PROGRESSIVE SPINE & ORTHOPAEDICS, LLC v. ANTHEM BLUE CROSS BLUE SHIELD
OPINION. Signed by Judge Kevin McNulty on 9/11/17. (DD, )
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
Civ. No. 17-536 (KMflMAH)
PROGRESSIVE SPINE &
ANTHEM BLUE CROSS BLUE
This is the latest chapter in the quest of out-of-network health care
providers to be reimbursed by ERISA plans at in-network rates. The providers
first struggled to be heard in federal court, finally persuading the Third Circuit
that they could, via assignment, assert the rights of their patients. The Plans in
many cases have responded by adopting anti-assignment provisions.
Increasingly, providers have preferred to pursue claims in state court. To avoid
ERISA preemption and get around the anti-assignment provision, the provider
here has asserted what it deems an independent state-law contract claim on
behalf of itself, rather than its patient. The insurer, citing ERISA preemption,
has removed the case to federal court and promptly moved to dismiss on, inter
cilia, standing grounds. The result, from the insurer’s point of view, should be
that the provider cannot sue anywhere. The provider here agrees that it lacks
derivative standing, but nevertheless seeks remand to a state forum where it
can assert its own rights. Whether its allegedly independent state-law claims
are viable, it says, is for the state courts to decide.
Progressive Spine & Orthopaedics, LLC (“Progressive”), an out-of-network
health care provider, brings this state-law action to recover reimbursement
from the claims administrator for the patient’s health plan, Anthem Blue Cross
Blue Shield (“Anthem”). Progressive alleges that Anthem underpaid on its claim
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for reimbursement for surgery performed on, and billed to, its patient, B.G.
Progressive’s state-law complaint asserts three claims against Anthem: (1)
breach of contract; (2) quantum meruit; and (3) unjust enrichment. Anthem
removed this action from state court on the premise that this Court had
subject matter jurisdiction, because all state law claims were completely
preempted by Section 502(a) of the Employment Retirement Income Security
Act of 1974 (“ERISA”), 29 U.S.C.
1001 et seq.
Anthem now moves under Fed. R. Civ. P. l2(bJ(6) to dismiss the
Complaint for failure to state a claim upon which relief may be granted.
Progressive cross-moves for the case to be remanded to state court, and for
reimbursement of attorney’s fees. Because the motion to remand implicates
this Court’s subject matter jurisdiction, I will address it first.
For the reasons stated herein, I will grant Progressive’s motion to
remand, but deny its motion for attorney’s fees. Anthem’s motion to dismiss is
denied as moot.
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I. Procedural History1
The Complaint was originally filed by Progressive in New Jersey Superior
Court, Bergen County, on December 8, 2016. (CpIt.). It alleges that Progressive
“proceed[s] on its own individual claims” against Anthem. The evident intent is
to state that Progressive is asserting its own rights, not those of its patient,
B.C. Anthem “was engaged in the business of providing or administering
healthcare insurance benefits for [B.C.]” (Cplt.
3 and 4). The Complaint
contains three state contract-related claims against Anthem: (1) breach of
contract; (2) quantum meruit; and (3) unjust enrichment. (Cplt.
15 to 29).
On January 26, 2017, Anthem filed a notice of removal to federal court
pursuant to 28 U.S.C.
1441(a) and (c). (Notice of Removal). The Notice states
that because Progressive is seeking to recover “increased benefit payments”
under a health benefits plan which is governed by ERISA, the doctrine of
Certain key record items are abbreviated as follows:
Anti-Assignment Clause = Benefit Description p. 57
Assignment of Benefits
ECF no. 1 at 23 (Ex. C to Notice of Removal)
Benefit Description Manual of Volt Plan, Ex. A, ECF
Health Insurance Claim Form, Ex. C to P1. Remand
Complaint, ECF no. 1 at 12 (Ex. A to Notice of Removai)
Brief of defendant in support of motion to dismiss, ECF no. 5-1
Reply Brief of defendant in further support of its motion to dismiss
and in opposition to plaintiffs motion to remand, ECF no. 13
Genovese Dec. = Declaration of Amanda Genovese, ECF no. 13-1
Notice of Removal= ECF no. 1 at 1
Brief of plaintiff in opposition to motion to dismiss, ECF no. 11
P1. Remand Brf.= Brief of plaintiff in support of motion to remand, ECF no. 10-1
P1. Reply = Reply Brief of plaintiff reply brief in further support of its motion
to remand and for attorney’s fees and costs, ECF no. 14
Declaration of Kori Sheridan, ECF no. 10-2
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complete preemption confers federal question subject matter jurisdiction under
1331. (Notice of removal,
7 to 13).
On February 16, 2017, Anthem filed a motion under Federal Rule of Civil
Procedure 12(b)(6) to dismiss the Complaint with prejudice for failure to state a
claim. (Def. Brf.). In particular, Anthem maintained that Progressive’s claims,
all sounding in state law, should be dismissed because they are preempted by
ERISA. (Def. Brf. at 4 to 6). Anthem argued in the alternative that, even setting
aside preemption, the claims were deficient. (Def. Brf. 6—9).
On April 3, 2017, Progressive filed an opposition to Anthem’s motion to
dismiss, and a cross-motion to remand the case to state court and award
attorney’s fees incurred as a result of the improper removal. (P1. Remand Brf.;
P1 BrL). The cross-motion to remand asserted that this court lacks federal
subject matter jurisdiction because ERISA preemption does not apply. (P1.
Remand Brf. at 9 to 19).
On April 10, 2017, Anthem submitted a reply memorandum of law in
further support of its motion to dismiss and in opposition to Progressive’s
motion to remand. (Def. Reply). On May 8, 2017, Progressive filed a reply brief
in further support of its motion to remand and for attorney’s fees and costs. (P1.
On May 9, 2017, without having previously requested leave, Anthem filed
a surreply letter. (ECF no. 15). On May 11, 2017, without have previously
requested leave to file, Progressive filed a letter in response to the surreply.
(ECE no. 16). On that same date, without having previously requested leave,
Anthem filed a letter in response to Progressive’s letter, and Progressive (of
course) filed another letter in response to that. (ECF no. 17 and l8).2 On
August 24, 2017, Progressive filed a letter informing the court that McCulloch
Orthopaedic Surgical Set-vs., PLLC v. Aetna US. Healthcare, No. 15-CV-2007
Under Local Civil Rule 7. 1(d)(6), “no sur-replies are permitted without
permission of the Judge or Magistrate Judge to whom the case is assigned.”
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KBF, 2015 WL 2183900 (S.D.N.Y. May 11, 2015), relied upon by Anthem in its
opposition brief, had been overruled. (ECF no. 21).
Progressive is a health care provider specializing in spinal orthopedics.
(P1. Remand Brf. at 6). Located in Bergen County, New Jersey, it employs one
orthopedic surgeon. (Cplt.
1; P1. Remand Brf. at 6).
On October 24, 2014, Progressive’s surgeon, with the aid of a physician
assistant, provided medical services to B.G. The services consisted of spinal
surgery and “related procedures”. (Cplt.
10; Sheridan Dec.
B.G. is a member of an employer-sponsored health benefits plan:
specifically, the Blue Cross Blue Shield Select Plus PPO Option for Volt
Information Sciences, Inc. (“Volt Plan” or “the Plan”). (Def. Brf. at 2). Anthem is
the Claims Administrator for the Volt Plan. (DeL Brf. at 2; Benefit Description
at 82). The parties do not dispute that the VOLT Plan is governed by ERISA.
At B.Q.’s initial visit to Progressive, B.G. provided Progressive with a copy
of his Blue Cross Blue Shield card. (Sheridan Dec.
3; Ex. A to Sheridan
Dec.).3 As an out-of-network provider, Progressive does not have any written
agreement with Anthem for payment of services. (Cplt.
11). According to
Progressive, before providing medical services to B.G., one of its representatives
contacted Anthem by telephone to gain information about payment of services.
A Progressive representative allegedly spoke with an Anthem
representative on three occasions. (Sheridan Dec.
5—7). According to
The back of the insurance card includes the following statement: “Anthem Blue
Cross and Blue shield, an independent licensee of the Blue Cross arid Blue Shield
Association, provides administrative claims payment services only and does not
assume any financial risk or obligation with respect to claims. Anthem Blue Cross and
Blue Shield is the trade name of Anthem Insurance Companies, Inc.” (Ex. A to
A Declaration was submitted by Kori Sheridan, Progressive’s practice manager.
(Sheridan Dec. ¶1). When describing who called Anthem representatives, Ms.
Sheridan’s Declaration uses the word “we.” (Sheridan Dec. ¶3f 5, 6, and 7). It is
therefore unclear exactly who spoke to Anthem representatives, and I will use “a
Progressive representative” to describe the party to those calls.
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Progressive’s practice manager, on May 7, 2014, Progressive “called to confirm
the medical benefits that Patient B.Q.’s insurer would pay.” (Id.
Progressive alleges that an Anthem representative stated that Anthem “paid the
‘usual, customary, and reasonable [C’UCR”)] rate’, and the patient a 30% co
insurance (meaning that the patient was responsible for 30% of the billed
amount after the deductible, and the insurer would pay the other 70%).” (Id.).
On May 8, 2014, Progressive received an assignment of benefits from
B.G. (Notice of Removal Ex. C).
Then, on October 6, 2014, prior to B.G.’s surgery, Progressive called to
“reconfirm the medical benefits that [Anthem] would pay.” (Sheridan Dec.
Anthem reiterated the information that it had already provided on May 7, 2014.
On October 8, 2014, Progressive “called to confirm that [Anthem] would
pay for the particular surgery Progressive sought to perform on Patient B.G.”
(Sheridan Dec. ¶7). According to Ms. Sheridan, “[w]e were told that we could
perform the procedure, and that no other medical documentation was required
in order to pre-authorize it.” (Sheridan Dec. ¶7).
Relying on Anthem’s representations, on October 24, 2014, the
Progressive doctor performed spinal surgery on B.G. (Cplt.
¶ 10; Sheridan Dec.
Five days after B.G.’s surgery, Progressive submitted two health
insurance claim forms: one for the surgeon’s services and the other for the
physician assistant’s services. (Sheridan Dec. Ex. C; Claim Form). The total
charge claimed for the surgeon was $60,453. (Sheridan Dec. Lx. C; Claim
Form). Progressive asserts that only $2,381.97 of the surgeon’s bill has been
reimbursed by Anthem. (Sheridan Dec.
¶ 14; Sheridan Dec. Lx. F; ECF no. 10
Lx. F).5 Progressive appealed the payment decision through Anthem’s
The bill of the physician assistant was ultimately negotiated and is not at issue
here. Ms. Sheridan “negotiated a partial payment with one of Anthem’s agents, the
National Care Network.” (Sheridan Dec. ¶ 12). That agreement was finalized on
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administrative appeals process by sending a letter from counsel dated April 1,
2016. (Genovese DecI., Ex. 1). The outcome of the appeal is not specifically
documented, but the implication is that it was denied.
On December 8, 2016, Progressive filed this action in the Superior Court
of New Jersey, Law Division, Bergen County. (Cplt.)
Removal and Remand in the Context of ERISA Preemption
Pursuant to the federal removal statute, “any civil action brought in a
State court of which the district courts of the United States have original
jurisdiction” may be removed by the defendants to the appropriate district
court where the action is pending. 28 U.S.C.
§ 144 1(a). Removal is not
appropriate if the case does not fall within the district court’s original federal
question jurisdiction and the parties are not diverse. See US. Express Lines
Ltd. v. Higgins, 281 F.3d 383, 389 (3d Cir. 2002) (citing Franchise TaxBd. of
Cal. v. Constr. Laborers Vacation TnzstforS. Cal., 463 U.S. 1, 8 (1983)); see
generally 28 U.S.C.
The Third Circuit has cautioned that 28 U.S.C.
§ 1441 must be strictly
construed against removal. Samuel—Bassett, 357 F.3d at 396, 403 (citing Boyer
v. Snap—On Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990), cert. denied, 498
U.S. 1085 (1991). Accordingly, all doubts should be resolved in favor of
remand. Id. A parnr opposing remand must show that removal was
proper. Boyer, 913 F.2d at 111.
A party may move to remand a civil action to state court “at any time”
based on the federal court’s lack of subject matter jurisdiction. 28 U.S.C.
1447(c). As in any federal court case, “the party asserting federal jurisdiction in
a removal case bears the burden of showing, at all stages of the litigation, that
the case is properly before the federal court.” Frederico v. Home Depot, 507 F.3d
188, 193 (3d Cir. 2007) (citing Samuel—Bassett v. KM Motors Am., Inc., 357 F.3d
392, 396 (3d Cir. 2004)).
November 18, 2014 and on or around December 9, 2014, Anthem paid Progressive the
negotiated amount. (Sheridan Dec. ¶ 12; Sheridan Dec. Ex. D and E).
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In general, under the well-pleaded complaint rule, a cause of action
“arises under” federal law, and removal is proper, only if a federal question is
presented on the face of a properly pleaded complaint. Dukes v. U.S.
Healthcare, 57 F.3d 350, 353 (3d Cir. 1995) (citing Franchise Tax Bd., 463 U.S.
at 9—12). The complete preemption doctrine, however, may be viewed as
creating a quasi-exception to the well-pleaded complaint rule: “Congress may
so completely pre-empt a particular area that any civil complaint raising this
select group of claims is necessarily federal in character.” Metro. Life Ins. Co. v.
Taylor, 481 U.S. 58, 63—64 (1987) (emphasis added); Dukes, 57 F.3d at
354 (citing Taylor); see generally Qoepel v. Nat’l Postal Mail Handlers Union, 36
F.3d 306, 309—13 (3d Cir. 1994) (discussing the Court’s complete-preemption
jurisprudence). In such a case, even a facial state claim will be deemed to
present a federal question.
The complete preemption doctrine applies when
the pre-emptive force of [the federal statutory provision] is so
powerful as to displace entirely any state cause of action
[addressed by the federal statute]. Any such suit is purely a
creature of federal law, notwithstanding the fact that state law
would provide a cause of action in the absence of [the federal
Dukes, 57 F.3d at 354 (quoting Franchise TaxEd., 463 U.S. at 23). When the
federal law completely preempts a state law cause of action, a claim within the
scope of that federal law is federal in nature, even if it is pleaded in terms of
state law, and it is therefore removable under 28 U.S.C.
§ 1441. Beneficial
Nat’l Bank v. Anderson, 539 U.S. 1, 8 (2003).
Although ERISA preemption is broad, it is not all-encompassing. The
Supreme Court has “addressed claims of pre-emption with the starting
presumption that Congress does not intend to supplant state law.” N.Y. State
Conf of Blue Cross & Blue Shield Plans v. Travelers Inc. Co., 514 U.S. 645, 654
(1995). Thus, even though “[t]he governing text of ERISA is clearly expansive”
in prescribing preemption for any state law claims that “relate to any employee
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benefit plan,” the Supreme Court did not extend “relate to” “to the furthest
stretch of its indeterminacy.” Id. at 655 (internal citations and quotations
Here, a federal question is not presented on the face of the complaint.
Progressive is suing in its individual capacity as a third-party health care
provider, not in its derivative capacity as an assignee of the patient’s ERISA
plan benefits. Its state-law claims are based on alleged independent promises
or obligations of Anthem to Progressive itself. Such claims, in Progressive’s
view, lie outside the scope of the beneficiary/Plan relationship. Anthem’s notice
of removal is based on its argument that Progressive’s claims are completely
preempted under Section 502(a) of ERISA. The central question, then, is
whether the doctrine of complete preemption encompasses these allegedly
A. Complete Preemption
Two conditions must be met for a claim to be completely preempted
under Section 502(a): (1) the plaintiff could have brought the claim under
Section 502(a) of ERISA, and (2) there is no independent legal duty supporting
the plaintiffs claims. Pascack Valley Hosp. v. Local 464A UFCW Welfare
Reimbursement Plan, 388 F.3d 393, 400 (3d Cir. 2004). See also Aetna Health
Inc. v. Davila, 542 U.S. 200, 210 (2004) (holding that state law claim is
completely preempted when action could have been brought under Section
502(a)(l)(B) and no other legal duty independent of ERISA exists). “Because the
[Pascackj test is conjunctive, a state-law cause of action is completely
preempted only if both of its prongs are satisfied.” NeLU Jersey Cwpenters & the
Trustees Thereof v. Tishman Const. Corp. of New Jersey, 760 F.3d 297, 303 (3d
Cir. 2014). As the removing party in this case, Anthem bears the burden of
establishing both prongs. Pascack, 388 F.3d at 401.
Courts have further disaggregated the first prong of the Pascack test into
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1(a) Whether the plaintiff is the type of party that can bring a claim
pursuant to Section 502(afll)(B), and
1(b) whether the actual claim that the plaintiff asserts can be construed
as a colorable claim for benefits pursuant to Section 502(a)(1)(B).
Montefiore Med. Ctr. u. Teamsters Loca1272, 642 F.3d 321, 328 (2d Cir. 2011).
See also McCulloch Orthopaedic Surgical Servs., PLLC v. Aetna Inc., 857 F.3d
141, 145-46 (2d Cir. 2017); Emergency Physicians of St. Clares u. United Health
Care, Civ. A. No. 14-404 (ES), 2014 WL 7404563, at *2_6 (D.N.J. Dec. 29,
I find that complete preemption does not apply, because Anthem fails to
satisfy the first prong of the conjunctive Pascack test.
Pascack Prong 1
a) Standing/Type of Party
Subpart a of the first Pascack prong is not satisfied. Anthem has not
established that Progressive “is the type of party that can bring a claim
§ 502(a)(1)(B).” Montefiore, 642 F.3d at 328.
Under Section 502(a) of ERISA, only “a participant or beneficiary” may
bring a civil action to recover benefits or enforce rights under the plan. 29
U.S.C. 1132 (a). However, such a plan beneficiary may confer a derivative
right to sue upon a health care provider via a valid assignment. 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. App’x 169, 175 (3d
Cir. 2015); CardioNet, Inc. v. Cigna Health Corp., 751 F.3d 165, 176 n.10 (3d
Cir. 2014). By assignment, the provider stands in the shoes of the participant
or beneficiary who is its patient.
Here, though, Progressive asserts that it does not possess a valid
assignment. Although it received an assignment of benefits from E.G., the Volt
Plan has an anti-assignment clause which expressly prohibits 8G. from
assigning his rights or benefits. (P1. Remand Brf. at 15).
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Anthem characterizes Progressive’s argument as irrelevant. According to
Anthem, the sole consideration is a more generic one: whether the plaintiff is
the type of party that can assert standing. Whether this particular assignment
is valid under the terms of the Volt Plan, says Anthem, is not an appropriate
consideration at this stage. (Def. Reply at 7). If the claim is that the antiassignment clause must be disregarded at this stage (only to be reasserted with
a vengeance later), I disagree.
Anthem’s argument rests on McCulloch Orthopaedic Surgical Sews., FLLC
v. Aetna U.S. Healthcare, No. 15-CV-2007 KBF, 2015 WL 2183900 (S.D.N.Y.
May 11, 2015), a case which has recently been vacated by the Second Circuit.6
Given the factual similarities between this case and McCulloch, and the Second
Circuit’s explicit rejection of the argument now being proffered by Anthem,
some discussion is warranted.
In McCulloch, an out-of-network health care provider brought a state
promissory-estoppel action against Aetna. The provider claimed that it received
an independent promise from Aetna that it would be reimbursed at the UCR
rate for two knee surgeries provided to the insured. 857 F.3d at 144. Aetna
removed the case to federal court, arguing that the health care provider’s
complaint was completely preempted by ERISA. Id. at 145. The provider then
filed a motion to remand, which was denied by the District Court based in part
on its conclusion that an attempted assignment between the patient and the
health care provider satisfied the first prong. Thid. “Whether the assignment is
valid under the terms of the ERISA plan at issue,” said the District Court, “is a
question to be decided once an ERISA claim is before the Court.”’ Ibid.
The United States Court of Appeals for the Second Circuit reversed,
holding that the out-of-network provider’s claim was not completely preempted
by ERISA. Id. at 152. In evaluating the first prong of the Pascack test,7 the
Anthem submitted its brief on April 10, 2017, before the Second Circuit had
issued its May 18, 2017 decision.
I simplify. From Davila, 542 U.S. at 210, the Second Circuit derived an
analytical framework similar to that prescribed by the Third Circuit in Pascack. See
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Second Circuit concluded, the validity of an assignment of a claim is an
appropriate consideration. Id. at 147-48. It highlighted the practical drawbacks
of holding otherwise:
If we were to ignore that the health care plan prohibits an
assignment to [the provider] in determining whether his claim is
preempted, this would lead to a result that is both unjust and
anomalous: [the provider] would be barred from pursuing state-law
claims in state court on preemption grounds and from pursuing an
ERISA claim in federal court for lack of standing. McCulloch—and
other third-party providers in similar situations—would be left
without a remedy to enforce promises of payment made by an
Id. at 148. The Second Circuit added that such a ruling would not
advance the purpose of ERISA because the risk of non-payment would
discourage medical providers from providing treatment or would lead
them to “otherwise screen patients who are participants in certain
I agree, and I adopt the McCulloch Court’s reasoning. Finding the antiassignment clause relevant, I will consider it in evaluating the first prong of the
Progressive received an assignment of benefits from 8.0. (Notice of
Removal Ex. C). That “One Time Authorization Form” provides:
Assignment of benefits:
I hereby authorize payment of medical insurance benefits
otherwise payable to me, be made directly to [the doctor]. I
authorize the release of any medical or other pertinent information
necessary to determine these benefits for payable services rendered
by [the doctor]. I authorize [the doctor] to submit appeals on my
behalf for any denied benefits to my medical insurance carrier.
I Give Progressive Spine & Orthopaedics authorization to appeal
any claim on my behalf. I agree to allow any of my medical
documents to be released that is pertinent to the appeal. Any
Montefiore, 642 F.3d at 327. So the test applied by the Second Circuit, although
identical to the Pascack test, would better be described as the Montefiore test.
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(Assignment of Benefits)
A separate page entitled “ASSIGNMENT OF BENEFITS” states:
I hereby authorize payment of medical insurance benefits
otherwise payable to me, be made directly to [the doctorj.
I authorize the release of any medical or other pertinent
information necessary to determine these benefits for payable
services rendered by Lthe doctor].
I authorize [the doctorl to submit appeals on my behalf for any
denied benefits to my medical insurance carrier.
However, B.G.’s health care plan, the Volt Plan, has an anti-assignment
clause in the benefit description booklet. It provides as follows:
You authorize the Claims Administrator, on behalf of the
Employer, to make payments directly to Providers for Covered
Services. The Claims Administrator also reserves the right to make
payments directly to You. Payments may also be made to, and
notice regarding the receipt and/or adjudication of claims, an
Alternate Recipient, or that person’s custodial parent or designated
representative. Any payments made by the Claims Administrator
will discharge the Employer’s obligation to pay for Covered
Services. You cannot assign Your right to receive payment to anyone
else, except as required by a “Qualified Medical Child Support order”
as defined by ERISA or any applicable Federal law.
Progressive also points to a standard claim form which contains an assignment
of payment for medical benefits. First, Box 13 of the form, if filled in, requires the
insured to authorize the payment of medical services. B.G. signed both of the
completed forms submitted by Progressive. Box 13 so indicates by stating “signature
on file.” (Claim Form). Second, in box 27, the form asks if the provider will accept
assignment. Progressive checked “yes” in response to that question. (Id.) This
additional form, assuming it is properly considered, is not essential to the analysis
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Once a Provider performs a Covered Service, the Claims
Administrator will not honor a request to withhold payment of the
The coverage and any benefits under the Plan are not assignable by
any Member without the written consent of the Plan, except as
(Anti-Assignment Clause) (emphasis added).
Courts in this district have held that such an anti-assignment provision
is effective. It thus precludes a finding that a provider possesses derivative
standing based on such an assignment. See Cohen v. Indep. Blue Cross, 820 F.
Supp. 2d 594, 603-07 (D.N.J. 2011); Kaul v. Horizon Blue Cross Blue Shield of
New Jersey, 2016 WL 4071953 (D.N.J. Jul. 29, 2016); Advanced Orthopedics
and Sports Medicine v. Blue Cross Blue Shield of Massachusetts, 2015 WL
4430488,*4 (D.N.J. Jul. 20, 2015).
I find that the anti-assignment clause in B.Q.’s Health Benefit Plan is
facially valid, enforceable, and applicable to B.B.’s assignment to Progressive.
The unambiguous language of that clause prohibits B.G. from assigning his
benefits. Therefore, subpart (a) of the first prong of the Pascack test is not met.
b) Subpart b
Actual claim as a colorable claim
Subpart b of the first Pascack prong is also not satisfied. Anthem has not
established that that the actual claim asserted by Progressive can be
considered a colorable claim for benefits under Section 502(a)(lflB). Montefiore,
642 F.3d at 328.
A claim is subject to ERISA preemption if it is 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). To find that
Progressive’s claim is one “under the terms of [the] Plan,” says Anthem, it is
sufficient that the allegations in the Complaint implicate coverage and benefits
under the Volt Plan. (Def. Reply at 10). Progressive, it says, seeks Plan benefits,
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which it cannot recover unless B.G., the plan member, is entitled to them. (Def.
Reply at 10-11).
For that proposition, Anthem cites Elite Orthopedic & Sports Med. PA v.
Aetna Ins. Co., No. CV14617SKSHCLW, 2015 WL 5770474 (D.N.J. Sept. 30,
2015). In Elite Orthopedic, an out-of-network provider alleged that the claims
administrator, Aetna, “pre-certified and authorized” it to perform surgery on
two patients. 2015 WL 5770474 at *1. Aetna then refused to pay for the
surgeries in full. Id. at
1. Although it had assignments of the patients’ right to
payment, Elite based its claims on a breach of an alleged contract between
itself and Aetna. Id. at *2.
Aetna removed the case to federal court, asserting that the out-ofnetwork provider’s claims were preempted by Section 502(a) of ERISA. Thid.
Elite Orthopedic then filed a motion to remand, arguing that “Aetna’s pre
certification and authorization created separate, independent contracts, apart
from the insureds health plans, in which Aetna promised to reimburse Elite
Orthopedic for the medical services it provided, and assertledi that Aetna
breached those contracts by refusing to pay in full.” Id. at *12.
The parties’ arguments before the District Court focused on derivative
standing. Id. at 3. Aetna claimed that the patient’s assignment of payment of
benefits conferred derivative standing on Elite Orthopedic, bringing Elite under
the Plan umbrella. Ibid. Elite Orthopedic replied that “a limited assignment of
the right to receive payment is insufficient to confer it with derivative standing.”
The court rejected Elite Orthopedic’s argument, citing N.J. Brain & Spine
Ct,-. Id. at *3 In that case, the parties were in the more traditional alignment:
the provider claiming it possessed standing to sue via an assignment, and the
insurer denying it. The Third Circuit 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
Ctr., 801 F.3d at 372.
502(a).” N.J. Brain & Spine
Case 2:17-cv-00536-KM-MAH Document 22 Filed 09/11/17 Page 16 of 18 PageID: 336
In the Elite court’s view, Elite Orthopedic must have been suing pursuant
to the assignments, because it saw no alternative:
Elite Orthopedic for all purposes concedes that the assignments
were for the payment of benefits when it argues that the two
assignments were given so that checks would be mailed to the
The contention that Elites
office rather than the patients.
breach of contract claims are not founded on the assignment but
on Aetna’s pre-certification is unpersuasive. The breach of contract
claims obviously look for recovery of insurance benefits under the
insureds’ health plan, and so they fall within the scope of § 502(a).
Ibid. (citing Metro. Lifeins. Co. v. Taylor, 481 U.S. 58,66(1987))
Anthem’s reliance on Elite Orthopedic is misplaced, because the case is
distinguishable and confined to its facts. See Progressive Spine & Orthopaedics,
LLC v. Empire Blue Cross Blue Shield, No. CV 16-01649, 2017 WL 751851,
n.7 (D.N.J. Feb. 27, 2017) (declining to extend Elite Orthopedic and noting that
the court “did not provide an in-depth analysis to support its conclusion”). Elite
Orthopedic concluded, based on Third Circuit precedent, that the assignments
were valid. No anti-assignment provision was present.
Here, by contrast, an anti-assignment provision renders the purported
assignments ineffective; it is as if there were no assignments at all. Moreover,
Progressive explicitly disclaims any attempt to assert the rights of its patient,
B.G. It purports to assert its own rights under theories of contract and quasicontract. Those claims have some facial vulnerability, and may or may not have
any validity as a matter of state law. But this Court cannot conclude, contrary
to all appearances and Progressive’s own disclaimer, that Progressive must
“really” be asserting the rights of its patient, B.G.
In short, Anthem has not established Pascack prong 1, or either of its
subparts. For this reason alone, I am compelled to find that the court lacks
subject matter jurisdiction and remand the case. I do not reach Pascack prong
Case 2:17-cv-00536-KM-MAH Document 22 Filed 09/11/17 Page 17 of 18 PageID: 337
B. Progressive’s Request for Attorney’s fees
In connection with its motion to remand, Progressive requests attorneys
fees pursuant to 28 U.S.C.
§ 1447(c). This part of Progressive’s motion argues
that Anthem did not have a reasonable basis for removing the complaint
because it must have been aware of the Pascack standard, and the prior
adverse decision in Progressive Spine & Orthopaedics, LLC v. Empire Blue Cross
Blue Shield, No. CV 16-01649, 2017 WL 751851 (D.N.J. Feb. 27, 2017), which
rejected parallel preemption arguments. (P1. Remand Brf. 2 1—23).
The Court “may require payment of just costs and any actual expenses,
including attorney fees, incurred as a result of the removal.” 28 U.S.C.
1447(c). The Supreme court has held “the standard for awarding fees should
turn on the reasonableness of the removal. Absent unusual circumstances,
courts may award attorneys fees under
§ 1447(c) only where the removing
party’ lacked an objectively reasonable basis for seeking removal. Conversely,
when an objectively reasonable basis exists, fees should be denied.” Martin v.
Franklin Capital Corp., 546 U.S. 132, 141 (2005).
Under the circumstances, I cannot say that Anthem “lacked an
objectively reasonable basis for seeking removal.” See Martin, 546 U.S. at 141.
Although I agree that jurisdiction is lacking and that the prior decision in
Progressive Spine & Orthopaedics, LLC is instructive on the point, Anthem’s
removal of this action was based on ERISA preemption, a complex area of law.
See Kollman v. Hewitt Assocs., LIX?, 487 F.3d 139, 147 (3d Cir. 2007) (“It is no
secret to judges and lawyers that the courts have struggled with the scope of
ERISA preemption”). The issue is fairly debatable. It is plausible that
Progressive’s position was asserted in the belief that it had current legal
support, or as part of a good faith argument for an extension of existing law.
Progressive’s motion for attorney’s fees is therefore denied.
Case 2:17-cv-00536-KM-MAH Document 22 Filed 09/11/17 Page 18 of 18 PageID: 338
For the foregoing reasons, I hold that Anthem has failed to satisfy its
burden of showing that the Court has subject matter jurisdiction of this case.
Accordingly, because ERISA complete preemption does not apply, removal was
not proper pursuant to 28 U.S.C.
Progressive’s cross-motion to remand is granted, but its motion for
attorney’s fees is denied. Because the Court lacks subject matter jurisdiction,
Anthem’s motion to dismiss is denied as moot.
Dated: September 11,2017
United States District Judge
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