District Photo Inc. Health Care Plan v. Pyrros, MD et al

Filing 43

ORDER granting 35 Motion for Reconsideration ; granting 36 Motion for Leave to File. For the reasons set forth herein, the Court grants defendants' motion for reconsideration. Defendants' motion for summary judgment on plaintiff' s claims is granted, and plaintiff's complaint is dismissed. Additionally, defendants' motion for judgment on their counterclaim is granted in the amount of $17,966.26. The Court will schedule a telephone conference to discuss defendants' request for attorneys' fees.. Ordered by Judge Joseph F. Bianco on 9/28/2016. (Dolecki, Lauren)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
_____________________
No 13-CV-4285 (JFB)(SIL)

_____________________

DISTRICT PHOTO INC. HEALTH CARE PLAN,
Plaintiff,
VERSUS

DIMITRI PYRROS, M.D. AND ZELEN PYRROS, M.D., P.C.,
Defendants.
___________________
MEMORANDUM AND ORDER
September 28, 2016

___________________
JOSEPH F. BIANCO, District Judge:
On December 2, 2015, the Court denied
both parties’ respective motions for
summary judgment in an oral ruling (the
“Ruling”). By motion filed February 11,
2016, defendants Dr. Dimitri Pyrros (“Dr.
Pyrros”), a thoracic surgeon, and his
practice, Zelen Pyrros, M.D., P.C. (“Zelen
Pyrros”)
(collectively,
“defendants”),
request that the Court re-consider the
December 2, 2015 Ruling. Specifically,
defendants argue that the Supreme Court’s
recent decision in Montanile v. Board of
Trustees of the National Elevator Industry
Health Benefit Plan, 136 S. Ct. 651 (2016)
abrogated the Second Circuit’s decision in
Thurber v. Aetna Life Insurance Company,
712 F.3d 654 (2d Cir. 2013), which this
Court relied upon in reaching its conclusions
in the Ruling.
For the reasons set forth below, the
Court grants defendants’ motion for
reconsideration.

I.

BACKGROUND

The Court assumes the parties’
familiarity with the facts of this case, which
were set forth more fully on the record in the
Court’s December 2, 2015 Ruling. (ECF No.
33.) The Court reserves recitation of the
relevant facts for the discussion below.
On July 30, 2013, plaintiff District Photo
Inc. Health Care Plan (“the Plan” or
“plaintiff”), brought this action, naming Dr.
Pyrros and Zelen Pyrros as defendants,
pursuant to the Employment Retirement
Income Security Act (“ERISA”), 29 U.S.C.
§ 1132(a)(3), seeking restitution of overpaid
benefits in the amount of $140,400.00, and
alleging breach of contract under N.Y. ISC.
Law § 3224 and unjust enrichment. In their
October 18, 2013 Answer, defendants
asserted a counterclaim seeking to recover
additional funds not paid under settlement
agreements with plaintiff.
On July 9, 2014, both plaintiff and

defendants filed their respective motions for
summary judgment. On December 2, 2015,
the Court granted defendants’ motion for
summary judgment to the extent plaintiff
sought to bring state law claims and denied
the cross-motions in all other respects.
Defendants requested an extension of time
to file a motion for reconsideration on
December 18, 2016, and a subsequent
extension of time to file a motion for
reconsideration on January 11, 2016, both of
which the Court granted. On February 11,
2016, defendants filed a motion for
reconsideration of the Ruling. Plaintiff
submitted an opposition on March 9, 2016,
which it replaced with a corrected document
on March 10, 2016. Defendants filed their
reply on March 11, 2016. The Court held
oral argument on the motion on September
6, 2016.

underlying motion . . . and which, had they
been considered, might have reasonably
altered the result before the court.” Id. at
283-84 (internal quotation marks and
citation omitted).
“Alternatively, the
movant must demonstrate the need to correct
a clear error or prevent manifest injustice.”
Id. at 284 (internal quotation marks and
citation omitted).
Local Civil Rule 6.3 provides that a
party moving for reconsideration must “set[]
forth concisely the matters or controlling
decisions which [the party] believes the
court has overlooked.” Id. “The standard
for granting [a motion for reconsideration] is
strict, and reconsideration will generally be
denied unless the moving party can point to
controlling decisions or data that the court
overlooked—matters, in other words, that
might reasonably be expected to alter the
conclusion reached by the court.” Shrader
v. CSX Transp., 70 F.3d 255, 257 (2d Cir.
1995); see also Black v. Diamond, 163 F.
App’x 58, 61 (2d Cir. 2006) (“To merit
reconsideration, a movant must point to law
or facts overlooked by the court in its initial
ruling. . . .”); Medoy v. Warnaco Employees’
Long Term Disability Ins. Plan, 97-cv-6612
(SJ), 2006 WL 355137, at *1 (E.D.N.Y. Feb.
15, 2006) (“The standard . . . is strict in
order to dissuade repetitive arguments on
issues that have already been considered
fully by the Court.”).

The matter is fully submitted, and the
Court has fully considered the submissions
of the parties.
II.

STANDARD OF REVIEW

Motions for reconsideration of a nonfinal judgment may be filed pursuant to
Federal Rules of Civil Procedure 59(e).1
The standard for granting a motion for
reconsideration pursuant to Rule 59(e) is
“strict, and reconsideration will generally be
denied.” Herschaft v. N.Y. City Campaign
Fin. Bd., 139 F. Supp. 2d 282, 283
(E.D.N.Y. 2001) (internal quotation marks
and citation omitted).
A motion for
reconsideration is appropriate when the
moving party can demonstrate that the Court
“overlooked controlling decisions or factual
matters that were put before it on the

III. DISCUSSION
Defendants’ motion for reconsideration
is based upon the Supreme Court’s recent
decision in Montanile v. Board of Trustees
of the National Elevator Industry Health
Benefit Plan, 136 S. Ct. 651 (2016). Because
Montanile abrogated the Second Circuit’s
decision in Thurber v. Aetna Life Insurance
Company, 712 F.3d 654 (2d Cir. 2013),
which this Court relied upon in reaching its
conclusions in the Ruling, the Court grants

1

The standard regarding motions for reconsideration
under Rule 60(b) of the Federal Rules of Civil
Procedure, by which parties may seek relief from
final judgments, see House v. Sec’y of Health &
Human Servs., 688 F.2d 7, 9 (2d Cir. 1982), is not
relevant for the purposes of this motion.

2

defendants’ motion for reconsideration.

abrogated Thurber, and, thus, alters the
Court’s analysis in its prior Ruling.

A. Abrogation of Thurber

B. Plaintiff Does Not Have a Claim
for Equitable Relief

ERISA authorizes plan participants,
beneficiaries, or fiduciaries to bring a civil
action “(A) to enjoin any act or practice
which violates any provision of this
subchapter or the terms of the plan, or (B) to
obtain other appropriate equitable relief (i)
to redress such violations or (ii) to enforce
any provisions of this subchapter or the
terms of the plan.” 29 U.S.C. § 1132(a)(3)
(emphasis added).

As discussed supra, Section 502(a)(3) of
ERISA provides that a fiduciary can bring
suit to obtain “appropriate equitable relief”
to redress violations of ERISA, or enforce
provisions of ERISA or terms of the
applicable plan. 29 U.S.C. § 1132(a)(3);
Sereboff v. Mid Atl. Med. Servs., Inc., 547
U.S. 356, 361 (2006). Thus, plaintiff must
establish that the relief sought is equitable in
order to recover under Section 502(a)(3)(B).
See Sereboff, 547 U.S. at 361. The Supreme
Court has made clear that “equitable relief”
is intended to include “only ‘those
categories of relief that were typically
available in equity,’” id. (quoting Mertens v.
Hewitt Assocs., 508 U.S. 248, 256 (1993)),
as opposed to “all relief falling under the
rubric of restitution.” Id. (quoting Great-W.
Life & Annuity Ins. Co. v. Knudson, 534
U.S. 204, 212 (2002)) (internal quotation
marks omitted).

In denying the cross-motions for
summary judgment, this Court relied upon
the Second Circuit’s decision in Thurber.
(See ECF No. 33, at 8 (“I believe that the
2nd Circuit case of Thurber is controlling
and instructive on this issue.”).) In Thurber,
the Second Circuit held that a claim seeking
the return of overpaid benefits constituted an
action for “appropriate equitable relief”
under Section 1132(a)(3). 712 F.3d at 661.
The Second Circuit further held that whether
the funds had been segregated and even
dissipated had no bearing on whether there
was an equitable claim under ERISA. Id. at
663-64.

1. Funds Are Not Traceable

However, in Montanile, the Supreme
Court held that a plaintiff can “enforce an
equitable lien only against specifically
identified funds that remain in the
defendant’s possession or against traceable
items that the defendant purchased with the
funds. . . . A defendant’s expenditure of the
entire identifiable fund on nontraceable
items . . . destroys equitable lien. The
plaintiff then may have a personal claim
against the defendant’s general assets—but
recovering out of those assets is a legal
remedy, not an equitable one.” 136 S. Ct. at
658.1 Accordingly, Montanile clearly

Defendants first argue that plaintiff does
not have equitable relief because the funds
are not traceable. The Court agrees.

The Supreme Court noted that it “granted certiorari
to resolve a conflict among the Court of Appeals over
whether an ERISA fiduciary can enforce an equitable

lien against a defendant’s general assets” and listed
Thurber as one of the Circuit cases causing the
Circuit split. 136 S. Ct. at 656 & n.2.

As discussed supra, in Montanile, the
Supreme Court held that a plaintiff can
“enforce an equitable lien only against
specifically identified funds that remain in
the defendant’s possession or against
traceable items that the defendant purchased
with the funds. . . . A defendant’s
expenditure of the entire identifiable fund on
nontraceable items . . . destroys an equitable
lien.” 136 S. Ct. at 658; see also Knudson,

1

3

534 U.S. at 213-14 (“[A] plaintiff could seek
restitution in equity, ordinarily in the form of
a constructive trust or an equitable lien,
where money or property identified as
belonging in good conscience to the plaintiff
could clearly be traced to particular funds or
property in the defendant’s possession. . . .
Thus, for restitution to lie in equity, the
action generally must seek not to impose
personal liability on the defendant, but to
restore to the plaintiff particular funds or
property in the defendant’s possession”).

alleged overpayments based on the ‘tracing’
method, as it cannot identify any specific res
separate and apart from Humble’s general
assets.”).2
2. The Plan Document Does Not
Impose an Equitable Lien
Defendants further argue that the
language of the operative document,
plaintiff’s Plan Document and Summary
Plan Description, effective November 1,
2010 (the “Plan Document”), does not create
an equitable trust for payments to the Plan’s
beneficiaries or providers. The Court agrees.

Here, it is uncontroverted that Zelen
Pyross did not segregate the funds paid by
plaintiff. Instead, Dr. Jonathan Zelen (“Dr.
Zelen”), the principal of Zelen Pyross,
submitted a declaration in connection with
the defendants’ motion for summary
judgment, in which he indicated that he
supervised all business aspects of Zelen
Pyrros and processed all funds received
since December 1, 2011. (Zelen July 9, 2014
Decl. ¶ 1.) Dr. Zelen declared that Zelen
Pyrros received $307,000 from plaintiff for
the surgery at issue, and that the funds “went
into general funds and were not segregated.”
(Id. ¶ 9.) Thus, because no evidence has
been brought forth to demonstrate that the
funds are traceable, plaintiff cannot seek
equitable relief based upon the tracing
method. See, e.g., Cent. States, Se. & Sw.
Areas Health & Welfare Fund v. Gerber Life
Ins. Co., 771 F.3d 150, 155 (2d Cir. 2014)
(“The relief sought by Central States is not
equitable because it does not assert title or
right to possession of particular property,
but simply asserts a claim against Gerber’s
general assets. For this reason, Central
States cannot ‘trac[e]’ the money it claims to
‘particular funds or property in [Gerber’s]
possession. . . .’” (quoting Knudson, 534
U.S. at 213)); see also Conn. Gen. Life Ins.
Co. v. Humble Surgical Hosp., LLC, No.
4:13-CV-3291, 2016 WL 3077405, at *11
(S.D. Tex. June 1, 2016) (“Cigna is not
entitled to equitable restitution of any

The Plan Document’s Rights
Recovery section provides that:

of

Whenever payments have been made
by the Claims Administrator with
respect to allowable expenses in
excess of the maximum amount of
payment necessary to satisfy the
intent of this Plan, the Claims
Administrator shall have the right to
recover such excess payments. If a
covered Employee is paid a benefit
greater than that allowed by the Plan,
the covered Employee will be
requested to refund the overpayment.
If the refund is not received from the
covered Employee, the amount of
overpayment will be deducted from
future benefits. Similarly, if payment
2

Defendants also argue that the relief sought is not
equitable because the funds have been dissipated.
The Court notes that Dr. Zelen filed a subsequent
declaration in connection with the motion for
reconsideration, in which he declared that Zelen
Pyross “closed its doors and terminated its
operations” as of December 31, 2015, and “currently
has less than $20,000 of debt, less than $6,500 in
cash (which will be used to pay the debt in the
immediate future) and no other assets of any value.”
(Zelen Feb. 11, 2016 Decl. ¶ 3.) Plaintiff did not
contest this evidence.

4

is made on behalf of a covered
Employee to a hospital, Physician, or
other provider of health care, and
that payment is found to be an
overpayment, the Plan will request a
refund of the overpayment from the
provider.

covered person, up to and including the
amount of claims paid, are subject to the
Plan’s equitable lien thereon and are deemed
to be held in constructive trust for the
benefit of the Plan until such funds are
delivered to the Plan or its attorneys.” (Plan
Document and Summary Plan Description at
59 (emphasis added).) Thus, an equitable
lien
is
clearly
created
by
the
“Subrogation/Reimbursement” section.

(Plan Document and Summary Plan
Description, Ex. 1 to Fishman Aff., ECF No.
19-2, at 59-60.)3 Thus, this section clearly
provides two options when excess payments
have been made: (1) the administrator can
request a refund, or (2) the administrator can
deduct the overpayment from future
benefits. Absent from the Rights of
Recovery section is any indication that an
equitable lien is created if overpayment
occurs. See, e.g., Cent. States, Se. & Sw.
Areas Health & Welfare Fund, 771 F.3d at
157 (“There is no equitable lien by
agreement because there is no agreement
between Central States and Gerber that
‘specifically identified a particular fund,
distinct from [Gerber’s] general assets’ nor
‘a particular share of that fund to which
[Central States] was entitled.’” (quoting
Sereboff, 547 U.S. at 364)).

In contrast, the Rights of Recovery
section includes no such language regarding
an equitable lien or constructive trust. Thus,
the average plan participant would clearly
not understand that the Plan Document
implicitly imposed a lien if providers were
overpaid. See, e.g., Humble Surgical Hosp.,
LLC, 2016 WL 3077405, at *10
(distinguishing between “Recovery of
Overpayment” section, which did not
include language regarding liens, and
“Subrogation/Right of Reimbursement”
section, which specifically provided for the
creation of a lien, and noting that the
plaintiff failed to establish that the
“Recovery of Overpayment” provision
contained in its plan documents created a
constructive trust or equitable lien by
agreement); Conn. Gen. Life Ins. Co. v.
Advanced Surgery Ctr. of Bethesda, LLC,
No. CIV.A. DKC 14-2376, 2015 WL
4394408, at *9-10 (D. Md. July 15, 2015)
(distinguishing between language in
“Subrogation/Right of Reimbursement”
section, which specifically created a lien on
particular funds, and “Overpayment
Provision,” which did not include such
language, and noting that “[t]he language
used in the Overpayment Provision cannot
be understood by a plan member—or a
provider that is not a party to the plan—as
asserting an equitable lien or constructive
trust on plan overpayments to providers”);
see also 29 U.S.C. § 1022(a) (providing that
a summary plan description “shall be written
in a manner calculated to be understood by

In contrast, other portions of the Plan
Document demonstrate that plaintiff knew
how to draft the document in order to create
an equitable lien. Specifically, the
“Subrogation/Reimbursement”
section
provides that when the Plan has paid for a
beneficiary’s medical expenses following an
accident and the beneficiary then recovers in
a lawsuit, “[a]ll funds received by or for any
3

The Court notes that plaintiff cited to different
“Recovery of Payments” language in its opposition.
(See Pl.’s Opp’n at 5.) In their reply, defendants
argued that such language was inapplicable because it
was found in a later version of the Plan Document,
which was in effect after the events at issue occurred.
At oral argument, counsel for plaintiff conceded that
the language quoted in the opposition brief was from
a later version of the Plan Document, and thus, not
the operative document in this case.
5

the average plan participant, and shall be
sufficiently accurate and comprehensive to
reasonably apprise such participants and
beneficiaries of their rights and obligations
under the plan.”).

expressly preempted. To the extent that the
Court previously concluded that the
Settlement Letters were preempted by
ERISA because of the existence of an
overpayment claim under Section 502(a)(3),
that has been overruled by Montanile, as
discussed supra. In any event, to the extent
that the Court concluded that ERISA would
trump the Settlement Agreements if the
alleged overpayment clearly violated the
Plan Document, defendants have submitted
additional Plan Document language which
makes clear that the payments did not
violate the Plan Document.

Because “ERISA-plan provisions do not
create constructive trusts and equitable liens
by the mere fact of their existence; the liens
and trusts are created by the agreement
between the parties to deliver assets,” Cent.
States, Se. & Sw. Areas Health & Welfare
Fund, 771 F.3d at 157 (quoting Cent. States,
Se. & Sw. Areas Health and Welfare Fund v.
Health Special Risk, Inc., 756 F.3d 356, 365
(5th Cir. 2014)) (internal quotation marks
omitted), and there was no agreement
providing that excess payments would be
subject to an equitable lien, plaintiffs do not
have a claim for equitable relief under
ERISA. Thus, because plaintiffs seek only
legal relief, which is not available under
Section 502(a)(3), defendants are entitled to
summary judgment. See, e.g., id. (noting
claims
seeking
compensation
from
defendant’s general assets, in the absence of
an agreement that specifically identified a
particular fund, sought “legal relief that is
not available under § 502(a)(3)”); Knudson,
534 U.S. at 221 (“[Section] 502(a)(3), by its
terms, only allows for equitable relief. . . .
Because petitioners are seeking legal
relief—the imposition of personal liability
on respondents for a contractual obligation
to pay money—§ 502(a)(3) does not
authorize this action.”); Montanile, 136 S.
Ct. at 661 (“[L]egal remedies—even legal
remedies that a court of equity could
sometimes award—are not ‘equitable relief’
under § 502(a)(3).”).

Although the parties dispute whether Dr.
Pyrros should have been paid the primary
surgeon or assistant surgeon rate, defendants
argue that even assuming he should be billed
as an assistant surgeon, the amount plaintiff
agreed to pay Zelen Pyrros and the amount
Zelen Pyrros was actually paid by plaintiff
do not violate the terms of the Plan
Document due to the rates set out in the Plan
Document’s Medical Benefits section.
The Plan Document’s Medical Benefits
section sets forth a schedule that details the
payments that will be paid to out-of-network
providers for various medical procedures.
(Plan Document and Summary Plan
Description at 19.) With respect to surgery,
the schedule provides that “surgery,
inpatient,” “surgical assistant – inpatient or
outpatient,” “surgery, outpatient hospital,”
and “surgery, physician’s office” will all be
reimbursed at a rate of 90% for in-network
surgeries and 75% subject to deductible for
out-of-network surgeries. (Id. at 21.)
Further, the notes to the schedule provide
that “Emergency Care . . . rendered for an
emergency will be payable at the InNetwork level of benefits if choice of
hospital and ambulance was beyond the
control of the Participant.” (Id. at 24.)
Because Dr. Pyrros and Dr. Webb,
performed emergency thoracic surgery on a

C. Settlement Letters
Defendants
also
move
for
reconsideration of the Court’s determination
that the settlement agreements between the
parties (the “Settlement Letters”) were
6

patient who was a participant in the Plan,
(Pl.’s 56.1 ¶ 8; Defs.’ 56.1 ¶ 1), defendants
were entitled to reimbursement at a rate of
90% of the Allowed Benefit for their
services.4,5 Zelen Pyrros billed a total of
$405,000 for the surgery performed by Dr.
Pyrros and Dr. Webb (Zelen July 9, 2014
Decl. ¶ 9), and thus, according to the
schedule, would be entitled to 90% of that
rate, or $364,500. Thus, agreeing to pay
Zelen Pyrros $325,500 for its services was
not a clear violation of the Plan Document.

the operation and administration of the plan.
. . . Any and all such decisions and
determinations made by the Plan shall be
final and binding upon all parties.” (Plan
Document and Summary Plan Description at
61.) Here, the Plan’s claims administrator,
NCAS, commissioned HRGi to negotiate the
claims with defendants, and, after
negotiating with HRGi, Zelen Pyrros agreed
to accept $325,500 for its services, which
was memorialized in the Settlement Letters.
(Defs.’ 56.1 ¶¶ 6-11.) Thus, because by the
express terms of the Plan Document, the
administrator had the sole and absolute
discretion to resolve the dispute with Zelen
Pyrros, the alleged overpayment does not
violate the Plan Document. Further, because
the “decisions and determinations made by
the Plan [are] final and binding upon all
parties,” plaintiff failed to abide by those
terms by failing to pay defendants the entire
amount owed under the Settlement Letters.
In particular, although the Settlement Letters
provide for a total payment of $325,500, the
Plan only paid Zelen Pyrros $307,533.74.
(See Ex. 5 to Fletcher Tr., ECF No. 19-3 at
111-15.) Thus, Zelen Pyrros is owed an
additional $17,966.26 from plaintiff under
the Letter Agreements.

Defendants further argue that the Plan
Administrator has complete discretion in
setting the Allowed Benefit, which it
exercised in agreeing to pay the amounts set
forth in the Settlement Letters. The plain
language of the Plan Document clearly
supports defendants’ position.
The Plan Document specifically
provides that “[t]he Plan Administrator has
the sole and absolute discretion to construe
and interpret the provisions and terms of the
plan, to resolve any disputes which may
arise under the plan and otherwise determine
“Allowed Benefit” is defined as “[p]lan allowances
for treatment, services or supplies, rendered by an
Out-of-Network provider, essential to the care of the
individual as determined by the Claims
Administrator. Charges by a Licensed Provider must
be the amount usually charged for similar services
and supplies in the absence of a Plan or insurance.
Charges for Covered Services that do not exceed the
Allowed Benefit will be reimbursed as specified in
the Schedule of Benefits. A fee schedule, approved
by NCAS, may be used by the Plan in determining
the amount of the Allowed Benefit.” (Plan Document
and Summary Plan Description at 47.)
4

Therefore, because the Settlement
Agreements did not clearly violate the Plan
Document and the Plan Administrator had
the sole discretion to negotiate the claims
with defendants, there is no clear reason for
the Court not to enforce the Settlement
Letters. Thus, the Court concludes that
summary judgment should be granted to
defendants on their counterclaim6 and they

5

When asked at oral argument, whether she had a
response to defendants’ argument regarding this
language of the Plan Document, plaintiff’s counsel
told the Court that she “didn’t have a response to
that.” The Court also offered plaintiff’s counsel the
opportunity to brief the issue since she did not
address it in plaintiff’s opposition papers, but she
declined and again indicated that she “had no
response.”

6

The Court further notes that the Settlement Letters
are not preempted by ERISA. As an initial matter,
plaintiff did not plead express preemption as a
defense to the counterclaim and has accordingly
waived such an argument. See, e.g., Delville v.
Firmenich Inc., 920 F. Supp. 2d 446, 466 (S.D.N.Y.
2013) (“ERISA preemption is an affirmative defense,
and as such, is waived if not pleaded in a defendant’s
7

should be awarded $17,966.26, the amount
owed under the Settlement Letters.

SO ORDERED.

IV. CONCLUSION

_______________________
JOSEPH F. BIANCO
United States District Judge

For the foregoing reasons, the Court
grants
defendants’
motion
for
reconsideration. Defendants’ motion for
summary judgment on plaintiff’s claims is
granted, and plaintiff’s complaint is
dismissed. Additionally, defendants’ motion
for judgment on their counterclaim is
granted in the amount of $17,966.26. The
Court will schedule a telephone conference
to discuss defendants’ request for attorneys’
fees. 7

Dated: September 28, 2016
Central Islip, NY
***
Plaintiff is represented by Gloria B. Cherry
of Braff Harris & Sukoneck, 305 Broadway,
New York, NY 07039. Defendants Dr.
Pyrros and Zelen Pyrros are represented by
Mark I. Fishman and Simon I. Allentuch of
Neubert, Pepe & Monteith, P.C., 195
Church Street, 13th Floor, New Haven, CT
06510.

answer.”); see also Saks v. Franklin Covey Co., 316
F.3d 337, 350 (2d Cir. 2003) (“ERISA preemption of
state contract claims in a benefits-due action is an
affirmative defense that is untimely, and therefore
subject to waiver, if not pleaded in the defendant’s
answer.”). Further, because the Settlement Letters
clearly provide that a specific amount must be paid
for the services rendered by defendants, there is no
need to refer to the Plan Document in order to
interpret these documents, and thus, no preemption.
Cf. In re Managed Care Litig., 135 F. Supp. 2d 1253,
1268 (S.D. Fla. 2001) (“In this case, the Provider
Plaintiffs assert that they seek to enforce the terms
and conditions of their own contracts with the
Defendants, rather than assignments from ERISA
beneficiaries. . . . The Plaintiffs allege that the
Defendants engaged in bundling and downcoding,
actions which might sustain a breach of contract
claim without a need for reference to the
interpretation of ERISA plans. The Plaintiffs’ state
law contract claims therefore do not ‘relate to’ the
ERISA plans, and are not preempted by the Act.”);
Pa. Chiropractic Ass’n v. Blue Cross Blue Shield
Ass’n, No. 09 C 5619, 2011 WL 1626546, at *4
(N.D. Ill. Apr. 28, 2011) (finding coinsurance claims
were not preempted because “the claims do not
require construction of the terms of ERISA plans.
Instead, the claims arise from a provider agreement
and do not rely on a direct and unequivocal nexus
with any ERISA plans”).

plaintiff’s claims lacked a basis in law or fact when
Montanile was decided after the filing of the lawsuit
and the summary judgment papers, and this Court
initially concluded that Thurber supported plaintiff’s
claim. If defendants intend to pursue an attorneys’
fees motion, they would need to put in a motion in
which they fully brief the standard as well as submit
an affidavit with respect to the fees themselves.

7

Although in their original summary judgment
papers, defendants argued that they are entitled to
reasonable attorneys’ fees, the Court would require
supplemental briefing to resolve this issue. In
particular, defendants have failed to articulate how
8