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Millennium Health, LLC v. Emblemhealth, Inc.

United States District Court, S.D. New York

March 9, 2017

MILLENNIUM HEALTH, LLC, Plaintiff,
v.
EMBLEMHEALTH, INC. AND HEALTH INSURANCE PLAN OF GREATER NEW YORK D/B/A/ EMBLEM HEALTH, Defendants.

          MEMORANDUM OPINION AND ORDER

          John G. Koeltl United States District Judge

         The 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.

         I.

         In 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).

         When 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 (S.D.N.Y. 2015).

         II.

         The following facts alleged in the complaint are accepted as true for the purposes of this motion to dismiss.

         Millennium 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.

         "Emblem 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.

         Millennium 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. ¶ 20.

         The 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.

         Millennium 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.

         The 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 ...


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