MONTVALE SURGICAL CENTER, LLC v. CONVENTRY HEALTH CARE et al

Filing 15

OPINION. Signed by Judge Jose L. Linares on 3/18/13. (DD, )

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

MONTVALE SURGICAL CENTER,
LLC, a/s/o GERALD TYSKA
Plaintift

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v.
COVENTRY HEALTH CARE,
AMTCA MUTUAL INSURANCE
COMPANY, AND ABC CORP (1-10),
Defendants.

Civil Action No. 12-69 16

OPINION

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This matter comes before the Court by way of Defendants Coventry Health Care, Inc.
(“Coventry”) and Amica Mutual Insurance Company’s (“Amica”) (collectively, “Defendants”)
Joint Motion to Dismiss Plaintiff Montvale Surgical Center, LLC’s (“Plaintiff’ or Montvale”)
Complaint. CM/ECF No. 11. The Court has considered the submissions made in support of and
in opposition to the instant motion and decides this matter without oral argument pursuant to

Rule 78 of the Federal Rules of Civil Procedure. For the reasons that follow, Defendants’
motion is granted.
I.

BACKGROUND’

Plaintiff is an outpatient ambulatory surgery center where minimally invasive pain
management and podiatry procedures are performed. Compl. at 1. In March 2009, New Jersey
¶
resident Gerald Tyska (“Tyska”) underwent what Plaintiff describes as “medically necessary”

For purposes of the current motion, the Court accepts as true each of the facts set forth in
Plaintiffs complaint. See Phillips County ofAlleghenv, 515 F.3d 224, 231 (3d Cir. 2008).

spinal manipulation under anesthesia (“MUA”) procedures at Plaintiff’s facility. Compi. at 9,
¶
12-14. Plaintiff explains that Tyska subscribes to a fully-funded group health insurance plan
maintained by Coventry, and presumably Amica, and assigned Plaintiff his contractual rights
2
under these plans. Compi. at ¶ 2, 7.
Tyska underwent a total of three MUA procedures and Plaintiff submitted requests for
reimbursement to Defendants for each of these procedures. Compi. at
¶J 12-14. Defendants
denied each of these requests after allegedly finding the “MUA treatment administered to Tyska
to be experimental and investigational, as well as not the national standard of care for the
diagnosis given.” Compi. at ¶‘jJ 12-15. Plaintiff appealed this decision and alleges that
Defendants failed to provide a “timely” and “appropriate response to the appeal.” Compl. at
¶
15.
On October 4, 2012, Plaintiff filed the present action against Defendants in the Superior
Court of New Jersey, Bergen County: Law Division. CM/ECF No. 1. Plaintiff’s Complaint
consisted of Five Counts—two counts alleging that Defendants violated ERISA, two counts
alleging that Defendants breached a contract with Plaintiff, and one count against fictitious
3
corporate defendants. Compl. at ¶J 20, 3 8-39, 42, 46. This action was subsequently removed to
this Court, and Defendants filed the present Motion to Dismiss on February 15, 2013. CM/ECF
No. 11.
2

Plaintiff states that Tyska is a “subscriber to a fully funded plan of group health insurance
maintained by Defendant Coventry Health Care” but does not explain Tyska’s relationship with
Amica. Compi. at ¶ 2. To the extent Plaintiff wishes to file an amended complaint, Plaintiff is
instructed to clearly identify Tyska’ s relationship with each defendant.
Plaintiff argues that these fictitious corporate defendants were “responsible for payments of
Plaintiffs reasonable and customary fees.” Compi. at ¶ 49. Plaintiff does not identify any
allegedly wrongful conduct nor does Plaintiff set forth “sufficient factual matter” to “state a
claim for relief that is plausible on its face.” See Ashcroft Iqbal, 556 U.S. 662, 678 (2009)
(quoting Bell All. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Accordingly, Count Five cannot
survive Defendants’ Motion to Dismiss. See id.
2

II.

LEGAL STANDARDS
A.

Motions to Dismiss

On a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), “courts are required to
accept all well-pleaded allegations in the complaint as true and to draw all reasonable inferences
in favor of the non-moving party.” Phillips, 515 F.3d at 231 (citing In re Rockefeller Ctr. Props.
Sees. Litig., 311 F.3d 198, 2 15-16 (3d Cir. 2002)). However, “[fjactual allegations must be
enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. Courts
are not required to credit bald assertions or legal conclusions draped in the guise of factual

allegations. See In re Burlington Coat Factoiy Sec. Litig., 114 F.3d 1410, 1429 (3d Cir. 1997).
“A pleading that offers ‘labels and conclusions’ or a ‘formulaic recitation of the elements of a
cause of action will

not

do.” lqbal, 556 U.S. at 678 (quoting Twoinbly, 550 U.S. at 555). Thus,

a complaint will only survive a motion to dismiss if it contains “sufficient factual matter” to
“state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678 (quoting Twombly,
550 U.S. at 570). “A claim has facial plausibility when the pleaded factual content allows the
court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”

Id.
B.

Standard of Review Under ERISA

An ERISA benefits denial is reviewed using a de novo standard of review “unless the
benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility
for benefits or to construe the terms of the plan.” Firestone Tire & Rubber Co. v. Bruch, 489
U.S. 101, 115 (1989). Where the administrator is vested with discretionary authority, “a
deferential standard of review [is] appropriate;” and a reviewing court is limited to determining
whether the administrator abused its discretion. Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 111

3

(2008) (quoting Firestone, 489 U.S. at 115). However, where there is evidence of conflict or
bias by the administrator, such evidence may play an important role in determining whether the
administrator abused its discretion. Metro. Life Ins. Co., 554 U.S. at 111. In the Third Circuit,
“[u]nder the arbitrary and capricious (or abuse of discretion) standard of review, the district court
may overturn a decision of the Plan administrator only if it is without reason, unsupported by
substantial evidence or erroneous as a matter of law.” Abnathya v. Hofjmann-La Roche, Inc., 2
F.3d 40, 45 (3d Cir. 1993 (internal quotations omitted). If the plan language is plain, then
“actions taken by the plan administrator inconsistent with [those] terms.

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are arbitrary.” Bill

Gray Enters. v. Gourley, 248 F.3d 206, 218 (3d Cir. 2001).
III.

ANALYSIS
A.

Counts One and Two

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ERISA

In Counts One and Two of Plaintiff’s Complaint, Plaintiff claims that Defendants
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arbitrarily and capriciously denied Tyska’s claim for reimbursement in violation of ERISA.
Compi. at ¶[ 29, 38-39. Specifically, in Count One, Plaintiff alleges that the “denial of Tyska’s
claims is unsupported by substantial evidence, erroneous as a matter of law, not made in good
faith, is arbitrary and capricious and is a violation of ERISA.” Compl. at 29. In Count Two,
¶
Plaintiff alleges that Defendants’ “determinations of all claims without any (or even substantial)
explanation were arbitrary and capricious” and a violation of Defendants’ “fiduciary duty” under
ERISA. See Compl. at ¶J 3 8-39. Defendants move to dismiss both of these counts arguing that

In Defendant’s Joint motion to Dismiss, Defendants argue that “Montvale does not attempt to
differentiate these two Defendants.” Defs. Br. at 2. The Court agrees. In Counts One and Two,
Plaintiff attributes “all actions generally to either ‘Coventry/Amica’ or ‘Defendant
Coventry/Amica.” See Defs. Br. at 2; see also Compi. at ¶J 2 1-28, 34-39. To the extent
Plaintiff chooses to file an Amended Complaint, it is hereby instructed to differentiate between
each individual defendant so that “each individual defendant can fairly respond to the allegations
made.” See Defs. Br. at 2.
4

“Plaintiff has not sufficiently pleaded that Defendants’ alleged benefit determination violated
ERISA.” Defs. Br. at 2. The Court agrees.
Plaintiff does not dispute the essential terms of Tyska’s benefits plaants have
—Defendn
5
fiduciary discretion to determine whether an “administered treatment is medically necessary”
and to deny benefits for investigative or experimental procedures. See Cornpl. at ¶J 15, 22.
Instead, Plaintiff argues that Tyska’s MUA procedures were clearly covered under the terms of
this plan and that Defendants abused their discretion in denying coverage. See Compl. at
¶J 1516. In support of these allegations, Plaintiff asserts that, 1) there “exist AMA-CPT codes that
indicate that MUA is not investigational or experimental, as well as nationally accepted criteria
for practicing MUA on selected patients,” and 2) Tyska’s MUA procedures were “medically
necessary.” See Compi. at ¶ 9, 15. However, neither statement, alone or in concert, contains
“sufficient factual matter” to “state a claim to relief that is plausible on its face.” Jqbal, 556 U.s.
at 678 (quoting Twombly, 550 U.S. at 570).
First, in Advanced Rehabilitation, the Court considered a nearly identical argument that a
denial of reimbursement for an MUA procedure was improper in light of AMA-CPT codes and
found such an argument insufficient to withstand a motion to dismiss. See Advanced
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Rehabilitation

i.’.

UnitedHealth Group, No. 10-00263, 2011 U.S. Dist. LEXIS 27710, *7 (D.N.J.

Mar. 17, 2011) (“Advanced Rehabilitation”). In granting that motion to dismiss, the Court relied
Plaintiff argues that Defendants “should be required to produce their Plan, the medical
documentation upon which they rely and denials of reimbursement with the basis for the same.”
P1. Br. at 8. However, even assuming that the Court was permitted to request such
documentation, it is not necessary in this case. Plaintiff does not dispute the essential terms of
the insurance contract, and, as discussed, the Court accepts as true Plaintiff’s assertion that
Defendants systematically denied reimbursement claims for MUA procedures. See generaly
Compi. at 15, 38.
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Plaintiff relies on the existence of these “AMA-CPT” codes to argue that the “medical
community, including the American Medical Association, determined that the MUA procedures
are accepted and non-experimental.” See P1. Br. at 2 (citing Compl. at 15).
¶
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on the explicit language of the CPT book that:
Inclusion in the CPT codebook does not represent endorsement by the American Medical
Association (AMA) of any particular diagnostic or therapeutic procedure. Inclusion or
exclusion of a procedure does not imply any health insurance coverage or reimbursement
policy.
Id. In light of this language, the Court held that the “CPT codes on which Plaintiffs rely to prove
that, objectively, the MUA procedure is medically necessary and not experimental or
investigative is not availing, and is refuted by the language of the CPT code book itselfi.]” Id. at
9. Here, Plaintiff does not present a single persuasive argument why the Court should depart
from this holding.
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Second, in its opinion affirming Advanced Rehabilitation, the Third Circuit addressed the
sufficiency of PlaintifIs second argument. See Advanced Rehabilitation v. UnitedHealthcare,
No. 11-4269, 2012 U.S. App. LEXIS 20050, fn. 3 (3d Cir. Sept. 25, 2012). li so doing, the
Third Circuit concluded that, “even if [those] Plaintiffs had asserted that MUA procedures were
‘medically necessary,’ that would have been insufficient because, whether express or implied,
conclusory allegations without more cannot unlock the doors of discovery.” Id. (quotations
omitted). The Third Circuit’s opinion is unpublished and not precedential, but the Court finds
the Third Circuit’s analysis persuasive. There, like here, Plaintiff’s assertion that the MUA
procedures were “medically necessary” was conclusory and not supported by any evidence in the
pleadings. See Advanced Rehabilitation, 2012 U.S. App. LEXIS 20050 at fn. 3 (quotations and
citations omitted); see also In re Burlington Coat Factory Sec. Litig., 114 F.3d at 1429 (stating
that courts are not required to credit bald assertions or legal conclusions). Accordingly, neither
Plaintiff argues that this case is distinguishable from Advanced Medicine because “Plaintiff has
not been afforded any opportunity to review the Coventry/Amica plan or the administrative
record in this case.” P1. Br. at 7. Plaintiff cannot, however, point to one important distinction
between this case and Advanced Medicine, and, as discussed above, there is no reason for the
production of documents at this stage. See P1. Br, at 6-8.
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of Plaintiff’s assertions is sufficient for its Complaint to withstand a motion to dismiss. See id.
In Plaintiffs Opposition, Plaintiff now also alleges that Defendants had “preordained that
[they would] deny coverage for” MUA procedures. P1. Br. at 2. This argument is noticeably
absent from the Complaint; however, even if it were included, Plaintiff’s Complaint would still
fail. See generally Compi. at ¶ 8-32. The Court addressed a similar argument in Advanced
Rehabilitation and held that, accepting as true plaintiff’s “allegations that denial of coverage for
MUA procedures is systemic,” plaintiff still had not met its “threshold showing that [d]efendants
acted outside the scope of decision making that they were, by the terms of the plans, entitled to,
or that their determinations were arbitrary or capricious.” See Advanced Rehabilitation, 2011
U.S. Dist. LEXIS 27710 at *8. Here, Plaintiff again fails to present a persuasive argument why
the Court should depart from this opinion. Accordingly, Defendants’ Joint Motion to Dismiss
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Counts One and Two of the Complaint is granted. Counts One and Two of the Complaint are
dismissed without prejudice.
B.

Counts Three and Four

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Breach of Contract

In Counts Three and Four, Plaintiff claims that Coventry and Amica breached their
contracts with Plaintiff. See Compl. at ¶jJ 42, 46. Specifically, Plaintiff argues that Defendants
breached a contract by “failing to pay the reasonable and customary rate for services rendered
under the terms of the policy and by failing to properly respond to the appeal.” See Compi. at
¶J
42, 46. Defendants move to dismiss each of these counts arguing that Plaintiffs “state law

breach of contract claims arising from the alleged denial of benefits fail as a matter of law
because they are preempted by ERISA.” Defs. Br. at 6. In Plaintiffs Opposition, Plaintiff does
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Plaintiff relies on a footnote in Devito v. Aetna in support of its argument. See P1. Br. at 7
(citing Devito v. Aetna, 536 F. Supp. 2d 523, 532, n. 7 (D.N.J. 2008)). However, the facts of the
present action are more in line with those in the Court’s more recent holding in Advanced
Rehabilitation. See Advanced Rehabilitation, 2011 U.S. Dist. LEXIS 27710 at *8.
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not respond to Defendants’ preemption arguments or provide any other arguments in effort to
save its breach of contract claims. See generally P1. Br. at 2-9.
Even if Plaintiff had attempted to rebut this argument, its endeavors would fail. Section
5 14(a) of ERISA, 29 U.S.C.

§ 1144(a) states that ERISA “shall supersede any and all State laws

insofar as they may now or hereafter relate to any employee benefit plan described in section
4(a).” 29 U.S.C.

§ 1144(a). This preemption clause is not limited to “state laws specifically

designed to affect employee benefit plans” but also encompasses “common law causes of action”
related to said plans. Pilot Life Ins. Co.

i’.

Dedeaux, 481 U.S. 41, 47-48 (1987) (quotations and

citations omitted). Here, Counts Three and Four assert claims for breach of Tyska’s employee
benefits plan and are therefore preempted. See Compi. at ¶J 42, 46; see also Pilot Lije Ins., 481
U.S. at 47-48. Accordingly, Counts Three and Four are dismissed with prejudice. See Iqbal,
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556 U.S. at 678 (quoting Twombly, 550 U.S. at 570) (stating that a complaint will only survive a
motion to dismiss if it contains “sufficient factual matter” to “state a claim to relief that is
plausible on its face.”).
IV.

CONCLUSION

For the reasons set forth above, Defendant’s Motion to Dismiss is granted and Plaintiff’s
Complaint is dismissed in its entirety. An appropriate Order accompanies this Opinion.

DATED:
March42Ol3

L. Linares
United States District Judge

In light of this finding, the Court need not address Defendants’ argument that “Section 502(a)
of ERISA completely preempts Montvale’s state law claims against Defendants because it
improperly seeks to duplicate and supplement the exclusive remedies available under ERISA.”
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