Peters v. Aetna Inc. et al

THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
ASHEVILLE DIVISION
CIVIL CASE NO. 1:15-cv-00109-MR
SANDRA M. PETERS, on behalf of )
herself and all others similarly )
situated, )
)
Plaintiff, )
) MEMORANDUM OF
vs. ) DECISION AND ORDER
)
)
AETNA INC., AETNA LIFE )
INSURANCE COMPANY, and )
OPTUMHEALTH CARE SOLUTIONS, )
INC., )
)
Defendants. )
_______________________________ )
THIS MATTER is before the Court on the Plaintiff’s Motion for Leave
to File First Amended Class Action Complaint [Doc. 128]; the Parties’ Joint
Motion for Leave to File Under Seal Portions of Plaintiff’s Motion for Leave
to File a First Amended Class Action Complaint and Proposed First
Amended Class Action Complaint [Doc. 127]; and the Defendants’ Motion
for Leave to File under Seal Portions of Defendants’ Combined Opposition
to Plaintiff’s Motion for Leave to File First Amended Class Action Complaint
and Exhibits C and D [Doc. 132].
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I. PROCEDURAL BACKGROUND
On June 12, 2015, the Plaintiff Sandra M. Peters filed this putative
class action against the Defendants Aetna, Inc., Aetna Life Insurance
Company (collectively, “Aetna”), and OptumHealth Care Solutions, Inc.
(“Optum”), asserting claims pursuant to the Racketeer Influenced and
Corrupt Organizations Act, 18 U.S.C. § 1961, et seq. (“RICO”) and the
Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C.
§ 1001, et seq. (“ERISA”). [Doc. 1]. In her Complaint, the Plaintiff alleged
that Aetna engaged in a fraudulent scheme with Optum and other
subcontractors, which were employed to process and administer health care
claims, whereby insureds were caused to pay the subcontractors’
administrative fees because the Defendants misrepresented such fees as
medical expenses. The Plaintiff alleged that these misrepresentations
allowed Aetna to illegally (i) obtain payment of the subcontractors’
administrative fees directly from insureds when the insureds’ deductibles
have not been reached; (ii) use insureds’ health spending accounts to pay
for these fees; (iii) inflate insureds’ co-insurance obligations using
administrative fees; (iv) artificially reduce the amount of available coverage
for medical services when such coverage is subject to an annual cap; and
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(v) obtain payment of the administrative fees directly from employers when
an insured’s deductible has been exhausted or is inapplicable. [Id.].
The Plaintiff asserted two claims based on RICO violations. In Count
I of the Complaint, the Plaintiff alleged that Aetna and its subcontractors,
including Optum, violated 18 U.S.C. § 1962(c) by engaging in acts of mail
and wire fraud in furtherance of a common purpose to collect administrative
fees from Aetna insureds and plans by improperly characterizing them as
payment for covered medical expenses, and as such, constitute an
associated-in-fact “enterprise” as defined in 18 U.S.C. § 1961(4).
Alternatively, the Plaintiff alleged that Aetna has conducted multiple bilateral
association-in-fact RICO enterprises with each of its subcontractors. In
Count II of the Complaint, the Plaintiff alleged that the Defendants conspired
to violate 18 U.S.C. § 1962(c), in violation of 18 U.S.C. § 1962(d). The
Plaintiff also asserted two claims under ERISA, alleging that the Defendants
breached their fiduciary duties as plan administrators, in violation of 29
U.S.C. § 1132(a)(2) (Count III) and 29 U.S.C. § 1132(a)(1), (a)(3), and/or 29
U.S.C. § 1104 (Count IV).
Aetna and Optum moved to dismiss the action pursuant to Rules
12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure, arguing that
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the Plaintiff lacked standing to assert her claims and that her Complaint
otherwise failed to state claims upon which relief can be granted. [Docs. 37,
39]. On August 31, 2016 the Court entered an Order, granting in part and
denying in part the Defendants’ motions. [Doc. 54]. Specifically, the Court
concluded that the Plaintiff had standing to assert claims regarding Aetna’s
actions with respect to Optum but that the Plaintiff lacked standing to assert
any claims with respect to Aetna’s interactions with other subcontractors. [Id.
at 18-20]. The Court, however, dismissed the Plaintiff’s RICO claims with
prejudice, reasoning as follows:
A contractual arrangement through which a claims
administrator contracts with a network of providers at
a negotiated flat rate hardly suggests the existence
of a RICO enterprise. Aetna’s purpose in its
contractual relationship with Optum is to have
insurance claims administered. Optum’s purpose is
to provide claims administration services for a fee.
The fact that a small part of their arrangement
deflects responsibility for the fee to an improper party
does not transform their otherwise legitimate
contractual arrangement into a criminal enterprise.
The interactions between Aetna and Optum show
only that the defendants had a commercial
relationship, not that they had joined together to
create a distinct entity for purposes of the allegedly
wrongful activity. Without an indication that the
cooperation in this case exceeded that inherent in
every commercial transaction, the Complaint
provides no basis for inferring that the Defendants
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were conducting the enterprise’s affairs and not their
own, independent interests.
[Id. at 25-26]. The Court denied the Defendants’ motions with respect to the
Plaintiff’s ERISA claims. [Id. at 34].
On November 21, 2016, the Court entered a Pretrial Order and Case
Management Plan, setting a fact discovery deadline of June 1, 2017 and a
class certification motion deadline of October 10, 2017. [Doc. 61]. In April
2017, upon motion of the parties, the Court amended the Case Management
Plan to extend the fact discovery deadline to October 1, 2017 and the class
certification motion deadline to February 16, 2018. [Doc. 66]. In September
2017, the Case Management Plan was modified again at the parties’ request
to extend these deadlines to December 15, 2017 and May 9, 2018,
respectively. [Doc. 72]. In November 2017, the Case Management Plan
was modified a third time at the request of the parties to extend the fact
discovery deadline to January 31, 2018 and the class certification motion
deadline to June 22, 2018. [Doc. 77]. In January 2018, the Court granted
the parties’ fourth request for a modification of the Case Management Plan,
extending the fact discovery deadline to March 8, 2018 and the class
certification motion deadline to August 3, 2018. [Doc. 81]. In the Order,
however, the Court cautioned that “[a]bsent a showing of extraordinary
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circumstances, no further extensions of [these] deadlines will be permitted.”
[Id. at 2].
On May 29, 2018, the Plaintiff filed the present motion seeking leave
to file an Amended Complaint. For grounds, the Plaintiff contends that she
“has uncovered evidence in discovery showing that Defendants . . . have
coordinated in establishing and directing a RICO enterprise to illegally collect
Optum’s charges from members and plans under the guise that the charges
are medical expenses.” [Doc. 128 at 1]. Accordingly, the Plaintiff seeks
leave to amend her Complaint to “reflect these new facts about Defendants’
enterprise and to test her RICO claims on the merits.” [Id. at 1-2]. The
Defendants oppose the Plaintiff’s motion. [Doc. 135].
II. DISCUSSION
The Court dismissed the Plaintiff’s RICO claims more than two years
ago. By dismissing these claims with prejudice, the Court declined to grant
the Plaintiff any leave to amend or replead these claims. See United States
v. Union Corp., 194 F.R.D. 223, 236 (E.D. Pa. 2000). As the Court’s Order
did not dismiss all of the Plaintiff’s claims, however, it was not a final
judgment and therefore remained subject to modification. See Fed. R. Civ.
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P. 54(b). The Plaintiff, however, never sought reconsideration of this
dismissal order.
The Plaintiff argues that she was not required to seek reconsideration
of the dismissal. Rather, she contends that she could properly seek
amendment pursuant to Rule 15(a), which provides that amendments may
be made with leave of Court and that such leave should be given freely
“when justice so requires.” Fed. R. Civ. P. 15(a).
Regardless of the appropriate procedural vehicle for the Plaintiff’s
request, the fact remains that amendment of the Plaintiff’s Complaint would
only be proper if such amendment were not futile. Here, the Plaintiff asserts
that her amended pleading is based on evidence which was disclosed during
discovery in this litigation. These “newly discovered facts,” however, are not
materially different from the factual allegations that the Court previously
considered in dismissing her RICO claims.
The Court previously considered the Plaintiff’s allegations that Aetna
used false codes in EOBs to conceal Optum’s administrative fees; that the
Defendants coordinated to develop this alleged plan; that Aetna failed to
disclose the manner in which it charged these fees to plan sponsors and
members; and that the supposed scheme was intended to ensure that Aetna
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did not have to pay Optum’s fees. Contrary to the Plaintiff’s contention, the
Court did not dismiss these claims because of a lack of factual detail and
specificity; rather, the Plaintiff’s claims were dismissed because her
allegations, when taken as true, simply do not describe a RICO enterprise.
Even taking all of the Plaintiff’s newly amended factual allegations as true,
the Plaintiff has still failed to plausibly allege “that ‘the cooperation in this
case exceeded that inherent in every commercial transaction’” and “‘that [the
Defendants were] conducting the enterprise’s affairs’ and not their own
independent interests.” [Doc. 54 at 26 (quoting United Food & Commercial
Workers Unions & Employers Midwest Health Benefits Fund v. Walgreen
Co., 719 F.3d 849, 856 (7th Cir. 2013)) (alteration in original)]. The Plaintiff’s
proposed amended allegations do nothing to change the Court’s prior Rule
12(b)(6) analysis.
In addition to the futility of the Plaintiff’s proposed amendment, the
Court finds that the Plaintiff’s amendment is dilatory and would require a
significant modification of the Case Management Plan. Rule 16 of the
Federal Rules of Civil Procedure provides that a scheduling order “may be
modified only for good cause and with the judge’s consent.” Fed. R. Civ. P.
16(b)(4). “Rule 16(b)’s good cause standard focuses on the timeliness of
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the amendment and the reasons for its tardy submission; the primary
consideration is the diligence of the moving party.” Montgomery v. Anne
Arundel County, 182 F. App’x 156, 162 (4th Cir. 2006).
Here, the Plaintiff contends that she learned of the facts upon which
she bases her amended allegations during the course of discovery. The
Plaintiff, however, waited more than 11 weeks after the discovery period
ended to file her motion to amend. The Plaintiff has not proffered any good
reason for this delay.
The fact discovery period has closed, and the Plaintiff is on the verge
of filing her motion for class certification. Granting the Plaintiff leave to
amend the Complaint at this late date in order to re-assert her RICO claims
would prejudice the Defendants by forcing them to conduct further discovery,
thereby adding even further expense. See 6 Charles Alan Wright, et al.,
Federal Practice and Procedure, § 1487 (3d ed. 2018). Moreover, allowing
an amendment at this point would undoubtedly result in a delay in the
resolution of the class certification issue, which would in turn disrupt the
Court's administration of justice and the management of its caseload. This
matter is already one of the oldest cases on the Court’s docket; allowing the
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Plaintiff to amend her Complaint at this late date would only further delay the
resolution of this action.
For all these reasons, the Plaintiff’s motion for leave to file an amended
complaint is denied. Further, in light of the representations of the parties as
set forth in the Defendants’ Supplemental Submission Regarding Pending
Motions to Seal [Doc. 140], the parties’ motions to seal [Docs. 127, 132] are
deemed withdrawn.
O R D E R
IT IS, THEREFORE, ORDERED that the Plaintiff’s Motion for Leave to
File First Amended Class Action Complaint [Doc. 128] is DENIED.
IT IS FURTHER ORDERED that the Parties’ Joint Motion for Leave to
File Under Seal Portions of Plaintiff’s Motion for Leave to File a First
Amended Class Action Complaint and Proposed First Amended Class Action
Complaint [Doc. 127] and the Defendants’ Motion for Leave to File under
Seal Portions of Defendants’ Combined Opposition to Plaintiff’s Motion for
Leave to File First Amended Class Action Complaint and Exhibits C and D
[Doc. 132] are DEEMED WITHDRAWN.
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IT IS SO ORDERED.
Signed: July 27, 2018
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