duty” separate from the plan, the
district court differentiated between letters that provided a “rate of payment” and letters
that “implicate a right to benefits available under the Plans.”115
According to the district judge, insurer preauthorization letters that promise a
specific “rate of payment” could implicate an independent duty separate from the
benefits plan; however, letters that “implicate a right to benefits under the Plans” do
not, and thus are completely preempted by ERISA.116 The district court reasoned Aetna’s
preauthorization letters were “clear that no specific amount of payment for services
[was] promised.”117 Instead, the preauthorization letters referenced benefits, and the

determination of the benefits required interpretation of the plans.118 Consistent with
other caselaw, the mere fact that partial payment of a claim was sometimes made by
Aetna did not transform the preauthorization letters into obligations separate from the

112 Id. at 455.
113 Id. at 469.
114 Id. at 472. Again, the rate of payment may still be at issue in the context of a right to payment claim.
115 See generally id.
116 Id. at 469-72.
117 Id. at 469.
118 Id. at 470 (citing Ambulatory Infusion Therapy Specialists, Inc. v. Aetna, 2007 WL 320974 (S.D. Tex.
1/30/2007)).
plans.119 The district court highlighted that the preauthorization letters were not
addressed to the medical providers exclusively, which further undermined any claim
that the letters were separate contracts between the providers and Aetna.120 The explicit
text of the plans also stated that prior approval was not a guarantee of payment, and
payment for services was subject to terms and conditions of the plans.121 “[T]he promise

[in the letters that services were eligible for coverage] was not [a promise] that Plaintiffs
would be reimbursed a specified amount for services; rather, it is a representation of
when the services would be covered” under the relevant plans.122 This kind of “‘promise’
is expressly conditional and necessarily turns on interpretation” of the ERISA plan.123
Accordingly, the district court found
the [letters] do not provide a rate of payment; rather they implicate a right
to benefits available under the Plans. The [letters] do not simply cross-
reference the Plans or overlap with promises set forth therein; rather, the
terms of the [letters] depend almost entirely on consultation with and
interpretation of the Plans. . . . Therefore, the [court found] Plaintiffs’ state
law breach of contract and detrimental reliance claims are completely
preempted by ERISA.124

The Court finds the reasoning of Sadeghi to be highly persuasive. Applying that
reasoning to the case at bar, as a matter of law, the Letters (the First Pre-Authorization
and Medical Necessity Letter, the Second Pre-Authorization Letter, and the Third Pre-
Authorization Letter) do not constitute a separate agreement that gives rise to a legal
duty outside of ERISA and the Plan. Accordingly, Plaintiffs’ state law claims are right to
payment claims.125

119 Id. at
120 Id. at 469.
121 Id. at 470.
122 Id. at 472.
123 Id.
124 Id.
125 The rate of payment also seems to be at issue. To be sure, some courts have characterized these kinds of
With respect to the Letters, like in Sadeghi, the Letters UHC sent: (1) are
addressed to Patient N.T., not the medical providers;126 (2) provide for eligibility under
the Plan;127 (3) refer to the Plan when stating the “plan may have limits on . . . services
the plan covers;”128 (4) explicitly provide that they “do[] not guarantee that the plan will
pay for the service” because “[p]ayment of covered services depends on other plan

rules;”129 and (5) set out no specific rate of payment, meaning they cannot give rise to a
rate of payment claim.130 It is abundantly clear that the Letters are a reflection of, and
not separate from, the Plan; rather, they implicate a right to benefits under the Plan.
Pre-authorization letters that merely “implicate a right to benefits available under the
Plan[]” do not implicate an independent duty separate from the benefits plan and claims
arising from them are completely preempted by ERISA as they are right to payment
claims.131 This is because a rate of payment claim is alleged when a provider is disputing
only the amount of payment, the basic right to payment has already been established,
and the remaining dispute only involves obligations derived from a source other than
the ERISA-governed plan.132 In the context of the Letters, the source of the obligation to
pay Sadeghi and TBT, to the extent there is any, is derived entirely from the Plan

itself.133
Similarly, the Letters state that the insurer looks to the ERISA plan to determine

claims as “hybrid claims—challenging both the rate of payment and the right to payment.” Such “hybrid”
claims “still fall within the scope of ERISA under the Davilla complete preemption analysis.” La Ley
Recovery Sys-OB, Inc. v. UnitedHealthcare Ins. Co., 2014 WL 5524389, at *3 (S.D. Fla. 10/31/2014).
126 The parties confirmed this during the March 30, 2023 status conference. R. Doc. 36 at p. 2.
127 R. Doc. 20-5, R. Doc. 20-6, and R. Doc. 20-7.
128 R. Doc. 20-6 at p. 2; R. Doc. 20-7 at p. 1.
129 R. Doc. 20-5 at p. 2; R. Doc. 20-6 at p. 2; R. Doc. 20-7 at p. 2.
130 See generally R. Doc. 20-5, R. Doc. 20-6, and R. Doc. 20-7.
131 Sadeghi v. Aetna Life Ins. Co., 564 F.Supp.3d 429, 472 (M.D. La. 9/28/2021). Again, the first element
of complete preemption is met: Plaintiffs have standing to sue under ERISA § 502(a)(1)(B).
132 Lone Star OB/GYN Assoc., 579 F.3d at 530-31; see also Long Island Thoracic Surgery, P.C. v. Building
Service 32BJ Health Fund, 2019 WL 7598669 (E.D. NY 9/3/2019).
133 As in Sadeghi, the fact that UHC made partial payment to TBT is not dispositive.
both the scope of any services eligible for reimbursement, and the amount of any
subsequent payment.134 As a result, the alleged breach of contract and detrimental
reliance claims based on the Letters require the Court to consult and analyze the Plan to
make a determination of benefits. “State law legal duties are not independent of ERISA
where ‘interpretation of the terms of [the] benefit plan forms an essential part’ of the

claim, and legal liability can exist only because of [the defendant’s] administration of
ERISA-regulated benefit plans.”135
Finally, jurisprudence from other circuits supports the argument that Plaintiffs’
state law claims are completely preempted by ERISA for another reason. The United
States Court of Appeals for the Second Circuit has held state law claims brought by
providers on the basis of pre-authorization communications are completely preempted
by ERISA when the “pre-approval process was expressly required by the terms of the
Plan itself [because the claims are] therefore inextricably intertwined with the
interpretation of Plan coverage and benefits.”136 During a status conference with the
Court on March 30, 2023, the parties stipulated the Plan required Plaintiffs to seek prior
authorization for the reconstruction procedure.137 Thus, the Letters in this case do not

“create a sufficiently independent duty.”138
With respect to the medical necessity component of the First Pre-Authorization
and Medical Necessity Letter, courts have recognized a “determination of the medical
necessity [, like the medical necessity determination in the case at bar,] of a particular
procedure is not the equivalent of a representation that benefits will be paid to cover the

134 See generally R. Doc. 20-5, R. Doc. 20-6, and R. Doc. 20-7.
135 In re WellPoint, Inc., 903 F.Supp.2d 880, 929 (C.D. Cal. 2012) (quoting Davila, 542 U.S. at 213).
136 Montefiore Medical Center v. Teamsters Local 272, 642 F.3d 321, 332 (2d Cir. 2011).
137 R. Doc. 36 at p. 2.
138 Montefiore, 642 F.3d at 332.
cost of that procedure; rather, a medical-necessity determination is but the first step in
the process to determine the coverage of a procedure under a patient’s insurance
plan.”139 In this case, the Plan is clear that a medical necessity determination is but one
element in determining whether a particular treatment is eligible for benefits.140
Accordingly, the First Pre-Authorization and Medical Necessity Letter cannot give rise

to a separate legal duty independent of ERISA or the Plan.
In sum, Plaintiffs’ breach of contract and detrimental reliance claims based on
the Letters are right to payment/benefits claims, not rate of payment claims. The Letters
do not create a legal duty independent of the Plan. Plaintiffs seemingly recognize this in
their first amended complaint when they allege in the second paragraph that “[t]his case
is a claim for benefits due under the Plan, . . . based upon adverse benefits
determinations.”141 Thus, the second element for complete preemption is satisfied.
Plaintiffs’ state law claims of breach of contract and detrimental reliance based on the
Letters are completely preempted by ERISA. Pursuant to Rule 12(b)(6), “[a] preempted
state law claim fails to state a claim on which relief may be granted because it is not
plausible on its face.”142

139 Toups v. Moreno Grp., 2013 WL 1187102, at *13 (W.D. La. 3/21/2013).
140 R. Doc. 20-4 at p. 125.
141 R. Doc. 12 at p. 1, ¶ 2. Plaintiffs argue in opposition that their state law claims are rate of payment
claims. R. Doc. 25. Obviously, this argument is inconsistent with the allegation made in the second
paragraph of their first amended complaint that “[t]his case is a claim for benefits due under the Plan, . . .
based upon adverse benefits determinations.” Such an inconsistency is likely barred by the doctrine of
judicial estoppel. “The doctrine [of judicial estoppel] prevents internal inconsistency, precludes litigants
from ‘playing fast and loose’ with the courts, and prohibits parties from deliberately changing positions
upon the exigencies of the moment.” Gabarick v. Laurin Maritime (America), Inc., 2013 WL 12092512, at
*2 (E.D. La. 6/12/2013) (Lemelle, J.) (internal quotations omitted). Regardless, as reflected in this Order
and Reasons, the Court has ignored alleged labels affixed to Plaintiffs’ state law claims and has, instead,
independently analyzed whether the state law claims give rise to a rate of payment or right to payment
claim.
142 Reddick v. Medtronic, Inc., 2021 WL 798294 (E.D. La. 3/2/2021) (Morgan, J.) (recognizing that
preemption may be properly decided at the 12(b)(6) stage).
II. The Court will grant Plaintiffs further leave only to amend their
complaint to assert the preempted state law claims as federal claims.

With respect to the preempted state law claims, to grant Plaintiffs another
opportunity to amend their complaint would be futile because there is no other way to
plead around the bar of preemption. Accordingly, the dismissal of Plaintiffs’ state law
claims is with prejudice.
Be that as it may, Plaintiffs may wish to re-assert their preempted state law
claims as properly asserted federal claims. The Fifth Circuit has not clearly indicated
“the appropriate course of action for claims found to be completely preempted” but that
a plaintiff wishes to re-assert as federal claims, though it has outlined two possible
approaches:
District courts in this circuit are split. Most hold that complete preemption
results in dismissal of the state-law claim, even though they typically allow
plaintiffs to replead and assert the dismissed state law claims as federal
claims. . . . But at least one of our district courts does not dismiss the
claim, instead treating it as having become a properly asserted federal
claim and proceeding to adjudicate it on the merits.143

The Court adopts the majority approach, will dismiss the completely preempted
state law claims, i.e., the breach of contract claim and detrimental reliance claim based
on the Letters, but will allow Plaintiffs to replead and assert the dismissed state law
claims as federal claims. It bears mentioning that, in the case at bar, Plaintiffs already
bring a federal ERISA claim stemming from the same operative facts,144 meaning there
is no apparent need to grant Plaintiff’s leave to “replead and assert the dismissed state
law claims as federal claims.”145 Nevertheless, in the form of a properly filed motion,
Plaintiffs may bring to the Court’s attention their wish to replead and assert the

143 Spear Mktg., Inc. v. BancorpSouth Bank, 791 F.3d 586, 598 n.62 (5th Cir. 2015) (cleaned up)
(collecting cases).
144 Plaintiffs’ ERISA claim is stayed. R. Doc. 17 at p. 2.
145 Spear Mktg., Inc., 791 F.3d at 598 n.62.
dismissed state law claims as federal claims within 7 days of this Court’s Order and
Reasons.
CONCLUSION
For the foregoing reasons;
IT IS ORDERED that UHC’s Second Motion to Dismiss4° is GRANTED, and
Plaintiffs’ Louisiana law breach of contract and detrimental reliance claims based on the
Letters are hereby DISMISSED WITH PREJUDICE. Plaintiffs’ state law breach of
contract claim on the basis of the “MARS Negotiated Resolution”447 and stayed ERISA
claim‘48 will remain.
IT IS FURTHER ORDERED that, in the form of a properly filed motion,
Plaintiffs may bring to the Court’s attention their wish to replead and assert the
dismissed state law claims as federal claims within 7 days of today’s date.149
New Orleans, Louisiana, this 12th day of April, 2023.

SUSIE MORGAN
UNITED STATES DISTRICT JUDGE

146 R. Doc. 20.
147 R, Doc. 36.
148 R. Doc. 17.
149 Plaintiffs shall indicate in their motion whether UHC objects to such a request. If UHC does object,
Plaintiffs shall set their motion for submission on an appropriate submission date.
22

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10189264. Public record. Not legal advice.