Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_13-cv-02378/USCOURTS-caed-2_13-cv-02378-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 29:1001 E.R.I.S.A.: Employee Retirement

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

NUTRISHARE, INC., a California 

corporation,

Plaintiff,

v.

CONNECTICUT GENERAL LIFE INSURANCE 

COMPANY, a Connecticut 

Corporation, CIGNA HEALTH AND LIFE 

INSURANCE COMPANY, a Connecticut 

Corporation, and DOES 1 THROUGH 

10, inclusive,

Defendants.

No. 2:13-cv-02378-JAM-AC

ORDER DENYING NUTRISHARE’S 

MOTION TO STRIKE AND MOTION 

TO DISMISS IN THEIR 

ENTIRETY 

CONNECTICUT GENERAL LIFE INSURANCE 

COMPANY and CIGNA HEALTH AND LIFE 

INSURANCE COMPANY, 

 Counter-Claimants,

 v.

NUTRISHARE, INC.,

 Counter-Defendant. 

This matter is before the Court on Plaintiff and CounterDefendant Nutrishare, Inc.’s (“Nutrishare”) Motion to Dismiss 

Case 2:13-cv-02378-JAM-AC Document 25 Filed 03/14/14 Page 1 of 20
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(Doc. #13) Defendants and Counter-Claimants Connecticut General 

Life Insurance Company and CIGNA Health and Life Insurance 

Company’s (collectively “CIGNA”) Counterclaim (Doc. #8) and 

Nutrishare’s Motion to Strike (Doc. #12) portions of the 

Counterclaim.1 CIGNA filed oppositions to both motions (Doc. 

#17-18) and requests judicial notice of several documents (Doc. 

#17-1). Plaintiff filed replies to both (Doc. #20-21) and also 

seeks judicial notice of one document (Doc. #19). For purposes 

of judicial efficiency, both motions are considered together 

here. 

I. FACTUAL ALLEGATIONS IN THE COUNTERCLAIM

The Counterclaim states four causes of action against 

Nutrishare: the first two are brought pursuant to § 502(a)(3) of 

the Employment Retirement Income Security Act (“ERISA”), 29 

U.S.C. § 1132, in order to redress alleged violations of ERISA 

plans; the third claim is for violations of California Business 

and Professions Code § 17200, et seq., California’s unfair 

competition law (“UCL”); and the fourth is for fraud. 

As alleged in the Counterclaim, CIGNA serves as the claims 

administrator and/or the insurer of employee health benefit plans 

governed by ERISA that provide reimbursement for covered medical 

expenses incurred by individual plan participants and 

beneficiaries covered under the plans. CC ¶ 2. According to the 

Counterclaim, CIGNA acts as a claims review fiduciary, either as 

 

1 This motion was determined to be suitable for decision without 

oral argument. E.D. Cal. L.R. 230(g). The hearing was 

scheduled for February 19, 2014.

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the third party administrator of a self-funded, employersponsored group health plan, or as an insurer of such employersponsored ERISA plans. CC ¶ 16. Members of these plans may 

select to receive medical treatment from “in-network” or “out-ofnetwork” providers. Participants must pay more for healthcare 

provided to them outside of CIGNA’s network in order to offset 

increased costs and to incentivize them to choose in-network 

providers. Id. ¶ 2. Obtaining “in-network” care is more cost 

effective because healthcare providers agree in advance to a 

discounted fee schedule, enabling controlled and predictable 

costs to the benefit of all involved. Id. Participants are 

advised of the benefits covered by their plans in Summary Plan 

Descriptions (“SPDs”), including the variance in charges between 

in-network and out-of-network services. Id. ¶¶ 19-22. The SPDs 

provide that CIGNA is entitled to recover any overpayments and to 

enforce the terms of the plans by invoking equitable remedies. 

Id. ¶¶ 24-25. 

Nutrishare is a medical provider specializing in “home 

infusion” and the provision of Total Parenteral Nutrition (“TPN”) 

to consumers. CC ¶ 17. Nutrishare is outside of CIGNA’s network 

of providers. Id. ¶ 3. CIGNA alleges that Nutrishare fails to 

disclose to CIGNA patients that it is an “out-of-network” 

provider or that the cost of the treatment Nutrishare provides is 

significantly higher than “in-network” providers. Id. ¶ 4. In 

addition, it alleges Nutrishare told some participants that they 

would not be billed at all for Nutrishare’s services. Id. 

Nutrishare would then bill CIGNA at exorbitant rates while 

misrepresenting the amounts it usually accepts for the services 

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provided and what the “actual, total charges” for those services 

were. Id. ¶¶ 3, 6-7, 27-32, 39. CIGNA alleges Nutrishare failed

to inform CIGNA that it was not charging the required copayments, deductibles, or coinsurance. Id. CIGNA alleges that 

this has resulted in Nutrishare fraudulently billing CIGNA for 

services provided to plan participants since 2003. Id. ¶ 7. It 

estimates that Nutrishare has fraudulently billed over $6 million 

in inflated charges since 2008. Id.

II. OPINION

A. Judicial Notice

CIGNA requests judicial notice (Doc. #17-1) of three 

documents. The first two are the tentative ruling from a 

California Superior Court case, Aetna Life Insurance Company v. 

Bay Area Surgical Management, et al., and the transcript of the 

hearing wherein the court adopts that ruling. CIGNA RJN Exh. A & 

B. The third is a ruling from the United States District Court 

for the District of New Jersey in Connecticut General Life 

Insurance Company v. Roseland Ambulatory Center, No. 12-cv-05941-

DMC. Id. Exh. C. Nutrishare seeks judicial notice of a 

California Superior Court order in Washington Township Health 

Care District v. Aetna Health of California, et al. (Doc. #19). 

Rule 201(b) of the Federal Rules of Civil Procedure provides 

that “[t]he court may judicially notice a fact that is not 

subject to reasonable dispute because it . . . can be accurately 

and readily determined from sources whose accuracy cannot 

reasonably be questioned.” Because the contents of public court 

records “can be accurately and readily determined from sources 

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whose accuracy cannot reasonably be questioned,” both CIGNA’s and 

Nutrishare’s requests for judicial notice are GRANTED. However, 

the Court merely takes notice of the existence of these 

documents, not the truth of any facts asserted in them. See, 

e.g., Allstate Ins. Co. v. Pira, 2012 WL 1997212 (N.D. Cal. 

2012). 

B. Motion to File a Sur-Reply

CIGNA requests the Court to strike certain misstatements and 

arguments contained in Nutrishare’s Reply to CIGNA’s opposition 

to the Motion to Dismiss, or in the alternative, requests leave 

to file a sur-reply (Doc. #23). 

The Court “does not consider arguments first set forth in a 

reply brief.” Powell v. Union Pac. R. Co., 864 F. Supp. 2d 949, 

962 (E.D. Cal. 2012). Therefore, CIGNA’s request to strike 

arguments first raised by Nutrishare in its reply is unnecessary, 

as would be a sur-reply. Accordingly, these requests are DENIED. 

C. Motion to Dismiss

Nutrishare presents a series of arguments in its Motion to 

Dismiss the Counterclaim; each will be addressed in turn.

1. Standing2

Nutrishare first contends that CIGNA lacks standing to 

bring its claims because it has not suffered an injury-in-fact 

and fails to sufficiently allege it is authorized to bring these 

claims as a fiduciary. MTD at pp. 3-7.

An indispensable element of federal standing is that a party 

 

2 The Court has considered the supplemental authority regarding 

standing submitted by Nutrishare (Doc. #24). However, the 

authority does not alter the Court’s decision in this matter. 

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brining a claim must have suffered an “injury in fact.” Lujan v. 

Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). This is 

defined as an “invasion of a legally protected interest which is 

(a) concrete and particularized; and (b) ‘actual or imminent, not 

“conjectural” or “hypothetical.”’” Id. (citations omitted). 

Although the party invoking federal jurisdiction bears the burden 

of establishing an injury in fact, at the pleading stage, 

“general factual allegations of injury resulting from the 

defendant’s conduct may suffice.” Id.; see also Warren v. Fox 

Family Worldwide, Inc., 328 F.3d 1136, 1140 (9th Cir. 2003). 

Nutrishare contends CIGNA lacks standing because it only 

administers many of these ERISA plans and an ERISA plan “must 

bring a claim in its own name to satisfy Article III standing 

requirements.” MTD at pp. 3-4. 

ERISA specifically identifies who may bring suit to enforce 

its provisions. A civil action to enforce ERISA may be brought 

“by a participant, beneficiary, or fiduciary.” 29 U.S.C. 

§ 1132(a)(3). An ERISA fiduciary includes anyone who exercises 

any discretionary authority or control over the plan's 

management, anyone who exercises any authority or control over 

the management of its assets, and anyone having any discretionary 

authority or responsibility in the plan's administration. 29 

U.S.C. § 1002(21)(A); see also US Airways, Inc. v. McCutchen, 133 

S. Ct. 1537, 1544-45 (2013); Arizona State Carpenters Pension 

Trust Fund v. Citibank, 125 F.3d 715, 721-22 (9th Cir. 1997). 

Although third-party administrators are not fiduciaries under 

ERISA when they merely perform ministerial duties or process 

claims, administrators can be an ERISA fiduciary if “they are 

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given the discretion to manage plan assets or to determine claims 

made against the plan. An insurer will be found to be an ERISA 

fiduciary if it has the authority to grant, deny, or review 

denied claims.” Kyle Railways, Inc. v. Pacific Admin. Serv. 

Inc., 990 F.2d 513, 516, 517-18 (9th Cir. 1993).

Based on the allegations in the Counterclaim, CIGNA is the 

claims administrator for the ERISA plans at issue and has 

discretionary authority and control regarding claims made under 

the plan. CC ¶¶ 2, 9, 16. Therefore, it has a fiduciary duty 

to enforce the terms of the ERISA plans and thus standing to 

bring the federal claims at issue. Nothing further in the way 

of proof is necessary at this stage of the litigation.

Nutrishare also argues CIGNA lacks standing to bring its 

UCL claims. MTD at pp. 5-6. Any party who has suffered injury 

in fact and has lost money or property as a result of unfair 

competition has standing to bring a claim under the UCL.

Kwikset Corp. v. Superior Court, 51 Cal. 4th 310, 320-21 (2011). 

For the same reasons discussed above, CIGNA has adequately 

alleged an injury in fact and causation to establish standing 

for its UCL claim. Indeed, CIGNA alleges Nutrishare’s scheme has 

caused it to pay Nutrishare over six million dollars for

procedures that should have cost twenty to thirty percent less 

than that amount. CIGNA’s Counterclaim also includes alleged

detailed, specific examples of how Nutrishare’s schemes caused 

such injuries. CC¶30. Accordingly, Nutrishare’s motion to 

dismiss based on lack of standing is DENIED. 

2. Failure to Exhaust Administrative Remedies

Nutrishare contends CIGNA’s ERISA claims must be dismissed 

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because it has failed to exhaust its administrative remedies. In 

its Motion to Dismiss, Nutrishare argues that CIGNA’s claims for 

recoupment of ill-gotten gains constitute “adverse benefits 

determinations,” triggering ERISA notice requirements. MTD at 

pp. 8-10. However, Nutrishare fails to provide persuasive 

authority for such a contention. Neither the relevant ERISA 

provisions nor rulings from other federal courts indicate any 

such exhaustion requirement for the equitable claims in the 

Counterclaim. See 29 U.S.C. § 1133 (claims procedure applies to 

benefits claims that have been denied); 29 C.F.R. § 2560.503-

1(b); see also Aetna Life Ins. Co. v. Bay Area Surgical Mgmt., 

LLC, C-12-05829 RMW, 2013 WL 685375, at *6 (N.D. Cal. 2013)

(finding plaintiff’s claims to recover previously dispensed 

medical benefits did not involve any “adverse benefits 

determination”).

The Court declines to imply a requirement not clearly 

provided for in ERISA. Accordingly, Nutrishare’s motion to 

dismiss the ERISA claims for failure to exhaust administrative 

remedies is DENIED. 

3. Failure to Comply with Cal. Ins. Code § 10123.145

Nutrishare next contends CIGNA has failed to comply with 

the requirements of California Insurance Code § 10123.145. MTD 

at pp. 12-13. It argues the allegations relating to the fullyinsured claims should therefore be dismissed.

The Insurance Code provision cited by Nutrishare sets forth 

the responsibilities of providers who are given notice of an 

overpayment. It states in relevant part that “the provider

shall reimburse the insurer” unless it contests the overpayment 

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determination. Cal. Ins. Code § 10123.145(a). The provision 

does not place any restrictions on CIGNA’s ability to bring its 

claims in this action. Accordingly, Nutrishare’s motion to 

dismiss based on failure to comply with the California Insurance 

Code is DENIED.

4. Failure to Plead a Viable Fraud Claim

Nutrishare contends CIGNA has failed to plead its claim for 

fraud with the requisite particularity and has failed to plead

justifiable reliance, a required element. MTD at pp. 13-16.

Under Rule 9 of the Federal Rules of Civil Procedure, a 

complaint must “state with particularity the circumstances 

constituting fraud . . . including the who, what, when, where, 

and how of the misconduct charged.” Ebeid ex rel. United States 

v. Lungwitz, 616 F.3d 993, 998 (9th Cir. 2010) (internal 

quotation marks and citation omitted).

Nutrishare argues CIGNA has failed to state what 

representations were made, to whom they were made, when they were 

made, or how CIGNA relied on them. MTD at p. 14. However, as 

indicated in its Opposition, CIGNA provides specific details in 

its Counterclaim of the representations that underlie its claims. 

Opp. MTD at pp. 16-17; CC ¶¶ 28-32. 

CIGNA specifically alleges Nutrishare submitted standard 

forms that intentionally misrepresented the “actual, total 

charges” for its services. CC ¶¶ 28-29. The Counterclaim 

identifies specific categories of claims that were made by 

Nutrishare for certain services, the number of claims made, a 

specific time period during which those claims were made, and 

the amount of reimbursement induced by these fraudulent claims. 

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Id. ¶¶ 28-32. Although the Counterclaim does not specify each 

and every transaction, such particularity is neither practical 

nor required. Even with the heightened pleading requirements, 

“[l]ess specificity is required when ‘it appears from the nature 

of the allegations that the [cross]defendant must necessarily 

possess full information concerning the facts of the 

controversy.’” Comm. On Children's Television, Inc. v. Gen. 

Foods Corp., 35 Cal. 3d 197, 217 (1983) (citation omitted)

(superseded on other grounds). When dealing with thousands of 

instances, it is often the case that a complaint or counterclaim 

laying out each and every misrepresentation in detail would 

“provide less effective notice and be less useful in framing the 

issues than would a shorter, more generalized version.” Id. As 

alleged, Nutrishare itself submitted each of the claims 

identified generally by CIGNA and has certainly been provided 

notice as to CIGNA’s bases for its fraud claim. The Court finds 

the claim for fraud has been pleaded with the particularity 

required by Rule 9. 

Additionally, Nutrishare argues CIGNA did not adequately 

allege that it justifiably relied on the representations of the 

prices charged by Nutrishare, required for a viable cause of 

action for fraud. MTD at pp. 15-16. Nutrishare contends CIGNA 

did not rely on the alleged misrepresentations of its charges 

for services in determining the amounts it would reimburse 

Nutrishare. 

The Counterclaim specifically alleges that CIGNA relied on 

the misrepresentations in the claim forms submitted by 

Nutrishare, leading it to reimburse Nutrishare amounts in excess 

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of what was due under the terms of the plans. CC ¶¶ 30, 34, 65. 

The Counterclaim specifically alleges: “CIGNA typically paid 

NUTRISHARE based upon and in reliance upon the claim forms 

submitted by NUTRISHARE. As a result, NUTRISHARE received 

payments well in excess of the amounts due pursuant to the terms 

of the Plans” (¶ 34); and CIGNA relied on Nutrishare’s “false 

representations and omissions, and based upon such reasonable 

reliance, CIGNA paid NUTRISHARE based upon the artificially 

inflated amounts submitted in the claims” (¶ 65). The Court 

finds this adequately alleges justifiable reliance. 

Accordingly, Nutrishare’s motion to dismiss CIGNA’s claim 

for fraud is DENIED. 

5. Preemption of State Law Claims

Nutrishare contends CIGNA’s state law claims are both 

preempted under ERISA’s broad preemption scheme. MTD at p. 16. 

They argue that the claims are completely preempted under ERISA 

section 502(a), and also subject to conflict preemption under 

section 514(a). 

a. Conflict Preemption § 514(a) 

ERISA contains a preemption provision that states it “shall 

supersede any and all State laws insofar as they may now or 

hereafter relate to any employee benefit plan.” ERISA § 514(a), 

as amended, 29 U.S.C. § 1144(a). ERISA's preemption clause is 

“deliberately expansive,” Pilot Life Ins. Co. v. Dedeaux, 481 

U.S. 41, 45–46 (1987), and “contains one of the broadest 

preemption clauses ever enacted by Congress.” Spain v. Aetna 

Life Ins. Co., 11 F.3d 129, 131 (9th Cir. 1993) (citations 

omitted), cert. denied, 511 U.S. 1052 (1994). However, the 

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Supreme Court has “admonished that the term [‘relate to’] is to 

be read practically, with an eye toward the action’s actual 

relationship to the subject plan.” Providence Health Plan v. 

McDowell, 385 F.3d 1168, 1171-73 (9th Cir. 2004) (citing New York 

State Conference of Blue Cross & Blue Shield Plans v. Travelers 

Ins. Co., 514 U.S. 645, 655–56 (1995)). 

The Supreme Court has produced a two-part inquiry when 

applying the preemptive effect of the provision: “A ‘law 

“relate[s] to” a covered employee benefit plan for purposes of 

§ 514(a) “if it [1] has a connection with or [2] reference to 

such a plan.”’” California Div. of Labor Standards Enforcement 

v. Dillingham Const., N.A., Inc., 519 U.S. 316, 324-25 (1997)

(quoting District of Columbia v. Greater Washington Bd. of 

Trade, 506 U.S. 125, 129 (1992)). Regarding the second inquiry, 

the Supreme Court has found that “[w]here a State's law acts 

immediately and exclusively upon ERISA plans . . . or where the 

existence of ERISA plans is essential to the law's operation 

. . . that ‘reference’ will result in pre-emption.” Id. As for 

the first inquiry, in determining whether the state law has a 

“connection with” an ERISA plan, courts must “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 of the effect of the state law on ERISA plans.” 

Id. (quoting Travelers Ins. Co., 514 U.S. at 658–59.

The Supreme Court has determined that Congress' aims in 

passing ERISA's preemption provision were “to ensure that plans 

and plan sponsors would be subject to a uniform body of benefits 

law; the goal was to minimize the administrative and financial 

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burden of complying with conflicting directives among States or 

between States and the Federal Government.” Ingersoll–Rand Co. 

v. McClendon, 498 U.S. 133, 142 (1990). Otherwise, Congress 

feared that “the inefficiencies created could work to the 

detriment of plan beneficiaries” and create a potential for 

conflict in substantive law. Id. 

Nutrishare contends CIGNA’s fraud and UCL claims have a 

“connection to” or “reference to” the ERISA plans. MTD at p. 

18. It argues the specific terms of the ERISA plans are the 

“basis upon which CIGNA contends that overpayments exist and may 

be recovered by CIGNA” and, therefore, it contends the claims 

are preempted. 

The Counterclaim contains state law claims for fraud and 

violations of the UCL. Although the claims involve ERISA plans, 

the state law invoked “does not create an alternative 

enforcement mechanism for securing benefits under the terms of 

[the] ERISA-covered plans.” Blue Cross of California v. 

Anesthesia Care Associates Med. Grp., Inc., 187 F.3d 1045, 1054 

(9th Cir. 1999). 

“As with many state laws of general applicability,” CIGNA’s

state law claims have only a “‘tenuous, remote, or peripheral 

connection with covered plans.’” Anesthesia Care Associates, 187 

F.3d at 1054 (quoting Travelers, 514 U.S. at 661). “Where the 

meaning of a term in the Plan is not subject to dispute, the bare 

fact that the Plan may be consulted in the course of litigating a 

state-law claim does not require that the claim be extinguished 

by ERISA's enforcement provision.” Id. at 1051. 

Although Nutrishare contends that a determination of its 

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obligations require consultation with the plans, the relevant 

claims allege that Nutrishare made fraudulent claims in the 

documents it submitted to CIGNA, causing CIGNA to pay out amounts 

in excess of what was owed. These claims do not require 

significant interpretation of the ERISA plans. Therefore, the 

claims are not subject to conflict preemption under section 

514(a).

b. Complete Preemption § 502(a)

Nutrishare also contends the state claims are completely 

preempted because they fall within the comprehensive scheme of 

civil remedies under section 502(a). MTD at p. 16.

The Supreme Court has formulated a two-prong test to 

determine whether a claim is completely preempted by ERISA. 

Aetna Health Inc. v. Davila, 542 U.S. 200, 210 (2004); Marin Gen. 

Hosp. v. Modesto & Empire Traction Co., 581 F.3d 941, 946 (9th 

Cir. 2009). Under the test, a state law claim is completely 

preempted if (1) an individual could have brought the claim under 

ERISA section 502(a); and (2) “where there is no other 

independent legal duty that is implicated by a defendant’s 

actions.” Davila, at 210. 

Turning to the second prong first, Nutrishare argues that 

CIGNA has failed “to identify any duties or obligations that 

arise independently of ERISA.” Reply at p. 10. However, the UCL 

and fraud claims both involve violations of duties completely 

independent of ERISA. CIGNA has alleged that Nutrishare 

fraudulently misrepresented the rates for its services. This 

would be an actionable claim and a violation of a legal duty 

regardless of whether an ERISA plan was involved. 

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Nutrishare points to Cleghorn v. Blue Shield of California, 

408 F.3d 1222, 1225 (9th Cir. 2005) as support for its complete 

preemption claim. In Cleghorn, the plaintiff had submitted a 

claim for coverage under the terms of a health plan covered by 

ERISA. Id. at 1224. After he was denied benefits, he brought a 

UCL claim, among others, against the insurer seeking damages for 

the unlawful withholding of benefits. Id. The Ninth Circuit 

found the claims conflicted with the exclusive civil enforcement 

scheme established by ERISA and thus were preempted. Id. at 

1227. The case involved a determination of whether the defendant 

improperly denied the plaintiff benefits under the terms of the 

ERISA plan. Id. The court reasoned that any duty the defendant 

had to reimburse the plaintiff existed only because of the ERISAregulated plan, “precisely the kind of claim[]” that is intended 

to be preempted. Id. at 1225-26.

However, here, the issue is whether Nutrishare made 

knowingly false representations to CIGNA about the charges for 

its services and whether that constituted an unlawful practice. 

Nutrishare’s alleged false representations in the submitted 

claims implicate an independent legal duty. Davila, 542 U.S. at 

210. “These claims do not rely on, and are independent of, any 

duty under an ERISA plan.” Marin Gen. Hosp., 581 F.3d at 949. 

Therefore, CIGNA’s state law claims are not subject to complete 

preemption under ERISA as they fail to satisfy the second prong 

of the Davila test.

A more apt factual comparison is found in Trustees ex rel. 

N. California Gen. Teamsters Sec. Fund v. Fresno French Bread 

Bakery, Inc., CV F 12-0187 LJO BAM, 2012 WL 3062174 (E.D. Cal. 

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2012). In Fresno French Bread, the plaintiffs, bringing their 

claims as fiduciaries of the plan, alleged that defendants 

misrepresented an individual’s eligibility for benefits, 

improperly inducing the ERISA plan to cover the individual’s 

health costs. Id. at *1-2. The plaintiffs sought “to recover 

monies which the fund paid based on the alleged 

misrepresent[ations].” Id. The defendants argued that ERISA 

preempted the plaintiff’s claims for fraud and negligent 

misrepresentation. Id. at *7. The court found the fraud claims 

constituted an attempt by a fiduciary “to protect the fund’s 

integrity and the best interests of its beneficiaries.” Id. at 

*8. Finding no evidence that such claims erode ERISA purposes or 

interfere with its exclusive remedial scheme, the court found 

they were not subject to preemption and allowed the state law 

claims for fraud to survive alongside plaintiffs’ ERISA claim

seeking equitable restitution. Id. 

Here, CIGNA brings state law claims against Nutrishare for 

obtaining funds from the ERISA plans through fraudulent means. 

The Court finds such claims constitute an attempt by CIGNA, a 

fiduciary of the plans, to protect the integrity of the plans and 

ultimately the best interests of their beneficiaries. As such, 

it does not conflict with the enforcement scheme laid out by 

ERISA or with Congress’ intent in passing it into law. 

Accordingly, Nutrishare’s motion to dismiss the state law 

claims based on ERISA preemption under either section 514 or 502

is DENIED. 

6. Lawfulness of Nutrishare’s Actions

Nutrishare contends that even if the allegations are true, 

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CIGNA’s counterclaims for fraud and violation of the UCL must 

fail as a matter of law because its actions are lawful under 

California law. MTD at pp. 18-21.

Nutrishare contends it simply discounted patients’ 

coinsurance, which is lawful under California law. It relies on

a provision of the Affordable Care Act, a California insurance 

regulation, a thirty-year-old Attorney General Opinion, and a 

California Court of Appeal case. MTD at pp. 18-21. The 

references to the Affordable Care Act and the California Code of 

Regulations have no application to the issue presented by 

Nutrishare’s motion. 

The Attorney General Opinion addresses the specific issue 

of whether a dentist may claim as a “usual fee” an amount that 

does not take into consideration certain discounts granted to 

patients. 64 Ops. Cal. Atty. Gen. 782, 1981 WL 126814, at *2-4 

(1981). The Attorney General based its decision largely on the 

ambiguity of the term “usual fee,” resolving it against the 

insurer who drafted the policy. Id. The Counterclaim alleges 

Nutrishare affirmatively misrepresented the “actual, total 

charges” for its services as part of a larger scheme to defraud 

CIGNA. CC ¶ 29. There is no textual ambiguity in the alleged 

fraud, and therefore, Nutrishare’s reliance on the Opinion in 

support of its motion is misplaced. 

Nutrishare also cites to People v. Duz-Mor Diagnostic 

Laboratory, Inc., 68 Cal.App.4th 654 (1998). In Duz-Mor, a 

clinical laboratory negotiated discounts with physician clients 

for tests performed on their private-pay patients. Id. at 661-

62. Nutrishare argues that since the Duz-Mor court found 

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nothing unlawful or unfair about this practice, then its alleged 

practices are also lawful. However, Nutrishare has failed to 

show how the very distinct factual circumstances in Duz-Mor

have any bearing on those alleged in the Counterclaim. The 

Court finds the case does not support Nutrishare’s contention 

that the Counterclaim fails to state viable causes of action. 

In the absence of any persuasive arguments or authority, 

Nutrishare’s motion to dismiss the state law claims on the 

grounds that the alleged practices are lawful is DENIED. 

D. Motion to Strike

Nutrishare has also filed a concurrent Motion to Strike 

(Doc. #12). It moves the Court to strike any references or 

comparisons to the payments made by in-network providers. 

Rule 12(f) of the Federal Rules of Civil Procedure provides 

that a court may strike from a pleading any impertinent or 

immaterial matter. “Motions to strike are disfavored and 

infrequently granted. A motion to strike should not be granted 

unless it is clear that the matter to be stricken could have no 

possible bearing on the subject matter of the litigation.” 

Bassett v. Ruggles, No. CV-F-09-528-OWW-SMS, 2009 WL 2982895, at 

*24 (E.D. Cal. 2009) (internal citations omitted).

Nutrishare argues it is an out-of-network, non-contracted 

provider, and, therefore, any comparisons of its charges to those 

of providers who have pre-negotiated rates with CIGNA are

immaterial and impertinent. Motion to Strike at pp. 2-3. It 

moves to strike paragraph 30 of the Counterclaim in its entirety. 

As an initial matter, Nutrishare’s motion objects to the 

inclusion of references to the in-network contract rates. Id. at 

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p. 5. Even were this Court to find the references to those rates 

immaterial or impertinent, it would not warrant the Court’s 

striking of the entirety of paragraph 30 as requested by 

Nutrishare, as that paragraph includes details of the claims 

submitted by Nutrishare to CIGNA in addition to the references 

and comparisons to in-network rates. CC ¶ 30. However, the 

issue is rendered moot because the Court finds Nutrishare’s 

arguments unpersuasive. 

While a contention that Nutrishare’s charges should have 

been equal to those of the average in-network provider would be 

impertinent, the Counterclaim does not include such an

allegation. In fact, it is clear from the Counterclaim that the 

purpose of having in-network providers is for the reduced cost to 

both the insurers and the insured, a benefit allegedly undermined 

by Nutrishare’s practices. Nutrishare appears to jump to the 

conclusion that through the language in paragraph 30 CIGNA is 

proposing the theory that any deviation between the average innetwork rate and Nutrishare’s rate is evidence of exorbitant 

charges. It does not appear to the Court that such a proposition

is being asserted. The Court cannot conclude at this stage of 

the litigation that the use of the average in-network rates as a 

general reference point “could have no possible bearing on the 

subject matter of the litigation” before it. Bassett, 2009 WL 

2982895, at *24.

Accordingly, Nutrishare’s Motion to Strike is DENIED. 

III. ORDER

For the reasons set forth above, the Court DENIES 

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Nutrishare’s Motion to Dismiss and its Motion to Strike.

IT IS SO ORDERED.

Dated: March 13, 2014

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