1 O 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 Case No.: 2:23-cv-02028-MEMF-MRW 11 CLARISOL MEJIA,

12 Plaintiff, ORDER DENYING MOTION FOR

JUDGMENT ON THE PLEADINGS [ECF

13 v. NO. 47] 14

CREDENCE MANAGEMENT SOLUTIONS,

15 UNITEDHEALTHCARE INSURANCE COMPANY and DOES 1- 10, 16 Defendants. 17

18 19 20 Before the Court is Defendants’ Motion for Judgment on the Pleadings. ECF No. 47. 21 Defendants also filed a Request for Judicial Notice. ECF No. 48. For the reasons stated herein, the 22 Court hereby GRANTS the Request for Judicial Notice and DENIES the Motion. 23 24 25 26 27 / / / 28 / / / 1 BACKGROUND 2 I. Factual Allegations1 3 Plaintiff Clarisol Mejia (“Mejia”) is a resident of California. FAC ¶ 6. Defendant Credence 4 Management Solutions (“Credence”) does business in California. Id. ¶ 1. Defendant 5 UnitedHealthcare Insurance, Co. (“UHS”; together with Credence, “Defendants”) is the 6 administrator and representative for Credence. Id. ¶ 2. Credence is Mejia’s employer. Id. ¶ 10. Mejia 7 received insurance and health benefits through Credence. Id. Her health plan through Credence is 8 governed by the Employee Retirement Income Securities Act of 1974 (“ERISA”). Id. ¶ 16. 9 On March 22, 2021, Mejia received an EGD or upper endoscopy (CPT code 43239) from 10 Advanced Weight Loss Surgical Association (“Advanced”) and Minimally Invasive Surgical 11 Association (“Minimally”; together with Advanced, “Medical Providers”). Id. ¶¶ 18, 3, 4. On April 12 7, 2021, Mejia received a hiatal hernia repair (CPT code 43281) from the Medical Providers. Id. ¶ 13 19. The services were covered under the health plan provided by Credence. Id. ¶ 21. These 14 procedures were successful. Id. ¶ 25. 15 Following the procedures, the Medical Providers submitted bills to Mejia and UHS. Id. ¶ 26. 16 The bills totaled to $101,046.00. Id. UHS, on behalf of Credence, paid $1,606.60. Id. ¶ 27. 17 Mejia and the Medical Providers asked Defendants to negotiate Mejia’s bills. Id. ¶ 36. 18 Defendants refused. Id. ¶ 37. 19 On June 27, 2022, Mejia and the Medical Providers appealed and submitted documentation 20 indicating that UHS had not paid for Mejia’s bills. Id. ¶ 43. UHS upheld its decision on August 12, 21 2022. Id. ¶ 44. Mejia and the Medical Providers appealed again on August 17, 2022, and October 28, 22 2022, but Defendants did not respond. Id. ¶¶ 44–47. Mejia is now responsible to the Medical 23 Providers for the difference between the full cost of the medical procedures she received and the 24 amount paid by Defendants. Id. ¶ 48. 25

26 1All facts stated herein are taken from the allegations in Mejia’s First Amended Complaint unless otherwise 27 indicated. ECF No. 39 (“FAC”). For the purposes of this Motion, the Court treats these factual allegations as true, but at this stage of the litigation, the Court makes no finding on the truth of these allegations and is 28 1 II. Procedural History 2 On February 14, 2023, Mejia filed suit in the Los Angeles County Superior Court, alleging 3 one claim for Recovery of Benefits under 29 U.S.C. § 1132(a)(1)(B). See generally ECF No. 1-1. On 4 March 17, 2023, Defendants removed the action on the basis of federal question jurisdiction. ECF 5 No. 1. (“Notice of Removal” or “NOR”). 6 On October 19, 2023, Mejia filed a motion for leave to file an amended complaint, seeking to 7 add additional factual allegations supporting her claim under 29 U.S.C. § 1132(a)(3). ECF No. 28. 8 The Court granted the motion on February 15, 2024. ECF No. 38 (“Amendment Order”). 9 On March 1, 2024, Mejia filed the First Amended Complaint, alleging to claims for: (1) 10 Failure to Pay ERISA Plan Benefits, under 29 U.S.C. § 1132(a)(1)(B), and (2) Breach of Fiduciary 11 Duty, under 29 U.S.C. § 1132(a)(3). See generally FAC. 12 On October 18, 2024, Defendants filed the instant Motion for Judgment on the Pleadings. 13 ECF No. 47 (“Motion” or “Mot.”). Defendants also filed a Request for Judicial Notice. ECF No. 48 14 (“RJN”). The Motion is fully briefed. ECF Nos. 50 (“Opposition” or “Opp’n”), 52 (“Reply”). 15 The Court shared its tentative order on the Motion on April 9, 2025. On April 10, 2025, the 16 Court held a hearing on the Motion. After oral argument, the Court took the Motion under 17 submission. 18 III. Applicable Law 19 Rule 12(c) of the Federal Rules of Civil Procedure (“Rule”) provides that “[a]fter the 20 pleadings are closed—but early enough not to delay trial—a party may move for judgment on the 21 pleadings.” Fed. R. Civ. P. 12(c). “Judgment on the pleadings is properly granted when, accepting all 22 factual allegations in the complaint as true, there is no issue of material fact in dispute, and the 23 moving party is entitled to judgment as a matter of law.” Chavez v. United States, 683 F.3d 1102, 24 1108 (9th Cir. 2012) (internal quotation marks omitted). A court must construe all factual allegations 25 in the pleadings in the light most favorable to the non-moving party. Fleming v. Pickard, 581 F.3d 26 922, 925 (9th Cir. 2009). 27 A motion under Rule 12(c) is considered “functionally identical” to a motion under Rule 28 12(b)(6). Lyon v. Chase Bank USA, N.A., 656 F.3d 877, 883 (9th Cir. 2011) (citing Dworkin v. 1 Hustler Mag. Inc., 867 F.2d 1188, 1192 (9th Cir. 1989)). The key difference between these two 2 motions is just the timing of the filing. See Dworkin, 867 F.2d at 1192. Accordingly, judgment on 3 the pleadings should be entered when a complaint does not plead “enough facts to state a claim to 4 relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is 5 factually plausible when “the plaintiff pleads factual content that allows the court to draw the 6 reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 7 U.S. 662, 678 (2009). 8 If judgment on the pleadings is appropriate, a court may grant the non-moving party leave to 9 amend, grant dismissal, or enter a judgment. Leave to amend may be denied when “the court 10 determines that the allegation of other facts consistent with the challenged pleading could not 11 possibly cure the deficiency.” Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 12 1401 (9th Cir. 1986). Thus, leave to amend “is properly denied . . . if amendment would be futile.” 13 Carrico v. City & Cnty. of San Francisco, 656 F.3d 1002, 1008 (9th Cir. 2011). 14 REQUEST FOR JUDICIAL NOTICE [ECF NO. 48] 15 I. Applicable Law 16 A court may judicially notice facts that: “(1) [are] generally known within the trial court’s 17 territorial jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy 18 cannot reasonably be questioned.” Fed. R. Evid. 201(b) (“Rule 201”). Under this standard, courts 19 may judicially notice “undisputed matters of public record,” but generally may not notice “disputed 20 facts stated in public records.” Lee v. City of Los Angeles, 250 F.3d 668, 690 (9th Cir. 2001), 21 overruled on other grounds by Galbraith v. Cnty. of Santa Clara, 307 F.3d 1119, 1125–26 (9th Cir. 22 2002). Public records, including documents on file in federal or state court, are proper subjects of 23 judicial notice. Harris v. Cnty. of Orange, 682 F.3d 1126, 1131–32 (9th Cir. 2012). Courts may also 24 consider documents under the incorporation by reference doctrine, which is appropriate where “the 25 documents’ ‘authenticity . . . is not contested’ and ‘the plaintiff’s complaint necessarily relies’ on 26 [the documents].” Lee, 250 F.3d at 688. 27 / / / 28 / / / 1 II. Discussion 2 Defendants request the Court judicially notice two documents: (1) the Declaration of Jane 3 Stalinski, ECF No. 1-3 (“Stalinski Declaration” or “Stalinski Decl.”), and (2) the health benefits plan 4 sponsored by Credence, ECF No. 1-4 (“Plan”).2 5 The Court takes judicial notice of both documents. First, the Stalinski Declaration is a public 6 record, filed in this Court alongside the Notice of Removal. See Harris, 682 F.3d at 1131–32. 7 Second, throughout the FAC, Mejia references the Plan; pursuant to the incorporation by reference 8 doctrine, the Court finds it appropriate to take judicial notice thereof. Further, Mejia does not oppose 9 the RJN. 10 As such, the Court GRANTS the RJN in its entirety. 11 MOTION FOR JUDGMENT ON THE PLEADINGS [ECF NO. 47] 12 I. Discussion 13 Defendants move for judgment on the basis that Mejia has failed to state her second claim3 14 for Breach of Fiduciary Duty, under 29 U.S.C. § 1132(a)(3) on two grounds: (1) Defendants do not 15 have a duty to negotiate with the Medical Providers and (2) Mejia seeks inappropriate (i.e., 16 duplicative) relief. Mot. at 6–7. The Court will evaluate these grounds in order. 17 A. The Court Finds Fiduciary Duty to Attempt to Negotiate. 18 On the first ground, Defendants argue that “[a] breach of fiduciary duty based upon an 19 alleged failure to initiate or engage in a negotiation . . . cannot give rise to a claim.” Id. at 12 (citing 20 to four recent district court cases). Mejia responds that there is a fiduciary duty to attempt to 21 negotiate. See Opp’n at 6 (framing the issue as fiduciary duty to “consider or [] attempt a 22 negotiation”). Mejia also attempts to distinguish her case from Defendants’ cited cases to contend 23 24 25

26 2 When citing to the Plan, the Court cites to the page numbers generated by the CM/ECF system, not the 27 pagination inherent to the document. 3 There is no dispute over Mejia’s first claim for Failure to Pay ERISA Plan Benefits, under 29 U.S.C. § 28 1 that her Breach of Fiduciary Duty claim is valid.4 Opp’n at 6–9. During the hearing, Mejia’s counsel 2 added that (1) absent a fiduciary duty to attempt to negotiate, the Plan’s provision stating that 3 Defendants would pay “negotiated rates” if such rates exist would be rendered meaningless and (2) 4 no authority precludes finding a fiduciary duty to attempt to negotiate. Defendants’ counsel 5 responded that (i) there is no binding authority that affirmatively finds a fiduciary duty to attempt to 6 negotiate and (ii) attempting to negotiate would interfere with their fiduciary duty to “defray[] 7 reasonable expenses in administering the [P]lan.” See 29 U.S.C. § 1104(a)(1)(A). As such, the Court 8 will evaluate whether Defendants, under the Breach of Fiduciary Duty claim, are obligated to 9 attempt to negotiate on Mejia’s behalf with the Medical Providers. 10 The Court finds that Defendants do not owe a contractual duty to attempt to negotiate—or to 11 negotiate—on Mejia’s behalf. The Court, however, finds that insofar as Defendants owe fiduciary 12 duties to act in the best interest of Plan participants and beneficiaries—including Mejia—and 13 reading the allegations and drawing reasonable inferences in the light most favorable to Mejia, 14 Defendants have a fiduciary duty to attempt to negotiate with the Medical Providers. The Court 15 therefore DENIES the Motion as to the first ground. 16 “To state a claim for breach of fiduciary under ERISA, a plaintiff must allege that (1) the 17 defendant was a fiduciary; (2) the defendant breached a fiduciary duty; and (3) the plaintiff suffered 18 damages.” Bafford v. Northrop Grumman Corp., 994 F.3d 1020, 1026 (9th Cir. 2021). There is no 19 dispute that ERISA governs the Plan, that Defendants are ERISA fiduciaries, and that Defendants 20 owe fiduciary duties to Mejia. 21 Turning first to the Plan, the Court finds that the plain language of the Plan does not obligate 22 Defendants to negotiate better rates on Mejia’s behalf. The Plan provides two main ways of paying 23 for services received under the Plan (“Allowed Amounts”): 24 25

26 4 Mejia also asserts that this Court “has already found [in the Amendment Order] that Ms. Mejia’s breach of fiduciary duty claim is a valid claim at this stage . . . .” Opp’n at 6. For clarification, the Court did not find 27 that her claim under 29 U.S.C. § 1132(a)(3) is valid. In its Amendment Order, the Court found that the claim is “not futile” for purposes of Mejia’s motion for leave to file an amended complaint, for which the Court 28 l When Covered Health Care Services? are received from an out-of-Network provider, Allowed Amounts are determined, based on: 2 e Negotiated rates agreed to by the out-of-Network provider and either us or one of our vendors, affiliates or subcontractors. 3 e Ifrates have not been negotiated, then one of the following amounts: 4 o Allowed Amounts are determined based on 110% of the published rates allowed by the Centers for Medicare and Medicaid Services (CMS) for 5 Medicare for the same or similar service within the geographic market.... 6 o When arate is not published by CMS for the service, we use an available 4 gap methodology to determine a rate for the service .... 8 | Plan at 40-41 (italicization in original). Mejia does not allege that Defendants have negotiated rates 9 | with the Medical Providers. The Court finds that in the absence of negotiated rates, the natural 10 reading of the Plan allows Defendants to calculate payment based on 110% of the CMS’s published I1 | rates or Defendants’ gap methodology. Mejia provides no binding authority that compels this Court 12 | reach a different conclusion.® And insofar as there is no contractual duty to negotiate, the 13 | Court also finds that there is no contractual duty to attempt to do what Defendants are not obligated 14 | todo. 15 16 17 | —— 18 || ° The parties do not dispute that Mejia received Covered Health Care Services as defined by the Plan. See Plan at 117 (referencing Section | of the Plan, titled “Covered Health Care Services,” which lists the types of 19 | services covered by the Plan). 20 This reading of the Plan is also consistent with what the district court found in Mejia v. Credence Memt. Sols. (Oscar Mejia), No. 2:23-cv-02032-SVW-E, 2024 WL 637261, *4 (C.D. Cal. Feb. 14, 2024). See also 21 | Aguilar v. Coast to Coast Comput. Prods., Inc., No. 2:23-cv-03996-MCS-E, 2024 WL 4040466 (C.D. Cal. Aug. 7, 2024) (relying on Oscar Mejia to reach the same conclusion). The Court sees no reason to disagree 22 | with that finding. 03 7 Defendants also rely on two other district court decisions: Talbot v. United Healthcare Ins., Co., No. 2:23- cv-02032-SVW-E, 2024 WL 847960 (C.D. Cal. Feb. 16, 2024); Campbell v. United Healthcare Ins. Co., No. 74 2:23-cv-08823-RGK-E, 2024 WL 1642390 (C.D. Cal. Mar. 20, 2024). Mot. at 11-14. But these cases are inapposite, as they both concern emergency medical services, whereas Mejia does not allege that she received 95 such services. See Talbot, 2024 WL 847960 at *6—*7; Campbell, 2024 WL 1642390 at *1. Therefore, the Court declines to consider these nonbinding, factually distinguishable cases. 26 | 8 Mejia argues that Oscar Mejia is inapplicable because the standard of review applied there was “abuse of discretion” and the case concerned only a claim for failure to pay ERISA benefits under 29 U.S.C. § 27 1132(a)(1)(B). Opp’n at 6. Be that as it may, this argument is unavailing because this Court would have 28 reached the same conclusion—that the Plan does not impose an obligation to negotiate on Defendants— separately from Oscar Mejia.

1 But the fact that the plain language of the Plan does not require an attempt at negotiation 2 does not necessarily mean that the Defendants have no fiduciary duty to attempt to negotiate. As this 3 Court previously found, the claim for breach of fiduciary duty is distinct from the claim for denial of 4 benefits and is not futile. Amendment Order at 3–4. Moreover, the Court finds, based upon the 5 governing case law, that fiduciary duties imposed by ERISA are broader than the contractual duties 6 imposed by individual ERISA plans. For instance, ERISA requires a fiduciary to discharge its duties 7 “for exclusive purpose of: (i) providing benefits to participants and their beneficiaries; and (ii) 8 defraying reasonable expenses of administering the plan.” 29 U.S.C. § 1104(a)(1)(A). Although 9 Defendants argued during the hearing that obligating them to attempt to negotiate with out-of- 10 network providers each time a participant or beneficiary requests would cause Defendants to incur 11 costs, which in turn would be detrimental to the assets in the Plan or at least interfere with their duty 12 to prudently manage the Plan, the Court does not find that merely attempting to negotiate would 13 necessarily be so detrimental to either the participants (or their beneficiaries) or to the Plan’s assets. 14 Rather, reading the allegations and inferences in Mejia’s favor, the Court concludes that it is 15 plausible that attempting to negotiate would result in favorable rates for both the participants and the 16 Plan. 17 To be clear, Defendants are not obligated to attempt to negotiate until they secure rates to 18 Mejia’s satisfaction. The Supreme Court has made clear that “[t]he common law of trusts recognizes 19 the need to preserve asserts to satisfy future, as well as present, claims and requires a trustee to take 20 impartial account of the interests of all beneficiaries.” Varity Corp. v. Howe, 516 U.S. 489, 514 21 (1996). Therefore, “a fiduciary obligation, enforceable by beneficiaries seeking relief for themselves, 22 do not necessarily favor payment over nonpayment.” Id.; see also Conkright v. Frommert, 559 U.S. 23 506, 520 (2010) (“[P]lan administrators . . . have a duty to all beneficiaries to preserve limited plan 24 assets . . . .”). Similarly, the Ninth Circuit has held that “[t]he duty to act in accordance with the plan 25 document does not require a fiduciary to resolve every issue of interpretation in favor of plan 26 beneficiaries.” Wright v. Or. Metallurgical Corp., 360 F.3d 1090, 1100 (9th Cir. 2004). More 27 relevant to this action, ERISA “does not create an exclusive duty to maximize pecuniary benefits.” 28 1 Id. It is clear to this Court that the determination of whether a particular action constitutes a fiduciary 2 duty in this context depends on whether the action would imperil Plan assets. 3 Here, particularly at the current stage of this litigation, where the Court must read the 4 allegations and draw inferences in Mejia’s favor, the Court finds Defendants’ concern over detriment 5 to the Plan’s assets premature and lacking foundation. See FAC ¶ 37 (“Defendants refused to even 6 consider Plaintiff’s request or to engage in any negotiation with Medical Providers.”). The Court is 7 therefore not inclined to find that a fiduciary duty to attempt to negotiate never exists.9 8 Taking all of these principles together, the Court finds that in light of the breadth of fiduciary 9 duties imposed by ERISA, and reading the allegations and inferences in Mejia’s favor, there is a 10 fiduciary duty to attempt to negotiate where doing so would not imperil Plan assets. 11 B. Mejia May Seek the Relief Requested under § 1132(a)(1)(B) and § 1132(a)(3) as Alternative Theories of Liability 12 13 Regarding the second ground for the Motion, the Court found in its Amendment Order that 14 Mejia may pursue both monetary relief (payment of her current bill) and equitable relief (an order 15 compelling Defendants to attempt a negotiation with the Medical Providers). See Amendment Order 16 at 4 (citing Moyle v. Liberty Mutual Retirement Benefit Plan, 823 F.3d 948, 961–62 (9th Cir. 2016)). 17 Defendants argue that the equitable relief is not available for Mejia because there is no duty to 18 negotiate, Mot. at 15, and allowing Mejia to proceed with the requested monetary relief under both 19 theories of liability may result in a windfall, id. at 15–16; see Reply at 7–8. Defendants also contend 20 that the monetary relief is more appropriate under Mejia’s Failure to Pay ERISA Plan Benefits 21 claim. Id. at 16. These arguments fail. 22 With respect to whether Mejia is entitled to equitable relief for her Breach of Fiduciary Duty 23 claim, the parties appear to agree that so long as Mejia asserts a valid 29 U.S.C. § 1132(a)(3) claim, 24 she may be entitled to equitable relief. See Mot. at 15 (citing Castillo v. Metro. Life Ins. Co., 970 25

26 9 It appears that discovery will likely reveal whether attempting to negotiate would have had an effect on the 27 Plan’s financial health and whether the desire to preserve Plan assets motivated or justified any failure to negotiate that may have occurred here. During the hearing, Defendants’ counsel argued that discovery would 28 1 F.3d 1224, 1229 (9th Cir. 2020)); Opp’n at 6 (citing Mathews v. Chevron Corp., 362 F.3d 1172, 2 1178 (9th Cir. 2004)). The Court finds that insofar as there is a fiduciary duty to attempt to negotiate, 3 Section I.A, supra, it is proper for Mejia to seek this relief. 4 Defendants’ argument about potential windfall is unavailing. Defendants assert that “paying 5 the full costs of services is not a benefit provided to Plaintiff under the Plan.” Mot. at 16 (citing 6 Collins v. Pension & Ins. Comm. of So. Cal. Rock Prods. & Ready Mixed Concrete Ass’ns, 144 F.3d 7 1279, 1282 (9th Cir. 1998)); Reply at 8, 9 (“[Mejia] is not entitled to the full reimbursement of her 8 non-emergent out-of-network medical services . . . .”). But the Court found in its prior Amendment 9 Order that “[a]lthough [Defendants] are correct that the plan provision cited does not necessarily 10 provide that [Defendants] must pay the full amount sought ($101,406.00), the language does not 11 preclude such a remedy either.” Amendment Order at 5.10 Defendants have not set forth judicially 12 noticeable fact that contradicts the Court’s previous finding through its Motion. As such, the Court 13 sees no reason to make a different finding at this time. 14 As to Defendants’ argument that monetary relief is more appropriate under 29 U.S.C. § 15 1132(a)(1)(B), the Court finds, consistent with the prior Amendment Order, that Mejia may proceed 16 with the requested relief under § 1132(a)(1)(B) and § 1132(a)(3) as alternative theories. Defendants, 17 relying on Castillo, contend that Mejia’s request for monetary damages under both § 1132(a)(1)(B) 18 and § 1132(a)(3) “would be duplicative and improper under ERISA.” Mot. at 16 (citing 970 F.3d at 19 1229). But, as the Court explained in the Amendment Order, the Ninth Circuit held in Moyle11 that 20 plaintiffs may “present § 1132(a)(1)(B) and § 1132(a)(3) as alternative—rather than duplicative— 21 theories of liability.” Amendment Order at 4. Insofar as the Court’s prior finding that “Mejia’s claim 22 under section 1132(a)(1)(B) seeks different relief from her claim under section 1132(a)(3)” was 23 based on Mejia’s PFAC, which contains the same allegations as the FAC, the Court does not see a 24

25 10 Although the Court made this finding while determining whether Mejia’s Failure to Pay ERISA Plan 26 Benefits claim, the Court finds that the analysis is applicable for Mejia’s Breach of Fiduciary Duty claim as well. 27 11 The Ninth Circuit in Castillo also cited to Moyle and held that “a claimant . . . may proceed simultaneously [under § 1132(a)(1)(B) and § 1132(a)(3)] so long as there is no double recovery.” Castillo, 970 F.3d at 1229 28 1 | reason to reach a different finding now. The Court stands by its previous finding that “Mejia may 2 | pursue both theories of relief” at this stage of litigation. Amendment Order at 4. 3 Accordingly, the Court DENIES the Motion with respect to Mejia’s requests for monetary 4 | and equitable relief under her Breach of Fiduciary Duty claim. 5 CONCLUSION 6 For the foregoing reasons, the Court hereby ORDERS as follows: 7 1. Defendants’ RJN is GRANTED. 8 2. Defendants’ Motion is DENIED. 9 10 IT IS SO ORDERED. 11 12 Dated: April 21, 2025 tf a 13 © EWUSI-MENSAH FRIMPONG 14 United States District Judge 15 16 17 18 19 20 21 22 23 24 25 26 27 28