Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_12-cv-00800/USCOURTS-casd-3_12-cv-00800-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1331 Fed. Question

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2flil NOV 26 PN 2: 26 

UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF CALIFORNIA 

BING CAO, an individual, CASE NO. 12-CV-0800 BEN (NLS) 

Plaintiff, ORDER GRANTING DEFENDANT'S 

vs. MOTION TO DISMISS PLAINTIFF'S 

CAUSES OF ACTION FOR 

NEGLIGENT MISREPRESENTATION 

AETNA LIFE AND PROMISSORY ESTOPPEL INSURANCE COMPANY and 

DOES 1-10, inclusive, 

Defendants. [Docket No. 19]

Presently before the Court is Defendant's motion to dismiss the second and third causes of 

action in Plaintiff's First Amended Complaint ("F AC") for negligent misrepresentation and promissory 

estoppel. For the reasons stated below, the motion is GRANTED. 

BACKGROUND 

According to the F AC, Defendant Aetna Life Insurance Company is the plan administrator of 

an ERISA governed health benefit plan ofwhich Plaintiff Bing Cao is a member. (FAC ~ 8.) Plaintiff 

was recommended to undergo a medical procedure at Ambulatory Care Surgery Center ("ACSC"). 

(Id. ~ 10.) On August 18, 2011, ACSC called Defendant to confirm the availability and applicability 

of Plaintiffs insurance coverage. (Id. ~ 12.) Defendant advised ACSC that the procedure would be 

covered at 65% ofthe reasonable and customary charges by the clinic. (Id. ~ 13.) Plaintiff alleges that 

she would not have undergone the procedure but for the coverage of her plan. (Id. ~ 15.) She also 

alleges that ACSC would not have performed the procedure but for her plan coverage and Defendant's 

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representation. (ld. ~ 16.) After the procedure was performed, ACSC sent invoices to Defendant in 

the sum of$17,351.10. (ld. ~ 18.) Defendant paid only $2,224.33 ofthe total sum and refused to pay 

the remaining balance. (Id. ~~ 19-20.) In her FAC, Plaintiff asserts wrongful denial ofbenefits under 

Section 502 of ERISA. (ld. ~~ 28-30.) Plaintiff also asserts negligent misrepresentation and 

promissory estoppel, based on the allegedly false representations Defendant made to ACSC. (ld. ~~ 

31-46.) 

Defendant moves to dismiss the causes of action for negligent misrepresentation and 

promissory estoppel. Being fully briefed, the Court finds the motion suitable for determination on the 

papers without oral argument, pursuant to Civil Local Rule 7.I.d.l. 

DISCUSSION 

Under Federal Rule ofCivil Procedure 12(b)(6), dismissal is appropriate if, taking all factual 

allegations as true, the complaint fails to state a plausible claim for relief on its face. FED. R. CIV. P. 

12(b)(6); BellAtl. Corp. v. Twombly, 550U.S. 544, 556-57 (2007); see also Ashcroftv. Iqbal,556U.S. 

662,678 (2009) (requiring plaintiff to plead factual contentthat provides "more than a sheer possibility 

that a defendant has acted unlawfully"). Under this standard, dismissal is appropriate ifthe complaint 

fails to state enough facts to raise a reasonable expectation that discovery will reveal evidence ofthe 

matter complained of, or ifthe complaint lacks a cognizable legal theory under which relief may be 

granted. Twombly, 550 U.S. at 556. 

Defendant moves to dismiss Plaintiff's state law causes of action for negligent 

misrepresentation and promissory estoppel, arguing that they are preempted by Section 514 ofERISA. 

Alternatively, Defendant argues that the causes of action should be dismissed as insufficiently pled. 

Section 514 ofERISA provides that ERISA preempts "any and all State laws insofar as they 

may now or hereafter relate to any [ERISA governed employee benefit plan]." 29 U.S.C. § 1144(a). 

"A law 'relates to' an employee benefit plan ... ifit has a connection with or reference to such a plan." 

Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 139 (1990) (internal quotation marks omitted). A 

state law may "relate to" a benefit plan "even if the law is not specifically designed to affect such 

plans, or the effect is only indirect." Id. Nevertheless, a state law does not "relate to" an ERISA plan 

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ifit affects the plan in "too tenuous, remote, or peripheral" a manner. Shaw v. Delta Air Lines, Inc., 

463 U.S. 85, 100 n.21 (1983). 

In determining whether a claim has a "connection with" an ERISA plan, courts are instructed 

to "look both to the objectives of the ERISA statute as a guide to the scope of the state law that 

Congress understood would survive, as well as to the nature ofthe effect ofthe state law on ERISA 

plans." Cal. Div. ofLabor Standards Enforcement v. Dillingham Constr., NA., Inc., 519 U.S. 316, 

325 (1997) (internal quotation marks and citation omitted). The Ninth Circuit adopts a relationship 

test for determining the "connection" prong. Under the test, courts look to "whether the state law 

encroaches on relationships regulated by ERISA, such as between plan and plan member, plan and 

employer, and plan and trustee." Blue Cross ofCal. v. Anesthesia Care Assocs. Med. Grp., Inc., 187 

F.3d 1045, 1053 (9th Cir. 1999). "Any regulation ofthe relationship is basis enough for preemption." 

Gen. Am. Life Ins. Co. v. Castonguay, 984 F.2d 1518, 1522 (9th CiT. 1993). 

"The basic thrust ofthe pre-emption clause ... [is] to avoid a multiplicity ofregulation in order 

to permit the nationally uniform administration ofemployee benefit plans." N 1': State Conference of 

Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 657 (1995). One type of 

regulation that may impede the uniformity ofplan administration is state laws that provide alternative 

enforcement mechanisms. When claimants "dress[] up an ERISA benefits claim inthe garb ofa state 

law tort," the claim should be preempted. Dishman v. UNUMLift Ins. Co. ofAm., 269 FJd 974, 983 

(9th Cir. 2001). The United States Supreme Court has held that state tort and contract causes ofaction 

are preempted ifthey arise out ofthe processing ofa claim for benefits by plan participants. Pilot Life 

Ins. Co. v. Dedeaux, 481 U.S. 41,48 (1987). The Ninth Circuit has also held that ERISA preempts 

common law theories ofbreach ofcontract, fraud, and promissory estoppel for the improper handling 

of claims under ERISA plans, because they violate the "connection" prong. Ellenburg v. Brockway, 

Inc., 763 F.2d 1091, 1095 (9th CiT. 1985). 

In the instant case, Plaintiff is a plan participant and Defendant is her plan administrator. 

Moreover, Defendant's representations over the phone concerned Plaintiff's coverage under the plan. 

(FAC ~ 13.) Similar to the cases that have been decided, Plaintiffs state law causes of action focus 

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Case 3:12-cv-00800-BEN-NLS Document 24 Filed 11/26/12 Page 3 of 4
1 on the processing and administration of an ERISA governed plan. The relationship appears to be a 

2 matter that falls under exclusive ERISA regulation. 

3 The Ninth Circuit provides additional guidance on the relationship test. In Dishman, the plan 

4 participant plaintiff alleged invasion ofprivacy against his insurance company for the investigation 

5 conducted against him. 269 F.3d at 979-80. The court adopted a "but for" test, holding that 

6 preemption can be found if "[b]ut for the denial of[the claim for benefits], there would have been no 

7 grounds for [the] state law actions." Id. at 983. The court concluded that because the plaintiff's claim 

8 for invasion ofprivacy remained whether or not the defendant ultimately paid his claim, his tort claim 

9 was not preempted. Id. 

lOInthe instant case, had Defendant approved Plaintiff's claim under the plan, Plaintiff would 

II have had no cause of action for negligent misrepresentation or promissory estoppel, because there 

12 would have been no damages resulting from Defendant's representation over the phone. In that sense, 

13 the state law causes of action are employed as an alternative method for obtaining benefits under the 

14 ERISA governed plan. Accordingly, the two state law causes of action are preempted. 

15 Plaintiff attempts to avoid preemption by contending that the causes of action are based on 

16 Defendant's duties owed to ACSC, not to Plaintiffherself, which would mean that there is no ERISA17 regulated relationship. This argument is futile, since it is Plaintiff, not ACSC, that is bringing the state 

1& law causes of action. 

19 Accordingly, the state law causes ofaction relate to an ERISA governed plan and are therefore 

20 preempted. Because the state law causes of action are preempted, the Court need not reach 

21 Defendant's argument that the causes ofaction are insufficiently pled. 

22 CONCLUSION 

23 For the reasons stated above, Defendant's motion to dismiss Plaintiff's causes of action for 

24 negligent misrepresentation and promissory estoppel is GRANTED. 

25 IT IS SO ORDERED. 

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27,f{_ DATED: November-"¥', 2012 

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