Citations
- 623 F. Supp. 2d 1110
Full opinion text
MEMORANDUM DECISION DENYING PLAINTIFFS’ MOTION TO REMAND (Doe. 15) AND GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS FIRST AMENDED COMPLAINT AND DIRECTING PLAINTIFFS TO FILE SECOND AMENDED COMPLAINT (Doc. 12)
OLIVER W. WANGER, District Judge.
Before the Court are Plaintiffs’ motion to remand and Defendant’s motion to dismiss the First Amended Complaint.
A. BACKGROUND.
On January 30, 2007, Plaintiffs Maria Quaresma, an individual and successor in interest of Leonel DaRosa, a deceased individual, and Marshal S. Flam, M.D., filed a Complaint in the Fresno County Superi- or Court. Defendants are BC Life & Health Insurance Company and Does 1-10. The Complaint alleged seventeen causes of action. In pertinent part, the Complaint alleged:
IV. STATE COURT HAS ‘CONCURRENT’ JURISDICTION 28. Section 1132(a)(1)(B) of Title 29, U.S.Code, Labor, read, ‘(a) A civil action may be brought — (1) by a participant or beneficiary — (B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of his plan, or to clarify his rights to future benefits under the terms of the plan ... ’ In this regard, subsection (e) of section 1132 of Title 29, U.S.Code, Labor, adds, ‘State courts of competent jurisdiction and district courts of the United, States shall have concurrent jurisdiction of actions under paragraphs (1)(B) and (7) of subsection (a) of this section (1132).’ [emphasis added.]
29. As such, because participant DaRosa’s successor-in-interest Maria Quaresma and third-party beneficiary Dr. Flam bring the present civil action in order to recover benefits due them under the terms of DaRosa’s plan with BC Life and/or to enforce their rights under the terms of DaRosa’s insurance policy with BC Life, the Superior Court of California, County of Fresno, has concurrent jurisdiction over this action.
V. FEDERAL LAW CLAIMS UNDER THE EMPLOYEE RETIREMENT INCOME SECURITY ACT (ERISA)
FIRST CAUSE OF ACTION
31. As alleged above, DaRosa and BC Life entered into a contract of insurance, whereby BC Life agreed to provide DaRosa with health insurance in consideration for DaRosa paying premiums.
32. Throughout the period of said insurance policy, DaRosa regularly paid premiums when due and performed each act, obligation and/or condition on his part to be performed under the parties’ agreements and policy of insurance to keep the policy in full force and effect. DaRosa intended and expected thereby to receive the health insurance he had contracted to receive. Notwithstanding BC Life’s obligation to do so, BC Life has failed and refused, and continues to fail and refuse, to perform its obligations as agreed and as set forth in the policy of insurance. Despite DaRosa’s demands, BC Life has failed and refused to approve coverage for treatment, which is part of the health insurance policy. Such failure and refusal constitutes a material breach of the contract requested by the insurance policy as well as the covenant of good faith and fair dealing implied into the insurance contract by law.
33. Also, implied within the above-described contract (insurance policy) entered into with DaRosa, BC Life further agreed (as a matter of implication by law) to act in good faith and to deal fairly with DaRosa in carrying out its responsibilities under the agreement and policy of insurance. Upon entering into the agreement and policy of insurance, and accepting premiums from DaRosa, BC Life agreed to provide DaRosa with health insurance. Implicit in BC Life’s obligations to act fairly and in good faith toward DaRosa was its duty to timely and properly reconsider its denial of DaRosa’s claim upon receiving DaRosa’s valid appeal with supporting documents and/or consulting with DaRosa’s physicians.
34. BC Life breached its express obligations under the policy and breached its implied obligations and duties to act fairly and in good faith toward DaRosa by failing to timely and properly reconsider its denial of DaRosa’s claim upon receiving DaRosa’s valid appeal with supporting documents and/or failing to consult DaRosa’s physicians.
35. BC Life also breached its duties in light of the fact that California law is clear that an insurance company cannot deny the use of a particular drug treatment when the following criteria are satisfied: (a) the drug is approved by the federal Food and Drug Administration (‘FDA ’); (b) the drug is prescribed by a participating licensed health care professional for the treatment of a life-threatening condition; and (c) the drug has been recognized for treatment of that condition by two articles from major peer reviewed medical journals that present data supporting the proposed off-label use or uses as generally safe and effective unless there is clear and convincing contradictory evidence presented in a major peer reviewed medical journal. (See, Cal. Health & Safety Code § 1367.21; and Cal. Ins.Code § 10123.195.) Here, Alimta has been approved by the FDA, Alimta was prescribed by Dr. Flam (a participating licensed health care professional), Alimta was prescribed for DaRosa’s life-threatening cancer condition, Alimta has been recognized for treatment of medical conditions such as DaRosa’s by at least two articles from major peer reviewed medical journals that present data supporting the proposed off-label use of Alimta as generally safe and effective, and there is no clear and convincing contradictory evidence presented in a major reviewed [sic] medical journal regarding the fact that Alimta should not be used to treat medical conditions such as DaRosa’s.
[Emphasis deleted].
36.Applicable federal law, namely the Employee Retirement Income Security Act of 1974, as amended (hereinafter ‘ERISA ’) provides that this civil action may be brought against these defendants. (See, ERISA Section 502(a)(1)(B); Title 29 U.S.Code § 1132(a)(1)(B).) Said provision provides in pertinent part as follows; [sic] ‘... (a) A civil action may be brought— (1) by a participant of [sic] beneficiary — (B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of his plan, or to clarify his rights to future benefits under the terms of the plan ... ’
37. As a direct and proximate result of BC Life’s breach of its express and implied contractual duties and obligations, DaRosa was deprived of the benefits of the insurance coverage for which he paid substantial premiums, and suffered damages that exceed the jurisdictional minimum of the Superior Court, in an amount that will be determined at trial. DaRosa’s damages include attorneys’ fees and costs necessarily incurred in bringing the instant lawsuit to require BC Life to perform its obligations under the contract of insurance at issue. Applicable federal law specifically allows for the award of attorneys’ fees under subsection (g) of section 1132 of Title 29, U.S.Code (ERISA): [‘(1) In any action under this subchapter ... by a participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney’s fee and costs of action to either party.’].
On February 27, 2007, Blue Cross of California, contending that it was erroneously sued as BC Life & Health Insurance Company, removed the Complaint to this Court. The Notice of Removal asserts in pertinent part:
5. The District Court of the United States, Eastern District of California has original jurisdiction under 29 U.S.C. Section 1132(e)(1) and 28 U.S.C. § 1331 and the Action is one that may be removed to this Court by Defendant pursuant to 28 U.S.C. Section 1441(a)(b) and (c), for the following reasons:
(a) Plaintiffs allege that in or about November 2005, Blue Cross denied payment for the use of Alimta to treat decedent Leonel DaRosa’s (‘Decedent’) cancer, and, in or about August 2006, denied payment for the use of Avastin to treat Decedent’s cancer, contending that both treatments were investigational and, therefore, excluded from coverage by the health plan issued by Blue Cross.
(b) The health plan issued to Decedent on which plaintiffs [sic] claim is based was a group health policy issued to the Decedent’s employer, Contente Dairy, and constitutes an employee welfare benefit plan within the meaning of 29 U.S.C. Section 1332(e)(1). The enforcement of rights under the plan is governed exclusively by federal law under ERISA. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 [107 S.Ct. 1549, 95 L.Ed.2d 39] (1987). Removal of such cases to federal court is proper. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58 [107 S.Ct. 1542, 95 L.Ed.2d 55] (1987).
6. This Court has original jurisdiction over ERISA claims under the provisions of 28 U.S.C. Section 1331. Thus, this Action may be removed to this Court by Defendant pursuant to the provisions of 28 U.S.C. Section 1441(a) as an action arising under the Constitution, laws or treaties of the United States.
On March 2, 2007, Defendant filed a motion to dismiss the Complaint. Plaintiffs filed a First Amended Complaint (FAC) on March 23, 2007. (Doc.10). Defendant’s motion to dismiss the Complaint was denied as moot by Order filed on March 30, 2007. (Doc. 11).
The FAC still names the Defendant as BC Life & Health Insurance Company. The FAC alleges twenty-three causes of action, grouped as follows:
A. Decedent DaRosa’s Contract Claims Which Have Been Assigned to Dr. Flam
1. Breach of Written Contract by Assignee Dr. Flam
2. Breach of Oral Contract and/or Promissory Estoppel by Assignee Dr. Flam
3. Declaratory Relief by Assignee Dr. Flam
B. Dr. Flam’s State Law Contract or Quasi Contract Claims
4. Breach of Oral Contract and/or Breach of Promissory Estoppel Contract By Dr. Flam
5. Declaratory Relief By Dr. Flam
6. Breach of Quasi-Contract (Common Count of Quantum Meriut) By Dr. Flam
C. Dr. Flam’s State Law Torts Based on Defendant’s Pre-Approval
7. Breach of Implied Covenant of Good Faith and Fair Dealing
8. Negligence
9. Fraud/Deceit
10. Negligent Misrepresentation
11. Fraud — False Promise
12. Violation of California Unfair Business Practices Act
D. Decedent DaRosa’s Non-Assigned State Law Tort Claims Based On Various State Code Violations
13. Breach of Implied Covenant Of Good Faith and Fair Dealing
14. Tortious Bad Faith Breach Of The Duty Of Good Faith And Fair Dealing
15. Negligence
16. Fraud/Deceit
17. Negligent Misrepresentation
18. Fraud — False Promise
19. Negligent Infliction of Emotional Distress Against All Defendants
20. Violation of California Unfair Business Practices Act
21. Equitable Relief Of Reformation Based On Fraud
22. Ambiguity, Mutual Mistake, or Unconscionability Equitable Relief of Rescission and Restitution
23. Unjust Enrichment Against All Defendants.
Except as alleged below, all references to ERISA have been deleted in the FAC. Paragraph 1 of the FAC alleges:
Prior to the filing of this First Amended Complaint, Maria Quaresma, as the sole heir and Successor In Interest of Leonel DaRosa, assigned to Dr. Flam Decedent DaRosa’s claim for insurance benefits against Defendants as herein set forth, and Dr. Flam is now the legal owner and holder thereof.
In addition, the FAC alleges in pertinent part:
IV. AS AN ASSIGNEE OF DECEDENT DAROSA’S STATE CONTRACT CLAIM, DR. FLAM HAS STANDING TO SUE FOR CONTRACT BENEFITS AND, FURTHERMORE, THIS ACTION IS NOT SUBJECT TO REMOVAL TO FEDERAL COURT.
29. A healthcare provider’s suit against an ERISA plan for payment is generally not subject to removal because the provider is neither an ERISA ‘beneficiary ’ nor a ‘participant.’ (Hermann Hospital v. MEBA Medical & Benefits Plan (5th Cir.1988) 845 F.2d 1286, 1288-1289; and Blue Cross of California v. Anesthesia [Care] Assocs. Med. Group, Inc. (9th Cir.1999) 187 F.3d 1045, 1053 [providers’ claims did not affect relationship between Plaintiff and its beneficiaries].) Moreover, the law is clear that ERISA does not cover such non-enumerated parties as assignees and thus there can be no complete preemption and no removal jurisdiction. (See, All State [Allstate ] Insurance Company v. 65 Security Plan (3rd Cir.1989) 879 F.2d 90, 94 [‘Congress simply made no provision in 1132(a)(1)(B) for persons other than participants and beneficiaries to sue, including persons purporting to sue on their behalf ... We also observed that a prior precedent of this court “implicitly adopted the view that § 1132 must be read narrowly and literally” ... Moreover, turning to the second prerequisite for “complete preemption,” our attention has not been directed to any evidence of an intent of the part of Congress to permit removal of the type of state-law claims made by Allstate [the assignee/subrogee] in cases where the plaintiff exclusively relies on state law.’]); see also Harris v. Provident Life and Accident Ins. Co. (9th Cir.1994) 26 F.3d 930, 934 [‘ERISA pre-emption, without more, does not convert a state claim into an action arising under federal law ... ERISA carefully enumerates the parties entitled to seek relief under ERISA’s civil enforcement provisions [29 U.S.C. § 1132(a) ]; it does not provide anyone other than participants, beneficiaries, or fiduciaries with an express cause of action for a declaratory judgment on the issues in this case. A suit for similar relief by some other party does not “arise under” that provision.’]; citing, Metropolitan Life Ins. Co. v. Taylor (1987) 481 U.S. 58, 64 [107 S.Ct. 1542, 95 L.Ed.2d 55] ....
30. Here, because Dr. Flam is an assignee of Decedent DaRosa’s claims under Decedent DaRosa’s insurance contract with BC Life, and because Dr. Flam’s own non-assigned causes of action against BC Life include only California state law causes of action which are independent of the insurance contract (i.e., causes of action based on violations of Cal. Ins. Code, Health & Safety Code, Cal. Bus. & Prof. Code, and/or common law duties), there is no Federal Court jurisdiction of this matter.
On April 4, 2007, Defendant filed a motion to dismiss the First Amended Complaint, (Doc. 12), which motion Plaintiffs oppose. However, on April 20, 2007, Plaintiffs filed a motion to remand the First Amended Complaint to the Fresno County Superior Court. (Doc. 15).
B. MOTION TO REMAND.
Plaintiffs move to remand the action to the Fresno County Superior Court on the ground that “no federal question exists (since all of the causes of action in the [FAC] are state laws) so that there is no federal subject matter jurisdiction.” Plaintiffs assert that BC Life improperly removed the Complaint to this Court:
As further clarified by the Plaintiffs’ First Amended Complaint filed herein, the Plaintiffs’ lawsuit against Defendant Blue Cross does not contain any causes of action arising under any federal statute, and certainly not arising under ERISA, as was wrongly claimed by Defendant Blue Cross in its Removal.
28 U.S.C. § 1441 provides in pertinent part:
(a) Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or defendants, to the district and division embracing the place where such action is pending
(b) Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship of the parties ....
(c) Whenever a separate and independent claim or cause of action with the jurisdiction conferred by section 1331 [federal question] of this title is joined with one or more otherwise non-removable claims or causes of action, the entire case may be removed and the district court may determine all issues therein, or, in its discretion, may remand all matters in which State law predominates.
The removal statute is strictly construed against removal and federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.1992). The burden of establishing federal jurisdiction falls on the party invoking removal. Harris v. Provident Life and Acc. Ins. Co., 26 F.3d 930, 932 (9th Cir.1994).
In determining the existence of removal jurisdiction, the Court ordinarily looks to the complaint as originally filed, and not as amended. Id. “[Jjurisdiction must be analyzed on the basis of the pleadings filed at the time of removal without reference to subsequent amendments ... Because of this rule, a plaintiff may not compel remand by amending a complaint to eliminate the federal question upon which removal was based.” Sparta Surgical Corp. v. National Ass’n of Securities Dealers, Inc., 159 F.3d 1209, 1213 (9th Cir.1998).
Given that the Complaint alleged a cause of action under ERISA and sought relief under ERISA, Plaintiffs’ contention that the Complaint was improperly removed on the basis of ERISA preemption is totally unfounded. Plaintiffs filed the FAC to compel remand by eliminating the ERISA cause of action. In Barraclough v. ADP Automotive Claims Services, 818 F.Supp. 1310, 1311-1312 (N.D.Cal.1993), the plaintiff filed a complaint in state court asserting a claim under the Americans with Disabilities Act. After defendant removed the action, the plaintiff moved to remand on the ground that the District Court lacked subject matter jurisdiction. The District Court held:
Barraclough contends that this court does not have subject matter jurisdiction over her claim against ADP because her only federal claim lacks merit. The date upon which Barraclough bases her cause of action for wrongful termination is September 30, 1991. The ADA did not become effective until July 26, 1992 ... Since the wrongful termination occurred before the effective date of the ADA, Barraclough’s claim under the ADA is meritless. Therefore, with her only federal claim devoid of any merit, Barraclough argues that the court has no basis for federal jurisdiction and should remand the matter to state court.
The law is clear, however, that a plaintiff should not be permitted to ‘effectuate remand by pointing out the flaws in her own complaint, in effect arguing for dismissal of that claim * * *.’ Dworkin v. Hustler Magazine, Inc., 611 F.Supp. 781, 784 (D.C.Wyo.1985). Similarly, the court in Sarmiento v. Texas Board of Veterinary Medical Examiners, 939 F.2d 1242, 1245 (5th Cir.1991), held that the fact that a federal claim lacks merit does not deprive the district court of subject matter jurisdiction. In the present case, Barraclough argues for remand on just that ground.
Because plaintiff is asserting a federal claim (whether or not meritorious), defendant has a right to a federal forum. As stated in Austwick v. Board of Education, 555 F.Supp. 840, 842 (N.D.Ill. 1983), ‘A federal forum for federal claims is certainly defendant’s right.’ Even if plaintiffs federal claim is merit-less, as plaintiff now claims, defendant is entitled to have the court so determine. Only when the merits of the ADA have been decided and the claim dismissed will remand be proper.
To the extent that Plaintiffs seek remand on the ground that the removal of the Complaint was improper, Plaintiffs’ motion to remand is DENIED.
C. MOTION TO DISMISS.
Defendant moves to dismiss the state law contract and tort claims alleged in the FAC pursuant to Rule 12(b)(6), Federal Rules of Civil Procedure, on the ground that these claims are preempted by ERISA. Defendant also contends that Dr. Flam has no standing to pursue an ERISA claim as an assignee of health care benefits because of the anti-assignment provision in the health care plan, nor as a third party beneficiary of the health care plan.
1. GOVERNING STANDARDS.
A motion to dismiss under Rule 12(b)(6) tests the sufficiency of the complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir.2001). Dismissal of a claim under Rule 12(b)(6) is appropriate only where “it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). Dismissal is warranted under Rule 12(b)(6) where the complaint lacks a cognizable legal theory or where the complaint presents a cognizable legal theory yet fails to plead essential facts under that theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir.1984). In reviewing a motion to dismiss under Rule 12(b)(6), the court must assume the truth of all factual allegations and must construe all inferences from them in the light most favorable to the nonmoving party. Thompson v. Davis, 295 F.3d 890, 895 (9th Cir.2002). However, legal conclusions need not be taken as true merely because they are cast in the form of factual allegations. Ileto v. Glock, Inc., 349 F.3d 1191, 1200 (9th Cir.2003). Immunities and other affirmative defenses may be upheld on a motion to dismiss only when they are established on the face of the complaint. See Morley v. Walker, 175 F.3d 756, 759 (9th Cir.1999); Jablon v. Dean Witter & Co., 614 F.2d 677, 682 (9th Cir.1980) When ruling on a motion to dismiss, the court may consider the facts alleged in the complaint, documents attached to the complaint, documents relied upon but not attached to the complaint when authenticity is not contested, and matters of which the court takes judicial notice. Parrino v. FHP, Inc., 146 F.3d 699, 705-706 (9th Cir.1998).
2. ERISA PREEMPTION.
In contending that ERISA preempts the state law tort and contract claims alleged in the FAC, Defendant submits the Declaration of Susan L. Horthy, employed as a Legal Assistant in Defendant’s Legal Department. Attached to Ms. Horthy’s Declaration is a copy of Leonel DaRosa’s “2-50 Small Group Employee Application”, showing that Mr. DaRosa was employed by Contente Dairy. Mr. DaRosa selected medical coverage “Premier PPO $20 Copay” and “authorize[d] my employer to deduct from my earnings the contribution (if any) required to apply toward the cost of this plan.” Also attached is a copy of Contente Dairy’s “2-50 Small Group Employer Application”. Under the provision for “Employer Medical Contribution Option”, Contente Dairy selected “Traditional Contribution” with the employee to contribute 90% per month.
The parties do not dispute that the insurance policy at issue is an ERISA plan within the meaning of 29 U.S.C. § 1002(1).
29 U.S.C. § 1144(a) provides in pertinent part:
Except as otherwise provided in subsection (b) of this section, the provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title and not exempt under Section 1003(b) of this title ....
Section 1144(b)(2)(A) provides in pertinent part: “[NJothing in this subchapter shall be construed to exempt or relieve any person from any law of any State which regulates insurance .... ”
The starting point for determining whether ERISA preempts a state law is Section 1144(a). The Supreme Court has emphasized the broad effect of Section 1144(a). See California Division of Labor Standards v. Dillingham, 519 U.S. 316, 324, 117 S.Ct. 832, 136 L.Ed.2d 791 (1997) (quoting prior cases using the phrases “clearly expansive”, “broad scope”, “expansive sweep”, “broadly worded”, “deliberately expansive”, and “conspicuous for its breadth”.). The Supreme Court has stated that “[a] law ‘relates to’ an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan.” Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 139, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990). “Where a State’s law acts immediately and exclusively upon ERISA plans ... or where the existence of ERISA plans is essential to the law’s operation ... that ‘reference’ will result in preemption.” Dillingham, 519 U.S. at 325, 117 S.Ct. 832. With regard to the phrase “connection with”, the Supreme Court holds: “[T]o determine whether a state law has the forbidden connection, we look both to ‘the objectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive,’ as well as to the nature of the effect of the state law on ERISA plans.” Dillingham, id. In analyzing these objectives “[t]he basic thrust of the pre-emption clause [is] to avoid a multiplicity of regulation in order to permit the nationally uniform administration of employee benefit plans.” New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 657, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995). The Supreme Court has also emphasized that “[t]he principal object of the [ERISA] statute is to protect plan participants and beneficiaries.” Boggs v. Boggs, 520 U.S. 833, 845, 117 S.Ct. 1754, 138 L.Ed.2d 45 (1997). However, the Supreme Court “has established a presumption that Congress did not intend ERISA to preempt areas of ‘traditional state regulation’ that are “quite remote from the areas with which ERISA is expressly concerned — ‘reporting, disclosure, fiduciary responsibility, and the like.’ ” ” Rutledge v. Seyfarth, Shaw, Fairweather & Geraldson, 201 F.3d 1212, 1217, amended, 208 F.3d 1170 (9th Cir.), cert. denied 531 U.S. 992, 121 S.Ct. 482, 148 L.Ed.2d 456 (2000), citing Dillingham, 519 U.S. at 330, 117 S.Ct. 832.
a. DR. FLAM’S FIRST, SECOND AND THIRD CAUSES OF ACTION.
Paragraph 1 of the FAC alleges that “[p]rior to the filing of this First Amended Complaint, Maria Quaresma, as the sole heir and Successor In Interest of Leonel DaRosa, assigned to Dr. Flam Decedent DaRosa’s claim for insurance benefits against Defendants as herein set forth and Dr. Flam is now the legal owner and holder thereof.”
Plaintiffs’ contend that Dr. Flam’s First, Second and Third Causes of Action are not preempted by ERISA because these causes of action are based on a valid assignment of payment by Mr. DaRosa to Dr. Flam. Plaintiffs assert that, therefore, Dr. Flam is a “non-ERISA entity” whose claims against Defendant in these causes of action cannot be preempted.
Plaintiffs cite General American Life Ins. Co. v. Castonguay, 984 F.2d 1518 (9th Cir.1993). In Castonguay, an insurer, General, brought an action against an ERISA trust and its trustee, alleging breach of contract, fraud, and negligent misrepresentation. The ERISA trust provided health and other benefits to participating car dealers and their employees. The ERISA trust bought an insurance policy from General, under which General was to pay part of the claims made the trust’s plan members. The trust was to pay the remainder, but if it could not, General would protect the plan members by paying on their behalf and then seeking reimbursement from the trust. In order to protect itself in the event of the trust’s insolvency, General drafted an agreement to permit either party to cancel the policy on a month’s notice, to permit General to periodically demand audited financial statements, and to permit General to cancel the policy immediately if the trust did not provide audited financial statements. By the end of 1987, the trust was in the red, but General did not look at any financial statements when it renewed the insurance policy in 1988. Instead, General relied on representations of the trust’s agent in the renewal negotiations that the trust was solvent but that no financial statements were available, and in a document provided by the trust’s agent listing the trust’s assets but not its liabilities. When General finally realized that the trust was insolvent, General canceled the insurance policy and brought suit. At issue on appeal was the personal liability of the trustees for the $3 million shortfall. Noting that questions concerning a trustee’s liability for a trust’s debts are normally determined by state law, the Ninth Circuit held:
But this is no ordinary trust. It’s an employee benefit plan trust, and under ERISA ‘any and all State laws’ are preempted ‘insofar as they ... relate to any employee benefit plan.’ ERISA’s preemption clause is one of the broadest ever enacted by Congress ... and it preempts even generally applicable laws, not just laws aimed exclusively at employee benefit plans ....
The difficulty is that ERISA doesn’t preempt all generally applicable laws whenever they happen to affect an employee benefit plan. The Supreme Court has explained that much of state tort law and contract law isn’t preempted. See Mackey v. Lanier Collection Agency & Serv., Inc., 486 U.S. 825, 832-33, 108 S.Ct. 2182, 100 L.Ed.2d 836 (1988). Likewise, state law isn’t preempted when an employee benefit plan acts as employer ..., or as stockholder ... It’s far easier to make T know it when I see it’ decisions in this field than to come up with a general rule, but we must try.
The key to distinguishing between what ERISA preempts and what it does not lies, we believe, in recognizing that the statute comprehensively regulates certain relationships: for instance, the relationship between plan and plan member, between plan and employer, between employer and employee (to the extent an employee benefit plan is involved), and between plan and trustee ... Because of ERISA’s explicit language ... and because state laws regulating these relationships (or the obligations flowing from these relationships) are particularly likely to interfere with ERISA’s scheme, these laws are presumptively preempted.
But ERISA doesn’t purport to regulate those relationships where a plan operates just like any other commercial entity — for instance, the relationship between the plan and its own employees, or the plan and the landlord from whom it leases office space. State law is allowed to govern these relationships, because it’s much less likely to disrupt the ERISA scheme than in other situations. Moreover, if these relationships were governed by federal law, federal courts would have to invent a federal common law of contracts, torts, property, corporations — something that would run against the grain of our federal system
To determine a state law is preempted we must look at whether is encroaches on the relationships regulated by ERISA. State tort and contract causes of action, for instance, don’t apply to transactions between plans and their participants ..., because the relationship between a plan and participant is, under ERISA, a matter of exclusively federal concern ... Wrongful discharge laws don’t apply to employee terminations carried out to avoid benefit payments, because the employer-employee relationship is — insofar as it deals with benefit plans — also an exclusively federal matter ... State law can, however, apply to transactions between plans and their creditors or their landlords or their own employees, because those relationships are outside ERISA’s purview.
Under this approach, the first question we ask is whether the state law reaches a relationship that is already regulated by ERISA. It doesn’t matter whether the state law regulates the relationship directly (by telling the parties what they can or cannot do) or indirectly (by imposing on the parties extra duties that flow from their conduct in the relationship). Any regulation of the relationship is basis enough for preemption.
Here, the state law subjects trustees to personal liability on account of things they do in discharging their responsibility to the trust. ERISA already regulates the trust-trustee relationship: For instance, it gives the trustees the authority to control and manage the plan, 29 U.S.C. § 1102, imposes on them a fiduciary duty to the plan’s beneficiaries, 29 U.S.C. § 1104, demands that they avoid certain conflicts of interest, 29 U.S.C. §§ 1106-1107, and makes them personally liable to the plan for breach of fiduciary duty, 29 U.S.C. § 1109. And Cal.Prob.Code § 18000 certainly regulates this relationship, because it imposes an extra burden on trustees by virtue of their part in the relationship. This burden affects the trustees’ conduct just as surely as direct regulation would; a trustee exposed to additional personal liability for his acts as trustee may act much more timidly than one who’s immunized from such liability. Moreover, adding to the trustees’ personal obligations can make it harder for plans to find qualified trustees, who may be frightened away by the specter of personal liability ....
Because the state law here regulates one of the relationships regulated by ERISA, we must give effect to ERISA’s broad preemption clause. The liability of the trustees in this case must be governed by federal, not California, law.
Plaintiffs also contend that “state law claims by a healthcare provider such as Plaintiff Dr. Flam against a medical insurance company such as Blue Cross for benefit payment (such as Plaintiff Dr. Flam’s individual claims in light of the pre-approval, and assigned claims against Defendant Blue Cross) are generally not subject to removal to federal courts because the physieian/provider is neither an ERISA plan ‘beneficiary’ nor a ‘participant.’ ”.
Plaintiffs cite Blue Cross of California v. Anesthesia Care Assocs. Med. Group, Inc., 187 F.3d 1045, 1053 (9th Cir.1999), as authority that a physician provider’s claims do not affect the relationship between the insurance company and the beneficiaries.
In Anesthesia Care Assocs., Blue Cross brought actions to compel arbitration of medical providers’ claims for breach of provider agreements. The litigation arose from a fee dispute between four medical providers who participated in the Prudent Buyer Plan, a medical care plan offered by Blue Cross. As part of the Prudent Buyer Plan, Blue Cross entered into a standardized contract, the Participating Physician Agreement (the provider agreement), with physicians. Under the provider agreements, Blue Cross agreed to identify the participating physicians in the information materials distributed to members of the Prudent Buyer Plan and to direct its subscribers to these physicians. In turn, the physicians agreed to accept payment from Blue Cross for services rendered to Prudent Buyer Plan subscribers according to specified fee schedules. In the provider agreements, the physician agreed to “seek, accept and maintain evidence of assignment for the payment of Medical Services provided to Members by PHYSICIAN under the applicable Prudent Buyer Benefit Agreement”, that “PHYSICIAN shall seek payment only from BLUE CROSS for the provision of Medical Services,” except pursuant to specified exceptions, that “PHYSICIAN agrees to accept the fee schedule as provided in Exhibit B, attached and made part of this Agreement, or PHYSICIAN’S covered billed charges, whichever is less, as payment in full for all Medical Services provided to Members.” The provider agreements provided for review of new fee schedules by the Blue Cross Physician Advisory/Relations Committee prior to adoption. The provider agreements included arbitration provisions in which the parties agreed to submit disputes concerning the terms of the provider agreements to arbitration pursuant to California law. Each of the medical providers had some patients who were enrolled in the Prudent Buyer Plan as part of a health benefit plan covered by ERISA. The dispute between the medical providers and Blue Cross related to changes in the fee schedules that Blue Cross allegedly made in 1993-1995. 187 F.3d at 1048-1049. The District Court rejected Blue Cross’ argument that the medical providers’ claims related to an ERISA-covered plan under 29 U.S.C. § 1144(a). On appeal, the Ninth Circuit ruled that the medical providers claims were not preempted by ERISA’s civil enforcement provision, 29 U.S.C. § 1132(a), or ERISA’s express preemption provision, 29 U.S.C. § 1144(a). With regard to Section 1132(a), the Ninth Circuit held:
Under ERISA § 502(a), a civil action may be brought by an ERISA plan participant or beneficiary seeking to ‘recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.’ 29 U.S.C. § 1132(a)(1)(B). Blue Cross contends that our decision in Misic v. Building Serv. Employees Health & Welfare Trust, 789 F.2d 1374 (9th Cir.1986), is dispositive of our analysis under § 502(a). We disagree.
In Misic, a dentist rendered dental services to beneficiaries of an ERISA plan that provided dental benefits of 80 percent of the cost of their dental care. See id. at 1376. The beneficiaries assigned their rights to reimbursement to the dentist who in turn billed the plan directly. When the plan did not pay 80 percent of the dentist’s bill, the dentist sued to recover the deficiencies in payment. See id. The court held that unlike pension benefits, which may not be assigned to others, see ERISA § 206(d), 29 U.S.C. § 1056(d), ERISA does not prohibit the assignment by a beneficiary of his or her right to reimbursement under a health care plan to the health care provider. See id. at 1377. The Misic court further held that because a health care provider-assignee stands in the shoes of the beneficiary, such a provider has standing to sue under § 502(a)(1)(B) to recover benefits due under the plan. Accordingly, as we later commented, Misic ‘affirmed the principle that ERISA preempts the state law claims of a provider suing as an assignee of a beneficiary’s right to benefits under an ERISA plan.’ The Meadows v. Employers Health Ins., 47 F.3d 1006, 1008 (9th Cir.1995).
Misic does not address, much less control, the circumstances presented here. In Misic, the provider had no contractual agreement with his patient’s health benefit plan, such as a provider agreement, specifying his fee entitlements. It is clear in Misic that the provider sought, as an assignee, to recover reimbursement due to his assignors under the terms of the benefit plan; indeed, the terms of the benefit plan were the provider’s only basis for his reimbursement claim. Here, in contrast, the Providers and Blue Cross have executed provider agreements, and it is the terms of the provider agreements that Providers contend Blue Cross has breached. Indeed, the Providers are asserting contractual breaches, and related violations of the implied duty of good faith and fair dealing, that their patient-assignors could not assert: the patients simply are not parties to the provider agreements between the Providers and Blue Cross. The dispute here is not over the right to payment, which might be said to depend on the patients’ assignments to the Providers, but the amount, or level, of payment, which depends on the terms of the provider agreements.
Blue Cross also argues that the reference in the provider agreements to ‘PHYSICIAN’S covered billed charges’ shows that the Providers’ claims depend on the interpretation of the terms of the plan. As noted above, this phrase appears in version B of the provider agreements:
PHYSICIAN agrees to accept the fee schedule as provided in Exhibit B, attached to and made part of this Agreement, or PHYSICIAN’S covered billing charges, whichever is less, as payment in full for all Medical Services provided to members.
... But the Providers’ claims arise from Blue Cross’ alleged breach of the provider agreements’ provisions regarding fee schedules, and the procedure for setting them, not what charges are ‘covered’ under the Prudent Buyer Plan. The Providers’ claims, therefore, do not rest upon this term of the Prudent Buyer Plan. Where the meaning of a term in the Plan is not subject to dispute, the bare fact that the Plan may be consulted in the course of litigating a state-law claim does not require that the claim be extinguished by ERISA’s enforcement provision. See Livadas v. Bradshaw, 512 U.S. 107, 128-25, 114 S.Ct. 2068, 129 L.Ed.2d 93 (1994) (stating rule that need to refer to collective bargaining agreement did not bring claims within § 301, the enforcement provision of the Labor-Management Relations Act ....)
In view of the fact that, although beneficiaries of ERISA-covered plans have assigned their rights to reimbursement to the Providers, the Providers are asserting state law claims arising out of separate agreements for the provision of goods and services, we find no basis to conclude that the mere fact of assignment converts the Providers’ claims into claims to recover benefits under the terms of an ERISA plan ....
Id., at 1050-1052. With regard to Blue Cross’ argument that ERISA’s express preemption provision applied to the medical providers’ claims on the grounds that the claims will impose economic burdens on ERISA plans and their beneficiaries and will implicate relationships regulated by ERISA, the Ninth Circuit, relying on New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 655, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995), and De Buono v. NYSA ILA Med. and Clinical Sersv. Fund, 520 U.S. 806, 117 S.Ct. 1747, 138 L.Ed.2d 21 (1997), ruled that the economic effects that the medical providers’ claims might have on ERISA plans are not sufficient for preemption to occur. Id. at 1052-1054.
Plaintiffs further assert that “the law is clear that claims under ERISA do not cover such non-enumerated parties as assignees”, citing Allstate Insurance Company v. 65 Security Plan, 879 F.2d 90, 94 (3rd Cir.1989) and Harris v. Provident Life and Accident Ins. Co., 26 F.3d 930, 934 (9th Cir.1994).
In 65 Security Plan, Allstate brought suit in state court against a beneficiary and an ERISA employee benefit plan providing medical insurance, to determine whether the insurer’s medical coverage or that of the ERISA plan’s was primary. At the time Michael Lindemuth was involved in an automobile accident, he was covered as a dependent under Allstate’s no-fault automobile insurance policy issued to his father, and also covered as a dependent under a medical insurance program provided by the ERISA plan. Following the accident, claims for no-fault insurance benefits were presented to Allstate, which paid the claims. Allstate thereafter contended that its insurance policy only provided “excess” coverage and that the ERISA plan must both reimburse Allstate for its payments to Lindemuth and assume responsibility for all such future payments. The ERISA plan, citing its own “escape” and “excess” clauses, contended that it was not the primary insurer and refused to reimburse Allstate. 879 F.2d at 92. Allstate’s complaint sought an order that (1) Lindemuth’s medical expenses are included within the coverage of the Plan and that Allstate is only secondarily liable for them; and (2) Allstate is entitled to indemnity or contribution from the Plan for Lindemuth’s medical expenses paid to date. The Third Circuit held that ERISA’s civil enforcement provision, Section 1132 preempted Allstate’s claims:
... ERISA nowhere provides an express cause of action in favor of a nonERISA insurance company for contribution or indemnity from an ERISA plan. In this respect, the case before us is much like the situation before the court in Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983). There, a state tax authority filed suit in state court in an attempt to levy on funds held in trust by an ERISA plan and the plan removed the case to a federal district court. The Supreme Court held that there was no removal jurisdiction because Section 502(a) [Section 1132(a) ] did not create a ‘cause of action in favor of state governments, to enforce tax levies or for any other purpose.’ Id. at 25, 103 S.Ct. at 2854 .... Appellees argue, however, that Allstate’s complaint does state a cause of action explicitly recognized under ERISA in that Allstate is in some manner subrogated to beneficiary Lindemuth’s claim against the Plan under section 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), the statutory provision that authorizes a beneficiary’s suit to recover benefits from an ERISA plan. We have recently considered and rejected a similar argument, however. In Northeast Department ILGWU v. Teamsters Local Un. No. 229, 764 F.2d 147 (3rd Cir.1985), one ERISA plan sued another claiming contribution and indemnity in connection with benefits it had paid to a participant of both plans. This court held ‘that the express jurisdictional provisions of ERISA, found in 29 U.S.C. § 1132, do not authorize federal jurisdiction over a suit ... brought by a pension fund and its trustee against another pension fund.’ 764 F.2d at 154. In rejecting the genre of subrogation analysis urged by appellees as a basis for jurisdiction under section 502(a)(1)(B), this court reasoned that ‘Congress simply made no provision in 1132(a)(1)(B) for persons other than participants or beneficiaries to sue, including persons purporting to sue on their behalf.’ Northeast Dept., 764 F.2d at 154 n. 6. We also observed that a prior precedent of this court ‘implicitly adopted the view that § 1132 must be read narrowly and literally’ and that such ‘a reading precludes the interpretation that a pension fund or a trustee (fiduciary) of a fund can sue under § 1132(a)(1)(B) on behalf of participants or beneficiaries.’ Id. at 153.
Moreover, turning to the second prong for ‘complete preemption,’ our attention has not been directed to any evidence of an intent on the part of Congress to permit removal of the type of state-law claims made by Allstate in cases where the plaintiff relies exclusively on state law.
Id. at 94.
In Harris v. Provident Life, a former employee brought an action alleging state law causes of action for misrepresentation and breach of contract with respect to coverage under the employer’s health care plan, and alleging a claim under ERISA for breach of fiduciary duty. The Ninth Circuit ruled in pertinent part:
... Whether a person is a plan participant must be decided as of the time of the filing of the lawsuit ... At the time of filing suit, Lawrence Harris was a former employee of Lincoln. A former employee is a plan participant only if he has ‘a reasonable expectation of returning to covered employment or [has] a colorable claim to vested benefits.’ Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 117, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989) ... The Harrises have not established that Lawrence Harris has either. As such, Lawrence Harris is not a plan participant and therefore we have no jurisdiction to hear the Harrises’ ERISA claim for breach of fiduciary duty ....
Id. at 933. The Ninth Circuit further held that, because Harris was not a plan participant, their state law claims were not within the scope of Section 1132(a) and therefore not completely preempted. Id. at 934.
Plaintiffs’ contention that the First, Second, and Third Causes of Action brought by Dr. Flam as the assignee of Mr. Da Rosa’s claims against BC Life are not subject to ERISA preemption is not supported by the cases upon which Plaintiffs rely and is not supported by Ninth Circuit precedent, precedent not cited or distinguished by Plaintiffs. As Defendant contends, the controlling Ninth Circuit case is Misic v. Building Serv. Employees Health & Welfare Trust, supra, 789 F.2d 1374 (9th Cir.1986), the case distinguished by the Ninth Circuit in Blue Cross of California v. Anesthesia Care Assocs. Med. Group, Inc., supra, 187 F.3d 1045.
In Misic, a dentist rendered dental services to beneficiaries of an ERISA plan that provided dental benefits of 80 percent of the cost of their dental care. 789 F.2d at 1376. The beneficiaries assigned their rights to reimbursement to the dentist who in turn billed the plan directly. When the plan did not pay 80 percent of the dentist’s bill, the dentist sued to recover the deficiencies in payment. See id. The Ninth Circuit rejected the argument that, because only the parties named in Section 1132 have standing to sue under ERISA, and assignees are not named, Dr. Misic did not have standing to sue under ERISA:
These arguments mistakenly treat Dr. Misic as a suitor in his own right. Dr. Misic sues derivatively, as assignee of beneficiaries.
As paragraph 12 of the complaint alleges, Dr. Misic ‘stands in the shoes of the [bjeneficiaries;’ and Dr. Misic’s assignors, beneficiaries under the Act, are expressly authorized by section 1132(a)(1)(B) to sue to recover benefits due under a plan.
We conclude Dr. Misic, as assignee of beneficiaries pursuant to assignments valid under ERISA, has standing to assert the claims of his assignors.
Plaintiffs’ failure to discuss Misic and their reliance on cases distinguishable from the allegations in the FAC, compel the conclusion that the First, Second and Third Causes of Action, brought by Dr. Flam as the assignee of Mr. DaRosa’s claims against Defendant under the ERISA plan are governed and pre-empted by ERISA because, as discussed infra, the claims assigned to Dr. Flam by Mr. DaRosa are pre-empted by ERISA.
Defendant contends that Dr. Flam’s causes of action based on the assignment to him by Mr. DaRosa must be dismissed because Part XI, General Provisions, of the Blue Cross Policy, attached to the FAC as Exhibit 2a-c, provides:
Benefits Not Transferable: You and your eligible Family Members are the only persons entitled to receive benefits under this Combined Evidence of Coverage and Disclosure Form. The right to benefits cannot be transferred. FRAUDULENT USE OF SUCH BENEFITS WILL RESULT IN CANCELLATION OF THIS COMBINED EVIDENCE OF COVERAGE AND DISCLOSURE FORM AND APPROPRIATE LEGAL ACTION WILL BE TAKEN.
Relying on this policy provision, Defendant suggests that Dr. Flam does not have standing to sue for the recovery of Mr. DaRosa’s ERISA benefits. Defendant cites Davidowitz v. Delta Dental Plan of California, Inc., 946 F.2d 1476 (9th Cir.1991).
In Davidowitz, Delta Dental Plan provided dental benefits to employees under a welfare benefit plans governed by ERISA. Under the plans, Delta agreed to pay 70% of the beneficiary’s dental bill and the beneficiary paid the co-payment balance. Some of the dental service providers participated, while others did not. A beneficiary was free to go to either a participating or a non-participating dentist; in either ease, Delta paid the same percentage of the bill. However, Delta paid participating dentists directly, while non-participating dentists must collect from the beneficiary. In consideration for direct Delta payment, participating dentists agreed to bill and attempt to collect the co-payment from beneficiaries, and to meet Delta quality standards. Neither obligation applied to non-participating dentists. To circumvent non-direct payment, some non-participating dentists asked beneficiaries to assign their rights to receive Delta’s checks to the dentists in exchange for a waiver of the co-payment. Delta’s plans provided: “Payment for services provided by a dentist who is not a Participating Dentist shall be made to an Eligible Person, and shall not be assignable.” Appellees, a group of non-participating dentists, sought a preliminary injunction ordering Delta to honor beneficiary assignments. The District Court granted the preliminary injunction and the Ninth Circuit reversed, concluding that “ERISA welfare plan payments are not assignable in the face of an express non-assignment clause in the plan.” 946 F.2d at 1481.
Plaintiffs respond that Blue Cross’ contention “is based solely on the misinterpretation of a vague and ambiguous clause in the insurance contract which prohibits the transfer of the health care policy itself.” Plaintiffs assert that the above-quoted language in the policy “is a prohibition only to the transfer of the health care policy itself, and not the accounts receivable from Plaintiff Decedent DaRosa and Plaintiff Dr. Flam.” Comparing the “Benefits Not Transferable” provision in the Blue Cross policy to the anti-assignment provision in the Delta Dental plans at issue in Davidowitz, Plaintiffs argue that the Blue Cross provision “is far less expressive about the prohibition of assignment of payment for services” and that “[o]n its face, the language is clearly the prohibition of the transfer of the health care policy [sic].” Plaintiffs cite Royal Indem. Co. v. Kaiser Aluminum & Chemical Corp., 516 F.2d 1067, 1072 (9th Cir.1975):
It is well settled that when a contract of insurance is drafted by the insurer, any ambiguity, uncertainty, or doubt is to be resolved by a construction favoring the insured.
Plaintiffs also refer to Feit v. St. Paul Fire & Marine Ins. Co., 27 Cal.Rptr. 870, 209 Cal.App.2d Supp. 825, 828 (1962):
It is a generally accepted rule of construction that ambiguities in a contract of insurance are to be resolved against the insurer who drafted the same and in favor of the insured ... Furthermore, policies of insurance are to be given a reasonable construction, and not one that leads to an absurd result.
Relying on these cases, Plaintiffs argue that Defendant’s attempt to construe the “Benefits Not Transferable” provision to prohibit the assignment of accounts receivable to Dr. Flam leads to an absurd result:
[I]t would indeed be absurd to construe the language of a clause which limits the transfer of a health insurance policy to include the assignment of payments. If such an agreement were contemplated, surely it would have been made in express, specific, and unambiguous terms.
Plaintiffs’ argument that the “Benefits Not Transferable” provision only prohibits transfer of the policy is belied by the terms of the provision itself. There is no language in that provision from which such a construction can be inferred. The provision very clearly states that the right to benefits cannot be transferred.
Defendant’s motion to dismiss the First, Second and Third Causes of Action of the Amended Complaint asserted by Dr. Flam as assignee of Decadent DaRosa’s claims is GRANTED WITH LEAVE TO AMEND on the basis of ERISA preemption, see discussion infra, and because of Dr. Flam’s lack of standing to assert these claims.
b. Dr. Flam’s Fourth through Twelfth Causes of Action.
Defendant further argues that Dr. Flam’s state law contract or quasi-contract causes of action (B 4-6) and his state law tort claims based on Defendant’s preapproval (C 7-12) are preempted by ERISA.
The Fourth Cause of Action is for breach of contract and/or promissory estoppel and alleges that Dr. Flam and Defendant entered into an oral agreement whereby Defendant agreed to provide health insurance to Decedent DaRosa “so as to pay the bills of Decedent DaRosa’s treating physician (Dr. Flam) as to the aforementioned Alimta treatments”; that Defendant breached its oral agreement by failing to provide health insurance for the Alimta treatments for which Dr. Flam obtained pre-approval from Defendant and by failing to timely reconsider its denial of Decedent DaRosa’s claim upon receiving Decedent DaRosa’s/Dr. Flam’s valid appeal with supporting documents and/or by failing to consult with Dr. Flam.
The Fifth Cause of Action is for declaratory relief and alleges:
53. A controversy has arisen and exists between Dr. Flam and the Defendants concerning their respective rights and duties as to the parties’ agreements and the provisions of the policies (and the above-described promissory estoppel pre-approval) at issue regarding BC Life’s obligations to properly reconsider Decedent DaRosa’s/Dr. Flam’s request with respect to the denial of health insurance coverage by BC Life to Decedent DaRosa for payment to Dr. Flam. Dr. Flam seeks a declaration of his rights and the Defendants’ duties under the parties’ agreements and policies (and under promissory estoppel pre-approval), including a determination that Decedent DaRosa is entitled to the health insurance benefits, and that Dr. Flam is thus entitled to payment by BC Life for the medical treatment he provided to Decedent DaRosa (after preapproval from BC Life).
The Sixth Cause of Action is captioned “Breach of Quasi-Contract (Common Count of Quantum Meriut)” and alleges that “[b]etween May 2005 and October 2006, on BC Life’s promise to pay the reasonable value of the Alimta treatments provided by Dr. Flam to Decedent DaRosa, Dr. Flam provided Decedent DaRosa with Alimta for the purpose of treating Decedent DaRosa’s cancer” and that BC Life has wrongfully refused to pay for the Alimta treatments despite its pre-approval, and that “[a]s a result of BC Life’s breach of the oral pre-approval agreement and unjustifiable refusal to pay Dr. Flam for the Alimta treatments, Dr. Flam has sustained substantial damages.”
The Seventh Cause of Action is for breach of the implied covenant of good faith and fair dealing. The Seventh Cause of Action alleges that Dr. Flam obtained pre-approval from BC Life and rendered treatment to Decedent DaRosa in reliance of BC Life’s pre-approval promise of payment; that implied within the pre-approval was BC Life’s agreement to act in good faith and deal fairly with Dr. Flam in carrying out its responsibilities under the pre-approval promise; and that BC Life failed in these obligations. The Seventh Cause of Action further alleges:
62. Implicit in BC Life’s obligations to act fairly and in good faith toward Dr. Flam (in light of its pre-approval for Alimta treatment) was its duty to timely reconsider its denial of the claim for payment upon receiving a valid appeal with supporting documents and/or to consult with Decedent DaRosa’s physicians.
63. BC Life breached its obligations and duties to act fairly and in good faith toward Dr. Flam by failing to uphold its obligations as to its pre-approval of the Alimta treatment as well as to timely reconsider its denial of the claim upon receiving a valid appeal with supporting documents and/or failing to consult with Decedent DaRosa’s physicians. BC Life further breached its obligations and duties to act fairly and in good faith towards Dr. Flam by:
(a) Failing to acknowledge and promptly respond to Decedent DaRosa/Dr. Flam’s tender for insurance benefits as required under California Insurance Code §§ 790.03(h)(2)(3) [sic];
(b) Failing to acknowledge receipt of the claim and/or to begin any necessary investigation of the claim within fifteen (15) days of receipt of the claim as mandated by 10 California Code of Regulations § 2695.2(e); and,
(c) Failing to accept or deny a claim for insurance benefits within forty (40) days of notification of the insured’s claim as required under 10 California Code of Regulations § 2695.7(b)(d) [sic].
64. BC Life also breached its duties in light of the fact that California law is clear that an insurance company cannot deny the use of a particular drug treatment when the following criteria are satisfied: (a) the drug is approved by the federal Food and Drug Administration ...; (b) the drug is prescribed by a participating licensed health care professional for the treatment of a life-threatening condition; and (c) the drug has been recognized for treatment of that condition by two articles from major peer reviewed medical journals that present data supporting the proposed off-label use or uses as generally safe and effective unless this is [sic] clear and convincing contradictory evidence presented in a major peer reviewed medical journal. (See Cal.Health & Safety Code § 1367.21; and Cal.Ins.Code § 10123.195.) Here, Alimta has been approved by the FDA, Alimta was prescribed by Dr. Flam (a participating licensed health care professional), Alimta was prescribed for Decedent DaRosa’s life-threatening cancer condition, Alimta has been recognized for treatment of medical conditions such as Decedent DaRosa’s by at least two articles from major peer reviewed medical journals that present data supporting the proposed off-label use of Alimta as generally safe and effective, and this is [sic] no clear and convincing contradictory evidence presented in a major reviewed [sic] medical journal regarding the fact that Alimta should not be used to treat medical conditions such as Decedent DaRosa’s. [underlining omitted].
The Eighth Cause of Actio