WILLIAMS v. BLUE CROSS AND BLUE SHIELD OF FLORIDA INC

Filing 126

ORDER - Plaintiffs' 83 Motion to Certify Class is DENIED and their Complaint (doc 13 ) is DISMISSED with prejudice. The Clerk of Court is directed to enter judgment in favor of BCBSF consistent with this order and to tax costs against the plaintiffs. - - - Signed by District Judge M CASEY RODGERS on October 12, 2010. (cbj)

WILLIAMS v. BLUE CROSS AND BLUE SHIELD OF FLORIDA INC

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IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF FLORIDA PENSACOLA DIVISION

JOHN S. WILLIAMS, PAUL F. REEVES, ERIK S. GRAVES, and TAMMY D. DAY, on behalf of themselves and all others similarly situated, Plaintiffs, v. BLUE CROSS AND BLUE SHIELD OF FLORIDA, INC., Defendant. ________________________________/ ORDER This action is brought under the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. § 1001, et seq. ("ERISA"), for breach of fiduciary duty and declaratory and injunctive relief (doc. 13). Before the court is the plaintiffs' Motion to Certify a Class of Cancer Patients Who Were Denied Radiology Benefits Known as Diagnostic CT and Supporting Memorandum of Law (doc. 83). The defendant, Blue Cross and Blue Shield of Florida, Inc. ("BCBSF"), responded in opposition (doc. 92), and the plaintiffs filed a reply to BCBSF's response (doc. 121). Having considered the parties' positions, the court finds that the named plaintiffs lack standing to assert the claims in their Second Amended Complaint ("Complaint") and thus that their motion should be denied and their Complaint dismissed. BACKGROUND The named plaintiffs, all of whom are BCBSF insureds, were diagnosed with cancer and underwent fusion PET/CT scans at Angel Williams Imaging Center ("AWIC") in Pensacola, Florida, for additional diagnostic purposes. According to the Complaint ("Complaint"), a fusion PET/CT scan is performed by a single machine that combines Case No.: 3:09cv225/MCR/MD

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images obtained through positron emission tomography ("PET"), which depicts the body's metabolic or chemical activity, and computed tomography ("CT"), which depicts the body's anatomical structures, allowing the interpreting physician to detect "metabolic changes in the proper anatomical context of the patient's body." See doc. 13 at ¶¶ 37-38, 40. As the plaintiffs explain in their Complaint, although fusion PET/CT consists of one scan, it produces three different images ­ one through PET, one through CT, and one that is a combination or overlap of the two.1 See doc. 13 at ¶¶ 37-39. According to the plaintiffs, fusion PET/CT is the most effective tool to distinguish benign from malignant disease, determine the extent of disease, detect residual and recurrent tumors, and monitor therapy, providing increased accuracy over the former approach of performing PET and CT scans separately and subjecting patients to less radiation. See doc. 13 at ¶¶ 6, 8. The plaintiffs also contend that the CT portion of the scan must be interpreted separately from the fused PET/CT to avoid false interpretations and thus incorrect diagnoses. See doc. 13 at ¶ 53. BCBSF did not deny coverage for any of the named plaintiffs' PET/CT scans. In fact, with respect to each of the named plaintiffs, BCBSF initially reimbursed AWIC separately for the PET/CT scan and CT scan. After it discovered through a post-claims audit that the PET/CT scan and CT scan were performed in a single procedure, however, BCBSF recouped payment from AWIC for the CT scan.2 The plaintiffs claim that, in doing so, BCBSF breached its fiduciary duty to them. Even though none of the named plaintiffs
The record reflects that, during all pertinent tim e s , when a fusion PET/CT scan was perform e d , A W IC billed for both a PET/CT scan and a CT scan. Accordingly, in connection with the PET/CT scans p e r f o r m e d on the nam e d plaintiffs, AW IC billed BCBSF for both a PET/CT scan and a CT scan. According to the affidavit of Regina W illia m s , a supervisor in BCBSF's Overpaym e n t Recovery Unit, B C B S F recoups from participating providers overpaym e n ts identified by BCBSF's Healthcare Provider Audit D e p a r tm e n t ("HPAD"). Once the HPAD identifies an overpaym e n t, it sends the provider a notice of intent to r e c o v e r the overpaym e n t, identifying the claim that was overpaid, the reason BCBSF considers the claim to h a v e been overpaid, and the am o u n t of overpaym e n t BCBSF intends to recover. If the provider fails to s u c c e s s f u lly contest the recoupm e n t within the tim e allowed or voluntarily return the paym e n t, BCBSF r e c o v e r s the overpaid am o u n t by deducting it from future claim paym e n ts pursuant to its agreem e n t with the p r o v id e r . W illia m s testified that, on July 25, 2008, BCBSF sent a notice of intent to recover $129,550.89 in o v e r p a ym e n ts from Dr. Angel W illia m s o n , the owner of AW IC , stem m in g prim a r ily from AW IC 's billing of CT s c a n s concom ita n tly with PET/CT scans. The $129,550.89 in overpaym e n ts included claim s subm itte d on b e h a lf of 79 patients. BCBSF recovered overpaym e n ts on claim s subm itte d on behalf of only 37 patients b e f o r e halting its recovery efforts due to AW IC ' s Dem a n d for Arbitration stem m in g from BCBSF's July 25, 2 0 0 8 , notice of intent to recover overpaym e n ts . Case No. 3:09cv225/MCR/MD
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paid out-of-pocket for any portion of the fusion PET/CT scan,3 the plaintiffs seek to recover the amount recouped from AWIC for the CT scan under 29 U.S.C. § 1132(a)(1)(B).4 They also seek declaratory and injunctive relief under 29 U.S.C. § 1132(a)(3)5 and to certify the following class action: All individuals insured under an ERISA-governed health insurance policy with Blue Cross and Blue Shield of Florida ("BCBSF") who received denials of provider-requested diagnostic CT (CPT codes 71250, 74150, 70450, 70490, 72192) when fusion PET/CT (CPT codes 78815, 78816) was concomitantly requested and approved, pursuant to the July 25, 2008 audit advanced by BCBSF against Angel Williamson

As Michelle Shipley, BCBSF's Senior Manager of Provider Contracting, explained in her affidavit, B C B S F entered into contracts with AW IC pursuant to which AW IC was to render m e d ic a l services to BCBSF's m e m b e r s at certain agreed upon rates. AW IC was precluded under the agreem e n ts from billing or otherwise s e e k in g any type of recourse against any BCBSF m e m b e r for covered services and, instead, was to look s o le ly to BCBSF for paym e n t. The record reflects that, contrary to its agreem e n ts with BCBSF, AW IC sent a letter to the nam e d plaintiffs on or about March 4, 2009, inform in g them that BCBSF had denied paym e n t f o r services provided to them , requesting paym e n t from them , and encouraging them to m e e t with AW IC 's c o u n s e l, which is now representing them in this m a tte r , for a free consultation to discuss a possible appeal o f BCBSF's decision. Although AW IC requested paym e n t, it did not include any bill or invoice with its letter o r otherwise specify any am o u n t allegedly owed. Moreover, the record reflects that AW IC never recovered a n y paym e n t from the nam e d plaintiffs or any of its other patients for the CT scans and has no intention of d o in g so. Indeed, although Dr. W illia m s o n is not a party to this lawsuit, plaintiffs' counsel states in the p la in tif f s ' reply brief that Dr. W illia m s o n "would be rem is s . . . if it was not pointed out that her office never a c tu a lly recovered any paym e n ts for unpaid diagnostic CT benefits from any of her patients, including the n a m e d Plaintiffs, by sending invoices or by other m e a n s , and her office no longer engages in the billing p r a c tic e s in question." W h ile the court is perplexed by counsel's statem e n t, particularly considering that Dr. W i l l ia m s o n is not a party to this action, the statem e n t indicates to the court that AW IC has no intention of r e c o v e r in g any paym e n t from the nam e d plaintiffs. The court additionally notes there is no evidence in the r e c o r d that AW IC ever m a d e any further effort to collect any outstanding am o u n ts from the nam e d plaintiffs, m u c h less turned the m a tte r over to a collections agency. A participant or beneficiary in an ERISA plan m a y bring suit under § 1132(a)(1)(B) "to recover b e n e f its due to him under the term s of his plan, to enforce his rights under the term s of the plan, or to clarify h is rights to future benefits under the term s of the plan." Under § 1132(a)(3), an ERISA participant or beneficiary m a y sue "to enjoin any act or practice which v io la te s any provision of this subchapter or the term s of the plan, or . . . to obtain other appropriate equitable r e lie f (i) to redress such violations or (ii) enforce any provisions of this subchapter or the term s of the plan." In their Com p la in t, the plaintiffs request that the court enjoin BCBSF "from com m ittin g these financiallym o tiv a te d acts in the future and/or declar[e] their invalidity . . . ." See doc. 13 at ¶ 105. Case No. 3:09cv225/MCR/MD
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Imaging Center, P.A. ("AWIC").6 In response to plaintiffs' motion to certify, BCBSF asserts, among other things, that the named plaintiffs lack standing to bring the causes of action alleged in their Complaint. The court agrees. DISCUSSION It is well-settled in the Eleventh Circuit that "`any analysis of class certification must begin with the issue of standing.'" Prado-Steiman v. Bush, 221 F.3d 1266, 1280 (11th Cir. 2000) (quoting Griffin v. Dugger, 823 F.2d 1476, 1482 (11th Cir. 1987), cert. denied, 486 U.S. 1005 (1988)). Indeed, "[f]ederal courts . . . have only the power that is authorized by Article III of the Constitution and the statutes enacted by Congress pursuant thereto." Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541 (1986). As a result, "prior to the certification of a class, and technically speaking before undertaking any formal typicality or commonality review, the district court must determine that at least one named class representative has Article III standing to raise each class subclaim." Bush, 221 F.3d at 1279. "`Only after the court determines the issues for which the named plaintiffs have standing should it address the question whether the named plaintiffs have representative capacity, as defined by Rule 23(a), to assert the rights of others.'" Id. (quoting Griffin, 823 F.2d at 1282). "At an `irreducible constitutional minimum' Article III standing requires that the plaintiff `must have suffered an injury in fact ­ an invasion of a legally protected interest which is (a) concrete and particularized; and (b) actual or imminent, not conjectural or hypothetical.'" Connecticut v. Health Net, Inc., 383 F.3d 1258, 1261 (11th Cir. 2004), cert. denied, 543 U.S. 1149 (2005) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)).7 In other words, in evaluating a plaintiff's standing, the court must determine
The description of denied benefits is broader in the plaintiffs' Com p la in t and includes, in addition to d ia g n o s tic CT scans perform e d in conjunction with PET/CT scans, fusion PET/CT scans, adm in is tr a tio n of a radioactive pharm a c e u tic a l in connection with PET/CT scans, and office consultation with the interpreting p h y s ic ia n . (See doc. 13 at ¶ 95). Although the class the plaintiffs seek to certify includes only an alleged d e n ia l of diagnostic CT scans, there is no indication that the plaintiffs were denied any of the other benefits; a s a result, the court's analysis applies equally to all the benefits referenced in the Com p la in t. According to Lujan, to establish that an injury is particularized, the plaintiff m u s t establish that it e f f e c te d him in a personal and individual way. Lujan, 504 U.S. at 561 fn.1. Case No. 3:09cv225/MCR/MD
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whether he has "`alleged `such a personal stake in the outcome of the controversy' as to warrant his invocation of federal-court jurisdiction and to justify exercise of the court's remedial powers on his behalf.'" Warth v. Seldin, 422 U.S. 490, 498-99 (1975) (quoting Baker v. Carr, 369 U.S. 186, 204 (1962)). "Generally, a plaintiff `must assert his own legal rights and interests, and cannot rest his claim to relief on the legal rights or interests of third parties.'" Id. (quoting Warth, 422 U.S. at 499). Bringing suit in the form of a class action does not abrogate the individualized standing requirement. See Bowen v. First Family Fin. Servs., Inc., 233 F.3d 1331, 1339 fn.6 (11th Cir. 2000). "Without a plaintiff's satisfaction and demonstration of the requirements of Article III standing, a federal court has no subject matter jurisdiction to hear the merits of a plaintiff's ­ or, in this case, the class plaintiffs' ­ claim." Central States Southeast and Southwest Areas Health and Welfare Fund v. MerckMedco Managed Care, L.L.C., 433 F.3d 181, 198 (2d Cir. 2005). When the court lacks jurisdiction, its only function is to announce that fact and dismiss the case. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94 (1998). The plaintiffs' motion for class certification is woefully inadequate for a number of reasons, only one of which needs to be addressed here. As BCBSF observes, none of the named plaintiffs suffered any injury as a result of the acts alleged in their Complaint. Indeed, not only did each of the named plaintiffs receive a diagnostic CT scan in conjunction with a fusion PET/CT scan, but none of them have been required to pay for the separately billed CT scan. Rather, as previously discussed, AWIC is precluded under its agreements with BCBSF from collecting payment from any of the named plaintiffs, and its counsel has confirmed that it has no intention of doing so. Having received the diagnostic CT scan and having no financial responsibility for it, the named plaintiffs have not been injured by BCBSF's alleged actions and thus lack standing to assert the breach of fiduciary duty claim alleged in their Complaint. See Lanfear v. Home Depot, Inc., 536 F.3d 1217, 1222 (11th Cir. 2008) (noting that "ERISA allows the recovery of benefits, but it does not allow suits for extracontractual damages"); see also Weaver v. BCBSF Life Ins. Co., 370 Fed. Appx. 822, 823 (9th Cir. 2010) (concluding that the plaintiff suffered no injury-in-fact, as required to support standing, where she failed to show that she did not receive the
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benefit of her policy) (unpublished op.);8 Romberio v. Unumprovident Corp., 2009 WL 87510, at *6 (6th Cir. Jan. 12, 2009) (unpublished op.) (holding that, "[t]o prevail on a breach-of-fiduciary-duty claim under ERISA, a plaintiff must generally prove that the defendant not only breached its fiduciary duty but also caused harm by that breach"); Nahigian v. Leonard, 233 F. Supp. 2d 151, 168 (D. Mass. 2002) (finding that, "[b]ecause ERISA is concerned primarily with ensuring that employees receive benefits due to them, an employee usually cannot recover under ERISA ­ even if there has been a breach of fiduciary duty ­ unless the breach caused some reduction in her benefits"); Allstate Indem. Co. v. Forth, 204 S.W.3d 795, 796 (Tex. 2006) (finding that the plaintiff, who sued her former insurance company for settling her medical bills in an arbitrary and unreasonable manner, suffered no injury and therefore lacked standing to bring a breach of contract claim against her former insurer where she was not denied medical treatment and had no unreimbursed, out-of-pocket medical expenses). In addition to lacking standing to assert the breach of fiduciary duty claim alleged in their Complaint, the plaintiffs have no standing to assert a claim under § 1132(a)(3) for declaratory and injunctive relief. As the Eleventh Circuit has noted, "[a] plaintiff has standing to seek declaratory or injunctive relief only when he `allege[s] facts from which it appears there is a substantial likelihood that he will suffer injury in the future.'" Bowen, 233 F.3d at 1340 (quoting Malowney v. Fed. Collection Deposit Group, 193 F.3d 1342, 1346-47 (11th Cir. 1999), cert. denied, 529 U.S. 1055 (2000)). "Allegations of possible future injury do not satisfy the requirements of Art. III. A threatened injury must be `certainly impending' to constitute an injury in fact." Whitmore v. Arkansas, 495 U.S. 149, 158 (1990).9 The

W h ile unpublished opinions are not considered binding, they m a y be considered as persuasive a u th o r ity. See 11th Cir. R. 36-2; see also United States v. Futrell, 209 F.3d 1286, 1289 (11th Cir. 2000). The court recognizes that som e circuits, including the Second and Third Circuits, have held that p la in tif f s need not dem o n s tr a te actual harm to have standing to seek injunctive relief under ERISA pertaining to the disclosure and fiduciary responsibilities im p o s e d on plan adm in is tr a to r s . See, e.g., Central States, 433 F .3 d at 199; Horvath v. Keystone Health Plan East, Inc., 333 F.3d 450, 456 (3d Cir. 2003). In both Central S ta te s and Hovarth, however, the plaintiffs' claim s for injunctive relief were brought on behalf of plans and p e r ta in e d to ERISA's statutory disclosure and reporting requirem e n ts , as well as allegations of self-dealing in Central States, rather than to benefits decisions, as in this case, which affect only certain individuals and n o t the plans in general. In fact, BCBSF's refusal to reim b u r s e AW IC separately for the CT scans not only C a s e No. 3:09cv225/MCR/MD
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purpose of the "injury-in-fact" requirement is to "reserv[e] limited judicial resources for individuals who face immediate, tangible harm absent the grant of declaratory or injunctive relief." Bowen, 233 F.3d at 1340. The named plaintiffs ­ and putative class members, for that matter ­ plainly do not fit in that category. In their Complaint, the plaintiffs allege only that BCBSF's failure to reimburse for a separately billed CT scan "is an ongoing problem that will continue to cause the Named Plaintiffs and members of the class injury and/or economic loss." See doc. 13 at ¶¶ 78, 104. They do not allege any impending need for such services and, as discussed above, even if they did, they have not demonstrated any action by BCBSF that could result in injury or economic loss to them.10 The court thus finds that the plaintiffs' motion for class certification should be denied and their Complaint dismissed.11 See Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1265 (11th Cir. 2009) (noting that, "[f]or a district court to certify a class action, the named plaintiffs must have standing") (internal quotations omitted).12

r e s u lte d in no harm to the nam e d plaintiffs, but it inured to the benefit of the plans. Notably, the Eighth Circuit h a s held that a direct injury m u s t be established even when bringing a claim for injunctive relief on behalf of a plan. See Harley v. Minn. Mining and Mfg. Co., 284 F.3d 901, 906-07 (8th Cir. 2002), cert denied, 537 U.S. 1 1 0 6 (2003). Not only have the nam e d plaintiffs suffered no injury as a result of the acts alleged in their C o m p la in t, but one of them ­ John W illia m s ­ is not even a m e m b e r of an ERISA plan and thus does not fit th e definition of the proposed class. Because the nam e d plaintiffs have no standing to assert the causes of action alleged in their C o m p la in t, the court has no jurisdiction over the m a tte r and m u s t dism is s their Com p la in t. See Jenkins v. L e n n a r Corp., 216 Fed. Appx. 920, 921 (11th Cir. 2007) (noting that, "when the district court lacks subjectm a t t e r jurisdiction, it should dism is s the com p la in t `sua sponte if necessary, pursuant to Fed. R. Civ. P. 1 2 ( h ) ( 3 ) ' instead of [deciding] the m e r its " ) (unpublished op.); see also Steel Co., 523 U.S. at 94, and Central S ta te s , 433 F.3d at 198. To the extent anyone has been injured by BCBSF's failure to pay for the separately billed CT scans, it appears to be AW IC . Indeed, it is clear that the real controversy here stem s from billing issues between A W IC and BCBSF and that AW IC is the only proper party to assert the causes of action alleged in the p la in tif f s ' com p la in t. The sam e day AW IC wrote the nam e d plaintiffs regarding BCBSF's refusal to reim b u r s e s e p a r a te ly for the CT scans, AW IC sent BCBSF a dem a n d for arbitration seeking to recover the recouped p a ym e n ts pursuant to the dispute resolution process set forth in the parties' agreem e n ts . For reasons not in c lu d e d in the record, AW IC decided not to pursue its claim against BCBSF, at least not directly. In a related c a s e also filed in this court and assigned to the undersigned, however, AW IC sued Aetna Life Insurance C o m p a n y to recover am o u n ts not reim b u r s e d for CT scans billed concom ita n tly with fusion PET/CT scans. AW IC settled that lawsuit, but specifically excluded from the settlem e n t claim s subm itte d on behalf of several p a tie n ts who later filed a lawsuit nearly identical to this one. The court concluded in that case, for the sam e C a s e No. 3:09cv225/MCR/MD
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Accordingly, it is hereby ORDERED that plaintiffs' motion for class certification (doc. 83) is DENIED and their Complaint (doc. 13) is DISMISSED with prejudice.13 The Clerk of Court is directed to enter judgment in favor of BCBSF consistent with this order and to tax costs against the plaintiffs. DONE and ORDERED this 12th day of October, 2010.

s/

M. Casey Rodgers

M. CASEY RODGERS UNITED STATES DISTRICT JUDGE

r e a s o n s set forth herein, that the plaintiffs lacked standing to assert the causes of action alleged in their C o m p la in t. The fact that the plaintiffs in this m a tte r lack standing to assert the causes of action alleged in their C o m p la in t is reinforced by plaintiffs' counsel's confirm a tio n in the plaintiffs' reply brief that the plaintiffs have n o t them s e lv e s paid any am o u n t for the CT scans. Having found that the nam e d plaintiffs lack standing to assert the causes of action alleged in their C o m p la in t, the court need not address the requirem e n ts of Fed. R. Civ. P. 23(a) for class certification. The c o u r t would note, however, that the nam e d plaintiffs failed to satisfy the elem e n t of num e r o s ity. Based on the b illin g records of AW IC and BCBSF's July 25, 2008, letter to AW IC regarding the results of its claim s audit, th e nam e d plaintiffs insist there are either 138 or 139 putative class m e m b e r s . As W illia m s explains in her a f f id a v it, however, the audit included 138 claims subm itte d on behalf of 79 patients. And BCBSF recouped f u n d s for services provided to only 37 of those patients, including the four nam e d plaintiffs. Moreover, a c c o r d in g to the affidavit of Sylvia Dornes, a senior legal affairs consultant for BCBSF, of those 37 patients, o n ly 19 were m e m b e r s of an ERISA plan. As a result, based on the record, it appears there are only 19 p u ta tiv e class m e m b e r s , which is insufficient under Rule 23(a). See, e.g., Cox v. Am. Cast Iron Pipe Co., 784 F .2 d 1546, 1553 (11th Cir. 1986), cert. denied, 479 U.S. 883 (1986) (noting the general rule that twenty or f e w e r class m e m b e r s is inadequate under Rule 23(a)); County of Monroe, Fla. v. Priceline.com, Inc., 265 F .R .D . 659, 667 (S.D. Fla. 2010) (sam e ) . Although the nam e d plaintiffs dispute BCBSF's sum m a r y of the a u d it report, insisting it includes 139 patients, they have not dem o n s tr a te d that fact and the court's review of th e audit report is consistent with BCBSF's sum m a r y. The nam e d plaintiffs likewise have offered no support f o r their position that, for purposes of determ in in g whether they have established the requisite num e r o s ity, the c o u r t should consider all individuals whose claim s were offset by BCBSF in connection with reim b u r s e m e n t f o r overpaym e n ts m a d e for the CT scans at issue in this case. As a result, any inference of num e r o s ity above th e 19 m e m b e r s identified by BCBSF would constitute sheer ­ and im p e r m is s ib le ­ speculation by the court. See Vega, 564 F.3d at 1267. Case No. 3:09cv225/MCR/MD
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