IJKG OPCO LLC v. GENERAL TRADING COMPANY et al
Filing
122
OPINION. Signed by Judge Kevin McNulty on 06/15/2018. (sms)
Case 2:17-cv-06131-KM-JBC Document 122 Filed 06/18/18 Page 1 of 18 PageID: 1109
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
IJKG OPCO LLC, d/b/a CAREPOINT
HEALTH-BAYONNE MEDICAL
CENTER,
Civ. No. 17-613 1 (KM) (JBC)
OPINION
Plaintiff,
V.
GENERAL TRADING COMPANY,
CONSOLIDATED HEALTH PLANS
INC., CIGNA CORPORATION, INC.,
ZELIS HEALTHCARE, INC. a/k/a
PREMIER HEALTH EXCHANGE, INC.,
FIRST CHOICE INSURANCE
SERVICES, L.L.C., and STANDARD
SECURITY LIFE INSURANCE
COMPANY OF NEW YORK,
Defendants.
KEVIN MCNULTY, U.S.D.J.:
The plaintiff, IJKG Opco LLC, doing business as CarePoint Health—
Bayonne Medical Center (“BMC”), brings suit to recover the costs of medical
care it provided to a patient who experienced severe renal complications and
was hospitalized for about three weeks. Defendants are General Trading
Company (“General Trading”), which provided the patient’s employee welfare
benefits plan; Cigna Corporation Inc. (“Cigna”), which was the claims
administrator for the plan; Consolidated Health Plans, Inc. (“CR?”), which,
along with Cigna, jointly administered the plan and was the third-party
administrator for the plan; Zelis Healthcare, Inc. (“Zelis”), also known as
Premier Health Exchange, Inc. or PHX, which was the claims contract
negotiator; and Standard Security Life Insurance Company of New York (“SS
1
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Life”), which provided General Trading with a stop-loss policy that insured
losses in excess of a deductible arising from specific plan beneficiaries. Several
defendants have brought motions to dismiss and for judgment on the
pleadings) For the reasons outlined below, I will grant SS Life’s motion to
dismiss, deny General Trading’s motion to dismiss, and deny Zelis’s motion for
judgment on the pleadings.
I.
Summary of Facts2
BMC operates a fully-accredited, 278-bed hospital in Bayonne, New
Jersey, which provides health care services to more than 70,000 patients
annually. (AC
¶ 1, 22.) On November 2, 2013, “Patient 1”, who is insured by
General Trading, entered BMC’s emergency department and, after testing,
showed abnormally elevated levels of creatine and potassium. (Id.
¶ 21.) She
was diagnosed with acute renal failure and received medical treatment from
BMC from her admission to the hospital until November 24, 2013. (Id.) This
inpatient care, which lasted for 22 days, included testing to determine the
progress of Patient 1 ‘s kidney disease, treatment to stabilize the abnormal
levels of blood urea nitrogen and creatine, treatment for Goodpasture
Syndrome, which was a result of the kidney failure, plasmaphereisis,
hemodialysis, as well as other care. (Id.)
Patient 1 incurred a charge of $771,191.58 for the treatment of her
kidney disease and her nearly stay at BMC. (Id.) General Trading, whose
employee welfare benefits plan provides coverage for “in-network benefits” for
“preferred providers” and for “out-of-network benefits” for “nonpreferred
Additionally, CHP and CIGNA have brought motions to dismiss (ECF nos. 104,
105), which were not fully briefed at the time of this opinion. They will be decided
separately.
2
For the purposes of these motions, I will assume the facts alleged in the
Amended Complaint to be true. The Amended Complaint (ECF no. 51), which is cited
repeatedly, will be abbreviated as “AC.”
3
In the pleadings and the motion papers, the patient at issue is referred to as
“Patient 1.” (See, e.g., AC ¶ 20.) She is the only patient whose medical care costs BMC
sues to recover in this case.
2
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providers,” has reimbursed BMC, an “out-of-network” provider, for only
$175,358.05. (Id.
¶
27.) CHP, General Trading’s claim processor, issued an
explanation of benefits on January 29, 2014, which provided reasons for
disallowed charges. (Id.
“discount.
.
.
¶
28.) The majority of disallowances were labelled as
negotiated through Premier Healthcare Exchange” or “[e]xceeds
reasonable and customary charge.” (Id.)
On November 26, 2014, BMC received a letter from PHX stating that
“[t]he Payor has forwarded your letter for additional payment dated November
7, 2014 for our review and consideration” and that the bill would be
reimbursed in the amount of $175,358.05. (Id.
BMC filed an appeal with CHP. (Id.
¶
¶
29.) On November 28, 2014,
30.) CHP denied the appeal in its entirety
and directed BMC to balance-bill the patient for the outstanding amount. (Id.)
On January 13, 2015, BMC filed a second-level appeal within CHP. (Id.
¶
31.) On February 9, 2015, BMC and CHP discussed the status of the appeal in
a telephone call, in which a CHP representative advised BMC that appeals had
to be filed directly with PHX. (Id.) The representative also explained that the
claim was paid by CHP based on the out-of-network coverage provided by
Cigna and that no further payment would be made. (Id.) On February 23, 2015,
BMC received a letter from CHP that stated “[b]ased on the Plan benefits and
policy language it has been determined that the above listed claim was paid
appropriately and no additional payment shall be made.” (Id.
¶
32.) According
to BMC, this letter effectively signaled the exhaustion of its appeals process.
(Id.
¶
37.)
BMC sues to recover the unreimbursed balance of its bill, in the amount
of $595,833.53. It claims that defendants General Trading and Cigna have
violated
§
502(a)(1)(B) of the Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C.
§
1001, etseq., (AC
¶f
47—61); that all defendants (except
SS Life) have acted as fiduciaries to the employee welfare benefits plan that
cover the patient and breached their fiduciary duties under
§
502, (AC
¶f
62—
73), that all defendants (except 55 Life) denied BMC a full and fair review of
3
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their claim as mandated by
§
503 of ERISA (AC
¶13
74—79); and that 55 Life
breached its contractual obligations to BMC, as a purported third-party
beneficiaiy to the stop-loss policy. (AC ¶13 80—86.) Several motions are now
before the court. 55 Life has moved to dismiss the breach-of-contract claims
against it (ECF no. 63.), while General Trading has also moved to dismiss the
claims under ERISA against it. (ECF no. 69.) In addition, Zelis has moved for
judgment on the pleadings. (ECF no. 91.)
II.
Discussion
a. Standard of Review
Rule 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
defendants, as the moving parties, bear the burden of showing that no claim
has been stated. Animal Science Prods., Inc. v. China Minmetals Coip., 654 F.3d
462, 469 n.9 (3d Cir. 2011). For the purposes of a motion to dismiss, the facts
alleged in the complaint are accepted as true and all reasonable inferences are
drawn in favor of the plaintiff. N.J. Carpenters & the Trustees Thereof u.
Tishman Const. Corp. of N.J, 760 F.3d 297, 302 (3d Cir. 2014).
Fed. I?. Civ. P. 8(a) does not require that a complaint contain detailed
factual allegations. Nevertheless, “a plaintiffs obligation to provide the
‘grounds’ of his ‘entitlement to relief requires more than labels and
conclusions, and a 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
complaint’s factual allegations must be sufficient to raise a plaintiffs right to
relief above a speculative level, so that a claim is “plausible on its face.” Id. at
570; see also W. Run Student Housing Assocs., LLC zc Huntington Nat. Bank,
712 F.3d 165, 16 (3d Cir. 2013). That facial-plausibility standard is met “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 Ttvombly, 550 U.S. at 556). While “[t]he
4
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plausibility standard is not akin to a ‘probability requirement’.
.
it asks for
more than a sheer possibility.” Iqbal, 556 U.S. at 678.
A Rule 12(c) motion for judgment on the pleadings is often
indistinguishable from a motion to dismiss, except that it is made after the
filing of a responsive pleading. Fed. R. Civ. P. 12(h)(2) “provides that a defense
of failure to state a claim upon which relief can be granted may also be made
by a motion for judgment on the pleadings.” Thrbe v. Gov’t of Virgin Islands,
938 F.2d 426, 428 (3d Cir. 1991)). Accordingly, when a Rule 12(c) motion
asserts that the complaint fails to state a claim, the familiar Rule 12(b)(6)
standard applies. Id. (making due allowance, of course, for any factual
allegations that are admitted in the responsive pleading). Thus, 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).
I am permitted to consider “extraneous documents that are referred to in
the complaint or documents on which the claims in the complaint are based”
without converting this motion into one for summary judgment. Morano ic
BMW of N. Am., LLC, 928 F. Supp.2d 826, 830 (D.N.J. 2013) (citing In re
Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997); Pension
Benefit Quar. Corp.
ii.
White Consol. Indus., 998 F.2d 1192, 1996 (3d Cir.
1993)).
b. Motion to Dismiss by SS Life
55 Life moves to dismiss the claims by BMC against it on two grounds.
First, 55 Life argues that BMC is not a third-party beneficiary of the stop-loss
policy between 55 Life and General Trading. (ECF no. 63, at 1.) Second, even if
BMC is a third-party beneficiary, BMC’s claim is time barred by the terms of
that policy. (Id. at 1—2.)
Under New Jersey law, contract liability to a third party depends on
“whether the contracting parties intended that a third party should receive a
benefit which might be enforced in the courts.” Fackelman z,’. Lac d’Amiante du
Quebec, 398 N.J. Super. 474, 488 (App. Div. 2008) (quoting Wennann u.
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Aratusa, Ltd., 266 N.J. Super. 471, 476 (App. Div. 1993)). For contract liability
to a third party to exist, a court must find that the parties to the contract
intended and contemplated that the contract would benefit a third party. Id.
(citing Gold Mills, Inc.
p.
Orbit Processing Corp., 121 N.J. Super. 370, 373 (Law
Div. 1972)). Conversely, parties to a contract may expressly negate any legally
enforceable right in a third party. Broadway Maint. Corp. v. Rutgers, State
Univ., 90 N.J. 253, 260 (1982).
SS Life states that its policy with General Trading explicitly disclaims any
enforceable rights on behalf of third parties. It has attached SS Life’s policy
with General Trading as an exhibit to a certification by Jonathan R. Pepin, an
attorney for SS Life.4 (ECF no. 63, Certification of Jonathan R. Pepin, ex. A).
The relevant portions of the policy state;
BMC objects to SS Life’s citation to and use of the language of the stop-loss
policy. (ECF no. 75, at 8.) It argues that it was not provided a copy of the “purported”
stop loss policy until SS Life filed its motion to dismiss. (Id. at 9.) It takes issue with
the submission of the document (that is, by certification of SS Life’s attorney and not
by the custodian of records of the company). (Id. at 10.) BMC believes, at a minimum,
that it should be permitted to conduct discovery so that it can obtain all relevant
material and test whether the policy is authentic and complete. (Id.)
BMC’s claims against SS Life are based entirely on the contract/policy between
General Trading and SS Life. (AC ¶ 80—86.) While BMC does not expressly quote or
cite to the policy in its Amended Complaint, it relies extensively on the existence of
provisions that would make 55 Life liable to General Trading, with some specificity.
(See, e.g., id. ¶ 83 (“General Trading contracted with SS Life to provide stop-loss
insurance coverage in excess of $50,000 for General Trading’s liability to Plan
beneficiaries under the Plan. General Trading alleges it paid its $50,000 deductible
under the Policy, and so SS Life must reimburse BMC any additional amounts due
under the Plan for the emergent medically necessary treatment provided by BMC for
Patient 1. BMC is a third-party beneficiary under the stop-loss policy, as SS Life must
reimburse General Trading any amounts due and owing to BMC under the Plan in
excess of General Trading’s $50,000 deductible.”).) Because I am allowed to consider
“indisputably authentic documents underlying the plaintiffs claims,” Sentinel Trust
Co. v. Universal Bonding Ins. Co., 316 F.3d 213, 216 (3d Cfr. 2003), the question turns
to whether the attached policy is “indisputably authentic.”
BMC has not explicitly alleged that the document is fake or incomplete or
pointed to anything within the document that would indicate either. Rather, it objects
to the appropriateness of the document’s sponsor. (ECF no. 75, at 10.) The policy, as
provided by SS Life, bears sufficient indicia to indicate is “indisputably authentic,” and
I will consider it on this motion to dismiss. In an abundance of caution, I will direct SS
6
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This Policy does not create any right or legal relationship whatsoever
between Us and a Covered Person or beneficiaries under the Plan. We
shall not have any responsibility or obligation under this Policy to
directly reimburse any Covered Person, or provider of professional or
medical services for any benefits which are provided under the terms of
the Plan. Our only liability under this Policy is You. Only one of Our
officers may change this Policy. No change shall be valid unless the
change is agreed to by Our President, Vice President or Secretary’ in
writing.
(Id. at 7, § 8 (Entire Contract).)
.
.
.
Except as specifically provided in any rider or endorsement, attached to
and forming part of the Policy, We have no obligation to any third party.
Our liability under this Policy is limited to reimbursing You, pursuant to
the terms of this Policy, for payments You make on behalf of Covered
Person for expenses covered under the Plan. You hold Us harmless for
damages, of any kind, which are not cause by Our own acts or
omissions. We are not responsible for any liability You assume under
any contract of agreement other than the Plan. (Id. at 8, § 8 (Liability and
Indemnification).)
Based on the explicit and unambiguous language of this provision, it was
General Trading and 55 Life’s intent that no party except General Trading
would benefit from the stop-loss coverage of the policy. Likewise, the
“surrounding facts and circumstance” do not support BMC’s argument that it
is a third-party beneficiary. (See ECF no. 75, at 12.) As to any person covered
by the policy, 55 Life promised to reimburse losses that exceeded the
deductible. (ECF no. 63, at 4,
§
3 (Specific Excess Loss Insurance).) This
provision, similar to most stop-loss policies, merely provides General Trading
with a means to recover excessive losses arising from specific plan beneficiaries
and does not function as a guarantee to any particular plan beneficiary.
Because BMC was explicitly not intended to be a third-party beneficiary
of the stop-loss policy issued by 55 Life, BMC cannot pursue a claim of breach
of contract against 55 Life. Because BMC cannot pursue a claim as a third
party beneficiary, I need not decide whether BMC’s claims against SS Life are
Life to file another copy under the certification of a records custodian. Should it fail to
do so, I will of course entertain a motion for reconsideration.
7
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time-barred. 55 Life’s motion to dismiss the claims against it in Count Four is
granted.
c. Motion to Dismiss by General Trading
General Trading moves to dismiss the claims by BMC against it on
several grounds. First, it argues that BMC lacks standing to pursue the
patient’s claims because the patient’s assignment of benefits is invalid. (ECF
no. 69, at 1.) Second, General Trading states that BMC’s suit is untimely under
the terms of the patient’s plan with General Trading. (Id. at 1, 8.) Third,
General Trading argues that BMC is not allowed to pursue claims of both
breach of fiduciary duty and denial of a full and fair
review
under ERISA
because the claims are duplicative. (Id. at 1.) Fourth, it asserts that BMC failed
to exhaust its administrative remedies. (Id.)
1. Standing
Health care providers may obtain standing to sue under
§ 502(a) of
ERISA by assignment from a plan participant. CarthoNet, Inc. v. Cigna Health
Corp., 751 F.3d 165, 176 n.10 (3d Cir. 2014) (adopting the majority position of
the other circuits); see also N. Jersey Brain & Spine Ctr. u. Aetna, Inc., 801 F.3d
369 (3d Cir. 2015) (holding that a valid assignment of benefits by a plan
participant or beneficiary transfers to a health care provider both the insured’s
right to payment under a plan and his right to sue for that payment). However,
that assignment from the plan participant to the health care provider must be
valid and enforceable. For example, courts within this district have routinely
declined to enforce assignments where they are contrary to anti-assignment
clauses in plans. See, e.g., Advanced Orthopedics & Sports Medicine a Blue
Cross Blue Shield of Ma., No. 14-7280, 2015 WL 4430488, at *5_*6 (D.N.J. July
20, 2015) (finding an anti-assignment clause enforceable “on its face” and
noting the weight of authority finding anti-assignment clauses generally
enforceable); Specialty Surgery of Middletown v. Aetna, No. 12-4429, 2014 WL
2861311, at *4 (D.N.J. June 24, 2014); Glen Ridge Surgicenter, LLC a Horizon
Blue Cross Blue Shield of N.J, Inc., No. 08-6 160, 2009 WL 3233427, at *4
8
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(D.N.J. Sept. 30, 2009) (“Parties may contractually opt against recognizing an
assignment of benefits.”).
General Trading’s “Plan Document and Summary Plan Description”
contains a notice requirement, but not a ban on assignments:
The Plan will pay benefits under this Plan to the employee unless
payment has been assigned to a hospital, physician, or other provider
of service furnishing the services for which benefits are provided herein.
No assignment of benefits shall be binding on the Plan unless the
claims processer is notified in writing of such assignment prior to
payment hereunder. (ECF no. 69, Declaration of Douglas Boyle, ex. A, at
69 (Assignment).)
The provision clearly contemplates assignments by the employee to a health
care provider, provided the claims processer receives notice of such assignment
in advance of payment.5
In the Amended Complaint, BMC alleges that the patient executed an
“Assignment of Benefits” that assigned to BMC “all of [the patient’s} rights,
benefits, privileges, protections, claims, causes of actions, interest or recovery
arising out of any policy of insurance, plan, trust, fund or otherwise
providing health coverage of any type to me” and expressly authorized BMC
and its affiliates to act as her authorized representative to appeal any adverse
benefits determination. (AC
¶ 34—35 (quoting from the “Assignment of
Benefits”).) While BMC contends in general terms that it has a “valid”
assignment (AC ¶j 34), it does not specifically allege that it gave notice.
I do not think the omission renders the assignment allegation defective.
The plan language here does not bespeak any general hostility to patient
assignments. In effect, it merely imposes the reasonable procedural
requirement that the insured or the provider clearly identify the party to whom
This is not ai-i and-assignment provision dependent on consent. Compare the
provision in Advanced Orthopedics, which stated “You cannot assign any benefit or
to any person, corporation, or other organization without Blue Cross and
monies.
Blue Shield’s written consent” and “[ajny assignment by [the patient] will be void.”
2015 WL 4430488, at *4
5
.
.
9
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the insurer should send the check. Whether notice occurred seems to be a
factual issue dividing the parties, but that issue need not be settled now.6
On a motion to dismiss, I must take the complaint’s allegations as true
and read them in the light most favorable to BMC. I find that BMC has
sufficiently alleged a valid assignment from the patient.
ii. Timeliness
General Trading next asserts that this claim was not brought within the
time frame defined by the plan, which sets both a starting date and an ending
date for submission of claims. While ERISA does not contain a statute of
limitations for claims under
§ 502(a)(1)(b) and imposes a limitation of six years
from the date of breach, violation, or omission, or three years from discovery
(whichever is earlier) for breach of fiduciary duty claims under
U.S.C.
§ 502(a)(3), 29
§ 11 13, plans may set their own limitations on actions. This is because
“[t]he plan, in short, is at the center of ERISA” and employers are given leeway
In so holding, I am cognizant of the Third Circuit’s recent decision in American
Orthopedics & Sports Medicine u. Independence Blue Cross Blue Shield, No. 17-1633,
2018 U.S. App. LEXIS 12637 (3d Cfr. May 16, 2018). That case, which generally
upheld anti-assignment clauses, does not dispose of the issue on this motion as a
matter of law. It was mainly concerned with the “statutory’ gap” left by Congress in
ERISA on whether anti-assignment clauses were enforceable. See Id. at *5_*1s. The
Court held that Congress’s silence on the issue meant that “nothing in ERISA
forecloses plan administrators from freely negotiating anti-assignment clauses, among
other terms.” Id. at *13. The clause in that case was a true prohibition on
assignments, not a mere notice requirement like the one here. It provided that “[t]he
right of a Member to receive benefit payments under this Program is personal to the
Member and is not assignable in whole or in part to any person, Hospital, or other
entity.” Id. at *3 The appellant in that case also focused on whether the provision was
waived under Pennsylvania law. The Court of Appeals found the anti-assignment
clause enforceable and held that waiver did not apply. Id. at *14_*15, *19 (relying on
Pennsylvania waiver law but citing some case law from the District of New Jersey).
6
In full, the relevant section of the statute states:
No action may be commenced under this subchapter with respect to a
fiduciary’s breach of any responsibility, duty, or obligation under this part, or
with respect to a violation of this part, after the earlier of—( 1) six years after (A)
the date of the last action which constituted part of the breach or violation, or
(B) in the case of an omission the latest date on which the fiduciary could have
cured the breach or violation, or (2) three years after the earliest date on which
the plaintiff had actual knowledge of the breach or violation. 29 U.S.C. § 1113.
10
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under ERISA to design plans as they see fit. Heimeshoff v. Hartford Life & Acc.
Ins. Co., 571 U.S. 99, 108 (2013) (quoting US. Airways, Inc. a McCutcheon, 569
U.s. 88, 102 (2013)) (“The principle that contractual limitations provisions
ordinarily should be enforced as written is especially appropriate when
enforcing an ERISA plan.”).
Here, the limitation period in General Trading’s plan applies. “[Nb
action
at law or in equity shall be brought to recover on the benefits from the Plan
prior to the expiration of sixty (60) days after all information on a claim for
benefits have been filed and the appeal process has been completed in
accordance with the requirements of the Plan.” (ECF no. 69, Declaration of
Douglas Boyle, ex. A, at 70 (Legal Action).) Additionally, “[n}o such action shall
be brought after the expiration of two (2) years from the date the expense was
incurred, or one (1) year from the date a completed claim was filed, whichever
occurs first.” (Id.)
BMC’s claim seemingly falls outside of the latest deadline in the plan:
“two years from the date the expense was incurred.” According to the Amended
Complaint, BMC provided the emergency care from November 2, 2013 until
November 24, 2013. (AC
¶
20.) Two years from the latter date would be
November 24, 2015. However, BMC did not file its original complaint until
August 15, 2017. (See ECF no. 1 (Complaint).)
BMC argues for the application of the general New Jersey six-year statute
of limitations for breach of contract claims; that is, it says, the most analogous
state law statute to be applied when ERISA is silent. (ECF no. 76, at 11 (citing
Mirza v. Ins. Adm’r of America, Inc., 800 F.3d 129, 137 (3d Cir. 2014).) BMC
acknowledges that the plan here purports to shorten the statute of limitations,
but argues that this provision cannot be applied, because the plan
administrator failed to “substantially comply” with the notice requirements of
29 C.F.R.
§
2560.503(g)(1)(iv) (providing that the plan administrator must
“provide a claimant with written or electronic notification of any adverse benefit
determination” and that “notification shall set forth
11
.
.
.
(iii) [a] description of
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the plan’s review procedures and the time limits applicable to such procedures,
including a statement of the claimant’s right to bring a civil action under
section 502(a) of [ERISA] following an adverse benefit determination on
review.”). See also Mirza, 800 F.3d at 136 (noting that “the failure to include
judicial review time limits in the adverse benefit determination letter renders
the letter not in substantial compliance” and explaining that the regulations
require that such letters set forth any plan-imposed time limits for seeking
judicial review).
For these purposes, I analogize to the standards for evaluating a claim
that a complaint must be dismissed as untimely under the statute of
limitations. Dismissal is appropriate only if the time bar is apparent from the
face of the complaint; otherwise timeliness presents a factual issue. See Fried
z’. JPMorgan Chase & Co., 850 F.3d 590, 604 (3d Cir. 2017); BetheL u. Jendoco
Const. Corp., 570 F.2d 1168, 1174 (3d Cir. 1978).
BMC alleges that General Trading failed to inform it of the contractual
limitations provision and the deadline for judicial review. (See AC
¶
72, 76.)
General Trading takes issue with that assertion (ECF no. 86, at 6), but as an
allegation it is sufficient. For purposes of a motion to dismiss, I must take
BMC’s allegation as true. On this issue, then, the motion to dismiss is denied.
iii. Duplicative claims
General Trading argues that BMC cannot pursue both Count Two and
Three of the Amended Complaint, because they are duplicative. (ECF no. 69, at
13.)
Section 502(a)(3) is a “catchall” provision, “offering appropriate equitable
relief for injuries caused by violations that Section 502 does not elsewhere
adequately remedy.” Varety u. Howe, 516 U.S. 489, 512 (1996). However,
BMC also points to a February 23, 2015 letter attached to General Trading’s
motion papers where CliP affirmed that BMC’s claim “was paid appropriately and no
additional shall be made” and notes that that letter does not contain a deadline for
filing suit. (ECF no. 76, at 13; ECF no. 69, ex. C (Letter).)
12
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“where Congress elsewhere provided adequate relief for a beneficiary’s injury,
there vill likely be no need for further equitable relief; in which case such relief
would not be ‘appropriate.tm Id. at 515. VaHty does not, however, impose a
prohibition on pleading claims under both
§ 502(a)(3) and § 501(a)(1)(B). See,
e.g., Lipstein zc United Healthcare Ins. Co., No. 11-1185, 2011 WL 5881925, at
*3_*4 (D.N.J. Nov. 22, 2011) (denying the motion to dismiss the claims on
duplicative grounds as premature but allowing defendants to renew their
argument at the motion to dismiss stage); Chang v. Life Ins. Co. of N. Am., No.
08-19, 2008 WL 2478379, at *4 (D.N.J. June 17, 2008) (dismissing, however,
plaintiffs claims under both sections since it “would lead to a significant waste
of the Court’s and the parties’ resources).
§ 502(a)(1)(B) suffices to cover all of BMC’s alleged
grievances and any appropriate relief. Nevertheless, whether the § 503(a)(3)
It may be that
claim is redundant is not clear at this stage, and a party is permitted to plead
in the alternative. Fed. R. Civ. P. 8(d). Therefore, I will not dismiss Count Two
or Count Three as duplicative.
iv. Exhaustion
General Trading argues finally that BMC has not exhausted its
administrative remedies. (ECF no. 69, at 15.) “A plaintiff is required to exhaust
administrative remedies prior to bringing an ERISA action to recover benefits
under a plan.” Mallon v. Trover Solutions, Inc., 613 Fed. App’x 142, 143 (3d Cir.
2015) (citing Harrow u. Prudential Ins. Co. of Am., 279 F.3d 244, 252 (3d Cir.
2002)). BMC argues that is has sufficiently pled futility with respect to
exhaustion in its Amended Complaint. (ECF no. 76, at 27.) Specifically, the
Complaint alleges that BMC filed appeals with CHP and with Zeus but was told
that it was “paid appropriately” and that no further payments would be made.
(AC
¶J 3 1—33.) It also alleges that General Trading (through its owner, Douglas
Boyle) told BMC that BMC’s claim “was properly handled through the proper
channels” and that General Trading was not responsible for the remaining
balance. (Id.
¶ 4 1—43.) Most significantly, the Complaint alleges that BMC was
13
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not given specific reasons for the denial of its claim. (Id.
¶
33, 76.) That is a
sufficient allegation that BMC has was not required to exhaust any additional
administrative remedies before bringing suit. See Campbell v. Sussex County
Fed. Credit Union 602 Fed. App’x 71, 75 (3d Cir. 2015) (explaining that,
according to Department of Labor regulations, when a plan administrator fails
to establish or follow claims procedures in denying a claim, such as failing to
provide “the specific reason or reason for [the administrator’s] denial [of a
claim],” a plaintiff is not required to exhaust additional remedies before suit). I
will not dismiss BMC’s claims on exhaustion grounds.
d. Motion for Judgment on the Pleadings by Zeus
Two of the Complaint’s four counts apply to Zeus (referred to as “PHX” in
the complaint). Count Two alleges that Zelis breached its fiduciary duty under
the employee welfare benefits plan. (AC
¶11
62—73.) Count Three alleges that
Zelis denied BMC a full and fair review of the claims made on behalf of the
patient, in violation of
§
503 of ERISA. (AC ¶j 74—7g.) Zelis, which has filed an
answer, has moved for judgment on the pleadings pursuant to Fed. R. Civ. P.
12(c).
First, Zeus echoes the arguments of General Trading that Patient l’s
assignment of benefits to BMC is invalid and that the Count Two and Count
Three claims are duplicative. I deny that portion of Zelis’s motion for the
reasons expressed in Section H.c., supra.
Second, Zelis points out that it is not named in the employee welfare
benefit plan and that there are no factual allegations in the Amended
Complaint that would support an inference that Zelis acted as a fiduciary
under the plan. (Id. at 1—2.) I will apply the motion to dismiss standard, as
Zelis is essentially arguing that BMC has failed to state a claim—that is, that
BMC has failed to sufficiently allege that Zelis is a fiduciary. See Thrbe, 938
F.2d at 428. I therefore look to Zelis’s role as alleged in the Amended Complaint
and the indisputably authentic documents relied upon by the Complaint.
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“In every case charging breach of fiduciary duty [under ERISA].
the
threshold question is not whether the actions of some person employed to
provide services under the plan adversely affected a plan beneficiary’s interest,
but whether that person was acting as a fiduciary (that is, was performing a
fiduciary function) when taking the action subject to the complaint.” Pegram v.
Herd rich, 530 U.S. 211, 226 (2000). Under ERISA, “an entity is a fiduciary with
respect to a plan if it (i) ‘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’ or (ii) ‘renders
investment advice for a fee or other compensation
.
.
.
or has any authority or
responsibility to do so,’ or (iii) ‘has discretionary authority or discretionary
responsibility in the administration of such plan.tm National Sec. Sys., Inc. v.
lola, 700 F.3d 65, 98 (3d Cir. 2012) (quoting 29 U.S.C.
§ 1002(21)(A)). An entity
can be a fiduciary with respect to certain plan activities, but not with respect to
others; thus, the threshold question is whether some person or entity was
acting as a fiduciary (that is, was performing a fiduciary function) when taking
the particular action at issue. Id. (citations omitted).
The determination of whether an entity or person performs as a fiduciary
is highly fact-based and dependent on the particular tasks they perform.
NeurosurgicalAssocs. of N.J, P.C. u. QualCare Inc., No. 12-3236, 2015 WL
4569792, at *2 (D.N.J. July 28, 2015). “Thus rulings on this issue have tended
to occur after discovery rather than at the pre-discovery motion to dismiss
stage.” Id. (citing In re Schering-Plough Corp. ERISA Litig., No. 03-1204, 2007
WL 2374989, at *7 (D.N.J. Aug. 15, 2007) (“Fiduciary status is a fact sensitive
inquiry and courts generally do not dismiss claims at this early stage where the
complaint sufficiently pleads defendants’ ERISA fiduciary status.
.
.
.
[A]t this
stage such allegations, unless squarely refuted by Plaintiffs’ own pleading or by
documents essential to their claims, are sufficient.”)).
Zelis argues that the Amended Complaint simply refers to Zelis as a
“claims contract negotiato? and that it makes only two factual allegations
15
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concerning Zeus: (1) that BMC received a letter from Zeus on November 26,
2014 concerning whether BMC was appropriately paid; and (2) that on a call
with a CIGNA! CHP on February 9, 2015 BMC was told that appeals had to be
filed directly with Zelis. (ECF no. 99, at 3—4 (citing AC ¶1J6, 29, 31, 51, 65).) The
Complaint’s sole allegation that Zelis (PHX) had “discretionary authority or
discretionary control” regarding the management and administration of the
plan is phrased as a legal conclusion in blanket fashion regarding all
defendants. (AC
¶
68 (“General Trading, Cigna, CHP and [Zeus] exercise
discretionary authority or discretionary control relating to the management
and/or administration of the Plan, and/or exercise authority and/or control
respecting the management and disposition of the Plan’s assets.”).)
BMC, however, points to several allegations which it believes would
support an inference that Zelis has a discretionary role regarding the plan.
First, it points to an allegation that it received a January 29, 2014 letter from
CHP/ CIGNA which contained labels identifying why one of the charges was
disallowed, one of those codes representing that “[a] discount was negotiated
through [Zelis].”9 (AC
¶
28.) Second, it points to the allegations regarding the
November 26, 2014 letter from Zelis itself which states that the request for
additional payment was fonvarded to Zelis for its “review and consideration.”
(AC
¶
29.) According to the Complaint, the letter further stated that the charges
“were paid in accordance with the Plan and that [ZelisJ was further reducing
the bill by the outstanding $590,205.72.” (Id.) BMC, in its briefing, further
quotes from the same letter,’° where Zelis states that “only the Company has
g
That allegation in full reads:
In an explanation of benefits (“EOB”) issued by CHP dated January 29, 2014,
CHP provided reason codes and a legend for the disallowed charges, without
explaining the bases for the reason codes as applied to BMC’s charges related to
services provided to [the patientj. The majority of disallowed services used a
reason code of “2” for “[a] discount was negotiated through [Zelis}” or “3” for
“[ejxceeds reasonable and customary charge.” (AC ¶ 28.)
The letter was provided as an exhibit to a declaration by Paul Doherty (ECF no.
91, ex. A), as part of Zelis’s motion. The parties do not dispute the authenticity of the
letter (as especially evidenced by BMC’s substantial use of the letter in its opposition).
10
16
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discretionary authority to interpret [the Plan] as it applied to Policy
administration.” (ECF no. 95, at 13 (quoting from ECF no. 91, Declaration of
Paul Doherty, ex. A).) “The Company,” however, is never identified in this letter,
which does not clearly attribute all discretionary authority to some entity other
than Zelis.” Finally, the Complaint alleges that a CHP representative advised
BMC that “appeals had to be filed directly with [Zelis].” (AC
¶
31.)
That is enough; as is common, the issue of discretionary authority is a
factual one that must await development in discovery. BMC has sufficiently
alleged that Zelis exerted discretionary control or authority over the plan
sufficient to make it a fiduciary under ERISA. I will thus deny Zelis’s motion for
judgment on the pleadings.
Because the Amended Complaint explicitly relies on this letter in establishing Zelis’
involvement with the denial of the payment, I may consider it without converting this
to a motion for summary judgment.
II
The relevant part of the letter states:
Please note that you are not authorized by contract or by law to define what the
Policy Allowance is. Only the Company may define this term and only the
Company has the discretionary authority to interpret it as it applies to Policy
administration. The Company shall have the exclusive right, power and
authority, in their sole and absolute discretion, to administer, apply, interpret
and[/]or terminate any provision of the Policy and to decide on all matters
arising in connection with the operation or administration of the Policy. The
Company has 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 payable under the Policy. All determinations made by the Company
with respect to any matter arising under the Policy shall be binding on all
parties. (ECF no. 91, Declaration of Paul Doherty, ex. A.)
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Ill.
Conclusion
For the foregoing reasons, SS Life’s motion to dismiss Count Four
(Breach of Contract) is GRANTED; General Trading’s motion to dismiss Counts
One, Two, and Three is DENIED; and Zeus’ motion for judgment on the
pleadings is DENIED.
An appropriate order follows.
Dated: June 15, 2017
United States District Judge
18
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