Hapeville Dialysis Center, LLC v. City of Atlanta, Georgia

Case: 13-11162 Date Filed: 11/13/2013 Page: 1 of 7

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT
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No. 13-11162
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D. C. Docket No. 1:12-cv-00055-SCJ

HAPEVILLE DIALYSIS CENTER, LLC,

Plaintiff-Appellant,

versus

CITY OF ATLANTA, GEORGIA,

Defendant-Appellee.

________________________

Appeal from the United States District Court
for the Northern District of Georgia
_________________________

(November 13, 2013)

Before HULL and ANDERSON, Circuit Judges, and MOTZ,* District Judge.

PER CURIAM:

____________

*Honorable J. Frederick Motz, United States District Judge for the District of Maryland, sitting by
designation.
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After oral argument and careful review of the briefs of the parties and the

record, we conclude that the judgment of the district court dismissing the complaint

pursuant to Federal Rule of Civil Procedure 12(b)(6) should be affirmed on the

ground that plaintiff failed to plead factual allegations that permit us to conclude

that plaintiff’s claim is plausible. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct.

1937, 1949 (2009). It is true that the complaint’s prayer for relief alleges that the

City violated 42 U.S.C. § 1395y(b)(1)(C)(i) by “impermissibly taking into account

that Patient was eligible for ESRD-based Medicare benefits”; and also alleges that

the City violated 42 U.S.C. §1395y(b)(1)(C)(ii) by “impermissibly differentiating in

benefits provided to individuals without ESRD and those with ESRD on the basis

of ESRD or the need for dialysis treatment.” However, those allegations are mere

legal conclusions.

Plaintiff provided dialysis treatments to a patient who was a participant in the

City’s group health plan (“the Plan”). The patient was Medicare eligible on the

basis of having end-stage renal disease (“ESRD”). To support its two legal

conclusions quoted above, plaintiff relies on only two relevant factual allegations in

the complaint, at paragraphs 42 and 47. These two paragraphs quote two provisions

from the “summary plan description” of the City’s Plan. We can assume arguendo

that these two Plan provisions, if considered by themselves and in isolation from the

other facts properly considered in this appeal, might raise a reasonable inference

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that the City’s Plan paid only part of plaintiff’s bill because the Plan considered

itself a payor secondary to Medicare. On the basis of this inference, the plaintiff

argues that the Plan “[took] into account that an individual is entitled to or eligible

for [Medicare] benefits” during the statutorily relevant 30-month period. 42 U.S.C.

§ 1395y(b)(1)(C)(i). Thus, plaintiff argues that the Plan and the City violated the

statute. However, that weak inference from those two general Plan provisions is

insufficient to state a plausible claim when considered in conjunction with the other

allegations in the complaint and the other provisions of the summary plan

description which was attached to the complaint. We turn to a consideration of

those other allegations and those other provisions of the summary plan description.

First, in paragraph 30, the complaint alleges that the stated reason for the

Plan’s payment of only part of plaintiff’s bill was that the Plan “does not provide

coverage for charges over the Default Reimbursement Rate (known as Usual,

Customary, and Reasonable).” It is undisputed that this was the Plan’s stated

reason, and no other reason was stated. Second, aside from the two general Plan

provisions relied upon by plaintiff, there are no factual allegations that the actual

payments by the Plan to plaintiff: (a) were based on an attempt to treat the Plan as a

payor secondary to Medicare; (b) were reduced or terminated on account of

Patient’s Medicare eligibility; or (c) were not in accordance with the terms of the

Plan. There are also no factual allegations that a non-ESRD patient or a non-

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Medicare eligible patient was or would have been paid for any differently. Third,

paragraph 33 of the complaint alleges, and it is undisputed that, plaintiff is an out-

of-network provider with respect to the Plan. Fourth, paragraph 32 of the complaint

quotes from the summary plan description (page 6): “For Out-of-Network services,

Eligible Charges are determined by (a) the Claims Administrator’s Usual,

Customary and Reasonable (“UCR”) Fees ….” This language is repeated at page

46 of the summary plan description, which adds that “Reimbursement for Non-

Contract Providers is determined by our Default Reimbursement Rate.”

The fifth disputed fact persuading us that plaintiff’s claim is not plausible is

somewhat more complicated. This fifth fact builds upon the premise that plaintiff is

an out-of-network provider, which plaintiff concedes in paragraph 33 of the

complaint. This fifth fact is that, notwithstanding plaintiff’s allegations to the

contrary, the provisions of the summary plan description clearly provide that

plaintiff, as an out-of-network provider, is properly paid at the Plan’s Default

Reimbursement Rate or its Usual, Customary and Reasonable Fees. The Plan

provisions to this effect are clear and unambiguous. Thus, it is clear that the Plan’s

payments to plaintiff – explained as payments pursuant to the Plan’s “Default

Reimbursement Rate (known as Usual, Customary, and Reasonable),” as admitted

in paragraph 30 of the complaint – were paid precisely pursuant to the terms of the

Plan. Therefore, it is also clear that any other out-of-network provider would also

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have been paid at the Usual, Customary, and Reasonable Fee or the Default

Reimbursement Rate, whether the services were rendered to a Medicare eligible

patient or a non-Medicare eligible patient.

Plaintiff apparently realized that this fifth fact would undermine the

plausibility of its claim, and thus plaintiff attempted in paragraphs 32 through 41 of

the complaint to allege that neither the Plan’s Default Reimbursement Rate nor its

Usual, Customary, and Reasonable Fees could be applied with respect to the claim

submitted by plaintiff. However, our careful study of the summary plan description

persuades us that the Plan clearly and unambiguously provides that plaintiff, as an

out-of-network provider, is properly paid pursuant to the Plan’s Usual, Customary,

and Reasonable Fees or its Default Reimbursement Rate. The Plan’s definition of

“Eligible Charges” (at page 46) expressly provides:

For Out-of-Network services, Eligible Charges are determined by: (a)
[the Plan’s] Usual, Customary and Reasonable (UCR) Fees ….

Reimbursement for Non-Contracted Providers is determined by our
Default Reimbursement Rate.

Although it may be true, as the complaint alleges, that plaintiff is neither a

hospital nor a physician, the Plan’s definition of an out-of-network provider

is not thus limited. The provisions of the summary plan description make it

unambiguously clear that plaintiff is an out-of-network provider whom the

Plan provisions provide will be paid the Plan’s Usual, Customary, and

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Reasonable Fees or reimbursed at the Plan’s Default Reimbursement Rate.

At page 51 of the summary plan description, the term “Out-of-Network

Provider” is defined as follows:

A Hospital, Physician, Skilled Nursing Facility, Hospice, Home Health
Care Agency, other medical practitioner or provider of medical
services and supplies, that does not have a Network Provider contract
with the Claims Administrator. This provider may also be referred to
as a Non-Network Provider.

(Emphasis added.)

Finally, the issue before us is whether the above-mentioned weak

inference based on the two summary plan provisions relied upon by plaintiff

can rise to the plausible level when considered in light of the foregoing very

forceful, undisputed facts. One final fact breaks the back of plaintiff’s claim.

Notwithstanding the two general provisions upon which plaintiff relies, the

first page of the summary plan description provides in bold print a NOTICE

which states in part:

[I]f the Plan is required to operate in a different manner to comply with
federal laws and regulations, … the appropriate federal laws and
regulations will govern.

Because the statute and regulations clearly prohibit the Plan from treating

itself as a payor secondary to Medicare under these facts, it is clear that the

two summary plan provisions on which plaintiff relies are simply inoperable

in this situation. Thus, even the weak inference from those two general plan

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provisions disappears. We readily conclude that plaintiff has failed to make

factual allegations that rise to the level of a plausible claim. 1

For the foregoing reasons, the judgment of the district court is

AFFIRMED. 2

1
In light of our resolution on this ground, we need not reach the additional question of
whether the plaintiff, in order to state a claim under 42 U.S.C. § 1395y(b)(3)(A), was required to
allege that Medicare had paid claims properly payable by the City. See Bio-Med. Applications of
Tenn., Inc. v. Cent. States Se. & Sw. Areas Health & Welfare Fund, 656 F.3d 277, 284-87 (6th
Cir. 2011).
2
We note that the district court declined to exercise supplemental jurisdiction over the
state law claim in the complaint, which the district court dismissed without prejudice. That was
not appealed.
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