Health Net Life Insurance Company v. ABC Services Group, Inc.

I. Background

A. Facts The following facts are drawn from Plaintiff’s Complaint (Dkt. 1-2). Between 2013 and 2015, Plaintiff’s insurance payments to out-of-network substance abuse treatment providers jumped from $251,000 to $190,000,000. Compl. ¶ 4. This is a result, Plaintiff contends, of widespread insurance fraud conducted by said providers, facilitated by the lesser regulation to which substance abuse treatment facilities are subject. Id. ¶¶ 1, 3. The fraudulent scheme works as follows: First, third-party “body-brokers” identify potential patients—who are frequently homeless, unemployed, or experiencing financial hardship—and refer them, for a kickback, to substance abuse treatment facilities. Id. ¶ 6. Second, because these “purchased patients” tend to be uninsured and ineligible to apply for coverage in the commercial market, their treatment providers procure insurance coverage for them using false information. Id. Third, treatment providers encourage their newly-insured patients to receive services by paying their premiums, waiving cost- sharing obligations, providing free housing and transportation, and giving the patients gift cards. Id. These inducements…