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Connecticut General Life Insurance Co. v. Southwest Surgery Center, LLC

United States District Court, N.D. Illinois, Eastern Division

May 24, 2018



          John Robert Blakey United States District Judge

         Plaintiff Connecticut General Life Insurance Company and Cigna Health and Life Insurance Company (Cigna) sued Southwest Surgery Center (CMIS) for insurance coverage costs that Cigna allegedly overpaid CMIS. [1]. CMIS brought counterclaims alleging that Cigna wrongfully withheld payments for claims properly filed by CMIS. [125]. Cigna moved to dismiss CMIS' third counterclaim, which alleges that Cigna violated the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA), 815 ILCS 505/1 et seq. [127]. For the reasons explained below, this Court grants Cigna's motion.

         I. The Counterclaim's Allegations

         This Court incorporates by reference, and presumes familiarity with, its prior opinion addressing CMIS' motion to dismiss Cigna's complaint [47]. This Court provides additional facts relevant to CMIS' counterclaim but only briefly revisits the relevant transactions, from which both parties' claims arise.

         CMIS alleges that Cigna makes representatives available to answer health care providers' questions about whether Cigna's insurance plans cover certain services. [125] ¶ 13. Providers like CMIS can call these representatives and confirm the scope of coverage for particular patients. See id. ¶¶ 14-16. The answers that Cigna's agents provide during these phone calls are “supposed to be true and accurate” and constitute “Cigna's unambiguous promise to pay the provider for the service.” Id. ¶¶ 15-16.

         After May 15, 2010, CMIS did not have a direct written contract with Cigna, and so lacked access to proof of patient coverage under Cigna's health insurance plans. Id. ¶ 18. As a result, CMIS would call Cigna to verify the coverage and eligibility for Cigna insureds seeking medical services from CMIS. Id. ¶ 19. CMIS called Cigna “before providing services to each insured, ” and relied upon Cigna's “coverage and eligibility verifications in deciding whether to deliver its services to Cigna's insureds without requiring the patients to pay CMIS's bill in full” at the time of the service. Id. ¶¶ 19, 20. If CMIS required patients to pay upfront and in full, that would “leave the patients in the position of having to file claims for reimbursement with Cigna if they wanted to get the benefit of their health insurance.” Id. ¶ 20.

         Between May 2011 and August 2014, CMIS provided “facility services” to numerous patients insured by or through Cigna; these services include the use of CMIS' operating rooms, supplies, and nursing services. See id. ¶¶ 23-25; [125-1] at 2-4. Before providing facility services to these insureds, CMIS called Cigna to verify their eligibility and coverage and thus determine whether Cigna would pay CMIS the costs of those services. [125] ¶ 26. Cigna's agents represented that these insureds “were covered and eligible for benefits for the services” CMIS planned to provide. Id. ¶ 28. Cigna's agents gave specific information about the dollar limits and out-of-pocket expense maximums applicable to the insureds, but never disclosed any other limitations on coverage. See id. ¶¶ 29-30.

         Because CMIS lacked access to the insureds' health plans and policies, it relied upon Cigna's coverage verifications. See id. ¶¶ 32-35. As a result, CMIS did not require its patients to pay their bills in full at the time CMIS provided a service. Id. ¶¶ 36-37. Instead, CMIS billed Cigna after providing its services to the insureds, submitting properly completed forms for payment under the insureds' plans. Id. ¶¶ 38-39. Cigna never paid CMIS the amounts its agents cited during the coverage and eligibility verification phone calls, damaging CMIS in an amount exceeding $75, 000. Id. ¶¶ 40, 43.

         In August 2012, Cigna flagged CMIS' account because of the fee-forgiveness scheme alleged in Cigna's complaint, see [1] ¶¶ 24-37, 46, and CMIS' failure to produce certain requested information, [125] ¶ 53. As a result of that flag, Cigna's claim system denied CMIS claims submitted from that point forward. See id.; [125-1] at 6-8. From August 2012 through August 2014, Cigna denied numerous CMIS claims for various medical services. [125] ¶ 53; [125-1] at 6-8. During that period, however, Cigna agents continued to verify coverage and eligibility for their insureds when CMIS agents called about specific patients. See [125] ¶¶ 47-54. Thus, Cigna agents confirmed that Cigna would pay CMIS' costs in these verification calls while the account flag-blocking payment of CMIS' claims-remained in place. See id. ¶¶ 53-54. CMIS alleges that the misrepresentations made during these verification calls were knowing and intentional. Id. ¶¶ 55-56. Had CMIS known Cigna would not pay for the services CMIS provided to these insureds, CMIS “would have taken upfront payments” from those patients “or sent them to another facility.” Id. ¶ 58. Cigna has not paid the amounts that its agents indicated it would pay CMIS for the services provided to these insureds, damaging CMIS in excess of $75, 000. Id. ¶ 62.

         With respect to these insureds-whose claims CMIS filed between August 2012 and August 2014-CMIS alleges that Cigna misrepresented their eligibility and coverage “in the course of its business of supplying patients and providers with information about the patients' health care coverage. Id. ¶ 66. CMIS also claims that Cigna's misrepresentations “harmed the patient consumers and CMIS because it deceived them into believing Cigna would pay for the services to be performed at CMIS when, in fact, it would not.” Id. ¶ 67.

         CMIS filed its amended counterclaim in January 2018, alleging claims for promissory estoppel (Count I), fraud (Count II), and violations of the ICFA (Count III). Id. at 4, 8, 10. This opinion only addresses Cigna's motion to dismiss Count III of CMIS' counterclaim. [127].

         II. Legal Standard

         A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) “challenges the sufficiency of the complaint for failure to state a claim upon which relief may be granted.” Gen. Elec. Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1080 (7th Cir. 1997). A counterclaim must meet the same standard as a complaint to survive a motion to dismiss. Cozzi Iron & Metal, Inc. v. U.S. Office Equip., Inc., 250 F.3d 570, 574 (7th Cir. 2001). Thus, it must provide a “short and plain statement of the claim showing that the pleader is entitled to relief, ” Fed.R.Civ.P. 8(a)(2), giving the counter-defendant “fair notice” of the claim and its basis, Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). The counterclaim must state a facially plausible claim to relief: the alleged facts must permit “the reasonable inference” that the counter-defendant is liable for the misconduct alleged. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         In evaluating a counterclaim, this Court draws all reasonable inferences in the counter-plaintiff's favor and accepts all well-pleaded allegations as true. See id. This Court need not, however, accept legal conclusions or conclusory allegations. McCauley v. City of Chicago, 671 F.3d 611, 616 (7th Cir. 2011). Thus, “threadbare recitals of the elements of a cause of action, supported by mere ...

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