PROFESSIONAL ORTHOPEDIC ASSOCIATES, PA et al v. HORIZON BLUE CROSS BLUE SHIELD OF NEW JERSEY

Filing 16

OPINION fld. Signed by Judge Stanley R. Chesler on 9/16/15. (sr, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
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PROFESSIONAL ORTHOPEDIC
ASSOCIATES, PA., DR. JASON COHEN,
M.D., F.A.C.S., and P.G.,
Plaintiffs,
v.
HORIZON BLUE CROSS BLUE SHIELD
OF NEW JERSEY,

Civil Action No. 14-4731 (SRC)
OPINION

Defendant.

CHESLER, District Judge
This matter comes before the Court on the motion filed by Defendant Horizon Blue Cross
Blue Shield of New Jersey (“Defendant” or “Horizon”) to dismiss the Complaint pursuant to
Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). Plaintiffs have opposed the motion.
The Court has considered the papers filed by the parties. For the reasons that follow, the Court
will grant the motion in part and deny it in part.

I.

BACKGROUND
This action to recover benefits arises out of the Employee Retirement Income Security

Act (“ERISA”), 29 U.S.C. § 1001, et seq. Plaintiff P.G., a New Jersey resident, is a member of
an employer-sponsored health care plan “issued and/or administered by Horizon.” (Compl., ¶ 5.)

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The Court will refer in this Opinion to P.G.’s health care plan as the “Horizon plan.” The
following facts are alleged in the Complaint and are taken as true for purposes of this motion
only.
On September 9, 2013, P.G. underwent spinal surgery performed by Dr. Jason Cohen, an
orthopedic surgeon with the medical provider group known as Professional Orthopedic
Associates (“POA”). Both Dr. Cohen and POA are also named as Plaintiffs in this ERISA suit.
P.G. sought coverage for their services under her Horizon plan’s provision for out-of-network
benefits, as neither Dr. Cohen nor POA were in the network of providers with which the plan has
contracted rates. On September 13, 2013, Dr. Cohen and POA submitted a claim to the Horizon
plan on P.G.’s behalf in the amount of $480,379. Horizon determined that the allowable amount
of reimbursement under P.G.’s plan was $22,272.63, and, after deducting the applicable
coinsurance obligation borne by the plan member, paid the claim accordingly. Dr. Cohen and
POA appealed the benefit determination through the plan’s two-level appeals process, but their
appeals were denied.
P.G., Dr. Cohen and POA thereafter initiated this lawsuit against Horizon to recover the
benefits they claim are due to them under the plan. Plaintiffs assert a cause of action under
ERISA § 502(a)(1)(B). 1 The Complaint also sets forth a separate count requesting attorneys’
fees in this action pursuant to ERISA § 502(g)(1).

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In Count II, the Complaint filed by Plaintiffs asserts a claim seeking statutory penalties under ERISA § 502(c) for
the alleged failure by Horizon to provide documents requested by Dr. Cohen on behalf of patient P.G. In their brief
in opposition to this motion to dismiss, Plaintiffs concede that the claim cannot be pursued against Horizon because
the disclosure obligation allegedly violated pertains to plan administrators and, as Plaintiffs further concede,
Horizon is not the plan administrator. The claim will accordingly be dismissed.

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II.

DISCUSSION
The principal issue raised in this motion to dismiss concerns the statutory standing of

provider Plaintiffs Dr. Cohen and POA to pursue a claim for benefits under ERISA §
502(a)(1)(B). In relevant part, ERISA § 502(a), the statute's civil enforcement mechanism,
empowers only the “participant or beneficiary” of a plan to bring an action “to recover benefits
due to him under the terms of his plan [or] to enforce his rights under the terms of the plan.” 29
U.S.C. § 1132(a)(1)(B). Before reaching the ERISA standing issue, however, the Court must
first address a challenge to subject matter jurisdiction presented by Defendant. Arbaugh v. Y& H
Corp., 546 U.S. 500, 514 (2006) (holding that because subject matter jurisdiction involves a
court’s power to hear a case, courts have an independent obligation to determine whether subject
matter jurisdiction exists and must dismiss an action in its entirety if it is lacking). Regardless of
whether the proper plaintiff on the ERISA claim is P.G., as the plan beneficiary, or, derivatively
under an assignment theory, her provider, Horizon argues that the action must be dismissed
pursuant to Rule 12(b)(1) for Plaintiffs’ failure to present a justiciable question under Article III
of the Constitution.
Article III, § 2 of the Constitution limits the subject matter jurisdiction of federal courts
to “cases” or “controversies.” Standing to sue or defend is an aspect of the case-or-controversy
requirement. Ne. Fla. Chapter, Associated Gen. Contractors of Am. v. Jacksonville, 508 U.S.
656, 663–64 (1993). “[T]he doctrine of standing serves to identify those disputes which are
appropriately resolved through the judicial process.” Whitmore v. Arkansas, 495 U.S. 149, 155
(1990). It is well-established that Article III standing contains three elements: (1) a plaintiff has
suffered an injury-in-fact, (2) the injury is fairly traceable to some action of the defendant and (3)

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the injury is capable of redress by the court. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560
(1992).
Horizon maintains that Complaint fails to state P.G. sustained injury in fact as a result of
any purported ERISA violation concerning underpayment of benefits, because it does not allege
that providers have balance billed her. Thus, they argue, even assuming benefits were
improperly determined, she has sustained no injury because she does not claim that she has paid
or is under an obligation to pay her providers an amount in excess of her responsibility had the
alleged ERISA violation not been committed. The Court concludes that the existence of a
financial obligation by P.G. to her out-of-network providers for services rendered has no bearing
on whether she has suffered injury in fact as a result of Horizon’s alleged failure to pay the
required benefits under the governing ERISA plan. For purposes of constitutional standing,
“injury in fact” has been defined by the Supreme Court as “an invasion of a legally protected
interest which is (a) concrete and particularized . . . and (b) actual or imminent, not conjectural or
hypothetical.” Lujan, 504 U.S. at 560 (citations and quotations omitted). Taking the
Complaint’s factual allegations as true, injury in fact occurred when Horizon determined
reimbursement for the claim related to Dr. Cohen’s surgical services in an amount that gave P.G.
a lesser benefit than the health care plan entitled her to receive. Stated differently, the receipt of
a lesser benefit than Horizon allegedly should have paid had it honored plan terms is a
sufficiently concrete invasion of P.G’s legally protected interest under ERISA and her plan to
confer Article III standing. Moreover, there is nothing hypothetical about the claimed injury. As
alleged, the harm actually occurred and is particularized to P.G. Thus, to the extent Defendant
moves for dismissal under Rule 12(b)(1) for lack of Article III standing, the motion will be
denied.

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Having determined that it has subject matter jurisdiction over this action, the Court turns
to the issue of Plaintiffs’ standing to sue under ERISA § 502(a). The standard of review
applicable to this motion to dismiss is set by Federal Rule of Civil Procedure 12(b)(6). Maio v.
Aetna, Inc., 221 F.3d 472, 482 n. 7 (3d Cir. 2000) (holding that a motion to dismiss for failure by
a plaintiff to meet statutory prerequisites to bring suit falls within the purview of Rule 12(b)(6));
see also North Jersey Brain & Spine Ctr. v. Aetna, Inc., --- F.3d ---, No. 14-2101, 2015 WL
5295125, at *1 n.3 (3d Cir. Sept. 11, 2015) (noting that, when statutory limitations to sue are
non-jurisdictional, as is the case where a party claims derivative standing to sue under ERISA §
502(a), a motion to dismiss challenging such standing is properly filed under Rule 12(b)(6)). To
survive a Rule 12(b)(6) motion to dismiss, a complaint must contain “enough facts to state a
claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In reviewing the sufficiency of a complaint, a court
“must accept all of the complaint’s well-pleaded facts as true, but may disregard any legal
conclusions.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009).
Dr. Cohen and POA are admittedly neither participants nor beneficiaries of the
governing Horizon plan. Dr. Cohen and POA claim they are authorized to bring suit based on an
assignment of rights given by P.G. in their favor. The Third Circuit recognizes that “health care
providers may obtain standing to sue [under ERISA § 502(a)] by assignment from a plan
participant.” Cardionet, Inc. v. Cigna Health Corp., 751 F.3d 165, 176 n. 10 (3d Cir. 2014).
Defendant Horizon argues that, as a threshold matter, there is an irreconcilable conflict in
the pursuit of the ERISA § 502(a) claim by both the beneficiary assignor and the provider

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assignees in this action. In other words, the claim for benefits due under the plan belongs either
to P.G. as a beneficiary of the Horizon plan or to Dr. Cohen and POA, by virtue of a valid
assignment executed by P.G., but it necessarily cannot belong to both. Horizon is correct. It is
basic hornbook law that an “assignment” accomplishes the “transfer of rights or property.”
Black’s Law Dictionary (9th ed. 2009); see also Middlesex Surgery Ctr. v. Horizon, Civ. Action
No. 13-112 (SRC), 2013 WL 775536, at *3 (D.N.J. Feb. 28, 2013) (holding same). The
“assignment of a right is a manifestation of the assignor’s intention to transfer it by virtue of
which the assignor’s right to performance by the obligor is extinguished in whole or in part and
the assignee acquires the right to such performance.” In re Jason Realty, L.P., 59 F.3d 423, 427
(3d Cir. 1995) (setting forth New Jersey law on assignments and citing Restatement (Second) of
Contracts § 317 (1981) and Aronsohn v. Mandara, 98 N.J. 92, 98 (1984); see also Amboy Nat'l
Bank v. Generali—U.S. Branch, 930 F. Supp. 1053, 1059 (D.N.J. 1996) (“the act of assignment
itself extinguishes all of the assignor’s rights in everything that is being assigned”). According
to the terms of ERISA § 502(a), the claim to recover benefits belongs to P.G., unless Plaintiffs
Dr. Cohen and POA can establish that they have acquired the right to sue under ERISA through
assignment by P.G. If that is the case, then P.G. has relinquished her right to bring the cause of
action. It is, however, abundantly clear that both assignor and assignee cannot proceed with the
claim.
The Court then turns to the assignment on which Dr. Cohen and POA base their right to
sue. According to the Complaint, P.G. executed two forms: an Authorization of Designated
Representative (“DAR”) and an Assignment of Benefits with Rights (“AOB”). The DAR
authorizes Dr. Cohen and POA to pursue appeals to Horizon in connection with the
“determination of services.” (Compl., ¶ 18.) The Complaint further alleges that, in the AOB

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“signed by Patient PG on or about April 25, 2014,” P.G. agreed that she “hereby assign[ed] all
rights . . . and benefits due me . . .to [Dr. Cohen] . . . as my designated Authorized
Representative, all medical benefits and/or insurance reimbursement, if any, otherwise payable to
me for services rendered.” (Id., ¶ 19.) That document also stated as follows:
I hereby convey to POA and Dr. Cohen, to the full extent permissible
under the law and under any applicable employee group health plan(s),
insurance policies or liability claims, any claim, chose in action, or other
right I may have to such group health plans, health insurance issuers or
tortfeasor insurer(s) under any applicable insurance policies, employee
benefit plan(s) or public policies with respect to medical expenses incurred
as a result of the medical services I received from POA and Dr. Cohen . . .
including, but not limited to (1) obtaining information about the claim to
the same extent as the assignor; (2) submitting evidence; (3) making
statements about facts or law; (4) making any request, or giving, or
receiving any notice about appeal proceedings; and (5) any administrative
and judicial actions by POA and Dr. Cohen to pursue such claim, chose in
action or right against any liable party or employee group health plan(s),
including, if necessary, to bring suit by POA and Dr. Cohen against any
such liable party or employee group health plan in my name with
derivative standing but at POA and Dr. Cohen’s expense.
(Id.)
According to the Third Circuit’s recent precedential decision in North Jersey Brain &
Spine Center v. Aetna, the language of the AOB signed by P.G. clearly constitutes a valid
transfer of her right, as plan beneficiary, to bring an ERISA § 502(a)(1)(B) claim for benefits
under the Horizon plan. In North Jersey Brain & Spine Center, the Court of Appeals held that
“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).” North Jersey Brain & Spine Ctr.,
2015 WL 5295125, at *2. In the AOB, P.G. assigned not only her right to the benefits and/or
reimbursements owed to her under her ERISA-governed Horizon plan, but also “any claim,
chose in action, or other right” she has to the plan. Pursuant to the assignment language set forth
in the Complaint, P.G. has relinquished her right to sue for benefits under ERISA § 502(a) and
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transferred it to provider Plaintiffs Dr. Cohen and POA. Her claim will accordingly be
dismissed, and insofar as Horizon’s motion seeks dismissal of the provider Plaintiffs’ § 502(a)
claim, the motion will be denied.
Apart from the issue of statutory standing, Horizon has also argued that because § 502
subjects only the plan itself to liability for unpaid benefits, the ERISA claim cannot proceed
because Horizon is neither the plan nor its administrator. See 29 U.S.C. § 1132(d)(2). ERISA §
502 authorizes suit against the plan and its administrators in their official capacities. Graden v.
Conexant Sys. Inc., 496 F.3d 291, 301 (3d Cir. 2007). ERISA defines “administrator” as “the
person specifically so designated by the terms of the instrument under which the plan is
operated” or, “if an administrator is not so designated, the plan sponsor.” 29 U.S.C. §
1002(16)(A)(i) & (ii). Plaintiffs acknowledge that Horizon is not the “plan administrator”
according to the plan but counter that they have sufficiently stated a claim against Horizon
because they have alleged that Horizon exercised discretionary authority over benefits decisions.
They argue that Horizon’s conduct in making benefits determinations render it an ERISA
fiduciary with respect to the Horizon plan and, in particular, with respect to the benefits decision
at issue and thus make it an appropriate defendant on the § 502(a)(1)(B) claim. Plaintiffs rely on
the Third Circuit’s decision in Curcio v. John Hancock Mutual Life Insurance Co., in which the
court held that suit under § 502(a)(3)(B)’s equitable relief provision could be brought against a
party other than the plan, so long as the party was a fiduciary of the plan. Curcio v. John
Hancock Mutual Life Ins. Co., 33 F.3d 226, 233 (3d Cir.1994). Other courts, including those of
this district, have been guided by Curcio to hold that a § 502(a)(1)(B) claim for benefits can be
brought against a third-party administrator of a plan if it is a fiduciary. See, e.g., Briglia v.
Horizon Healthcare Svcs., Inc., No. Civ. A. 03-6033 FLW, 2005 WL 1140687, at *5 (D.N.J.

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May 13, 2005). Moreover, in a non-precedential opinion, the Third Circuit has held that the
defining feature of a proper defendant under ERISA § 502(a)(1)(B) is whether that person or
entity “exercis[es] control over the administration of benefits.” Evans v. Employee Benefit Plan,
Camp Dresser & McKee, Inc., 311 F. App’x 556, 558 (3d Cir. 2009).
The Court finds that Plaintiffs’ allegations regarding Horizon’s role in analyzing the
claim at issue and making the challenged benefits determination are sufficient to state a § 502(a)
claim against it. Regarding the definition of a fiduciary, ERISA provides as follows:
[A] person is a fiduciary with respect to a plan to the extent (i) he
exercises any discretionary authority or discretionary control respecting
management of such plan or exercises any authority or control respecting
management or disposition of its assets, (ii) he renders investment advice
for a fee or other compensation, direct or indirect, with respect to any
moneys or other property of such plan, or has any authority or
responsibility to do so, or (iii) he has any discretionary authority or
discretionary responsibility in the administration of such plan. Such term
includes any person designated under section 1105(c)(1)(B) of this title.
29 U.S.C. § 1002(21)(A). Though Evans is not precedential, the Court is guided by its
consideration of the proper target of an ERISA claim. Rather than looking solely to the plan’s
identification of “plan administrator,” the Evans court focused on whether the identified entity
had discretion to interpret the plan and make benefits determinations. Here, the Complaint has
alleged that Horizon exercised such discretionary responsibility. Accordingly, the claim under
§ 502(a)(1)(B) asserted by Dr. Cohen and POA against Horizon will not be dismissed under Rule
12(b)(6).
Finally, insofar as Defendant moves to dismiss Count III of the Complaint, its motion
will be denied. In Count III, Plaintiffs attempt to assert a separate claim for attorneys’ fees under
ERISA § 502(g)(1). While Horizon is correct that the statute does not create an independent
cause of action for attorneys’ fees, ERISA does provide for such awards to parties that prevail on

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a cause of action authorized by the statute. As Plaintiffs Dr. Cohen and POA may proceed on
their ERISA § 502(a)(1)(B) claim, the Court will not dismiss Count III, which the Court
construes as a demand for an attorneys’ fee award.

III.

CONCLUSION
For the foregoing reasons, all claims brought by P.G. in this action will be dismissed.

Count II of the Complaint will also be dismissed. The remainder of the motion to dismiss will be
denied.
An appropriate Order will be filed.
s/ Stanley R. Chesler
STANLEY R. CHESLER
United States District Judge
Dated: September 16, 2015

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