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

Filing 31

OPINION. Signed by Judge Noel L. Hillman on 7/13/2018. (tf, )

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

RAHUL SHAH on assignment of
EDWARD H.,
Plaintiff,

1:17-cv-166 (NLH/JS)
OPINION

v.
HORIZON BLUE CROSS BLUE
SHIELD OF NEW JERSEY and BLUE
CROSS BLUE SHIELD OF
MINNESOTA,
Defendants.

APPEARANCES:
MICHAEL J. SMIKUN
MICHAEL GOTTLIEB
LAW OFFICES OF SEAN R. CALLAGY, ESQ
650 FROM ROAD
SUITE 565
PARAMUS, NJ 07652
On behalf of Plaintiff
MICHAEL E. HOLZAPFEL
BECKER LLC
354 EISENHOWER PARKWAY
SUITE 1500
LIVINGSTON, NJ 07039
On behalf of Defendant

HILLMAN, District Judge
This is one of many ERISA suits filed by Plaintiff Dr.
Rahul Shah, as purported assignee of his individual patients,
against his patients’ various insurance companies.

As in those

other suits, Plaintiff asserts in this matter that the insurance
company wrongfully denied a request for payment of benefits
under his patient’s health insurance policy, and consequently,
Plaintiff’s bills for service were not paid, or not fully paid.
Before the Court is Defendant’s Motion for Summary
Judgment.

For the reasons that follow, Defendant’s motion will

be granted.
I.
The Court takes its facts from Defendant’s Statement of
Undisputed Material Facts and Plaintiff’s Response.

On April

27, 2015, Plaintiff performed surgery on Edward H. (“Patient”),
during which he fused some of Patient’s cervical vertebrae.

At

the time of his surgery, Patient had health coverage through a
self-funded health benefits plan sponsored and administrated by
an employer (“the Plan”).

The Plan is an ERISA benefit plan.

Defendant Blue Cross Blue Shield of Minnesota is the Claims
Administrator for the Plan.

Under the Plan, a person must be an

eligible employee, retiree, or an eligible dependent of the
employee to be entitled to receive Plan benefits.
Plaintiff is an out-of-network, nonparticipating provider.
Out-of-network, nonparticipating providers may submit claims on
behalf of the claimant.

The Plan language explains that the

allowed amount for out-of-network providers is usually less than
the allowed amount for in-network providers.
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The Plan also

explains that use of an out-of-network provider can result in
significantly higher out-of-pocket expenses.
In addition, the Plan sets forth the following antiassignment clause:
A claimant may not assign his or her benefits to an Outof-Network
Nonparticipating
Provider,
except
when
parents are divorced.
In the case of divorce, the
custodial parent may request, in writing, that the Plan
pay an Out-of-Network Nonparticipating Provider for
covered services for a child. When the Plan pays the
provider at the request of the custodial parent, the
Plan has satisfied its payment obligation.
It further provides:
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 . . . ; however, you may not
assign, convey, or in any way transfer your right to
bring a lawsuit to anyone else.
It also provides that “[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.”

It

further states:
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.
Plaintiff submitted $255,695 in charges for his services
for reimbursement.

Defendant then reimbursed the Patient for

the amount covered by the Plan on May 8, 2015 through three

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checks to the Plan subscriber.

The subscriber then endorsed the

checks to “Premier Orthopaedic Associates.”

Plaintiff pleads he

is still due $239,680.12.
Plaintiff filed a Complaint in state court on November 23,
2016, bringing four claims: (1) breach of contract, (2) failure
to make all payments pursuant to 29 U.S.C. § 1132(a)(1)(B); (3)
breach of fiduciary duty; and (4) failure to maintain reasonable
claims procedures under 29 C.F.R. 2560.503-1.

Defendants

removed the Complaint to this Court on January 10, 2017.
Defendants thereafter filed a February 17, 2017 Motion to
Dismiss. 1

In this Court’s September 27, 2017 Opinion, the Court

granted Defendant’s Motion to Dismiss in part and denied it in
part.

The Court noted that the breach of contract claim had

been voluntarily dismissed.

The Court further dismissed

Plaintiff’s claim under 29 C.F.R. 2560.503-1 as lacking a
private right of action.
permitted to proceed.

Plaintiff’s remaining two claims were

Defendant filed a Motion for Summary

Judgment on November 30, 2017.
II.
This Court has federal question jurisdiction pursuant to 28
U.S.C. § 1331.

1

Defendant Horizon Blue Cross Blue Shield of New Jersey was
dismissed from this action by stipulation on March 8, 2017.
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III.
Summary judgment is appropriate where the Court is
satisfied that “’the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits if any,’ . . . demonstrate the absence of a genuine
issue of material fact” and that the moving party is entitled to
a judgment as a matter of law.

Celotex Corp. v. Catrett, 477

U.S. 317, 322-23 (1986) (citing Fed. R. Civ. P. 56).
An issue is “genuine” if it is supported by evidence such
that a reasonable jury could return a verdict in the nonmoving
party’s favor.
248 (1986).

Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

A fact is “material” if, under the governing

substantive law, a dispute about the fact might affect the
outcome of the suit.

Id.

“In considering a motion for summary

judgment, a district court may not make credibility
determinations or engage in any weighing of the evidence;
instead, the non-moving party’s evidence ‘is to be believed and
all justifiable inferences are to be drawn in his favor.’”
Marino v. Indus. Crating Co., 358 F.3d 241, 247 (3d Cir. 2004)
(citing Anderson, 477 U.S. at 255).
Initially, the moving party bears the burden of
demonstrating the absence of a genuine issue of material fact.
Celotex, 477 U.S. at 323 (“[A] party seeking summary judgment
always bears the initial responsibility of informing the
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district court of the basis for its motion, and identifying
those portions of ‘the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any,’ which it believes demonstrate the absence
of a genuine issue of material fact.”); see Singletary v. Pa.
Dep’t of Corr., 266 F.3d 186, 192 n.2 (3d Cir. 2001) (“Although
the initial burden is on the summary judgment movant to show the
absence of a genuine issue of material fact, ‘the burden on the
moving party may be discharged by “showing” – that is, pointing
out to the district court – that there is an absence of evidence
to support the nonmoving party’s case’ when the nonmoving party
bears the ultimate burden of proof.” (citing Celotex, 477 U.S.
at 325)).
Once the moving party has met this burden, the nonmoving
party must identify, by affidavits or otherwise, specific facts
showing that there is a genuine issue for trial.
U.S. at 324.

Celotex, 477

A “party opposing summary judgment ‘may not rest

upon the mere allegations or denials of the . . . pleading[s].’”
Saldana v. Kmart Corp., 260 F.3d 228, 232 (3d Cir. 2001).

For

“the non-moving party[] to prevail, [that party] must ‘make a
showing sufficient to establish the existence of [every] element
essential to that party’s case, and on which that party will
bear the burden of proof at trial.’”

Cooper v. Sniezek, 418

F. App’x 56, 58 (3d Cir. 2011) (citing Celotex, 477 U.S. at
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322).

Thus, to withstand a properly supported motion for

summary judgment, the nonmoving party must identify specific
facts and affirmative evidence that contradict those offered by
the moving party.

Anderson, 477 U.S. at 257.
IV.

Defendant argues four bases for dismissal: (1) Plaintiff
lacks standing because of the anti-assignment clause, (2)
Plaintiff failed to exhaust administrative remedies, (3)
Defendant’s decision was not arbitrary and capricious, and (4)
Plaintiff’s breach of fiduciary claim is duplicative.

The Court

begins with standing.
Plaintiff makes a familiar argument that anti-assignment
clauses cannot be used in health insurance plans to deny the
healthcare provider standing in an ERISA action.

The Court

rejected this argument in its Opinion deciding Defendant’s
Motion to Dismiss.

Plaintiff, however, notes the Court’s

acknowledgment that the Third Circuit had not addressed this
issue as of the date of the September 27, 2017 Opinion and
argues it is “plausible that the Third Circuit’s impending
decision [in American Orthopedic & Sports Medicine v.
Independence Blue Cross Blue Shield] will implicate the within
matter.”
The Third Circuit has since issued its decision in that
matter.

In May 2018, the Third Circuit concluded that “anti7

assignment clauses in ERISA-governed health insurance plans as a
general matter are enforceable.”

Am. Orthopedic & Sports Med.

v. Indep. Blue Cross Blue Shield, 890 F.3d 445, 453 (3d Cir.
2018).

Courts in the District have held that this is true even

when enforced against a healthcare provider.

Id.; see also

Univ. Spine Ctr. v. Horizon Blue Cross Blue Shield of N.J., No.
16-8253, 2017 WL 3610486, at *2 n.3 (D.N.J. Aug. 22, 2017)
(“[A]n anti-assignment clause can be enforced against the
provider of the services that the Plan is maintained to
furnish.”); Univ. Spine Ctr. v. Aetna Inc., No. 17-8160, 2018 WL
1409796, at *5 n.6 (D.N.J. Mar. 20, 2018).

Accordingly, the

Court stands by its original determination, now with the support
of the Third Circuit’s May 2018 ruling.
Plaintiff also argues that, even with a valid antiassignment clause, the anti-assignment clause has been waived.
Plaintiff argues “Defendant’s consistent course of direct
dealing with Plaintiff renders any purported anti-assignment
clause entirely unenforceable.”

He argues this “course of

direct dealing” consists of Defendant granting Plaintiff preapproval of Patient’s treatment, that Plaintiff treated Patient
and submitted a medical bill accompanied by an assignment of
benefits, that Defendant processed Plaintiff’s claim, and that
Defendant issued a statement of payment.
The Court disagrees that such conduct constituted a waiver.
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“[I]t is now well-settled law in the District of New Jersey that
the Plan did not waive the Anti-Assignment Clause by dealing
directly with the Medical Provider in the claim review process,
or by directly remitting payment to the Medical Provider.”
Emami v. Quinteles IMS, No. 17-3069, 2017 WL 4220329, at *3
(D.N.J. Sept. 21, 2017); accord Univ. Spine Ctr. v. Aetna, Inc.,
No. 17-8161, 2018 U.S. Dist. LEXIS 92578, at *13 (D.N.J. May 31,
2018) (finding that payment of part of the plaintiff’s claim and
engagement in the appeals process is “insufficient to establish
waiver”); IGEA Brain & Spine, P.A. v. Blue Cross & Blue Shield
of Minn., No. 16-5844, 2017 WL 1968387, at *3 (D.N.J. May 12,
2017) (finding that the plaintiff’s preparing of a health
insurance claim form demanding reimbursement for services and
the plaintiff’s engagement in the administrative appeals process
with the defendant was “insufficient to constitute a waiver” and
stating that “[s]imply engaging in a claim review process with
Plaintiff does not demonstrate a ‘clear and decisive act’ to
waive the Plan’s anti-assignment provisions and confer upon
Plaintiff standing”).
Indeed, the Third Circuit’s recent opinion, while
considering a claim under Pennsylvania law, held the same in
considering whether the insurer waived an anti-assignment
provision by processing a claim form and issuing a check to the
appellant.

See Am. Orthopedic, 890 F.3d at 454 (citing case law
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from the District of New Jersey and concluding that “routine
processing of a claim form, issuing payment at the out-ofnetwork rate, and summarily denying the informal appeal do not
demonstrate ‘an evident purpose to surrender’ an objection to a
provider’s standing in a federal lawsuit”).
In its Motion to Dismiss Opinion, the Court determined that
the Plan’s anti-assignment provisions were clear and unambiguous
and enforceable against healthcare providers.

The Court finds

the anti-assignment clause valid and that it was not waived.
The Court will grant Defendant’s Motion for Summary Judgment on
this basis.

The Court need not address Defendant’s other

arguments that Plaintiff failed to exhaust the Plan’s
administrative remedies or that Defendant’s payment decision was
not arbitrary and capricious.
The Court notes, however, that Plaintiff’s claim for breach
of fiduciary duty must be dismissed as Plaintiff seeks
duplicative monetary damages.

Plaintiff’s Complaint outlines

four bases for its breach of fiduciary duty claim:
1. Failing to issue an Adverse Benefit Determination in
accordance with the requirements of ERISA and
applicable regulations;
2. Participating knowingly in, or knowingly undertaking
to conceal, an act or omission of such other
fiduciary, knowing such act or omission is a breach;
3. Failing to make reasonable efforts under the
circumstances to remedy the breach of such other
fiduciary; and
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4. Wrongfully withholding money belonging to Plaintiff.

Plaintiff asks for the following relief from his breach of
fiduciary duty claim: (1) payment of $239,680.12; (2) payment of
all benefits Patient would be entitled to; (3) compensatory
damages; (4) attorneys’ fees and costs; and (5) any other relief
deemed just and equitable.
Plaintiff asserts his breach of fiduciary duty cause of
action pursuant to 29 U.S.C. § 1332(a)(3), which “does not
authorize a claim seeking money damages.”

Plastic Surgery Ctr.,

P.A. v. CIGNA Health & Life Ins. Co., No. 17-2055, 2018 WL
2441768, at *13 (D.N.J. May 31, 2018).

Title 29, U.S.C.

§ 1332(a)(3) provides that
[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 title 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 title or the terms of
the plan.
While Plaintiff argues the Court should deny this motion
because Plaintiff should be able to maintain an action for
“other appropriate equitable relief,” Plaintiff’s argument
appears to be more appropriate for a motion to dismiss than a
summary judgment motion.

Courts in this district have

frequently declined to dismiss a breach of fiduciary duty claim
for seeking only monetary relief, finding such a determination
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would be premature at the motion to dismiss stage.

See, e.g.,

Univ. Spine Ctr., 2017 WL 3610486, at *4 (“Courts in this
district and elsewhere have held that because a plaintiff may
plead in the alternative, dismissal of a breach of fiduciary
duty claim as duplicative of a benefits claim is generally not
appropriate on a motion to dismiss.

At this early stage, the

Court cannot state with certainty the precise nature of USC’s
injuries or the appropriateness of any particular remedy, and
thus cannot determine whether its claim under Section 502(a)(3)
is coterminous with its claim under Section 502(a)(1)(B).”);
Lourdes Specialty Hosp. of S. N.J. v. Anthem Blue Cross Blue
Shield, No. 16-7631, 2017 WL 3393807, at *4 (D.N.J. Aug. 7,
2017).

Plaintiff has not demonstrated any appropriate equitable

relief would be appropriate in the face of Defendant’s properly
supported motion for summary judgment.

Accordingly, Defendant’s

motion will be granted on that claim as well.
Defendant’s Motion for Summary Judgment will be granted.
An appropriate Order will be entered.

Date: July 13, 2018
At Camden, New Jersey

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

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