Contract – Anthem sued for rejecting invoices from testing laboratory

Where a testing laboratory plausibly alleged that Anthem wrongly denied claims, its claim under ERISA, for breach of contract and for violation of the duty of good faith and fair dealing survived the motion to dismiss.

Background

This is an ERISA and contract dispute action brought by Genesis Diagnostics against Anthem Blue Cross Blue Shield of Virginia. Plaintiff is a medical testing business offering clinical laboratory, pharmacy, genetic, addiction rehabilitation and COVID-19 testing services based on requisitions submitted by medical service providers on behalf of, as relevant here, defendant’s subscribers/members.

Plaintiff alleges that defendant, in response to claims submitted under each insured’s plan, “blatantly disregarded . . .
express obligations to pay Plaintiff for services rendered.” Defendant has filed a motion to dismiss.

ERISA

Count One alleges that defendant’s non- or under-payment for services, flouting insureds’ assignment of benefits to plaintiff, constitutes an ERISA violation. Defendant first argues that plaintiff fails to identify the specific provision of ERISA under which plaintiff seeks to recover. However the Fourth Circuit has made clear that “the failure specifically to identify the provision permitting recovery is not fatal.”

Defendant next contends that, because plaintiff is not “a participant or beneficiary,” plaintiff must rely on derivative standing to bring its claim, and further that, applying a derivative standing theory, plaintiff’s claim fails because plaintiff does not sufficiently plead facts supporting the “existence and scope of a valid assignment” conferring standing. The court disagrees.

Courts within the Fourth Circuit have held that plaintiffs generally need not plead specific language of assignment for purposes of showing derivative standing. Outside the Fourth Circuit, courts have held that plaintiff-assignees should allege “specific factual allegations to render plausible their claim that the [a]ssignments they received from the [p]lan [p]articipants conferred them with the right to receive the full benefits of that [p]lan.”

Here, the court finds sufficient the allegations that (1) medical service providers submitted requisitions for lab services to plaintiff; (2) those requisitions contained an assignment of benefits from defendant’s insureds to plaintiff; (3) defendant’s insureds executed the assignment(s) and (4) the assignments specifically assigned the right of payment and the right to pursue and collect such payments to plaintiff.

Defendant next argues that plaintiff fails to plausibly allege the necessary elements of an ERISA § 502(a) claim. The court again disagrees. Because plaintiff has pled that it has valid assignments of benefits from participants in ERISA-governed plans and that defendant wrongfully denied benefits to which plaintiff is eligible under the plans, plaintiff has properly stated a claim under ERISA § 502(a)(1)(B).

Defendant asserts that plaintiff’s allegation that it exhausted administrative remedies is “wholly insufficient” to, on its own, establish administrative exhaustion. The court agrees. However, the court also agrees with plaintiff that in ERISA cases, administrative exhaustion is an affirmative defense and therefore not properly ascertainable on a 12(b)(6) motion to dismiss.

Breach of contract

The allegation that plaintiff performed testing services for defendants’ insureds at the request of the insureds’ health care providers gives rise to a plausible inference that defendant owed its insureds coverage (i.e., payment) for such testing. And the principles of assignment dictate that this legal obligation passed to the benefit of plaintiff.

Second, it is entirely plausible that a health insurance company’s “arbitrary, capricious, and unreasonable” and otherwise “groundless” refusal to pay for services may constitute a breach of the underlying plan. Finally, plaintiff has clearly alleged that it suffered damages insofar as it was deprived of “thousands of dollars to which it is rightfully entitled.”

Good faith/fair dealing

Plaintiff asserts the same allegations for its breach of contract claim as it does for its breach of the implied covenant of good faith and fair dealing claim—which is simply
another form of breach of contract claim. However, those allegations also satisfy the elements of a claim for breach of an implied covenant of good faith and fair dealing. That being said, if plaintiff’s express breach of contract and breach of the implied covenant claims remain factually duplicative by the summary judgment stage, plaintiff will not be able to pursue both.

Fraud

Plaintiff’s general, conclusory and anonymous allegations regarding its course of dealing with defendant and/or defendant’s “representatives” are insufficient to state a claim for fraud under either Virginia law or Rule 9(b). Count Four is dismissed.

Improper joinder

Defendant asserts that it is unfeasible to continue the litigation as currently pled because it will need to “analyze and argue defenses for an alleged 2,170 separate claims based on hundreds [of] different health benefits plans.” While 2,170 is certainly a large number of claims to parse through, that does not render them—or defendant’s underlying, allegedly improper approach to handling each such claim—any less related. And in its arguments for severance, defendant does not acknowledge the alternative to permitting plaintiff to bring all its claims together, i.e., that the court would be inundated with duplicative, claim-by-claim litigation.

Defendant’s motion to dismiss granted in part, denied in part. Defendant’s request to sever denied.

Abira Medical Laboratories v. Anthem Health Plans of Virginia, Inc. Case No.  3:25-cv-108, Feb. 3, 2026. EDVA at Richmond (Young). VLW 026-3-058. 21 pp.

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