SHAH v. HORIZON BLUE CROSS BLUE SHIELD OF NEW JERSEY
Filing
23
OPINION. Signed by Judge Noel L. Hillman on 12/18/2018. (tf, )
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
RAHUL SHAH, MD
ON ASSIGNMENT OF MARY A.,
1:17-cv-00632-NLH-AMD
OPINION
Plaintiff,
v.
HORIZON BLUE CROSS BLUE
SHIELD OF NEW JERSEY,
Defendant.
APPEARANCES:
MICHAEL GOTTLIEB
DANIEL C. NOWAK
CALLAGY LAW PC
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 matter concerns claims by an out-of-network physician,
as assignee of his patient’s rights, against a benefits plan for
violations of the Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. § 1001 et seq., when the plan paid him less
than $10,000 for what he valued to be a $217,000 elective spinal
surgery.
The Court granted summary judgment in Defendant’s favor,
holding that the plan did not abuse its discretion when it paid
Plaintiff for his surgical services as an out-of-network provider.
Pursuant to Fed. R. Civ. P. 54(d) and L. Civ. R. 54.2, Defendant
now moves for an award of attorney’s fees incurred in defending
this action under the ERISA fee shifting provision, ERISA §
502(g)(1), 29 U.S.C. § 1132(g)(1).
For the reasons expressed
below, Defendant’s motion will be denied.
BACKGROUND & DISCUSSION
To provide the context for Defendant’s motion for attorney’s
fees, the Court will summarize the facts and holdings from the
Court’s Opinion granting Defendant’s motion for summary judgment.
(See Docket No. 16.)
On August 27, 2014, Plaintiff, Rahul Shah, M.D., performed a
non-emergency, elective, outpatient spinal surgery on his patient,
Mary A.
The patient is a participant and beneficiary of a health
benefit plan sponsored by her spouse’s employer.
The plan is
administered by Defendant, Horizon Blue Cross Blue Shield of New
Jersey, and it is governed by ERISA.
Defendant describes the plan
it had in place for Mary A.’s spouse’s employer as a “70/30 plan”
as it relates to out-of-network providers.
At the time of the surgery, Plaintiff was an out-of-network
provider under the plan.
The patient assigned her rights to
benefits under the plan to Plaintiff, who then filed for
reimbursement for the surgery.
Plaintiff submitted a claim for
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$217,363.00, and the plan paid Plaintiff $9,762.95.
Plaintiff
followed the plan’s appeal process, with the plan ultimately
concluding that the reimbursement amount was properly calculated
at the rate prescribed by the plan.
In his complaint, Plaintiff
claimed that Defendant violated ERISA § 502(a)(1)(B), and sought
$207,600.05 – the balance for his entire charge for the surgery plus interest, attorney’s fees, and costs. 1
Defendant’s fee was governed by the terms of the plan, which
provided that, as an out-of-network provider, Plaintiff was
entitled to 70% of 150% of the Medicare-prescribed amount for the
same services.
In a change from his complaint, which asked for
reimbursement of his full charge, Plaintiff argued in his summary
judgment opposition brief that he should have been paid 70% of his
charges - as he himself calculated them - without reference to any
other provision in the plan.
Plaintiff’s argument was based
simply and exclusively on the plan’s “Schedule of Covered Services
and Supplies,” which stated: “Surgical Services – Out-of-Network Outpatient - Subject to Deductible and 70% Coinsurance.”
(Docket
No. 11-3 at 56, SCHEDULE OF COVERED SERVICES AND SUPPLIES, A.
1
Defendant removed this action pursuant to 28 U.S.C. §§ 1331,
1441(a) & (c), and 28 U.S.C. § 1446 to this Court from the
Superior Court of New Jersey, Law Division, Cumberland County.
Federal question jurisdiction exists in this matter pursuant to 28
U.S.C. § 1331. ERISA further provides that the district courts of
the United States shall have at least concurrent, and sometimes
exclusive, jurisdiction over the ERISA causes of action pleaded in
the complaint. 29 U.S.C. § 1132(e)(1).
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COVERED BASIC SERVICES AND SUPPLIES.)
Plaintiff argued that
having to unpack, like Russian nesting dolls, the provisions
buried in the plan relied upon by Defendant was deceptive and
constituted a breach its fiduciary duties.
In assessing Plaintiff’s claims, the Court applied an abuse
of discretion standard, which required the determination as to
whether Defendant was arbitrary and capricious in its
interpretation of the plan and resulting payment to Plaintiff.
See Fleisher v. Standard Ins. Co., 679 F.3d 116, 120 (3d Cir.
2012).
The Court found that Defendant did not abuse its
discretion, and that “Plaintiff’s self-serving interpretation of
the plan myopically ignore[d] the clear inter-relationship and
correlation between sequential plan provisions and [was] so
lacking in support from the terms of the plan itself as to be
borderline frivolous.”
(Docket No. 16 at 10.)
The Court explained:
First, even accepting Plaintiff’s characterization that
the provisions in the plan regarding payment for an out-ofnetwork out-patient surgery must be “unpacked,” that does not
mean that the plan acted in an arbitrary and capricious
manner when it paid Plaintiff’s claim in accord with those
provisions. The plan language provides that for an out-ofnetwork surgery, the plan will pay 70% of allowable charges,
and those allowable charges are 150% of the Medicare rates,
with the plan participant owing 30% of 150% of the Medicare
rates to the provider as co-insurance if the provider chose
to bill the participant for the additional amount. As
assignee of the plan participant’s benefits, Plaintiff is
therefore entitled to no more than 70% of the 150% of the
Medicare rates directly from Defendant.
4
Although the plan language is required to be read in
reference to several defined terms of the plan, the lack of
one compound sentence linking those terms does not cause the
plan’s decision to be erroneous. Moreover, Plaintiff’s
disagreement with the fairness of the reimbursement terms
under the plan does not render the plan’s decision, which
followed those terms, to be in error. . . .
Second, even though Plaintiff argues that the plan terms
are unfair and ambiguous, the claims before the Court do not
require the assessment of the plan participant’s
interpretation of the plan or her reliance on certain terms in
the plan. That is an entirely different case not pleaded here
. . . . Plaintiff may be disappointed with the out-of-network
reimbursement terms of his patient’s benefits plan, which
resulted in a payment that was a small percentage of
Plaintiff’s charges, but Plaintiff accepted the terms of the
plan when he agreed with his patient to the assignment of her
benefits. . . .
When Mary A. first consulted Plaintiff about his
services, he had several options. First, he could have set
what he perceived as the market rate for his services and
conditioned providing his services on the payment of that
fee, leaving to the patient reimbursement under applicable
insurance. Second, he could have agreed to accept Mary A.’s
insurance and the benefit it provided (70% of 150% of the
Medicare rate for the covered service) and billed Mary for
the remaining 30% of the allowed and clearly defined benefit.
What he could not do was accept the benefit under the
plan, take an assignment from Mary A. of any additional
claims she might have, and through this lawsuit seek to blow
up – without legal or factual support - the carefully and
clearly drafted mutually beneficial agreement between Mary
A.’s spouse’s employer and Defendant. Plaintiff’s claim that
he is entitled to 70% of the fee he has set for his services
as against this Defendant lacks any support in the law or the
plan terms. Despite his protestations to the contrary, as
the Court can best discern, Plaintiff seeks his demanded fee
of over $217,000 simply because he thinks he’s entitled to
it.
In sum, the clear, unambiguous, bargained for terms of
the plan provide for the exact payment Defendant paid
Plaintiff. It cannot be found, therefore, that Defendant’s
benefits determination was without reason, unsupported by
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substantial evidence, or erroneous as a matter of law.
(Docket No. 16 at 10-14.)
Defendant now seeks to recover its fees and costs in the
amount of $9,346.45 under ERISA § 502(g)(1), which provides, “[I]n
any action under this subchapter (other than an action described
in paragraph (2)) by a participant, beneficiary, or fiduciary, the
court in its discretion may allow a reasonable attorney’s fee and
29 U.S.C. § 1132(g)(1). 2
costs of action to either party.”
A fee-requesting party must show that it had achieved “‘some
degree of success on the merits.’”
Perelman v. Perelman, 793 F.3d
368, 376–77 (3d Cir. 2015) (Hardt v. Reliance Standard Life Ins.
Co., 560 U.S. 242, 244–45 (2010)) (other citation omitted).
“Surmounting that hurdle requires more than ‘trivial success on
the merits’ or a ‘purely procedural victory.’”
Hardt, 560 U.S. at 255) (citation omitted).
Id. (quoting
The court must
instead be able to resolve the question “without conducting a
lengthy inquiry into the question whether a particular party's
success was ‘substantial’ or occurred on a ‘central issue.’”
Id.
(quoting Hardt, 560 U.S. at 255) (alterations omitted).
Even where the party has achieved success on the merits, the
2
The Federal Rules of Civil Procedure and the Local Civil Rules
permit fee shifting where a federal statute, federal rule, or
court order otherwise permits. See Fed. R. Civ. P. 54(d); L. Civ.
R. 54.2. Such an award must be sought on motion filed within
thirty days after the entry of judgment. L. Civ. R. 54.2(a).
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court nonetheless retains discretion as to whether to award fees
in light the Ursic factors, which include:
(1) the offending parties' culpability or bad faith;
(2) the ability of the offending parties to satisfy an award
of attorneys' fees;
(3) the deterrent effect of an award of attorneys' fees
against the offending parties;
(4) the benefit conferred on members of the pension plan as a
whole; and
(5) the relative merits of the parties’ position[s].
Id. at 377 (quoting Ursic v. Bethlehem Mines, 719 F.2d 670, 673
(3d Cir. 1983)).
Defendant argues that all the relevant considerations warrant
the award of fees and costs:
(1) Success on the merits - it prevailed on all of
Plaintiff’s claims against it, having been awarded summary
judgment in its favor.
(2) Bad faith - Plaintiff is a habitual litigant who
routinely files the same canned complaint (none of which have
prevailed on the merits against Defendant) as a regular part of
his business model, and like his many others, the instant
complaint was prosecuted without aforethought, corroborating
proofs, or legal authority.
Plaintiff’s bad faith was recognized
by the Court by finding Plaintiff’s interpretation of the plan to
be self-serving and that his claims were “borderline frivolous.”
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(3) Ability to satisfy award - Plaintiff has the ability to
satisfy an award of attorney’s fees because he holds himself out
as an internationally-renowned spinal surgeon with practice
locations throughout South Jersey, Defendant’s fees are modest,
and Plaintiff voluntarily assumed the risk because as a habitual
filer of ERISA complaints, Plaintiff is presumed to be aware of
ERISA’s fee-shifting provision.
(4) Deterrence - Although the fees Defendant incurred on this
particular groundless action were not exorbitant, when compounded
over dozens of similarly baseless lawsuits, they become an undue
burden on Defendant.
(5) Benefit incurred to the plan members - although one fee
award, in isolation, will not reduce premiums, there is value in a
deterrent to meritless claims, which in the end benefits insureds.
(6) Merits of the parties’ positions – that the Court granted
summary judgment in favor of Defendant, rejecting Plaintiff’s
contention that he was entitled to a much greater benefit than
what was bargained for in the plan, supports that Plaintiff’s
position had no merit.
Plaintiff has opposed Defendant’s motion, arguing that
Plaintiff is attempting to bully him into not filing future law
suits, and advancing the opposite argument to each of Plaintiff’s
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contentions for its entitlement to fees: 3
(1) Success on the merits - There is no presumption that a
successful plaintiff in an ERISA suit should receive an award of
attorneys fees, and there is no such presumption in favor of
defendants which prevail.
(2) Bad faith - Plaintiff’s suit was brought in good faith
because the denial of Plaintiff’s appeal to the plan stated it was
based on “the reasonable and customary fee schedule outlined in
their benefits,” and that is exactly what Plaintiff sued for.
Because Plaintiff does not have access to the plan documents, it
is nearly impossible to provide medically necessary services to
patients by forcing every patient to prove before the surgery that
they can pay the cost of services up front, confirm their benefits
prior to a surgery or procedure, and that their benefits can be
assigned.
As a result, Plaintiff obtains an assignment of the
benefits and attempts to collect those benefits after the fact
through the appeals process.
If Defendant had simply responded to
Plaintiff’s request for the plan documents during the appeal,
Plaintiff would not have had to file suit, which demonstrates that
Defendant’s actions were the culpable ones, and Defendant should
be equitably prevented from being awarded fees.
3
The fact that
Alternatively, Plaintiff argues that Defendant’s fees are not
reasonable, and if awarded, should be reduced because they are
duplicative and over-billed.
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Plaintiff acknowledges he was owed less than the amount demanded
in the Complaint — regardless of the fact that there was still a
fundamental disagreement between himself and Defendant as to how
the plan should be interpreted with regard to the definition of
the “allowed amount” — proves that Plaintiff acted in good faith.
(3) Ability to satisfy award – it is incredulous for
Defendant to use as an offensive weapon the fact that Plaintiff
litigates a lot, when it is Defendant’s conduct – the refusal to
produce the SPD or plan prior to suit – that forces Plaintiff to
file a litany of lawsuits in the first place.
It is not an axiom
that since Plaintiff is a doctor he is rich and can routinely
afford to pay approximately $10,000.00 in attorney’s fees.
(4) Deterrence - Forcing plan participants to man the
laboring oar on these payment efforts instead of the out-ofnetwork providers would be a major disservice to the patients and
create a powerful incentive for doctors to sue their patients.
Assuming that Defendant does not always pay according to the plan
terms, which is a reasonable assumption, awarding attorneys’ fees
here will allow Defendant to wrongly underpay or deny claims and
simply get away with it.
(5) Benefit incurred to the plan members – None, as
articulated in the deterrence factor.
Defendant is essentially
saying that no one should challenge its benefits determination,
and, if anyone does, it will punish plan members by increasing
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their premiums.
(6) Merits of the parties’ positions - Although the Court
ultimately disagreed with Plaintiff’s position regarding the
proper interpretation of the plan, this alone does not warrant
granting Defendant attorney’s fees, as Plaintiff had a good faith
basis both in bringing this suit and interpreting the plan terms
as he did.
The Court finds that Defendant has satisfied all of the
factors to warrant the imposition of fees and costs on Plaintiff,
except for the “bad faith” Ursic factor, but only by a hair.
As the Court observed in the Opinion granting Defendant’s
motion for summary judgment, Plaintiff stepped into the shoes of
his patient when he obtained the assignment of benefits, and he
thus occupied the same position as his patient.
If the patient
advanced an ERISA claim against Defendant for its benefits
decision relative to the surgery performed by Plaintiff, it would
have been reasonable to presume that she had access to the plan
documents, 4 and, accordingly, the same presumption would apply to
4
Absent some claim, which is not present here, that the plan
violated 29 U.S.C. § 1024(b), which provides, “The administrator
shall furnish to each participant, and each beneficiary receiving
benefits under the plan, a copy of the summary plan description,
and all modifications and changes referred to in section 1022(a)
of this title--(A) within 90 days after he becomes a participant,
or (in the case of a beneficiary) within 90 days after he first
receives benefits, or (B) if later, within 120 days after the plan
becomes subject to this part.”
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Plaintiff, who is standing in his patient’s shoes.
The Court
therefore finds disingenuous Plaintiff’s claim that Defendant kept
him in the dark as to the nature of his patient’s benefits until
the discovery process of this lawsuit, because all he had to do
was ask his patient for the plan documents prior to surgery – or
at a minimum, prior to filing suit against Defendant. 5
Instead,
Plaintiff filed suit, claiming he was entitled to the full charge
of the surgery, without any consideration of the terms of his
patient’s insurance at all (Docket No. 1 at 12), “simply because
he thinks he’s entitled to it” (Docket No. 16 at 14). 6
However, although it is a very close call, on balance and
within its discretion, the Court will not award attorney’s fees in
this particular case despite the failure of Plaintiff’s
“borderline” claim.
As observed by Judge Renée Marie Bumb when
5
Relatedly, the Court finds disingenuous Plaintiff’s contention
that “it is nearly impossible to provide medically necessary
services to patients by forcing every patient to prove before the
surgery that they can pay the cost of services up front, confirm
their benefits prior to a surgery or procedure, and that their
benefits can be assigned.” Plaintiff performed an elective
surgery on his patient’s back – it was not a life-threatening
emergency. This Court also rejects the intimation that Plaintiff
is some kind of Hippocratic Robin Hood seeking to vindicate the
interests of poor patients against rich insurance companies.
Plaintiff’s interests are clear – receiving as much money as he
can for his services.
6
The Court finds Plaintiff’s argument that he should be credited
for later changing his position to seek 70% of his charges – and
not 100% of his charges as he claimed in his complaint unpersuasive for the reasons set forth in the Court’s summary
judgment Opinion.
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deciding the identical motion in an almost identical case,
Horizon’s argument [] is made with the benefit of hindsight.
This particular case was the first of the 17 to be filed.
Thus, the complaint in this case cannot be characterized as
“canned,” insofar as it could not have been copied from
earlier, similar complaints that Plaintiff filed.
Even so, as Plaintiff correctly observes, all 17 of the cases
he filed arose out of “the very same or similar
circumstances.” Thus, substantial similarity among
complaints is -- to some extent -- to be expected, until at
least there have been adjudications on the merits of the
claims asserted in the complaints. As such, the Court does
not find culpability within the context of this specific
case.
Shah v. Horizon Blue Cross Blue Shield of New Jersey, 2018 WL
4380990, at *2 (D.N.J. 2018) ( 1:15-cv-08590-RMB-KMW).
In contrast to the case before Judge Bumb, this case is
toward the end of the pack of seventeen cases filed by Plaintiff.
(See 1:15-cv-08590-RMB-KMW, Docket No. 65-3, listing the seventeen
cases.)
As noted by Judge Bumb, however, “Plaintiff filed the
last of his 17 complaints on February 6, 2017.
In other words, at
the time Plaintiff filed the 17th complaint, the only ruling that
had been issued was this Court’s decision granting in part and
denying in part Horizon’s Motion to Dismiss.”
Shah, 2018 WL
4380990, at *2 n.5.
“Bad faith normally connotes an ulterior motive or sinister
purpose,” but a “losing party may be culpable [] without having
acted with an ulterior motive,” and a “party is not culpable
merely because it has taken a position that did not prevail in
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litigation.”
McPherson v. Employees' Pension plan of American Re-
Insurance Co., Inc., 33 F.3d 253, 256 (3d Cir. 1994).
As a group,
the seventeen cases filed by Plaintiff, including this one, have
lacked merit for various reasons, but the Court cannot conclude
that this case is such an outlier that an award fees and costs to
Defendant is warranted.
The Court is mindful that an award of
attorney’s fees may have the unintended consequence of chilling
other cases that advance the development of the law.
Nonetheless, Plaintiff and his attorneys should take no
comfort from this ruling.
Despite Plaintiff’s protestations to
the contrary, nothing precludes him from obtaining plan documents
from his patient at the same time he receives a valid assignment
and examining the terms of such plans.
And there is every good
reason to examine them before he asserts a legal claim based on
them not the least of which is Federal Rule of Civil Procedure 11.
Such failures in the future may very well justify not only feeshifting under the statute but sanctions as well.
Again, the Court echoes Judge Bumb’s observation that since
Plaintiff filed his group of cases, he has had numerous judges in
this District opine on the validity and veracity of his claims,
and he should heed those adverse opinions when considering future
litigation on his assignment of benefits from his patients.
Plaintiff is on notice that he may no longer be protected in this
Court from the caution inherent in hindsight.
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CONCLUSION
For the reasons expressed above, Defendant’s motion for
attorney’s fees and costs will be denied.
An appropriate Order
will be entered.
Date: December 18, 2018
At Camden, New Jersey
s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.
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