Raymond A. Semente D.C., P.C. v. Empire Healthchoice Assurance, Inc. et al

Filing 120

ORDER denying 115 Motion for Summary Judgment: Plaintiff's motion for summary judgment is denied and the case is dismissed. The Clerk of Court is directed to enter judgment and close the case. See attached Memorandum and Order. Ordered by Judge Denis R. Hurley on 3/16/2020. (Hoon, Megha)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
-----------------------------------------------------------X
RAYMOND A. SEMENTE, D.C., P.C.,
MEMORANDUM AND ORDER
14-CV-5823 (DRH) (SIL)

Plaintiff,
- against EMPIRE HEALTHCHOICE ASSURANCE, INC.,
d/b/a EMPIRE BLUE CROSS BLUE SHIELD,
VERIZON COMMUNICATIONS, INC., VERIZON
ADVANCED DATA INC., VERIZON AVENUE
CORP., VERIZON CORPORATE SERVICES
CORP., VERIZON NEW YORK INC., VERIZON
NEW ENGLAND INC., VERIZON SERVICES
CORP., EMPIRE CITY SUBWAY COMPANY
(LIMITED), COUNTY OF SUFFOLK, SUFFOLK
COUNTY LABOR/MANAGEMENT
COMMITEE and THE EMPLOYEE MEDICAL
HEALTH PLAN OF SUFFOLK COUNTY,
Defendants.
-----------------------------------------------------------X
APPEARANCES:
For Plaintiff:
The Law Offices of Harold J. Levy, P.C.
823 Anderson Avenue
Fort Lee, New Jersey 07024
By:
Harold J. Levy, Esq.
For Defendants / Cross Claimants:
Suffolk County Attorney
100 Veterans Memorial Highway
Hauppauge, New York 11788-0099
By:
Hope Senzer Gabor, Esq.
For Cross Defendant:
Foley & Lardner LLP
90 Park Avenue
New York, New York 10016
By:
Robert A. Scher, Esq.
Rachel E. Kramer, Esq.
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HURLEY, Senior District Judge:
Plaintiff Raymond A. Semente, D.C., P.C. (“Plaintiff” or “Semente”) commenced this
action against defendants Empire Healthchoice Assurance, Inc. d/b/a Empire Blue Cross Blue
Shield, (“Empire”), Verizon Communications, Inc., Verizon Advanced Data, Inc., Verizon
Avenue Corp., Verizon Corporate Services Corp., Verizon New York Inc., Verizon New England
Inc., Verizon Services Corp., Empire City Subway Company (Limited), (collectively, the “Verizon
defendants”), and County of Suffolk, Suffolk County Labor/Management Committee, and the
Employee Medical Health Plan of Suffolk County (collectively, “Suffolk”).

Plaintiff is a

corporation providing chiropractic and related medical services, which commenced this action on
behalf of its patients to recover money allegedly wrongfully withheld by Empire and the health
plans it administers for Verizon and Suffolk employees.
The Complaint consists of three counts. Count I asserts claims against the Empire and
Verizon defendants pursuant to the Employee Retirement Income Security Act (“ERISA”), 28
U.S.C. § 1332(a)(1)(B). Count II asserts a claim for breach of the Employee Medical Health Plan
administered by Empire and sponsored by Suffolk. Count III asserts a claim against Empire and
Suffolk for violation of New York’s Prompt Pay Law. Plaintiff subsequently dismissed Count II
against Empire and Count III in its entirety.
Before the Court is Plaintiff’s motion for summary judgment. Since the filing of the
motion, Plaintiff has settled its claims with the Empire and Verizon Defendants. Accordingly, the
Court only addresses Count II against the Suffolk Defendants. 1 For the reasons set forth below,
Plaintiff’s motion is denied.

1

Though Plaintiff has settled his claims with the Empire defendants, it is still involved in this
action as a third-party defendant because Suffolk County has asserted a cross-claim for
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BACKGROUND
The following facts are undisputed unless otherwise noted. 2
Plaintiff Raymond A. Semente, D.C., P.C. is a professional corporation located in Suffolk
County, of which Dr. Raymond A. Semente, a licensed chiropractor, is the owner and sole
shareholder. (Pl.’s 56.1 Stmt. [ECF No. 115-32] ¶¶ 1-2.) Defendants County of Suffolk and the
Suffolk County Labor/Management Committee are “the Plan Sponsor and a Plan Administrator”
for the Employee Medical Health Plan of Suffolk County (the “Suffolk Plan”). (Pl.’s 56.1 Stmt.
¶¶ 5-6.) Plaintiff states that Empire is the Plan Administrator for the Suffolk Plan, however Empire
states that “Plaintiff’s complaint alleges, and Empire admitted in its Answer, that Empire is the
claims administrator for the Suffolk Plan.” (Empire’s 56.1 Stmt. [ECF No. 117-13] ¶ 7.)
The Suffolk Plan is a contract between Suffolk and its employees that covers, among other
things, “medically necessary treatments and procedures provided by licensed health care providers,
including chiropractors.” (Pl.’s 56.1 Stmt. ¶ 9.) The Suffolk Plan is set forth in the Employee
Medical Health Plan of Suffolk County Benefit Booklet, which contains an anti-assignment
provision stating “Note: Assignment of benefits to a non-network provider is not permitted.” (Pl.’s
56.1 Stmt. ¶ 11; Levy Decl. Ex. 4 [ECF No. 115-7] (January 2012 Benefit Booklet) at 91.) Under
the Suffolk Plan, Plaintiff is an out-of-network provider. (Suffolk’s 56.1 Stmt. [ECF No. 116-15]
¶ 83.)
Plaintiff brings this action on behalf of certain patients who assigned him their rights under
the Suffolk Plan. An example of one assignment is titled “Assignment of Causes of Action and

contribution and judgment against it. (Empire’s Mem. in Opp. [ECF No. 117-14] at 1 n.2.)
Empire has submitted an opposition to Plaintiff’s motion in that capacity.
2
The Court only includes the facts relevant to its analysis.
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Right to Pursue Litigation on Behalf of Health Plan Employee Members and Dependents” and
states in relevant part:
I hereby assign to Dr. Raymond A. Semente, D.C., P.C. any and all legal causes of
action and the right to commence and pursue a lawsuit on my behalf and/or on
behalf of the employee member and/or all covered persons or dependents under the
group health plan issued by the County of Suffolk, New York to pursue payment to
me or the employee member for health plan claims that have been denied or
partially unpaid by the health plan and[/]or its administrator, Empire Blue Cross
Blue Shield, for services rendered to me and/or my dependents or the covered
employee under the health plan. I hereby authorize such lawsuit to be commenced
and pursued against the County of Suffolk and/or any of its subdivisions and/or the
Employee Medical Health Plan of Suffolk County and Empire Blue Cross Blue
Shield.
(Gabor Decl. Ex. K [ECF No. 116-12] (Assignment of Causes of Action and Right to
Pursue Litigation on Behalf of Health Plan Employee Members and Dependents).).
LEGAL STANDARD
Summary judgment pursuant to Rule 56 is appropriate only where admissible evidence in
the form of affidavits, deposition transcripts, or other documentation demonstrates the absence of
a genuine issue of material fact, and one party’s entitlement to judgment as a matter of law. See
Viola v. Philips Med. SYS. of N. Am., 42 F.3d 712, 716 (2d Cir. 1994). The relevant governing law
in each case determines which facts are material; “only disputes over facts that might affect the
outcome of the suit under the governing law will properly preclude the entry of summary
judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). No genuinely triable factual
issue exists when the moving party demonstrates, on the basis of the pleadings and submitted
evidence, and after drawing all inferences and resolving all ambiguities in favor of the non-movant,
that no rational jury could find in the non-movant's favor. Chertkova v. Conn. Gen’l Life Ins. Co.,
92 F.3d 81, 86 (2d Cir. 1996).

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DISCUSSION
I.

Anti-assignment provision
As an initial matter, the Court addresses Suffolk and Empire’s argument that Plaintiff does

not have standing because of the anti-assignment provision in the Suffolk Plan. Plaintiff argues
that the anti-assignment provision only prohibits assignment of benefits, not other rights such as
the right to sue on behalf of Suffolk plan members. (Pl.’s Mem. in Rep. [ECF No. 118] at 13.)
The anti-assignment provision states “Note: Assignment of benefits to a non-network provider is
not permitted.” (Levy Decl. Ex. 4 (EMHP Benefits Book 2012) at 91.) The provision appears in
a section titled “How to File Claims.” Id. Semente executed assignments with certain plan
members stating, in relevant part, “I hereby assign to [Semente] any and all legal causes of action
and the right to commence and pursue a lawsuit on my behalf and/or on behalf of the employee
member and/or all covered persons or dependents under the group heath plan issued by the County
of Suffolk, New York to pursue payment to me or the employee member for health plan claims
that have been denied or partially unpaid by the health plan and[/]or its administrator…” (Gabor
Decl., Ex. K.) Plaintiff brought this action on behalf of patients who assigned their rights under
the Suffolk Plan to him.
The Court has previously addressed the issue of whether Plaintiff has standing to bring a
breach of contract action against Suffolk. In 2015, Suffolk moved to dismiss this action for lack
of standing, among other reasons. (Def.’s Mot. to Dismiss [ECF No. 41-3].) At the time, Suffolk
County cited to case law from outside this circuit regarding assignment of benefits under ERISA
health plans and argued that, “[a]t a maximum, Plaintiff’s ‘assignment’ provides an authorization
only to represent an individual patient in an individual action against the EMHP….” (Id. at 8-9.)
Suffolk County also argued that Plaintiff lacked standing based on general principles of New York
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contract law. (Id. at 11-12.) Nonetheless, the cases that Suffolk County cited specifically relating
to assignment of benefits under health plans pertained to plans governed by ERISA rather than
New York law, even though the parties agreed that New York contract law was applicable. In its
opposition, Plaintiff argued that the anti-assignment provision was “extremely narrow and
restricted” to benefits and did not foreclose its patients from transferring their right to bring legal
action. (Pl.’s Mem. in Opp. to Mot. to Dismiss [ECF No. 42] at 14.) Plaintiff further argued that
“[u]nder New York law, an assignment is valid even where an agreement generally prohibits
assignment, unless the agreement specifies that an assignment ‘would be invalid or void.’” (Id. at
17 (citing Mosdos Chofetz Chaim, Inc. v. RBS Citizens, N.A., 2014 WL 1612988 (S.D.N.Y. Mar.
30, 2014)).) Given the case law presented by the parties at the motion to dismiss stage, I found
that the assignment clauses were valid because the anti-assignment provision did not explicitly
state that any assignments would be void. (Mem. and Order, Dec. 4, 2015 [ECF No. 48] at 7-8.)
In its opposition to the instant motion for summary judgment, Suffolk and Empire have
presented a number of cases dealing specifically with anti-assignment provisions, like the one at
issue here, in the context of similar health plans governed by New York law. For example, Suffolk
cites to another case in this district brought by healthcare providers against Empire Healthcare
HMO, Inc. and Empire Healthcare Assurance, Inc. to recover money for unpaid benefit claims.
Angstadt v. Empire Healthcare HMO, Inc., 2017 WL 10844692 (E.D.N.Y. Mar. 16, 2017).
Angstadt also considered the anti-assignment provision in the Suffolk Plan and found that it
deprived the plaintiff healthcare providers in that case of standing, despite assignments between
the plaintiffs and their patients. The Honorable Judge Sandra J. Feurstein explained in Angstadt
that a “virtually identical provision to the one at issue both here and in Semente, contained the
clear, definite and appropriate language declaring the invalidity of assignments necessary to be a
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valid anti-assignment clause.” 2017 WL 10844692 at *8 (citing American Med. Ass'n v. United
Healthcare Corp., 2001 WL 863561 at *12 (S.D.N.Y. July 31, 2001) (quoting Cole v.
Metropolitan Life Ins. Co., 273 A.D.2d 832, 833, 708 N.Y.S.2d 789 (N.Y. App. Div. 2000)))
(internal quotations omitted).
Plaintiff attempts to distinguish Angstadt on the basis that plaintiffs in that case “were
seeking to receive additional unpaid ‘benefits,’” as opposed to transferring their rights to bring a
legal action. (Pl.’s Mem. in Reply at 13.) In Angstadt, plaintiff healthcare providers brought suit
on behalf of their patients for claims where Empire made partial payment or “improperly denied
payment altogether.” Angstadt v. Empire Healthcare HMO, Inc., 2017 WL 10844693 (E.D.N.Y.
Jan. 6, 2017), report and recommendation adopted as modified sub nom. Angstadt v. Empire
HealthChoice HMO, Inc., 2017 WL 10844692, **1-2 (E.D.N.Y. Mar. 16, 2017). As with the case
here, plaintiff out-of-network healthcare providers executed assignment agreements with their
patients, transferring “‘all rights, title and interest in benefits payable for services rendered by the
Practice,’ and ‘authorize[d] the…employee benefit plans…to pay directly to this medical provider
or practice all benefits due under said policy or plan by reasonable services rendered.” Id. Thus,
the Court fails to see how the facts in Angstadt are distinguishable from the facts here.
In further support of his argument, Plaintiff argues that the “distinction” noted above is
supported by an Eighth Circuit case. (Pl.’s Mem. in Rep. at 13-14 (citing Lutheran Med. Ctr. of
Omaha, Neb. v. Contractors, Laborers, Teamsters & Engineers Health & Welfare Plan, 25 F.3d
616 (8th Cir. 1994), abrogated by Martin v. Arkansas Blue Cross & Blue Shield, 299 F.3d 966
(8th Cir. 2002).) That case is inapplicable here because it pertains to standing under ERISA,
whereas the standing issue in this case arises under New York state law. That is because Plaintiff’s

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claim against Suffolk is one for breach of contract under New York law. Thus, the relevant law
for purposes of this inquiry is New York law.
In light of the case law presented in the instant motion papers and the reasoning in Angstadt,
the Court has reexamined its previous decision. Based on that exercise, the Court notes a
distinction in the case law regarding anti-assignment provisions between prohibitions on
assignments and provisions containing personal covenants not to assign. For example, the antiassignment provisions in some of the cases previously cited by the parties and the Court prohibited
assignment without consent of the other party. See, e.g. Sullivan v. Int’l Fid. Ins. Co., 96 A.D.2d
555, 555 (2d Dep’t 1983) (“The contract further provided that ‘[n]either party may assign this
agreement, or any right or interest hereunder without the consent of the other party…’”) Based on
that kind of anti-assignment provision, which included a personal covenant not to assign rights,
those cases drew a distinction between “assignments made in contravention of a prohibition
clause” and “personal covenants against assignments,” finding that a violation of the latter “gives
rise only to a claim for damages against the assignor for violation of the covenant.” Id. at 556.
Because the provision here is more akin to the first category, as in “assignments made in
contravention of a prohibition clause,” the Court finds that case law regarding “personal covenants
against assignments” is inapplicable here. Furthermore, where there is a “clearly stated intent to
render [a party] powerless to assign, there [is] no need for the non-assignment clause to contain
talismanic language or magic words describing the effect of any attempt by the payee to make an
assignment.” C.U. Annuity Serv. Corp. v. Young, 281 A.D.2d 292, 293, 722 N.Y.S.2d 236 (2001).
Upon reviewing the more factually analogous cases that have now been presented to the
Court, I find that my earlier determination was wrong and that the anti-assignment provision in the

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EMPH is enforceable. 3 Accordingly, the various assignment agreements between Plaintiff and the
patients on whose behalf it brings this suit are void. Because Plaintiff is not a party to the Suffolk
Plan, which is between the County and its plan members and the assignment of rights from the
plan members to Plaintiff is not valid, Plaintiff is without standing to pursue this suit.
CONCLUSION
For the foregoing reasons, Plaintiff’s motion for summary judgment is denied and the
case is dismissed. Accordingly, the Clerk of Court is directed to enter judgment and close the
case.
SO ORDERED.
Dated: Central Islip, New York
March 16, 2020
s/ Denis R. Hurley
Denis R. Hurley
Unites States District Judge

3

The Court is not bound by its previous decision denying Suffolk’s motion to dismiss for lack of
standing. See In re Bennett Funding Grp., Inc., 336 F.3d 94, 102 (2d Cir. 2003) (“Denial of the
motion to dismiss on standing grounds does not preclude later consideration on summary judgment
or indeed at trial as standing is an aspect of subject matter jurisdiction.”) (citing Lujan v. Defs. of
Wildlife, 504 U.S. 555, 561 (1992)); Fed. R. Civ. P. 12(h)(3) (“If the court determines at any time
that it lacks subject-matter jurisdiction, the court must dismiss the action.”).
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