Pennsylvania Chiropractic Association et al. vs. Blue Cross Blue Shield Association et al.

Filing 567

MEMORANDUM OPINION AND ORDER signed by the Honorable Matthew F. Kennelly on 1/23/12. (mk)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

PENNSYLVANIA CHIROPRACTIC ASSOCIATION, )
NEW YORK CHIROPRACTIC COUNCIL, et al.,
)
)
Plaintiffs,
)
)
vs.
)
)
BLUE CROSS BLUE SHIELD ASSOCIATION,
)
et al.,
)
)
Defendants.
)

Case No. 09 C 5619

MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, District Judge:
The plaintiffs in this case are medical professionals, associations, and facilities,
as well as Katherine Hopkins, an individual subscriber.1 The defendants are Blue Cross
and Blue Shield Association and individual Blue Cross and Blue Shield entities,
including WellPoint, Inc. and Community Insurance Company d/b/a Anthem Ohio
(Anthem Ohio). The plaintiffs other than Hopkins generally allege that defendants
initially reimbursed them for services they provided to BCBS insureds and then
sometime afterward would make a false or fraudulent determination that the payments
had been in error and would demand repayment.

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The Court assumes familiarity with the plaintiffs’ allegations in this case. A
more detailed recounting of the plaintiffs’ allegations can be found in the Court’s May
17, 2010 decision. Pennsylvania Chiropractic Ass’n v. Blue Cross Blue Shield Ass’n,
No. 09 C 5619, 2010 WL 1979569 (N.D. Ill. May 17, 2010).
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Hopkins claims that she received medical services at Miami Valley Hospital
(MVH) for which her insurer, Anthem Ohio, paid. Two years later, however, Hopkins
received a bill from MVH informing her that Anthem Ohio had recouped funds it had
paid to the hospital, making her liable for the balance.
In plaintiffs’ fourth amended complaint, Hopkins asserts claims under the
Employee Retirement Income Security Act (ERISA) and for injunctive relief against
WellPoint and Anthem Ohio, arguing that they used improper procedures in recouping
funds from MVH. The Court previously dismissed Hopkins’ claims for prospective
equitable relief based on her admission that she is “no longer a participant or
beneficiary in her former employer’s health plan” and her statement that she would
seek relief only “with regard to pre-existing repayment demands and recoupments, and
defers to other Plaintiffs for an injunction applicable to Defendants’ future misconduct.”
Order of April 27, 2011 (dkt. no. 486); see also April 28, 2011 Tr. at 7.
Anthem Ohio and WellPoint have moved for summary judgment on Hopkins’
remaining claims. For the reasons stated below, the Court grants the motion.
Background
As of September 2007, Hopkins was insured through her employer, Queen City
Reprographics, under an Anthem Ohio policy. The policy had an annual member
deductible of $500 for in-network care and a co-payment requirement of twenty percent
for most covered services. Hopkins left Queen City in 2008 and is no longer covered
under Anthem Ohio’s plan.
On September 9, 2007, Hopkins was taken by ambulance to MVH and was
treated there. On October 12, 2007, Anthem Ohio made separate payments of
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$876.88 and $476.88 to MVH based on what it later claimed were duplicate claims by
MVH for Hopkins’ treatment. On July 30, 2008, an Anthem Ohio vendor sent a letter to
MVH regarding Hopkins’ treatment, entitled “Request for refund of overpayment,” that
requested “remittance in full” of $876.88. Def. Ex. I. The letter included two tables.
The first stated in part:
Amount Due:

$876.88

Reason:

duplicate payment

Patient Name:

KATHERINE HOPKINS

Date(s) of Service:

September 09, 2007

Total Charges:

$2,514.00

Total Paid:

$876.88

Payee Name:

MIAMI VALLEY HOSPITAL

Id. The letter then indicated that the “calculations” underlying the request were based
on the following information (reproduced in part):
Date of
Services

Charge

Allowed

Patient
Liability

Benefit

ACTUAL:

9/09/07

$2,514.00

$1,096.10

$219.22

$876.88

RECALCULATED:

9/09/07

$2,514.00

$1,096.10

$619.22

$476.88

Id. Anthem Ohio did not notify Hopkins that this letter had been sent.
On June 16, 2009, MVH paid $876.88 to defendants in response to the
recoupment demand. On or around November 12, 2009, Hopkins received a letter from
a collection agency stating that she owed a balance of $619.22 to MVH. Hopkins
testified at her deposition that this was the first time she was notified that “Miami Valley

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Hospital had a balance due and owing from” her. Hopkins Dep. 85:23-86:2. She
testified further that she contacted the collection agency and Anthem Ohio upon receipt
of this letter to obtain information regarding what, if anything, she owed. She has
provided letters she sent to MVH in November 2009 and to Anthem Ohio in January
2010 requesting documentation regarding her balance. Anthem Ohio responded with a
notice indicating that it was “unable to process documents” because Hopkins had not
provided her account identification number. Pl.’s Ex. 3.
Hopkins asserts two claims under ERISA. In count one, she seeks unpaid
benefits and interest, repayment of any amounts wrongfully paid or withheld, and
declaratory and injunctive relief enforcing the terms of the plan. She brings this claim
under section 502(a)(1)(B) of ERISA, which states, “A civil action may be brought by a
participant or beneficiary 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.” 29 U.S.C. § 1132(a)(1)(B).
Hopkins further contends that she was denied her right to a “full and fair review”
of all claims denied, including notice and an opportunity to appeal. Id. § 1133. She
brings count two under ERISA section 502(a)(3), which states,
A civil action may be brought by a participant, beneficiary, or fiduciary
(A) to enjoin any act or practice which violates any provision of this subchapter or
the terms of the plan, or
(B) to obtain other appropriate equitable relief
(i) to redress such violations or
(ii) to enforce any provisions of this subchapter or the terms of the plan.
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Id. § 1132(a)(3).
Discussion
Summary judgment is appropriate if “the pleadings, the discovery and disclosure
materials on file, and any affidavits show that there is no genuine issue as to any
material fact and that the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(c). To determine whether a genuine issue of material fact exists, the Court
views the record in the light most favorable to the nonmoving party and draws
reasonable inferences in that party’s favor. Anderson v. Liberty Lobby, 477 U.S. 242,
248 (1986); AA Sales & Assocs., Inc. v. Coni-Seal, Inc., 550 F. 3d 605, 609 (7th Cir.
2008).
Hopkins’ argument focuses on “what procedures an insurer must apply when
seeking to recover an overpayment of benefits issued under ERISA health care plans.”
Pl.’s Resp. at 3 (emphasis in original). She claims that defendants violated ERISA by
seeking recoupment from MVH without providing her notice or an opportunity to appeal
their decision to do so. She contends that MVH “balance billed” her “as a direct result
of Defendants [sic] recoupment of benefits on her claim without complying with the
processes mandated under ERISA. As such, Defendants deprived Hopkins the
opportunity to challenge their recalculation of her benefits and the resulting increase in
her liability to MVH.” Id. at 4-5. She asks the Court for an order that will “return the
parties to the position they were in before Defendants recouped any funds – through
restitution of all payments that had been improperly recouped or otherwise recovered.”
Pl.’s Resp. at 12.

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Defendants argue that they are entitled to summary judgment on Hopkins’
remaining claims for several reasons. Their primary argument is that their request for
repayment from MVH had no effect on Hopkins’ financial liability because MVH’s bill to
Hopkins was based only on her deductible and co-payment obligations, amounts she
owed under her Anthem Ohio policy. They argue that because the $619.22 that MVH
billed Hopkins reflects the amount she actually owed, she is not entitled to any benefits
under her plan beyond those she has already received. They also contend that
Hopkins is not entitled to equitable relief against Anthem Ohio because “as a matter of
law, she cannot transform a claim for benefits into a claim for equitable relief,” Def.’s
Mem. at 3, and that restitution would be improper because Hopkins was financially
obligated to pay her deductible and co-payment regardless of the recoupment from
MVH.
A.

Evidence
As a threshold matter, Hopkins argues that defendants may not rely on any

evidence outside the so-called “administrative record” – the information available to
Anthem Ohio at the time it decided to recoup. When reviewing “a Plan Administrator’s
decisions regarding benefits,” a court applies deferential review if “the plan establishes
[that the administrator] had discretionary authority” to make those decisions. Vallone v.
CNA Fin. Corp., 375 F.3d 623, 629 (7th Cir. 2004) (citation and internal quotation marks
omitted). “[D]eferential review of an administrative decision means review on the
administrative record.” Id.
Defendants do not dispute that this is a correct statement of the standard. They

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argue, however, that the rule applies only to “a court’s deferential review of a benefits
determination under Section 502(a)(1)(B),” and that Hopkins is making another kind of
claim. Def.’s Reply at 13 (emphasis in original). They point out that Hopkins has
expressly stated that “[s]he does not seek ‘benefits’” but rather seeks equitable relief in
the form of restitution. Pl.’s Resp. at 12. Hopkins asks the Court “not . . . to adjudicate
the underlying claims for the repayment demands, but to adjudicate the issue of
Defendants’ compliance with ERISA and allow for equitable relief – a return to the
status quo.” Id. at 10-11.
Although Vallone refers to the “standard of review of a Plan Administrator’s
decisions regarding benefits,” it does not expressly state the point argued by
defendants: that claims not directly seeking “benefits” are not subject to the
administrative-record requirement. Nonetheless, the Court agrees that it may properly
consider additional evidence. Vallone and the decisions Hopkins cites in her response
were based on determinations by a plan administrator that a claimant was not entitled
to a certain benefit (such as long-term disability benefits or payment for a particular
medical procedure) or a change in the underlying terms of a plan. Hopkins’ claim, by
contrast, is based on defendants’ recoupment of a duplicate payment they determined
they had made based on a hospital’s billing procedures.
This claim is fundamentally different from those in the cases Hopkins cites, each
of which involved a claim in which a court was asked to review the substance of the
underlying decision by the plan administrator. Such review is, in a “discretionary
authority” case, logically limited in scope to the information available to the decision
maker, because a court examines whether there is “reasoning in the record to support”
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the decision. See Hackett v. Xerox Corp. Long-Term Disability Income Plan, 315 F.3d
771, 774-75 (7th Cir. 2003). In this case, by contrast, Hopkins concedes that she is not
asking for review of the underlying decision or the information that led to it. She is
challenging defendants’ process, not their reasoning. The Court concludes that it is not
limited to the evidence that was available to defendants at the time they requested
repayment from MVH.
B.

Standing
Defendants contend that they are entitled to summary judgment for three

separate but related reasons: Hopkins lacks standing; the recoupment was not an
“adverse benefit determination” entitling her to notice and a hearing; and she is not
otherwise entitled to equitable relief. Hopkins argues that she has a colorable claim
under ERISA because defendants’ recoupment was the sole reason she received a bill
from MVH, and that this decision was, therefore, a “termination of benefits that were
being paid,” entitling her to equitable relief. Pl.’s Resp. at 12 (emphasis in original).
In order to have standing to sue under sections 502(a)(1)(B) or 502(a)(3), a
plaintiff must qualify as a “participant,” a “beneficiary,” or a “fiduciary.” Defendants
argue that Hopkins cannot qualify as a “participant” under sections 502(a)(1)(B) or
502(a)(3), and Hopkins does not argue that any other category would apply to her. A
“participant” is defined as “any employee or former employee . . . who is or may
become eligible to receive a benefit of any type from an employee benefit plan which
covers employees of such employer or members of such organization.” 29 U.S.C. §
1002(7).

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A former employee who is no longer covered under a benefit plan may qualify as
a participant if she has “a reasonable expectation of returning to covered employment”
or “a colorable claim to vested benefits.” Firestone Tire and Rubber Co. v. Bruch, 489
U.S. 101, 117 (1989) (citations and internal quotation marks omitted). The Seventh
Circuit has noted that “[t]he requirement of a colorable claim is not a stringent one.”
Panaras v. Liquid Carbonic Indus. Corp., 74 F.3d 786, 791 (7th Cir. 1996). It has also
stated, however, that “vested benefits” under Firestone means “that the former
employee had to have an entitlement – had to show that had it not been for the
trustees’ breach . . . he would have been entitled to greater benefits than he received.”
Harzewski v. Guidant Corp., 489 F.3d 799, 806 (7th Cir. 2007).
Defendants focus their argument on what they contend is an unequivocal
admission by Hopkins in her deposition that MVH’s balance bill reflected her deductible
and co-payment obligations. Defendants contend that Hopkins can have no claim for
benefits, vested or otherwise, because she has already received everything due to her
under her Anthem Ohio policy. They argue that regardless of whether or not she had
received notice of the recoupment request, she would not have been “entitled to greater
benefits.” See id. Hopkins disputes that her testimony constituted an admission,
contending that it instead was merely an acknowledgment of what a particular
document showed.
A reasonable fact finder could find that, as Hopkins argues, the recoupment was
what “caused” MVH to balance bill Hopkins, meaning that MVH would not have billed
Hopkins absent the recoupment. This might have been because Anthem Ohio’s
duplicate payment had covered the amount MVH would have sought from Hopkins, or
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perhaps because MVH had simply neglected to take account of Hopkins’ deductible
and co-payment obligations until the recoupment led it to reexamine her bill.
Despite this, there is no evidence from which a reasonable fact finder could find
that the balance bill reflects anything other than money that Hopkins did, in fact, owe
after Anthem Ohio paid all the benefits due under the insurance policy. Hopkins argues
in her brief that this remains a disputed issue of fact, but she offers no evidence from
which a reasonable fact finder could find that the $619.22 she was billed represented
anything other than her $500 deductible plus twenty percent of the remaining cost of
her $1,096.10 hospitalization (twenty percent of $596.10, or $119.22). In short, there is
no evidence from which a reasonable fact finder could find that Hopkins’ actual
obligation under her Anthem Ohio policy was increased or changed by the recoupment.
Though one might question why it took Anthem Ohio and MVH two years to resolve the
issue, no reasonable fact finder could find that Anthem Ohio made a determination
regarding her eligibility for benefits or a decision regarding plan management that
negatively affected the amount of money available to her under the plan.
Hopkins argues that the word “Recalculated” on the recoupment letter indicates
that Anthem Ohio made a new decision regarding the amount that she owed. See Def.
Ex. I. This suggestion, however, does not constitute evidence from which a reasonable
fact finder could find that this occurred. The evidence shows that she was billed twice
for $1,096.10 on the same day in 2007. The “patient amount” listed for the first billing
was $619.22, reflecting the calculations the Court explained above. The “patient
amount” listed for the second billing was $219.22, which is twenty percent of $1,096.10.
The most logical explanation for this calculation is that it failed to take into account
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Hopkins’ $500 deductible. There is no evidence from which a fact finder could
conclude that the second payment was anything other than, as defendants argue, “the
liability Hopkins would have had if the second claim submitted by MVH to Anthem Ohio
had not been a duplicate claim, but rather a claim for additional services/benefits.”
Def.’s Resp. to Pl.’s L.R. 56.1 Stmt. ¶ 4. There is no other evidence that Anthem made,
as a precursor to its recoupment request, a new determination regarding the benefits to
which Hopkins was entitled.
Hopkins’ claim therefore does not rise to the status of a colorable claim to vested
benefits. Hopkins has not provided any evidence from which a reasonable fact finder
could find that she would have been entitled to greater benefits from Anthem Ohio
absent its decision to recoup – only that MVH’s bill for the amount she truly owed the
hospital under the terms of her insurance policy might never have been issued.
Hopkins cites a previous decision of this Court that indicated the “colorable claim”
requirement from Firestone may be construed liberally. See Brieger v. Tellabs, Inc.,
473 F. Supp. 2d 878, 887 (N. D. Ill. 2007) (citing Firestone, 498 U.S. at 117). That
decision, however, dealt with the question of causation, reflecting that a fact finder,
when possible, should resolve the question of whether a defendant’s actions actually
had the effect on a plaintiff’s benefits or plan that the plaintiff claims. It does not
suggest that a claim like Hopkins’ is a colorable claim to vested benefits. The Seventh
Circuit’s subsequent pronouncement that a claimant must make a showing of
“entitle[ment] to greater benefits than he received” confirms this. Harzewski, 489 F.3d
at 806.
Defendants’ two additional arguments further underscore this point. Defendants
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argue that they were not obligated to give Hopkins advance notice or a right to appeal,
under 29 U.S.C. § 1133, which establishes those requirements for “any participant or
beneficiary whose claim for benefits under the plan has been denied.” Regulations
promulgated under the section establish that these rights apply when there has been an
“adverse benefit determination,” defined as
a denial, reduction, or termination of, or a failure to provide or make payment (in
whole or in part) for, a benefit, including any such denial, reduction, termination,
or failure to provide or make payment that is based on a determination of a
participant's or beneficiary's eligibility to participate in a plan, and including, with
respect to group health plans, a denial, reduction, or termination of, or a failure to
provide or make payment (in whole or in part) for, a benefit resulting from the
application of any utilization review, as well as a failure to cover an item or
service for which benefits are otherwise provided because it is determined to be
experimental or investigational or not medically necessary or appropriate.
29 C.F.R. § 2560.503-l(m)(4).
Although a reasonable fact finder could find that Anthem Ohio’s recoupment
decision had some financial effect on Hopkins, the decision was not a “denial,
reduction, termination, or failure to provide a benefit” under the plain meaning of those
terms. Additionally, the regulation’s references to “eligibility,” “utilization review,” and
“failure to cover an item or service” indicate that “adverse benefit determinations” are
akin to the types of decisions discussed earlier – substantive decisions regarding a
plaintiff’s rights under a particular plan. Anthem Ohio’s decision would have qualified as
a termination, denial, or reduction of benefits, as Hopkins argues, if it had amounted to
a decision not to pay a benefit that was arguably due and owing. For the reasons the
Court has discussed, however, there is no evidence that Anthem Ohio’s decision was
anything of the kind.
Hopkins also argues that the fact that she lacked an opportunity to challenge
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Anthem Ohio’s decision to recoup amounted to a denial of administrative process that
was inherently harmful, regardless of whether the process would have resulted in any
change to what she owed or was billed. She claims that she has a right to an injunction
to alleviate this harm under the Supreme Court’s recent decision in CIGNA Corp. v.
Amara, 131 S. Ct. 1866 (2011). In that case, the Court determined that a district court’s
“reformation” of the terms of a healthcare plan “in order to remedy the false or
misleading information CIGNA provided” was not authorized under section 502(a)(1)(B).
Id. at 1879. The Court ruled, however, that the district court’s remedies were “within the
scope of the term ‘appropriate equitable relief’ in § 502(a)(3). Id. at 1880. The Court
went on to say that, because ERISA does not specify the standard for determining
harm, “any requirement of harm must come from the law of equity.” Id. at 1881. The
Court stated that “just as a court of equity would not surcharge a trustee for a
nonexistent harm, a fiduciary can be surcharged under § 502(a)(3) only upon a showing
of actual harm – proved (under the default rule for civil cases) by a preponderance of
the evidence.” Id. (internal citation omitted). For the reasons this Court has already
stated, it concludes that there is no evidence from which a reasonable fact finder could
find that Hopkins has experienced “actual harm” because there is no evidence that she
was billed for anything other than what she actually owed to MVH under the terms of
her insurance policy.
Conclusion
For the foregoing reasons, the Court grants defendants Anthem Ohio and
WellPoint’s motion for summary judgment on the remaining claims of plaintiff Katherine

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Hopkins [docket no. 497].

________________________________
MATTHEW F. KENNELLY
United States District Judge
Date: January 23, 2011

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