LOURDES SPECIALTY HOSPITAL OF SOUTHERN NEW JERSEY v. HORIZON BLUE CROSS BLUE SHIELD OF NEW JERSEY et al

Filing 28

OPINION FILED. Signed by Judge Noel L. Hillman on 8/7/17. (js)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

HONORABLE NOEL L. HILLMAN

LOURDES SPECIALTY HOSPITAL OF
SOUTHERN NEW JERSEY
on assignment of Micah V.,

1:16-cv-07631-NLH-AMD
OPINION

Plaintiff,
v.
ANTHEM BLUE CROSS BLUE SHIELD,
Defendant.

APPEARANCES:
CALLAGY LAW, P.C.
By: Michael Gottlieb, Esq.
650 From Road, Suite 565
Paramus, New Jersey 07652
Counsel for Plaintiff
TROUTMAN SANDERS LLP
By: Amanda Lyn Genovese, Esq.
875 Third Avenue
New York, NY 10022
Counsel for Defendant Anthem Blue Cross Blue Shield

HILLMAN, United States District Judge:
This is one of many ERISA suits 1 in this District filed by
purported assignees – here, Plaintiff Lourdes Specialty Hospital

The Court has federal question subject matter jurisdiction
pursuant 28 U.S.C. § 1331, and supplemental jurisdiction
pursuant to 28 U.S.C. § 1367.
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of Southern New Jersey - of individual patients against the
patients’ various insurance companies – here, Defendant Anthem
Blue Cross Blue Shield.

Those purported assignees claim that

the insurance companies wrongfully denied requests for payment
of benefits under the patients’ health insurance policies, and
consequently, bills for services were not paid, or not fully
paid.
Presently before the Court is Defendant’s motion to dismiss
the complaint pursuant to Fed. R. Civ. P. 12(b)(1) and (6).

For

the reasons stated herein, the motion will be granted in part,
denied in part, and denied as moot in part.
I.
Patient, Micah V., is insured as a participant in a health
benefits plan (“Plan”) provided by Defendant.

From September 1,

2014, through September 26, 2014, Patient underwent acute care
medical treatment in Plaintiff’s facility.

Specifically,

Patient was transferred to Plaintiff’s facility for further
management following a complex hospital course of treatment
involving respiratory failure and a tracheostomy procedure.
Plaintiff obtained an assignment of benefits (“AOB”) from
Patient.
Subsequently, Plaintiff prepared and submitted a Health
Insurance Claim Form (“HICF”) demanding reimbursement in the
amount of $248,902.97 for the medically necessary services
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rendered to Patient.

In response to the HICF, Defendant issued

payment in the amount of only $69,849.57.

Taking into account

any known deductibles, copayments, and coinsurance, Plaintiff
claims that Defendant’s reimbursement amounts to an underpayment
of $179,053.40.

Plaintiff claims that it adhered to the proper

appeals process to no avail, giving rise to this action for
relief.
The complaint asserts four claims: Count One - breach of
contract; Count Two – failure to make all payments in violation
of 29 U.S.C. § 1132(a)(1)(B); Count Three - breach of fiduciary
duty in violation of 29 U.S.C. § 1132(a)(3)(B); and Count Four failure to maintain a reasonable claims process pursuant to 29
C.F.R. 2560.503-1.

Defendant has moved to dismiss Plaintiff’s

case on various bases, including lack of subject matter
jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1) and failure to
state a claim pursuant to Fed. R. Civ. P. 12(b)(6).

Plaintiff

has opposed Defendant’s motion, except for the dismissal of
Count One, which claim Plaintiff agrees to dismiss.
II.
Pursuant to the Federal Rule of Civil Procedure 12(b)(1), a
claim can be dismissed for “lack of jurisdiction over the
subject matter.”

There are two types of Rule 12(b)(1) motions:

one which presents a facial challenge, and one which presents a
factual challenge.

See Constitution Party of Pennsylvania v.
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Aichele, 757 F.3d 347, 358 (3d Cir. 2014); Petruska v. Gannon
Univ., 462 F.3d 294, 302 n.3 (3d Cir. 2006) (citing Mortensen v.
First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977)).
A “facial attack” assumes that the allegations of the complaint
are true, but contends that the pleadings fail to present an
action within the court's jurisdiction.
891.

Mortensen, 549 F.2d at

“When considering a facial attack, ‘the Court must

consider the allegations of the complaint as true,’ and in that
respect such a Rule 12(b)(1) motion is similar to a Rule
12(b)(6) motion.”

Petruska, 462 F.3d at 302 n.3 (citing

Mortensen, 549 F.2d at 891).

By contrast, when an attack is a

factual one, “no presumptive truthfulness attaches to
plaintiff's allegations, and the existence of disputed material
facts will not preclude the trial court from evaluating for
itself the merits of jurisdictional claims.”

Mortensen, 549

F.2d at 891; see also Aichele, 757 F.3d at 358 (explaining
differences between a facial and factual attack under Rule
12(b)(1)).
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).
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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
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.”).

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III.
Defendant asserts the following arguments: (1) the breach
of contract claim – Count One in Plaintiff’s complaint - is
preempted by ERISA; (2) Plaintiff lacks standing because the
applicable ERISA plan contains an anti-assignment clause; (3)
Plaintiff failed to exhaust its administrative remedies under
the Plan; (4) Count Three – breach of fiduciary duty - must be
dismissed because it seeks only legal, monetary relief that is
duplicative of the claim for benefits, and a breach of fiduciary
duty under ERISA permits only equitable relief; and (5) Count
Four, violation of 29 C.F.R. 2560.503-1, fails to state a claim.
1.

Count One - Breach of Contract

Plaintiff agrees to voluntarily dismiss the breach of
contract count.

The Court will dismiss this claim pursuant to

Fed. R. Civ. P. 41(a), and Defendant’s motion to dismiss Count
One will be denied as moot.
2.

Defendant’s standing argument

Even though it has been held that rights to pursue ERISA
claims may be validly assigned, see Atlantic Orthopaedic
Associates, LLC v. Blue Cross, 2016 WL 889562, at *3 (D.N.J.
2016) (citing American Chiropractic Ass'n v. American Specialty
Health Inc., 625 F. App'x 169 (3d Cir. 2015), Defendant argues
that the rights were not validly assigned to Plaintiff in this
case.

Defendant argues that only participants and beneficiaries
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have standing to bring claims based on the denial of ERISA
benefits, and Plaintiff is not a participant or beneficiary
because the assignment of benefits Patient provided to Plaintiff
is void under the Plan’s anti-assignment clause, which provides:
Payment of Benefits
You authorize the Plan to make payments directly to
Providers for Covered Services. Payments may also be made
to, and notice regarding the receipt and/or adjudication of
claims sent to, an Alternate Recipient (any child of a
Subscriber who is recognized, under a Qualified Medical
Child Support Order (QMSCO), as having a right to
enrollment under the Employer’s Plan), or that person’s
custodial parent or designated representative. Any
payments made by the Plan will discharge the Plan’s
obligation to pay for Covered Services. You cannot assign
your right to receive payment to anyone else, except as
required by a “Qualified Medical Child Support Order” as
defined by ERISA or any applicable state law. Once a
Provider performs a Covered Service, the Plan will not
honor a request to withhold payment of the claims
submitted.
(Docket No. 19 at 12.)
Defendant argues that the language “You cannot assign your
right to receive payment to anyone else” invalidates Patient’s
assignment to Plaintiff, and therefore causes Plaintiff to lack
standing to sue for benefits.
Plaintiff counters that this provision is not an antiassignment clause because the section is called “Payment of
Benefits,” rather than a specific anti-assignment provision.
Plaintiff also argues that the language, “You authorize the Plan
to make payments directly to Providers for Covered Services”
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permits Patient’s assignment of benefits to Plaintiff.
Plaintiff further argues that the language “anyone else” in the
“You cannot assign your right to receive payment to anyone else”
phrase does not refer to the healthcare provider, but instead
refers to anyone but the healthcare provider.
In addition to the language of the Plan which Plaintiff
claims permits the AOB, Plaintiff argues that the course of
dealings with Defendant evidences that Defendant waived the
enforcement of any anti-assignment provision, if such a
provision were deemed to exist in the Plan.

Plaintiff supports

this argument with a series of communications between Plaintiff
and Defendant about how Plaintiff was to be paid, and then
actual payments made to Defendant.
Finally, to the extent that the Plan language is not clear,
Plaintiff argues that the ambiguousness of the provision renders
it unenforceable, or at a minimum precludes a resolution as to
the provision’s interpretation on a Rule 12 motion.
Defendant’s defense cannot be decided on a motion to
dismiss because it implicates matters outside of the pleadings,
including the parties’ differing interpretations of the “Payment
of Benefits” provision, and the impact of the parties’ course of
dealing on that interpretation.

The determination of whether

the Plan permitted Patient to validly assign his rights under
the Plan to Plaintiff must be decided on a more complete record.
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Cf. Shah v. Horizon Blue Cross Blue Shield of Massachusetts,
2017 WL 1745608, at *2 (D.N.J. 2017) (making the same
determination); Atlantic Orthopaedic Associates, 2016 WL 889562,
at *3 (declining to rule on a motion to dismiss that an antiassignment clause was or was not waived by a course of dealing,
explaining that the issue must be “explored further in
discovery”); Drzala v. Horizon Blue Cross Blue Shield, 2016 WL
2932545, at *4 (D.N.J. 2016) (denying a Plan’s motion to dismiss
for lack of standing based on an anti-assignment clause because
the clause in the Plan left the reader guessing and it was
therefore not unambiguous as a matter of law so that it could be
deciphered on a motion to dismiss). 2
Accordingly, Defendant’s motion to dismiss on the basis of
Plaintiff’s asserted lack of standing will be denied.

2

The Court recognizes that the determination of whether these
types of cases should be dismissed at the motion to dismiss
stage on the interpretation of an ERISA plan’s purported antiassignment provision varies throughout the District. From the
Court’s review of the cases, although the anti-assignment
clauses at issue are similar, they are not identical, and it is
therefore unlikely one rule will apply uniformly to all these
matters. Moreover, even though similar or the same antiassignment clauses may be presented in different cases, while
persuasive, no one district court’s decision on the issue is
binding on another district court. In the instances that this
Court has been tasked to assess an anti-assignment provision by
way of a motion to dismiss, the Court has looked at each case
individually to determine whether dismissal is appropriate,
which is the course that should be followed in any type of case.
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3.

Defendant’s limitations period argument

Similarly, Defendant’s argument that this suit is untimely
implicates matters outside the pleadings, such as whether
Defendant failed to inform Plaintiff or Patient of the planimposed deadline for judicial review.

Thus, Defendant’s

timeliness defense is more appropriately addressed at summary
judgment.

See Shah, 2017 WL 1745608, at *2 (making the same

determination).
4.

Count Three - breach of fiduciary duty in violation of
29 U.S.C. § 1132(a)(3)(B)

Defendant argues that this claim must be dismissed because
it seeks only legal, monetary relief that is duplicative of the
claim for benefits, while a breach of fiduciary duty under ERISA
permits only equitable relief.

Plaintiff points out, however,

that this claim’s “wherefore” clause seeks “other and further
relief as the Court may deem just and equitable.”
38.)

(Compl. ¶

The Court finds that dismissal of a breach of fiduciary

claim on a motion to dismiss is not appropriate, which is in
line with many other cases in this district, as well as being in
line with the denial of Defendant’s motion on the assignment of
benefits issue.

See Shah v. Aetna, 2017 WL 2918943, at *2

(D.N.J. 2017) (collecting cases) (“The Court agrees with Dr.
Shah, and with other courts in this District, that dismissal of
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an ERISA breach of fiduciary duty claim on this basis is not
appropriate at this early procedural stage.”).
5.

Count Four (violation of 29 C.F.R. 2560.503-1)

“29 C.F.R. 2560.503-1 does not give rise to a private right
of action.”

Shah, 2017 WL 1745608, at *2; Shah, 2017 WL

2918943, at *3.

Accordingly, Defendant’s motion to dismiss

Count Four will be granted.
IV.
For the reasons set forth above, Count One of the Complaint
will be dismissed pursuant to Fed. R. Civ. P. 41(a), and
Defendant’s motion to dismiss Count One will be denied as moot.
Defendant’s motion to dismiss will be granted as to Count Four,
but denied in all other respects.
An appropriate Order accompanies this Opinion.

Date:
August 7, 2017
At Camden, New Jersey

s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.

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