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Puget Sound Surgical Center, P.S. v. Aetna Life Insurance Co.

United States District Court, W.D. Washington, Seattle

March 6, 2018





         Before the court is Defendant Anchorage School District Active Employee Open Choice PPO Medical Plan's (“ASD Plan”) motion to dismiss based on lack of personal jurisdiction and failure to state a claim. (Mot. (Dkt. # 27).) Plaintiff Puget Sound Surgical Center, P.S. (“PSSC”) opposes the motion. (See Resp. (Dkt. # 45); see also Sur-reply (Dkt. # 55).) The court has reviewed the motion, all submissions filed in support of and opposition to the motion, the relevant portions of the record, and the applicable law. Being fully advised, [1] the court GRANTS the motion because the court lacks personal jurisdiction over ASD Plan. Because personal jurisdiction over ASD Plan is lacking, the court does not reach the merits of PSSC's motion to dismiss for failure to state a claim.


         On August 8, 2017, PSSC filed a complaint against Defendants Aetna Life Insurance Company and Aetna, Inc. (collectively, “Aetna”) and other Defendants, including ASD Plan (collectively, “Plan Defendants”). (See Compl. (Dkt # 1).) ASD Plan is a self-funded health insurance plan providing health coverage to employees of the Anchorage School District, [2] along with their dependents. (Hess Decl. (Dkt. # 28) ¶ 3; Haldane Decl. (Dkt. # 48) ¶ 2; Compl. ¶ 14.) ASD Plan executed an Administrative Services Agreement (“ASA”) with Aetna under which Aetna assumed duties as the third-party administrator for ASD Plan. (Haldane Decl. ¶ 3.) Under the ASA, Aetna is responsible for all claims processing, approval, payment, and denial of claims, along with issuance of Explanation of Benefits (“EOB”) forms, and processing and resolving appeals. (Id.) The ASA provides for complete internal review procedures. (Id. ¶ 4.) Aetna handles all internal or external appeals with no participation from ASD Plan. (Id.)

         Generally, ASD Plan's involvement in health insurance claims is limited to confirming whether an individual is eligible for health coverage. (Id. ¶ 6.)

         PSSC alleges that Aetna improperly denied coverage for certain medical services PSSC provided to patients who were insured by Plan Defendants. (Id. ¶¶ 4, 23-65.) Specifically with regard to ASD Plan, PSSC alleges that, on April 7, 2017, PSSC billed one hundred and fifty dollars ($150.00) for services rendered to a patient insured by ASD Plan and Aetna did not pay for those services. (Id. ¶ 69.) This is the only fact specifically related to ASD Plan that PSSC alleges. (See id.) On the basis of the foregoing alleged facts, PSSC asserts a claim for unjust enrichment against ASD Plan. (Id. ¶¶ 112-24.)

         ASD Plan does not conduct any operations in Washington State. (Hess Decl. ¶ 4.) ASD Plan does not pay taxes in Washington State and is not licensed to do business there. (Id. ¶¶ 6, 10.) ASD Plan does not have any employees, offices, real estate, bank accounts, or other property in Washington State. (Id. ¶ 7.)

         ASD Plan also submits testimony that it “does not solicit business in the State of Washington.” (Id. ¶ 9.) PSSC, however, counters with evidence that the Anchorage School District (1) solicited a number of companies, including a Seattle, Washington based company known as Vera Whole Health (“Vera”), to submit a bid for a multiyear, $11, 333, 500.00 contract to operate a healthcare clinic in Anchorage, Alaska for Anchorage School District employees and their dependents, and (2) ultimately, awarded the contract to Vera. (See Axelrod Decl. (Dkt # 46) ¶ 2, Ex. 1.) ASD Plan does not deny these facts, but notes that this contract is between the Anchorage School District and Vera and did not involve ASD Plan. (See Reply (Dkt. # 47) at 10; see also Whiting Decl. (Dkt. # 49) ¶ 2.)

         ASD Plan does not ordinarily receive copies of the Explanation of Benefits EOB forms that Aetna sends to individuals filing claims. (Haldane Decl. ¶ 7.) Nevertheless, ASD Plan investigated the allegations in PSSC's complaint and, in the course of that investigation, asked Aetna to provide information regarding the $150.00 claim related to an insured under ASD Plan that PSSC alleges Aetna did not pay. (Id.; see also Compl. ¶ 69.) In response, ASD Plan received an EOB form from Aetna showing that the claim was paid. (Haldane Decl. ¶ 7, Ex. 1.) PSSC filed an agreed sur-reply, along with documentary evidence, of additional claims that Aetna did not pay related to ASD Plan.[3](See generally Sur-reply; see Sherman Decl. (Dkt. # 56) ¶¶ 1-7, Exs. 1-6; see also Reply at 5 n.3 (stating that ASD Plan does not object to PSSC filing a sur-reply).

         III. ANALYSIS

         ASD Plan moves to dismiss PSSC's claim against it on two grounds. First, ASD Plan argues that PSSC's complaint against it should be dismissed because the complaint fails to state a claim under Federal Rule of Civil Procedure 12(b)(6). (Mot. at 4-8.) Second, ASD Plan asserts that PSSC's claim against it must be dismissed because the court lacks personal jurisdiction over ASD Plan pursuant to Federal Rule of Civil Procedure 12(b)(2). (Id. at 9-15.) Personal jurisdiction is a threshold issue, and so the court must address the jurisdictional challenge before considering the merits of the case. See, e.g., Brayton Purcell LLP v. Recordon & Recordon, 575 F.3d 981, 991 (9th Cir. 2009) (explaining that “personal jurisdiction is a threshold issue in every lawsuit and the erroneous exercise of personal jurisdiction deprives all subsequent proceedings of legal effect.”). As discussed herein, because the court concludes that it lacks personal jurisdiction over ASD Plan, it dismisses PSSC's claim against ASD Plan without prejudice and does not reach the issue of the adequacy of PSSC's pleading.

         A. Standards for Considering a Rule 12(b)(2) Motion to Dismiss

         A motion to dismiss for lack of personal jurisdiction is governed by Rule 12(b)(2). See Fed. R. Civ. P. 12(b)(2). “In opposition to a . . . motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing that jurisdiction is proper.” Boschetto v. Hansing, 539 F.3d 1011, 1015 (9th Cir. 2008) (citing Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990)). In evaluating ASD Plan's motion, “[t]he court may consider evidence presented in affidavits to assist it in its determination and may order discovery on the jurisdictional issues.” Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir. 2001) (citing Data Disc, Inc. v. Sys. Tech. Assoc, Inc., 557 F.2d 1280, 1285 (9th Cir. 1977)). If the court decides the motion based on the pleadings and affidavits submitted by the parties without conducting an evidentiary hearing, “the plaintiff need make only a prima facie showing of jurisdictional facts to withstand the motion to dismiss.” Id. (quoting Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995). Although a plaintiff cannot simply rest on the bare allegations of her complaint, the court must accept uncontroverted allegations in the complaint as true, and conflicts between parties over statements in affidavits must be resolved in the plaintiff's favor. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004); see Boschetto, 539 F.3d at 1015.

         To establish personal jurisdiction, a plaintiff must show that the forum state's jurisdictional statute confers jurisdiction and that the exercise of jurisdiction accords with federal constitutional principles of due process. Amoco Egypt Oil Co. v. Leonis Navigation Co., Inc., 1 F.3d 848, 850 (9th Cir. 1993). In Washington, general personal jurisdiction is authorized by RCW 4.28.080(10), which provides for service on a foreign corporation “doing business” in Washington, while RCW 4.28.185, Washington's long arm statute, creates specific jurisdiction. Id. Washington courts interpret RCW 4.28.080(10) “as conferring general jurisdiction over nonresident defendants who conduct ‘substantial' and ‘continuous' business in the state ‘of such character as to give rise to a legal obligation, '” and consistently hold that the “doing business” and due process inquiries are the same. Id. at 850-51 (quoting Crose v. Volkswagenwerk Aktiengesellschaft, 558 P.2d 764, 766-67 (Wash. 1977)). Washington courts also hold that RCW 4.28.185 “extends jurisdiction over a defendant to the fullest extent” due process permits. Washington Shoe Co. v. A-Z Sporting Goods Inc., 704 F.3d 668, 672 (9th Cir. 2012) (citing RCW 4.28.185; Shute v. Carnival Cruise Lines, 783 P.2d 78, 82 (Wash. 1989)). Thus, the court's jurisdictional analysis collapses into a determination of whether the exercise of personal jurisdiction comports with due process. Id.; see also Stairmaster Sports/Med. Prod., Inc. v. Pac. Fitness Corp., 916 F.Supp. 1049, 1052 (W.D. Wash. 1994), aff'd, 78 F.3d 602 (Fed. Cir. 1996) (citing Amoco, 1 F.3d at 850-51 (“Washington's two statutes [RCW 4.28.080(10) and RCW 4.28.185] are coextensive with the bounds of due process.”); Raymond v. Robinson, 15 P.3d 697, 705 (Wash.Ct.App. 2001) (“Washington courts have held repeatedly that the current general jurisdiction analysis subsumes the due process requirements.”).

         “Due process requires that the defendant ‘have certain minimum contacts' with the forum state ‘such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.'” Picot v. Weston, 780 F.3d 1206, 1211 (9th Cir. 2015) (quoting Int'l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945) (internal quotation marks omitted)). “The strength of contacts required depends on which of the two categories of personal jurisdiction a litigant invokes: specific jurisdiction or general jurisdiction.” Ranza v. Nike, Inc., 793 F.3d 1059, 1068 (9th Cir. 2015).

         PSSC generally alleges that “each Defendant systematically and continuously conducts business in [Washington], and otherwise has minimum contacts with [Washington] sufficient to establish personal jurisdiction over each of them.” (Compl. ¶ 7.) PSSC does not assert any specific allegations related to ASD Plan concerning personal jurisdiction. (See generally id.) As discussed below, PSSC fails to meet its burden of establishing that the court's exercise of either general or specific personal jurisdiction over ASD Plan is proper.

         B. General ...

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