RAHUL SHAH, M.D. v. HORIZON BLUE CROSS BLUE SHIELD OF NEW JERSEY et al

Filing 17

OPINION FILED. Signed by Judge Noel L. Hillman on 9/27/17. (js)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

RAHUL SHAH, MD, o/a/o
Edward H.,
Plaintiff,

1:17-cv-00166 (NLH/JS)
OPINION

v.
HORIZON BLUE CROSS BLUE
SHIELD OF NEW JERSEY, et al.,
Defendants.

APPEARANCES:
MICHAEL GOTTLIEB
CALLAGY LAW, PC
650 FROM ROAD, SUITE 565
PARAMUS, NEW JERSEY 07652
On behalf of Plaintiff
MICHAEL E. HOLZAPFEL
BECKER LLC
354 EISENHOWER PARKWAY
PLAZA II SUITE 1500
LIVINGSTON, NEW JERSEY 07039
On behalf of Defendants

HILLMAN, District Judge
This is one of many ERISA suits in this District filed by
purported assignees – here, Plaintiff Rahul Shah, M.D. – of
individual patients against the patients’ various insurance
companies – here, Defendants Horizon Blue Cross Blue Shield of

New Jersey and Blue Cross Blue Shield of Minnesota. 1

The

assignees claim the defendant insurance companies wrongfully
denied requests for payment of benefits under the patients’
health insurance policies, and, consequently, bills for services
were not fully paid.
Presently before the Court is Defendant’s Motion to Dismiss
the complaint pursuant to Federal Rule of Civil Procedure
12(b)(6).

For the reasons expressed below, Defendant’s motion

will be granted in part, denied in part, and denied as moot in
part.
I.
We take our facts from Plaintiff’s November 23, 2016
complaint.

On April 27, 2015, Plaintiff performed a cervical

fusion procedure on Edward H. (“Patient”).

Defendant

administered Patient’s employee welfare benefit plan (“Plan”).
Plaintiff obtained an assignment of benefits from Patient,
pursuant to which Plaintiff completed a Health Insurance Claim
Form demanding a $255,695 reimbursement for Patient’s surgical
procedure.

Defendant paid $16,014.88.

Accordingly, Plaintiff

alleges he is still due $239,680.12.
Plaintiff brings claims for breach of contract; failure to

1

The Court
pursuant to 28
pursuant to 28
New Jersey was

has federal question subject matter jurisdiction
U.S.C. § 1331 and supplemental jurisdiction
U.S.C. § 1367. Horizon Blue Cross Blue Shield of
dismissed from this action on March 8, 2017.
2

make payments under 29 U.S.C. § 1132(a)(1)(B); breach of
fiduciary duty under 29 U.S.C. § 1132(a)(3), 29 U.S.C. §
1104(a)(1), and 29 U.S.C. § 1105(a); and failure to maintain
reasonable claims procedures under 29 C.F.R. 2560.503-1.
Defendant subsequently filed a motion to dismiss for failure to
state a claim.
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 the defendant fair notice of what the
plaintiff’s claim is and the grounds upon which it rests.’”
Baldwin Cty. Welcome Ctr. v. Brown, 466 U.S. 147, 149-50 n.3
3

(1984) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).
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 Atl. 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.
Defendant asserts the following arguments: (1) Plaintiff
lacks standing due to the anti-assignment clauses in the Plan;
(2) Plaintiff failed to sufficiently allege exhaustion of
administrative remedies; (3) Plaintiff’s state law claims are
preempted by ERISA; and (4) Plaintiff’s claim of violation of 29
C.F.R. 2560.503-1 is defective as lacking a private right of
action.
A.

The Court addresses each argument in turn.
Defendant’s Standing Argument Is Not Ripe for Decision on
a Motion to Dismiss.

“ERISA confers standing to sue on a plan ‘participant’ or
‘beneficiary,’ or ‘fiduciary.’”

Atl. Orthopaedic Assocs., LLC

4

v. Blue Cross & Blue Shield of Tex., No. 15-1854, 2016 WL
889562, at *3 (D.N.J. Mar. 7, 2016) (quoting ERISA § 502(a), 29
U.S.C. § 1132(a)).

However, “when a patient assigns payment of

insurance benefits to a healthcare provider, that provider gains
standing to sue for that payment under ERISA § 502(a).

An

assignment of the right to payment logically entails the right
to sue for non-payment.”

N. Jersey Brain & Spine Ctr. v. Aetna,

Inc., 801 F.3d 369, 372 (3d Cir. 2015); accord Am. Orthopedic &
Sports Med. v. Indep. Blue Cross, LLC, No. 16-8988, 2017 WL
1243147, at *2 (D.N.J. Feb. 24, 2017) (“Third Circuit precedent
sets forth that a healthcare provider may bring a cause of
action by acquiring derivative standing through an assignment of
rights from the plan participant or beneficiary to the
healthcare provider.”).
Defendant argues the Plan “contains clear anti-assignment
clauses, which prohibit the Participant’s assignment of any
rights or benefits under his Plan.”

Defendant highlights the

following provisions from the Plan:
Authorized Representatives
. . . .
A claimant may not assign to any other person or
entity his or her right to legally challenge any
decision,
action,
or
inaction
of
the
Claims
Administrator.
. . . .

5

No Third Party Beneficiaries
The Plan benefits described in this Summary Plan
Description are intended solely for the benefit of you
and your covered dependents.
No person who is not a
Plan participant or dependent of a Plan participant may
bring a legal or equitable claim or cause of action
pursuant to this Summary Plan Description as a third
party beneficiary or assignee hereof.
. . . .
Enforce Your Rights
. . . .
. . . If you have a claim for benefits which is
denied or ignored, in whole or in part, you may file
suit in a state or federal court. . . . [H]owever, you
may not assign, convey, or in any way transfer your right
to bring a lawsuit to anyone else.
(Docket No. 8-3 at 21, 73). 2
In opposition, Plaintiff makes three distinct arguments as
to why the anti-assignment clauses do not apply.

First,

Plaintiff argues the anti-assignment clauses are inapplicable
because the assignment concerns a “post-loss” claim rather than

2

While not attached to the Complaint, the Plan documents may
still be considered by this Court. “To decide a motion to
dismiss, courts generally consider only the allegations
contained in the complaint, exhibits attached to the complaint,
and matters of public record.” Pension Benefit Guar. Corp. v.
White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993).
However, “a court may consider an undisputedly authentic
document that a defendant attaches as an exhibit to a motion to
dismiss if the plaintiff’s claims are based on the document.”
Id. “Otherwise, a plaintiff with a legally deficient claim
could survive a motion to dismiss simply by failing to attach a
dispositive document on which it relied.” Id.
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a “pre-loss” claim.

Plaintiff relies primarily on the New

Jersey Supreme Court case Givaudan Fragrances Corp. v. Aetna
Casualty & Surety Co., 151 A.3d 576 (N.J. 2017) for this
argument.

However, this case is governed by ERISA, and thus

this Court is guided by federal law. 3
“Although the Third Circuit has not addressed the issue of
anti-assignment clauses in health care plans, courts in this
District have found provisions similar to those contained in
this Plan to be valid and enforceable,” which “is consistent
with the overwhelming weight of authority from the various
circuit courts that have addressed the enforceability of antiassignment clauses under ERISA.”

IGEA Brain & Spine, P.A. v.

Blue Cross & Blue Shield of Minn., No. 16-5844, 2017 WL 1968387,
at *2 (D.N.J. May 12, 2017) (citing authorities).

We find the

anti-assignment provisions to be “clear and unambiguous and
therefore valid and enforceable.”
Med., 2017 WL 1243147, at *4.

See Am. Orthopedic & Sports

Accordingly, we move to

Plaintiff’s second argument.
Plaintiff next argues the anti-assignment clauses are
inapplicable because the Plan is maintained for Plaintiff in the

3

Further, Plaintiff fails to cite any authority from the
Third Circuit for this argument.
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sense he is a provider of a covered service. 4

However, “courts

in this District have repeatedly upheld anti-assignments
provisions in ERISA contracts against providers.”

Advanced

Orthopedics & Sports Med. v. Blue Cross Blue Shield of Mass.,
No. 14-7280, 2015 WL 4430488, at *5 (D.N.J. July 20, 2015).
Third, Plaintiff argues the anti-assignment clauses are
inapplicable because they were waived by Defendant through a
course of dealing with Plaintiff.

This defense implicates facts

outside the scope of the pleadings, and thus this issue cannot
be decided on a motion to dismiss. 5

See, e.g., Lourdes Specialty

Hosp. of S. N.J. v. Anthem Blue Cross Blue Shield, No. 16-07631,
2017 WL 3393807, at *3 (D.N.J. Aug. 7, 2017) (deciding
similarly); Shah ex rel. Monica M. v. Horizon Blue Cross Blue
Shield of Mass., No. 16-5946, 2017 WL 1745608, at *2 (D.N.J. May
4, 2017) (deciding similarly); Drzala v. Horizon Blue Cross Blue
Shield, No. 15-8392, 2016 WL 2932545, at *4 (D.N.J. May 18,
2016) (denying a motion to dismiss for lack of standing based on
an anti-assignment clause); Atl. Orthopaedic Assocs., LLC, 2016
WL 889562, at *5 (declining to rule, on a motion to dismiss,

4

Plaintiff again fails to cite any Third Circuit authority
for this proposition.
5

Similarly, Defendant’s argument that Plaintiff first
assigned the benefits in July 2014 to Premier Orthopedic
Associates of Southern NJ, LLC also implicates facts outside the
scope of the pleadings.
8

that an anti-assignment clause was or was not waived by a course
of dealing, explaining that the issue may be “explored further
in discovery” and decided on “a far more complete record”).
Accordingly, Defendant’s motion to dismiss on the basis of
Plaintiff’s asserted lack of standing is denied. 6
B.

Defendant’s Exhaustion of Administrative Remedies
Argument Is Not Ripe for Decision on a Motion to Dismiss.
We similarly decline to dismiss the complaint based on

Defendant’s argument that Plaintiff failed to exhaust his
administrative remedies.

In his complaint, Plaintiff alleges he

“engaged in the applicable administrative appeals process
maintained by Defendant.”

“The requirement that a plaintiff

have exhausted administrative remedies does not seem to embody
any particular standard of pleading.

Rather, it is ordinarily

addressed with the aid of evidence adduced in discovery,
typically on a motion for summary judgment.”

6

NJSR Surgical

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
anti-assignment 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.
9

Ctr., LLC v. Horizon Blue Cross Blue Shield of N.J., Inc., 979
F. Supp. 2d 513, 524 (D.N.J. 2013).

The Court similarly finds

this issue more appropriate for decision on a summary judgment
motion.
C.

Plaintiff’s state law breach of contract claim has been
voluntarily dismissed.
In his opposition brief, Plaintiff “agrees to voluntarily

dismiss Count I” – the state law breach of contract claim.
Accordingly, the Court will dismiss this claim pursuant to
Federal Rule of Civil Procedure 41(a), and the Motion to Dismiss
Count One is denied as moot.
D.

Plaintiff’s claim under 29 C.F.R. 2560.503-1 will be
dismissed as lacking a private right of action.
“29 C.F.R. § 2560.503-1 does not give rise to a private

right of action.”

Shah ex rel. Marjorie M. v. Horizon Blue

Cross Blue Shield, No. 15-8590, 2016 WL 4499551, at *12 (D.N.J.
Aug. 25, 2016); accord Lourdes Specialty Hosp. of Southern N.J.
ex rel. Micah V., 2017 WL 3393807, at *4; Shah ex rel. Lorraine
J., No. 17-195, 2017 WL 2918943, at *3 (D.N.J. July 6, 2017);
Shah ex rel. Monica M., 2017 WL 1745608, at *2.

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 Federal Rule of Civil Procedure
41(a), and Defendant’s motion to dismiss Count One will be
10

denied as moot.

Defendant’s motion to dismiss will be granted

as to Count Four, but denied in all other respects.

An appropriate Order will be entered.

Date: September 27, 2017
At Camden, New Jersey

_s/ Noel L. Hillman______
NOEL L. HILLMAN, U.S.D.J.

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