United States District Court, S.D. New York
MEMORANDUM OPINION AND ORDER
G. Koeltl United States District Judge
plaintiff Millennium Health, LLC ("Millennium")
claims that the defendants EmblemHealth and Health Insurance
Plan of Greater New York ("Emblem"), who maintain
health insurance plans, improperly ignored and ultimately
refused to pay for more than 27, 000 claims submitted by
Millennium for clinical drug testing. The plaintiff claims
that Emblem violated the New York "Prompt Pay"
statute, N.Y. Ins. L. § 3224~a, and the New York
deceptive practices law, N.Y. Gen. Bus. L. § 349, and
that it breached an implied-in-fact contract with Millennium
to pay for services rendered by Millennium to patients
covered by Emblem's health plans. Millennium also seeks a
declaratory judgment, among other relief, directing that
Emblem is required to pay for all services Millennium
rendered to patients enrolled in Emblem's plans. The
defendants now move to dismiss the complaint pursuant to Rule
12(b)(6) of the Federal Rules of Civil Procedure for failure
to state a claim or, in the alternative, for a more definite
statement pursuant to Rule 12(e) of the Federal Rules of
Civil Procedure. This Court has jurisdiction under 28 U.S.C.
§ 1332(a). For the reasons explained below, the motion
is granted in part and denied in part.
deciding a motion to dismiss pursuant to Rule 12(b)(6), the
allegations in the complaint are accepted as true, and all
reasonable inferences must be drawn in the plaintiff's
favor. McCarthy v. Dun & Bradstreet Corp., 482
F.3d 184, 191 (2d Cir. 2007). The Court's function on a
motion to dismiss is "not to weigh the evidence that
might be presented at a trial but merely to determine whether
the complaint itself is legally sufficient." Goldman
v. Belden, 754 F.2d 1059, 1067 (2d Cir. 1985). The Court
should not dismiss the complaint if the plaintiff has stated
"enough facts to state a claim to relief that is
plausible on its face." Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). "A claim has
facial plausibility when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged."
Ashcroft v. Igbal, 556 U.S. 662, 678 (200 9). While
the Court should construe the factual allegations in the
light most favorable to the plaintiff, "the tenet that a
court must accept as true all of the allegations contained in
the complaint is inapplicable to legal conclusions."
Id.; see also Springer v. U.S. Bank Nat' 1
Ass'n, No. 15-cv-1107 (JGK), 2015 WL 9462083, at *1
(S.D.N.Y. Dec. 23, 2015).
presented with a motion to dismiss pursuant to Rule 12(b)(6),
the Court may consider documents that are referenced in the
complaint, documents that the plaintiff relied on in bringing
suit and that are either in the plaintiff s possession or
that the plaintiff knew of when bringing suit, or matters of
which judicial notice may be taken. See Chambers v. Time
Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002); see
also Plumbers & Pipefitters Natfl Pension Fund
v. Orthofix Int'1 N.V., 89 F.Supp.3d 602, 607-08
following facts alleged in the complaint are accepted as true
for the purposes of this motion to dismiss.
is a San Diego-based "health solutions company"
that, among other things, provides clinical drug testing and
related services to "physicians, clinics, health plans,
and other medical providers" throughout the United
States. Complaint ("Compl.") ¶ 2. Health care
providers use Millennium's drug testing services,
including urine drug testing ("UDT"), to monitor
their patients' use of highly addictive prescription
narcotic pain medications. Id. ¶ 2.
maintains health insurance plans." Id. ¶
14. Members of those insurance plans ("Emblem
members") pay premiums to Emblem and, in exchange, rely
on Emblem to pay for the costs of providing health care
covered under those health insurance plans. Id.
Millennium provides UDT services to "physicians and
other health care providers" that treat Emblem members.
Id. ¶ 16. In particular, physicians treating an
Emblem member who has been prescribed addictive narcotic pain
medication may send Millennium a requisition ordering UDT
testing which specifies what drugs and metabolites Millennium
should test for. Id. ¶ 16. Millennium then
provides the UDT results to the physicians, who use them to
make informed prescribing decisions for their patients.
Id. ¶ 17. Millennium then submits claims
directly to Emblem for payment of the services rendered for
the Emblem member. Id. ¶ 18.
alleges that it began submitting claims for its UDT services
to Emblem in 2011 and that Millennium received payments from
Emblem throughout 2011 and 2012. Compl. ¶ 19. The
complaint also alleges that Emblem's own "Provider
Manual" confirms that the types of services provided by
Millennium are medically necessary, and that Emblem regularly
pays for those services when they are rendered by providers
other than Millennium. Id. ¶¶ 19, 20 n.5.
Millennium alleges that, beginning in early 2013, Emblem
began consistently refusing to pay the claims submitted by
Millennium which had previously been paid. Id.
¶ 20. The complaint alleges that, all told, Emblem
failed to pay and/or respond adequately to at least 27, 169
claims for UDT testing performed by Millennium in response to
orders from physicians treating Emblem members. Id.
complaint alleges that in March 2014, after repeated
inquiries from Millennium, Emblem advised Millennium that its
pending claims were in "flag status" and would be
automatically denied. Id. ¶ 23. Later, in 2015,
Emblem allegedly explained that its decision to place the
claims on "flag status" and summarily deny them was
based on its investigation of twenty-two claims related to
services provided upon the orders of three physicians.
Id. ¶ 24. Emblem allegedly indicated that it
had determined that Millennium's services were not
medically necessary because there was no evidence that the
physicians had ever discussed the UDT test results with their
patients. Id. 1 24. Emblem has allegedly continued
to pay other laboratories for UDT services provided to Emblem
members. Id. ¶ 27.
alleges that Emblem's failure to respond to or pay the
claims submitted violates the prompt pay and notification
requirements under New York's Prompt Pay statute, N.Y.
Ins. L. § 3224-a. Compl. ¶¶ 30-37. The
complaint also alleges that there was an implied-in-fact
contract between Millennium and Emblem under which Emblem was
obligated to pay for UDT services provided by Millennium to
patients covered by an Emblem health plan, which contract
Emblem breached by refusing to pay for those services.
Id. ¶¶ 38-43. Finally, Millennium alleges
that the representations made by Emblem to its members that
it "will cover the costs of their health care
services" constitute unlawful deceptive acts and
practices in violation of N.Y. General Business Law §
349. Id. ¶¶ 44-53. The complaint seeks
declaratory and injunctive relief, damages, and fees.
Id. p. 16.
defendants now move to dismiss the complaint on a wide
variety of grounds. Among other things, the defendants argue
that any agreement between Emblem and Millennium does not
trigger the requirements of the Prompt Pay law; that no
implied-in-fact contract can exist because the health plans
between Emblem and its members cover the same subject matter;
and that the ...