DRZALA, MD v. HORIZON BLUE CROSS BLUE SHIELD et al
Filing
42
LETTER ORDER & OPINION granting in part and denying in part 9 Motion to Dismiss ; granting in part and denying in part 17 Motion to Dismiss as they pertain to Count I, Count III and Count IV, and those counts are dismissed with prejudice. As to Count II, the motions are denied without prejudice, etc. Signed by Judge John Michael Vazquez on 5/18/16. (cm )
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
CHAMBERS OF
JOHN MICHAEL VAZQUEZ
UNITED STATES DISTRICT
JUDGE
2
FRANK R. LAUTENBERG
POST OFFICE AND
COURTHOUSE
FEDERAL SQUARE, ROOM
417
NEWARK, NJ 07102
973-297-4851
May 18, 2016
VIA ECF
LETTER ORDER AND OPINION
Re:
Mark Drzala, MD on assignment of Louis V. v. Horizon Blue Cross Blue
Shield and Anthem Blue Cross Blue Shield of Ohio
Civil Action No. 15-8392
Dear Litigants:
The Court has reviewed Defendant Horizon Blue Cross Blue Shield (“Horizon”) and
Defendant Anthem Blue Cross Blue Shield of Ohio’s (“Anthem,” collectively “Defendants”)
Motions to Dismiss pursuant to Rule 12 of the federal Rules of Civil Procedure. For the reasons
stated below, the motions are granted in part and denied in part. Specifically, the motions to
dismiss with respect to Counts I, III and IV are granted and those counts are dismissed with
prejudice. As to the sole remaining count, Count II, the motion is denied without prejudice.
This case concerns Defendants’ alleged failure to reimburse Plaintiff Mark Drzala
(“Drzala” or “Plaintiff’) for the medical procedures he performed on Defendants’ insured. Louis
V. Plaintiff originally filed a Complaint on October 5, 2015, against Defendants in New Jersey
Superior Court. D.E. 1, Ex. A. In his Complaint, Plaintiff asserted four causes of action: Count I
Breach of Contract, Count II Failure to Make all Payments Pursuant to Member’s Plan under
29 U.S.C. § 1 132(a)(l)(B), Count III Breach of Fiduciary Duty and Co-fiduciary Duty under 29
U.S.C. § ll32(a)(3), 29 U.S.C. § 1104(a)(1) and 29 U.S.C. § 1105(a), and Count IV failure to
Establish/Maintain Reasonable Claim Procedures under 29 C.F.R. 2560.503-1. On December 2,
2015, Defendants removed the matter to this Court. D.E. 1. Defendants now move to dismiss
Plaintiffs Complaint. D.E. 9; D.E. 17.
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On May 5, 2016, the Court held oral argument on these motions. D.E. 41. Defendants
allege that Plaintiffs Breach of Contract claim is preempted by the Employee Retirement Income
Security Act (“ERISA”). Defendants further allege that the anti-assignment provision contained
within the Siemens Benefits Plan (the “Plan”)’ prevents assignment from Louis V to Dr. Drzala,
and therefore Plaintiff lacks standing to bring these claims. Additionally, Defendants take issue
with the duplicative relief requested in Count II and Count III. Defendants further allege that
equitable relief is the only remedy available under Count III, and that Plaintiff fails to sufficiently
state the type of equitable relief he seeks. Defendants also allege that Count IV does not contain
a private right of action and should therefore be dismissed. Defendant Horizon separately alleges
that because it does not administer the Plan at issue, it is not a “fiduciary” under ERISA and the
Complaint should be dismissed against it in the entirety.
Plaintiff voluntarily dismissed Count Ion May 4, 2016. D.E. 39. Plaintiff argues, however,
that the anti-assignment clause in the Plan is ambiguous and thereby void.2 further, Plaintiff
argues that Count III should not be dismissed at this early stage of the proceedings, and
distinguishes Defendants’ cases cited in favor of a dismissal of Count IV.3 Lastly, Plaintiff argues
that Horizon’s status as a fiduciary is fact-specific, requiring discovery, and that dismissal at this
point would be premature.
The facts of this matter derive from Plaintiffs Complaint, the exhibits attached thereto, as
well as the exhibits attached to each party’s motion papers. See Pension Benefit Gitar. Corp. v.
White Consol. Inthts., Inc., 99$ F.2d 1192, 1196 (3d Cir. 1993) (“[A] court may consider an
undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss if
the plaintiffs claims are based on the document.”). The additional documents considered by the
Court are the Plan, the assignment at issue, and documents related to the internal benefits’ appeal.
Louis V, during the relevant time, was enrolled in the Plan which is administered by Defendants
Horizon and Anthem. D.E. 1, Ex. A ¶ 14. Plaintiff Drzala, a healthcare provider, performed spinal
surgery on Louis Von or about April 23, 2013. D.E. 1, Ex. A ¶J 5-6. Plaintiff then requested
reimbursement, in the amount of $249,435.00, for the medical services rendered to Louis V. D.E.
1, Ex. A ¶ 2. Subsequently, Plaintiff was partially denied reimbursement. D.E. 1, Ex. A ¶ 9. After
going through the administrative appeals process maintained by Defendants, Plaintiff maintains
he was underpaid in the amount of $224,751.35. D.E. 1, Ex. A ¶] 10-16. Plaintiff received an
assignment of benefits from Louis V in order to bring this claim under ERISA. D.E. 1, Ex. A ¶
The Plan is attached to Defendant Anthem’s Motion to Dismiss and is titled: “Siemens
Corporation Group Insurance and Flexible Benefits Program.” D.E. 9, Ex. A. Louis V was a
member of the Plan during the relevant period.
2
Plaintiff also argues waiver as to the anti-assignment clause. Because the Court is denying the
motion as to Count II for the reasons stated herein, Plaintiffs argument concerning waiver is not
addressed. Nevertheless, since the issue of waiver is a fact-sensitive issue, the parties may take
discovery on the issue of waiver of the anti-assignment provision. See Atlantic Orthopaedic Ass.
v. Bitte Cross & Bitte Shield of Tex., No. 15-1854, 2016 WL $29562, at *5 (D.N.J. Mar. 7, 2016)
(finding the issue of waiver to be “fact-intesive” and allowing parties to explore the issue further
in discovery).
Plaintiff conceded at oral argument that he did not have any legal authority indicating that
Count IV permits a private right of action. See Oral Arg. Tr. at 3:8-9.
2
7•4
Plaintiff therefore brings the present action to recover the outstanding balance. D.E. 1, Ex.
AJ 17.
Defendant Anthem brings its Motion to Dismiss under Rule 12(b)(l) for lack of subject
matter jurisdiction and under Rule 12(b)(6) for failure to state a claim upon which relief can be
granted, while Defendant Horizon limits its motion to 12(b)(6). D.E. 9 at 4; D.E. 17 at 7-8. A
motion to dismiss based on standing is usually brought pursuant to Rule 12(b)(l). See N. Jersey
Brain & Spine Ctr. v. Aetna, Inc., 801 F.3d 369, 371 n.3 (3d Cir. 2015) (“Ordinarily, Rule 12(b)(1)
governs motions to dismiss for lack of standing, as standing is a jurisdictional matter.”). However,
in cases where a party claims derivative standing to sue under ERISA § 502(a), it is a statutory
limitation, and thus non-jurisdictional and properly brought under Rule I 2(b)(6). See Cohen V.
Horizon Blite Cross Blue Shield ofN.J., No. 15-4525, 2015 WL 6082299, at *1 (D.N.J. Oct. 15,
2015). Regardless, “a motion for lack of statutory standing is effectively the same whether it
comes under Rule 12(b)(1) or 12(b)(6).” N. Jersey Brain & Spine Ctr., $01 F.3d at 371 n.3.
Therefore, this Court will analyze the entirety of Defendants’ Motions pursuant to Rule 12(b)(6).
To withstand a motion to dismiss under Rule 12(b)(6), a plaintiff must allege “enough facts
to state a claim to relief that is plausible on its face.” Bell Ad. Corp. v. Twombly, 550 U.S. 544,
570 (2007). A complaint is plausible on its face when there is enough 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). Although the plausibility standard “does not impose
a probability requirement, it does require a pleading to show more than a sheer possibility that a
defendant has acted unlawfully.” Connellv v. Lane Const. Corp., 809 F.3d 780, 786 (3d Cir. 2016)
(internal quotation marks and citations omitted). As a result, a plaintiff must “allege sufficient
facts to raise a reasonable expectation that discovery will uncover proof of her claims.” Id. at 789.
In evaluating the sufficiency of a complaint, district courts must accept all factual
allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff.
Phillips v. C’tv. of Allegheny, 515 f.3d 224, 231 (3d Cir. 2008). A court, however, is “not
compelled to accept unwarranted inferences, unsupported conclusions or legal conclusions
disguised as factual allegations.” Baraka v. McGreevey, 481 F.3d 187, 211 (3d Cir. 2007). If,
after viewing the allegations in the complaint most favorable to the plaintiff it appears that no relief
could be granted under any set of facts consistent with the allegations, a court must dismiss the
complaint for failure to state a claim. Defazio v. Leading Edge Recovery Sols., No. 10-2945, 2010
WL 5146765, at *1 (D.N.J. Dec. 13, 2010).
Defendants’ primary argument is that the Plan contains an anti-assignment clause and
therefore the assignment from Louis V to Plaintiff Drzala is invalid. Here, the anti-assignment
Although the Complaint is not clear as to the timing of the assignment, the assignment itself
demonstrates that it was executed after the appeals process began. See D.E. I, Ex. B. According
to Defendants, the assignment occurred after the appeals process concluded, and according to the
documents, Defendants appear to be correct. See D.E. 17 at 11; D.E. 1, Ex. B. However, the
supporting documentation in the appeals process likewise reflects that Plaintiff Drzala was an
active participant and provided material information to Defendants from the outset.
‘
3
clause states: “Generally, your benefit from any Plan may not be assigned, sold, transferred, or
pledged to anyone else.” D.E. 9, Ex. A at 180. ERISA’s civil enforcement provision provides that
to recover benefits due him
by a participant or beneficiary
“[a] civil action may be brought
under the terms of the plan.” 29 U.S.C. § 1 132(a)(1)(B) (emphasis added). As a result, standing
is generally limited to “participants” and “beneficiaries.” Id.; see Pascack Valley Hosp., Inc. v.
Local 464A UFCW Welfare Reimbursement Plan, 38$ F.3d 393, 400 (3d dr. 2004). The Third
circuit has determined that an assignment of benefits in the ERISA context is permissible. See N.
Jersey Brain & Spine Ctr., 801 f.3d at 372. Therefore, “[h]ealthcare providers that are neither
participants nor beneficiaries in their own right may obtain derivative standing by assignment from
a plan participant or beneficiary.” Id.
...
...
Thus, while assignment clauses are permissible, the question in this matter is whether an
anti-assignment clause effectively voids any attempted assignment. In the Third Circuit, it remains
an open issue as to whether anti-assignment clauses contained in healthcare plans are enforceable.
See Advanced Orthopedics & Sports Med. v. Blue Cross Blue Shield ofMass., No. 14-7280, 2015
WL 4430488, at *4 (D.N.J. July 20, 2015) (noting that the Third Circuit has not yet addressed the
issue of anti-assignment clauses in the ERISA context); Neitrological Surgery Assocs. P.A. v.
Aetna Lfe Ins. Co., No. 12-5600, 2014 WL 2510555, at *2..3 (D.N.J. June 4, 2014) (noting that
while the Third Circuit has not addressed the question of anti-assignment clauses in ERISA plans,
the majority position appears to permit them). Most courts that have addressed this issue (both
within and outside this Circuit) have found anti-assignment clauses to be enforceable, provided
the clause is unambiguous. See e.g., Davidowitz v. Delta Dental Plan of Cal., Inc., 946 F.2d 1476,
1478 (9th Cir. 1991) (enforceable where intent is clear); Cohen v. Indep. Bltte Cross, 820 F. Supp.
2d 594, 605 (D.N.J. 2011) (noting that most courts have found that “unambiguous anti-assignment
provisions in group health care plans are valid”); Briglia v. Horizon Healthcare Servs., Inc., No.
03-6033, 2005 WL 1140687, at *4 (D.N.J. May 13, 2005) (collecting “a number of federal and
state courts [which] have found that unambiguous anti-assignment provisions in group health care
plans are valid”). Thus, a prerequisite to a valid anti-assignment provision is unambiguity. See
Physicians Mttltispecialtv Grp. v. Health Care Plan ofHorton Homes, Inc., 371 F.3d 1291, 1295
(11th Cir. 2004) (adopting the reasoning of “the majority of federal courts that have concluded that
an assignment is ineffectual if the plan contains an ttnambiguous anti-assignment provision”)
(emphasis added); Advanced Orthopedics & Sports Med., 2015 WL 4430488, at *5..6 (noting that
the clause is not ambiguous and reaffirming the conclusion that “unambiguous anti-assignment
clauses in the ERISA context are valid”) (emphasis added).
A term is ambiguous where the language “is susceptible to more than one reasonable
interpretation.” In re Unisys Corp. Retiree Med. Benefits ERISA Litig., 58 f.3d 896, 903 (3d Cir.
1995). In determining whether a particular clause in a plan document is ambiguous, courts must
first look to the plain language of the document. Id. at 902. If the plain language is clear on its
face, then the terms of the plan control and courts may not look to other evidence. See Taylor v.
Cont ‘1 Gip. C’hange in Control Severance Pay Plan, 933 F.2d 1227, 1234 (3d Cir. 1991).
However, if the language lends itself to more than one reasonable interpretation, then courts may
look to extrinsic evidence to resolve any ambiguities. See Id. at 1232 (“When an ERISA plan is
ambiguous, ascertaining its meaning requires examining many factors, which may include
considering how the plan was understood by its beneficiaries.”). Thus, when a term in a contract
is sufficiently ambiguous, it creates a triable issue of fact. Id. at 1234 (finding the term “successor”
4
ambiguous and reversing the District Court’s granting of summary judgirient in order to permit
introduction of extrinsic evidence); Brig/ia, 2010 WL 4226512, at *5 (“[T]he interpretation of
ambiguous plan provisions is a question of fact.”) (internal citations omitted).
As noted, the anti-assignment clause in this matter states: “Generally, your benefit from
any Plan may not be assigned, sold, transferred, or pledged to anyone else.” D.E. 9, Ex. A at 180.
The term “generally” is not defined in the Plan. “In interpreting the provisions of an ERISA plan,
terms must be given their plain meanings.” Brig/ia, 2010 WL 4226512, at *4 Determining a
term’s plain meaning ofien involves consulting the dictionary definition of the term. See e.g., Nat ‘1
Credit Union Admin. 3d. v. Nomura Home Equity Loan, Inc., 764 F.3d 1199, 1227 (10th Cir. 2014)
(“Courts ofien begin an ordinary meaning analyses by consulting contemporary dictionary
definitions”); Uti/. Workers Union of Am,, Local 60] v. Public Serv. Flee. & Gas Co., No. 072378, 2009 WL 331421, at *8 (looking to the dictionary to determine the plain language of an
agreement). The term “generally” is given three definitions by the Random House unabridged
dictionary: “1. usually; commonly; ordinarily 2. with respect to the larger part; for the most part
3. without reference to or disregarding particular persons, things, situations, etc., that may be
an exception.” Random House Dictionary of the English Language 795 (2d ed. 1987). The plain
meaning of this term is clear: “generally” means most of the time (but not always) and necessarily
implies exceptions. The parties themselves at oral argument agreed that the word “generally”
implies the existence of exceptions.5 Thus, the word “generally” is unambiguous. However,
“generally” inherently implicates an exception or exceptions. Unfortunately, the “exceptions” here
are undefined, thereby creating ambiguity in the anti-assignment clause. The specific exceptions
that apply here are subject to more than one reasonable interpretation. While Defendant Anthem
asked this Court to read in the exception of requiring prior approval before assignment, there is no
evidence as to why this exception should be presumptively read in to the clause. See Oral Arg. Tr.
at 8:6-9. In fact, Anthem’s reading of this exception in to the clause while Plaintiff divined no
such particular exception further highlights the difficulty in interpreting the anti-assignment
provision in Anthem and Horizon’s favor as a matter of law.6
...
Other examples in this District in which the court found an anti-assignment provision
unambiguous are significantly more detailed and clear. For example, in Advanced Orthopedics &
Sports Medicine v. Bhte Cross Bhte Shield of Massachttsetts, Judge Wolfson found an anti-
Defendant Anthem conceded that “Generally would be absent a special circumstance.” Oral
Arg. Tr. at 8:5-6. Plaintiff interprets generally to mean “in most cases but not all
always
room for exceptions.” Oral Arg. Tr. at 17:6-10. Defendant Horizon agrees with Plaintiffs
definition, “that generally means in most cases, subject to a few exceptions.” Oral Arg. Tr. at
2 1:14-16.
...
6
Defendant Horizon cites Rothschild v. Foremost Insurance Company for the proposition that
“courts are not afforded the luxury to change the language of the insurance policy to create
ambiguity.” See D.E. 17 at 10 (citing Rothschild v. Foremost Ins. Co., 653 F. Supp. 2d 526, 532
(D.N.J. 2009)). The Court agrees with this statement but finds that this goes against Horizon’s
argument. The Court cannot rewrite the clause by removing the term “generally” and thus
eliminating any ambiguity the term creates.
5
assignment provision in an ERISA plan to be unambiguous. 2015 WL 4430488, at *5..6. The antiassignment clause stated:
You caimot assign any benefit or monies due from this health plan
to any person, corporation, or other organization without Blue Cross
and Blue Shield’s written consent. Any assignment by you will be
void. Assignment means the transfer of your rights to the benefits
provided by this health plan to another person or organization.
2015 WL 443048$, at *3 The clause in Advanced Orthopedics not only defines the
instances in which a beneficiary can assign (in the case of written consent), but also provides for
the result if an improper assignment does, in fact, occur (it will be void). The anti-assignment
provision in Advanced Orthopedics also has the additional benefit of explicitly defining what an
assignment is. The clause in this case, on the other hand, has the modifier “generally,” is followed
by no clear exceptions, and does not contain any provision explaining what occurs in the case of
an assignment. Because the term “generally” necessarily implies exceptions, and the reader of the
plan is left guessing as to what those exceptions are, the Court does not find this clause
unambiguous as a matter of law.7
Defendant Horizon raises an additional argument that the assignment is invalid due to timing.
D.E. 17 at 11-12. Specifically, Horizon alleges that since the assignment was made after the
claims review process began, it is invalid as a matter of law. This argument is different than the
position that the anti-assignment provision in the Plan precluded the assignment to Plaintiff in
the first place. Instead, Horizon focuses on the timing of the assignment, arguing that because
the assignment came after the internal appeals process, the assignment is invalid. Contract rights
and duties are generally assignable and delegable. See Citibank N.A. v. Tele/Resottrces, Inc.,
724 F.2d 266, 268 (2d Cir. 1983). In In re Merck & Co., Inc. Securities, Derivative & ERISA
Litigation, the court held that a post-filing assignment was valid. No. 05-5060, 2015 WL
38239 12 (D.N.J. June 19, 2015). There, Plaintiffs received an assignment to the rights in the
underlying securities after the initiation of the lawsuit. Id. at *2. While Defendants claimed that
Plaintiffs lacked Article III standing at the outset of the suit, the court refused to “elevate
technicalities over substance.” Id. at *3• Finding that there was “no question that the real parties
in interest when the suit was filed have since authorized the Challenged Plaintiffs to pursue this
lawsuit on their behalf,” the court refused to grant the Defendants’ motion for summary
judgment and found the assignment valid. Id. at *5• Here, Defendant Horizon alleges that the
assignment, while made prior to the onset of litigation, was nonetheless too late since the
administrative appeals process had already concluded. D.E. 17 at 11-12. The Court does not
find this argument persuasive. Defendant Horizon cites to Judge Hayden’s opinion in Center for
Orthopedics & Sports Medicine i Horizon in support of its argument. No. 13-1963, 2015 WL
5770385, at *5 (D.N.J. Sep. 30, 2015). However, in Centerfor Orthopedics & Sports Medicine,
the case was denied at the summary judgment stage. The Court will therefore deny the motions
without prejudice, so the parties can raise the issue of the timing of the assignment at the
summary judgment stage. The Court notes that Horizon has not shown that it was materially
prejudiced by the timing of the assignment, other than to claim so in a conclusory fashion.
Based on the documents reviewed by the Court in relation to the current motion, there does not
appear to have been any material prejudice to either Horizon or Anthem based on the timing of
‘
6
Defendant Horizon raises an additional argument that it is not a “fiduciary” as defined by
ERISA and therefore should be dismissed. D.E. 17 at 12-14. Under ERISA,
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.
29 U.S.C. § 1002(21)(A). ERISA defines “fiduciary” in “functional terms of control and
authority over the plan.” Mertens v. Hewitt Assocs., 508 U.S. 248, 262 (1993) (emphasis in
original). This functional definition expands the universe of persons subject to fiduciary duties.
Id. Thus, the definition of a fiduciary under ERISA is broadly construed. Edmonson v. Lincoln
Nat. Lfe Ins. Co., 725 f.3d 406, 413 (3d Cir. 2013).
Horizon alleges that Plaintiffs Complaint “does not articulate any facts (contrary to Iqbat
and Twomblv) explaining how Horizon, specifically, acted as a fiduciary under ERISA in
connection with the underlying claims.” D.E. 17 at 13. Horizon argues that it performed no
fiduciary role in this case and, instead, merely acted in a non-discretionary role. Horizon may
well be correct, but it would require the Court to engage in fact-finding beyond that which is
permissible at this stage of the matter. At this stage it is not the Court’s task to determine
whether Horizon is actually an administrator or fiduciary of the Plan. See Prof1 Orthopedic
Assocs., PA v. Excettits Blue Cross Bitte Shield, No. 14-6950, 2015 WL 4387981, at *10 (D.N.J.
July 15, 2015). Instead, the Court “must determine whether Plaintiffs have pled sufficient facts
to support the plausible inference that [Defendant] exercised control over the administration of
benefits with regards to [Plaintiff’].” Id. This standard sets a low bar, taking the facts pleaded as
true and requiring only a platusible inference that Defendant exercised control or authority over
the Plan’s benefits.
Here, Plaintiff alleges that Defendants were acting as fiduciaries under ERISA because
they “acted with discretionary authority or control to deny the payment and to manage the
administration of the employee benefit plan.” D.E. 1, Ex. A ¶40. Additionally, Plaintiff alleges
that “Defendant Horizon is the Claims Administrator” for the applicable Plan. D.E. I, Ex. A ¶
14. This claim is supported by documents attached to the Complaint. See D.E. 1, Ex. C. The
Third Circuit has held that plan administrators assume the role of fiduciary under ERISA.
Hozier v. Midwest Fasteners, Inc., 908 F.2d 1155, 1158 (3d Cir.1990). Taking these facts as
this assignment because Plaintiff Drzala was actively involved in the process from the outset.
D.E. 1, Ex. A.
7
true, they create at least a plausible inference that Defendant Horizon exercised sufficient control
to qualify as a fiduciary, sufficient to meet the Iqbal/Twombly pleading standard.
Courts have consistently held that “[t]he determination of whether a person is a fiduciary
is fact-based, and cannot be determined in a motion to dismiss.” Rispler v. SQl Splitz Co., Inc.,
No. 04-1323, 2007 WL 1926531, at *4 (E.D.N.Y. June 6, 2007); see e.g., Beye v. Horizon 3/tie
Cross 3/tie Shield of N.i, 568 F. Supp. 2d 556, 576 (D.N.J. 2008) (“Because the determination
of whether a party is an ERISA fiduciary is a ‘functional one’ the determination will not
typically be resolved at the motion to dismiss stage.”) (internal citations omitted). Due to the
fact-intensive nature of the inquiry as to fiduciary status under ERISA, the Court cannot say as a
matter of law that Horizon is not a fiduciary at this early stage of the proceeding. Horizon’s
motion is therefore denied.
Defendants next contend that Count III seeks duplicative relief to Count II, and only
permits equitable remedies, which Plaintiff does not specify in his pleadings. D.E. 9 at 7-8; D.E.
17 at 18-20. Defendants thus set forth two bases on which to dismiss Count III. The first is that
Count III cannot survive in light of Count II as it is improperly duplicative. See Varity Corp. v.
Howe, 516 U.S. 489, 515 (1996). The second is that Plaintiff has insufficiently pled equitable
relief, the only relief available pursuant to Count III. See Mertens, 508 U.S. at 255-56 (finding
ERISA § 502(a)(3) to only allow for traditional equitable restitution).8 In response, Plaintiff argues
that Count III should survive at least until the conclusion of factual discovery in order to be able
to adequately ascertain the available relief. D.E. 25 at 14-15. Normally, the Court would not
dismiss Count III at this stage, but Plaintiffs Counsel candidly admitted at oral argument that he
could not think of any equitable relief Plaintiff would seek if successful on this Count. See Oral
Arg. Tr. at 5:2-3. Accordingly, the Court will dismiss Count III.
Defendants final argument is in respect to Count IV: Failure to Maintain Reasonable
Claims Procedures under 29 C.F.R. 2560.503-1, which Defendants allege does not permit a private
right of action.9 Judge Linares’ opinion in Cohen v. Horizon 3/tie Cross 3/tie Shield ofNew Jersey,
8
Plaintiffs bring Count III, Breach of Fiduciary Duty and Co-Fiduciary Duty, under 29 U.S.C. §
1 132(a)(3) (codified at § 502(a)(3)), 29 U.S.C. § 1 104(a)(1) and 29 U.S.C. § 1105(a). § 1104
provides that “a fiduciary shall discharge his duties with respect to a plan solely in the interests
of the participants and beneficiaries.” 29 U.S.C. § 1104. § 1105 provides for co-fiduciary duty
under specific circumstances. See 29 U.S.C. § 1105. § 1132 provides for civil remedies for an
ERISA violation, including § 1104 and § 1105. See Horvath v. Keystone Health F/an E., Inc.,
333 F.3d 450, 456 (3d Cir. 2003) (Participants and beneficiaries may “seek [] to utilize the
enforcement provisions contained in § 502(a)(3), 29 U.S.C. § 1 132(a)(3), in order to remedy an
alleged violation of the fiduciary duties imposed by § 1104, 29 U.S.C. § 1104”). Therefore, none
of these statutes permit recovery of non-equitable remedies.
ERISA claims procedure is governed by ERISA § 502(a) (codified as 29 U.S.C. § 1132(a)) and
§ 503 (codified as 29 U.S.C. § 1133). 29 C.F.R. 2560.503-1 was promulgated by the Secretary
of Labor pursuant to 29 U.S.C. § 1133, which grants the Secretary of Labor the authority to
promulgate regulations regarding notice provisions to beneficiaries whose claims have been
8
2013 WL 5780815 (D.N.J. Oct. 25, 2013), is instructive on this point. In Cohen, Plaintiffs alleged
that Defendant Horizon was liable for failing “to provide a full and fair review” of their claims and
failing “to make necessary disclosures in accordance with 29 U.S.C. § 1133.” Id. at *g citing to
the Third Circuit, Judge Linares concluded that § 503 sets forth basic requirements governing
ERISA plans, but does not provide for its own cause of action. Id. at *9 (citing Miller e. Am.
Airlines, Inc., 632 f.3d 837, 850-51 (3d Cir. 2011)). This is in line with the Supreme Court’s
reasoning in its opinion in Massachusetts Mtttttal Lfe Insurance Company v. Russell, where the
Court held that “there really is nothing at all in the statutory text to support the conclusion that
such a delay [in the plan processing] gives rise to a private right of action for compensatory or
punitive relief.” 473 U.S. 134, 144 (1985).
While the courts in both Massachitsetts Mutual and Cohen were analyzing procedures
claims under 29 U.S.C. § 1133, there is no distinction between ERISA procedures claims brought
directly under ERISA § 1133 and those brought pursuant to the applicable regulation. See e.g.,
Walter, 949 f.2d at 310 (finding that even though defendant violated C.F.R. § 2560.503.1, “ERISA
does not provide a private cause of action for damages to compensate a petitioner for delay”);
Varney v. Verizon Commc’ns, Inc., No. 07-695, 2013 WL 1345211, at *16 (E.D.N.Y. Mar. 1,
2013) (dismissing Plaintiffs allegation that Defendants failed to comply with proper claims
procedure brought under both 29 U.S.C. § 1133 and 29 C.F.R. 2560.503(1)(f)(1) because “failure
to comply with ERISA regulations does not give rise to a private of action”); Ranke v. Sanofi
Synthelabo, Inc., No. 04-1618, 2004 WL 2473282, at *7 (E.D. Pa. Nov. 2,2004) (“Plaintiffs cannot
seek to impose § 502(c) penalties for violation of a regulation, 29 C.F.R. 2560.503-(1)(h)(iii),
especially one imposing requirements on plans rather than administrators.”). Accordingly,
Plaintiffs Count IV is dismissed.
In sum, Defendants’ Motions to Dismiss are granted as they pertain to Count I, Count III
and Count IV, and those counts are dismissed with prejudice. As to Count II, the motions are
denied without prejudice.
SO ORDERED.
JOHN MICHAEI(jAVUEZ
UNITED STATES DISTRICT JUDGE
denied as well as providing beneficiaries an opportunity to participate in the review process. See
Walter v. Int’l Ass ‘n ofMachinists Pension Fttnd, 949 F.2d 310, 315-16 (10th Cir. 1991).
9
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