LB Surgery Center, LLC v. United Parcel Service of America, Inc. et al
MEMORANDUM Opinion and Order signed by the Honorable Robert W. Gettleman on 11/14/2017: For the reasons set forth in the Court's memorandum opinion and order, defendants' motion 31 to dismiss for failure to state a claim and lack of standing is granted. Status hearing set for 12/21/2017 is stricken. Civil case terminated. Mailed notice (cn)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
LB SURGERY CENTER, LLC d/b/a Greater
Long Beach Surgery Center,
UNITED PARCEL SERVICE OF AMERICA,
INC., HEALTH CARE SERVICE
CORPORATION d/b/a Blue Cross and Blue Shield )
of Illinois, UPS NATIONAL HEALTH PLAN FOR )
PART-TIME EMPLOYEES, UPS AND
WELFARE PACKAGE and ADMINISTRATIVE )
COMMITTEE OF THE UPS HEALTH AND
Case No. 17 C 3073
Judge Robert W. Gettleman
MEMORANDUM OPINION AND ORDER
Plaintiff LB Surgery Center, LLC d/b/a as Greater Long Beach Surgery Center has brought
a three count first amended complaint (“FAC”) against defendants United Parcel Service of
America, Inc. (“UPS”) Health Care Service Corporation d/b/a Blue Cross and Blue Shield of
Illinois (“BCBS”), UPS National Health Plan for Part-Time Employees, UPS and Welfare
Package and Administrative Committee of the UPS Health and Welfare Package. alleging:
(1) failure to pay benefits allegedly due under § 502(a)(1)(B) of the Employee Retirement Income
Security Act (“ERISA”), 29 U.S.C. § 1132(a)(1)(B) (Count I); (2) breach of fiduciary duties under
29 U.S.C. § 1132(a)(3) (Count II); and failure to provide requested documents in violation of
29 U.S.C. § 1132(c)(1)(B). Defendants have jointly moved to dismiss under Fed. R. Civ. P. 12
for failure to state a claim and lack of standing. For the reasons stated below, defendants’ motion
to dismiss is granted.
Plaintiff is a California surgical center that is not in defendant BCBS’s provider network.
Plaintiff brings this action to recover for alleged underpayments by defendants for medical
services plaintiff rendered to four patients who were participants or beneficiaries of two
self-funded health benefit plans sponsored by defendant UPS. Defendant BCBS was the third
party administrator (“TPA”) overseeing the processing of claims and other administrative services
related to the plans. Plaintiff alleges that in exchange for rendering medical services to the four
patients in question it received an assignment of benefits owed to each patient under the plans.
The FAC alleges that “[u]nder the terms of the Plans, BCBS is required to promptly pay benefits
for OON [out of network] services based upon the usual, customary, and reasonable rate of those
same services in the same geographic area,” but had failed to do so. Instead, BCBS paid far less
than the amount billed by plaintiff for services it rendered to four of its patients. 1
Defendants have moved to dismiss Counts I and II under Fed. R. Civ. P. 12(b)(6) for failure
to state a claim. A motion under Rule 12(b)(6) challenges the sufficiency of the complaint, not its
merits. Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). The court accepts as
true all well-pleaded factual allegations and draws all reasonable inferences in the plaintiff’s favor.
Sprint Spectrum L.P. v. City of Carmel, Ind., 361 F.3d 998, 1001 (7th Cir. 2004). The complaint
must allege sufficient facts that, if true, would raise a right to relief above the speculative level,
showing that the claim is plausible on its fact. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555
(2007). To be plausible on its face, the complaint must plead facts sufficient for the court to draw
Plaintiff alleges that it charged a total of $290,500 for the medical services provided, of which defendants denied
the reasonable inference that the defendant is liable for the alleged misconduct. Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009).
In Count I, plaintiff alleges that defendants have failed to pay to plaintiff its full billed
charges in violation of § 502(a)(1)(B), which provides that a civil action may be brought by a
participant or a beneficiary “to recover benefits due him under the terms of his plan, to enforce his
rights under the terms of the plan, or to clarify his right to further benefits under the terms of the
plan.” 29 U.S.C. § 1132(a)(1)(B). As the Seventh Circuit has recognized, “benefits payable
under an ERISA plan are limited to the benefits specified in the plan.” Clair v. Harris Trust and
Savings Bank, 190 F.3d 495, 497 (7th Cir. 1999).
Defendants argue that Count I fails to state a claim because plaintiff has not identified any
provision in either plan that provides for the benefits plaintiff claims. As numerous courts have
noted, a plaintiff suing under § 502(a)(1)(B) “must identify a specific plan term that confers the
benefit in question.” Stewert v. Nat’l Educ. Ass’n, 404 F.Supp.2d 122, 130 (D. D.C. 2005).
Failure to specify the allegedly breached plan term is grounds for dismissal. Sanctuary Surgical
Center, Inc. v. UnitedHealth Group, Inc., 2013 WL 149356 *3 (S.D. Fla. Jan. 14, 2013); Paragon
Office Services, LLC v. UnitedHealthcare Ins. Co., 2012 WL 5868249 *3 (N.D. Tex. Nov. 20,
2012); Midwest Special Surgery, P.C. v. Anthem Ins. Cos., 2010 WL 716105 *2 (E.D. Mo.
Feb. 24, 2010). In addition, the complaint must also “provide the court with enough factual
information to determine whether the services were indeed covered services under the plan.”
Sanctuary Surgical, 2013 WL 149356 at *3.
In the instant case, the FAC fails to identify any provision of either plan that specifically
provides for the claims benefits. As noted, the FAC alleges generally that under the plans
defendant BCBS is required to “promptly pay benefits for OON services based on the usual,
customary, and reasonable rate for those services,” but fails to identify any plan provision on
which it relies. Nor does the FAC attach a copy of the plans or even the summary plan
descriptions, despite plaintiff having been provided with copies of both prior to filing the FAC.
Nor has plaintiff provided enough factual information for the court to determine that the services
rendered were covered services.
Plaintiff’s only response is to argue that it cannot provide the necessary information
because defendants have not provided the reasons and claim documents that form the basis of each
denial. Nonsense. Plaintiff does not have to allege which provisions on which defendants base
their denial; instead, plaintiff is required to identify the plan provisions that provide for the benefits
it seeks. It has failed to do so. Consequently, Count I fails to state a claim and is dismissed.
In Count II, plaintiff alleges that defendants breached their fiduciary duties in violation
§ 502(a)(3) by failing to pay the amounts owed. As an initial matter this count suffers from the
same deficiency as Count I because it fails to identify any provision requiring such payment. In
addition, as defendants argue, the count is entirely duplicative of Count I, because it is based on the
same grounds and seeks the same relief. An ERISA plaintiff may bring an equitable claim under
§ 502(a)(3) only when no adequate remedy is available under § 502(a)(1)(B). Halley v. Aetna
Life Ins. Co., 2014 WL 4463239 * (N.D. Ill. Sept. 10, 2014), and a failure to state a claim under
§ 502(a)(1)(B) does not allow a plaintiff to assert a § 502(a)(3) claim in the alternative. Moffat v.
Unicare Midwest Plan Group, 314541, 2005 WL 1766372* (N.D. Ill. 2005). “Courts in this
district have almost uniformly held that § 502(a)(3) claims must be dismissed if relief may be
obtained under § 502(a)(1)(B).” Roque v. Roofers’ Union Welfare Tr. Fund, 2013 WL 2242455
*6 (N.D. Ill. May 21, 2013) (collecting cases). Consequently, Count II is dismissed.
Finally, in Count III plaintiff seeks a civil penalty under § 501(c)(1)(B) from defendants for
failure to supply requested documents. This provision provides that an administrator may be
personally liable to a participant or beneficiary for up to $100 per day for failure to provide
requested materials. As defendant notes, however, ERISA does not authorize “participants or
beneficiaries to assign away their rights to statutory penalties” under § 502(c)(1). See Elite Ctr
for Minimally Invasive Surgery, LLC v. Healthcare Servc. Corp., 221 F.Supp.3d 853, 860 (S.D.
Tex. 2016). Moreover, in the instant case the assignments executed by the participants were
limited to recovering information and documents “relating to a claim submitted,” as opposed to
current plan documents, the only type of information subject to ERISA § 104(b)(4), the predicate
for a civil penalty claim. Id. Consequently, plaintiff lacks standing to bring Count III.
For the reasons described above, defendants’ motion to dismiss (Doc. 31) is granted.
November 14, 2017
Robert W. Gettleman
United States District Judge
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