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Law360 (June 30, 2021, 10:10 PM EDT) -- A New Jersey federal judge dismissed a suit Wednesday alleging that Cigna Health and Life Insurance Co. wrongfully refused to pay for a health care provider's COVID-19 services, saying the provider only suggested that its patients gave it valid assignments to sue on their behalf but did not actually allege that it possessed them.
U.S. District Judge Kevin McNulty dismissed the suit without prejudice to amendment within 30 days and said he agreed with plaintiff Open MRI and Imaging of RP Vestibular Diagnostics' argument that it is not yet required to prove that the assignments exist — but only if Open MRI actually alleges that they do.
"Given that an assignment is the very basis of its entitlement to sue, Open MRI may reasonably be asked to at least allege its existence," the judge said of the claim alleging Employment Retirement Income Security Act violations.
Without the assignments, Open MRI cannot state a claim, the judge said, adding that "[i]f Smith files a negligence suit for damages because Jones was injured in a car accident, Smith has not (yet) stated a claim."
The lab, which is in Rochelle Park, New Jersey, filed its initial suit in August and an amended complaint in December, alleging that the insurer owed $400,000 for treatment and diagnostic services the lab provided to COVID-19 patients. The lab also asserted a violation of ERISA and claims of unjust enrichment and quantum meruit.
According to court filings, Open MRI has claimed that Cigna's coverage denial violated the insurance coverage provisions of the Families First Coronavirus Response Act and the Coronavirus Aid Relief and Economic Security Act.
In February, Cigna asked the court to toss the suit and said Open MRI has not identified the patients behind the denied payments and whether the lab has been assigned their rights under their benefit plans.
The judge agreed Wednesday and cited the Third Circuit's 2014 ruling in CardioNet, Inc. v. Cigna Health Corp." target="_blank">CardioNet, Inc. v. Cigna Health Corp., which held that a health care provider may bring claims if it has a valid assignment of benefits from a plan participant.
The judge also said Open MRI argued that because Cigna denied the insurance claims on various grounds but did not mention a lack of an assignment, the court can infer there was one.
"The Twombly/Iqbal standard does not require the court to engage in such gymnastics for plaintiff's benefit," the judge said.
The counts for unjust enrichment and quantum meruit were also dismissed without prejudice, with the judge saying they are dismissed for lack of subject matter jurisdiction.
"At this early stage, there are no countervailing factors requiring the court to retain jurisdiction," the judge said. "And because no ERISA claim has been stated thus far, I do not consider preemption arguments."
Counsel for the parties did not immediately respond to requests for comment.
The lab is represented by Peter Nichols of Levine Desantis LLC.
Cigna is represented by E. Evans Wohlforth Jr. and Charlotte Howells of Gibbons PC.
The case is Open MRI and Imaging of RP Vestibular Diagnostics PA v. Cigna Health and Life Insurance Co., case number 2:20-cv-10345, in the U.S. District Court for the District of New Jersey.
--Additional reporting by Bill Wichert. Editing by Rich Mills.
For a reprint of this article, please contact reprints@law360.com.
