Lee Memorial Health System v. Blue Cross and Blue Shield of Florida, Inc.

Filing 58

OPINION AND ORDER finding 49 Objection moot; rejecting 47 Report and Recommendations for the alternative reasons set forth in the Opinion and Order; granting 19 Motion to Dismiss for Failure to State a Claim and Count I for declaratory relief is dismissed for lack of standing. The Clerk shall terminate Blue Cross on the docket. The case will proceed as to Winn Dixie on Count II, who did not join in the motion. Signed by Judge John E. Steele on 3/9/2018. (RKR)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
LEE MEMORIAL HEALTH SYSTEM,
Plaintiff,
v.

Case No:

2:16-cv-738-FtM-29CM

BLUE CROSS AND BLUE SHIELD
OF FLORIDA, INC. and WINN
DIXIE STORES, INC.,
Defendants.
OPINION AND ORDER
This matter is before the Court on consideration of the
Magistrate Judge’s Report and Recommendation (Doc. #47), filed
December 5, 2017, recommending that Blue Cross and Blue Shield of
Florida, Inc.'s Motion to Dismiss Plaintiff's Amended Complaint
(Doc. #19) be denied.
Florida,

Inc.

(Blue

Defendant Blue Cross and Blue Shield of
Cross)

filed

an

Objection

(Doc.

#49)

on

December 19, 2017, to which plaintiff Lee Memorial Health System
(Lee Memorial) filed a Response in Opposition to Objection (Doc.
#53) on January 19, 2018.
Lee Memorial believes that Winn Dixie Stores, Inc. (Winn
Dixie) improperly denied a claim for health care benefits by
adopting a misconstruction of a provision in its ERISA 1 employee

1

Employee Retirement Income Security Act, 29 U.S.C. § 1001
et seq.

health benefits plan (the Plan) by Blue Cross, its third-party
claims

administrator.

Acting

as

the

assignee

of

a

Plan

participant, Lee Memorial seeks damages from Winn Dixie for nonpayment of benefits due the participant for its hospital services
(Count

II).

Lee

Memorial

also

seeks

a

declaratory

judgment

against both Winn Dixie and Blue Cross as to (1) the proper
interpretation a provision in the ERISA plan, (2) the sufficiency
under ERISA of certain procedures followed in the denial of the
claim, and (3) the proper interpretation of a separate agreement
between Lee Memorial and Blue Cross (Count I).

Blue Cross seeks

dismissal of the declaratory judgment claim in Count I, the only
count in which it is a named defendant.
I.
The

Amended

Complaint

(Doc.

#17)

contains

the

following

material factual allegations, which are alleged to apply to both
counts (Id., ¶¶ 36, 46):
Shannon Anderson (“Anderson”) was an employee of Winn Dixie,
and as such was a participant of an Employer Sponsored Benefit
Plan (the “Plan”) which provides health plan coverage to Winn Dixie
employees.

(Id.

¶¶

7,

15;

Doc.

#17-1,

Exh.

A.) 2

The

Plan

constitutes an employee welfare plan within the meaning of ERISA.

2

A copy of the summary plan description is attached to the
Amended Complaint as Exhibit A. (Doc. #17-1, Exh. A.) The Plan
is a self-insured plan, and Blue Cross does not provide either
insurance coverage or any funds from which benefits are paid.

- 2 -

(Doc. #17, ¶ 8.)

As a participant, Anderson had the right to have

her medical and hospitalization costs paid under the Plan. (Id. ¶
15.)
Winn Dixie was the Plan sponsor, Plan administrator, an
interested party, and a “fiduciary” of the Plan, as defined by
various ERISA provisions, and had the authority to control the
operation and administration of the Plan. (Id. ¶ 9.)

Blue Cross

provides third-party claims administration for the Plan pursuant
to an Administrative Services Agreement (Doc. #17-1, Exh. B), and
is alleged to be an interested party and a fiduciary under ERISA.
(Id. ¶¶ 7, 11(a).)

Additionally, Blue Cross and Lee Health entered

into a Preferred Patient Hospital Agreement ("Agreement") (Id. ¶
11(a)), although a copy of the Agreement is not attached to the
Amended Complaint.

Lee Memorial alleges that Blue Cross and Winn

Dixie have a variety of duties imposed by ERISA, the Plan, and the
Agreement.

(Id. ¶ 14(a)-(g).)

On October 3, 2013, Anderson was involved in a motor vehicle
accident

that

resulted

when

Todd

Anthony

Rosario,

traveling

southbound in a northbound lane of traffic, collided head on with
Anderson’s vehicle.

(Id. ¶ 17.)

For his conduct, Rosario was

found guilty of two DUI felony offenses and the misdemeanor offense
of failure to submit to a DUI test after his license had been
suspended.

(Id. ¶ 18.)

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Lee Memorial provided hospital services to Anderson from
October 3, 2013 through October 18, 2013 for injuries she sustained
as a result of the October 3, 2013 accident.
Upon

being

admitted

to

the

hospital,

(Id. ¶¶ 16-17.)

Anderson

executed

an

admissions contract assigning to Lee Memorial (among other things)
all rights to receive payments from Blue Cross under the Plan for
hospital services rendered. (Id. ¶ 19.)
Lee Memorial submitted a claim to Blue Cross under the Plan
for payment of hospital services rendered to Anderson.
20.)

(Id. ¶

Without identifying a specific provision within the Plan,

Blue Cross denied coverage, stating that “the member’s injuries
were the result of the member’s alcohol intoxication.”
Doc. #17-4.)

Blue Cross stated that Anderson’s blood alcohol

content was 0.21%, more than twice the legal limit.
at 2.)
benefit

(Id. ¶ 21;

(Doc. #17-4

The denial notice stated that a “section of the member’s
booklet

describing

exclusions

was

used

to

make

this

determination,” but failed to specifically identify which of the
98 exclusions Blue Cross based its denial.

(Doc. #17, ¶ 23; Doc.

#17-4, Exh. D.)
The summary plan description of the Plan, attached as Exhibit
A to the Amended Complaint, contains an exclusion relating to
intoxication.

This provision excludes from coverage

[a]ny service (other than Substance Abuse
Services), Medical Supplies, charges or losses
resulting
from
a
Covered
Member
being
intoxicated or under the influence of any drug

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or substance; abusing alcohol, drugs, or other
substance; or, taking some action the purpose
of which is to create a euphoric state or alter
consciousness, unless taken on the advice of
a Physician[.]
(Doc. #17-1, Exh. A, p. 17.)
this

is

the

inapplicable
applies

to

exclusion
to

under

Anderson’s

services

Lee Memorial asserts that, assuming
which

claim

“resulting

because

from

intoxicated.” (Id.; Doc. #17, ¶ 24.)

coverage

a

the

was

denied,

exclusion

Covered

Member

is

only
being

Lee Memorial further alleges

that the “intoxication exclusion does not apply to health care
services

resulting

inflicting

injuries

from
upon

25)(emphasis in original).

a

third
a

party

covered

being

member.”

intoxicated
(Doc.

and

#17,

¶

Additionally, Lee Memorial asserts the

notice and denial process violated various ERISA requirements and
the Plan. (Id., ¶¶ 28, 32, 33.)
In Count I, Lee Memorial seeks a declaratory judgment pursuant
to 28 U.S.C. § 2201 et seq. as to the rights of Lee Memorial, Blue
Cross and Winn Dixie under ERISA, the Plan, and the Agreement.
(Id. ¶37.)

Lee Memorial alleges that the parties are uncertain

as to their rights under the ERISA statutes and the two documents.
(Id. ¶¶ 37, 38.)

Specifically, Lee Memorial alleges that the

parties disagree about: (1) Whether Blue Cross violated the Plan,
ERISA, and the Agreement by denying benefits under the Plan and
refusing to pay Lee Memorial (id. ¶¶ 39, 40); (2) whether Blue
Cross complied with various ERISA requirements concerning the

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denial of benefits (id. ¶¶ 41, 42); and (3) whether administrative
exhaustion was required (id. ¶¶ 44, 45).
In Count II, Lee Memorial asserts a claim for damages against
Winn Dixie.

(Id. ¶ 47.)

Count II asserts that Lee Memorial is

entitled (presumably as Anderson’s assignee) to receive payment
for the hospital services it provided to Anderson, and (again
presumably as Anderson’s assignee) to enforce its rights under the
Plan and ERISA.

(Id. ¶ 48.)

Lee Memorial also asserts that Blue

Cross and Winn Dixie violated ERISA and breached the Plan by
denying the claim submitted by Lee Memorial (id. ¶49), which
resulted in damages (id. ¶50).

Lee Memorial seeks a money judgment

for its damages, interest, costs, and attorney fees. (Doc. #17, p.
11.)
II.
The Magistrate Judge recommends denial of Blue Cross’s motion
to dismiss the declaratory judgement claim in Count I.

The

Magistrate

the

Judge

found

that

Count

I

is

analyzed

under

Declaratory Judgment Act, not under ERISA, and that Lee Memorial
adequately plead violations of ERISA by both Blue Cross and Winn
Dixie which sufficiently supports a claim for declaratory relief.
(Doc. #47, p. 6.)

The Magistrate Judge further found that Lee

Memorial properly pled a continuing controversy sufficient to
state a claim and provide jurisdiction under the Declaratory
Judgment Act (id. pp. 7-8); that despite some stray language, no

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state law claim is implicated in the ERISA controversy alleged in
Count I (id. pp. 8-10); and that Counts I and II are not duplicative
of

each

other

(id.

pp.

11-12).

Blue

Cross

objects

to

the

recommendations relating to the continuing controversy and the
lack of duplicative counts.

(Doc. #49.)
III.

After conducting a careful and complete review of the findings
and recommendations, a district judge may accept, reject or modify
the magistrate judge’s report and recommendation.

28 U.S.C. §

636(b)(1); United States v. Powell, 628 F.3d 1254, 1256 (11th Cir.
2010).

A district judge “shall make a de novo determination of

those portions of the report or specified proposed findings or
recommendations
636(b)(1).

to

which

objection

is

made.”

28

U.S.C.

§

See also United States v. Farias-Gonzalez, 556 F.3d

1181, 1184 n.1 (11th Cir. 2009).

This requires that the district

judge “give fresh consideration to those issues to which specific
objection has been made by a party.”

Jeffrey S. v. State Bd. of

Educ. of Ga., 896 F.2d 507, 512 (11th Cir. 1990) (quoting H.R.
1609, 94th Cong., § 2 (1976)).

The district judge reviews legal

conclusions de novo, even in the absence of an objection.

See

Cooper-Houston v. Southern Ry. Co., 37 F.3d 603, 604 (11th Cir.
1994).

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IV.
A. Availability of Declaratory Judgment Claim
The

Court

begins

by

determining

whether

the

declaratory

judgment claim in Count I is available given the presence of the
substantive claim in Count II of the Amended Complaint.

Blue

Cross argues it is not available because such declaratory relief
is merely duplicative of the damage claim against Winn Dixie in
Count II.

The Court disagrees with Blue Cross, and overrules its

objection to the Report and Recommendation.
With exceptions not applicable to this case, the federal
Declaratory Judgment Act provides:
In a case of actual controversy within its
jurisdiction . . . any court of the United
States, upon the filing of an appropriate
pleading, may declare the rights and other
legal relations of any interested party
seeking such declaration, whether or not
further relief is or could be sought. Any such
declaration shall have the force and effect of
a final judgment or decree and shall be
reviewable as such.
28 U.S.C. § 2201(a).

If the Court enters such a declaration,

“[f]urther necessary or proper relief based on a declaratory
judgment or decree may be granted, after reasonable notice and
hearing,

against

any

adverse

determined by such judgment.”

party

whose

rights

have

been

28 U.S.C. § 2202.

“The Declaratory Judgment Act has been characterized as an
‘enabling Act,’ giving the district courts discretion to grant a
new form of relief.”

Stevens v. Osuna, 877 F.3d 1293, 1311 (11th

- 8 -

Cir. 2017) (quoting Wilton v. Seven Falls Co., 515 U.S. 277, 28788 (1995)).

“The statute was intentionally written so broadly as

to create an optional remedy coextensive with those remedies
traditionally available at law or equity. [ ] Hence, Federal Rule
of Civil Procedure 57 provides that ‘[t]he existence of another
adequate remedy does not preclude a declaratory judgment that is
otherwise appropriate.’”

Musselman v. Blue Cross & Blue Shield

of Ala., 684 F. App’x 824, 829 (11th Cir. 2017) (internal citation
omitted).
not

“Congress intended to create a remedy to supplement—

supplant—the

equity.

remedies

traditionally

available

at

law

and

Id. at 832 (citing 28 U.S.C. § 2201; Fed. R. Civ. P. 57

Advisory Committee Note.”).
Nothing in the Amended Complaint changes the general rule in
Rule 57 that the existence of another remedy, i.e., money damages
in

Count

II,

precludes

judgment claim.

an

otherwise

appropriate

declaratory

If Lee Memorial prevails on Count II, it obtains

a money judgment against Winn Dixie. 3

Lee Memorial does not obtain

an express declaration of its legal rights which results in the
money

judgment,

regarding

the

and

ERISA

violated in this case.

certainly
procedural

does

not

obtain

requirements

it

a

declaration

asserts

were

Thus, the Court finds that the declaratory

3

While Count II also seeks unspecified “further relief” (Doc.
#17, p. 11), a declaratory judgment is not such further relief in
the context of this case. E.g., Gulf Life Insur. Co. v. Arnold,
809 F.2d 1520, 1523 (11th Cir. 1987).

- 9 -

judgment claim in Count I is not precluded by the money damages
claim in Count II.
B. Lee Memorial’s
Judgment Claim

Standing

to

Assert

ERISA

Declaratory

While a declaratory judgment claim is available despite the
presence of Count II, the question remains whether Lee Memorial is
able to bring such a claim.

To maintain an action under ERISA, a

plaintiff must establish statutory standing, that is, must make a
non-frivolous

claim

under

29

U.S.C.

§

1132(a).

Physicians

Multispecialty Grp. v. Health Care Plan of Horton Homes, Inc., 371
F.3d 1291, 1293-94 (11th Cir. 2004).
“ERISA sets forth those parties who may bring civil actions
under ERISA and specifies the types of actions each of those
parties may pursue.
only

to

those

enumerated.”

Thus, civil actions under ERISA are limited

parties

and

actions

Congress

specifically

WestRock RKT Co. v. Pace Indus. Union-Mgmt. Pension

Fund, 856 F.3d 1320, 1322 (11th Cir. 2017) (quoting Gulf Life Ins.
v. Arnold, 809 F.2d 1520, 1524 (11th Cir. 1987)).

A “participant”

and a “beneficiary” of an ERISA plan may bring a civil action “to
recover benefits due to him under the terms of his plan, to enforce
his rights under the terms of the plan, or to clarify his rights
to future benefits under the terms of the plan.”
1132(a)(1)(B).

29 U.S.C. §

Additionally, a “participant,” “beneficiary,” or

“fiduciary” may bring a civil action for certain injunctive and
equitable relief.

29 U.S.C. § 1132(a)(3).
- 10 -

Green v. Holland, 480

F.3d 1216, 1224 (11th Cir. 2007).

A healthcare provider such as

Lee Memorial is not a “participant” or a “beneficiary” under ERISA,
and thus lacks independent standing to sue under § 1132(a)(1)(B).
Physicians Multispecialty Grp., 371 F.3d at 1294.

Additionally,

a healthcare provider is not a “fiduciary” under ERISA, and thus
lacks independent standing to sue under § 1132(a)(3).
A

healthcare

provider

may,

however,

acquire

derivative

standing to sue under ERISA by obtaining a written assignment from
a participant or beneficiary of her right to payment of medical
benefits.

Cagle v. Bruner, 112 F.3d 1510, 1515 (11th Cir. 1997)

(“We hold that neither § 1132(a) nor any other ERISA provision
prevents derivative standing based upon an assignment of rights
from an entity listed in that subsection.”)

See also Gables Ins.

Recovery, Inc. v. Blue Cross & Blue Shield of Florida, Inc., 813
F.3d 1333, 1338–39 (11th Cir. 2015); Borrero v. United Healthcare
of N.Y., Inc., 610 F.3d 1296, 1302 (11th Cir. 2010); Conn. State
Dental Ass’n v. Anthem Health Plans, Inc., 591 F.3d 1337, 1347
(11th Cir. 2009); Physicians Multispecialty Grp., 371 F.3d at 1294;
Hobbs v. Blue Cross Blue Shield of Ala., 276 F.3d 1236, 1240–41
(11th Cir. 2001).

Derivative standing may be obtained in the same

manner with self-funded ERISA plans.

BioHealth Med. Lab., Inc.

v. Cigna Health & Life Ins. Co., 706 F. App’x 521, 525 (11th Cir.
2017).

In this case, Lee Memorial asserts derivative standing as

the assignee of Anderson, a Plan participant.

- 11 -

The assignment

signed by Anderson provides:

“I hereby assign to LMHS payment

from all third party payors* with whom I have coverage or from
whom benefits are or may become payable to me, for the charges of
hospital and health care services I receive for, related to, or
connected

with

future). . . .

my

admission

or

treatment

(past,

present,

or

I also assign payment of any available insurance

benefits to the physician(s) who provide me treatment at LMHS.”
(Doc. #17-3, Exh. C.)

“[T]hird party payors” are defined in the

assignment to include coverage available from “Medicare, Medicaid,
Tri-care, or governmental programs; health, accident, automobile,
or

other

insurance;

employers;

and

any

services.”

workers’

compensation;

sponsors

who

may

HMOs;

self-insured

contribute

payment

for

(Id.)

Such an assignment is ineffectual, however, “if the plan
contains an unambiguous anti-assignemnt provision.”
Multispecialty Grp., 371 F.3d at 1295.

Physicians

“[A]n unambiguous anti-

assignment provision in an ERISA-governed welfare benefit plan is
valid

and

enforceable.”

Id.

at

1296.

The

Summary

Plan

Description (SPD) attached as Exhibit A to the Amended Complaint
(Doc. #17-1) contains the following provision:

“A Covered Member

is expressly prohibited from assigning any right to payment of
Covered Expenses or any payment related to Benefits.”
1, p. 79.)

(Doc. #17-

This is a clear, unambiguous prohibition of assignment,

and therefore the assignment Lee Memorial obtained from Anderson

- 12 -

is void.

Physicians Multispecialty Grp., 371 F.3d at 1296.

See

also Griffin v. Coca-Cola Enterprises, Inc., 686 F. App’x 820, 822
(11th Cir. 2017).

Lee Memorial has not plausibly stated any other

basis for standing which would allow it to bring the declaratory
action.

Therefore, Court I will be dismissed as to Blue Cross

because Lee Memorial lacks standing.
Accordingly, it is now
ORDERED:
1. Blue Cross and Blue Shield of Florida, Inc.'s Objection
(Doc. #49) is moot.
2. The Report and Recommendation (Doc. #47) is hereby rejected
for the alternative reasons set forth above.
3. Blue Cross and Blue Shield of Florida, Inc.'s Motion to
Dismiss Plaintiff’s Amended Complaint (Doc. #19) is granted and
Count I for declaratory relief is dismissed for lack of standing.
The Clerk shall terminate Blue Cross on the docket.

The case will

proceed as to Winn Dixie on Count II who did not join in the
motion.
DONE and ORDERED at Fort Myers, Florida, this
March, 2018.

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9th

day of

Copies:
Hon. Carol Mirando
United States Magistrate Judge
All Parties of Record

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