MED-X GLOBAL, LLC v. WORLDWIDE INSURANCE SERVICES, LLC (T/N GEOBLUE) et al

Filing 180

MEMORANDUM and ORDER granting 142 Motion to Dismiss and granting 146 Motion to Dismiss. Signed by Judge Peter G. Sheridan on 4/30/2019. (km)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

MED-X GLOBAL, LLC,

Civil Action No.: 17-cv-1 1742 (PGS)

Plaintiff,
MEMORANDUM AND ORDER

v.
WORLDWIDE INSURANCE SERVICES,
LLC (T/N GEOBLUE), et al.
Defendants.

SHERIDAN, U.S.D.J.
Presently before the Court are Defendants’ Horizon Blue Cross Blue Shield of New Jersey,
CareFirst of Maryland, Inc., Regence BlueShield of Idaho, Inc., Blue Cross and Blue Shield of
Massachusetts, Inc., Blue Cross Blue Shield of North Carolina, Premera Blue Cross, and Excellus
Health Plan, Inc. d/b/a Excellus Blue Cross Blue Shield Motion to Dismiss (ECF No. 142) and
Defendants’ Health Care Service Corporation (named as Blue Cross Blue Shield of Illinois and
Blue Cross Blue Shield of Texas), Highmark Inc. (named as Highmark Blue Cross Blue Shield),
and Blue Cross Blue Shield Delaware Inc. (named as Highmark Blue Cross Blue Shield Delaware)
Second Motion to Dismiss (ECF No. 146). For the purposes of clarity, the Court will refer to the
above-named defendants as the “Blue Defendants.”
Previously, the Court noted several deficiencies in Plaintiffs first amended complaint, and
granted Defendants’ motion to dismiss for failure to state a claim upon which relief could be
granted. (ECF No. 117). The Court thereafter allowed Plaintiff to file a second amended complaint.
In the second amended complaint, Plaintiff, a medical billing agent, alleges that healthcare

providers outside of the United States provided services to patients with healthcare coverage either
supplied by or administered by the Blue Defendants, and Plaintiff processed those claims on behalf
of citizens of the United States who received medical care while traveling abroad. (Second
Amended Compi. (“SAC”), ECF No. 134, at ¶ 22). Plaintiff alleges that in January 2017, the Blue
Defendants implemented a new procedure for processing claims, where GeoBlue (a corporation
that serves as the administrative service provider for the Blue Cross and Blue Shield Association)
would “handle” the international claims for the Blue Defendants. (Id. at

¶

25). Plaintiff further

alleges that this decision made “business incredibly difficult on Med-X so as to augment Blue’s
corporate profit by way of delaying claims, denying/underpaying claims, and defending claims,”
and that it required additional documentation before processing claims that were submitted by
Med-X. (Id. at

¶ 26).

Plaintiff alleges that on June 28 and 29, 2017, it sent letters to GeoBlue which concerned
claims that GeoBlue had allegedly “denied, underpaid, or not yet decided.” (Id. at 28). The letters,
in part, requested the “entire administrative record” for every single patient and the patient’s claims
that had been denied, underpaid, or had been delayed by non-decision. (Id. at

¶J

28, 36). In

response to the letters, GeoBlue informed Plaintiff that it would “pass those requests on to the
applicable Home Licensees [the Blue Defendants] for handling.” (Id. at ¶ 30). Plaintiff claims that
it has not received any administrative record in response to its request. (Id. at

¶ 31).

Plaintiffs Second Amended Complaint raises two claims: (1) Petition to Compel
Production of Administrative Records and Recovery of Administrative Penalty under ERISA, 29
U.S.C.

§

1024(b), 29 U.S.C.

§

1132(c)(1) and 29 C.F.R.

§

2575.502c-1 (Against all Defendants);

and (2) Tortious Interference with Prospective Economic Advantage (Against GeoBlue). Prior to

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the return date of the present motion, Plaintiff and GeoBlue reached a settlement agreement;
accordingly Count I is the only issue remaining before the Court. (ECF No. 169).

On a motion to dismiss for failure to state a claim pursuant to Fed. R. Civ. P. 1 2(b)(6), the
Court is required to accept as true all allegations in the Complaint and all reasonable inferences
that can be drawn therefrom, and to view them in the light most favorable to the non-moving
party. See Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 (3d Cir. 1994). “To
survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true,
to ‘state a claim to relief that is plausible on its face.” Ashcrofi v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The Third Circuit set forth a threepart analysis for determining whether a complaint may survive a motion to dismiss for failure to
state a claim:
First, the court must “tak[e] note of the elements a plaintiff must plead to state a
claim.” Second, the court should identify allegations that, “because they are no
more than conclusions, are not entitled to the assumption of truth.” Finally, “where
there are well-pleaded factual allegations, a court should assume their veracity and
then determine whether they plausibly give rise to an entitlement for relief.”
Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d Cir. 2010).
“This means that [the] inquiry is normally broken into three parts: (1) identifying the
elements of the claim, (2) reviewing the complaint to strike conclusory allegations, and then (3)
looking at the well-pleaded components of the complaint and evaluating whether all of the
elements identified in part one of the inquiry are sufficiently alleged.” Malleus v. George, 641 F.3d
560, 563 (3d Cir. 2011). While a court will accept well-pleaded allegations as true for the purposes
of the motion, it will not accept bald assertions, unsupported conclusions, unwarranted inferences,
or sweeping legal conclusions cast in the form of factual allegations. Iqbal, 556 U.S. at 678-79; see

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also Morse v. Lower Merion School District, 132 F.3d 902, 906 (3d Cir. 1997). A complaint should
be dismissed only if the well-pleaded alleged facts, taken as true, fail to state a claim. See In re
Warfarin Sodium, 214 F.3d 395, 397-98 (3d Cir. 2000).
II
Under 29 U.S.C.

§

1024(b)(4), the “administrator shall, upon written request of any

participant or beneficiary, furnish a copy of the latest updated summary, plan description, and the
latest annual report, any terminal report, the bargaining agreement, trust agreement, contract, or
other instruments under which the plan is established or operated.” Section 502(c)(1) of ERISA
imposes a statutory penalty of up to $110 per day for any administrator who fails to or refuses to
comply with a request for any information that the administrator is required to furnish to a
participant or beneficiary, within thirty days after such a request. See 29 U.S.C.
C.F.R.

§

1132(c)(l); 29

§ 2575.502c-1.
To state a claim under Section 502(c)(1), “a plaintiff must allege that 1) it made a request

to a plan administrator, 2) who was required to provide the requested material, but 3) failed to do
so within 30 days of the request.” Spine Surgery Assocs. & Discovery Imaging, P.C. v. INDECS
Corp., 50 F. Supp. 3d 647, 656 (D.N.J. 2014) (citing Narducci v. Aegon USA, Inc., No. 10-955,
2010 U.S. Dist. LEXIS 134514, at *3 (D.N.J. Dec. 15, 2010)). “As a penal statute, the terms of

§

502(c)(1) must be ‘construed strictly,’ and thus, a plaintiff seeking relief under

§

502(c)(1) must

demonstrate compliance with each of these statutory requirements.” Plastic Surgery Ctr., PA. v.
Cigna Health & Life Ins. Co., No. 17-2055, 2018 U.S. Dist. LEXIS 90422, at *24 (D.N.J. May 31,
2018) (quoting Haberern v. Kaupp Vascular Surgeons Ltd. Defined Ben. Pension Plan, 24 F.3d
1491, 1505 (3d Cir. 1994)).

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First, “[for the purposes of assessing statutory penalties under Section 502(c)(1), claims
are proper only as against the plan administrator.” Mazzarino v. Prudential Ins. Co. ofAm., No.
13-4702, 2015 U.S. Dist. LEXIS 38351, at *27 (D.N.J. Mar. 26, 2015). “Administrator” is
defined to mean:
(i) the person specifically so designated by the terms of the instrument under which
the plan is operated;
(ii) if an administrator is not so designated, the plan sponsor; or
(iii) in the case of a plan for which an administrator is not designated and a plan
sponsor cannot be identified, such other person as the Secretary may by regulation
prescribe.
Spine Surgery Assocs. & Discovery Imaging, P. C., 50 F. Supp. 3d at 656.
The SAC states:
37. Although GeoBlue was! is the plan and! or claim administrator (directly or
defacto) and accordingly was obligated to undertake the administrative record
request production, it did not and instead passed (or at least so said GeoBlue’s
counsel in writing) the administrative record requests along to all the other Blue
entities captioned as Defendants above.
(SAC,

¶ 37).

Here, Plaintiff has failed to show it made a request to a plan administrator,

as required under ERISA. In dismissing the First Amended Complaint, it was explained “Plaintiff
bears the burden of alleging and supporting that GeoBlue is a plan administrator. Med-X has failed
to do so and concedes its lack of knowledge.” (Mem. Op., April 25, 2018, ECF No. 117, at 7).
Plaintiffs SAC suffers the same fatal flaws as its First Amended Complaint: Plaintiff has failed to
show that GeoBlue, or any Blue Defendant, are administrators of the plan. Plaintiff argues that
GeoBlue was the de-facto plan administrator for the Blue Defendants. However, this Court has
rejected Plaintiffs arguments regarding de facto plan administrators.’ Even more, Plaintiff

Campo v. Oxford Health Plans, Inc., 2007 U.S. Dist. LEXIS 45804, *13 (D.N.J. Jun. 26, 2007),
which rejected the de facto theory, explaining “[t]his Court declines to adopt the minority view
recognizing a non-administrator as the de facto plan administrator that can be held liable under
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concedes in its SAC that it never made any request directly to the Blue Defendants. (See SAC, at

¶ 28-30).
Defendants further argue that Plaintiffs complaint fails to state a claim under as ERISA
because ERISA requires only plan administrators to furnish plan documents to plan beneficiaries
or participants. As Plaintiff is neither a beneficiary nor participant to the plans, nor has any
assignment of rights occurred, Plaintiff lacks standing to bring these claims. Plaintiff argues in
response that it does not need standing to bring this action under ERISA, and instead “Count I
sounds in Med-X’s right (as a hired domestic billing agent by foreign entities) to process claims
and exchange/receive germane claim documentationlinformation (the subject of Count I) so as to
be able to do its job for its clientele.
benefits..

.

.

.

When this matter gets to the point of recovering insurance

well then, perhaps there can be a standing debate.” (P1. br. at 20).

Plaintiff is incorrect. 29 U.S.C.

§

1024(b)(4) is very clear: “the administrator shall, upon

written request of any participant or beneficiary, furnish a copy of the latest updated summary,
plan description, and the latest annual report

.

.

.

.“(emphasis added). Accordingly, the ERISA

penalties under Section 502(c)(l) attach for a violation of 29 U.S.C.

§

1024(b)(4) only where a

plan beneficiary or plan participant makes a request upon a plan administrator to furnish plan
documents, and the plan administrator refuses or fails to furnish same within thirty days. Finally,
at oral argument, Plaintiffs counsel argued that it may bring these claims under “contract law” and
various state statutes. However, in its SAC, Plaintiff brings a claim to compel production of
administrative records and for recovery of administrative penalty under ERISA. Plaintiff has not
adequately explained how, if at all, it has any claims under “contract law” or state statutes.

Section 502(c). To do so would require the Court to ignore the statutory language that imposes a
duty on the plan’s ‘administrator’ alone.” Mem. Op., April 25, 2018, ECF No. 117, at 7-8.
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In short, Plaintiff has failed to show under ERISA: (1) that Med-X is a plan beneficiary or
plan participant, or it was assigned those rights; and (2) that the Blue Defendants are plan
administrators required to provide such documents to plan beneficiaries or plan participants.
Accordingly, Count I of Plaintiffs SAC is dismissed with prejudice.
ORDER
This matter is before the Court on Defendants’ motions to dismiss (ECF Nos. 142 and 146);
and the Court having carefully reviewed and taken into consideration the submissions of the
parties, as well as the arguments therein presented, and for good cause shown, and for all of the
foregoing reasons,
IT IS on this 30th day of April, 2019;
ORDERED that Defendants’ motions to dismiss (ECF Nos. 142 and 146) are GRANTED.

hiL9
PETER G. SHERIDAN, U.S.D.J.

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