COHEN, M.D., F.A.C.S. v. INDEPENDENCE BLUE CROSS
Filing
39
MEMORANDUM OPINION. Signed by Magistrate Judge Tonianne J. Bongiovanni on 12/19/2012. (gxh)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
DR. JASON M. COHEN, M.D., F.A.C.S, et
al.,
Plaintiffs,
Civil Action No. 10-4910 (MAS)
MEMORANDUM OPINION
v.
INDEPENDENCE BLUE CROSS, et al.,
Defendants.
BONGIOVANNI, Magistrate Judge
Currently pending before the Court is Plaintiff James Powers-Hill’s (“Plaintiff” or the
“Subscriber”) motion to amend his Amended Complaint in order to add Independence Blue
Cross (“IBC”) as a defendant, to assert a claim against IBC for violating § 502(a) of the
Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. 1101, et seq., and to
assert a breach of fiduciary duty claim against IBC, Defendant QCC Insurance Company
(“QCC”) and Defendant ComCast, Corp. (“ComCast”) (collectively, “Defendants”) for failing to
comply with 29 C.F.R. § 2560.503-1 [Docket Entry No. 31]. QCC opposes Plaintiff’s motion to
amend. The Court has fully reviewed Plaintiff’s motion to amend, including Plaintiff’s proposed
Second Amended Complaint, the Exhibits attached thereto and the Certification of Mark D.
Miller filed in support of Plaintiff’s motion.1 The Court has likewise fully considered and
reviewed all arguments raised by QCC in opposition to Plaintiff’s motion. The Court considers
1
The Court notes that in his Notice of Motion, Plaintiff represents that his application to
amend “does not involve any complicated issues of law or fact” and therefore “no brief is
necessary.” (Pl. Notice of Motion at 2; Docket Entry No. 31). The Court additionally notes that,
despite being granted an extension of time to file a reply brief in further support of his motion,
Plaintiff never filed same. Therefore, because there were none, the Court did not consider any
briefs filed by Plaintiff in support of the instant motion to amend.
Plaintiff’s motion without oral argument pursuant to Rule 78. For the reasons set forth more
fully below, Plaintiff’s motion to amend is GRANTED in part and DENIED in part.
I.
Procedural History and Background
A detailed recitation of the facts underlying this litigation were set forth in the District
Court’s Opinion dated October 24, 2011, as such the facts are not restated at length herein. Here,
Plaintiff was an insured under the health insurance policy between ComCast, the plan sponsor,
QCC, the plan administrator and IBC, the insurer. (Am. Compl. ¶ 2). In November 2008,
Plaintiff underwent spinal surgery performed by Dr. Cohen, an out-of-network or “NonPreferred, Non-Participating,” health care provider under the Plan. (Id. at ¶¶ 2,4). After the
surgery, Dr. Cohen, based on an assignment of benefits from Plaintiff, submitted an insurance
claim to Defendants for $143,626.00 for reimbursement for services rendered by him in
connection with the spinal surgery. (Id. at ¶¶ 9, 11). In response to Dr. Cohen’s claim, on April
2, 2009, Defendants made a single payment to Plaintiff in the amount of $5,123.90. Plaintiff
then forwarded this amount to Dr. Cohen. (Id. at ¶ 13).2
Dr. Cohen filed an appeal of the initial denial of his claim for reimbursement with
Defendants on April 20, 2009. (Id. at ¶ 17). Defendants denied Dr. Cohen’s appeal by telephone
and submitted a denial letter directly to Plaintiff. (Id. at ¶¶ 19, 20).3 After receiving Defendants’
denial, Dr. Cohen initiated this action solely on his own behalf, naming IBC as the only
defendant. IBC responded to Dr. Cohen’s Complaint by moving to dismiss same on standing
2
In Plaintiff’s Proposed Second Amended Complaint, Plaintiff alleges that IBC made the
single payment. (Porposed Second Am. Compl. ¶ 13).
3
In Plaintiff’s Proposed Second Amended Complaint, Plaintiff alleges that IBC denied
Dr. Cohen’s appeal and sent the denial letter to Plaintiff. (Proposed Second Am. Compl. ¶¶ 19,
20).
2
grounds. Dr. Cohen responded to IBC’s motion to dismiss by filing an Amended Complaint,
which included the Subscriber as a plaintiff and QCC and ComCast as additional defendants. As
filed, the Amended Complaint asserted five counts: Count I - violation of ERISA section 502(a)
brought by the Subscriber; Count II - failure to provide information required by law pursuant to
ERISA; Count III - breach of fiduciary duty; Count IV - ERISA violation brought by Dr. Cohen;
and Count V - state law claims of unjust enrichment/quantum meruit/promissory estoppel.
IBC and QCC responded to the Amended Complaint by filing a motion to dismiss. IBC
sought to dismiss all of Plaintiff and Dr. Cohen’s claims against it and QCC sought to dismiss
Counts II-V of the Amended Complaint. The District Court granted IBC and QCC’s motion to
dismiss. With respect to Dr. Cohen’s claims, the District Court determined that Dr. Cohen
lacked standing to pursue any of the asserted claims. (See Mem. Op. of 10/24/2011 at 14-20).
With respect to Plaintiff’s claims, the District Court dismissed all claims except for Plaintiff’s
claim that QCC violated § 502(a) of ERISA. With respect to the specific counts of the Amended
Complaint, the District Court determined that (1) Count I should be dismissed as to IBC because
Plaintiff failed to sufficiently allege that IBC is a fiduciary under ERISA (See Id. at 9); (2) Count
II should be dismissed because there was no allegation in the Amended Complaint that Plaintiff,
the beneficiary under the Plan, made a written request for documents, “an essential requirement
under 29 U.S.C. § 1024(b)(4),” and therefore Plaintiff failed to state a claim that Defendants
failed to provide plan documentation under ERISA (Id. at 24); (3) Count III should be dismissed
because Plaintiff’s breach of fiduciary duty claim was essentially the same as his claim for
benefits asserted and such duplicative claims are not permitted by ERISA (Id. at 20-22); (4)
Count IV should be dismissed because, as noted above, the District Court determined that Dr.
3
Cohen lacks standing to pursue any claims under § 502(a) of ERISA; and (5) Count V should be
dismissed because, as both Plaintiff and Dr. Cohen conceded, ERISA preempts their state law
claims. With respect to Plaintiff’s proposed § 502(a) ERISA claim against IBC, the District
Court noted that if Plaintiff “obtains information that would buttress allegations of IBC’s
fiduciary role, he may move to amend the Amended Complaint at that time.” (Id. at 9).
Plaintiff now seeks to file a Second Amended Complaint in order to reassert a § 502(a)
ERISA claim against IBC and to assert a claim against IBC, QCC and ComCast for breach of
fiduciary duty under ERISA for failing to comply with 29 C.F.R §2560.503-1. Plaintiff did not
file a brief in support of his motion to amend, stating instead that “[b]ecause this application does
not involve any complicated issues of law or fact, no brief is necessary.” (Pl. Notice of Mot. at 2;
Docket Entry No. 31; see also Statement That No Brief Is Necessary; Docket Entry No. 31-3).
However, in counsel’s certification submitted in support of Plaintiff’s motion to amend, Plaintiff
represents that he is relying on the following information to establish that IBC exercised
discretion over payment decisions and was therefore a plan fiduciary: documents produced by
QCC as part of their initial disclosures which show that “Independence Blue Cross repeatedly
was identified as the ‘claims fiduciary’ on their internal documents; that Independence Blue
Cross made the payment determinations; including rejecting the local Blue Card payment
recommendation to Independence Blue Cross; that Independence Blue Cross organized,
conducted and decided the appeals at their corporate headquarters; that Blue Cross personnel told
the Plaintiff that there were no surgeons in network who could perform the preapproved surgery
and then denied his second level appeal on that basis.” (Cert. of Mark D. Miller ¶ 3; Docket
Entry No. 31-1).
4
QCC opposes Plaintiff’s motion to amend, arguing that Plaintiff’s proposed amendments
are futile. In this regard, QCC claims that Plaintiff seeks to assert breach of fiduciary duty claims
in both Counts I and II of his proposed Second Amended Complaint.4 QCC, however, argues
that Plaintiff’s proposed breach of fiduciary duty claims are futile because the law of the case
doctrine precludes Plaintiff from attempting to reassert same. Specifically, QCC claims that the
District Court already considered whether Plaintiff’s allegations give rise to a breach of fiduciary
duty claim and determined that they do not. QCC argues that Plaintiff “has set forth no new
material allegations or evidence that transforms this case into anything other than a benefits
dispute” and therefore the law of the case renders Plaintiff’s proposed amendments futile. (QCC
Opp. Br. at 12).
For example, With respect to Count I of the proposed Second Amended Complaint, QCC
contends that the District Court already determined that Plaintiff’s “allegation that ‘[Defendants’]
determination of $5,123.90 as compensation for services, even for in-network providers’
constituted a breach of QCC’s fiduciary duty was insufficient to distinguish the claim from one
for ERISA plan benefits.” (Id. at 13 (quoting Mem. Op. of 10/24/2011 at 21)). QCC therefore
argues that Plaintiff’s “nearly identical allegation” contained in the proposed Second Amended
Complaint, namely that “‘[e]ven if Defendants pay out-of-network providers at in-network rates,
the amount paid for these surgeries would far exceed $5,123.90,’” fails because “nothing has
changed.” (Id. at 13-14 (quoting Second Am. Compl. ¶ 49)). Indeed, QCC argues that Plaintiff’s
allegations simply establish that this case only involves a claim for benefits under the Plan and
“[d]etermining whether the payment at issue was consistent with the Plan will require an
4
QCC also acknowledges that Count I of Plaintiff’s proposed Second Amended
Complaint includes a claim for benefits allegedly owed under the Plan.
5
interpretation and application of the Plan, not an interpretation and application of ERISA.” (Id.
at 14). Therefore, QCC contends that Plaintiff’s claim remains one for benefits under § 502(a)(1)
of ERISA and has not been transformed into a breach of fiduciary duty claim.
In addition, QCC argues that Plaintiff’s emphasis on the “administrative re-classification
of his appeal as a Medical Necessity/Grievance” does not transform his claim into a breach of
fiduciary duty claim. (Id.) QCC argues that Plaintiff himself acknowledged that his appeal
“‘involved the claim payment allowance for surgery services provided on November 3, 2008 [by]
Dr. Jason Cohen, an out-of-network provider.’” (Id. at 14-15 (quoting Ex. D to Second Am.
Compl.)). Thus, QCC argues that Plaintiff’s claim still revolves around whether he is owed more
benefits under the Plan, an issue which the District Court has already determined involves only a
claim for benefits under ERISA, not a fiduciary duty claim.
Further, QCC contends that Plaintiff’s allegations regarding whether any in-network
provider could have performed his surgery also do not transform Plaintiff’s claim into a breach of
fiduciary duty claim. In this regard, QCC notes that under the Plan, QCC “may approve Covered
Services provided by a Non-Preferred Provider subject to Preferred ‘In-Network’ cost sharing”
where the Covered person has:
(1) first sought and received care from a Preferred Provider in the
same American Board of Medical Specialties (ABMS) recognized
specialty as the Non-Preferred Provider requested; (2) been advised
by the Preferred Professional Provider that there are no Preferred
Providers that can provide the requested Covered Services; and (3)
Obtained authorization from the claims Administrator prior to
receiving care.
(Id. at 15 (quoting Ex. D to QCC Opp. Br.). QCC claims that Plaintiff’s proposed Second
Amended Complaint is devoid of any allegation (1) that Plaintiff received prior treatment from a
6
Preferred Provider; (2) that a Preferred Provider informed him that there were no Preferred
Providers who could perform his surgery; or (3) that Plaintiff requested, let alone received, prior
authorization from QCC to obtain care from a Non-Preferred Provider subject to in-network cost
sharing. In light of these deficiencies, QCC claims that “the only issue in this case remains
whether [Plaintiff’s] out-of-network benefits were properly determined and paid.” (Id. at 16).
As a result, QCC contends that Plaintiff’s proposed breach of fiduciary duty claim is futile.
With respect to the Second Count of Plaintiff’s Proposed Second Amended Complaint,
QCC argues that none of the allegations contained therein support Plaintiff’s proposed breach of
fiduciary duty claim. For example, QCC takes issue with Plaintiff’s allegation that “Defendants
determination of claims paid without explanation, the shifting of the basis for denial and the
structure of the appeals process created by Blue Cross provided Plaintiff little opportunity for a
full and fair hearing under ERISA applicable guidelines.” (Id. at 16-17 (quoting Second Am.
Compl. ¶ 56)). QCC argues that through this allegation, Plaintiff again appears to be challenging
the payment determination at issue, which QCC contends is insufficient to support a breach of
fiduciary duty claim.
Further, QCC challenges Plaintiff’s allegation that “Defendants have never provided
Patient with the schedule it used to fix reimbursement rates.” (Id. at 17 (quoting Second Am.
Compl. ¶ 58)). QCC argues that the District Court already determined that Plaintiff’s “failure to
make a written request for any documents precluded [him] from pursuing a claim for failure to
provide information.” (Id. at 17-18 (citing Mem. Op. of 10/24/2011 at 23-24)). QCC argues that
the aforementioned allegation fails for the same reason - Plaintiff never alleges that he requested
any documents related to the Plan and since ERISA requires a beneficiary to make a written
7
request for plan documents, Defendants’ alleged failure to provide information cannot support
Plaintiff’s proposed breach of fiduciary duty claim.
In addition, QCC objects to Count II of Plaintiff’s proposed Second Amended Complaint
to the extent Plaintiff seeks to assert a breach of fiduciary duty claim based on the administrative
appeal process available under the Plan. In this regard, QCC argues that Plaintiff “has set forth
an amorphous challenge to the appeal process as purportedly violative of ERISA regulations, this
bare legal conclusion is insufficient to plead a cause of action pursuant to the standards set forth
in Iqbal.” (Id. at 17).
Finally, QCC, relying on the District Court’s determination that Plaintiff’s Amended
Complaint failed to set forth sufficient factual material to support Plaintiff’s claim that IBC was a
plan fiduciary, argues that it is the only proper defendant with respect to Plaintiff’s claim for
benefits under § 502(a) of ERISA. As a result, QCC contends that Plaintiff’s proposed § 502(a)
claim against IBC is futile.
II.
Analysis
A.
Standard of Review
Motions to amend the pleadings are governed by Rule15(a). Pursuant to Rule 15(a)(2),
leave to amend the pleadings is generally given freely. See Foman v. Davis, 371 U.S. 178, 182
(1962); Alvin v. Suzuki, 227 F.3d 107, 121 (3d Cir. 2000). Nevertheless, the Court may deny a
motion to amend where there is “undue delay, bad faith or dilatory motive on the part of the
movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice
to the opposing party by virtue of allowance of the amendment, [or] futility of the amendment.”
Id. However, where there is an absence of undue delay, bad faith, prejudice or futility, a motion
8
for leave to amend a pleading should be liberally granted. Long v. Wilson, 393 F.3d 390, 400 (3d
Cir. 2004).
Here, QCC opposes Plaintiff’s motion solely on futility grounds. As a result, that is
where the Court focuses its inquiry. An amendment is futile if it “is frivolous or advances a
claim or defense that is legally insufficient on its face.” Harrison Beverage Co. v. Dribeck Imps.,
Inc.,, 133 F.R.D. 463, 468 (D.N.J. 1990) (internal quotation marks and citations omitted). In
determining whether an amendment is “insufficient on its face,” the Court employs the Rule
12(b)(6) motion to dismiss standard. See Alvin, 227 F.3d at 121. Under Rule 12(b)(6), a motion
to dismiss will be granted if the plaintiff fails to state a claim upon which relief can be granted.
The United States Supreme Court set forth the standard for addressing motions to dismiss under
Rule 12(b)(6) in Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929
(2007). According to Twombly, “[w]hile a complaint attacked by a Rule 12(b)(6) motion to
dismiss does not need detailed factual allegations, . . . a plaintiff’s obligation to provide the
‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action will not do.” Id. at 1964-65 (citations
omitted). Instead, “[f]actual allegations must be enough to raise a right to relief above the
speculative level . . . on the assumption that all the allegations in the complaint are true (even if
doubtful in fact).” Id. at 1965 (citations omitted).
In determining whether a civil complaint sufficiently states a claim for relief, the Court
applies a two-part test. First, the Court must separate the factual and legal elements of a claim.
While the Court must accept as true “all of the complaint’s well-pleaded facts[,]” the Court “may
disregard any legal conclusions.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210-211 (3d Cir.
9
2009) (citing Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009)). Second, the Court “must then
determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a
‘plausible claim for relief.’” Id. at 211 (quoting Iqbal, 129 S.Ct. at 1950). Merely alleging an
entitlement to relief is insufficient. Instead, the complaint “has to ‘show’ such an entitlement
with its facts.” Id. A complaint will be dismissed unless it “contain[s] sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face.’” Iqbal, 129 S.Ct. at 1949
(quoting Twombly, 127 S.Ct. at 1955).
B.
Discussion
In his proposed Second Amended Complaint, Plaintiff seeks permission to make several
changes to the Amended Complaint. Some of these changes are of little consequence. For
example, in addition to removing the dismissed counts (Counts II - V), in light of the District
Court’s determination that Dr. Cohen lacks standing to assert any claims in this matter, Plaintiff
deletes references to Dr. Cohen’s claims in the “Facts Common To All Counts” section of the
proposed Second Amended Complaint as well as in Count I of same. In addition to changes such
as these, Plaintiff also seeks to make more meaningful amendments as well. For example, in the
“Facts Common To All Counts” section, Plaintiff seeks to replace the term “Defendants” with
“Blue Cross” in ¶¶ 5, 13 and 19-21 of the Second Amended Complaint. In so doing, Plaintiff
seeks to attribute the payment of $5,123.90, the denial of Plaintiff’s claim and the denial of Dr.
Cohen’s appeal directly to IBC. In addition, in Count I of the proposed Second Amended
Complaint, Plaintiff seeks to (1) add several knew allegations concerning IBC (¶¶ 29-35 and 51);
(2) specifically name IBC as an administrator and fiduciary in relation to the Plan (¶ 36); (3)
replace the term “Defendants” with “Blue Cross” in a couple of paragraphs (¶¶ 38 and 39); and
10
(4) specifically name IBC as a defendant who made decisions concerning the payment of benefits
to be made to Plaintiff (¶ 43). Further, Plaintiff seeks to add Count II, his proposed breach of
fiduciary duty claim, in its entirety. The Court examines the viability of these proposed
amendments in relation to each of the counts of Plaintiff’s proposed Second Amended
Complaint.
1.
Count I - Violation of ERISA § 502(a)
Plaintiff seeks to amend his Amended Complaint in order to add IBC as a defendant for
the purpose of asserting a claim that IBC violated § 502(a) of ERISA.5 The District Court
previously dismissed this claim finding that Plaintiff failed to sufficiently allege that IBC is a
fiduciary under ERISA. In reaching this determination, the District Court did not foreclose the
possibility that such a claim could be asserted against IBC. Instead, the District Court
specifically noted that if Plaintiff “sufficiently alleg[ed] the degree of IBC’s discretion in
determining the Subscriber’s insurance claim - such as whether IBC ‘maintained any authority or
control over the management of the plan’s assets, management of the plan in general, or
maintained any responsibility over the administration of the plan’. . . IBC may be considered a
fiduciary, and therefore, an appropriate defendant under ERISA.” (Mem. Op. of 10/24/2011 at 8
(internal citations omitted)). Indeed, even after determining that Plaintiff had failed to
sufficiently allege that IBC is a fiduciary under ERISA, the District Court left open the possibility
of future amendment noting that “[i]f, during the course of discovery, [Plaintiff] obtains
5
QCC also believes that Plaintiff is seeking to add a breach of fiduciary duty claim against
Defendants in Count I. The Court does not read Plaintiff’s proposed Second Amended
Complaint to include such a claim as part of Count I. Instead, the Court finds that Plaintiff’s
references to fiduciaries in Count I relate to the fact that ERISA only imposes statutory duties on
plan fiduciaries and therefore unless IBC is found to be a plan fiduciary it cannot be liable under
§ 502(a) of ERISA.
11
information that would buttress allegations of IBC’s fiduciary role, he may move to amend the
Amended Complaint at that time.” (Id. at 9). Plaintiff now so moves.
In his proposed Second Amended Complaint, Plaintiff relies on the following allegations
to establish that IBC is a fiduciary under the Plain and therefore a proper defendant under
ERISA:
5.
13.
19.
Prior to rendering the Services to the Patient, Cohen called
Blue Cross to confirm that the Patient had out-of-network
benefits for the services that were to be provided by Cohen
and pre-certified the surgery.
***
On April 2, 2009, Blue Cross made a single payment to the
Patient for claim # IG03250900311 in the amount of
$5,123.90 and pursuant to the Assignment of Benefits form
signed by Patient, payment was then made by Patient to
Cohen.
***
Upon information and belief, Blue Cross denied Cohen’s
appeal by telephone, but has never sent a written denial
directly to Cohen.
20.
Upon information and belief, Blue Cross instead sent a
denial letter directly to and addressed to the Patient.
21.
On August 13, 2009, Blue Cross denied Plaintiff’s claim
for the following reasoning:
“In your member handbook or certificate, the section
entitled - “Payment of Providers” the Personal
Choice/PPO Program allows a Covered Person to obtain
Covered Services from Non-Preferred, Non-Participating
Providers. If a Covered Person uses a Non-Preferred, NonParticipating Provider, the Covered Person will be
reimbursed for Covered Services but will incur
significantly higher out-of-[pocket] expenses including
Deductibles, Coinsurance and the balance of the provider’s
bill. This is true whether a Non-Preferred, NonParticipating Provider is used by choice, for level of
12
expertise, for convenience, for location, because of the
nature of the services or based on the recommendation of a
provider.”
29.
Blue Cross is a fiduciary as documents produced by QCC
as part of its Rule 26 disclosures specifically name Blue
Cross as a plan Fiduciary. See QCC00146 (annexed hereto
as Exhibit “A”) entitled Members Appeal-Case Summary at
Section II C which identifies Blue Cross specifically as the
“claims fiduciary.”
30.
Blue Cross specifically made a decision to ignore Blue
Card’s recommendation of the fee to pay Dr. Cohen for
patient’s surgery. See QCC00159-160 (annexed hereto as
Exhibit “B”) which recounts Blue Card’s admission that
Blue Cross decided to decline the local Blue Card’s fee
recommendation.
31.
See QCC00239 (annexed hereto as Exhibit “C”) entitled
Self-Insured Groups member Appeal Unit Triage Coding
Sheet/ACK, Letter Request Form which identifies the
Claims Fiduciary as “IBC” (Blue Cross).
32.
Blue Cross made the determination that the appeal was to
be handled by it as a “Medical Necessity/Grievance
Appeal” rather than an Administrative Complaint. See
QCC 00258-00259 (annexed hereto as Exhibit “D”).
33.
Prior to the surgery two members of Blue Cross’ team,
Stephanie Issac and Samantha McCutchen advised the
Patient that [sic] were no surgeons in network who could
perform the approved surgery. See Powers-Hills vs.
Independence BC 0000051-0000052 (annexed hereto as
Exhibit “E”).
34.
Despite repeated requests to Blue Cross by the Patient no in
network surgeons were ever identified by Blue Cross.
35.
Blue Cross conducted the appeals at its corporate offices
and all decisions were relayed under Blue Cross letterhead.
36.
Defendant QCC is a named administrator under the Plan,
Blue Cross is the administrator and fiduciary in relation to
13
the matters set forth herein because, inter alia, they
exercise discretionary authority and/or discretionary control
respecting management of the plans.
38.
39.
43.
51.
***
Blue Cross’s fiduciary functions include, inter alia,
preparation and submission of explanations of benefits,
determination as to claims for benefits and coverage
decisions, oral and written communications with both
Dr.Cohen and the Patient concerning benefits to Patient
under the plans, and coverage, handling, management,
review, decision making and disposition of appeals and
grievances under the plan.
The Patient had “out of network benefits” for surgery under
his plan or insurance agreements with or administered by
Defendants as confirmed by Blue Cross to Cohen.
***
As described more fully in the Facts Common to All counts
herein, Defendants including Blue Cross made
determinations regarding the payment and withholding of
payments of benefits to the Patient that violate the terms of
the applicable ERISA plan.
***
Blue Cross decided to convert the grievance into a medical
necessity appeal which Blue Cross denied because they
claimed that in network surgeons were available to perform
the pre-approved procedure which was contrary to
representations made to the Patient.
(Second Am. Compl. 5, 13, 19-21, 29-36, 38-39, 43 and 51). Of these allegations the Court
focuses on ¶¶ 29-35 and 51. The Court finds the other allegations to be of little value as they are
essentially the same as those initially relied upon by Plaintiff to name IBC as a party defendant
and rejected by the District Court as being insufficient to establish that IBC exercised the
discretion necessary to be considered a fiduciary under ERISA. Indeed, the only differences
between ¶¶ 5, 13, 19-21, 36, 38, 39 and 43 and the corresponding paragraphs found in Plaintiff’s
14
Amended Complaint is that Plaintiff either substituted the term “Blue Cross” for the term
“Defendants” in these paragraphs or specifically added “Blue Cross” as a defendant in same.
With respect to ¶¶ 29-35 and 51, the Court finds that when these allegations are taken as
true, they include sufficient factual detail to support Plaintiff’s claim that IBC exercised the
discretion necessary to be considered a fiduciary under ERISA. Specifically, IBC alleges that
IBC is identified as a “claims fiduciary” on paperwork related to Plaintiff’s claim for benefits;
IBC exercised the decision-making authority to reject Blue Card’s recommendation regarding the
fee to pay Dr. Cohen for Plaintiff’s surgery; IBC was the entity that decided to handle Plaintiff’s
appeal of the benefits decision as a “Medical Necessity/Grievance Appeal” rather than as an
“Administrative Complaint”; two members of IBC’s team informed Plaintiff that there were no
in-network surgeons who could perform the approved surgery; IBC failed to identify in-network
surgeons capable of performing the approved surgery despite repeated requests by Plaintiff; IBC
conducted the appeal of Plaintiff’s claim for benefits at IBC’s corporate offices and all decisions
concerning said appeal were relayed under IBC letterhead; and IBC denied Plaintiff’s appeal,
claiming that in-network surgeons were available to perform the approved surgery despite its
prior representations to the contrary. This is significantly more detail than what was included in
Plaintiff’s Amended Complaint.
QCC does not address these additional factual allegations in opposing Plaintiff’s motion
to amend. Instead, QCC simply focuses on the District Court’s previous determination that
Plaintiff failed to adduce sufficient factual support for its claim that IBC was a fiduciary for
ERISA purposes. As noted above, however, the District Court in rendering that decision did not
foreclose the possibility that IBC could be considered a fiduciary. Quite to the contrary, the
15
District Court specifically left open the possibility of Plaintiff moving to amend the Amended
Complaint to name IBC as an ERISA defendant if Plaintiff obtained sufficient information to
buttress his allegations of IBC’s fiduciary role. (Mem. Op. of 10/24/2011 at 9).
The Court finds that Plaintiff has adduced such information here. Indeed, when taken as
true, the Court finds that the aforementioned allegations plausibly establish that IBC did not
merely perform ministerial tasks, such as claims processing and calculation, which would be
insufficient to support Plaintiff’s claim that IBC was a fiduciary for the Plan. (See Id. at 8 (citing
Briglia v. Horizon Healthcare Services, Inc., No. 03-6033, 2005 U.S. Dist. LEXIS 18708, at *6
(D.N.J. may 13, 2005); Confer v. Custom Engineering Co., 952 F.2d 34, 39 (3d Cir. 1991))
(noting that allegations of merely ministerial tasks, such as claims processing and calculation, are
insufficient to establish fiduciary status)). Instead, they are sufficient to support a claim that IBC
exercised control over the management of the Plan’s assets. (See Id. (quoting Curcio, 33 F.3d at
233) (finding that IBC could be considered fiduciary if it “maintained any authority or control
over the management of the plan’s assets, management of the plan in general, or maintained
responsibility over the administration of the plan.”) As a result, the Court shall permit Plaintiff to
amend the Amended Complaint to assert a claim against IBC for violating § 502(a) of ERISA.
2.
Breach of Fiduciary Duty Claims
Plaintiff seeks to amend his Complaint in order to add a breach of fiduciary duty claim
against QCC, ComCast and IBC (collectively, “Defendants”) for failing to comply with 29
C.F.R. § 2560.503-1. Plaintiff relies on the following specific allegations to support his claim
that Defendants breached their fiduciary duties to him:
16
54.
The ERISA regulations are enacted for the benefit of the
Patient. The Defendants have a duty to give Plaintiff a full
and fair hearing on the claims determination.
55.
Defendants are fiduciaries under ERISA.
56.
Defendants determinations of claims paid without
explanation, the shifting of the basis for denial and the
structure of the appeals process created by Blue Cross
provided Plaintiff little opportunity for a full and fair
hearing under ERISA applicable regulations.
57.
Defendants violated their fiduciary duty to Patient.
58.
Defendants have never provided Patient with the schedule
it used to fix reimbursement rates.
(Second Am. Compl. ¶¶ 54-58). Of these claims, the Court easily disregards ¶¶ 54, 55 and 57 as
legal conclusions. The Court similarly disregards ¶ 56. The Court finds that Plaintiff’s
conclusory assertions regarding the benefits determination and appeals process to be insufficient
to support his claim that he was denied a full and fairing hearing under the applicable ERISA
regulations and consequently that Defendants breached their fiduciary duties to him. In reaching
this conclusion the Court also notes that Plaintiff never fully identifies which ERISA regulations
were violated. 29 C.F.R. § 2560.503-1 is a rather lengthy provision that “sets forth minimum
requirements for employee benefit plan procedures pertaining to claims for benefits by
participants and beneficiaries[.]” 29 C.F.R. § 2560.503-1(a). 29 C.F.R. § 2560.503-1 contains
numerous subparts and Plaintiff fails to identify which of these subparts Defendants allegedly
violated or any detail regarding how their actions violated same. Moreover, like QCC, the Court
finds that Plaintiff, through this allegation, essentially takes issue with the payment determination
made with respect to Plaintiff’s claim. However, as the District Court previously determined, “it
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is improper to assert a breach of fiduciary claim when it is akin to a claim to enforce the terms of
a benefit plan.” (Mem. Op. of 10/24/2011 at 20-21). As a result, the Court finds that this
allegation is insufficient to support Plaintiff’s proposed breach of fiduciary duty claim
Further, the Court finds that Plaintiff’s remaining allegation - that “Defendants have
never provided Patient with the schedule it used to fix reimbursement rates” - is insufficient to
save Plaintiff’s proposed amendment from futility. (Second Am. Compl. ¶ 58). In the first
instance, the Court finds that this allegation, even when taken as true and viewed in the context
of Plaintiff’s entire proposed Second Amended Complaint, does not provide sufficient factual
support to plausibly state a breach of fiduciary duty claim. More importantly, the Court finds
that it would be inappropriate for the Court to rely on this allegation in support of Plaintiff’s
proposed claim. As QCC notes, the District Court already determined that Plaintiff’s failure to
make a written request for documents precludes Plaintiff from pursuing a claim based on
Defendants’ failure to provide plan information. (See Mem. Op. of 10/24/2011 at 24). Plaintiff
does not explain nor does the Court see any reason why Plaintiff’s allegation concerning
Defendants’ alleged failure to furnish the schedule used to fix reimbursement rates would be
exempt from this determination.
As a result, the Court finds that Plaintiff has not raised his right to relief above the
speculative level. Indeed, Plaintiff’s proposed Second Amended Complaint does not contain
sufficient factual allegations to show that Plaintiff has a plausible claim that Defendants breached
their fiduciary duties by failing to comply with 29 C.F.R. 2560.503-1. Consequently, the Court
finds that Plaintiff’s proposed breach of fiduciary duty claim is futile and it is therefore denied as
such.
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III.
Conclusion
For the reasons stated above, Plaintiff’s motion to amend is GRANTED in part and
DENIED in part. An appropriate Order follows.
Dated: December 19, 2012
s/Tonianne J. Bongiovanni
HONORABLE TONIANNE J. BONGIOVANNI
UNITED STATES MAGISTRATE JUDGE
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