SHAH v. HORIZON BLUE CROSS BLUE SHIELD et al

Filing 44

OPINION. Signed by Judge Noel L. Hillman on 2/21/2017. (dmr)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

HONORABLE NOEL L. HILLMAN

RAHUL SHAH, M.D., assignee of
Joanne G.,

CIVIL ACTION NO. 16-2528

Plaintiff,

OPINION

v.
HORIZON BLUE CROSS BLUE SHIELD
and BLUE ADVANTAGE
ADMINISTRATORS OF ARKANSAS,
Defendants.

APPEARANCES:
CALLAGY LAW, P.C.
By: Samuel S. Salman, Esq.
Michael Gottlieb, Esq.
650 From Road, Suite 565
Paramus, New Jersey 07652
Counsel for Plaintiff
BECKER LLC
By: Michael E. Holzapfel, Esq.
Revmont Park North
1151 Broad Street, Suite 112
Shrewsbury, New Jersey 07702
Counsel for Defendant Horizon Blue Cross Blue Shield
POST & SCHELL PC
By: Steven J. Schildt, Esq.
Marni S. Berger, Esq.
Four Penn Center, 13th Floor
1600 JFK Boulevard
Philadelphia, Pennsylvania 19103
and
LAWRENCE & RUSSELL, PLC
By: Thomas H. Lawrence, Esq.
J. Gordon Howard, Esq.
1

5178 Wheelis Drive
Memphis, Tennessee 38117
Counsel for Defendant Blue Advantage Administrators of
Arkansas
HILLMAN, United States District Judge:
This is one of many ERISA suits 1 filed by Plaintiff Dr.
Rahul Shah, as purported assignee of his individual patients,
against his patients’ various insurance companies. 2

In each

suit, Dr. Shah asserts that the insurance companies wrongfully
denied requests for payment of benefits under the patients’
health insurance policies, and consequently, Dr. Shah’s bills
for services were not paid, or not fully paid.
Presently before the Court are Defendants’ Motions to
Dismiss the Amended Complaint pursuant to Fed. R. Civ. P.
12(b)(6).

For the reasons stated herein, the motions will be

granted in part and denied in part.

The Court has federal question subject matter jurisdiction
pursuant 28 U.S.C. § 1331, and supplemental jurisdiction
pursuant to 28 U.S.C. § 1367.
1

In addition to this case, three other such suits are pending
before the undersigned, Shah v. Horizon Blue Cross Blue Shield
of New Jersey, Docket No. 17-cv-0632, Shah v. Blue Cross Blue
Shield of Michigan, Docket No. 17-0711, Shah v. Horizon Blue
Cross Blue Shield of New Jersey, Docket No. 16-2397, and a
fourth was dismissed by stipulation of the parties, Shah v.
Horizon Blue Cross Blue Shield of New Jersey, Docket No. 162495.
The Court’s records reflect 12 other open cases in this
District, including Rahul Shah on assignment from Marjorie M. v.
Horizon Blue Cross Blue Shield of New Jersey, 2016 U.S. Dist.
LEXIS 113556 (D.N.J. Aug. 25, 2016)(Bumb, D.J.), extensively
cited herein.
2
2

I.
On July 31, 2013, Dr. Shah allegedly performed back surgery
on Joanne G. (Amend. Compl. ¶ 4-6; and Ex. A)

He alleges all

services were medically necessary and reasonable (Id. at ¶ 4-5),
yet Joanne G.’s health insurance company, Defendant Blue
Advantage Administrators of Arkansas, allegedly underpaid the
claim by $170,991.07. (Amend. Compl. ¶ 16)
Dr. Shah alleges that he obtained an assignment of benefits
from Joanne G. (Amend. Compl. ¶ 7).

However, as Defendants

observe, the actual assignment of benefits, attached as Exhibit
B to the Amended Complaint, is dated December 19, 2015 -- almost
a year and a half after the surgery was performed.

Moreover,

the assignment is to Joanne G.’s “medical provider”; the
document is not clear as to whether the assignment is to Premier
Orthopaedic Associates of Southern New Jersey, or the individual
doctors within that practice (Thomas A. Dwyer, Rahul V. Shah,
and Christian Brenner), or both. 3
The Amended Complaint asserts four claims: breach of
contract; denial of benefits in violation of § 1132(a)(1)(B);
breach of fiduciary duty in violation of § 1132(a)(3)(B); and

The health insurance claim documents, attached as Exhibits C-E
to the Amended Complaint, identify the “billing provider” as
“Rahul Shah, M.D.”
3
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failure to maintain a reasonable claims process pursuant to 29
C.F.R. 2560.503-1.
II.
When considering a motion to dismiss a complaint for
failure to state a claim upon which relief can be granted
pursuant to Federal Rule of Civil Procedure 12(b)(6), a court
must accept all well-pleaded allegations in the complaint as
true and view them in the light most favorable to the plaintiff.
Evancho v. Fisher, 423 F.3d 347, 351 (3d Cir. 2005).

It is well

settled that a pleading is sufficient if it contains “a short
and plain statement of the claim showing that the pleader is
entitled to relief.”

Fed. R. Civ. P. 8(a)(2).

Under the liberal federal pleading rules, it is not
necessary to plead evidence, and it is not necessary to plead
all the facts that serve as a basis for the claim. Bogosian v.
Gulf Oil Corp., 562 F.2d 434, 446 (3d Cir. 1977).

However, “the

Federal Rules of Civil Procedure . . . do require that the
pleadings give defendant fair notice of what the plaintiff’s
claim is and the grounds upon which it rests.” Baldwin Cnty.
Welcome Ctr. v. Brown, 466 U.S. 147, 149-50 n.3 (1984)
(quotation and citation omitted).
A district court, in weighing a motion to dismiss, asks
“‘not whether a plaintiff will ultimately prevail but whether
the claimant is entitled to offer evidence to support the
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claim.’” Bell Atlantic v. Twombly, 550 U.S. 544, 563 n.8 (2007)
(quoting Scheuer v. Rhoades, 416 U.S. 232, 236 (1974)); see also
Ashcroft v. Iqbal, 556 U.S. 662, 684 (2009)(“Our decision in
Twombly expounded the pleading standard for ‘all civil actions’
. . . .”); Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.
2009)(“Iqbal . . . provides the final nail in the coffin for the
‘no set of facts’ standard that applied to federal complaints
before Twombly.”).
III.
A.

Defendant Blue Administrators of Arkansas’ Motion to Dismiss
Blue Administrators asserts the following arguments: (1)

the breach of contract claim (Count One) is preempted by ERISA;
(2) Count IV, a violation of 29 C.F.R. 2560.503-1, fails to
state a claim; (3) the ERISA fiduciary duty claim (Count Three)
is “duplicative” of the ERISA claim for benefits (Count Two);
(4) Dr. Shah’s claim for benefits (Count Two) fails because (a)
“no party has perfected a proper [administrative] appeal from
the alleged denial of benefits” and (b) the claim is barred by
the Plan’s limitations period; and (5) the alleged assignment
does not confer standing on Dr. Shah.
The Court addresses each argument in turn.
1.

Count One (the breach of contract claim) will be dismissed.
In his opposition brief, Dr. Shah states “Plaintiff agrees

to voluntarily dismiss [the breach of contract count].”
5

(Opposition Brief, p. 3) Cf. Rahul Shah on assignment from
Marjorie M. v. Horizon Blue Cross Blue Shield of New Jersey,
2016 U.S. Dist. LEXIS 113556 at *8 (D.N.J. Aug. 25, 2016)(Bumb,
D.J.)(“the Court notes that Plaintiff’s breach of contract claim
(Count One) is dismissed with prejudice, per Plaintiff’s
concession that [the claim] is preempted by ERISA.”).
The Court will dismiss this claim pursuant to Fed. R. Civ.
P. 41(a), and the Motion to Dismiss Count One will be denied as
moot.
2.
Count Four (violation of 29 C.F.R. 2560.503-1) will be
dismissed.
Dr. Shah’s opposition brief clarifies that Blue
Administrators’ alleged violation of the relevant federal
regulation is not an independent claim.

Rather, the asserted

violation is Dr. Shah’s counter-argument to Defendants’ argument
that the instant suit is untimely under the applicable Plan
limitations.

That is, Dr. Shah argues that Blue Administrators

failed to inform him (and/or his patient) of the “plan-imposed
deadline for judicial review” (Opposition Brief, p. 8), which he
asserts is a violation of 29 C.F.R. 2560.503-1, the remedy for
which is setting aside the plan’s time limit. See generally
Mirza v. Ins. Adm’r of Am., Inc., 800 F.3d 129, 130-31 (3d Cir.
2015)(“The principal question we address is whether plan
administrators must inform claimants, of plan-imposed deadlines
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for judicial review, in their notifications denying benefits.
We hold that they must, and that the appropriate remedy for this
regulatory violation is to set aside the plan’s time limit and
apply the limitations period from the most analogous state-law
cause of action—here, New Jersey’s six-year deadline for breach
of contract claims.”).

In short, Dr. Shah asserts that Blue

Administrators’ alleged failure to comply with the regulatory
requirement excuses the alleged failure to timely appeal the
adverse benefits determination.

This simply is not an

affirmative claim for relief, and therefore Count Four will be
dismissed.
Alternatively, “29 C.F.R. 2560.503-1 does not give rise to
a private right of action.” Rahul Shah on assignment from
Marjorie M., 2016 U.S. Dist. LEXIS 113556 at *31-34 (collecting
authorities).
3.
The remaining arguments are not ripe for disposition on a
motion to dismiss.
Defendant’s argument that the two statutory ERISA claims
(Counts Two and Three) are duplicative is not a basis for
dismissal at this early stage of the case. See Rahul Shah on
assignment from Marjorie M., 2016 U.S. Dist. LEXIS 113556 at *28
(“Defendant’s Motion to Dismiss Plaintiff’s breach of fiduciary
duty claim (Count Three) will be . . . [denied].

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Defendant may,

however, raise these arguments again on summary judgment, as
appropriate.”).
Defendant’s argument that this suit is untimely implicates
matters outside the pleadings, such as whether Defendant failed
to inform Dr. Shah (and/or his patient) of the plan-imposed
deadline for judicial review.
at III., A., 2.

See the Court’s discussion supra

Thus, Defendant’s timeliness defense is more

appropriately addressed at summary judgment.
Lastly, the Amended Complaint plausibly pleads a valid
assignment to Dr. Shah and attaches a document entitled
“Assignment of Benefits,” signed by Joanne G., assigning to her
“medical provider”, “all of [her] rights and benefits under
[her] insurance contract for payment for services rendered.”
(Amend. Compl. Ex. B) See Rahul Shah on assignment from Marjorie
M., 2016 U.S. Dist. LEXIS 113556 at *19 (holding that, “[a]t
this juncture, the Court finds that Plaintiff has adequately
pled that he has standing to pursue this action as an assignee
of the Participant’s rights and benefits under her ERISA plan. .
. . [A]t this early stage of the litigation, Defendant’s
challenge to Plaintiff’s standing must and will be denied
without prejudice.”).

Defendant’s argument that the assignment

is not to Dr. Shah individually, but rather only to Premier

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Orthopaedic Associates raises issues of disputed fact which may
be addressed at summary judgment. 4
B.
Defendant Horizon Blue Cross Blue Shield’s Motion to
Dismiss
Horizon asserts many of the same arguments asserted by Blue
Administrators, and the Court’s rulings on those arguments, set
forth above, apply equally to Horizon’s Motion to Dismiss. 5
Horizon asserts one additional argument not raised by Blue
Administrators: “the Court must dismiss the complaint against
Horizon because [Joanne G.’s] Plan is self-funded and Horizon
neither administers the plan nor exercises any discretion or
control over the plan.” (Moving Brief, p. 10)
This argument raises matters outside the pleadings and is
more appropriately addressed at summary judgment.

While Horizon

argues that no further discovery is necessary -- that this ERISA
case will be decided on the administrative record (see Reply

Moreover, to the extent Defendant’s argument might be
construed as an objection that Dr. Shah is not the proper
plaintiff to pursue this suit, the remedy likely would not be
dismissal. See generally Fed. R. Civ. P. 17(a)(3)(“the court may
not dismiss an action for failure to prosecute in the name of
the real party in interest until, after an objection, a
reasonable time has been allowed for the real party in interest
to ratify, join, or be substituted into the action.”).
4

To the extent Horizon’s arguments are not directly addressed
above, they are directly addressed, and rejected, in Judge
Bumb’s thorough opinion. See generally Rahul Shah on assignment
from Marjorie M. v. Horizon Blue Cross Blue Shield of New
Jersey, 2016 U.S. Dist. LEXIS 113556 (D.N.J. Aug. 25, 2016).
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5

Brief, p. 7) -- the Court notes that Federal Rule of Civil
Procedure 56(b) explicitly provides that, unless set by local
rule or court order (neither of which apply here), a party need
not wait until the close of discovery to move for summary
judgment.
IV.
For the reasons set forth above, Count One of the Complaint
will be dismissed pursuant to Fed. R. Civ. P. 41(a), and the
Motions to Dismiss Count One will be denied as moot.
Additionally, the Motions to Dismiss will be granted as to Count
Four, and denied in all other respects.
An appropriate Order accompanies this Opinion.

Dated: February 21, 2017
At Camden, New Jersey

___s/ Noel L. Hillman___
Noel L. Hillman, U.S.D.J.

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