SHAH v. BLUE CROSS BLUE SHIELD OF ALABAMA et al

Filing 29

MEMORANDUM OPINION. Signed by Judge Jerome B. Simandle on 9/21/2017. (rtm, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

RAHUL SHAH, MD on assignment of
CHRISTOPHER H.,
Plaintiff,

HONORABLE JEROME B. SIMANDLE

Civil Action
No. 17-700 (JBS/JS)

v.
BLUE CROSS BLUE SHIELD OF
ALABAMA and HORIZON BLUE CROSS
BLUE SHIELD OF NEW JERSEY,

MEMORANDUM OPINION

Defendants.
SIMANDLE, District Judge:
This dispute arises from Defendants Horizon Blue Cross Blue
Shield of New Jersey1 and Blue Cross Blue Shield of Alabama’s
(“BCBSAL”) alleged refusal to fully reimburse Plaintiff Dr.
Rahul Shah (“Dr. Shah”) for medical services provided to
Christopher H., a patient whose health care plan is administered
by BCBSAL. Before the Court is BCBSAL’s motion to dismiss the
Complaint in its entirety pursuant to Fed. R. Civ. P. 12(b)(6).
[Docket Item 10.] The principal issue to be determined is
whether the non-assignment clause in the health care plan of
Christopher H. bars Dr. Shah’s claim as assignee of his
patient’s payments from BCBSAL, for lack of standing, pursuant

1

On March 8, 2017, the Court signed a Stipulation and Order
dismissing Horizon Blue Cross Blue Shield of New Jersey without
prejudice. [Docket Item 16.] Accordingly, the Court will only
consider Dr. Shah’s claims against BCBSAL.

to the Employee Retirement Income Security Act of 1974
(“ERISA”). A secondary issue is whether Dr. Shah has a private
right of action alleging that BCBSAL failed to have reasonable
claims procedures required by Section 503 of ERISA, 29 U.S.C. §
1133 and the regulations at 29 C.F.R. 2569.503-1. For the
reasons that follow, the Court will grant the motion and dismiss
the Complaint.
The Court finds as follows:
1.

Factual and Procedural Background. The facts of this

case are straightforward.2 On March 8, 2016, Dr. Shah performed a
lumbar laminectomy and fusion procedure on Christopher H, a
patient who holds a health care plan administered by BCBSAL.
(Compl. at ¶¶ 5-6, 13.) After the surgery was performed, Dr.
Shah purportedly obtained an assignment of benefits from
Christopher H., allowing Dr. Shah to sue his patient’s insurer
under ERISA. (Id. at ¶ 7.) Dr. Shah then prepared a Health
Insurance Claim Form, demanding reimbursement from Defendants in
the amount of $238,310.00 for those services, but BCBSAL paid
only $4,782.93 for the patient’s treatment. (Id. at ¶¶ 8-9.) Dr.
Shah alleges that he is entitled to the $233,527.07 difference
under the terms of his patient’s plan. (Id. at ¶ 14.) The

2

The Court accepts as true for the purposes of the instant
motions the following facts as alleged in the Complaint.
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parties agree that the health benefit plan at issue is governed
by ERISA. (Def. Br. at 10; Pl. Opp. Br. at 1.)
2.

After allegedly engaging in BCBSAL’s administrative

appeals process, Dr. Shah filed a Complaint in the Superior
Court of New Jersey, Law Division, Cumberland County, which
BCBSAL timely removed. [Docket Item 1.] The Complaint brings
causes of action for: (1) breach of contract; (2) denial of
benefits under § 1132(a)(1)(B); (3) breach of fiduciary duty in
violation of § 1132(a)(3); and (4) failure to maintain
reasonable claims procedures pursuant to 29 C.F.R. 2560.503-1.
[See id. at Ex. 1.] In lieu of an answer, BCBSAL moves to
dismiss the Complaint. [Docket Item 5.] BCBSAL’s motion is now
fully briefed and will be decided without oral argument pursuant
to Fed. R. Civ. P. 78.
3.

Standard of Review. Pursuant to Fed. R. Civ. P.

8(a)(2), a complaint need only contain “a short and plain
statement of the claim showing that the pleader is entitled to
relief.” Specific facts are not required, and “the statement
need only ‘give the defendant fair notice of what the . . .
claim is and the grounds upon which it rests.’” Erickson v.
Pardus, 551 U.S. 89, 93 (2007) (internal citations omitted).
While a complaint is not required to contain detailed factual
allegations, the plaintiff must provide the “grounds” of her
“entitle[ment] to relief,” which requires more than mere labels
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and conclusions. Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
555 (2007).
4.

A motion to dismiss under Fed. R. Civ. P. 12(b)(6) may

be granted only if, accepting all well-pleaded allegations in
the complaint as true and viewing them in the light most
favorable to the plaintiff, a court concludes that the plaintiff
failed to set forth fair notice of what the claim is and the
grounds upon which it rests. Id.

A complaint will survive a

motion to dismiss if it contains sufficient factual matter to
“state a claim to relief that is plausible on its face.”
Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009).

Although a court

must accept as true all factual allegations in a complaint, that
tenet is “inapplicable to legal conclusions,” and “[a] pleading
that offers labels and conclusions or a formulaic recitation of
the elements of a cause of action will not do.” Id. at 678
5.

Discussion. As a preliminary matter, Dr. Shah

voluntarily dismissed the state law breach of contract claim in
Count One, conceding that it is preempted by ERISA. (Pl. Br. at
1.) Accordingly, the Court will dismiss this claim pursuant to
Fed. R. Civ. P. 41(a), and dismiss BCSBAL’s motion to dismiss as
moot as to Count One.
6.

The Court will also dismiss Count Four with prejudice

for the reasons explained in Shah v. Aetna, 2017 WL 2918943
(D.N.J. July 6, 2017). In Aetna, Dr. Shah also filed a complaint
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in which he alleged, as here, that the defendant failed to
maintain reasonable claims procedures pursuant to 29 C.F.R.
2569.503-1. Id. at *1. As this Court explained then, neither 29
C.F.R. 2569.503-1 nor its accompanying statute, 29 U.S.C. § 1133
(ERISA § 503), establish a private right of action for failure
to comply with the regulatory disclosure requirements. Id. at
*3. Accordingly, the Court must grant BCBSAL’s motion to dismiss
with respect to Count Four with prejudice. Id. (citing United
States ex rel. Schumann v. Astrazenca Pharma. L.P., 769 F.3d
837, 849 (3d Cir. 2014)).
7.

With respect to the remaining counts, BCBSAL argues

the Complaint must be dismissed because Dr. Shah lacks standing
to pursue his patient’s alleged ERISA claims under an assignment
agreement, as such an assignment is expressly prohibited under
the terms of Christopher H.’s health care agreement (“the
Plan”).3 Dr. Shah, in turn, contends that the clause in the Plan
prohibiting assignment is either unenforceable as a matter of
law or was waived by BCBSAL through a course of direct dealing
with Christopher H. and Dr. Shah. For the reasons that follow,
the Court finds that Dr. Shah does not have standing to bring
the remaining claims in this case.

3

Because the Court finds that the rest of the Complaint must be
dismissed for lack of standing under ERISA, it need not reach
BCSBAL’s other arguments in support of their motion.
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8.

The parties do not dispute that Christopher H.

executed an agreement with Dr. Shah (“the Assignment
Agreement”), whereby Christopher H. agreed to “irrevocably
assign to [Dr. Shah], my medical provider, all of my rights and
benefits under my insurance contract for payment for services
rendered to me, including but not limited to, all of my rights
under ‘ERISA’ applicable to the medical services at issue.”
(Compl. at Ex. B; Def. Br. at 6.) But, as BCBSAL highlights in
its briefing, the Plan contained an explicit anti-assignment
clause labeled “No Assignment” (“the Anti-Assignment Clause”),
which included in relevant part: “We will not honor an
assignment of your claim to anyone.” (Def. Br. at 7, Palmer
Cert. at Ex. A, p.46). In light of Dr. Shah’s attempt to collect
benefits as assignee of Christopher H., the Court must
determine: (1) whether the Anti-Assignment Clause is valid and
enforceable; and (2) if so, whether BCSBAL waived its right to
enforce the Anti-Assignment Clause through a course of direct
dealing with Christopher H.
9.

Dr. Shah argues that the Anti-Assignment Clause is

unenforceable because the assignment at issue here involves a
“post-loss claim and not a pre-loss policy.” (Pl. Opp. Br. at
3.) In support of this position, Dr. Shah relies upon a recent
New Jersey Supreme Court decision, Givaudan Fragrances Corp. v.
Aetna Cas. & Sur. Co., 227 N.J. 322 (2017). But, as previously
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noted, the parties agree that this action is governed by ERISA.
Accordingly, this Court is guided by relevant federal law
interpreting its provisions. See IGEA Brain & Spine, P.A. v.
Blue Cross & Blue Shield of Minn., 2017 WL 1968387, at *2 n.3
(D.N.J. May 12, 2017).
10.

To the extent Dr. Shah contends that the Anti-

Assignment Clause is unenforceable under federal law, the Court
disagrees. The Third Circuit has held that an assignment of
benefits in the ERISA context is permissible, see N. Jersey
Brain & Spine Ctr., 801 F.3d 369, 372 (3d Cir. 2015), but it has
not yet directly addressed the issue of whether anti-assignment
clauses in health care plans are valid and enforceable. Numerous
courts in this District have, however, recently found antiassignment clauses similar to those contained in the Plan to be
valid and enforceable. See, e.g., Progressive Spine &
Orthopaedics, LLC v. Anthem Blue Cross Blue Shield, 2017 WL
4011203, at *8 (D.N.J. Sept. 11, 2017); IGEA Brain & Spine,
P.A., 2017 WL 1968387, at *2; Am. Orthopaedic & Sports Med. v.
Indep. Blue Cross, LLC, 2017 WL 1243147, at *4 (D.N.J. Feb. 24,
2017); Kaul v. Horizon Blue Cross Blue Shield, 2016 WL 4071953,
at *2 (D.N.J. July 29, 2016); Atlantic Orthopaedic Assoc., LLC
v. Blue Cross, 2016 WL 889562, at *4 (D.N.J. Mar. 7, 2016).4 And

4

The Court notes that two cases in this District have found that
certain issues involving standing in anti-assignment clause
7 

the circuit courts that have addressed the issue have similarly
concluded that such anti-assignment clauses are valid and
enforceable, provided that the clause is clear and unambiguous.
See, e.g., Physicians Multispecialty Grp. v. Health Care Plan of
Horton Homes, Inc., 371 F.3d 1291, 1295 (11th Cir. 2004);
LeTourneau Lifelike Orthotics & Prosthetics, Inc. v. Wal-Mart
Stores, Inc., 298 F.3d 348, 352-53 (5th Cir. 2002); City of Hope
Nat’l Med. Ctr. v. HealthPlus Inc., 156 F.3d 223, 229 (1st Cir.
1998); St. Francis Reg’l Med. Ctr. v. Blue Cross & Blue Shield
of Kan., Inc., 49 F.3d 1460, 1464-65 (10th Cir. 1995);
Davidowitz v. Delta Dental Plan of Cal., Inc., 946 F.2d 1476,
1478 (9th Cir. 1991). The Court finds no reason to depart from
the overwhelming consensus that has developed within this
District and around the country. The clear and unambiguous AntiAssignment Clause is valid and enforceable.
11.

Having found that the Anti-Assignment Clause is valid

and enforceable, the Court now turns to whether BCBSAL waived

cases implicate facts outside the pleadings and should not be
decided on a motion to dismiss. See Lourdes Specialty Hosp. of
S. New Jersey v. Anthem Blue Cross Blue Shield, 2017 WL 3393807,
at *1 (D.N.J. Aug. 7, 2017); Shah v. Horizon Blue Cross Blue
Shield of Massachusetts, 2017 WL 1745608, at *1 (D.N.J. May 4,
2017). Given that there are no material disputes of fact here
(for example, the parties seem to agree that the Anti-Assignment
Clause is clear and unambiguous and that partial payment was
made to Christopher H.), the Court finds that further discovery
is unnecessary.
8 

its right to enforce the Anti-Assignment Clause. Dr. Shah
argues that BCBSAL waived the Anti-Assignment Clause by
partially reimbursing Christopher H. in the amount of
$4,782.93. (See Pl. Opp. Br. at 5-6.) The Court disagrees.
“Waiver is the voluntary and intentional relinquishment of
a known right.” Knorr v. Smeal, 178 N.J. 169, 836 A.2d 794,
798 (N.J. 2003). In order for a waiver to be effective, a
party is required to have full knowledge of his legal
rights and intent to surrender those rights. Id. “The party
waiving a known right must do so clearly, unequivocally,
and decisively.” Id. As courts in this District have held,
direct payment to a patient or healthcare provider does not
constitute waiver of an anti-assignment provision where the
plan at issue authorizes such payment. See, e.g., Kaul,
2016 WL 4071953, at *2; Advanced Orthopaedics and Sports
Medicine v. Blue Cross Blue Shield of Mass., 2015 WL
4430488, at *7 (D.N.J. July 20, 2015). Here, the Plan
clearly authorizes such payment, providing in relevant
part: “Some of the contracts we have with providers of
services, such as hospitals, require us to pay benefits
directly to the providers.” (See Def. Br. at 7, Palmer Cert
at Ex. A, p.46.) Accordingly, the Court finds that BCBSAL
did not waive its right to enforce the Anti-Assignment
Clause.
9 

12.

Conclusion. For the foregoing reasons, the Complaint

will be dismissed. An accompanying Order shall be entered.

September 21, 2017
Date

s/ Jerome B. Simandle
JEROME B. SIMANDLE
U.S. District Judge

10