PROFESSIONAL ORTHOPEDIC ASSOCIATES, PA et al v. EXCELLUS BLUE CROSS BLUE SHIELD et al

Filing 21

OPINION filed. Signed by Judge Freda L. Wolfson on 7/15/2015. (mmh)

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
PROFESSIONAL ORTHOPEDIC
ASSOCIATES, PA, et al.,
Plaintiffs,
v.
EXCELLUS BLUE CROSS BLUE
SHIELD, et al.,
Defendants.

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Civil Action No. 14-6950 (FLW)(DEA)
OPINION

WOLFSON, District Judge.
This case arises out of a dispute between Plaintiffs Jason Cohen, M.D., FA.C.S. (“Dr.
Cohen”), and his medical practice Professional Orthopedic Associates, PA (“POA,” together,
with Dr. Cohen, the “Provider Plaintiffs”) and Defendants Wegmans Food Markets, Inc.
(“Wegmans”) and Excellus Blue Cross Blue Shield (“Excellus,” together, with Wegmans, the
“Defendants”), for alleged underpayment of claims for medical services rendered by the Provider
Plaintiffs to CE, who is alleged to be an employee of Wegmans and a beneficiary of a health
insurance plan administered by Excellus and/or Wegmans. Plaintiffs contend that CE executed
an assignment of benefits that confers beneficiary status on the Provider Plaintiffs under ERISA.
The Complaint asserts three claims: (1) violation of § 502(a)(1)(B) of ERISA for failing to
properly pay billed charges for the services purportedly rendered to CE; (2) violation of §
502(c)(1)(B) of ERISA for failing to provide to the Provider Plaintiffs certain documents; and (3)
a claim for attorney’s fees. Excellus and Wegmans move separately to dismiss all counts in the
Complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). Plaintiffs oppose
these motions. Based on the reasons that follow, the Court concludes that the Provider Plaintiffs

do not have standing to bring the claims in this case and, as such, all of the claims against
Defendants brought by the Provider Plaintiffs are dismissed; with respect to the claims brought
by CE, Count II is likewise dismissed as to all Defendants; and finally, Wegmans is dismissed as
a defendant.
I.

Background 1
Plaintiff Dr. Cohen is a board certified orthopedic surgeon licensed to practice in New

Jersey. Compl. ¶ 2. Dr. Cohen is shareholder/owner of POA, a professional medical association
with offices in Tinton Falls, Toms River and Freehold, New Jersey. Id. at ¶ 1-2. In June 2013,
Dr. Cohen performed medically necessary surgery and other medical procedures on CE. See id.
at ¶¶ 33, 37.
CE is alleged to be an employee of Wegmans and a “member of, beneficiary of,
participant in, and/or insured by a health insurance policy,” 2 i.e., the Wegmans Food Markets,
Inc. Employee Welfare Benefit Plan (“the Plan”). 3 More specifically, CE was insured through
the Preferred Provider Organization Health Care Plan for Full-Time Employees (the “PPO
Program”), which is a component program of the Plan. See Lyons Aff. ¶¶ 4-5.
Dr. Cohen and POA are “‘out-of-network providers’ or ‘non-participating providers’”
with respect to the PPO Program because the Provider Plaintiffs “have not entered into contracts
with Excellus.” Id. at ¶ 10; see also id. at ¶ 34 (“POA and Dr. Cohen are non-participating
1

The following allegations are taken from the Complaint and assumed as true in deciding these Motions. See
Newman v. Beard, 617 F.3d 775, 779 (3d Cir. 2010) (“We accept all factual allegations as true, construe the
amended complaint in the light most favorable to [the plaintiff], and determine whether, under any reasonable
reading of the…complaint, he may be entitled to relief.”).
2
While the Complaint alleges that CE is the employee and participant of the Plan, Wegmans has supplied an
affidavit indicating that CE is a dependent of a participant in the Plan. Such distinctions are not relevant for the
purposes of these Motions.
3
Defendant Wegmans has submitted the Affidavit of Rebecca Lyons (“Lyons Aff.”), which authenticates
comprising the Plan. Because Plaintiffs have referenced and relied upon the Plan and these documents in their
Complaint, these documents are properly considered by the Court when deciding these Motions. See, e.g., Angstadt
v. Midd–West Sch. Dist., 377 F.3d 338, 342 (3d Cir. 2004) (explaining that a district court may appropriately
consider “a document integral to or explicitly relied upon in the complaint may be considered without converting the
motion to dismiss into one for summary judgment”).

2

providers of services in that they did not have a contract with Excellus to accept agreed upon
rates for services provided to the Patient CE on June 1, 2013.”). When providing services as an
out-of-network provider, the Provider Plaintiffs require all patients to sign documents whereby
the patient agrees to be personally liable for all medical charges. See id. at ¶ 16. The Provider
Plaintiffs allege that they obtain from each patient an Authorization of Designated
Representative (“DAR”) and an Assignment of Benefits with Rights (“AOB”), which allegedly
make POA a beneficiary under the Plan. Id. POA does not waive any deductible or co-payment
by accepting the AOB and DAR. Id. at ¶ 17. Patient CE is alleged to have signed the DAR on
December 19, 2012. Id. at ¶ 18.
After performing CE’s surgery and other medical procedures, the Provider Plaintiffs
submitted a claim to Excellus, seeking payments totally $550,971.00 for “‘out of network’
medical services” that they provided to CE. See id. at ¶¶ 35, 39. According to the Complaint,
Excellus approved portions of the claims submitted by the Provider Plaintiffs, and eventually
authorized $20,024.43 in payments to CE, who later forwarded said payments to the Provider
Plaintiffs. See id. at ¶¶ 40-48.
On September 25, 2013, pursuant to the terms of the Plan, the Provider Plaintiffs filed a
First Level Member Appeal with Excellus, alleging that Excellus’s payments were far below the
usual and customary rates charged by a surgeon in the relevant geographic area. Id. at ¶ 49-50.
The Provider Plaintiffs also requested the documentation that Excellus relied upon in making the
compensation decision. Id. at ¶ 50. On or about November 6, 2013, Excellus denied the First
Level Member Appeal, stating that the claim was processed correctly. This denial letter
allegedly did not address the request for documentation. See id. at ¶ 51.

3

The Provider Plaintiffs then filed a Second Level Member Appeal on or about December
17, 2013. They filed this appeal on the BlueCard Claims Appeal Form, allegedly at the direction
of the Appeals Arbitrator. Id. at ¶ 52. Because the Provider Plaintiffs allegedly never received a
response to this appeal, they filed another appeal entitled “Second Level Member Appeal” on
March 18, 2014. Id. at ¶ 53. On July 30, 2014, this appeal was denied for failure to file the
appeal in a timely manner. Id. at ¶ 54.
Plaintiffs allege that they have exhausted their administrative remedies and filed the
instant action seeking to recover the outstanding balance from Defendants for CE’s surgery.
After the denial of the final appeal, Plaintiffs initiated this action in November 2014. As
mentioned, the Complaint asserts three claims: (1) violation of § 502(a)(1)(B) of ERISA for
failing to appropriately pay billed charges for the services purportedly rendered to CE; (2)
violation of § 502(c)(1)(B) of ERISA for failing to provide to the Provider Plaintiffs certain
documents; and (3) a claim for attorney’s fees. Defendant Wegmans moves to dismiss the
Complaint in its entirety, arguing that Plaintiffs lack standing to bring any of their purported
claims or, alternatively, that Wegmans is not a proper defendant. Similarly, Defendant Excellus
moves to dismiss the Complaint in its entirety, arguing that the Complaint fails to establish that
Plaintiffs have proper standing to bring the Complaint and/or that it fails to properly allege a
violation of ERISA.
II.

Standard of Review
A.

Rule 12(b)(6) Standard

Federal Rule of Civil Procedure 12(b)(6) provides that a court may dismiss a claim “for
failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). When
reviewing a motion to dismiss, courts must first separate the factual and legal elements of the

4

claims, and accept all of the well-pleaded facts as true. See Fowler v. UPMC Shadyside, 578
F.3d 203, 210-11 (3d Cir. 2009). All reasonable inferences must be made in the plaintiff’s favor.
See In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 314 (3d Cir. 2010). In order to survive a
motion to dismiss, the plaintiff must provide “enough facts to state a claim to relief that is
plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This standard
requires the plaintiff to show “more than a sheer possibility that a defendant has acted
unlawfully,” but does not create as high of a standard as to be a “probability requirement.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
The Third Circuit has required a three-step analysis to meet the plausibility standard
mandated by Twombly and Iqbal. First, the court should “outline the elements a plaintiff must
plead to a state a claim for relief.” Bistrian v. Levi, 696 F.3d 352, 365 (3d Cir. 2012). Next, the
court should “peel away” legal conclusions that are not entitled to the assumption of truth. Id.;
see also Iqbal, 556 U.S. at 679 (“While legal conclusions can provide the framework of a
complaint, they must be supported by factual allegations.”). It is well-established that a proper
complaint “requires more than labels and conclusions, and a formulaic recitation of the elements
of a cause of action will not do.” Twombly, 550 U.S. at 555 (internal quotations and citations
omitted). Finally, the court should assume the veracity of all well-pled factual allegations, and
then “determine whether they plausibly give rise to an entitlement to relief.” Bistrian, 696 F.3d
at 365 (quoting Iqbal, 556 U.S. at 679). A claim is facially plausible when there is sufficient
factual content to draw a “reasonable inference that the defendant is liable for the misconduct
alleged.” Iqbal, 556 U.S. at 678. The third step of the analysis is “a context-specific task that
requires the reviewing court to draw on its judicial experience and common sense.” Id. at 679.

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Generally, when determining a motion under Rule 12(b)(6), the court may only consider
the complaint and its attached exhibits. However, while “a district court may not consider
matters extraneous to the pleadings, a document integral to or explicitly relied upon in the
complaint may be considered without converting the motion to dismiss into one for summary
judgment.” Angstadt v. Midd-West Sch. Dist., 377 F.3d 338, 342 (3d Cir. 2004) (quoting U.S.
Express Lines, Ltd. v. Higgins, 281 F.3d 383, 388 (3d Cir. 2002)); see also In re Burlington Coat
Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997).
B.

Rule 12(b)(1) Standard

Under Federal Rule of Civil Procedure 12(b)(1), a court must grant a motion to dismiss if
it lacks subject matter jurisdiction to hear a claim. See Fed. R. Civ. P. 12(b)(1). “A motion to
dismiss for want of standing is also properly brought pursuant to Rule 12(b)(1), because standing
is a jurisdictional matter.” Ballentine v. United States, 486 F.3d 806, 810 (3d Cir. 2007) (citing
St. Thomas-St. John Hotel & Tourism Ass’n v. Gov’t of the U.S. Virgin Islands, 218 F.3d 232,
240 (3d Cir. 2000) (“The issue of standing is jurisdictional.”)). The plaintiff must establish 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.’” Id. (quoting FOCUS v. Allegheny Cnty.
Court of Common Pleas, 75 F.3d 834, 838 (3d Cir. 1996)).
In evaluating a Rule 12(b)(1) motion to dismiss, the court must determine whether the
motion attacks the complaint as deficient on its face or whether the motion attacks the existence
of subject matter jurisdiction in fact, apart from any pleadings, because that distinction
determines how the pleadings must be reviewed. See Mortensen v. First Fed. Sav. & Loan
Ass’n, 549 F.2d 884, 891 (3d Cir. 1977). When reviewing a facial challenge to standing, which

6

contests the sufficiency of the pleadings to establish standing, “the court must only consider the
allegations of the complaint and the documents referenced therein and attached thereto, in the
light most favorable to the plaintiff.” Gould Elecs., Inc. v. United States, 220 F.3d 169, 176 (3d
Cir. 2000). “A factual attack, on the other hand, is an argument that there is no subject matter
because the facts of the case—and here, the [d]istrict [c]ourt may look beyond the pleadings to
ascertain the facts—do not support the asserted jurisdiction.” Constitution Party v. Aichele, 757
F.3d 347, 358 (3d Cir. 2014). The “trial court is free to weigh the evidence and satisfy itself as
to the existence of its power to hear the case” and “the plaintiff will have the burden of proof that
jurisdiction does in fact exist.” Petruska v. Gannon Univ., 462 F.3d 294, 302 n.3 (3d Cir. 2006)
(quoting Mortensen, 549 F.2d at 891).
“In essence the question of standing is whether the litigant is entitled to have the court
decide the merits of the dispute or of particular issues.” Storino v. Borough of Point Pleasant
Beach, 322 F.3d 293, 296 (3d Cir. 2003) (quoting Warth v. Seldin, 422 U.S. 490, 498, 95 S. Ct.
2197, 45 L. Ed. 2d 343 (1975)). “It is axiomatic that, in addition to those requirements imposed
by statute, plaintiffs must also satisfy Article III of the Constitution.” Horvath v. Keystone
Health Plan East, Inc., 333 F.3d 450, 455 (3d Cir. 2003) (citation omitted). “[T]he standing
question is whether the plaintiff has ‘alleged such a personal stake in the outcome of the
controversy’ as to warrant his invocation of federal-court jurisdiction and to justify exercise of
the court's remedial powers on his behalf.” In re Schering-Plough Corp. Intron/Temodar
Consumer Class Action, 678 F.3d 235, 244 (3d Cir. 2012) (quoting Warth, 422 U.S. at 498). As
articulated by the Third Circuit, the requirements of Article III standing are as follows:
(1) the plaintiff must have suffered an injury in fact - an invasion of a legally
protected interest which is (a) concrete and particularized and (b) actual or
imminent, not conjectural or hypothetical; (2) there must be a causal connection
between the injury and the conduct complained of - the injury has to be fairly
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traceable to the challenged action of the defendant and not the result of the
independent action of some third party not before the court; and (3) it must be
likely, as opposed to merely speculative, that the injury will be redressed by a
favorable decision.
Storino, 322 F.3d at 296 (quoting Society Hill Towers Owners’ Ass’n v. Rendell, 210 F.3d 168,
175-176 (3d Cir. 2000)).
III.

Discussion
In moving to dismiss Plaintiffs’ Complaint, Defendants make the following arguments:

(1) the Provider Plaintiffs lack standing to pursue a claim for benefits on behalf of CE; (2) the
Complaint fails to establish that CE has constitutional standing; (3) the Complaint fails to state a
colorable claim against Wegmans because Wegmans was not the administrator or claims
fiduciary under the Plan; and (4) the Complaint fails to properly allege an ERISA violation. The
Court will address each issue, in turn.
A.

Standing
1.

Whether the Provider Plaintiffs have Statutory Standing 4

First, Defendants argue that the Provider Plaintiffs have no standing to sue for benefits
relating to their treatment of CE because Plaintiff has failed to show that CE assigned his or her
benefits to the Provider Plaintiffs. Additionally, Defendants argue that the Provider Plaintiffs
have no standing to sue for benefits relating to their treatment of CE because the Plan contains a
valid and enforceable anti-assignment provision. Plaintiffs do not dispute Defendants’
interpretation of the anti-assignment provision, 5 but argue that the assignment is permitted under

4

Because Defendants challenge whether the Provider Plaintiffs meet the statutory prerequisites to bring an ERISA
claim, the Court analyzes the challenge under the standards applicable to Rule 12(b)(6). See Cohen v. Horizon Blue
Cross Blue Shield of N.J., Civil Action No. 2:13-CV-03057 (JLL)(JAD), 2013 U.S. Dist. LEXIS 153438, at *15 n.2
(D.N.J. Oct. 25, 2013) (citing Maio v. Aetna, Inc., 221 F.3d 472,482 n.7 (3d Cir. 2000).
5

Plaintiffs also assert that the Plan itself expressly grants standing to the Provider Plaintiffs, pointing to two sections
of the Plan’s benefits claims procedures that refer to claimants as a participant, beneficiary, or “authorized
representative” as evidence that the Plan grants standing to the Provider Plaintiffs. See Lyons Aff. Ex. 1 at Ex. D

8

ERISA; specifically, Plaintiffs point to 29 C.F.R. 2560.503-1(b)(4), which states that claims
procedures for a plan are reasonable only if “[t]he claims procedures do not preclude an
authorized representative of a claimant from acting on behalf of such claimant in pursuant a
benefit claim or appeal of an adverse benefit determination.”
By its terms, ERISA’s enforcement provision confers standing only to plan participants
or beneficiaries. See 29 U.S.C. § 1132(a)(1)(b) (“A civil action may be brought . . . by a
participant or a beneficiary . . . to recover benefits due 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.”). Indeed, the Third Circuit recently adopted the majority position of almost every
other circuit and held that “health care providers may obtain standing to sue [under § 502(a) of
ERISA] by assignment from a plan participant.” CardioNet, Inc. v. Cigna Health Corp., 751
F.3d 165, 176 n.10 (3d Cir. 2014). But, these claims must be “properly assigned.” Id.
It is undisputed that CE is a beneficiary of the Plan. Plaintiffs assert that the Provider
Plaintiffs, as a result of the AOB and DAR signed by CE, stand in the shoes of CE and
consequently may bring an ERISA action as a participant or beneficiary under § 502. The Court,
however, cannot conclusively determine the scope of the assignment in the AOB because the
Complaint fails to include any of the specific language of the assignment, nor has either party
attached this document to either of their respective submissions.
(hereinafter the “Claims Procedure”). This section, however, merely permits an “authorized representative” to
“assert a claim for benefits” in the administrative claims process. See id. at 19. It does not validate assignments,
and does not grant standing to medical providers to sue for additional payments for medical services they provided
to participants and beneficiaries under the Plan. Indeed, by its very terms, the Claims Procedure pertains the
administrative claims review process; such provisions clearly do not address or relate to the assignment of rights in
the context of a civil lawsuit, nor do they confer standing to bring a civil action. See, e.g., Menkowitz v. Blue Cross
Blue Shield of Ill., Civ. No. 14-2946, 2014 U.S. Dist. LEXIS 151232, at *7 n.5 (D.N.J. Oct. 23, 2014) (finding the
plaintiffs’ argument that the mention of “claimants” and “claimant’s representatives” in a plan’s summary plan
description evidenced that the plan permitted representation by a medical provider to pursue ERISA benefits to be
unavailing); Torpey v. Blue Cross Blue Shield of Tex., Civil Action No. 12-cv-7618, 2014 U.S. Dist. LEXIS 11412,
at *11 (D.N.J. Jan. 30, 2014) (explaining that the designation of an “authorized representative” in the context of a
similar plan “does not confer standing to bring a civil action”).

9

As the proponent of the ERISA claims, the Provider Plaintiffs have the burden of
establishing they have standing to sue. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561
(1992); Warth, 422 U.S. at 508. The Complaint merely pleads the most conclusory allegations
that the Provider Plaintiffs obtained beneficiary status from the AOB, which they required all
patients to sign. There are, however, no factual allegations that illuminate the extent or
boundaries of this purported assignment. In fact, there are no allegations that CE signed the
AOB. Without such allegations, the Complaint fails to plausibly establish that CE assigned his
or her rights to assert a claim for benefits to the Provider Plaintiffs under ERISA. See Franco v.
Conn. Gen. Life Ins. Co., 818 F. Supp. 2d 792, 810 (D.N.J. 2011) (finding that simply asserting
that the providers has been assigned plan benefits by their patients was insufficient to plausibly
establish standing in an ERISA litigation).
While the Complaint does allege that CE signed the DAR, the authority granted under the
DAR is limited; according to the Complaint, it authorizes the Provider Plaintiffs “to appeal to
[CE’s] insurance company, [Excellus], on [CE’s] behalf, in the determination of services
rendered by Dr. Cohen . . . .” Compl. ¶ 19. There are no allegations that the parties intended the
DAR to effect an assignment of any additional rights or benefits under the Plan, including the
initiation of a lawsuit for benefits, nor does the narrow language allow for any such inference.
In cases where derivative standing is predicated upon an assignment of benefits under an
ERISA plan, “failure to establish that an appropriate assignment exists is fatal to . . . standing.”
Cmty. Med. Ctr. v. Local 464A UFCW Welfare Reimbursement Plan, 143 F. App’x 433, 436 (3d
Cir. 2005); see also Specialty Surgery of Middletown v. Aetna, Civil Action No.: 12-4429 (JLL),
2014 U.S. Dist. LEXIS 85371, at *9 (D.N.J. June 24, 2014) (“In the absence of any evidence
tending to show the existence of a valid assignment, the Court is compelled to dismiss the claims

10

relating to [the patients] for lack of standing.”). While the Provider Plaintiffs may allege that
they are beneficiaries under the Plan, they have failed “to plead facts (for example, actual
assignment language) to support their legal conclusion that a valid assignment of the proper
breadth was given by” CE, a beneficiary under the Plan. Franco, 818 F. Supp. 2d at 811. Even
if the Court assumes that an assignment exists on the basis of Plaintiffs’ conclusory allegations, it
remains unknown the terms and parameters of such an assignment in order for the Court to
determine that the Provider Plaintiffs have proper standing to sue under ERISA. See id. (holding
that provider lacked standing to sue under § 502 where the court had “no way of knowing . . .
[the] terms or parameters [of the assignment]”). In order to establish the existence of a valid
assignment sufficient to confer standing under ERISA, a plaintiff must plausibly plead such an
assignment in the Complaint. Here, Plaintiffs have failed to plead the benefits that the AOB
conferred upon the Provider Plaintiffs. Consequently, Plaintiffs have not established the
existence of “properly assigned claims” to satisfy their burden of showing that the Provider
Plaintiffs have standing to sue under ERISA.
There is, however, a more fundamental flaw to the Provider Plaintiffs’ purported
standing. Even if there was a valid assignment on which the Provider Plaintiffs could plausibly
premise their standing claim, the Plan contains an express anti-assignment clause. This Court
has been confronted with the identical issue numerous times, including in a case involving the
Provider Plaintiffs in 2011. As this Court explained then:
Although the Third Circuit has not addressed the issue of anti-assignability
clauses, a number of federal and state courts have found that unambiguous
anti-assignment provisions in group health care plans are valid. See, e.g.,
Physicians Multispecialty Group v. Health Care Plan of Horton Homes, Inc.,
371 F.3d 1291, 1294-96 (11th Cir. 2004) (“Because ERISA-governed plans are
contracts, the parties are free to bargain for certain provisions in the plan—like
assignability. Thus, an unambiguous anti-assignment provision in an ERISAgoverned welfare benefit plan is valid and enforceable.”); City of Hope Nat’l
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Med. Ctr. v. Healthplus, Inc., 156 F.3d 223, 229 (1st Cir. 1998) (“Consistent
with the other circuits which have addressed this issue, we hold that ERISA
leaves the assignability or non-assignability of health care benefits under
ERISA-regulated welfare plans to the negotiations of the contracting parties.”);
St. Francis Reg’l Med. Ctr. v. Blue Cross & Blue Shield of Kan., Inc., 49 F.3d
1460, 1464-65 (10th Cir. 1995) (“ERISA’s silence on the issue of the
assignability of insurance benefits leaves the matter to the agreement of the
contracting parties.”); Davidowitz v. Delta Dental Plan of Cal., Inc., 946 F.2d
1476, 1478 (9th Cir. 1991) (“As a general rule of law, where the parties’ intent
is clear, courts will enforce non-assignment provisions.”); Washington Hosp.
Ctr. Corp. v. Group Hospitalization and Med. Servs., Inc., 758 F. Supp. 750,
755 (D.D.C. 1991) (holding that an anti-assignment provision was valid and
enforceable after concluding that enforcement of the provision was not
contrary to public policy); Renfrew Ctr. v. Blue Cross & Blue Shield, 1997
U.S. Dist. LEXIS 5088, 1997 WL 204309, *3 (N.D.N.Y. 1997) (“antiassignment clauses play an important role in constraining the costs of health
care”); Somerset Orthopedic Assocs. v. Horizon Blue Cross and Blue Cross
and Blue Shield of New Jersey, 345 N.J. Super. 410, 785 A.2d 457, 465 (N.J.
App. Div. 2001) (finding that “such subscriber assignment are void as contrary
to public policy” and holding that “the anti-assignment clause in Horizon’s
subscriber contracts is valid and enforceable to prevent assignment by
subscribers of policy benefit payments to non-participating medical providers
without Horizon’s consent”). This Court finds the caselaw supporting the
enforceability of anti-assignment provisions in health benefit plans persuasive.
Cohen v. Independence Blue Cross, 820 F. Supp. 2d 594, 605 (D.N.J. 2011) (quoting
Briglia v. Horizon Healthcare Servs., Civil Action No. 03-6033 (FLW), 2005 U.S. Dist. LEXIS
18708, at *12-14 (D.N.J. May 13, 2005)).
Since then, the Third Circuit has not confronted the issue; however, courts in this District
have followed this reasoning that an unambiguous anti-assignment provision in a plan is valid
and enforceable. See, e.g., Menkowitz, 2014 U.S. Dist. LEXIS 151232, at *7-8, Specialty
Surgery of Middletown v. Aetna, Civil Action No.: 12-4429 (JLL), 2014 U.S. Dist. LEXIS
85371, at *10-11 (D.N.J. June 24, 2014); Neurological Surgery Assoc. P.A. v. Aetna Life Ins.
Co., Civil Action No. 12-5600 (SRC), 2014 U.S. Dist. LEXIS 75906, at *7-9 (D.N.J. June 4,
2014); Torpey, 2014 U.S. Dist. LEXIS 11412, at *8-9; North Jersey Brain & Spine Ctr. v. St.
Peter’s Univ. Hosp., Civil Action No. 13-74 (ES), 2013 U.S. Dist. LEXIS 138040, at *15-17
12

(D.N.J. Sept. 25, 2013). Plaintiffs have offered no reason for this Court to break from these
cases, or its own precedent.
In this case, the anti-assignment clause provides:
Antiassignment Provision
Except for voluntary assignments to health care provides as may be required
by law or as may be provided in applicable policies, your right to receive
benefits under any of the plans covered by this summary may not be assigned,
voluntarily or involuntarily, to any other person.

See Lyons Aff. Ex. 3 at 5. This provision is unambiguous and express, and there is no allegation
or argument offered by Plaintiffs that the provision should be found void or unenforceable.
Plaintiffs have cited to a number of cases in support of their standing claim; however, these cases
are easily distinguishable from this case, as they involve scenarios where there was no antiassignment provision or where the provision had been waived. Here, Plaintiffs have not alleged
that CE obtained advanced written consent for the assignment given to the Provider Plaintiffs or
that the anti-assignment provision had been waived by Defendants. Further, Plaintiffs’ reliance
on 29 C.F.R. 2560.503-1(b)(4) is misplaced, as the “provision applies to internal submission of
claims and appeals on behalf of beneficiaries, not civil lawsuits in federal court.” Menkowitz,
2014 U.S. Dist. LEXIS 151232, at *8. Any assignment of rights and benefits under the Plan is
precluded by the unambiguous anti-assignment clause; accordingly, any purported assignment is
invalid. As such, the Provider Plaintiffs are not beneficiaries under the Plan, and lack standing to
bring their claims. Their claims are dismissed.
2.

Whether CE Has Article III Standing

Wegmans argues that CE lacks Article III standing to bring this suit because she has not
suffered any injury-in-fact because there are no allegations that the Provider Plaintiffs denied her

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any medical treatment or services or required her to make any out-of-pocket payments for any
treatment. It appears that Wegmans maintains that CE would only have sufficient injury to bring
a cause of action if the Provider Plaintiffs attempted to collect the unpaid amounts they claim
they are owed for services rendered to CE, or if CE had already paid out-of-pocket for the
treatments she received.
Contrary to Wegmans’ assertions, the allegations within the Complaint create more than
a “conjectural or hypothetical” interest. See Taliaferro v. Darby Twp. Zoning Bd., 458 F.3d 181,
188 (3d Cir. 2006) (explaining that an injury-in-fact must be “actual or imminent, not conjectural
or hypothetical”). Rather, drawing all inferences in favor of CE, as is required under Rule
12(b)(1), it appears that CE is personally responsible to the Provider Plaintiffs for any medical
charges that are unpaid by Defendants. See Compl. ¶¶ 16-17. There are no allegations that the
Provider Plaintiffs have forgiven or will forgive the outstanding medical charges owed to them
by CE. While Wegmans has emphasized that there are no allegations that CE actually paid any
portion of the billed charges, this argument applies solely to the issue of remedy; it does not
impact the question of whether CE’s legal interests have been violated by the conduct of the
Defendants. The clear inference from the Complaint is that CE remains indebted to the Provider
Plaintiffs for a greater amount than she would have been had Defendants properly paid the
asserted benefits. Such allegations are sufficient to create an injury-in-fact, and accordingly
establish Article III standing. See Prof’l Orthopedic Assocs., PA v. CareFirst BlueCross
BlueShield, Civil Action No. 14-4486 (MAS) (DEA), 2015 U.S. Dist. LEXIS 84996, at *11
(D.N.J. June 30, 2015) (“[T]he allegations that Defendants have failed to pay benefits allegedly
due to Patient GG and that Patient [GG] is personally liable to POA and Dr. Cohen for the
medical expenses incurred are sufficient to establish the existence of Article III standing.”);

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Menkowitz, 2014 U.S. Dist. LEXIS 151232, at *9 (holding that the plaintiffs had sufficiently
alleged an injury-in-fact to establish Article III standing where it could be inferred from the
complaint that the patient was indebted to the medical provider for any unpaid medical charges);
Cohen, 2013 U.S. Dist. LEXIS 153438, at *21 (“Horizon's failure to pay the benefits allegedly
due to Patient F.L., and Patient F.L.’s consequent liability to Dr. Cohen constitute a
particularized injury sufficient to confer Article III standing.”) (citing Whitmore v. Arkansas, 495
U.S. 149, 158 (1990) (“A threatened injury must be certainly impending to constitute injury in
fact.”)). Accordingly, CE’s claims will not be dismissed for lack of standing.
Having determined that CE has sufficiently pled an injury-in-fact to establish standing,
the Court proceeds to the merits of the claims asserted in the Complaint.
B.

Wegmans as a Defendant

Wegmans contends that it is not a proper defendant in this suit because it does not
administer the Plan and, while it is named as a Plan administrator, it had delegated the
responsibility for administering benefits to Excellus. Plaintiffs point out that the Plan
specifically names Wegmans as the Plan Administrator and as a fiduciary, and therefore
Wegmans is an appropriate party to this suit.
ERISA § 502 authorizes suit against the plan and its administrators in their official
capacities. Graden v. Conexant Sys. Inc., 496 F.3d 291, 301 (3d Cir. 2007). The Third Circuit
has explained that a proper defendant in a claim for wrongful denial of benefits under ERISA “is
the plan itself or a person who controls the administration of benefits under the plan.” Evans v.
Employee Benefit Plan, 311 F. App’x 556, 558 (3d Cir. 2009) (citing 29 U.S.C. § 1132(a)(1)(B)).
The “defining feature of the proper defendant” for such a claim is whether the party
“exercise[ed] control over the administration of benefits.” Id.

15

Plaintiffs point to sections of the Plan documents which identify Wegmans as the plan
administrator and as the designated fiduciary under the Plan. See Lyons Aff. Ex. 1 at 1, Ex. 2 at
81, Ex. 3 at 2. Specifically, Plaintiffs emphasize that that Plan states that Wegmans “has full
discretionary authority to administer the Plan, including and not limited to, full discretionary
authority to interpret the Plan and to determine all questions relating to benefits offered under the
Plan.” Lyons Aff. Ex. 3 at 4. Such statements, Plaintiffs argue, show that Wegmans is a plan
administrator and a proper defendant.
Wegmans, however, cites a provision in the Plain that specifically grants Wegmans the
authority to “designate . . . one or more other persons, including an insurance company or a third
party administrator, the authority to carry out some or all of its duties under the Plan or a
constituent Program.” Lyons Aff. Ex. 1 at 1. According to the Plan, if Wegmans chose to grant
an insurance company such authority, “such party shall have full discretionary authority to
interpret the Program and to determine all questions related to benefits offered under the
Program.” Id. The insurance company “who administers a Program shall be a fiduciary with
respect to the determination of claims for benefits (“claims fiduciary” or “claims administrator”)
and shall have discretionary authority to determine all matters with respect to whether a claim
qualifies for payment of benefits . . . .” Id. For further support, Wegmans also points to other
Plan documents, which tend to establish that Excellus is the third-party administrator and claims
fiduciary under the Plan. Lyons Aff. Ex. 2 at 1, 5. These documents make clear that Excellus
reviews claims for benefits pursuant to the PPO Program of the Plan, makes benefits
determinations, reviews appeals of those determinations, and makes the final determination
concerning all claims and appeals. See id. at 52-61.

16

At this stage, the Court’s task is not to determine whether Wegmans is actually a Plan
administrator or fiduciary. Rather, the Court must determine whether Plaintiffs have pled
sufficient facts to support the plausible inference that Wegmans exercised control over the
administration of benefits with regards to CE. Specifically, in order for Wegmans to be a proper
Defendant, the Complaint must allege that Wegmans had “authority or responsibility for
administering benefits under the Plan.” Evans, 311 F. App’x at 558. As discussed, the Plan
granted Wegmans the authority to delegate to insurance companies, such as Excellus, “the
authority to administer” the Plan and to have “full discretionary authority to interpret the
Program and to determine all questions relating to benefits under the Plan.” Lyons Aff. Ex. 1 at
1. Such entities became claims fiduciaries with respect to the determination of claims for
benefits, and have discretionary authority “to determine all matters with respect to whether a
claim qualifies for payment of benefits.” Id. In other words, these insurance companies would
become the third-party administrator and claims fiduciary on behalf of Wegmans. Wegmans did
just that in this case—assigning these administrative responsibilities to Excellus. The Summary
Plan Description (“SPD”) makes clear that Wegmans was not involved with the decision-making
process as it relates to claims under the PPO Program; rather, it was Excellus that was given the
authority and responsibility for making the claims decision that Plaintiffs challenge in this action.
See id. at Ex. 2.
While it is true that Wegmans is nominally the Plan administrator, the Third Circuit has
rejected ERISA claims against an employer in a similar situation. In Evans, the plaintiff had
named the employer as a defendant because the plan at issue listed the employer as the plan
administrator. The Third Circuit reasoned that, despite this express statement in the plan, the
plaintiff had failed to establish that the employer had “any authority or responsibility for

17

administering benefits under the Plan,” and that the “Plan’s language makes it clear that [the
insurer], not [the employer], has discretion to interpret the contract’s terms.” Evans, 311 F.
App’x at 558-59. Despite the fact that the plan did not specifically give the insurer exclusive
discretion to make benefit determinations, the Third Circuit found that the lack of evidence that
the employer had any role in the plaintiff’s benefits determination to be determinative. Id. at
559.
Likewise, here, despite the Plan expressly naming Wegmans as the Plan administrator,
the Plan makes clear that Excellus is the third-party administrator and claims fiduciary in this
case. There are no allegations in the Complaint that plausibly allow for an inference that
Wegmans had responsibility for, or controlled, the benefits determination as it relates to CE’s
claims. In fact, the Complaint specifically details how the Provider Plaintiffs submitted the
benefits claim and appeals directly to Excellus, and that Excellus made the very determinations
that Plaintiffs seek to challenge in this action. See Compl. ¶¶ 39-54; see also Evans, 311 F.
App’x at 559 (noting that the plaintiff directed all her communications when she was seeking
benefits with the insurer, not with her employer). While the Complaint does state that
“Defendants’ fiduciary functions include, inter alia, . . . determinations as to claims for benefits,
. . and coverage, handling, management, review, decision making and disposition of appeals and
grievances under a plan,” Compl. ¶ 24, there are no allegations that Wegmans itself engaged in
any of these activities as it relates to CE’s benefits claim. Rather, the Complaint specifically
states that Excellus’s fiduciary duties included providing health coverage and benefits to CE and
making the benefits claim determination in this case. See id. at ¶ 25.
Overall, these allegations in the Complaint, when read together with the Plan documents,
fail to establish that Wegmans exercised any discretion or control over the administration

18

benefits with regards to CE. Therefore, Plaintiffs have failed to establish that Wegmans is a
proper defendant with respect to Plaintiffs’ ERISA claims; consequently, Wegmans is dismissed
from this matter. Compare Mullica v. Minn. Life Ins. Co., Civil Action No. 11-4034, 2013 U.S.
Dist. LEXIS 139160, at *19-21 (E.D. Pa. Sept. 26, 2013) (finding that an employer/plan
administrator was not a proper defendant where the “allegations in the complaint, read together
with the SPD provisions, fail to state sufficient facts to establish [the employer] exercised any
discretion with respect to the administration of benefits under the SPD”), and Murray v. JeldWen Inc., 2013 U.S. Dist. LEXIS 3518 (M.D. Pa. Jan. 9, 2013) (entering judgment for
employer/plan administrator where the plaintiff failed to produce evidence that created
“legitimate question regarding whether [the employer] had some degree of control over the
decision to deny [the plaintiff’s] application for disability benefits” where another entity was
identified “as the claims administrator under the Plan with discretionary authority to interpret the
Plan and make claim determinations), and Narducci v. Aegon United States, Inc., Civil Action
No.10-CV-00955 (DMC)(JAD), 2010 U.S. Dist. LEXIS 134514, at *6-7 (D.N.J. Dec. 15, 2010)
(dismissing nominal plan administrator where the plan specified that the claims administrator
had discretionary authority to make benefit determinations because the plan administrator had
“no role in determining benefits”), with Franco, 818 F. Supp. 2d at 818-19 (finding that the
pleadings sufficiently established that an entity was a proper defendant where the plan delegated
authority to determine entitlement to benefits to the entity and the complaint alleged that the
entity made decisions regarding the payment of the plaintiff’s claims). However, if, during the
course of discovery, CE 6 obtains information that evinces that Wegmans did have some degree
of control over the decision to deny her application for benefits, she may move to amend the
Complaint at that time.
6

Because the Provider Plaintiffs lack standing, CE is the sole remaining plaintiff in the case.

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C.

Viability of Count I: Section 502(a)(1)(B)

Section 502(a)(1)(B) creates a civil action for a plan participant “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 assert a
claim under § 502(a)(1)(B), a plaintiff must demonstrate that “he or she [has] a right to benefits
that is legally enforceable against the plan” and that the plan administrator improperly denied
him or her those benefits. Hooven v. Exxon Mobil Corp., 465 F.3d 566, 574 (3d Cir. 2006); see
also Manning v. Sanofi-Aventis, U.S. Inc., No. 3:11cv1134, 2012 U.S. Dist. LEXIS 114129, at *8
(M.D. Pa. Aug. 14, 2012) (citing Erbe v. Billeter, Civil Action No. 06-113, 2007 U.S. Dist.
LEXIS 72835, at *22-23 (W.D. Pa. Sept. 28, 2007)).
Excellus argues that CE’s claim under Section 502(a)(1)(B) must fail because she has
failed to identify the plan provision under which she seeks relief, and because she does not
identify the services rendered or the dates of services for the allegedly unclaimed claims. In the
Complaint, CE has alleged that she is a beneficiary of the Plan, Compl. ¶ 6, and that the Plan
requires Excellus to reimburse CE for the cost of out-of-network medical services “based on the
usual, customary and reasonable rates for those services in the geographic area in which the
medical provider is located.” Id. at ¶¶ 9, 12. CE alleges that the services provided to her were
medically necessary and appropriate according to the medical standards in the community where
Dr. Cohen practices, and that the total claim for the services rendered was approximately
$551,000. Id. at ¶¶ 37, 39. CE further alleges that Excellus used flawed or inadequate data and
other information to determine the rate to reimburse CE, “which then resulted in reimbursements
to Dr. Cohen well below the usual, customary and reasonable rates for out-of-network medical
services.”

Id. at ¶ 75(b). In that regard, CE avers that the total payments made to her were

20

approximately $531,000 less than the amount of the claim, and represented less than 4% of the
amount of the services billed. Id. at ¶ 48. CE has also alleged a number of other terms of the
Plan that Excellus allegedly breached, such as failing to provide CE with accurate information
regarding her rights and benefits under the Plan, failing to provide adequate written notice for the
denial of benefits to CE in a manner calculated to be understood by her, and failing to state the
specific reason for the adverse determination. See id. at ¶ 75.
The Court finds that, after accepting as true the allegations contained within the
Complaint, these statements constitute sufficient facts upon which to state a plausible claim
under Section 502(a)(1)(B). These factual allegations in the Compliant assert that CE is a
beneficiary under the Plan, that she was entitled to reimbursements based on the usual,
customary, and reasonable rates for out-of-network medical providers under the terms of the
Plan, that Excellus wrongfully denied her these benefits, and that, by denying her benefits,
Excellus has violated Section 502(a) of ERISA. The Complaint also alleges that this denial was
improper because Excellus used flawed or inadequate data to determine the usual, customary,
and reasonably rates for Dr. Cohen’s services. Similar allegations have been found sufficient to
survive a motion under Rule 12(b)(6) in this Circuit. See Gregory Surgical Servs., LLC v.
Horizon Blue Cross Blue Shield of N.J., Inc., Civil Action No. 06-0462 (JAG), 2007 U.S. Dist.
LEXIS 94056, at *11-12 (D.N.J. Dec. 19, 2007); Erbe, 2007 U.S. Dist. LEXIS 72835, at *22-23.
Accordingly, Excellus’s motion to dismiss Count I of the Complaint is denied. 7

7

Excellus relies heavily on McDonough v. Horizon Blue Cross Blue Shield, Civil Action No. 09-571 (SRC), 2009
U.S. Dist. LEXIS 93642 (D.N.J. Oct. 7, 2009). This case, however, differs significantly. In McDonough, the Court
found the complaint to be deficient because it failed to properly allege any wrongdoing on behalf of Horizon, the
named defendant. The complaint, rather, alleged that Horizon was expressly permitted under the Plan to rely on an
outside database to calculate the usual and customary rates for a claim, but that the database used by Horizon to
calculate benefits was flawed. The complaint, however, did “not charge, nor reasonably permit the inference, that
Horizon was somehow involved in the generation of flawed data or complicit with the outside vendor such that it
could be faulted, as a breach of the health plan, for inaccurate [usual and customary rates].” McDonough, 2009 U.S.
Dist. LEXIS 93642, at *7-8. Therefore, the complaint failed “to give notice of what Horizon did in contravention of

21

D.

Viability of Count II: Section 502(c)(1)(B)

Pursuant to Section 502(c), a plan beneficiary and/or participant may pursue civil
remedies when plan administrators fail to provide documentation in response to written requests
by the beneficiary and/or participant for information to which they are entitled. See 29 U.S.C.
1132(c)(1) (“Any administrator . . . who fails or refuses to comply with a request for any
information which such administrator is required by this subchapter to furnish to a participant or
beneficiary . . . by mailing the material requested to the last known address of the requesting
participant or beneficiary within 30 days after such request may in the court’s discretion be
personally liable to such participant or beneficiary in the amount of up to $100 a day . . . .”).
Correspondingly, 29 U.S.C. § 1024(b)(4) states that “the administrator shall, upon written
request of any participant or beneficiary, furnish a copy of the . . . instruments under which the
plan is established or operated.” See also Bicknell v. Lockheed Martin Group Benefits Plan, 410
F. App’x 570, 577 (3d Cir. 2011).
A plausible claim under Section 502(c)(1)(B) requires allegations that: (1) that the
plaintiff is a plan participant or beneficiary; (2) that the plaintiff made a written request to the
plan administrator for information that falls within the scope of the disclosure requirements of
ERISA; and (3) that the requested documents were not provided within thirty days of the written
request. Wargotz v. Net Jets, Inc., Civ. No. 09-4789 (WJM), 2010 U.S. Dist. LEXIS 47118, at
*7 (D.N.J. May 13, 2010) (citing 29 U.S.C. § 1132(c)(1)(B)). The Third Circuit has explained
that the legislative history of ERISA “makes clear that Congress intended the informationproducing provisions to enable claimants to make their own decisions on how best to enforce
their rights.” Daniels v. Thomas & Betts Corp., 263 F.3d 66, 77 (3d Cir. 2001); see also Pane v.
the terms of the health plan and/or in violation of ERISA.” Id. at *7. Here, the Complaint clearly alleges that it was
the actual conduct of Excellus that contravened the terms of the health plan, i.e., that Excellus intentionally used
and/or generated flawed data that led to an underpayment of benefits in violation of the Plan and/or ERISA.

22

RCA Corp., 868 F.2d 631, 638-39 (3d Cir. 1989) (holding that the plan beneficiary’s 1132(c)
claim failed because the beneficiary did not actually request any information to which he was
entitled). “To be clear, in order to obtain plan documents under ERISA, a beneficiary and/or
participant must make the written request.” Cohen, 820 F. Supp. 2d at 609 (citing McDonough
v. Horizon Blue Cross Blue Shield of New Jersey, Inc., No. 09-571, 2011 U.S. Dist. LEXIS
108903, at *20-21 (D.N.J. Sep. 20, 2011)).
This claim, therefore, lacks merit for the same reason that this Court dismissed this
identical claim when last brought by Dr. Cohen before this Court. See Cohen, 820 F. Supp. 2d at
609. Just as in that case, CE has not alleged that she—the Plan beneficiary—made a request for
written documents. Rather, the Complaint alleges that Dr. Cohen and POA, on behalf of CE,
requested “the complete contents of the claim file and all relevant documents, including, but not
limited to, the summary plan description.” Compl. ¶ 84. This failure to allege that the plan
beneficiary made the written request is fatal to Plaintiffs’ claim under § 503(c). 8 Accordingly,
this claim must be dismissed. “Of course, to the extent this Count is premised upon [the
Provider Plaintiff’s] request as an assignee, it also fails to state a claim because the assignment
[the Provider Plaintiffs] received was not valid.” 9 Cohen, 820 F. Supp. 2d at 609.
IV.

Conclusion
For the foregoing reasons, the Court concludes that Wegmans is dismissed as a

defendant. In that regard, if during the course of discovery, CE obtains information that would
8

Perhaps realizing this, Plaintiffs have not opposed Excellus’s motion to dismiss this Count.
Even if there was no applicable anti-assignment provision in the Plan, there is no assignment language in the
Complaint expressly granting the Provider Plaintiffs the right to recover statutory penalties for the failure to provide
documents pursuant to § 502(c)(1)(B). Because the right to bring a claim under § 502(c)(1)(B) cannot be assigned
“by implication or by operation of law,” but rather must be “express and knowing,” Plaintiffs lack standing to bring
a § 502(c)(1)(B) claim. Sanctuary Surgical Ctr., Inc. v. Aetna Inc., 546 F. App’x 846, 851 (11th Cir. 2013) (quoting
Tex. Life, Acc. Health & Hosp. Serv. Ins. Guar. Ass'n v. Gaylord Entm't Co., 105 F.3d 210, 218-19 (5th Cir. 1997))
(holding that plaintiffs lack standing to bring a claim under § 502(c), and explaining that “[t]he plaintiffs’ contention
stretches beyond its breaking point the plain meaning of the agreement, which assigns only the right to receive
benefits and not the right to assert claims for . . . civil penalties”).
9

23

support allegations of Wegmans as a proper defendant, she may move to amend the Complaint at
that time. Next, because Plaintiffs have not plausibly alleged an assignment of benefits or rights
under the Plan and because the Plan prohibits the assignment of benefits, the Provider Plaintiffs
lack standing to bring any claims in this case. Finally, Count II by CE is dismissed for failure to
state a claim. Accordingly, only Count I against Excellus remains in the case at this time, as well
as “Count III” for attorney’s fees. An appropriate order accompanies this Opinion.
/s/ Freda L. Wolfson
FREDA L. WOLFSON, U.S.D.J.
Dated: July 15, 2015

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