MAYER et al v. AETNA INC. et al

Filing 219

MEMORANDUM OPINION filed. Signed by Magistrate Judge Tonianne J. Bongiovanni on 12/03/2021. (jdb)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

LUTZ SURGICAL PARTNERS PLLC, et
al.,

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Plaintiff,
v.
AETNA, INC., et al.,
Defendants.

Civil Action No. 15-2595 (ZNQ)
MEMORANDUM OPINION

BONGIOVANNI, United States Magistrate Judge
This matter comes before the Court upon Defendants Aetna Life Insurance Company and
Aetna Health Inc.’s (“Defendants”) motion to file amended counterclaims. (Docket Entry No.
210). Plaintiff Lutz Surgical Partners PLLC (“Plaintiff”) opposes Defendants’ motion. (Docket
Entry No. 213). The Court has fully reviewed and considered all arguments made in support of,
and in opposition to, Defendants’ motion. The Court considers Defendants’ motion without oral
argument pursuant to L.Civ.R. 78.1(b). For the reasons set forth more fully below, Defendants’
motion to file amended counterclaims is GRANTED.
I.

BACKGROUND AND PROCEDURAL HISTORY
The factual background of this dispute is explained in the Court’s Opinion dated June 21,

2021, (Docket Entry No. 202), which the Court incorporates by reference. The relevant procedural
history is summarized as follows: Plaintiff filed the instant action on October 24, 2014, against
Defendants asserting a claim under the Employee Retirement Income Security Act of 1974
(“ERISA”) § 1132(a)(1)(B) (or Section 502(a)(1)(B)) based on Defendants’ alleged failure to pay
benefits due under Defendants’ health insurance plans (Count I), and a claim for equitable and
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injunctive relief under ERISA § 1132(a)(3) (or Section 502(a)(3)) to remedy Defendants’ alleged
violations of their ERISA fiduciary duties (Count II). (Docket Entry No. 1).
On December 7, 2015, Defendants filed a Counterclaim, asserting counterclaims for setoff
as against the overpayments it allegedly made to Plaintiff (Count I), money had and received to
recover the alleged overpayments (Count II), and accounting of all the alleged overpayments if the
Court finds Plaintiff is entitled to any monetary relief (Count III). (Docket Entry No. 86).
On July 1, 2020, Plaintiff filed a Motion for Summary Judgment. (Docket Entry No. 179).
On September 30, 2020, Defendants filed a Cross Motion for Summary Judgment. (Docket Entry
No. 183). On December 18, 2020, Plaintiff filed a brief in further support of its motion. (Docket
Entry No. 190). On March 19, 2021, Defendants filed a brief in further support of the Cross Motion
for Summary Judgment. (Docket Entry No. 196). On June 21, 2021, the District Court filed an
Opinion addressing the Summary Judgment Motions. (Docket Entry No. 202). The District Court
granted summary judgment for Plaintiff on all three of Defendants’ Counterclaims and allowed
Defendants to file a motion for leave to amend their counterclaims within twenty-one (21) days of
the date of the Opinion. (Docket Entry No. 203).
On July 9, 2021, this Court granted Defendants’ request for a thirty (30) day extension of
the deadline for Defendants to file a motion for leave to amend the counterclaims. (Docket Entry
No. 208). Defendants filed their First Motion for Leave to file Amended Counterclaims on August
11, 2021. (Docket Entry No. 210). Plaintiff filed an Opposition to the First Motion for Leave to
File Amended Counterclaims on September 3, 2021. (Docket Entry No. 213). Defendants filed
the Reply Brief to the Opposition on September 27, 2021. (Docket Entry No.215).

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II.

THE PARTIES’ ARGUMENTS
A. Defendants’ Motion to Amend the Counterclaims
Defendants seek to amend their Counterclaims “(1) to restate counterclaims as claims for

appropriate equitable relief under Section 502(a)(3) of ERISA and (2) to assert common law claims
as to non-ERISA Plans.” (Defs.’ Br. in Supp. of Mot. at 5).
Defendants note that this Motion is not made in bad faith or with undue delay because their
request to amend the counterclaims comes after the District Court explicitly allowed Defendants
to file a motion for leave to amend the counterclaim. In its June 21, 2021, Opinion addressing the
parties’ cross motions for summary judgment, the District Court permitted Aetna Life Insurance
Company and the newly added Defendant, Aetna Health, to file a motion for leave to amend the
Counterclaim. (Docket Entry No. 202 at pp. 50-51). Defendants further note that the District
Court also “permitted Plaintiffs to proceed on a new, unpled theory of assignment of benefits that
Plaintiffs raised for the first time in their reply brief in support of their motion for summary
judgment.” (Defs.’ Br. in Supp. of Mot at 5). Additionally, Defendants argue that Plaintiff will
not be prejudiced because “the factual predicates, equitable theories, and request for equitable
relief is unaltered from [Defendants’] original counterclaim.” (Id. at 9). In support of their
argument, Defendants claim Plaintiff has had nearly six-years’ worth of notice based on
Defendants’ original counterclaims and Plaintiff should have no need to conduct additional
discovery because there are no new facts or theories. (Id. at 9-10).
Second, Defendants argue that the amended counterclaims with respect to the non-ERISA
Plans are viable because there are over $54,000 in overpayments to Plaintiff in connection with
Aetna members whose “Plan A” plans were not subject to ERISA. Defendants contend that,

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therefore, the District Court’s preemption holding could not apply to those overpayments. (Id. at
12).
Lastly, for “clarity,” Defendants have requested “that this Court deem Aetna Health to have
answered the Complaint in accordance with the Answer and Defenses at ECF Nos. 84 and 86.”
(Id.)
B. Plaintiff’s Opposition
In opposition to the motion at issue, Plaintiff claims that this motion will cause undue
prejudice. (Pl. Br. in Opp. of Mot.). First, Plaintiff argues that this motion “will unnecessarily
require Plaintiff to spend time and resources responding to new Aetna discovery demands that
could have been much more efficiently addressed during the parties’ active fact and deposition
discovery—and at minimum that Aetna was required to pursue before the close of fact discovery
in January 2020.” (Id. at 13). Second, Plaintiff claims that the motion will require it “to spend
time and resources seeking new discovery from Aetna regarding the Proposed ERISA
Counterclaim.” (Id.) Third, Plaintiff claims that the passage of time itself “would make it more
difficult for Plaintiff to obtain effective discovery” on the issues that may arise now “than it would
have been during the prior discovery periods.” (Id. at 14). Lastly, Plaintiff argues that the timing
of the proposed counterclaims is prejudicial because it “has prevailed on the main issue in the case,
as the District Court held that Aetna’s cross-plan offsetting violates ERISA,” (Id.), and “Plaintiff
would be highly prejudiced if forced to defend against the proposed Counterclaims, including
claims that Aetna chose not to assert at any time prior to the Court’s summary judgment decisions.”
(Id. at 15).
Additionally, Plaintiff contends that the Motion should be denied because the proposed
amendment is futile. (Id.) On this point, Plaintiff first claims that the proposed counterclaims do

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“not identify any provisions of ERISA or any plan term that Lutz allegedly violated,” which
Plaintiff asserts is required by Section 502(A)(3). (Id. at 17). Second, Plaintiff argues that
Defendants’ “proposed amendment is also futile because it depends on an implausible reading of
the Contracts.” (Id. at 18). Specifically, Plaintiff alleges that Defendants rely on a “misread” of
the Physician Group Agreement (“PGA”) because the PGA does not direct Plaintiff to comply
with the terms of “a separate agreement like the [Network Rental Agreement (“NRA”)].” (Id. at
19). Finally, Plaintiff claims that the PGA contains a mandatory dispute resolution procedure
which Defendants failed to exhaust “prior to asserting the Proposed Counterclaims under ERISA
and state law.” (Id.)
Lastly, Plaintiff argues that Defendants do not cite to any court decisions that have
“allowed plan administrator to pursue under Section 502(a)(3) any of the forms of relief that Aetna
identifies in its Proposed ERISA Counterclaim.” (Id. at 20).
C. Defendants’ Reply
First, Defendants note that after the District Court determined that Defendants’ claims were
pre-empted by ERISA, Defendants acted “at the Court’s invitation,” and filed for leave to amend
the counterclaims. (Defs. Reply Br. at 5). Defendants argue that the proposed amendment is
timely and made in good faith because the District Court’s summary judgment decision left
unresolved issues that require the completion of substantial work before further dispositive
briefing and any potential trial. (Id. at 4).
Defendants also present three reasons why there will be no prejudice to Plaintiff. First,
Defendants argue that discovery is already being reopened on certain issues in this matter. (Id. at
6). Second, Defendants contend that no new facts or theories are presented in the Amended
Counterclaims because Defendants have sought equitable relief since the commencement of this

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action and continue to do so in the motion at issue. (Id. at 6). Lastly, Defendants argue that the
Amended Counterclaims exceed Rule 8 pleading standards because Defendants allege specific
factual bases for ERISA and state law counterclaims. (Id. at 7-8). Defendants go on to articulate
that despite resistance from Plaintiff regarding their obligation to comply with the NRA, the
District Court is not to decide to what extent Plaintiff is bound by the agreements and is instead to
accept the allegations as true. (Id. at 9).
Moreover, Defendants assert that the mandatory dispute resolution procedure is not
intended for recovering debt. (Id. at 9-10). Defendants, therefore, contend that the mandatory
dispute resolution procedure is not relevant to the futility determination. (Id. at 9-10).
Finally, Defendants state that they do “not seek to have any member pay out-of-pocket for
medical expenses under any subrogation theory to reimburse” Defendants. (Id. at 12). Instead,
the newly proposed ERISA counterclaim is against Plaintiff for equitable relief to offset
overpayment by Defendants to Plaintiff against any recovery by Plaintiff. (Id.)
III. ANALYSIS
A. Standard of Review
Pursuant to Fed. R. Civ. P. 15(a)(2), leave to amend pleadings is generally granted 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.” Foman, 371 U.S. at 182; see Shane v. Fauver, 213
F.3d 113, 115 (3d Cir. 2002). However, where there is an absence of undue delay, bad faith,
prejudice or futility, a motion for leave to amend a pleading should be liberally granted. Long v.

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Wilson, 393 F.3d 390, 400 (3d Cir. 2004). In deciding whether to grant leave to amend, “prejudice
to the non-moving party is the touchstone for the denial of the amendment.” Bechtel v. Robinson,
886 F.2d 644, 652 (3d Cir. 1989) (quoting Cornell & Co., Inc. v. Occupational Health and Safety
Review Comm’n, 573 F.2d 820, 823 (3d Cir. 1978)).
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 Imp., Inc., 133 F.R.D. 463, 468 (D.N.J.
1990) (internal quotation marks and citations omitted).

“[F]utility is implicated when the

amendment fails to cure a deficiency in the original complaint or fails to state a claim on which
relief can be granted.” K.K-M v. New Jersey Dep't of Educ., No. CV1711579RBKKMW, 2020
WL 6817506, at *7 (D.N.J. Nov. 20, 2020) (citing Jablonski v. Pan American World Airways, Inc.,
863 F.2d 289, 292 (3rd Cir.1988)). “In assessing ‘futility,’ the district court applies the same
standard of legal sufficiency as applies under Rule 12(b)(6).” In re Burlington Coat Factory Sec.
Litig., 114 F.3d 1410, 1434 (3d Cir. 1997) (citing Glassman v. Computervision Corp., 90 F.3d 617,
623 (1st Cir. 1996)).
To determine if a complaint would survive a motion to dismiss under Rule 12(b)(6), the
Court must accept as true all the facts alleged in the pleading, draw all reasonable inferences in
favor of the plaintiff, and determine if “under any reasonable reading of the complaint, the plaintiff
may be entitled to relief.” Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008).
“[D]ismissal is appropriate only if, accepting all of the facts alleged in the [pleading] as true, the
p[arty] has failed to plead ‘enough facts to state a claim to relief that is plausible on its face.’”
Duran v. Equifirst Corp., Civil Action No. 2:09-cv-03856, 2010 WL 918444, *2 (D.N.J. March
12, 2010) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Put simply, the alleged
facts must be sufficient to “allow[] the court to draw the reasonable inference that the defendant is

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liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The focus is not
on “‘whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence
to support the claims.’” Bell Atl. Corp., 550 U.S. at 563 n.8 (quoting Scheuer v. Rhoades, 416
U.S. 232, 236 (1974)). Additionally, in assessing a motion to dismiss, while the Court must view
the factual allegations contained in the pleading at issue as true, the Court is “not compelled to
accept unwarranted inferences, unsupported conclusions or legal conclusions disguised as factual
allegations.” Baraka v. McGreevey, 481 F.3d 187, 211 (3d Cir. 2007).
B. Discussion
Plaintiff argues that Defendants acted with undue delay in seeking leave to amend their
counterclaims because Defendants allegedly “had ample opportunities to seek to amend during the
long life of this case, but chose not to.” (Pl. Br. in Opp. of Mot. at 9). Delay alone, however, does
not justify denying a motion to amend. See Cureton v. Nat’l Collegiate Athletic Ass’n, 252 F.3d
267, 273 (3d Cir. 2001). Rather, it is only where delay becomes “‘undue,’ placing an unwarranted
burden on the court, or . . . ‘prejudicial,’ placing an unfair burden on the opposing party” that
denial of a motion to amend is appropriate. Adams v. Gould Inc., 739 F.2d 858, 868 (3d Cir. 1984).
Likewise, “[s]imply failing to add a claim a party had prior knowledge of does not alone amount
to bad faith.” Zelma v. Choice Energy, LLC, No. CV 19- 17535 (CCC), 2020 WL 5201341, at *2
(D.N.J. Sept. 1, 2020).
Here, Defendants filed the Motion for Leave to File Amended Counterclaims at the
invitation of the District Court. “[C]ourts within the Third Circuit typically dismiss the preempted
state law claims and grant leave to amend the complaint to plead ERISA claims, so as to provide
[the non-moving party] with proper notice of the nature of these claims.” Chang v. Prudential Ins.
Co. of Am., No. 16-CV-3351, 2017 WL 402980, at *3 (D.N.J. Jan. 30, 2017). Defendants’ decision

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to comport with the District Court’s instruction, therefore, cannot be interpreted as an act of undue
delay or bad faith.
Plaintiff also contends that allowing the amendment of the counterclaims after the close of
discovery will be prejudicial because it requires Plaintiff to expend time and resources exchanging
new discovery arising from the Proposed Counterclaims. To establish prejudice, the non-moving
party must make a showing that allowing the amended pleading would (1) require the non-moving
party to expend significant additional resources to conduct discovery and prepare for trial, (2)
significantly delay the resolution of the dispute, or (3) prevent a party from bringing a timely action
in another jurisdiction. See Long, 393 F.3d at 400.
Defendants, however, note that the substance of the counterclaims have remained
unchanged. Defendants continue, through their amendments, to pursue equitable relief in the form
of offsets to overpayment by Defendants against any recovery Plaintiff may be entitled to. As
such, the proposed amendment does not require Plaintiff to expend significant additional resources
to conduct discovery. The Court finds that permitting Defendants to amend their counterclaims,
given their nature, would not result in significant additional expenses or delay. Plaintiff has failed
to demonstrate otherwise.
Similarly, Plaintiff alleges that the proposed ERISA counterclaim is futile because the
proposed amendment fails as matter of law. Unless a proposed amendment is “clearly futile . . .
denial of leave to amend is improper.” Morton Intern., Inc. v. A. E. Staley Mfg. Co., 106 F.Supp.2d
737, 745 (D.N.J. 2000).

As noted above, the proposed claim for equitable relief remains

substantially unchanged from the original counterclaims, thus, it is not apparent that Defendant’s
proposed amendments are “clearly futile.” Morton Intern., Inc. v. A. E. Staley Mfg. Co., 106
F.Supp.2d 737, 745 (D.N.J. 2000).

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Defendants filed their motion to amend in accordance with the Court’s Opinion from June
21, 2021. The Court finds that there was no undue delay, bad faith, or dilatory motive by
Defendants. Likewise, the Court finds that is no evidence that the proposed amendments are
“clearly futile.”
III.

Conclusion
For the reasons set forth above, Defendants’ Motion to Amend is GRANTED. An

appropriate Order follows.
Dated: December 3, 2021
s/ Tonianne J. Bongiovanni
HONORABLE TONIANNE J. BONGIOVANNI
UNITED STATES MAGISTRATE JUDGE

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