ELITE ORTHOPEDIC & SPORTS MEDICINE PA v. NORTHERN NEW JERSEY TEAMSTERS BENEFIT PLAN

Filing 33

OPINION. Signed by Judge Esther Salas on 8/29/17. (cm, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

ELITE ORTHOPEDIC & SPORTS
MEDICINE PA,
Plaintiff,
v.
NORTHERN NEW JERSEY
TEAMSTERS BENEFIT PLAN,
Defendant.

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Civil Action No. 14-6932 (ES) (MAH)
OPINION

SALAS, DISTRICT JUDGE
This action arises out of Defendant Northern New Jersey Teamsters Benefit Plan’s (the
“NNJ Plan”) refusal to pay Plaintiff Elite Orthopedics & Sports Medicine P.A. (“Elite”) for
emergency surgical services rendered to Juanita Rivera, a participant of the Plan. The NNJ Plan
moved for summary judgment pursuant to Federal Rule of Civil Procedure 56. (D.E. No. 24).
Having considered the parties’ submissions in support of and in opposition to the instant motion,
the Court decides the matter without oral argument. See Fed. R. Civ. P. 78(b). For the reasons set
forth below, the Court GRANTS the NNJ Plan’s motion for summary judgment.
I.

BACKGROUND1
The NNJ Plan. The NNJ Plan is a self-insured multiemployer “employee benefit plan,”

as defined in 29 U.S.C. § 1002(3) and § 1002(37)(A)(i), and is the result of collective bargaining
between several unions and employers. (D.E. No. 27, Defendant’s Statement of Material Facts

1

The Court distills these facts from the parties’ statements of material facts and exhibits accompanying the
parties’ submissions. Unless otherwise noted, these background facts are undisputed. Additional facts are provided
elsewhere in this Opinion as relevant to the Court’s analysis.

1

Not in Dispute (“SMF”) ¶ 1). The NNJ Plan is maintained pursuant to an Agreement and
Declaration of Trust (“Trust Agreement”) and is administered by a Board of Trustees comprising
representatives of the unions and contributing employers. (Id. ¶¶ 1-2).
Trustees.

The Board of Trustees (“Trustees”) is the “plan sponsor” and “plan

administrator” as defined by Employee Retirement Income Security Act of 1974 (“ERISA”). (Id.);
29 U.S.C. § 1002(16). The NNJ Plan offers several different benefit levels for hospitalization,
medical, and other benefits. (SMF ¶ 4). The specific benefit plan under which a participant is
covered is based upon the contributions negotiated in the participant’s employer’s collective
bargaining agreement. (Id.). Under the Trust Agreement, the Trustees are responsible for
determining the form, nature, and amount of benefits to be provided by the NNJ Plan. (Id. ¶ 8).
Specifically, the Trust Agreement (i) vests the Trustees with the power to interpret, apply, and
construe the terms of the Trust Agreement; and (ii) renders the Trustees’ interpretation,
application, or construction of the terms binding on the unions, employers, and employees. (Id.).
Elite. Elite is a medical services provider. (Id. ¶ 7). On October 24, 2013, Jason
Schneidkraut, M.D., a surgeon employed by Elite, performed emergency surgery on Ms. Rivera to
ameliorate complications caused by a break in a steel rod that had previously been implanted in
her femur. (Id. ¶ 15; D.E. No. 29, Fahimi Affidavit ¶ 4). Ms. Rivera, a “Plan N” level participant,
subsequently executed an assignment of benefits assigning the right to payment of benefits to Elite
for services rendered. (SMF ¶¶ 7, 15).
Plan N Description. The Plan N Summary Plan Description (“Description”) (i) provides
the Trustees with further authority to interpret and construe the terms of the benefit plans and the
Trust Agreement; and (ii) notes that “[a]ny determination made by the Board of Trustees with
respect to a Participant’s rights or benefits will be entitled to the maximum deference permitted by

2

law and will be final and binding upon all Participants and beneficiaries.” (Id. ¶ 9). Moreover,
the “ERISA and Appeal Rights” section of the Plan N Description details the Trustees’ discretion:
The Trustees shall, subject to the requirements of law, be the sole judges of
the standard of proof required in any case and the application and
interpretation of this Plan and any other Plan documents and to decide all
matters arising in connection with the operation or administration of the
Plan. Without limiting the generality of the foregoing, the Trustees shall
have the sole and absolute discretionary authority to: take all actions and
make all decisions with respect to the eligibility for and the amount of
benefits under the Plan; formulate, interpret and apply rules, regulations and
policies necessary to administer the Plan in accordance with its terms;
decide questions, including legal and factual questions, relating to the
payment of benefits under the Plan; resolve and/or clarify any ambiguities,
inconsistencies and omissions arising under the Plan or other Plan
documents; and to process and approve or deny benefit claims and rule on
any benefit exclusions. The decision upon review of the Board of Trustees
or its designated committee shall be given deference in all courts of law to
the greatest extent allowed by applicable law.
(Id. ¶ 10).
Generally, a participant’s benefits are limited to those set forth in the plan documents for
the applicable plan of benefits, and the Plan N level of benefits is no exception. (Id. ¶ 11). Notably,
the Plan N Description states, “IMPORTANT! NETWORK ONLY COVERAGE. THIS PLAN
COVERS SERVICES FOR NETWORK PROVIDERS. THIS MEANS THAT THERE IS NO
COVERAGE FOR DOCTORS, LABORATORIES, OR GENERALLY, OTHER PROVIDERS
THAT ARE NOT IN THE NETWORK.” (D.E. No. 25-1 at 7).
At all times relevant to this action, the NNJ Plan utilized Horizon Blue Cross Blue Shield
of New Jersey (“Horizon”) as its Preferred Provider Organization for facilities and medical
providers. (SMF ¶ 13). The Plan N Description defines “Preferred Provider Organization” as a
“group of selected physicians, specialists, Hospitals and other treatment centers which have agreed
to provide their services to Plan Participants and beneficiaries at a negotiated rate under the terms
of an agreement.” (Id. ¶ 12). Such providers are referred to as “Network providers.” (Id.).
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Conversely, medical providers not under contract “to provide services at negotiated rates” are
considered “Out-of-Network” by the Plan N Description. (Id.). Here, the parties agree that Elite
was an “Out-of-Network” provider under the Plan N Description. (Id. ¶ 14; D.E. No. 32, Plaintiff’s
Reply to Defendant’s Statement of Material Facts (“RSMF”) ¶ 14).
Summary of Allegations. Although Elite admits that Dr. Schneidkraut was an Out-ofNetwork provider, it alleges (namely, by including in its Complaint hospital authorization number
“#132960658”) that it is entitled to relief because the NNJ Plan preauthorized Dr. Schneidkraut’s
services. (D.E. No. 1-1, (“Compl.”) ¶ 3). Elite further argues that it would not have performed
the surgery “but for said representation.” (Id. ¶ 5). The NNJ Plan, however, contends that the
authorization Elite allegedly relied on was provided by Horizon, “not the NNJ Plan, and was
provided with respect to the hospital charges, not to the surgeon’s charges.” (D.E. No. 26, (“Def.
Mov. Br.”) at 22). Generally, Horizon provides preauthorization only for inpatient confinement—
not for procedures performed during the stay. (SMF ¶ 25). Further, the NNJ Plan does not demand
preauthorization for surgery, but where such preauthorization is sought, only the NNJ Plan could
grant it. (Id.). Finally, Horizon admitted that it provided the preauthorization for the hospital stay.
(Id. ¶ 26).
Procedural History. In response to the NNJ Plan’s denial of coverage for the surgery Dr.
Schneidkraut performed on Ms. Rivera, Elite appealed to the Board of Trustees. (SMF ¶ 18). The
Trustees found that because Elite was an Out-of-Network provider and because the Plan N level
of benefits did not provide coverage for Out-of-Network providers (even in emergency situations),
the NNJ Plan properly denied Elite’s claims. (Id.). By appealing to the Board of Trustees, Elite
exhausted its administrative remedies available through the NNJ Plan with respect to the surgery
Dr. Schneidkraut performed on Ms. Rivera. (Id. ¶ 19).

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Accordingly, on September 18, 2014, Elite initiated this lawsuit in the Superior Court of
New Jersey, Bergen County. (D.E. No. 1-1 at 3). The NNJ Plan removed the case to federal court
(D.E. No. 1) and moved for summary judgment (D.E. No. 24). Elite opposed the NNJ Plan’s
motion. (D.E. No. 29, (“Pl. Opp. Br.”) at 35-38). And on September 26, 2016, the NNJ Plan
replied to Elite’s opposition. (D.E. No. 30, (“Def. Reply Br.”)). Due to an error, the Court
instructed Elite to resubmit its response to the NNJ Plan’s statement of material facts (D.E. No.
31), which it refiled on March 3, 2017 (D.E. No. 32). The matter is now ripe for resolution.
II.

LEGAL STANDARD
Summary judgment is appropriate “if the movant shows that there is no genuine dispute as

to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). A fact is material if it “might affect the outcome of the suit under the governing law.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).2 A “genuine” issue of material fact
exists for trial “if the evidence is such that a reasonable jury could return a verdict for the
nonmoving party.” Id.
The movant bears the initial burden of establishing that no genuine issue of material fact
exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Where the non-moving party bears
the burden of proof at trial, the moving party may discharge its burden by showing “that there is
an absence of evidence to support the nonmoving party’s case.” Id. at 325. If the movant meets
this burden, the non-movant must then set forth specific facts that demonstrate the existence of a
genuine issue for trial. Id. at 324; Azur v. Chase Bank, USA, Nat’l Ass’n, 601 F.3d 212, 216 (3d
Cir. 2010).

2

Unless otherwise indicated, all internal citations and quotation marks are omitted, and all emphasis is added.

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Conversely, where the moving party bears the burden of proof at trial, it “must show that
it has produced enough evidence to support the findings of fact necessary to win.” El v. Se. Pa.
Transp. Auth. (SEPTA), 479 F.3d 232, 237 (3d Cir. 2007). “Put another way, it is inappropriate to
grant summary judgment in favor of a moving party who bears the burden of proof at trial unless
a reasonable juror would be compelled to find its way on the facts needed to rule in its favor on
the law.” Id. at 238.
Notably, the “evidence of the non-movant is to be believed, and all justifiable inferences
are to be drawn in his favor.” Anderson, 477 U.S. at 255. But the non-moving party “must do
more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); see also Swain v. City of
Vineland, 457 F. App’x 107, 109 (3d Cir. 2012) (stating that the non-moving party must support
its claim “by more than a mere scintilla of evidence”).
III.

DISCUSSION
A. ERISA Preempts Elite’s State Law Claims
Elite alleges that the NNJ Plan preauthorized Ms. Rivera’s emergency surgery, “promised

to pay” for the cost of the surgery, and subsequently failed to pay for Dr. Schneidkraut’s services.
(Compl. ¶ 3). Elite also alleges that it would not have performed the surgery “but for” the NNJ
Plan’s representation that it would pay for the procedure. (Id. ¶¶ 4-5). It is unclear from Elite’s
Complaint, however, whether it relies on state or federal law. (See generally id.). To the extent
Elite’s claims rely upon state law, they are preempted by ERISA and must be dismissed.
Generally, state law causes of action that relate to employee benefit plans are preempted
by ERISA. Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 138 (1990). Congress inserted a
provision in ERISA stating that the law “supersede[s] any and all State laws insofar as they may

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now or hereafter relate to any employee benefit plan.” 29 U.S.C. § 1144(a). The breadth of
ERISA’s preemption provision applies to “all [State] laws, decisions, rules, regulations, or other
State action having the effect of law.” Id. § 1144(c)(1). As the Supreme Court observed in
Ingersoll-Rand, ERISA’s preemption clause is “deliberately expansive” in order to “establish
pension plan regulation as exclusively a federal concern.” 498 U.S. at 138; see also Khan v.
Guardian Life Ins. Co. of Am., No. 16-0253, 2016 WL 1574611, at *2 (D.N.J. Apr. 19, 2016)
(noting that the clause “has been interpreted broadly in light of the legislative purpose in
establishing ERISA as the exclusive means of obtaining a legal remedy related to an employee
benefit plan.”). Further, the Court noted that a state law “relates to” an employee benefit plan even
if it is not “specifically designed to affect such plans, or the effect is only indirect.” IngersollRand, 498 U.S. at 139.
ERISA states that a civil action may be brought “by a participant or beneficiary . . . to
recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the
plan, or to clarify his rights to future benefits under the terms of the plan.” 29 U.S.C. §
1132(a)(1)(B). Because state law actions are largely preempted by ERISA, such civil actions
generally must be brought in federal court. For example, state breach-of-contract claims against
an ERISA plan stemming from a denial of benefits are preempted. See Ford v. UNUM Life Ins.
Co. of Am., 351 F. App’x 703, 706 (3d Cir. 2009) (noting that state law claims such as “breach of
contract, negligence, and intentional infliction of emotional distress” are preempted if they “relate
to an ERISA-governed benefits plan”). For the foregoing reasons, to the extent that Elite’s claims
rely on state law, they are preempted by ERISA.

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B. The Board of Trustees’ Decision Was Neither Arbitrary Nor Capricious
Standard of Review. The Supreme Court has held that where a benefit plan confers
discretion upon an administrator to construe or interpret the language in the plan, such
interpretation and construction warrants judicial deference unless it constitutes an abuse of
discretion. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 111, 115 (1989). And in the
Third Circuit, “[w]hen a plan grants its administrator such discretionary authority, trust principles
make a deferential standard of review appropriate . . . and we review a denial of benefits under an
arbitrary and capricious standard.” Fleisher v. Standard Ins. Co., 679 F.3d 116, 120-21 (3d Cir.
2012); see also McLeod v. Hartford Life & Accident Ins. Co., 372 F.3d 618, 623 (3d Cir. 2004)
(applying the arbitrary and capricious standard where the plan document provided the
administrator with “full discretion and authority to determine eligibility for benefits and to construe
and interpret all terms of the Plan”). In reviewing denial-of-coverage claims, courts treat the abuse
of discretion standard as synonymous with the arbitrary and capricious standard. Hunter v.
Federal Express Corp., 169 F. App’x 697, 703 (3d Cir. 2006).
Here, the Plan N Description vests the Board of Trustees with “sole authority and discretion
to interpret and construe the terms of this Plan . . . including provisions establishing eligibility for
benefits . . . as well as all other matters.” (SMF ¶ 9). The Plan N Description also notes that “[a]ny
determination made by the Board of Trustees with respect to a Participant’s rights or benefits will
be entitled to the maximum deference permitted by law and will be final and binding upon all
Participants and beneficiaries.” (Id.). Similarly, the “ERISA and Appeal Rights” section of the
Plan N Description grants the Trustees “absolute discretionary authority to . . . decide questions,
including legal and factual questions, relating to the payment of benefits under the Plan.” (Id. ¶
10). Because these provisions within the Plan N Description unequivocally grant the Trustees

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discretionary authority, the Court finds that the arbitrary and capricious standard governs the
Trustees’ decision.
Analysis. Generally, “[a]n administrator’s decision is arbitrary and capricious if it is
without reason, unsupported by substantial evidence or erroneous as a matter of law.” Fleisher,
679 F.3d at 121. Conversely, “[a]n administrator’s interpretation is not arbitrary if it is reasonably
consistent with unambiguous plan language.” Id. Further, a trustee’s interpretation “should be
upheld even if the court disagrees with it, so long as the interpretation is rationally related to a
valid plan purpose and not contrary to the plain language of the plan.” Pokol v. E.I. du Pont de
Nemours & Co., 963 F. Supp. 1361, 1370 (D.N.J. 1997); see also Foley v. Int’l Bhd. of Elec.
Workers Local Union 98 Pension Fund, 271 F.3d 551, 555 (3d Cir. 2001) (noting that the district
court “was bound to affirm [the administrator’s] decision if it was not contrary to the Plan’s terms
and was rationally related to a legitimate Plan purpose”); Orvosh v. Program of Grp. Ins. for
Salaried Emp. of Volkswagen of Am, 222 F.3d 123, 129 (3d Cir. 2000) (stating that “a plan
administrator’s decision will be overturned only if it is clearly not supported by the evidence in
the record or the administrator has failed to comply with the procedures required by the plan”).
In determining whether an administrator’s interpretation of a plan is reasonable, the Third
Circuit has employed a “series of helpful factors”:
(1) whether the interpretation is consistent with the goals of the Plan; (2)
whether it renders any language in the Plan meaningless or internally
inconsistent; (3) whether it conflicts with the substantive or procedural
requirements of the ERISA statute; (4) whether the [relevant entities have]
interpreted the provision at issue consistently; and (5) whether the
interpretation is contrary to the clear language of the Plan.
Moench v. Robertson, 62 F.3d 553, 566 (3d Cir. 1995). No single Moench factor is dispositive;
rather, a reviewing court must examine the Moench factors holistically in making a determination.
McCall v. Metro. Life Ins., 956 F. Supp. 1172, 1182 (D.N.J. 1996).
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Here, the NNJ Plan contends that the Trustees’ denial of Elite’s claims “reflected their
position that the intent of the language in the Plan N [Description] was to completely exclude
coverage for treatment or services rendered by non-network providers.” (Def. Mov. Br. at 18).
Further, it asserts that this interpretation was not unreasonable, irrational, or contrary to any of the
Plan N language. (Id.). Specifically, the NNJ Plan points to the language in the Plan N Description
stating that Plan N provides “NETWORK ONLY COVERAGE” and that “THIS PLAN COVERS
SERVICES FOR NETWORK PROVIDERS. THIS MEANS THAT THERE IS NO COVERAGE
FOR DOCTORS, LABORATORIES, OR GENERALLY, OTHER PROVIDERS THAT ARE
NOT IN THE NETWORK.” (Id. at 17). The NNJ Plan also references the Plan N Description’s
express statement that “Major Medical benefits are provided through Network providers only.”
(Id.). Relying on both of these provisions, the NNJ Plan concludes that the Trustees’ interpretation
of the Plan N documents—that no Out-of-Network coverage is provided—comports precisely with
Plan N language. (Id. at 18).
Elite, on the other hand, contends that the Trustees’ determination is arbitrary and
capricious. (Pl. Opp. Br. at 36). Elite argues that the NNJ Plan has already recognized that its
prior policy was unfair when it subsequently amended Plan N to cover emergency Out-of-Network
surgical services. (Id. at 35-36). Elite then notes that New Jersey state law requires “[c]overage
for out of service area medical Care when medically necessary for urgent or emergency conditions
where the member cannot reasonably access[] in network services.” (Id. at 36). Relying on this
provision, Elite alleges that “a body of law makers has recognized that [the NNJ Plan’s] policy is
unfair and creates a hardship.” (Id.). Elite next argues that although the NNJ Plan defines
“medically necessary” and “physician,” these definitions do not foreclose payments to Out-ofNetwork providers. (Id. at 36-37). Consequently, Elite concludes that “care of the patient is

10

foremost regardless of whether” the provider is Out-of-Network. (Id. at 37). Finally, Elite argues
that the NNJ Plan’s refusal to pay is arbitrary and capricious because it paid Elite for nonemergency surgery performed by Dr. Schneidkraut in June, July, and August of 2015. (Id.).
Contrary to Elite’s assertions, this Court is satisfied that the Trustees’ interpretation is
supported by substantial evidence, rationally related to the NNJ Plan’s purpose, and not contrary
to NNJ Plan’s plain language. The Court notes that the plain language of the Plan N Description
adequately indicates the NNJ Plan’s intent to cover predominantly in-network services, providing
only limited and explicit exceptions for Out-of-Network coverage. In the opening pages of the
Plan N Description, the NNJ Plan expressly states that no coverage is provided for doctors,
laboratories, or other providers that are Out-of-Network. (SMF ¶ 11). Similarly, the NNJ Plan
language also states that major medical benefits will only be provided through network providers.
(Id. ¶ 24). Notably, however, the Plan N Description also explicitly states that Out-of-Network
coverage is provided for hospitals, but requires 25% co-insurance from the participant. (D.E. No.
25-1 at 7). The Court holds that the Trustees’ finding that the NNJ Plan properly denied Elite’s
claim is consistent with the unequivocal language employed by the Plan N Description, stating
that coverage for Out-of-Network doctors (like Dr. Schneidkraut) is not provided.
Moreover, the Trustees’ interpretation satisfies the Moench factors. As to the first factor
(and as the NNJ Plan aptly notes), the Trustees’ interpretation of the Plan N Description is
consistent with the goals of the NNJ Plan to provide hospitalization, major medical, dental, optical,
and other benefits to participants while preserving NNJ Plan resources for participants and
dependents who are entitled to benefits under the terms of the NNJ Plan. (Def. Mov. Br. at 20);
see also Pers. Pool of Ocean Cty., Inc. v. Trs. of Heavy & Gen. Laborers’ Welfare Fund, 899 F.
Supp. 1362, 1372-73 (D.N.J. 1995) (holding that the first factor was met where the “goals of the

11

Plan are to provide those benefits permitted by the Plan in accordance with its provisions” where
the explicit language of that plan provided only limited benefits for the type of expense at issue).
Similarly, the second factor is met because the Trustees’ interpretation of the Plan N Description
does not render any language in the NNJ Plan meaningless or internally inconsistent. To the
contrary, the interpretation animates the precise language of the Plan N Description.
As to the third factor (and as the NNJ Plan again notes), the Trustees’ interpretation does
not conflict with any of the substantive or procedural requirements of ERISA because there is no
substantive requirement under ERISA that would mandate the coverage Elite seeks. (Def. Mov.
Br. at 20); see also Davidson v. Wal-Mart Assocs. Health & Welfare Plan, 305 F. Supp. 2d 1059,
1087 (S.D. Iowa 2004) (third factor satisfied because “ERISA does not create a substantive
entitlement to [health] benefits . . . [t]he level of benefits to be provided is within the control of the
private parties creating the plan . . . [and] ERISA does not prohibit exclusions in plan benefits
where the exclusion has a legitimate business purpose”).
As to the fourth factor, Elite makes no showing that the NNJ Plan has interpreted the type
of exclusion at issue inconsistently.3 (See generally Pl. Opp. Br.). Further, in their denial, the
Trustees noted that Plan N does not reimburse doctors, laboratories, or other providers that are
Out-of-Network. (D.E. No. 25-3 at 4). Finally, as to the fifth factor (and as this Court has already
noted), the interpretation is not contrary to the NNJ Plan language; rather, the interpretation
comports with NNJ Plan language requiring the exclusion of coverage for claims involving Outof-Network doctors and providers. (See D.E. No. 25-1 at 7).

3

“The non-moving party . . . must point to actual evidence in the record on which a jury could decide an issue
of fact its way.” El v. Se. Pa. Transp. Auth., 479 F.3d 232, 238 (3d Cir. 2007); see also Berckeley Inv. Grp. v. Colkitt,
455 F.3d 195, 201 (3d Cir. 2006) (“[S]ummary judgment is essentially ‘put up or shut up’ time for the non-moving
party: the non-moving party must rebut the motion with facts in the record and cannot rest solely on assertions made
in the pleadings, legal memoranda, or oral argument.”).

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Elite asserts that the New Jersey legislature has condemned insurance plans (like Plan N at
all times relevant to this action) that do not provide coverage for urgent Out-of-Network medical
care. (Pl. Opp. Br. at 36). But as the NNJ Plan notes (and Elite concedes), ERISA largely preempts
state law. (Def. Mov. Br. at 9-12; Def. Reply Br. at 2; Pl. Opp. Br. at 36). Consequently, Elite’s
reliance on the New Jersey legislature’s opinions concerning such insurance plans is inapposite.
Next, Elite argues that the Plan N Description suggests that the care of the patient is foremost
regardless of whether the provider is Out-of-Network. (Pl. Opp. Br. at 37). Elite draws this
conclusion based on the Plan N Description’s failure to note, in defining “physician” and
“medically necessary,” that Out-of-Network payments will not be made. (Id. at 36-37). Generally,
“[a]lthough the specific usually controls the general in contract construction, we are to construe a
contract as a whole.” In re Cendant Corp. Sec. Litig., 454 F.3d 235, 246 (3d Cir. 2006). Elite’s
argument wholly ignores the clarity with which the Plan N Description, in its opening papers,
states in capital letters that coverage is not provided by the NNJ Plan for Out-of-Network doctors,
laboratories, or other providers (with an exception for Out-of-Network hospitals). (D.E. No. 25-1
at 7).
Elite also argues that the NNJ Plan’s refusal to pay for Dr. Schneidkraut’s services is
arbitrary and capricious because the NNJ Plan paid for his services in June, July, and August of
2015 for non-emergency surgery. (Pl. Opp. Br. at 37). Elite, however, overlooks the fact that, as
of December 1, 2014, Ms. Rivera was moved from the Plan N level of benefits (which did not
provide any benefits for Out-of-Network providers) to the Plan 10 level of benefits (which did
provide Out-of-Network benefits). (Def. Reply Br. at 4).4 Because the Court finds—and Elite

4

Elite also cites case law demonstrating that an administrator’s failure to notify employees of certain severance
provisions and subsequent failure to pay benefits was deemed arbitrary and capricious. (Pl. Opp. Br. at 37). Elite
goes on to argue that Horizon, as an agent of the NNJ Plan, failed to notify St. Joseph’s Hospital. (Id.). Despite these

13

fails to show otherwise—that the NNJ Plan’s refusal to provide coverage for Dr. Schneidkraut’s
services was rationally related to Plan N’s purpose to provide coverage only for in-network doctors
and that the Trustees’ interpretation meets the Moench factors, the Court concludes that the
Trustees’ decision is neither arbitrary nor capricious.
C. Elite Has Abandoned Its Misrepresentation Claim
Elite alleges that it relied on the NNJ Plan’s representation in performing the surgery and
that it “would not have performed the surgery but for” the NNJ Plan’s representation that it “precertified and authorized Plaintiff ELITE to perform emergency surgery on JUANITA RIVERA.”
(Compl. ¶¶ 3-5). Elite references a “hospital authorization number” of “#132960658” as evidence
of the NNJ Plan’s preauthorization. (Id. ¶ 3).
While Elite makes much of the NNJ Plan’s alleged representation, it fails to explicitly set
out a misrepresentation claim as one of its counts. Further, the NNJ Plan contends that Elite cannot
establish a claim for misrepresentation in this case largely because the alleged authorization
number Elite relied on was provided by Horizon with respect to “the hospital charges, not to the
surgeon’s charges.” (Def. Mov. Br. at 22). The NNJ Plan also notes that it “does not require that
providers receive preauthorization for surgery,” but where such authorization is requested, “it
would only be given by the NNJ Plan, not Horizon.” (Id. at 23).
The Court finds that Elite has abandoned any alleged misrepresentation claim because it
failed to address this claim in its opposition to the NNJ Plan’s motion for summary judgment. See
Bray v. Schlumberger Tech. Corp., No. 10-4428, 2012 WL 1941855 (D.N.J. May 29, 2012)
(concluding that plaintiff abandoned and waived her disparate-impact and aiding-and-abetting
claims where she failed to respond to defendant’s arguments relating to those claims in her

contentions, however, Elite fails to allege precisely what Horizon failed to notify St. Joseph’s Hospital about and does
not offer any proof that Horizon was an agent of the NNJ Plan. (See Def. Reply Br. at 4-5).

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response to defendant’s summary judgment motion); Werner v. Warrell Corp., No. 09-1444, 2012
WL 2979034, at *9 (M.D. Pa. Feb. 17, 2012) (finding that plaintiff abandoned her retaliation
claims where she failed to address defendant’s arguments with respect to those claims in her
response to defendant’s motion for summary judgment).
To be sure, even if Elite had not abandoned its misrepresentation claim, the Court agrees
with the NNJ Plan that Elite has failed to establish such a claim. To establish a claim under ERISA
for equitable estoppel, a plaintiff “must establish (1) a material representation, (2) reasonable and
detrimental reliance upon the representation, and (3) extraordinary circumstances.” Curcio v. John
Hancock Mut. Life Ins., 33 F.3d 226, 235 (3d Cir. 1994). “[A] misrepresentation is material if
there is a substantial likelihood that it would mislead a reasonable employee in making an
adequately informed decision.” Fischer v. Phila. Elec. Co., 994 F.2d 130, 135 (3d Cir. 1993). As
to the second prong, a plaintiff must show “reasonableness and injury.” Curcio, 33 F.3d at 237.
For the third prong, a plaintiff must make “a showing of affirmative acts of fraud, establishing a
network of misrepresentations that arises over an extended course of dealing between parties, or
based on the vulnerability of particular plaintiffs.” Lees v. Munich Reinsurance Am., Inc., No. 142532, 2016 WL 164611, at *4 (D.N.J. Jan. 13, 2016) (citing Kurz v. Phila. Elec. Co., 96 F.3d 1544,
1553 (3d Cir. 1996)). This Circuit “has declined to find extraordinary circumstances where there
was an oral misrepresentation to beneficiaries, but no showing of repeated misrepresentations over
time.” Id. at *4. Conversely, the Third Circuit “has found extraordinary circumstances existed
where there were repeated oral and written misrepresentations coupled with plaintiff[’]s diligence
in trying to determine his benefits.” Id.
Here, Elite alleges that it relied on a representation made by the NNJ Plan in performing
the surgery on Ms. Rivera. (Compl. ¶¶ 3-5). But Elite cannot show that the NNJ Plan made a

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material representation because the only representation made to Elite was by Horizon, not the NNJ
Plan. (Def. Mov. Br. at 22-23). Similarly, because Horizon (not the NNJ Plan) provided Elite
with an authorization number, Elite cannot argue that it reasonably relied on a representation by
the NNJ Plan in performing the surgery. (See id.). Finally, Elite cannot show the existence of
extraordinary circumstances because there were no repeated oral or written misrepresentations
made to it; rather, as the NNJ Plan notes, there was no representation made to Elite that coverage
would be provided for the surgery. (Id.). Because Elite has abandoned—and nevertheless cannot
establish—a claim for misrepresentation, summary judgment is granted in favor of the NNJ Plan
on this issue.
D. Elite Failed to Exhaust its Administrative Remedies
In its Complaint, Elite seeks payment of $61,220.00 in benefits. (Compl. ¶ 7). The charges
sought by Dr. Schneidkraut on October 24, 2013, for Ms. Rivera’s surgery, however, totaled
$30,014.00. Aside from payment for the surgery, Elite seeks payment for services rendered by
John F. Ambrose, M.D., on October 24, 2013, and Dr. Schneidkraut on October 22, 2013. (Def.
Mov. Br. at 26-27).
Under § 502(a)(1)(B) of ERISA, a civil action may be brought to recover benefits due
under the terms of one’s plan. 29 U.S.C. § 1132 (a)(1)(B). However, “a federal court will not
entertain an ERISA claim unless the plaintiff has exhausted the remedies available under the plan.”
Harrow v. Prudential Ins. Co. of Am., 279 F.3d 244, 249 (3d Cir. 2002). Specifically, courts
require:
exhaustion of administrative remedies to help reduce the number of
frivolous lawsuits under ERISA; to promote the consistent treatment of
claims for benefits; to provide a nonadversarial method of claims
settlement; and to minimize the costs of claims settlement for all concerned.
Moreover, trustees of an ERISA plan are granted broad fiduciary rights and
responsibilities under ERISA . . . and implementation of the exhaustion
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requirement will enhance their ability to expertly and efficiently manage
their funds by preventing premature judicial intervention in their decisionmaking processes.
Id. at 249.
Here, the Plan N Description provides an administrative remedy in the form of an appeal:
when the NNJ Plan denies a participant’s claim for benefits, the participant may appeal the NNJ
Plan’s determination within 180 days of receiving the notice of denial. (SMF ¶ 27). If a participant
exhausts the appeals process and wishes “to file a lawsuit challenging the final determination, [the
participant] must do so within 12 months of the date of the final notice of denial.” (Id.). Although
Elite appealed the denial of benefits for the surgical services rendered by Dr. Schneidkraut on
October 24, 2013, it did not appeal the denial of benefits for services by Dr. Ambrose and Dr.
Schneidkraut on October 24, 2013 and October 22, 2013, respectively. (Id.). Elite makes a bald
assertion in its response to the NNJ Plan’s Statement of Material Facts that it appealed those
decisions, but has furnished no evidence consistent with this allegation.5 (D.E. No. 32 ¶ 28).
Therefore, Elite has failed to exhaust the NNJ Plan’s administrative remedies, as required by
ERISA, and any claims based on these services must be denied. Furthermore, like with its
misrepresentation claim, Elite did not respond to any of the NNJ Plan’s arguments addressing these
claims in its opposition to the NNJ Plan’s motion for summary judgment. Accordingly, Elite’s
claim for payment of services rendered by Dr. Ambrose on October 24, 2013, and Dr. Schneidkraut
on October 22, 2013, are deemed abandoned.

5

Pursuant to Local Civil Rule 56.1, the non-moving party must “furnish . . . a responsive statement of material
facts, addressing each paragraph of the movant’s statement, indicating agreement or disagreement and, if not agreed,
stating each material fact in dispute and citing to the affidavits and other documents submitted in connection with the
motion.” A party’s failure to appropriately dispute stated facts with record evidence constitutes an acceptance of the
other party’s facts as undisputed. McCann v. Unum Provident, 921 F. Supp. 2d 353, 359 (D.N.J. 2013); see also El,
479 F.3d at 238 (“The non-moving party cannot rest on mere pleadings or allegations; rather it must point to actual
evidence in the record on which a jury could decide an issue of fact its way.”).

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IV.

CONCLUSION
For the reasons set forth above, the Court GRANTS the NNJ Plan’s motion for summary

judgment. An appropriate order accompanies this Opinion.

s/ Esther Salas
Esther Salas, U.S.D.J.

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