IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TEXAS

AUSTIN DIVISION

ERIN ANGELO, et al. §

§

v. § 1:20-cv-0484-RP

§

CENTENE MANAGEMENT COMPANY, §

LLC, et al. §

REPORT AND RECOMMENDATION

OF THE UNITED STATES MAGISTRATE JUDGE

TO: THE HONORABLE ROBERT PITMAN

UNITED STATES DISTRICT JUDGE

Before the Court is Defendants’ Motion to Dismiss Plaintiffs’ First Amended Complaint

(Dkt. No. 25), Plaintiffs’ Response (Dkt. No. 35), and Defendants’ Reply (Dkt. No. 36). The District

Judge referred the above-motions to the undersigned for report and recommendation pursuant to 28

U.S.C. §636(b)(1)(B), FED. R. CIV. P. 72, and Rule 1(d) of Appendix C of the Local Court Rules.

I. GENERAL BACKGROUND

Plaintiffs Cynthia Wilson and Erin and Nicholas Angelo are Texas residents who purchased

ACA Ambetter insurance policies from Defendants. Dkt. No. 1. Plaintiffs allege that Defendants

engage in “a classic bait-and-switch, targeting low-income customers with the promise of certified

quality health coverage including networks of medical providers to provide that care but providing

woefully little coverage after they signed up.” Dkt. No. 35 at 1. After Plaintiffs were denied

coverage under the policies for out-of-network healthcare providers, Plaintiffs filed a a purported

class action alleging three causes of action against Defendants: (1) breach of contract, (2) breach of

express warranty, and (3) violations of the Texas Deceptive Trade Practices Consumer Protection

Act (“DTPA”). Dkt. No. 19. 

Case 1:20-cv-00484-RP Document 37 Filed 02/02/21 Page 1 of 8
In the instant motion Defendants assert that Plaintiffs’ claims should be dismissed for four

reasons: (1) all of Plaintiffs’ claims are precluded by the filed-rate doctrine; (2) Plaintiffs failed to

identify any specific insurance policy provision that was breached; (3) Plaintiffs have no basis to

make a claim for breach of express warranty on a contract that does not involve the sale of goods;

and (4) Plaintiffs’ DTPA claim fails to meet the heightened pleading standards applicable to claims

of fraud or misrepresentation. Dkt. No. 25. 

II. LEGAL STANDARD

Rule 12(b)(6) allows for dismissal of an action “for failure to state a claim upon which relief

can be granted.” While a complaint attacked by a Rule 12(b)(6) motion does not need detailed

factual allegations in order to avoid dismissal, the plaintiff’s factual allegations “must be enough to

raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544,

555 (2007). A plaintiff’s obligation “requires more than labels and conclusions, and a formulaic

recitation of the elements of a cause of action will not do.” Id. The Supreme Court has explained

that a complaint must contain sufficient factual matter “to state a claim to relief that is plausible on

its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “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.” Id. In evaluating a

motion to dismiss, the Court must construe the complaint liberally and accept all of the plaintiff’s

factual allegations in the complaint as true. See In re Katrina Canal Breaches Litigation, 495 F.3d

191, 205 (5th Cir. 2009).

Claims subject to Rule 9(b) must “state with particularity the circumstances constituting

fraud or mistake.” FED. R. CIV. P. 9(b). The Fifth Circuit “interprets Rule 9(b) strictly, requiring a

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plaintiff pleading fraud to specify the statements contended to be fraudulent, identify the speaker,

state when and where the statements were made, and explain why the statements were fraudulent.”

Dorsey v. Portfolio Equities, Inc., 540 F.3d 333, 339 (5th Cir. 2008). “Put simply, Rule 9(b) requires

‘the who, what, when, where, and how’ to be laid out.” Shandong Yinguang Chem. Indus. Joint

Stock Co. v. Potter, 607 F.3d 1029, 1032 (5th Cir. 2010). “Facts and circumstances constituting

charged fraud must be specifically demonstrated and cannot be presumed from vague allegations.”

Schnurr v. Preston, 2018 WL 8584292, at *3 (W.D. Tex. May 29, 2018) (quoting Howard v. Sun

Oil Co., 404 F.2d 596, 601 (5th Cir. 1968)).

III. ANALYSIS

A. Filed Rate Doctrine 

Defendants first assert that all of Plaintiffs’ claims should be dismissed because they are

precluded by the filed rate doctrine. Dkt. No. 25 at 4-14. The filed rate doctrine is a doctrine of

deference that “bars judicial recourse against a regulated entity based upon allegations that the

entity’s ‘filed rate’ is too high, unfair or unlawful.” Tex. Comm. Energy v. TXU Energy, Inc., 413

F.3d 503, 507 (5th Cir. 2005). Whether a state agency has the authority to approve reasonable rates

is critical to determining if the filed rate doctrine applies in any given case. Thus, in Texas, “[t]he

application of the filed rate doctrine . . . is necessarily circumscribed by the legislative grant of

authority” to the administrative agency. Mid–Century Ins. Co. of Texas v. Ademaj, 243 S.W.3d 618,

625 (Tex. 2007).

Defendants contend all of Plaintiffs’ claims are barred by the filed rate doctrine as each of

the claims would require the Court to “reevaluate the reasonableness of insurance rates filed with

and approved by the Texas Department of Insurance.” Dkt. No. 25 at 8. While Defendants are

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correct that Tex. Ins. Code § 1701.057(c) “require[s] an insurer to file the rates charged by that

insurer for individual accident and health insurance policies,” the rates are not filed for any purpose

having anything remotely to do with ratemaking or approval of rates. In fact, the Texas Insurance

Code makes explicit that the authority granted to the TDI to require rate filings “does not grant the

commissioner the authority to determine, fix, prescribe, or promulgate rates to be charged for an

individual accident and health insurance policy.” TEX. INS. CODE § 1701.057(e). Defendants cite

to no authority that the filed rate doctrine is applicable where rates are filed with an agency that lacks

authority to approve or reject them. As such, dismissal based on the filed rate doctrine is

unwarranted. See Harvey v. Centene Mgmt. Co. LLC, 357 F. Supp. 3d 1073, 1084 (E.D. Wash.

2018) (rejecting application of the filed rate doctrine in suit against Centene with substantially

similar claims); Houston v. Centene Mgmt. Co., LLC, 2019 WL 7971713, at *2 (S.D. Fla. Oct. 20,

2019) (same). 

B. Breach of Contract Claim

Defendants next argue that Plaintiffs’ breach of contract claims fail to state a claim by failing

to identify a specific material breach of a contract provision and by relying on general and conclusory

allegations. Dkt. No. 25 at 9. To state a claim for breach of contract under Texas law, a plaintiff

must allege “(1) the existence of a valid contract; (2) performance or tendered performance by the

plaintiff; (3) breach of the contract by the defendant; and (4) damages sustained by the plaintiff as

a result of the breach.” Harris v. Meridian Sec. Ins. Co., 2019 U.S. Dist. LEXIS 183727, at *7-9

(N.D. Tex. October 24, 2019). 

Plaintiffs adequately plead each of these elements. Plaintiffs’ Complaint identifies the

Ambetter Contract as the signed contract between Plaintiffs and Defendants. Dkt. No. 19 at. ¶¶ 57,

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60, 66. They identify specific promises and obligations Defendants made to Plaintiffs in the

Ambetter Contract in exchange for their premium payments. Those promises include providing

insureds with

• an accurate list of network providers; 

• “Complete medical coverage that meets [their] medical needs and contains all of the

Essential Health Benefits;”

• a QHP that Centene has certified meets ACA’s network adequacy requirements; and

• adequate access to physicians and medical practitioners and treatments or services. 

Id. at ¶¶ 12, 27-32, 37-41, 58-59, 91-92. Plaintiffs allege that Defendants failed to fulfill these

obligations, and that as a result, Plaintiffs suffered damages. Id. ¶ 97, 108-110. These are adequate

allegations to support a plausible breach of contract claim, and to overcome the 12(b)(6) motion. 

See Rapid Tox Screen LLC v. Cigna Healthcare of Tex. Inc., 2017 U.S. Dist. LEXIS 136218 (N.D.

Tex. August 24, 2017). 

C. Breach of Express Warranty Claim

Defendants next argue Plaintiffs cannot state a claim for breach of express warranty because

they do not allege that any“good” has been sold. Dkt. No. 25 at 13-14. Defendants further assert

that Plaintiffs’ breach of warranty claim merelyrepeats their breach of contract claim. Id. The Court

agrees. Under Texas law, “[i]n order to preserve the distinction between contract and express

warranty, breach of warranty claims must involve something more than a mere promise to perform

under the contract.” Staton Holdings, Inc. v. Tatum, L.L.C., 2014 WL 2583668, at *3 (Tex. App.

June 10, 2014). Here, Plaintiffs allege express warranties made by Defendants in the Ambetter

Contract, including a promise to provide essential benefits under the ACA and a promise that

insureds could access specific health care providers listed on the website as in-network. Dkt. No. 35

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at 27. However, as Defendants point out in their Reply, Plaintiffs allege nothing more than that

Defendants have not performed under the contract. Dkt. No. 36 at 6-7. As such, Defendants are

correct that Plaintiffs have failed to state a claim for breach of express warranty. The undersigned

recommends that Plaintiffs’ breach of express warranty claims be dismissed.

D. DTPA Claim

Lastly, Defendants move for dismissal of Plaintiffs’ DTPA claims on the basis that they are

barred by the statute of limitations, and alternatively, that Plaintiffs fail to satisfy the heightened

pleading standard for claims involving fraud or misrepresentation. Dkt. No. 25 at 14-18. The DTPA 

provides for a two-year limitations period. TEX. BUS. & COM. CODE § 17.565. In their Response,

Plaintiffs do not dispute that Plaintiff Wilson’s DTPA claim is time-barred. Dkt. No. 35 at 22. 

Plaintiffs argue that the Angelo Plaintiffs’ claims were timely filed because the Angelos disputed

Defendants’ denial of payment for two years after the initial denial of coverage, asserting that

because the case was closed sometime in 2019 the Angelos timely filed within the statue of

limitations. Id. In support of this position, Plaintiffs rely on the case United Neurology, P.A. v.

Hartford Lloyd’s Ins. Co., 101 F. Supp. 3d 584, 607 (S.D. Tex. 2015), for the proposition that where

“there is no express denial of a claim by the insurer for an accrual date, the legal injury to the insured

occurs at the latest when the claim file is closed.” Id. As Defendants point out, however, there was

an express denial of the Angelos’ claim by the insurer in this case, as the Plaintiffs’ Complaint

alleges. Dkt. No. 36 at 7. Because the Angelos’ claim was expressly denied by Defendants in 2017,

the claim accrued then, and expired two years later, in 2019. Because the Angelos did not file this

suit until 2020, their DTPA claims are time-barred. See Irwin v. Country Coach Inc., 2006 WL

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278267, at *5 (E.D. Tex. Feb. 3, 2006). As a result, all of the Plaintiffs’ DTPA claims are untimely

and should be dismissed.

E. Leave to Amend 

When a plaintiff’s complaint fails to state a claim, the court should generallygive the plaintiff

at least one chance to amend the complaint before dismissing the claim with prejudice. See Great

Plains Trust Co. v. Morgan Stanley Dean Witter &Co., 313 F.3d 305, 329 (5th Cir.2002). Granting

leave is not required when “it is clear that the defects are incurable or the plaintiffs advise the court

that they are unwilling or unable to amend in a manner that will avoid dismissal.” Id. The Fifth

Circuit has indicated that “[l]eave to amend should be freelygiven, and outright refusal to grant leave

to amend without a justification . . . is considered an abuse of discretion.” United States ex rel.

Adrian v. Regents of the Univ. of Cal., 363 F.3d 398, 403 (5th Cir. 2004)

It is not obvious that it would be futile for the Plaintiffs to attempt to cure the breach of

warranty claim with an amended complaint. But because Plaintiffs’ DTPA claims are time-barred

amendment cannot cure that defect. Accordingly, the Court recommends that the DTPA claim be

dismissed with prejudice, but that the breach of warranty claim be dismissed without prejudice to

the Plaintiffs filing an amended complaint, by a date certain, restating the breach of warranty claim

should they so choose.

IV. RECOMMENDATION

Based upon the foregoing, the undersigned RECOMMENDS that Defendants’ Motion to

Dismiss (Dkt. No. 25) be GRANTED IN PART and DENIED IN PART. Specifically, the

undersigned RECOMMENDS that the District Court DENY Defendants’s Motion to Dismiss the

breach of contract claims, GRANT the motion and DISMISS WITHOUT PREJUDICE the

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Plaintiffs’ breach of express warranty, subject to the Plaintiffs right to replead within a time set by

the District Court, and GRANT the motion and DISMISS WITH PREJUDICE the DTPA claims.

The Clerk is directed to remove this case from the undersigned’s docket and return it to the

docket of the Honorable Robert Pitman.

V. WARNINGS

The parties may file objections to this Report and Recommendation. A party filing

objections must specifically identify those findings or recommendations to which objections are

being made. The District Court need not consider frivolous, conclusive, or general objections. See

Battle v. United States Parole Comm’n, 834 F.2d 419, 421 (5th Cir. 1987). A party’s failure to file

written objections to the proposed findings and recommendations contained in this Report within

fourteen (14) days after the party is served with a copy of the Report shall bar that party from de novo

review bythe District Court of the proposed findings and recommendations in the Report and, except

upon grounds of plain error, shall bar the party from appellate review of unobjected-to proposed

factual findings and legal conclusions accepted by the District Court. See 28 U.S.C. § 636(b)(1)(C);

Thomas v. Arn, 474 U.S. 140, 150-53 (1985); Douglass v. United Servs. Auto. Ass’n, 79 F.3d 1415,

1428-29 (5th Cir. 1996) (en banc).

SIGNED this 2nd

day of February, 2021.

_____________________________________

ANDREW W. AUSTIN

UNITED STATES MAGISTRATE JUDGE

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