UNIVERSITY SPINE CENTER v. HORIZON BLUE CROSS BLUE SHIELD OF NEW JERSEY et al
OPINION. Signed by Judge Kevin McNulty on 6/12/17. (cm, )
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
UNWERSITY SPINE CENTER o/a/o
Civ. No. 16-8222 (KM)(MAH)
HORIZON BLUE CROSS BLUE
SHIELD OF NEW JERSEY and
CAREFIRST OF MARYLAND,
This is an action under the Employment Retirement Income Security Act
of 1974 (“ERISA”), 29 U.S.C.
1001 et seq. University Spine Center
(“University”), an out-of-network provider, billed its patient for some $374,000
in services; defendant CareFirst of Maryland (“CareFirst”), as claims
administrator, paid out approximately $9,100. Seeking to recover the adjusted
balance from CareFirst, University sues as assignee of its patient, Maria C.
CareFirst moves under Fed. R. Civ. P. 12(b)(6) to dismiss the Complaint
for failure to state a claim upon which relief may be granted. Primarily,
CareFirst contends that the relevant health benefits plan contains a noassignment clause that bars University from suing as the assignee of its
For the reasons stated herein, I agree with CareFirst, and with cases
decided in this District addressing the same issue, and I will grant the motion
The motion may be viewed in the alternative as a jurisdictional one, asserting
lack of standing under Fed. R. Civ. P. 12(b)(1). There seems to be no doubt, however,
that University has alleged a concrete financial injury in the Article III sense. Its right,
or not, to sue is a matter of contract. The distinction makes no difference for purposes
of this motion.
The Complaint was originally filed in New Jersey Superior Court, Passaic
County, on September 26, 2016. It essentially seeks reimbursement for a claim
denied under a health insurance plan. It contains one count of state-law
breach of contract, and three ERISA-related counts.
On November 3, 2016, the defendants filed a notice of removal to federal
court. (ECF no. 1 at 1) The plan, they stated, is covered by ERISA. See 29
§ 1002(1). Hence all related claims are preempted by federal law, see 29
U.S.C. § 1144(a), and this Court has jurisdiction, see 28 U.S.C. § 1331 and 29
U.S.C. § 1132(e)(1).
On January 13, 2017, the defendants, CareFirst and Horizon Blue Cross
Blue Shield of New Jersey (“Horizon”), filed a motion (ECF no. 9) to dismiss the
Complaint for failure to state a claim upon which relief may be granted. See
Fed. R. Civ. P. 12(b)(6). University filed a response. (ECF no. 11) The
defendants filed a reply. (ECF no. 12) Although defendants sought time to
decide whether to amend their Complaint in response to the motion, they have
now stated definitively that they do not seek to amend the Complaint. (ECF
nos. 19, 20) The motion is now fully briefed and ripe for decision.
The parties agree that the case is governed by ERISA. Accordingly,
University has agreed to voluntarily dismiss Count 1 of the Complaint, a state
law breach of contract claim. (See P1. Brf. 1.) In addition, the parties have by
Certain key record items are abbreviated as follows:
Complaint, ECF no. 1 at 11
Def. Brf. =
Brief of defendants in support of motion to dismiss, ECF no. 9-4
P1. Brf. =
Brief of plaintiff in opposition to motion to dismiss, ECF no. 11
Def. Reply = Reply Brief of defendants, ECF no. 12
Assignment of Benefits = Cplt. Ex. B, ECF no. 1 at 44
Benefit Description =
Benefit Description of Erickson Plan for 2015, ECF
no. 9-2, and 2016, ECF no. 9-3
Anti-Assignment Clause = Benefit Description p. 32 ¶H
stipulation dismissed defendant Horizon from the case. (ECF nos. 16, 17) What
remains, then, is a motion by Carefirst, the remaining defendant, to dismiss
Counts 2, 3, and 4, the remaining counts of the Complaint.
The allegations of the complaint (ECF no. 1 at 11, cited as “Cplt.”), taken
as true for purposes of this motion, see Section II, infra, are as follows.
University provided medical services to Maria C. between September 10,
2015, and February 1, 2016. The services consisted of spinal surgery and
related matters. (Cplt.
4 & Ex. A)
University obtained what it calls an Assignment of Benefits from Maria
C. The operative language on the first page of the Exhibit reads as follows:
Assignment and Release
I, the undersigned, certify that I (or my dependent/s) have insurance
coverage with BC/ES and assign directly to University Spine Center, all
insurance benefits, if any, otherwise payable to me for the services
rendered. I understand that I am financially responsible for all charges,
whether or not paid by insurance. I hereby authorize the doctor to
release all information necessary to secure the payment of benefits. I
authorize the use of this signature on all insurance submissions.
Responsible Party Signature: [redactedi Relationship:
(Assignment of Benefits, ECF no. 1 at 45)
The operative language on the following page of the Exhibit (actually
designated as page 6 in the original) reads as follows:
I, [redacted], understand that I am utilizing my out of network benefits
and that my insurance company may send to me, the payment(s) for
services by University Spine Center in my treatment. I also understand
The Assignment of Benefits is actually titled “Assignment and Release.”
CareFirst reserves the right to contest that this is an effective assignment of benefits,
but for purposes of the current motion it is treated as such. Obviously, if there were
no effective assignment of benefits in the first place, it would not be necessary to
consider the effect of any anti-assignment provision.
that by paying a partial payment at the time services are rendered, in no
way means the doctors are in network. I understand that the partial
payment collected will be posted to my account as a payment towards my
co/insurance and or deductible. I agree to sign over the full amount to
University Spine Center within thirty days of receipt of the same. If I fail
to do so, I understand that in addition to being responsible for the full
amount charged by University Spine Center for said services, I will be
responsible for any charge incurred by him in pursuing and collecting
I authorize payment of medical benefits for service performed by
University Spine Center to be sent directly to:
University Spine Center
(Assignment of Benefits, ECF no. 1 at 46)
At that time, Maria C. had health coverage through the Erickson Plan, a
self-funded health benefits plan sponsored and administered by her employer.
The Erickson Plan was an employee welfare benefit plan governed by ERISA.
The plan’s claims administrator was defendant CareFirst. (See Cplt.
The terms of the Erickson Plan are set forth in the 2015 and 2016 Benefit
Descriptions. (ECF nos. 9-2, 9-3)
As stated above, University sues pursuant to an Assignment of Benefits.
In the 2015 and 2016 Benefit Descriptions of the Erickson Plan, however, there
are identical Anti-Assignment Clauses:
H. Assignment of Benefits
A Member may not assign his or her right to receive benefits or benefit
payments under this Evidence of Coverage to another person or entity
except for routine assignment of benefit payments to a Preferred
Health Care Provider Pharmacy rendering Covered
(Anti-Assignment Clause, ECF nos. 9-2, 9-3 at 33)
I.e., an in—network provider, which would be paid directly by the Plan. See 2015
& 2016 Benefit Descriptions, ECF nos. 9-2, 9-3 at 10 (Definitions).
University is an out-of-network provider vis-à-vis the Erickson Plan. As
assignee, University submitted a claim form for the services it provided to
Maria C., requesting reimbursement in the amount of $374,419.00. (Cplt.
& Ex. C) The amounts paid out on the claim totaled $9,134.53. (Cplt.
¶ 9 & Ex.
D) The total underpayment, net of adjustments for deductions, copayments,
and coinsurance, was $273,987.96. (Cplt.
administrative appeals process. (Cplt.
¶ 14) University exhausted the
¶ 10 & Ex. E)
Count 1, now voluntarily dismissed, asserted a state law breach of
Count 2 asserts a claim of failure to make all payments pursuant to
member’s plan under ERISA
§ 502(a)(1), 29 U.S.C. § 1132(a).
Count 3 asserts an ERISA claim of breach of fiduciary duty or co
fiduciary duty under 29 U.S.C.
§ 1 132(a)(3)(B), 1 104(a)(1), and 1105(a).
Count 4 asserts an ERISA-related claim of failure to establish or
maintain reasonable claims procedures under 28 C.F.R.
Standard on a Motion to Dismiss
Fed. R. Civ. P. 12(b)(6) provides for the dismissal of a complaint, in whole
or in part, if it fails to state a claim upon which relief can be granted. The
moving party bears the burden of showing that no claim has been stated.
Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). In deciding a motion
to dismiss, a court must take all allegations in the complaint as true and view
them in the light most favorable to the plaintiff. See Warth v. Seldin, 422 U.S.
490, 501 (1975); Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc., 140
F.3d 478, 483 (3d Cir. 1998); see also Phillips v. County of Allegheny, 515 F.3d
224, 231 (3d Cir. 2008) (“reasonable inferences” principle not undermined by
later Supreme Court Twombly case, infra).
Fed. R. Civ. P. 8(a) does not require that a complaint contain detailed
factual allegations. Nevertheless, “a plaintiff’s obligation to provide the
‘grounds’ of his ‘entitlement to relief requires more than labels and
conclusions, and formulaic recitation of the elements of a cause of action will
not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, the factual
allegations must be sufficient to raise a plaintiff’s right to relief above a
speculative level, such that it is “plausible on its face.” See id. at 570; see also
Umland v. PLANCO Fin. Serv., Inc., 542 F.3d 59, 64 (3d Cir. 2008). 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) (citing
Twombly, 550 U.S. at 556). While “[tihe plausibility standard is not akin to a
it asks for more than a sheer possibility.” Iqbal, 556
U.S. at 678 (2009).
A court considering a Rule 12(b)(6) motion is confined to the allegations
of the complaint, with certain exceptions:
“Although phrased in relatively strict terms, we have declined to
interpret this rule narrowly. In deciding motions under Rule
12(b)(6), courts may consider “document[s] integral to or explicitly
relied upon in the complaint,” In re Burlington Coat Factory Sec.
Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) (emphasis in original), or
any “undisputedly authentic document that a defendant attaches
as an exhibit to a motion to dismiss if the plaintiff’s claims are
based on the document,” PBGC v. White Consol. Indus., 998 F.2d
1192, 1196 (3d Cir. 1993).”
In re Asbestos Products Liability Litigation (No. VI), 822 F.3d 125, 134 n.7 (3d
Cir. 2016). See also Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir. 2014)
(“However, an exception to the general rule is that a ‘document integral to or
explicitly relied upon in the complaint’ may be considered ‘without converting
the motion to dismiss into one for summary judgment.’
(quoting In re
Burlington Coat Factory, 114 F.3d at 1426); Pension Ben. Guar. Corp. v. White
Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993).
University brings its claim as assignee, and attaches the written
Assignment of Benefits to its complaint. (ECF no. 1 at 44) The very foundation
of University’s Claim is the Erickson Plan. Thus the defendants have
permissibly attached the Plan’s Benefit Descriptions (ECF nos. 9-2, 9-3),
containing the Anti-Assignment clause (id. at 33), to their papers. No party
contests the authenticity of these documents. They are properly considered on
this Rule 12(b)(6) motion.
University sues on behalf of the Plan beneficiary, Maria C., pursuant to a
written Assignment of Benefits. CareFirst responds that a person cannot
assign more than she has, Selective Ins. Co. of America v. Hudson East Pain
Management Osteopathic Medicine, 210 N.J. 597, 607 (2012), and that what
Marie C. has is an individual, non-assignable right to payment. An AntiAssignment Clause in the Erickson Plan bars University from suing as
With exceptions not relevant here, the operative document provides that
“[a] Member may not assign his or her right to receive benefits or benefit
payments under this Evidence of Coverage to another person or entity.
(Anti-Assignment Clause, ECF nos. 9-2, 9-3 at 33) That is clear enough. The
only issue is whether such a clause is legally effective and enforceable.
Considerable authority in this District supports CareFirst’s view that
such an anti-assignment clause is effective. Thus, for example, in Cohen v.
Independence Blue Cross, 820 F. Supp. 2d 594 (D.N.J. 2011), a doctor sought
reimbursement pursuant to an assignment of benefits. The ERISA plan in
question, however, had an anti-assignment clause: “The right of a Covered
There is no dispute that any ERISA cause of action belongs to Maria C. The civil
enforcement provision, 29 U.S.C. § 1132(a), confers a cause of action on a plan
“participant,” “beneficiary,” or “fiduciary.” The statute does not grant such a cause of
action to a health care provider. Pascack Valley Hosp. v. Local 464A UFCW Wefare
Reimbursement Plan, 388 F.3d 393, 400 (3d Cir. 2004). It is now settled, however, that
a provider may obtain a derivative right to sue via a valid assignment from a plan
participant. N.J. Brain & Spine Ctr. v. Aetna, Inc., 801 F.3d 369, 372 (3d Cir. 2015);
American Chiropractic Ass’n v. American Specialty Health Inc., 625 F. Appx 169, 175
(3d Cir. 2015); CardioNet, Inc. v. Cigna Health Corp., 751 F.3d 165, 176 n. 10 (3d Cir.
Person to receive benefit payments under this coverage is personal to the
Covered Person and is not assignable in whole or in part to any person,
Hospital, or other entity nor may benefits of this coverage be transferred, either
before or after Covered Services are rendered
Id. at 604. ERISA, Judge
Wolfson reasoned, did not preempt the assignment issue, instead leaving it to
the negotiations of the contracting parties. Id. at 605.6 She found the language
of the anti-assignment clause to be unambiguous, and enforced it. See also
Kaul v. Horizon Blue Cross Blue Shield of New Jersey, 2016 WL 4071953
(D.N.J. Jul. 29, 2016) (Cecchi, J.); Advanced Orthopedics and Sports Medicine
v. Blue Cross Blue Shield of Massachusetts, 2015 WL 4430488,*4 (D.N.J. Jul.
20, 2015) (Wolfson, J.).
In response, University offers a citation to Hermann Hosp. v. MEBA Med.
& Benefits Plan, 959 F.2d 569 (5th Cir. 1992), overruled on other grounds,
Access Mediquip, L.L.C. v. UnitedHealthcare Ins. Co., 698 F.3d 229 (5th Cir.
2012). Hermann held that an anti-assignment clause, even if generally
applicable, should not apply to an assignee who “is the provider of the very
services which the plan is maintained to furnish.” Id. at 575.
That 25-year-old case is not binding and has otherwise been limited. I
Citing, e.g., Physicians Multispecialty Group v. Health Care Plan of Horton
Homes, Inc., 371 F.3d 1291, 1294—96 (11th Cir. 2004) (“Because ERISA-governed
plans are contracts, the parties are free to bargain for certain provisions in the plan—
like assignability. Thus, an unambiguous anti-assignment provision in an ERISA
governed welfare benefit plan is valid and enforceable.”); City of Hope Nat’l Med. Ctr. v.
HealthPlus, Inc., 156 F.3d 223, 229 (1st Cir. 1998) (“Consistent with the other circuits
which have addressed this issue, we hold that ERISA leaves the assignability or nonassignability of health care benefits under ERISA-regulated welfare plans to the
negotiations of the contracting parties.”); St. Francis Reg’l Med. Ctr. v. Blue Cross &
Blue Shield of Kan., Inc., 49 F.3d 1460, 1464—65 (10th Cir. 1995) (“ERISA’s silence on
the issue of the assignability of insurance benefits leaves the matter to the agreement
of the contracting parties.”); Davidowitz v. Delta Dental Plan of Cal., Inc., 946 F.2d
1476, 1478 (9th Cir.1991) (“As a general rule of law, where the parties’ intent is clear,
courts will enforce non-assignment provisions.”).
University scrupulously points out that the Fifth Circuit later clarified that
Hermann did not state a holding applicable under all circumstances, but rather rested
on the wording of that particular anti-assignment clause. P1. Brf. 4 n.2 (citing
LeToumeau Lzfelike Orthotics & Prosthetics, Inc. v. Wal-Mart Stores, Inc., 298 F.3d 348,
352 (5th Cir. 2002)). Still, the policy argument remains, and it has some force.
must say, however, that I see what must have been concerning that court.
Medical bills can be ruinous; many a patient has no hope of paying them
without insurance, and may be judgment proof; and many a patient likewise
lacks the resources or incentive to fight an insurance company. It makes a
certain amount of sense to recognize that the provider is often the real party in
interest, and should be empowered to contest an insurer’s refusal of payment.
The ERISA statute, however, contains no such provision, and the parties
are therefore relegated to the law of contracts and assignments. The AntiAssignment clause, whatever its policy merits, is a bargained-for part of the
Plan. New Jersey, for its part, has declined to invalidate anti-assignment
clauses as a policy matter. Kaul, 2016 WL 4071953, at *2 (citing Advanced
Orthopedics, 2015 WL 4430488, at *5 (D.N.J. July 20, 2015); Somerset
Orthopedic Assocs. v. Horizon Blue Cross & Blue Shield of N.J., 345 N.J. Super.
410, 423 (N.J. Super. App. Div. 2001) (holding “the anti-assignment clause in
Horizons subscriber contracts is valid and enforceable to prevent assignment
by subscribers of policy benefit payments to non-participating medical
providers without Horizon’s consent”)). Generalized policy considerations are
insufficient to move a court—at least this trial-level court—to set aside the
Finally, University argues that CareFirst has waived the Anti-Assignment
clause. University does not allege that CareFirst dealt with it, or paid it,
directly. Indeed, the EOBs attached to the Complaint seem to indicate direct
payment to Maria C. See Cplt.
9 (asserting that Defendant “paid $9,134.53”);
To the extent, at least, that a subsection at page 32 of a 127-page Benefits
Description can be said to be the subject of bargaining. It is perhaps with
unintentional irony that CareFirst suggests the Assignment of Benefits itself is
insufficiently conspicuous: “Movants do not concede that this one-sentence
‘assignment’ buried within what appears to be a much broader form of at least sixpages constitutes a valid ‘assignment of benefits’ as defined by applicable law.” Def.
icL Ex. D (EOB forms). The waiver argument seems to be simply that CareFirst
sent duplicates of the EOBs to University. That fact lacks any great
significance, in my view, but at any rate it is not alleged in the Complaint.
Such a waiver argument, unsupported by specific factual allegations, has
been rejected by both Judge Cecchi and Judge Wolfson on Rule 12 motions.
See Kaul, 2016 WL 4071953, at *3 (rejecting waiver argument, at least absent
any allegation that direct payment to a provider occurred but was not
authorized by the Plan); Advanced Orthopedics, 2015 WL 4430488, at *7_*8. It
is hornbook law, those cases point out, that waiver entails intentional
relinquishment of a known right. Waiver is a multi-hued concept, and it is
possible to quibble about the particulars. But no factual allegation indicative of
such relinquishment, intentional or not, appears in this Complaint. 10
For the foregoing reasons, the motion (ECF no. 9) under Fed. R. Civ. P.
1 2(b)(6) to dismiss the complaint for failure to state a claim is GRANTED.
Because this is a first dismissal, it is without prejudice to the submission,
within 30 days, of a properly supported motion to amend the Complaint. In
that connection, counsel are directed to newly-amended Local Rule 15.1.
An appropriate Order is filed herewith. The clerk shall close the file.
Dated: June 12, 2017
United States District Judge
(ECF no. 1 at 58—66). University is identified as the provider, but nowhere as
the payee. The payee name after “Pay to the Order Of” on the checks is redacted,
indicating presumably that it is the name of Maria C.
There being no basis for University to sue, I do not reach CareFirst’s remaining
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