Norvell v. Blue Cross and Blue Shield Association

Filing 52

MEMORANDUM DECISION AND ORDER RE: PLAINTIFF'S MOTION TO DENY REQUEST FOR REASSIGNMENT (Docket No. 23 ), PLAINTIFF'S MOTION TO ALLOW REPLY TO BLUE CROSS'S ANSWER (Docket No. 30 ), FEDERAL DEFENDANTS' MOTION FOR PROTECTIVE ORDER ( Docket No. 46 ), NON-GOVERNMENT DEFENDANTS' MOTION FOR PROTECTIVE ORDER (Docket No. 47 ). IT IS HEREBY ORDERED that: 1. Plaintiff's Motion to Deny Request for Reassignment (Docket No. 23) is DENIED AS MOOT; 2. Plaintiff's Motion to A llow Reply to Blue Cross's Answer (Docket No. 30) is DENIED AS MOOT; 3. Federal Defendants' Motion for Protective Order (Docket No. 46) is DENIED AS MOOT; and 4. Non-Government Defendants' Motion for Protective Order (Docket No. 47) is DENIED AS MOOT. Signed by Judge Ronald E. Bush. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (km)

UNITED STATES DISTRICT COURT
DISTRICT OF IDAHO

BRUCE NORVELL
Plaintiff,

Case No.: 1:16-cv-00195-REB
REPORT AND RECOMMENDATION
RE:

vs.
BLUE CROSS AND BLUE SHIELD
ASSOCIATION; BLUE CROSS OF IDAHO
HEALTH SERVICE, INC.; SPECIAL AGENTS
MUTUAL BENEFIT ASSOCIATION;
DIRECTOR, OFFICE OF PERSONNEL
MANAGEMENT; SECRETARY, DEPARTMENT
OF HEALTH AND HUMAN SERVICES; and
DEPARTMENT OF HEALTH AND HUMAN
SERVICES,
Defendants.

FEDERAL DEFENDANTS’ MOTION
TO DISMISS
(Docket No. 10)
BLUE CROSS’S MOTION FOR
JUDGMENT ON THE PLEADINGS
AND JOINDER IN FEDERAL
DEFENDANTS’ MOTION TO
DISMISS
(Docket No. 27)
MEMORANDUM DECISION AND
ORDER RE:
PLAINTIFF’S MOTION TO DENY
REQUEST FOR REASSIGNMENT
(Docket No. 23)
PLAINTIFF’S MOTION TO ALLOW
REPLY TO BLUE CROSS’S
ANSWER
(Docket No. 30)
FEDERAL DEFENDANTS’ MOTION
FOR PROTECTIVE ORDER
(Docket No. 46)
NON-GOVERNMENT
DEFENDANTS’ MOTION FOR
PROTECTIVE ORDER
(Docket No. 47)

REPORT AND RECOMMENDATION/MEMORANDUM DECISION AND ORDER - 1

Now pending before the Court are the following motions: (1) Federal Defendants’
Motion to Dismiss (Docket No. 10); (2) Blue Cross’s Motion for Judgment on the Pleadings and
Joinder in Federal Defendants’ Motion to Dismiss (Docket No. 27); (3) Plaintiff’s Motion to
Deny Request for Reassignment (Docket No. 23); (4) Plaintiff’s Motion to Allow Reply to Blue
Cross’s Answer (Docket No. 30); (5) Federal Defendants’ Motion for Protective Order (Docket
No. 46); and (6) Non-Government Defendants’ Motion for Protective Order (Docket No. 47).
Having carefully considered the record, participated in oral argument, and otherwise being fully
advised, the undersigned enters the following Report and Recommendation as to the first two
dispositive motions, and Memorandum Decision and Order as to the remaining four motions:
I. BACKGROUND
Plaintiff Bruce Norvell was enrolled in the Service Benefit Plan (the “Plan’) – a
nationwide health benefits plan created pursuant to Federal Employee Health Benefit Act
(“FEHBA”), which authorizes Defendant U.S. Office of Personnel Management (“OPM”) to
enter into contracts with private entities (“carriers”) to offer insurance plans to federal
employees, retirees, and their dependents. See 5 U.S.C. § 8902(a); see also Compl., ¶¶ 6-8
(Docket No. 1). The Plan is one such plan and is created by a contract between OPM and
Defendant Blue Cross and Blue Shield Association (“BCBSA”), the latter of which is the Plan’s
carrier and acts on behalf of local Blue Cross and Blue Shield companies such as Defendant Blue
Cross of Idaho Health Service (“BCI”) that, in turn, administer the Plan with respect to health
care services rendered in their individual localities. See Compl., ¶¶ 7-8; see also Norvell v.
Office of Personnel Mgmt., et al., Case No. 1:14-cv-00421-BLW (D. Idaho) 9/23/15 Decision
(“Norvell I Decision”), pp. 2-3 (Docket No. 126).

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Relevant here, Plaintiff’s claims stem from a 2013 heart ablation surgery (a procedure
covered by the Plan) and the resulting cost share that he was initially charged. Specifically,
Plaintiff was dissatisfied with the approximately $3,800 cost share the Plan first told him he
would owe in connection with that surgery. See Compl., ¶ 40-43; see also Norvell I Decision, p.
3; Norvell Decl., ¶ j, attached as Ex. 7 to Compl. (Docket No. 1, Att. 8). According to Plaintiff,
the Plan’s original determination was based, in part, on the treatment being incorrectly or
ambiguously categorized as an “outpatient” procedure, instead of “inpatient” (with related
expense allocations). See generally id. Plaintiff then challenged the amount of the cost share
through the mandatory administrative appeal process, culminating with an administrative review
by OPM. See id.; see also 5 C.F.R. § 890.105(a), (e). Ultimately, Plaintiff had his cost share
reduced to $100. See Compl., ¶ 44; see also Novell I Decision, p. 3; Norvell Decl., ¶ j. But that
did not end the matter; instead, Plaintiff brought an action in this Court – Norvell I.
In Norvell I, Plaintiff argued that a lack of lack of definitions in the FEHBA plans for the
terms “inpatient” and “outpatient” violates two separate laws: (1) an FEHBA provision that
requires FEHBA contracts to contain “a detailed statement of benefits” that includes “definitions
of benefits as [OPM] considers necessary or desirable” (see 5 U.S.C. § 8902(d)); and (2) Public
Health Service Act (“PHSA”) § 2715, which requires the use of certain uniform definitions in
summary documents describing health plans (see 42 U.S.C. § 300gg-15). See Norvell I
Decision, p. 4. Relatedly, Plaintiff alleged that he was injured by the insufficient definitions in
five distinct ways, including purportedly being “unable to compare various [FEHBA] policies
because their statements of benefits contain ambiguous definitions.” See id. at p. 6.
On September 23, 2015, Chief U.S. District Judge B. Lynn Winmill dismissed Norvell I
for lack of subject matter jurisdiction (specifically, for lack of standing), holding, among other

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things, that “the inability to compare various plans does not constitute an injury in fact” in part
because that “so-called injury is neither concrete nor particularized.” Id. at p. 7;1 see also id. at
p. 11 (“Having found that [Plaintiff] has failed to establish that he has suffered an injury in fact
fairly traceable to the Defendants’ conduct, which could be redressed by judicial intervention,
the Court concludes that [Plaintiff] lacks standing. As such, this Court lacks jurisdiction to
entertain [Plaintiff’s] Complaint.”). Plaintiff then appealed the dismissal, and the Ninth Circuit
summarily affirmed Judge Winmill’s dismissal of Norvell I. See Norvell v. Office of Personnel
Mgmt., et al., No. 15-35783, Order (9th Cir. Feb. 25, 2016).
Plaintiff then brought this action – Norvell II – claiming, again, that Defendants’ failure
to include and/or require definitions of the terms “inpatient” and “outpatient” in any of the 2016
FEHBA plans makes it impossible for him and other consumers to make informed decisions, to
understand and compare health care coverages, and to determine benefits and co-payment
responsibilities. Compare generally Norvell I Compl. (Docket No. 1), with Norvell II Compl.
(Docket No. 1) (both discussing PHSA and FEHBA claims, failure to define terms “inpatient”
and “outpatient,” and alleged injuries). According to Plaintiff, “Judge Winmill did not
understand the nature of injury that [Plaintiff] alleged in Norvell I” and, as a result, “[a] fresh

1

In concluding that Plaintiff “failed to allege any discernible injury in fact resulting from
the mischaracterization of his 2013 claim as outpatient care,” Judge Winmill additionally
concluded that: (1) his assertion that he was injured when he was overcharged thousands of
dollars “ignores the fact that he was ultimately successful in getting his cost share obligation
reduced to $100"; (2) “spending hundreds of hours wading through the administrative appeals
process is not a judicially cognizable injury sufficient to confer standing”; (3) “the alleged harm
that [Plaintiff] may experience in having to assist his grandchildren” is “purely hypothetical and
not at all imminent” and “cannot constitute an injury in fact”; and (4) Plaintiff’s “contention that
he suffers a continuing injury because he remains vulnerable to a similar situation occurring in
the future does not satisfy the injury in fact requirement” because it “epitomizes the type of
conjectural harm for which standing is always denied.” Norvell I Decision, pp. 6-8.
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look by another judge would best serve the just determination of this action.” Pl.’s Mot. to Deny
Defs.’ Request for Reassign., p. 2 (Docket No. 23, Att. 1).
All current Defendants now move to dismiss this action (Norvell II), arguing that, under
the well-settled doctrines of standing, ripeness, sovereign immunity, res judicata, and/or
collateral estoppel, this action should be dismissed. See generally Fed. Defs.’ Mot. to Dismiss
(Docket No. 10); Non-Gov’t Defs.’ Mot. for J. on the Pleadings and Joinder (Docket No. 27).
Alternatively, these Defendants submit that this case must be dismissed for lack of standing for
the same reasons articulated by Judge Winmill in Norvell I. See id.
II. REPORT/DISCUSSION
Defendants contend that there is an identity of claims between Norvell I and this case,
such that Norvell I’s handling of the jurisdictional issues – namely standing – precludes
Plaintiff’s efforts at now re-litigating those same claims here. The undersigned agrees.
It may be true that FRCP 41(b) provides that a dismissal for lack of jurisdiction or
improper venue does not operate as an adjudication upon the merits. See Fed. R. Civ. P. 41(b)
(“Unless the dismissal order states otherwise, a dismissal under this subdivision (b) [(dealing
with effect of involuntary dismissal)] – except one for lack of jurisdiction, improper venue, or
failure to join a party under Rule 19 – operates as an adjudication on the merits.”). However,
this only means that “the dismissal permits a second action on the same claim that corrects the
deficiency found in the first action”; that is, “[t]he judgment remains effective to preclude
relitigation of the precise issue of jurisdiction or venue that led to the initial dismissal.” Wright,
Miller & Cooper, Federal Practice and Procedure: Jurisdiction 2d § 4436, p. 149 (emphasis
added) (citing Baris v. Sulpicio Lines, Inc., 74 F.3d 567, 571 (5th Cir. 1996) (dismissals for lack

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of jurisdiction “are not considered adjudications on the merits and ordinarily do not, and should
not preclude a party from later litigating the same claim, provided that the specific defect has
been corrected. Such a dismissal should, however, preclude relitigation of the specific issue of
jurisdiction . . . already resolved.”)); see also id. at p. 154 (“Although a dismissal for lack of
jurisdiction does not bar a second action as a matter of claim preclusion, it does preclude
relitigation of the issues determined in ruling on the jurisdiction question.”) (citing Kasap v.
Folger Nolan Fleming & Douglas, Inc., 166 F.3d 1243, 1248 (D.C. Cir. 1999) (“[U]nder
principles of issue preclusion, even a case dismissed without prejudice has preclusive effect on
the jurisdictional issue litigated.”) (emphasis in original)); id. at pp. 165-66 (“Dismissals for
want of justiciability are controlled by the same principles as apply to want of subject-matter
jurisdiction. The decision should preclude relitigation of the very issue of justiciability actually
determined, but does not preclude a second action on the same claim if the justiciability problem
can be overcome. This decision holds for dismissal based on a lack of standing . . . .”) (citing
McCarney v. Ford Motor Co., 657 F.2d 230, 233 (8th Cir. 1981) (dismissal for lack of standing
forecloses relitigation of standing question, but does not foreclose second action in which
justiciability barrier is overcome)).
In other words, Judge Winmill’s dismissal for lack of standing (and, thus, jurisdiction) in
Norvell I establishes issue preclusion as to the precise issue of standing/jurisdiction. At the same
time, it does not establish claim preclusion if jurisdiction can be shown in a second action (for
example, this action – Norvell II) on other grounds. Therefore, if Plaintiff has not cured the basis
for his previous dismissal in Norvell I, that same basis applies here to likewise warrant the
dismissal of Plaintiff’s similar claims here, in Norvell II. This principle was recently articulated

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in Myles v. Bank of America, Inc., 2017 WL 24865, *4 (N.D. Ca. 2017), with the district court
reasoning in relevant part:
Collateral estoppel precludes relitigation of issues argued and decided in prior
proceedings. Under California law, collateral estoppel bars litigation if: (1) the issue
sought to be precluded is identical to that decided in a former proceeding, (2) the
issue was actually litigated in the former proceeding, (3) the issue was necessarily
decided in the former proceeding, (4) the decision in the former proceeding was final
and on the merits, and (5) the party to be estopped was a party to the former
proceeding or in privity with a party to the former proceeding.
In Myles II, the state court dismissed the case with prejudice, finding that Plaintiff,
as an individual borrower, lacked standing to sue for breach of the Consent
Judgment. Defendant has satisfied the first four prongs of the requirements for
collateral estoppel, as the issue of Plaintiff’s standing to enforce the Consent
Judgment is identical to the issue that was presented, was necessarily decided, and
was actually litigated to a final judgment in Myles II. Finally, Plaintiff, the party to
be estopped, was a party to the prior state action. Plaintiff is therefore bound by the
state court’s judgment and cannot now re-litigate the issue of his standing to enforce
the Consent Judgment.
Id. (internal citations omitted) (emphasis added). Applying this same rationale, there is little
difficulty in concluding that Plaintiff’s second foray in this Court is procedurally barred.2
Norvell II is nearly identical to Norvell I – the allegations are the same and, importantly, the
alleged injuries are the same. And, the decision in Norvell I has already determined that these

2

The parties’ briefing discusses various doctrines for actually barring Plaintiff’s instant
claim – for example, res judicata and collateral estoppel. Inherent within these terms are
elements of ambiguity, at least insofar as to the proper manner in which they may apply in this
instance. Regardless of the appropriate term to be applied here, it is understood that, while only
judgments on the merits precludes parties from litigating the same cause of action in a
subsequent suit, that does not mean that dismissals for lack of jurisdiction have no preclusive
effect at all. Indeed, as already stated, a dismissal for lack of jurisdiction precludes relitigation
of the issue actually decided – namely, the jurisdictional issue. See supra; see also Okoro v.
Bohman, 164 F.3d 1059, 1063 (7th Cir. 1999) (“[A] judgment on the merits precludes relitigation
of any ground within the compass of the suit, while a jurisdictional dismissal precludes only
relitigation of the ground of that dismissal . . . and thus has collateral estoppel (issue preclusion)
effect rather than the broader res judicata effect that nowadays goes by the name of claim
preclusion.”).
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allegations fail to establish an injury in fact sufficient to incur standing. In short, Plaintiff has
not cured the jurisdictional defect; simply put, he includes no new facts that would prevent
application of Norvell I’s holding that Plaintiff failed to establish an injury in fact for this latest
claim. Thus, Norvell I now bars Plaintiff’s claims in this action. See, e.g., Coll. Sports Council
v. Dep’t of Educ., 465 F.3d 20, 22 (D.C. Cir. 2006) (holding previous dismissal for lack of
standing had preclusive effect where there were “no material differences” between the
complaints in the first and second actions).3 It is therefore recommended that (1) Federal
Defendants’ Motion to Dismiss (Docket No. 10) and (2) Blue Cross’s Motion for Judgment on
the Pleadings and Joinder in Federal Defendants’ Motion to Dismiss (Docket No. 27) be granted.
If this recommendation is adopted, its dispositive impact on the action will moot,
practically speaking, the remaining motions. With this in mind, (1) Plaintiff’s Motion to Deny
Request for Reassignment (Docket No. 23); (2) Plaintiff’s Motion to Allow Reply to Blue
Cross’s Answer (Docket No. 30); (3) Federal Defendants’ Motion for Protective Order (Docket
No. 46); and (4) Non-Government Defendants’ Motion for Protective Order (Docket No. 47) are
therefore denied as moot.
III. RECOMMENDATION/ORDER
Based upon the foregoing, IT IS HEREBY RECOMMENDED that:
1.

Federal Defendants’ Motion to Dismiss (Docket No. 10) be GRANTED; and

3

To be clear, this is not to say that Plaintiff cannot assert substantive claims in another
action, so long as he is able to establish standing for bringing those claims before doing so. His
work to date on a complicated issue that is unquestionably frustrating to him is admirable in its
nature and his dedication to the cause. However, based upon the record now before the Court,
Judge Winmill’s decision in Norvell I applies with preclusive effect here. Even if it did not (by
virtue of either res judicata or collateral estoppel), Plaintiff’s claims should be subject to
dismissal for the same substantive reasons noted in Norvell I.
REPORT AND RECOMMENDATION/MEMORANDUM DECISION AND ORDER - 8

2.

Blue Cross’s Motion for Judgment on the Pleadings and Joinder in Federal

Defendants’ Motion to Dismiss (Docket No. 27) be GRANTED.
Pursuant to District of Idaho Local Civil Rule 72.1(b)(2), a party objecting to a
Magistrate Judge’s recommended disposition “must serve and file specific, written objections,
not to exceed twenty pages . . . within fourteen (14) days. . ., unless the magistrate or district
judge sets a different time period.” Additionally, the other party “may serve and file a response,
not to exceed ten pages, to another party’s objections within fourteen (14) days after being
served with a copy thereof.”
Additionally, based on the foregoing, IT IS HEREBY ORDERED that:
1.

Plaintiff’s Motion to Deny Request for Reassignment (Docket No. 23) is

DENIED AS MOOT;
2.

Plaintiff’s Motion to Allow Reply to Blue Cross’s Answer (Docket No. 30) is

DENIED AS MOOT;
3.

Federal Defendants’ Motion for Protective Order (Docket No. 46) is DENIED AS

MOOT; and
4.

Non-Government Defendants’ Motion for Protective Order (Docket No. 47) is

DENIED AS MOOT.
DATED: February 2, 2017

Honorable Ronald E. Bush
Chief U. S. Magistrate Judge

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