MHA, LLC v. AMERIGROUP CORPORATION

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

MHA, LLC,

Plaintiff,

v. Civ. No. 18-16042 (KM) (JSA)

AMERIGROUP CORPORATION, OPINION

AMERIGROUP NEW JERSEY, INC.,

ABC COMPANIES 1–100, and JOHN

DOES 1–100,

Defendants.

KEVIN MCNULTY, U.S.D.J.:

This is an action by the former owner of a hospital, MHA, LLC, against a

health insurer, Amerigroup New Jersey, Inc., and Amerigroup Corporation

(“Amerigroup”). MHA seeks to recover for alleged non-payment for services

rendered by the hospital to Amerigroup enrollees. Amerigroup moves to dismiss

for failure to state a claim, see Fed. R. Civ. P. 12(b)(6). (DE 56.)1 For the

following reasons, the motion is GRANTED IN PART and DENIED IN PART.

I. BACKGROUND

Amerigroup offers healthcare plans to individuals eligible for Medicaid

and Medicare. (Compl. ¶ 12.)

Medicaid is a “cooperative federal-state program under which the federal

government furnishes funding to states for the purpose of providing medical

1 Certain citations to the record are abbreviated as follows:

DE = docket entry

Compl. = Complaint (DE 1-1)

Mot. = Amerigroup’s Brief in Support of its Motion to Dismiss (DE 56-1)

Opp. = MHA’s Opposition to Amerigroup’s Motion to Dismiss (DE 68)

Reply = Amerigroup’s Reply Brief (DE 69)

assistance to eligible low-income persons.” Sabree ex rel. Sabree v. Richman,

367 F.3d 180, 182 (3d Cir. 2004) (citation omitted). To administer Medicaid,

New Jersey enters into contracts with managed care organizations, “MCOs”

including Amerigroup. Medicaid-eligible individuals enroll in plans with

Amerigroup, and New Jersey pays Amerigroup “a fixed monthly fee per patient

and the anticipated use of services (the ‘capitation payment’).” N.J. Primary

Care Ass’n Inc. v. N.J. Dep’t of Human Servs., 722 F.3d 527, 530 (3d Cir. 2013).

MCOs, in turn, contract with providers to provide medical services to the

MCO’s enrollees and pay the providers using the capitation funds. Id.;

Appalachian Reg’l Healthcare, Inc. v. Coventry Health & Life Ins. Co., 714 F.3d

424, 426 (6th Cir. 2013). But if an enrollee receives care from a provider with

which Amerigroup does not contract (an “out-of-network provider”),

Amerigroup need only reimburse the provider in limited circumstances, mostly

when the provider furnished emergency services. Appalachian, 714 F.3d at

426; Prince George’s Hosp. Ctr. v. Advantage Healthplan Inc., 985 F. Supp. 2d

38, 40 (D.D.C. 2013).

Amerigroup also administers a similar program under Medicare. In

contrast with Medicaid, the federal government solely—not the states—

administers Medicare to provide health insurance to older individuals. MHA,

LLC v. Amerigroup Corp., Civ. No. 18-16042, 2021 WL 226110, at *1 (D.N.J.

Jan. 21, 2021). The federal Centers for Medicare and Medicaid Services (“CMS”)

contracts directly with Amerigroup and pays Amerigroup a capitation fee. Id.

Amerigroup, in turn, uses that money to pay providers, with which Amerigroup

contracts for covered services rendered to individuals enrolled in its “Medicare

Advantage” plan. Id. Amerigroup operates its Medicare Advantage plan as a

health maintenance organization (“HMO”). (See Compl. ¶¶ 41, 63.) An HMO is,

to simplify, a health insurance plan that acts as a healthcare provider itself or

contracts with providers to provide healthcare to its enrollees. See N.J. Stat.

Ann. §§ 26:2J-2(f); 26:2J-5(a)(4); Butler v. Wu, 853 F. Supp. 125, 130 (D.N.J.

1994).

MHA owned a hospital, Meadowlands, that served patients with

Amerigroup plans under Medicare and Medicaid. (Compl. ¶¶ 18–19.) From

December 2010 until July 2014, MHA did so as an in-network provider, under

a Network Agreement with Amerigroup. (Id. ¶ 18.) From July 2014 until

January 2018 (when MHA sold Meadowlands), MHA did so as an out-of-

network provider. (Id. ¶ 19.) For accounts billed during the in-network period,

MHA alleges that Amerigroup owes $60,492,941.84. (Id. ¶ 92.) For accounts

billed during the out-of-network period, MHA alleges that Amerigroup owes

$27,563,277.35. (Id. ¶ 91.) (The precise reasons that Amerigroup failed to pay

are not clear from the Complaint.)

To recover for the alleged non-payment, MHA sued Amerigroup in New

Jersey Superior Court, asserting claims for (1) violations of New Jersey

regulations requiring coverage for emergency services; (2) violation of the

Healthcare Information Networks and Technologies Act (“HINT Act”), N.J. Stat.

Ann. § 17B:26-9.1; (3) fraudulent and negligent misrepresentation, and

equitable and promissory estoppel; (4) unjust enrichment; (5) quantum meruit;

(6) breach of contract based on a repudiation of the Network Agreement;

(7) negligent misrepresentation; and (8) breach of contract as a third-party

beneficiary of the Amerigroup-New Jersey Medicaid contract. (Compl. ¶¶ 94–

173.) Amerigroup removed the case to this Court. (DE 1.)2 Amerigroup now

moves to dismiss the complaint.

II. STANDARD OF REVIEW

Federal Rule of Civil Procedure 8(a) does not require that a pleading

contain detailed factual allegations but “more than labels and conclusions.”

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The allegations must raise

2 This case was originally assigned to then-Chief Judge Linares. Amerigroup first

moved to dismiss shortly after removal. (DE 6.) When this case was transferred to me,

I issued an order to show cause as to whether there was federal jurisdiction and

terminated the original motion to dismiss. (DE 41) Based on the submissions, I

concluded that this court possessed subject matter jurisdiction. (DE 51; see also MHA,

2021 WL 226110, at *8.) Amerigroup then refiled its motion to dismiss. (DE 56.)

a claimant’s right to relief above a speculative level, so that a claim is “plausible

on its face.” Id. at 570. That standard is met when “factual content [] allows the

court to draw the reasonable inference that the defendant is liable for the

misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Rule 12(b)(6)

provides for the dismissal of a complaint if it fails to state a claim. The

defendant bears the burden to show that no claim has been stated. Davis v.

Wells Fargo, 824 F.3d 333, 349 (3d Cir. 2016). I accept facts in the complaint

as true and draw reasonable inferences in the plaintiff’s favor. Morrow v.

Balaski, 719 F.3d 160, 165 (3d Cir. 2013) (en banc).

III. DISCUSSION

I discuss whether each claim is adequate overall, and then, as to the

surviving claims, discuss Amerigroup’s cross-cutting arguments for dismissal

of portions of those claims.

A. Count 1

In Count 1, MHA alleges that Amerigroup’s non-payment violated

regulations requiring Amerigroup to cover out-of-network emergency services,

N.J.A.C. §§ 10:74-9.1 (applying to Medicaid plans), 11:24-5.3(b) (applying to

HMOs), and services referred by an HMO, id. § 11:24-5.1(a)(1). (Compl., Count

1.) Amerigroup argues that MHA lacks a private right of action to seek damages

for such regulatory violations. (Mot. at 16–19.)

There is no express provision allowing a claimant to bring a damages suit

based on violations of those regulations. In such a case, “a private cause of

action would have to be implied from the statutory scheme involved or the

administrative regulations promulgated thereunder.” Jalowiecki v. Leuc, 440

A.2d 21, 24 (N.J. Super. Ct. App. Div. 1981). To decide whether to imply a

private right of action from a statute, New Jersey courts use a three-part test

adopted from Cort v. Ash, 422 U.S. 66, 78 (1975). See Jarrell v. Kaul, 123 A.3d

1022, 1029 (N.J. 2015). A version of this test has been applied in New Jersey to

decide whether to imply a private right of action from administrative

regulations, in the context of the enabling statute. Jalowiecki, 440 A.2d at 26,

cited favorably in R.J. Gaydos Ins. Agency, Inc. v. Nat’l Consumer Ins. Co., 773

A.2d 1132, 1144 (N.J. 2001).3 So I ask whether (1) the plaintiff is “one of the

class for whose especial benefit the statute [or regulation] was enacted,”

(2) “there is any evidence that the Legislature [or agency with delegated

authority] intended to create a private cause of action,” and (3) “implication of a

private cause of action in this case would be consistent with the underlying

purposes of the legislative scheme.” Jarrell, 123 A.3d at 1029 (cleaned up); see

Jalowiecki, 440 A.2d at 26–27.

New Jersey courts apply this test against a general background

reluctance to imply a private right of action. Gaydos, 773 A.2d at 1142.

Compounding that reluctance here, federal courts will generally avoid

expanding state-law liability in ways not foreshadowed by state-court

precedent. City of Philadelphia v. Beretta U.S.A. Corp., 277 F.3d 415, 421 (3d

Cir. 2002). It follows that federal courts “should be even less inclined” than

state courts to imply private rights of action from state statutes and

regulations. Beye v. Horizon Blue Cross Blue Shield of N.J., 568 F. Supp. 2d

556, 571–72 (D.N.J. 2008).

I begin with the regulation that imposes obligations on Amerigroup to

cover emergency services as to Medicaid enrollees, N.J.A.C. § 10:74-9.1, and

then the regulations that impose similar obligations as to Medicare insureds,

see id. §§ 11:24-5.1(a)(1), 11:24-5.3(b).

3 To be sure, federal courts addressing federal regulations have refined the

analysis to focus on whether an agency’s enabling statute permits a private right of

action. Three Rivers Ctr. for Indep. Living v. Housing Auth. of City of Pittsburgh, 382

F.3d 412, 424 (3d Cir. 2004). In other words, “regulations do not furnish an

independent basis to ‘conjure’ an implied right of action.” Id. New Jersey courts do not

appear to have foreclosed the possibility that a regulation itself could provide a private

cause of action, but they have not grappled with the contrary reasons given by cases

like Three Rivers. See Jalowiecki, 440 A.2d at 26. So I apply my analysis to both the

regulations here and their larger statutory scheme. Because neither support a private

right of action, I need not address thornier questions about agency power under New

Jersey law.

N.J.A.C. § 10:74-9.1

N.J.A.C. § 10:74-9.1 requires MCOs to reimburse out-of-network

providers that provide emergency services to their enrollees. The New Jersey

Department of Human Services (“NJDHS”) promulgated this regulation under

its authority to promulgate rules to implement New Jersey’s Medicaid program.

See id. § 10:74-1.2; N.J. Stat. Ann. § 30:4D-7; In re A.N., 63 A.3d 764, 769

(N.J. Super. Ct. App. Div. 2013).

On the first factor, the purpose of the New Jersey Medicaid statutory

scheme is “to provide medical assistance . . . on behalf of persons whose

resources are determined to be inadequate to enable them to secure quality

medical care at their own expense.” N.J. Stat. Ann. § 30:4D-2. The regulatory

chapter that houses N.J.A.C. § 10:74-9.1 likewise expresses its purpose to “set

forth the manner in which” MCOs “shall provide covered health services to

eligible persons.” N.J.A.C. § 10:74-1.1. Thus, generally, New Jersey’s Medicaid

program and managed care approach were enacted for the benefit of enrollees,

not providers as such.

Zooming in on N.J.A.C. § 10:74-9.1, its language speaks of obligations on

MCOs, not benefits to providers; the regulation repeatedly uses phrases like

“the contractor [i.e., the MCO] shall.” See Wright-Phillips v. United Airlines, Inc.,

Civ. No. 20-14609, 2021 WL 1221111, at *3–4 (D.N.J. Apr. 1, 2021) (applying

similar test under federal law). To be sure, a provider “may receive a direct

benefit” from the regulation because it obligates the MCO to pay the provider.

Jarrell, 123 A.3d at 1030. But more is required to imply a private right of

action: The statute or regulation must have been enacted for the “especial

benefit” of the plaintiff—in this case, the provider. Id. at 1029 (citation omitted).

While the regulation enables providers to receive payment, its thrust is to

ensure that MCO enrollees receive emergency care regardless of whether the

closest provider is in-network. Cf. Ass’n of N.J. Chiropractors, Inc. v. Horizon

Healthcare Servs., Inc., No. A-6033-11T4, 2013 WL 5879517, at *3–4 (N.J.

Super. Ct. App. Div. Nov. 4, 2013) (statute requiring equal reimbursement of

chiropractors benefited consumers by allowing them access to chiropractor

services). Thus, MHA has not made a strong showing on the first factor.

On the second factor, MHA has pointed to no evidence in the legislative

or regulatory history showing an intent to create a private right of action.

On the third factor, the New Jersey Supreme Court holds that when

another enforcement mechanism or remedy already exists, “a court should

always hesitate to recognize another unmentioned remedy.” Jarrell, 123 A.3d at

1030. Here, NJDHS may seek damages, terminate its contract with the MCO,

or withhold payments to the MCO for failure to comply with its obligations.

N.J.A.C. § 10:74-14.1. This enforcement mechanism displaces any implied

private right of action. Jarrell, 123 A.3d at 1030.

What is more, the statutory scheme that encompasses N.J.A.C. § 10:74-

9.1 includes the federal Medicaid statute. See Sabree, 367 F.3d at 182.

Medicaid requires states to include, as terms in their contracts with MCOs,

certain sanctions for non-compliance with Medicaid obligations, including

obligations to cover out-of-network emergency services. 42 U.S.C. § 1396u-2(e).

“The fact that the Medicaid statute expressly authorizes such sanctions further

underscores that it was Congress’s intent for states themselves—rather than

private third parties—to police compliance with the requirements of the

Medicaid program.” Prince George’s, 985 F. Supp. 3d at 50. Thus, Congress

and New Jersey, in implementing a federal program, intended the remedy for

Amerigroup’s non-payment to be sought by NJDHS.

Because MHA has failed to make a showing on any of the Cort factors, I

decline to imply a private right of action to enforce N.J.A.C. § 10:74-9.1.

N.J.A.C. §§ 11:24-5.1(a)(1), 11:24-5.3

N.J.A.C. § 11:24-5.1(a)(1) provides that “[i]f the HMO refers a member out

of network, the service or supply shall be covered as an in-network service or

supply, such that the HMO is fully responsible for payment to the provider.”

N.J.A.C. § 11:24-5.3 provides that HMOs shall have policies to cover emergency

or urgent-care services. The New Jersey Department of Banking and Insurance

(“NJDOBI”) promulgated these regulations under its authority from the Health

Maintenance Organizations Act (“HMO Act”) to regulate HMOs, N.J. Stat. Ann.

§ 26:2J-21. There is no discernible private right of action for these regulations.

First, the purpose of the HMO Act was to authorize the creation of HMOs,

which were, at the time, a new corporate/organizational form. See Dunn v.

Praiss, 656 A.2d 413, 415 (N.J. 1995). The beneficiary was presumably the

patient, as HMOs were seen as a “new concept” to improve “health care

delivery.” Governor’s Statement on Signing Senate Bill No. 2148 (Dec. 27, 1973).

Like with the Medicaid regulation, these HMO regulations speak in terms of

obligations on the regulated entities, HMOs. Likewise, although out-of-network

providers may benefit, the primary purpose of the regulations cannot be to

benefit the providers, because their obvious, overriding purpose is to ensure

that HMO enrollees can always access emergency services.

On the second factor, MHA has pointed to no evidence in the legislative

or regulatory history showing an intent to create a private right of action.

On the third factor, there is an administrative enforcement scheme that

undermines any implication of a private right of action. NJDOBI may assess

penalties, seek injunctive relief, or revoke an HMO’s certificate for violations of

the HMO Act and its implementing regulations. N.J. Stat. Ann. § 26:2J-24;

N.J.A.C. § 11:24-2.14. Such remedies provisions make no mention of a civil

remedy to providers, raising a strong inference that none exists or was

intended.

Although MHA thus fails to make a showing on the Cort factors, it offers

two reasons to save its claim. Neither has merit.

First, MHA points to a New Jersey trial court opinion holding that

N.J.A.C. § 11:24-5.3 provided a private right of action. N. Jersey Brain & Spine

Ctr. v. Health Net, Inc., No. L-5421-08, 2009 WL 10696172, at *10 (N.J. Super.

Ct. L. Div. Aug. 24, 2009). (Opp. at 20–21.) “State trial court opinions . . . do

not bind federal courts predicting state law,” and thus are persuasive authority

only. Ryu v. Bank of Hope, Civ. No. 19-18998, 2021 WL 50255, at *5 n.7

(D.N.J. Jan. 6, 2021) (citations omitted). Health Net is not persuasive; it did not

apply the Cort test and instead summarily concluded that there was a private

right of action. 2009 WL 10696172, at *10. Its perfunctory analysis does not

convince me the New Jersey Supreme Court would decide the issue similarly.

Houbigant, Inc. v. Fed. Ins. Co., 374 F.3d 192, 199 n.9 (3d Cir. 2004). Finally,

Health Net allowed the claim to go forward because it was “plausible” that a

cause of action existed. 2009 WL 10696172, at *10. But whether a statute

creates a private cause of action is a legal question, and thus not a question of

pleading sufficiency. Am. Trucking Ass’n, Inc. v. Del. River Joint Toll Bridge

Comm’n, 458 F.3d 291, 295 (3d Cir. 2006); see Bistrian v. Levi, 696 F.3d 352,

365 (3d Cir. 2012). For these reasons, I do not follow Health Net.

Second, MHA suggests that the “regulatory requirements are often

incorporated into the parties’ agreement, and so would be enforceable as a

breach of implied contract.” (Opp. at 22.) Putting aside the vagueness of this

argument, the Complaint unequivocally alleges that it brings Count 1 pursuant

to “a private right of action, express or implied, . . . under these regulations.”

(Compl. ¶ 108.) Thus, the Complaint does not use the regulations as the basis

for an implied contract theory in Count 1. I will not retrofit this revised theory

to effectively amend the Complaint, which controls. See Pa. ex. rel Zimmerman

v. PepsiCo, Inc., 836 F.2d 173, 181 (3d Cir. 1988); Warfield v. SEPTA, 460 F.

App’x 127, 132 (3d Cir. 2012).

Because MHA presents no good reason otherwise, I decline to imply a

private right of action to enforce N.J.A.C. §§ 11:24-5.1(a)(1) and 11:24-5.3.

* * *

There is no express or implied private of action to recover for violations of

the regulations referenced in Count 1. The motion to dismiss Count 1 is

GRANTED.

B. Count 2

In Count 2, MHA alleges that Amerigroup’s non-payment violated the

New Jersey HINT Act. (Compl., Count 2.) The HINT Act establishes timetables

for health insurers to pay healthcare providers and imposes interest rates for

late payments. See N.J. Stat. Ann. § 17B:26-9.1. Amerigroup argues that there

is no private right of action to recover under the HINT Act. (Mot. at 17.) Unlike

the regulations in Count 1, New Jersey courts have more fully addressed this

question. I closely look at the two key cases and then discuss legislative

developments post-dating them.

Sutter v. Horizon BlueCross/Blue Shield of New Jersey

The first case is Sutter v. Horizon BlueCross/Blue Shield of New Jersey,

No. L-3685-02, 2003 WL 27381731 (N.J. Super. Ct. L. Div. Feb. 13, 2003),

which applied the Cort factors to conclude that there is a private right of action

under the HINT Act. On the first, the court reasoned that the Act benefits

providers because it “compel[s] payers to promptly pay claims.” Id. at *5. On

the second, the court found a “close issue” “since the Legislature did not clearly

evince its intent.” Id. Nonetheless, the court explained that implementing

regulations required insurers to use a non-binding arbitration mechanism to

resolve payment disputes. Id. From this, the court reasoned that the non-

binding nature evinced an intent by NJDOBI to allow providers to turn to a

judicial forum if arbitration did not resolve the dispute. Id. On the third factor,

the court acknowledged that NJDOBI could enforce the Act but concluded that,

given the number of providers in the state, NJDOBI cannot “exclusive[ly]”

handle enforcement. Id. at *7. Rather, a private remedy would complement

agency enforcement. Id. Thus, the court held that the three factors favored the

provider. Id.

Medical Society of New Jersey v. AmeriHealth HMO, Inc.

The next case is Medical Society of New Jersey v. AmeriHealth HMO, Inc.,

868 A.2d 1162 (N.J. Super. Ct. App. Div. 2005). There, an association of

physicians (the Medical Society), on behalf of itself and its members, sued a

health insurer, alleging that the insurer had contracted with its members but

denied or delayed payment, thereby violating the HINT Act. Id. at 1164–65. The

Society sought only injunctive or declaratory relief. Id. at 1165.

The Appellate Division issued a nuanced opinion, holding that the

Society could not pursue a claim for injunctive or declaratory relief. Id. at 1167.

But the court reserved judgment on whether the doctors themselves could

pursue a damages claim. Id. The court explained that “[a]llowing the HINT Act

to be privately enforced by doctors suing for overdue payment would appear to

further the purpose of the Act by permitting the doctors, for whose benefit the

statute was enacted, to recover the interest on those payments.” Id. at 1168.

But because only the Society was a plaintiff, the court did not decide the issue.

As to the Society’s claims, however, the court concluded that there was

no private right of action. Id. The court explained that the Act authorized

NJDOBI to seek injunctive relief, and the court construed the Act in parallel

with other New Jersey statutes that allow only the state agency to seek

injunctive relief, while permitting individuals directly injured to seek damages.

Id. at 1169. Thus, the Act displaced the Society’s specific claims. Id.

Application

Sutter and Medical Society provide persuasive, if not binding, support for

MHA’s position. Nonetheless, legislative developments after Sutter (decided in

2003) and Medical Society (2005) clearly show an intent to displace a private

cause of action.

In 2006, New Jersey enacted the Health Claims Authorization,

Processing and Payment Act (“HCAPPA”), 2005 NJ Sess. Law Serv. ch. 352

(West). HCAPPA amended the HINT Act’s prompt-payment provision to provide

that (1) insurers must establish an internal appeals process to resolve disputes

with providers, (2) if an appeal is resolved in favor of the provider, the insurer

must pay the provider with interest, (3) if an appeal is resolved in favor of the

insurer, the provider may seek arbitration, (4) the arbitrator can order the

insurer to make payment with interest, and (5) the arbitrator’s decision is

binding and final. HCAPPA § 13, codified at N.J. Stat. Ann. § 17B:26-9.1(e)(1).

HCAPPA is dispositive in the private-right-of-action analysis. It renders

much of Sutter’s and Medical Society’s reasoning moot. The Legislature’s

creation of a detailed and specific arbitration mechanism clarifies its intention

that disputes be resolved by arbitration, not litigation, and firmly establishes

that a private right of action is unnecessary to accomplish the statute’s

purposes. Warren Cnty. Bar Ass’n v. Bd. of Chosen Freeholders of Cnty. of

Warren, 899 A.2d 1028, 1034 (N.J. Super. Ct. App. Div. 2006); see also Dolan

v. U.S. Equestrian Team, Inc., 608 A.2d 434, 437 (N.J. Super. Ct. App. Div.

1992). Sutter, it is true, considered that NJDOBI required arbitration even

then, but those procedures differed from those soon to be imposed by HCAPPA.

Sutter found it significant, for example, that the then-current arbitration

procedures were non-binding, so a judicial remedy was ultimately necessary to

allow providers to enforce their rights. 2003 WL 27381731, at *6. The HCAPPA-

prescribed procedures, by contrast, are binding, and the arbitrator is required

to file its determination with NJDOBI, which can enforce it if need be. N.J. Stat.

Ann. § 17B:26-9.1(e)(4), (7). Thus, HCAPPA appeases Sutter’s concerns and

obviates the need for a private right of action.

Nonetheless, MHA argues that HCAPPA helps its position because the

Legislature did not reject Sutter and Medical Society when amending the HINT

Act with HCAPPA, thus approving their judicial constructions. (Opp. at 21.)

True, when the Legislature amends a statute, courts may presume that it did

not “alter an established judicial interpretation absent a clear manifestation of

such intent.” Coyle v. Bd. of Chosen Freeholders, 787 A.2d 881, 886 (N.J. 2002)

(quotation marks and citation omitted). But this canon of statutory

interpretation has little force here for two reasons.

First, that canon works best when the judicial construction in question is

authoritative: i.e., it comes from the New Jersey Supreme Court, the final

interpreter of New Jersey law, or a firm line of Appellate Division decisions. See,

e.g., State v. Smith, 963 A.2d 281, 286–87 (N.J. 2009); State v. Chapland, 901

A.2d 351, 361–62 (N.J. 2006). The judicial construction in this case, by

contrast, consists of one trial-court opinion and dicta from an Appellate

Division opinion. The Legislature might not have found it necessary, or even

pressing, to rebut these nonbinding interpretations, and I draw no strong

inference that it consented to them.

Second, a different interpretive canon4 provides that courts should

interpret amendments to work a change in the law and avoid rendering them

“meaningless.” Kasper v. Bd. of Trs. of Teachers’ Pension & Annuity Fund, 754

A.2d 525, 532 (N.J. 2000); accord Intel Corp. Inv. Pol’y Comm. v. Sulyma, 140 S.

Ct. 768, 779 (2020) (“When Congress acts to amend a statute, we presume it

intends its amendment to have real and substantial effect.” (citation omitted)).

Implying a private right of action would undermine the Legislature’s directives

to insurers to follow a particular dispute-resolution scheme. In other words,

allowing providers to immediately sue under the HINT Act would create a

workaround that would nullify the carefully calibrated procedures fashioned by

the Legislature. To give meaningful effect to the procedures prescribed by

HCAPPA, it is necessary to close off that alternative.

Given HCAPPA, I decline to imply a private right of action to seek

damages under the HINT Act. Accordingly, the motion to dismiss Count 2 is

GRANTED.

C. Count 3

Count 3 is a claim for “Fraudulent and Negligent Misrepresentation &

Equitable and Promissory Estoppel.” (Compl., Count 3.) MHA alleges that

Amerigroup misrepresented to MHA that it would cover services provided to

4 It has become a maxim in its own right that the canons of interpretation are

Janus-faced: “Specific canons ‘are often countered ... by some maxim pointing in a

different direction.’” Chickasaw Nation v. United States, 534 U.S. 84, 94 (2001)

(quoting Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 115 (2001)). Famously, Karl

Llewellyn published a list of twenty-eight such canons, each paired with its “counter-

canon,” from which he drew the legal-realist conclusion that the canons may be

employed to obtain any result. Karl N. Llewellyn, Remarks on the Theory of Appellate

Decision and the Rules of Canons About How Statutes are to be Construed, 3 Vand. L.

Rev. 395 (1950). I draw the less drastic conclusion that the canons are useful tools,

but that there is no escape from the obligation of sound legal reasoning. For a more

systematic view, incorporating a more sympathetic view of the canons, see A. Scalia &

B. Garner, Reading Law: The Interpretation of Legal Texts (2012).

Amerigroup enrollees but never intended to pay those claims. (Id. ¶¶ 124, 126.)

Thus, Amerigroup “fraudulently induced” MHA to provide services. (Id. ¶ 128.)

Fraud-based claims are subject to a heightened pleading standard. “In

alleging fraud or mistake, a party must state with particularity the

circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). Rule 9(b)

applies to fraudulent misrepresentation because it is, on its face, a fraud claim.

Durr Mech. Constr., Inc. v. PSEG Fossil, LLC, --- F. Supp. 3d ----, ----, Civ. No.

18-10675, 2021 WL 303030, at *7–8 (D.N.J. Jan. 29, 2021). But Rule 9(b) also

applies to claims under any legal theory whose supporting factual allegations

“sound in fraud.” In re Suprema Specialties, Inc. Secs. Litig., 438 F.3d 256, 272

(3d Cir. 2006). As a result, if negligent misrepresentation, equitable estoppel, or

promissory estoppel claims are based on intentional misrepresentations or

knowingly false promises, Rule 9(b) applies. Durr, 2021 WL 303030, at *7–8

(negligent misrepresentation); Bayer CropScience AG v. Dow AgroSciences LLC,

Civ. No. 10-1045, 2011 WL 6934557, at *3 (D. Del. Dec. 30, 2011) (equitable

estoppel); Cincinnati Life Ins. Co. v. Beyrer, 722 F.3d 939, 949–50 (7th Cir.

2013) (promissory estoppel); see Suprema, 438 F.3d at 272.

Count 3’s factual allegations sound in fraud. Count 3 alleges that

Amerigroup “materially misrepresented” that it would cover services when it

currently had no intention to do so, and that these statements were

“fraudulent[ ].” (Compl. ¶¶ 124, 128.) There is no allegation that Amerigroup

made its representations or promises negligently; rather, the Complaint is clear

that Amerigroup’s practices were “intentional, willful and malicious.” (Id.

¶ 127.) Accordingly, no matter the precise legal theory, Rule 9(b) applies

“across the board” to Count 3. Durr, 2021 WL 303030, at *8.

Count 3 does not satisfy Rule 9(b), which requires that the plaintiff plead

“the who, what, when, where, and how of the events at issue.” U.S. ex rel.

Bookwalter v. UPMC, 946 F.3d 162, 176 (3d Cir. 2019) (citation omitted). The

Complaint never goes beyond generalities. It never identifies a speaker or

specific communications. See Frederico v. Home Depot, 507 F.3d 188, 201 (3d

Cir. 2007) (Rule 9(b) “requires, at a minimum, that the plaintiff identify the

speaker of allegedly fraudulent statements.” (citation omitted)); compare Durr,

2021 WL 303030, at *9 (allegations sufficient when they referred to bid process

on specific date). MHA jumps over the motion-to-dismiss stage, stating in its

brief that in discovery it will produce documents “memorializing the

preauthorizations provided by Amerigroup for disputed claims.” (Opp. at 24–

25.) But MHA must adequately allege a cause of action in its complaint;

statement in a brief won’t do. See Frederico, 507 F.3d at 201 (“[W]e do not

consider after-the-fact allegations in determining the sufficiency of [a]

complaint . . . .”).

Because Count 3 does not satisfy Rule 9(b), the motion to dismiss Count

3 is GRANTED.

D. Counts 4 and 5

Count 4 is a claim for unjust enrichment. It alleges that MHA conferred a

benefit, i.e., medical treatment, on “Amerigroup’s . . . members,” but

Amerigroup has unjustly withheld payments for those treatments. (Compl.

¶¶ 134, 136.) Count 5 is a claim for quantum meruit, similarly alleging that

MHA provided services to Amerigroup members for which Amerigroup should

now pay. (Id. ¶¶ 143–46.) Amerigroup argues that (1) the Network Agreement

and its Medicaid contract with New Jersey preclude these claims, and (2) MHA

fails to allege a cognizable benefit. (Mot. at 26–27.) Both arguments lack merit.

First, it is true that “a claimant cannot collect damages for breach of

express contract and recover the same damages on a quasi-contract theory

such as quantum meruit or unjust enrichment.” Gap Props., LLC v. Cairo, Civ.

No. 19-20117, 2020 WL 7183509, at *4 (D.N.J. Sept. 17, 2020). But because

Rule 8 permits alternative pleading, “federal courts applying New Jersey law

have generally declined to dismiss quasi-contract claims that are pleaded along

with express contract claims.” Id. At least when it comes to the Network

Agreement, this could be a case in which dismissal of a quasi-contract claim is

justified to eliminate clutter, because the Complaint clearly alleges that the

contract is binding and thus does not use a quasi-contract theory as an

alternative. Compare id. (permitting quasi-contract theories because the breach

of contract theory was based on an allegedly implied term that the court could

reject). But MHA also seeks to recover for claims dating from after the Network

Agreement ended, so no contract would preclude those. Although Amerigroup

makes a passing argument that its contract with New Jersey to administer

Medicaid governs its relationship with MHA for this period, I am unable to see

how a contract to which MHA was not a party could have that effect. Thus, to

dismiss the quasi-contract claims based on the existence of express contracts

would be at best premature.

Second, Amerigroup’s argument that the Complaint fails to allege a

benefit is contrary to Third Circuit precedent. Unjust enrichment requires that

the defendant “received a benefit and that retention of that benefit without

payment would be unjust.” Thieme v. Aucoin-Thieme, 151 A.3d 545, 557 (N.J.

2016) (citation omitted). Quantum meruit similarly requires “(1) the

performance of services in good faith, (2) the acceptance of the services by the

person to whom they are rendered, (3) an expectation of compensation therefor,

and (4) the reasonable value of the services.” Starkey, Kelly, Blaney & White v.

Estate of Nicolaysen, 796 A.2d 238, 242–43 (N.J. 2002) (citation omitted).

Without venturing into the differences between the two, “[r]ecovery under both

of these doctrines requires a determination that defendant has benefitted from

plaintiff’s performance.” Woodlands Cmty. Ass’n, Inc. v. Mitchell, 162 A.3d 306,

310 (N.J. Super. Ct. App. Div. 2017). Amerigroup argues that the benefit in this

case, medical services provided by MHA, inures only to the patients treated,

not to Amerigroup.

Amerigroup is correct that many, although not all, courts in this District

saw things that way, but the Third Circuit now sees it differently. In Plastic

Surgery Center, P.A. v. Aetna Life Insurance Co., the Court explained that

“where a healthcare provider claims unjust enrichment against an insurer, the

benefit conferred, if any, is not the provision of the healthcare services per se,

but rather the discharge of the obligation the insurer owes to its insured.” 967

F.3d 218, 240 (3d Cir. 2020) (footnote omitted). The Court rejected contrary

district-court cases, stating that they relied on inapposite case law and

overlooked New Jersey Supreme Court precedent allowing unjust enrichment

claims against insurers. Id. at 240 n.26. I am bound by Plastic Surgery Center,

so Amerigroup’s argument (which relies on the very district court decision

reversed by Plastic Surgery Center) is without merit.

Accordingly, the motion to dismiss Counts 4 and 5 is DENIED.

E. Count 6

Count 6 is pleaded as a claim for “Repudiation of the Network

Agreement.” (Compl., Count 6.) The parties devote little attention to explaining

the “repudiation” aspect of this claim. (Opp. at 30; Reply at 9.) It appears to be,

more simply, a claim that Amerigroup “breached” the Network Agreement by

failing to make payments pursuant thereto. (Id. ¶ 155.) MHA simply argues

that because Amerigroup breached the contract (without specifying how), MHA

was excused from further performance. (Opp. at 30.) But MHA’s performance

(providing medical services) was already complete, so the concept of

“repudiation” appears to add little if anything to the argument.

All that aside, within Count 6 is a discernible breach of contract claim:

Amerigroup failed to pay MHA what it was obligated to pay under the Network

Agreement. “Federal pleading rules . . . do not countenance dismissal of a

complaint for imperfect statement of the legal theory supporting the claim

asserted.” Johnson v. City of Shelby, 574 U.S. 10, 11 (2014) (per curiam). I need

not dismiss Count 6 “if there are adequate factual allegations and the court

can readily discern a claim.” Wright-Phillips, 2021 WL 1221111, at *11 n.7

(citing Johnson, 574 U.S. at 11). I can do so here, notwithstanding the

misplaced focus on repudiation.

Amerigroup only moves to dismiss Count 6 on the basis that MHA fails to

plead a “repudiation.” (Mot. at 27–28) Because I do not find that repudiation is

essential to the claim, the motion to dismiss Count 6 is DENIED.

F. Count 7

Count 7 is a standalone claim for negligent misrepresentation, relying on

allegations similar to those in Count 3. (Compl. ¶¶ 159–61.) Unlike Count 3,

however, Count 7 does include an allegation that “Amerigroup defendants

negligently represented that it would provide proper coverage to the patients.”

(Id. ¶ 159 (emphasis added).) As a result, Count 7 comes closer to

distinguishing negligent misrepresentation from fraudulent misrepresentation

in a way that would allow MHA to escape the heightened pleading standard of

Rule 9(b). See Durr, 2021 WL 303030, at *7–8.

Nonetheless, MHA still has not “exercised care in differentiating asserted

negligence claims from fraud claims.” Suprema, 438 F.3d at 272. For starters,

the Complaint does not provide any factual allegations to indicate how

Amerigroup was negligent. Negligence is a legal conclusion; even under

ordinary pleading standards, plaintiff is required to plead facts from which the

court can infer a duty and breach. See Reed v. Profeta, 397 F. Supp. 3d 597,

637 (D.N.J. 2019) (explaining what qualifies as a negligent statement).

Moreover, the few remaining allegations in Count 7 undermine any conclusion

that MHA actually alleges negligence or culpable inadvertence; MHA alleges

that Amerigroup “intended” MHA to rely on its statements. (Compl. ¶ 160

(emphasis added).) See Durr, 2021 WL 303030, at *8 (a plaintiff fails to

distinguish between negligent and fraudulent misrepresentation when it makes

allegations of knowledge, intent, or deliberateness). Accordingly, Count 7,

stripped of legal conclusions, comes down to a fraud claim, subject to Rule

9(b), which fails for the same reasons that Count 3 does. (Section III.C, supra.)

The motion to dismiss Count 7 is therefore GRANTED.

G. Count 8

In Count 8, MHA alleges that it is a third-party beneficiary of

Amerigroup’s Medicaid contract with New Jersey; that the contract requires

Amerigroup to cover emergency services; and that Amerigroup breached that

requirement by denying payment to MHA. (Compl. ¶¶ 165–67, 171.) To state a

third-party beneficiary claim, MHA must plausibly allege that Amerigroup and

New Jersey “intended [MHA] to benefit from the existence of the [Medicaid

contract].” Ross v. Lowitz, 120 A.3d 178, 189–90 (N.J. 2015) (quoting

Broadway Maint. Corp. v. Rutgers, State Univ., 447 A.2d 906, 909 (N.J. 1982)).

“The contractual intent to recognize a right to performance in the third person

is the key.” Broadway, 447 A.2d at 909; see also Dravo Corp. v. Robert B.

Kerris, Inc., 655 F.2d 503, 510 (3d Cir. 1981) (“New Jersey courts have been

hesitant to imply a third-party beneficiary obligation without an explicit

indication by the parties that . . . [the third party] will have a direct claim

under the contract.”). Courts will glean that intent “from an examination of the

contract and a consideration of the circumstances.” Rieder Cmtys., Inc. v.

Township of N. Brunswick, 546 A.2d 563, 597 (N.J. Super. Ct. App. Div. 1988).

Because MHA does not submit the Medicaid contract itself, my

consideration is largely confined to the allegations of the Complaint. (Compl.

¶¶ 167–68)5 So I am left to discern whether MHA has alleged the requisite

intent from the Complaint alone. The Complaint simply alleges that MHA “is an

intended third-party beneficiary,” a legal conclusion. (Id. ¶ 166.) While MHA

would obviously benefit from the contract, there are no factual allegations to

support the critical inference that Amerigroup and New Jersey intended that

MHA would be able to sue to enforce the contract. Absent allegations as to that

5 Actually, Amerigroup provides one portion of the contract with the motion to

dismiss, and its authenticity appears to be undisputed, so I might consider that

extract. See Doe v. Univ. of Scis., 961 F.3d 203, 208 (3d Cir. 2020). The extract

provides that “[n]othing in this contract is intended or shall confer upon anyone, other

than the parties hereto, any legal or equitable right, remedy or claim against any of the

parties hereto.” (DE 56-4 ¶ 7.20.6.) This provision standing alone could defeat a third-

party beneficiary claim. See TekDoc Servs., LLC v. 3i-Infotech Inc., Civ. No. 09- 6573,

2012 WL 3560794, at *15 (D.N.J. Aug. 16, 2012). Still, I am cognizant that I do not

have the remainder of the contract, which evidently runs to hundreds of pages, and

the court is obligated to read contracts “as a whole.” Manahawkin Convalescent v.

O’Neill, 85 A.3d 947, 958 (N.J. 2014) (citation omitted). So, although I do ultimately

find the third-party-beneficiary allegations insufficient, I do not rest my decision on

this clause.

“key” element, the third-party beneficiary claim must be dismissed. Gap Props.,

2020 WL 7183509, at *6 (citation omitted).

For those reasons, the motion to dismiss Count 8 is GRANTED.

H. Remaining Arguments

Three claims remain: unjust enrichment, quantum meruit, and breach of

contract. Amerigroup asserts arguments for dismissal that cut across multiple

claims or sub-parts of multiple claims. I address those cross-cutting arguments

to the extent they bear on the three remaining claims.

Statute of Limitations and Laches

Amerigroup argues that the statute of limitations bars MHA’s recovery for

some of the accounts because they were adjudicated more than six years ago.

(Mot. at 32–33.) Similarly, Amerigroup argues that laches bars recovery

because MHA inexcusably delayed in seeking recovery on some accounts. (Id.

at 33–34.) Statute of limitations and laches are both affirmative defenses. Fried

v. JP Morgan Chase & Co., 850 F.3d 590, 604 (3d Cir. 2017) (statute of

limitations); Univ. of Pittsburgh v. Champion Prods., 686 F.2d 1040, 1044 (3d

Cir. 1982) (laches). “Affirmative defenses generally depend on extrinsic facts,

and the Third Circuit therefore requires that a court tread warily, dismissing

under Rule 12(b)(6) only when the plaintiff has effectively pled itself out of

court.” Gaetano v. Gilead Scis., Inc., Civ. No. 21-01418, 2021 WL 1153193, at

*11 (D.N.J. Mar. 26, 2021) (citations omitted).

Here, MHA has attached a spreadsheet to its Complaint listing account

numbers, the patient’s admission and discharge dates, and Amerigroup’s

outstanding balance. (Compl., Ex. D.) Amerigroup effectively asks me to excise

from this case any accounts with dates older than the statute of limitations for

contract and quasi-contract claims would allow.

As to laches, Amerigroup does not specify which accounts are subject to

that doctrine. In any event, this equitable defense requires consideration of

facts not typically found in a complaint. Kaufhold v. Caiafa, 872 F. Supp. 2d

374, 379 (D.N.J. 2012). The statute of limitations, too, requires consideration

of such issues as tolling, which are often ill-suited to the Rule 12(b)(6) analysis.

This count is going forward to discovery in any event. There is little to be

gained from line-editing this spreadsheet when a bit of discovery will permit the

court to make a more sure-footed determination. The motion to dismiss based

on the affirmative defenses of laches and the statute of limitations is therefore

DENIED as premature.

Medicare Preemption

Amerigroup argues that, to the extent MHA seeks recovery for services

provided to Medicare enrollees, the Medicare Act preempts those claims. (Mot.

at 11–13.) The Medicare Act indeed contains a preemption provision stating

that “[t]he standards established under this part shall supersede any State law

or regulation . . . with respect to [Medicare Advantage] plans which are offered

by [Medicare Advantage] organizations under this part.” 42 U.S.C. § 1395w-

26(b)(3). The U.S. Court of Appeals for the Ninth Circuit has held that this

provision could “preempt at least some common law claims.” Do Song Uhm v.

Humana, Inc., 620 F.3d 1134, 1155 (9th Cir. 2010). Amerigroup argues that

the Medicare Act establishes standards for which services a plan must

reimburse a provider and at what rate, the contract or quasi-contract claims

overlap with those standards, and they are thus preempted. (Mot. at 12 (citing,

e.g., 42 C.F.R. §§ 422.100(b)(1), 22.214(b)).)

Nonetheless, preemption is an affirmative defense; if it is to be the basis

for a Rule 12(b)(6) dismissal, its application must be patent on the face of the

complaint. Gaetano, 2021 WL 1153193, at *11. The spreadsheet, however, does

not even clearly specify which accounts were Medicare accounts. Amerigroup

suggests that I generally hold that the claims are preempted to whatever

(unspecified) extent they are based on Medicare accounts. I retain discretion,

however, with respect to advisory dismissals of sub-theories. See

loanDepot.com v. CrossCountry Mortg. Inc., 399 F. Supp. 3d 226, 235 (D.N.J.

2019). Three claims are going forward in any event, and discovery will permit

the Court to rule specifically. For now, the motion to dismiss based on

Medicare preemption is DENIED.

Parent Corporation Liability

Amerigroup argues that claims against the parent corporation

(Amerigroup Corp.) should be dismissed because MHA only dealt and

contracted with the subsidiary entity (Amerigroup New Jersey, Inc.). (Mot. at

15; Reply at 2–3.) The Complaint lumps Amerigroup Corp. and Amerigroup

New Jersey together and attributes all the conduct alleged in the Complaint to

them both. (Compl. ¶ 6.) Nonetheless, the Network Agreement, which governs

the lion’s share of the recovery sought (id. ¶¶ 91–92), names only Amerigroup

New Jersey as a contracting party (id., Ex. B at 1).

I will dismiss Amerigroup Corp. as a defendant. Two principles animate

this conclusion. For one, separate corporate forms must be respected and will

not be disregarded to impose liability on an entity for the acts of a related entity

except in limited circumstances. United States v. Bestfoods, 524 U.S. 51, 61–62

(1998); see also State, Dep’t of Env’t Protect. v. Ventron Corp., 468 A.2d 150,

164 (N.J. 1983). Second, the Rule 12(b)(6) standard requires the plaintiff to

plausibly allege that each “defendant is liable for the misconduct alleged.”

Iqbal, 556 U.S. at 678. As a result, courts in this District generally do not allow

“group pleading,” because the complaint must allege “sufficient facts to identify

each defendant’s role.” D’Addario v. Johnson & Johnson, Civ. No. 19-15627,

2020 WL 3546750, at *6 (D.N.J. June 30, 2020) (citations omitted). Putting

those principles together, courts dismiss claims alleged indiscriminately

against multiple corporate defendants without factual allegations warranting

an inference that each could be liable. Glob. Fresh Produce, Inc. v. Epicure

Trading, Inc., Civ. No. 11-01270, 2012 WL 924326, at *6 (D.N.J. Mar. 16,

2012).

The Complaint does not allege any facts to permit an inference that

Amerigroup Corp. should equally be liable. Rather, the Network Agreement

makes clear that the contractual relationship in this case, and thus any

lingering quasi-contractual relationship, existed between Amerigroup New

Jersey and MHA. Absent facts to disregard the separate corporate forms, I

cannot infer that Amerigroup Corp. is factually alleged to be liable for the

conduct alleged. Id.; see also Gap Props., 2020 WL 7183509, at *6 (generally,

only parties to the contract can be subject to breach of contract claims).

The motion to dismiss Amerigroup Corp. from the case is therefore

GRANTED.

IV. CONCLUSION

For the reasons set forth above, the motion to dismiss is granted in part

and denied in part. It is granted as to Counts 1, 2, 3, 7, and 8. It is denied as

to Counts 4, 5, and 6. Counts 4, 5, and 6 are dismissed, however, insofar as

they are asserted against Amerigroup Corporation.

A separate order will issue.

Dated: May 17, 2021

/s/ Kevin McNulty

___________________________________

Hon. Kevin McNulty

United States District Judge