NEW JERSEY SPINE AND ORTHOPEDICS, LLC v. NOVO NORDISK, INC., EMPLOYEE HEALTH PLAN et al
Filing
19
OPINION. Signed by Chief Judge Jose L. Linares on 07/11/2018. (ek)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT Of NEW JERSEY
NEW JERSEY SPINE AND
ORTHOPEDICS, LLC,
Plaintiff,
V.
NOVO NORDISK, INC., EMPLOYEE
HEALTH PLAN, et al.
Defendants.
Civil Action No. 18-3699 (JLL)
OPINION
LINARES, Chief Distnct Judge
This matter comes before the Court by way of Defendant Novo Nordisk Inc. Welfare
Plan’s’ Motion to Dismiss Plaintiff New Jersey Spine and Orthopedics’ Amended Complaint
Pursuant to Federal Rule of Civil Procedure 12(b)(6). (ECF No. 7). Plaintiff has filed
opposition and Defendant has submitted its reply thereto. (ECF Nos. 11, 17). The Court has
read the parties’ submissions and considers this matter without oral argument in accordance with
Federal Rule of Civil Procedure 78. For the reasons set forth below, the Court grants
Defendant’s Motion to Dismiss.
Defendant is identified in Plaintiff’s Amended Complaint, (ECf No. I-I), as Novo Nordisk, Inc., Employee Health
Plan, Novo Nordisk. Inc., Health Plan, Novo Nordisk. Inc., Medical Plan, Novo Nordisk, Inc., Health and Welfare
Plan. Defendant identifies itself as Novo Nordisk Inc. Welfare Plan in its Notice of Removal. (ECF No. 1).
I. BACKGROUND2
Plaintiff is a healthcare provider located in Essex County, New Jersey. (ECF No. 1-1 at
16—19 (“Am. Compi.”)
¶
1). Defendant is a self-funded employee health and welfare benefits
plan which provides its employees and/or insured(s) health and welfare benefits in the State of
New Jersey. (Am. Compl.
(Am. Cornpl.
¶ 4).
¶ 2).
Defendant contracted with Aetna, Inc. to administer the plan.
On or about August 25, 2016 and February 7, 2017, Plaintiff performed
surgical procedures on AG (“the Patient”), who was a member of Defendant’s plan. (Am.
Cornpl.
¶ 3, 5).
The Patient had signed a document entitled “Assignment of Benefits,
Authorization to Settle Claim and Direction to Pay Medical Provider Directly,” allegedly
assigning his or her rights, interests, and benefits under the plan to Plaintiff. (Am. Compl.
¶ 6;
ECF No. 1-1 at 21). Plaintiff submitted all medical bills to Defendant and/or Aetna, Inc., (Am.
Compi.
¶ 7), and alleges that Defendant failed to comply with the terms of the plan when it failed
to reimburse Plaintiff for medical services totaling $170,541.19, (Am. Compl.
¶ 8).
On February 8, 2018, Plaintiff filed suit in the Superior Court of New Jersey, Essex
County, Law Division. (ECF No. 1-1 at 4). On February 2$, 201$, Plaintiff filed a one-count
Amended Complaint seeking to enforce a plan benefit under section 502(a)(1)(B) of the
Employee Retirement Income Security Act (“ERISA”) pursuant to the assignment of benefits
from the Patient to Plaintiff. (Am. Compl.
¶ 9).
On March 16, 2018, Defendant removed the
matter to this Court, (ECF No. I), and on April 20, 201$, Defendant moved to dismiss Plaintiffs
Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), (ECF No. 7).
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This background is derived from Plaintiffs Amended Complaint, which the Court must accept as true at this stage
of the proceedings. SeeAlston i’. Countrywide Fin. Coip., 585 f.3d 753, 758 (3d Cir. 2009).
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II. LEGAL STANDARD
This Court must dismiss a complaint if it lacks subject matter jurisdiction. Fed. R. Civ.
P. 12(b)(1). “Ordinarily, Rule 12(b)(1) governs motions to dismiss for lack of standing, as
standing is a jurisdictional matter.” N Jersey Brain & Spine Ctr. v. Aetna, Inc., $01 F.3d 369,
371 n.3 (3d Cir. 2015) (“NJBSC’). However, when statutory limitations to sue are nonjurisdictional, as is the case where a party claims derivative standing to sue under ERISA section
502(a), a motion to dismiss challenging such standing is “properly filed under Rule 12(b)(6).”
Id. Regardless, “a motion for lack of statutory standing is effectively the same whether it comes
under Rule 12(b)(1) or 12(b)(6).” Id. (citation omitted).
On a motion to dismiss for lack of standing, the plaintiff “bears the burden of
establishing’ the elements of standing, and ‘each element must be supported in the same way as
any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and
degree of evidence required at the successive stages of the litigation.” FOCUS v. Allegheny Cty.
Ct. C.P., 75 F.3d 834, $38 (3d Cir. 1996) (quoting Liçjan v. Defs. of Wildlife, 504 U.S. 555, 561
(1992)). “For the purpose of determining standing, [the Court] must accept as true all material
allegations set forth in the complaint, and must construe those facts in favor of the complaining
party.” Storino v. Borough ofPoint Pleasant Beach, 322 F.3d 293, 296 (3d. Cir. 2003) (citing
Wart/i v. Se/din, 422 U.S. 490, 501 (1975)).
III. DISCUSSION
Defendant moves to dismiss Plaintiffs complaint for lack of standing pursuant to Federal
Rule of Civil Procedure 12(b)(6). (ECF No. 7). Defendant argues that Plaintiff does not have
statutory standing to sue because the plan contains a clear and unambiguous anti-assignment
clause preventing the Patient from assigning his or her rights or benefits to Plaintiff. (ECF No.
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7-1 at 6). Specifically, the plan states: “Coverage and [the Patient’s] rights under this plan may
not be assigned. A direction to pay a provider is not an assignment of any right under this plan
or of any legal or equitable right to institute any court proceeding.” (ECf No. 7-1 at 8; ECF No.
7-3 at 67; ECF No. 7-4 at 76).
This case therefore turns on the enforceability of the anti-assignment clause contained in
the Plan. If it is not enforceable, the Patient can be deemed to have successfully assigned his or
her rights and benefits to Plaintiff, thereby giving Plaintiff derivative statutory standing to bring
this action. If it is enforceable, Plaintiff has no derivative standing by which to bring this action,
and the Court must grant Defendant’s Motion to Dismiss.
The Third Circuit recently held that anti-assignment clauses in ERISA-governed health
insurance plans are generally enforceable. Am. Orthopedic & Sports Med. v. Indep. Blue Cross
Blue Shield, 890 F.3d 445, 453 (3d Cir. 2018). This Court has also issued several decisions in
accord with American Orthopedic. See Univ. Spine Ctr. v. Aetna, Inc., No. 17-13654, 2018 WL
1757027 (D.N.J. Apr. 12, 2018); Univ. Spine Ctr. v. Aetna, Inc., No. 17-7825, 2017 WL 6514663
(D.N.J. Dec. 20, 2017); Univ. Spine Ctr. v. Horizon Blue Cross Blue Shield ofIVJ, No. 17-193,
2017 WL 637223$ (D.N.J. Dec. 12, 2017). Further, Plaintiffs arguments as to why the antiassignment clause should not be enforced have already been explicitly rejected by either the
Third Circuit or extensive case law within this District. See infra Section III.A. Thus, the Court
agrees with Defendant that the anti-assignment clause in the plan is valid and enforceable,
thereby depriving Plaintiff of derivative standing to bring this suit.
A. Enforceability of the Anti-Assignment Clause
Plaintiff argues that its executed assignment of benefits from the Patient, a plan
beneficiary, is enough to give it derivative standing under ERISA to bring this suit. (ECF No. 11
4
at 11—16). ERISA grants a “participant” or “beneficiary” the right to sue “to recover benefits
due to him under the terms of his plan.” 29 U.S.C.
§
H32(a)(1). “Healthcare providers that are
neither participants nor beneficiaries in their own right may obtain derivative standing by
assignment from a plan participant or beneficiary.” NJBSC, 801 F.3d at 372; see also
C’ardioNet, Inc. v. Cigna Health Coip., 751 F.3d 165, 176 n.10 (3d Cir. 2014) (adopting the
position that healthcare providers may obtain standing to sue by assignment from a plan
participant). In American Orthopedic, however, the Third Circuit specifically rejected the
appellant’s argument that NJBSC confers derivative standing on healthcare providers by
assigmuent despite the presence of an anti-assignment clause, because that case did not address
the enforceability of such anti-assignment clauses. $90 F.3d at 450. Therefore, the fact that
healthcare providers can obtain assignments of benefits from their patients in the absence of an
anti-assignment clause does not mean that anti-assignment clauses forbidding such assignments
are invalid. The anti-assignment clause at issue here is the same variety of clear and
unambiguous contract provision that this Court has found valid in other similar cases. Compare
sltpra Part III with Unñ Spine Ctr., 201$ WL 1757027, at *3; Univ. Spine Ctr., 2017 WL
65 14663, at *3; Univ. Spine Ctr., 2017 WL 6372238, at *3
Plaintiff also argues that it has derivative standing to sue because the anti-assignment
clause in the Plan only limits the Patient’s right to assign its benefits, not the Patient’s power to
do so, and therefore does not invalidate the assignment of benefits to Plaintiff (ECf No. 11 at
16—19). Such a limitation, Plaintiff alleges, renders the assignment of benefits a breach of
covenant, entitling the non-assigning party to damages, but maintaining the validity of the
assignment. (ECF No. 11 at 17). This argument has been rejected within this District on
multiple occasions. See Univ. Spine Ctr. v. Highmark, Inc., No. 17-11403, 2018 WL 2947859, at
5
*2_3 (D.N.J. June 12, 2018); Univ. Spine Ctr. v. Aetna, Inc., No. 17-7823, 201$ WL 2332226, at
*3 (D.N.J. May 23, 201$); Univ.
Spine
Ctr. v. United Healthcare, No. 17-10978, 2018 WL
2332204, at *34 (D.N.J. May 23, 201$); Univ. Spine Ctr., 201$ WL 1757027, at *2. Plaintiffs
argument that the anti-assignment clause fails to manifest an intent to limit the Patient’s power to
assign, (ECF No. 1 1 at 1$), is equally unavailing. See Univ. Spine Ctr. v. Anthem
Bttte
Cross
Blue Shield, No. 18-1103, 2018 WL 2357756, at *3 (D.N.J. May 24, 201$) (noting that “the antiassignment clause in American Orthopedic also did not contain the words ‘void’ or ‘invalid,’ and
yet the Third Circuit still detenriined that the clause was enforceable and that [the] plaintiff,
therefore, lacked standing to sue”).
Lastly, Plaintiff challenges the enforceability of the anti-assignment clause, arguing that
such clauses are unenforceable against healthcare providers and that the enforcement of such
clacises against healthcare providers would violate congressional intent. (ECf No. Ii at 19—25).
American Orthopedic squarely rejects both of these arguments. $90 F.3d at 45 1—53 (concluding
that in the absence of authoritative empirical data, Congress, rather than the courts, should decide
whether anti-assignment clauses promote or impede the goals of ERISA, and that Hermann
Hospital v. MEBA Medical and Benefits Plan, 959 F.2d 569 (5th Cir. 1992), does not require a
finding that anti-assignment clauses are unenforceable against healthcare providers in light of the
substantial authority holding otherwise). Thus, the plan’s anti-assignment clause is valid and
enforceable against Plaintiff.
B. Waiver of the Anti-Assignment Clause
Plaintiff also contends that even if the anti-assignment clause is enforceable, Defendant
waived its right to enforce the clause through Aetna’s “course of dealings” with Plaintiff. (ECF
No. 11 at 25). Specifically, Plaintiff received a partial payment from Aetna and went through an
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appeals process with Aetna seeking full reimbursement for its medical services without
Defendant or Aetna raising the anti-assignment clause as a defense to the claim during the
internal appeals process. (ECF No. 11 at 27—28). In American Orthopedic, Appellant also
argi.ied that the anti-assignment clause, if enforceable, should have been considered waived
because Independence Blue Cross Blue Shield had remitted some payment to the appellant and
allowed the appellant to go through its appeals process seeking full reimbursement. $90 F.3d at
453. The Third Circuit rejected this argument and stated that “routine processing of a claim
form, issuing payment at the out-of-network rate, and summarily denying the informal appeal do
not demonstrate ‘an evident purpose to surrender’ an objection to a provider’s standing in a
federal lawsuit.” Id. at 454 (quoting Brol4’n v. City ofPittsburgh, 186 A.2d 399, 401 (Pa.
1 962)).
Therefore, the Court sees no reason to deviate from established precedent in the Third
Circuit and the extensive relevant case law within this District. The Court finds this antiassignment clause to be valid and enforceable, and Plaintiff therefore has no derivative standing
to bring this action. Accordingly, the Court dismisses Plaintiffs Amended Complaint.
IV. CONCLUSION
For the reasons stated above, the Court grants Defendant’s Motion to Dismiss. An
appropriate Order accompanies this opinion.
Dated:July
It
,2018
While American Orthopedics applies the waiver law of Pennsylvania, New Jersey has a similarly high bar for
waiver, requiring a party “to have full knowledge of his legal rights and intent to surrender those rights,” and that the
waiver must be done “clearly, unequivocally, and decisively.” Knorr v. Smeal, 178 N.J. 169, 177 (2003).
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