Polk Medical Center, Inc. v. Blue Cross And Blue Shield of Georgia, Inc. et al
Filing
17
OPINION AND ORDER GRANTING 6 Motion to Dismiss for Failure to State a Claim. The Complaint is dismissed without prejudice, and the Plaintiff is ORDERED to amend the Complaint to adequately plead its ERISA claims. Signed by Judge Thomas W. Thrash, Jr. on 1/29/18. (jkl)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
POLK MEDICAL CENTER, INC.,
Plaintiff,
v.
CIVIL ACTION FILE
NO. 1:17-CV-3692-TWT
BLUE CROSS AND BLUE SHIELD
OF GEORGIA, INC., et al.,
Defendants.
OPINION AND ORDER
This is an ERISA action. It is before the Court on the Defendants’ Motion
to Dismiss [Doc. 6]. For the reasons set forth below, the Defendants’ Motion to
Dismiss [Doc. 6] is GRANTED.
I. Background
The Plaintiff Polk Medical Center, Inc. is a critical access hospital located
in Cedartown, Georgia.1 It is a small rural hospital that delivers medical
services to underserved areas.2 It operates the only hospital emergency service
in Cedartown.3 The Defendants are Blue Cross and Blue Shield of Georgia, Inc.,
a for-profit health insurer, and Blue Cross Blue Shield Healthcare Plan of
1
Compl. ¶¶ 2, 21.
2
Id. ¶ 2.
3
Id. ¶ 21.
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Georgia, Inc., a for-profit Health Maintenance Organization (collectively
referred to as “Blue Cross”).4 Blue Cross is the plan administrator, claims
administrator, or insurer for the health plans and insurance policies at issue in
this lawsuit.5 The Plaintiff has filed this action to recover payment of benefits
allegedly owed under health insurance plans.
The Plaintiff is an out-of-network provider with regard to Blue Crossadministered plans.6 This means that the Plaintiff does not have a specific
contract with Blue Cross stating the terms and conditions for services provided
to Blue Cross members.7 However, Blue Cross members still have health
benefits coverage for services that they chose to obtain from out-of-network
health providers such as the Plaintiff, including coverage for out-of-network
emergency services.8 The Plaintiff operates the only hospital emergency room
service in the Cedartown area, and is required by federal law to provide
emergency services whether or not a patient has insurance or has an out-ofnetwork insurance plan.9 Thus, the Plaintiff provides medical services to Blue
4
Id. ¶¶ 12-13.
5
Id. ¶ 19.
6
Id. ¶ 20.
7
Id.
8
Id.
9
Id. ¶¶ 21-22.
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Cross members, and submits claims for reimbursement to Blue Cross on behalf
of the patients for the services provided.10
In an effort to obtain prompt payment, the Plaintiff requires its patients
to assign their contractual rights to benefits and payments under their health
plans to the Plaintiff.11 According to the Plaintiff, this is standard practice in the
healthcare industry.12 The Plaintiff requires its patients to sign a written
“Assignment of Benefits” form, as well as a written form authorizing the
Plaintiff to act as the patient’s “authorized agent and representative and to act
on [the patient’s] behalf as necessary to appeal any denial of payment or
underpayment by any insurance company/health plan.”13 Blue Cross members
at issue in this action agreed to assign their health insurance benefits under
their ERISA plan or individual insurance policy to the Plaintiff.14 According to
the Plaintiff, Blue Cross received notice of the assignment of these claims.15
In 2012, the Plaintiff became an out-of-network provider with respect to
Blue Cross.16 From 2012 until 2015, Blue Cross generally honored the
10
Id. ¶¶ 21-23.
11
Id. ¶ 24.
12
Id.
13
Id. ¶¶ 26-27.
14
Id. ¶ 25.
15
Id. ¶ 30.
16
Id. ¶ 32.
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assignment of benefits between the Plaintiff and Blue Cross members, with
limited exceptions.17 Thus, Blue Cross directly reimbursed the Plaintiff for
medical services it provided to Blue Cross members.18 For the past five years,
the Plaintiff has sought to enter into an in-network agreement with Blue
Cross.19 The Plaintiff alleges that in the parties’ negotiation of such an
agreement, the Plaintiff has offered Blue Cross compensation rates that are well
below the market rates established by other insurers that have contracted with
the Plaintiff.20 However, according to the Plaintiff, Blue Cross has refused these
offers and insisted that the Plaintiff agree to “far-below-market rates and other
oppressive terms.”21 The Plaintiff refused to accept these terms.22
Then, after the Plaintiff rejected these contract terms, Blue Cross refused
to honor the majority of its members’ assignments of benefits to the Plaintiff,
despite doing so for a number of years.23 The Plaintiff alleges that Blue Cross
“illegally and unfairly” paid its members for the medical services the Plaintiff
17
Id.
18
Id.
19
Id. ¶ 33.
20
Id.
21
Id. ¶ 34.
22
Id. ¶ 35.
23
Id. ¶ 36.
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provided, in retaliation for the Plaintiff’s rejection of Blue Cross’s offer.24 The
Plaintiff alleges that most patients who have received these direct payments
from Blue Cross have failed to transfer the payment to it, leaving the Plaintiff
uncompensated for substantial sums of money.25 The Plaintiff alleges that the
patients are often confused, frustrated, unable, or unwilling to pay it for the
services it provided to them when it attempts to collect payment.26
The Plaintiff also alleges that Blue Cross has issued refund demands to
the Plaintiff for past payments made to it, sent notices to patients Blue Cross
had already paid claiming it had overpaid them and demanding a refund, and
consistently refused to pay, or underpaid, claims for services incurred by Blue
Cross members at the Plaintiff’s facility.27 Overall, the Plaintiff alleges that the
Plaintiff has billed Blue Cross for approximately $13.2 million since October
2015, and that Blue Cross has reduced its reimbursement by seventy percent.28
The Plaintiff alleges that there are over $9.4 million in unpaid claims for which
it has the right to receive payment under the assignment of benefits.29 According
to the Plaintiff, Blue Cross’s conduct has forced it to bill patients directly, which
24
Id. ¶ 37.
25
Id. ¶ 38.
26
Id. ¶ 39.
27
Id. ¶¶ 40-42.
28
Id. ¶¶ 44-45.
29
Id. ¶ 47.
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requires the Plaintiff to expend significant resources, and which often leaves the
Plaintiff unsuccessful in obtaining this payment.30 On September 21, 2017, the
Plaintiff filed this action. In its Complaint, the Plaintiff asserts claims for
ERISA benefits pursuant to 29 U.S.C. § 1132(a)(1)(b), breach of contract,
quantum meruit, money had and received, and violation of the Affordable Care
Act. Blue Cross now moves to dismiss.
II. Legal Standard
A complaint should be dismissed under Rule 12(b)(6) only where it
appears that the facts alleged fail to state a “plausible” claim for relief.31 A
complaint may survive a motion to dismiss for failure to state a claim, however,
even if it is “improbable” that a plaintiff would be able to prove those facts; even
if the possibility of recovery is extremely “remote and unlikely.”32 In ruling on
a motion to dismiss, the court must accept the facts pleaded in the complaint as
true and construe them in the light most favorable to the plaintiff.33 Generally,
30
Id. ¶ 50.
31
Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009); FED. R. CIV. P.
12(b)(6).
32
Bell Atlantic v. Twombly, 550 U.S. 544, 556 (2007).
See Quality Foods de Centro America, S.A. v. Latin American
Agribusiness Dev. Corp., S.A., 711 F.2d 989, 994-95 (11th Cir. 1983); see also
Sanjuan v. American Bd. of Psychiatry and Neurology, Inc., 40 F.3d 247, 251
33
(7th Cir. 1994) (noting that at the pleading stage, the plaintiff “receives the
benefit of imagination”).
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notice pleading is all that is required for a valid complaint.34 Under notice
pleading, the plaintiff need only give the defendant fair notice of the plaintiff’s
claim and the grounds upon which it rests.
III. Discussion
Blue Cross first argues that this action should be dismissed because the
Plaintiff has failed to sufficiently identify the ERISA plans and claims at issue.
Blue Cross contends that the Plaintiff has failed to identify the health benefit
plans at issue, and failed to identify the claims under those plans at issue.35
Consequently, Blue Cross argues that it cannot effectively respond to the
Complaint because it does not know which plans or claims are at issue, and
cannot know what terms it has allegedly breached.36 The Court agrees that the
Plaintiff has failed to adequately plead these claims.
To sufficiently plead an ERISA claim, plaintiffs “must establish the
existence of the ERISA plans under which they sue.”37 “A ‘plan, fund, or
program’ under ERISA is established if from the surrounding circumstances a
reasonable person can ascertain the intended benefits, a class of beneficiaries,
See Lombard’s, Inc. v. Prince Mfg., Inc., 753 F.2d 974, 975 (11th
Cir. 1985), cert. denied, 474 U.S. 1082 (1986).
34
35
Defs.’ Mot. to Dismiss, at 7.
36
Id.
Sanctuary Surgical Ctr., Inc. v. Conn. Gen. Life Ins. Co., No. 1180800-CV, 2012 WL 28263, at *3 (S.D. Fla. Jan. 5, 2012) (citing Advanced
Rehabilitation, LLC v. Unitedhealth Grp., Inc., No. 10-cv-00263, 2011 WL
37
995960, at *2 (D.N.J. Mar. 17, 2011)).
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the source of financing, and procedures for receiving benefits.”38 Then, “[h]aving
established the plan at issue, Plaintiffs must then identify the plan terms
Defendants have breached.”39 “In doing so, Plaintiffs must be mindful of their
obligation under Rules 8 and 10 of the Federal Rules of Civil Procedure to plead
their claims discretely in counts such that dissimilar plan terms and patient
conditions that present entirely different factual and legal questions are not
improperly grouped together into a single count.”40 “The mere fact that Plaintiffs
have yet to obtain the policies does not excuse them from this pleading
obligation.”41
For example, in Sanctuary Surgical Centre, Inc. v. Connecticut General
Life Insurance Co., the court concluded that the plaintiffs failed to sufficiently
plead the existence of the ERISA plans under which they sued.42 The court noted
that the plaintiffs “fail[ed] to distinguish between the patients who were
participants in an ERISA covered plan and those who were not—a crucial
Donovan v. Dillingham, 688 F.2d 1367, 1373 (11th Cir. 1982); see
also Sanctuary Surgical Ctr., 2012 WL 28263, at *3 (“A plan is established if a
38
reasonable person ‘can ascertain the intended benefits, a class of beneficiaries,
the source of financing, and procedures for receiving benefits.’”).
39
Sanctuary Surgical Ctr., 2012 WL 28263, at *3.
40
Id.
Ctr. for Reconstructive Breast Surgery, LLC v. Blue Cross Blue
Shield of La., No. 11-806, 2013 WL 5519320, at *1 (E.D. La. Sept. 30, 2013)
(quoting Sanctuary Surgical Ctr., 2012 WL 28263, at *2).
41
42
Id. at *1.
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distinction.”43 The complaint there “group[ed] all Defendants together and
contain[ed] no specific allegations against a given health insurance plan based
on a given patient.” Instead, the plaintiffs “simply made general allegations
against all Defendants and attached a list of patients.”44
Similarly, the Plaintiff’s Complaint does not satisfy these pleading
requirements. The Complaint, which only describes “employee welfare benefit
plans” under ERISA and other plans “to which ERISA does not apply,” fails to
establish the ERISA plans under which it sues.45 It does not provide surrounding circumstances at all from which a reasonable person could “ascertain the
intended benefits, a class of beneficiaries, the source of financing, and
procedures for receiving benefits” under the plans at issue.46 Instead, the
Plaintiff merely provides a vague reference to ERISA and non-ERISA plans in
general. It also fails to distinguish between patients who were covered by ERISA
plans and the patients who were covered by non-ERISA plans, which is a
“crucial distinction.”47 The Complaint has provided Blue Cross no notice as to
what claims the Plaintiff is bringing suit under, what ERISA and non-ERISA
43
Id.
44
Id.
45
Compl. ¶ 19.
46
Donovan v. Dillingham, 688 F.2d 1367, 1373 (11th Cir. 1982).
Ctr. for Reconstructive Breast Surgery, LLC v. Blue Cross Blue
Shield of La., No. 11-806, 2013 WL 5519320, at *1 (E.D. La. Sept. 30, 2013).
47
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plans cover those claims, or how the Defendants have breached the terms of
those plans. The Complaint provides almost no information at all detailing the
claims and health plans at issue. This does not provide Blue Cross with the type
of notice that allows it to respond to the allegations of the Complaint. Therefore,
the Plaintiff fails to satisfy the pleading requirements for ERISA claims.48
The Plaintiff responds that it has adequately described the plans at issue
in this case, and that requiring a plan-by-plan analysis would undermine
judicial economy.49 The Plaintiff cites multiple cases for this proposition, and
argues that a complaint need only generally describe plans consisting of ERISA
plans and non-ERISA plans.50 However, in each of the cases cited by the
Plaintiff, the complaint provides a specific number of ERISA and non-ERISA
claims under which the plaintiffs sue, and also provides a list attached to the
complaint providing details of these claims. Thus, the defendants in those cases
could ascertain the plans and claims at issue. In contrast, the Complaint in this
action only references ERISA and non-ERISA plans generally, with no other
identifying information that allows the Defendants to identify any of the claims,
plans, and terms of those plans underlying the Plaintiff’s allegations.
48
Sanctuary Surgical Ctr., Inc. v. Conn. Gen. Life Ins. Co., No. 11-
80800-CV, 2012 WL 28263, at *3 (S.D. Fla. Jan. 5, 2012).
49
Pl.’s Br. in Opp’n to Defs.’ Mot. to Dismiss, at 5-6.
50
Id.
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For example, the Plaintiff relies upon Productive MD, LLC v. Aetna
Health, Inc.51 In Productive MD, the court noted that “[i]n the interest of judicial
economy, the court ordered the parties to brief several threshold legal issues,
none of which would require the court to conduct a plan-by-plan analysis of the
numerous underlying insurance plans.”52 However, in that case, the plaintiff
alleged in the complaint that there were 167 claims at issue, including 160 plans
governed by ERISA, one plan governed by Medicare, and six plans governed by
state law.53 Furthermore, the plaintiff in that case attached numerous exhibits
to its complaint detailing the claims under which it sued, including the patient
identification numbers, plan names, date of services, and more.54 In contrast, the
Plaintiff here only generally describes ERISA and non-ERISA plans, without
more, in the Complaint.
The Plaintiff also cites Elite Center for Minimally Invasive Surgery, LLC
v. Health Care Service Corporation. There, the court stated that requiring the
plaintiff “to plead the specific terms of every plan governing all 1,159 ERISA
claims would produce an enormous and unwieldy complaint, far exceeding the
51
Productive MD, LLC v. Aetna Health, Inc., 969 F. Supp. 2d 901
(M.D. Tenn. 2013).
52
Id. at 912.
53
Id. at 911.
See Second Am. Compl. [Doc. 98], Productive MD, LLC v. Aetna
Health, Inc., 969 F. Supp. 2d 901 (M.D. Tenn. 2013), under No. 3:12-cv-00052.
54
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plausibility standards imposed by Twombly.”55 However, in that case, the
plaintiff alleged that the defendant denied or underpaid 1,159 ERISA claims,
and attached an exhibit to the complaint providing “the date of submission,
insurance and group identification numbers, charges, and payments for each
claim submitted to [the defendant].”56 Thus, even if the Plaintiff may not be
required to plead the specific terms of every plan governing the ERISA claims
at issue, it still must provide enough information so that the Defendants can
ascertain the ERISA plan, fund, or program from the surrounding circumstances. The Plaintiff fails to do this.
Unlike the complaint in Elite Center, where the plaintiff attached a table
detailing the information for each of the 1,159 claims, and the complaint in
Productive MD, where the plaintiff attached numerous exhibits filled with
information concerning the claims, the Plaintiff here only generally describes
“employee welfare benefit plans” under ERISA and “one or more . . . individual
insurance policies or church plans to which ERISA does not apply.”57 This
Elite Ctr. for Minimally Invasive Surgery, LLC v. Health Care
Serv. Corp., 221 F. Supp. 3d 853, 857 (S.D. Tex. 2016).
55
Id.; see also Exhibit A, Second Am. Compl. [Doc. 48-1], Elite Ctr.
for Minimally Invasive Surgery, LLC v. Health Care Serv. Corp., 221 F. Supp.
56
3d 853 (S.D. Tex. 2016), under No. 4:15-CV-00954. The plaintiffs in each of the
cases cited above also attached similar exhibits providing the claim information
to their complaint.
Compl. ¶ 19; see also Pl.’s Br. in Opp’n to Defs.’ Mot. to Dismiss, at
6 (“Here, the Complaint adequately describes the plans as consisting of both
ERISA plans and individual policies or church plans that [Blue Cross] members
57
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information does not allow a reasonable person to ascertain “the intended
benefits, a class of beneficiaries, the source of financing, and procedures for
receiving benefits” of an alleged ERISA plan.58 The Complaint, which merely
alleges the existence of ERISA claims in general, fails to put Blue Cross on
notice of the claims that the Plaintiff bases its allegations upon. Therefore, the
Court grants the Defendants’ Motion to Dismiss, and will allow the Plaintiff to
file an Amended Complaint adequately identifying the underlying ERISA plans
and distinguishing between ERISA and non-ERISA plans.59 The Court declines
to exercise supplementary jurisdiction of the Plaintiff’s state law claims in the
absence of a viable federal claim.
IV. Conclusion
For the reasons stated above, the Defendants’ Motion to Dismiss [Doc. 6]
is GRANTED. The Complaint is dismissed without prejudice, and the Plaintiff
is ordered to amend the Complaint to adequately plead its ERISA claims.
utilized when seeking medical treatment at Polk.”).
58
See Donovan v. Dillingham, 688 F.2d 1367, 1373 (11th Cir. 1982).
Sanctuary Surgical Ctr., 2012 WL 28263, at *3. The Court finds it
unnecessary to address the remainder of the Defendants’ arguments until the
Plaintiff files an Amended Complaint that adequately identifies the ERISA
plans at issue and distinguishes between patients who were participants in
ERISA and non-ERISA plans. Ctr. for Reconstructive Breast Surgery, LLC v.
Blue Cross Blue Shield of La., No. 11-806, 2013 WL 5519320, at *1 (E.D. La.
Sept. 30, 2013).
59
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SO ORDERED, this 29 day of January, 2018.
/s/Thomas W. Thrash
THOMAS W. THRASH, JR.
United States District Judge
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