DaSilva Plastic and Reconstructive Surgery, P.C. v. Empire HealthChoice HMO, Inc. et al

Filing 65

MEMORANDUM & ORDER: The Court grants plaintiff leave to file a third amended complaint solely for those claims involving a singular ERISA healthcare plan in a singular year, without prejudice to refiling plaintiff's remaining claims in separate civil actions. Plaintiff shall file its third amended complaint no later than May 23, 2025. ORDER ATTACHED. Ordered by Judge Natasha C. Merle on 4/23/2025. (AG)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

DA SILVA PLASTIC AND
RECONSTRUCTIVE SURGERY, P.C.,
Plaintiff,

MEMORANDUM & ORDER
22-cv-07121 (NCM) (JMW)

– against –
EMPIRE HEALTHCHOICE HMO, INC.
and EMPIRE HEALTHCHOICE
ASSURANCE, INC.,
Defendants.

NATASHA C. MERLE, United States District Judge:
Before the Court are plaintiff Da Silva Plastic and Reconstructive Surgery, P.C.’s
and defendants Anthem HealthChoice HMO, Inc., formerly Empire HealthChoice HMO,
Inc., and Anthem HealthChoice Assurance, Inc.’s, formerly Empire HealthChoice
Assurance, Inc., competing proposals as to how to sever plaintiff’s claims. For the reasons
stated below, the Court adopts defendants’ proposal and plaintiff is granted leave to file a
third amended complaint for medical reimbursement claims under a single ERISA-health
plan for a single year.
BACKGROUND
The Court assumes the parties’ familiarity with the facts and procedural history. In
dismissing plaintiff’s second amended complaint, the Court also granted defendants’
motion to sever plaintiff’s claims should it file a third amended complaint. Memorandum

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& Order (“M&O”) 27–28, 1 ECF No. 62. The Court concluded that severance was
appropriate because “a number of factors suggest[e]d that the claims in this case have
been improperly joined.” M&O 25. First, the Court found it implausible that a majority
of the more than “1,000 claims on behalf of 366 individual patients, subject to over 140
independent self-funded health benefit plans issued by over 100 different groups and plan
sponsors . . . arose out of the same transaction or occurrence.” M&O 25. Next, the Court
noted the “strong possibility plaintiff would need to rely on different discovery and trial
witnesses” to prove its claims under each of the different health plans. M&O 26. The Court
also pointed out that “no overarching legal question . . . will resolve all of [plaintiff’s]
diverse claims.” M&O 26 (quoting Gordon Surgical Grp., P.C. v. Empire HealthChoice
HMO, Inc., No. 21-cv-04796, 2024 WL 3387345, at *3 (S.D.N.Y. May 16, 2024)) (“Gordon
II”). Finally, the Court explained that severance was justified due to the “immense record
and conglomeration of [plaintiff’s] claims,” because it would serve one of the goals of Rule
21: judicial efficiency. M&O 26; see also Fed. R. Civ. P. 21.
However, the Court deferred ruling on the appropriate way to sever the claims, and
instead granted plaintiff an opportunity to propose how it would sever its claims in a
manner addressing the issues raised in the Court’s Order. M&O 28. Plaintiff submitted its
proposal one month later. See Pl.’s Status Report (“Pl.’s Proposal”), ECF No. 63. Following
the submission of plaintiff’s proposal, the Court directed defendants to respond with their
own proposal. See ECF Order dated February 19, 2025. Accordingly, two weeks later,
defendants responded with their own proposed method of severance. See Defs.’ Status
Report (“Defs.’ Proposal”), ECF No. 64.

Throughout this Opinion, page numbers for docket filings refer to the page
numbers assigned in ECF filing headers.
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LEGAL STANDARD
Rule 21 provides a remedy for misjoinder of parties and claims: “[o]n motion or on
its own, the court may at any time, on just terms . . . drop a party. The court may also sever
any claim against a party.” 2 Fed R. Civ. P. 21. This rule “authorizes severance of any claim
even without a finding of improper joinder where there are sufficient other reasons for
ordering a severance.” Wilmington Tr., Nat’l Ass’n v. 31 Prince St., LLC, No. 22-cv-05855,
2023 WL 3647397, at *4 (S.D.N.Y. May 25, 2023) (quoting Wyndham Assocs. v. Bintliff,
398 F.2d 614, 618 (2d Cir. 1968)). A court makes the decision to sever “pursuant to its
broad discretion in determining whether to add or drop, or otherwise sever claims against
parties.” M&O 24 (quoting Gordon Surgical Grp., P.C. v. Empire HealthChoice HMO,
Inc., No. 21-cv-04796, 2024 WL 3012637, at *4 (S.D.N.Y. June 12, 2024)) (“Gordon III”).
This discretion is guided by “principles of fundamental fairness and judicial efficiency.”
Anwar v. Fairfield Greenwich Ltd., 118 F. Supp. 3d 591, 619 (S.D.N.Y. 2015).
In the Second Circuit, courts consider several factors in deciding whether
severance is appropriate: “(1) whether the claims arise out of the same transaction or
occurrence; (2) whether the claims present some common questions of law or fact; (3)
whether settlement of the claims or judicial economy would be facilitated; (4) whether
prejudice would be avoided if severance were granted; and (5) whether different witnesses
and documentary proof are required for the separate claims.” Cofane Assocs., LLC v. Long
Island City Devs. Grp., LLC, No. 21-cv-07162, 2022 WL 4813060, at *7 (E.D.N.Y. Aug.
29, 2022), report and recommendation adopted 2022 WL 4813546 (Sept. 30, 2022). The
existence of any one of these conditions suffices to justify severance. Id. Further, under

Throughout this Opinion, the Court omits all internal quotation marks, footnotes,
and citations, and adopts all alterations, unless otherwise indicated.

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Rule 1, the Court must take steps to “secure the just, speedy, and inexpensive
determination of every action and proceeding.” Fed. R. Civ. P. 1.
DISCUSSION
Plaintiff proposes severing its medical reimbursement claims into at least six
separate lawsuits. See Pl.’s Proposal 1–2. Specifically, plaintiff suggests severing its claims
into different lawsuits based on four criteria: (1) whether defendants contend that they
are the improper defendants for a given claim; (2) whether defendants contend that a
given claim is untimely; (3) whether a given claim is governed by an ERISA health plan;
and (4) whether a given claim is governed by a health plan containing surprise bill
provisions. See Pl.’s Proposal 1–2.
For example, plaintiff suggests commencing a new lawsuit for reimbursement
claims pursuant to health plans “governed by ERISA . . . which contain surprise bill
provisions and which [d]efendants also contend . . . are untimely.” Pl.’s Proposal 2.
Excluded from that lawsuit would be claims “in which [d]efendants contend that they are
improper parties to be sued.” Pl.’s Proposal 2. Based on plaintiff’s proposal, the only
reimbursement claims that would remain in the instant suit are claims governed by
ERISA health plans containing surprise bill provisions, not including claims for which
defendants “contend that they are improper parties to be sued or that the claims are
untimely.” Pl.’s Proposal 1.
For their part, defendants argue that plaintiff’s proposal “fails to sufficiently
narrow the types of claims that should be grouped together for purposes of judicial
economy.” Defs.’ Proposal 2. Instead, defendants propose that plaintiff’s claims be
severed such that only reimbursement claims “covered by the same health benefit plan
for a particular year” are included in a single suit. Defs.’ Proposal 3. In defendants’ view,
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because “the same plan terms would be at issue” for all patients receiving services covered
by a particular plan in a particular year, “there is more likely to be overlapping
documentary proof and trial witnesses.” Defs.’ Proposal 3. Further, according to
defendants, because “[health] plan terms can vary year to year for the same employer[,]
as can the claims administrator,” plaintiff’s proposal is deficient because it will result in
grouping together “claims with almost zero overlapping facts, witnesses, or documents.”
Defs.’ Proposal 2–3.
Instructive as to these competing proposals is Gordon III. 2024 WL 3012637.
There, after dismissing without prejudice the plaintiffs’ complaint alleging ERISA claims,
the district court expressed “concern[] regarding the potentially improper joinder” of “291
medical [reimbursement] claims,” over 200 of which “were governed by ERISA plans, and
all of which were governed by a total of 72 different health insurance plans overall.” Id. at
*1. Following briefing on the joinder issue, the magistrate judge recommended by report
and recommendation that the plaintiffs be permitted to replead medical reimbursement
claims “with common plan terms and overlapping witnesses.” Id. The defendants objected
to the report and recommendation and proposed to “narrow[] it further, to apply only to
plans of the same employer or sponsor issued the same year, such that all claims for
patients who received medical services by [the] [p]laintiffs under the coverage year of a
single plan may be grouped together in a single lawsuit.” Id.
The district court agreed with the defendants’ proposed limitation. Id. The court
placed importance on the fact that the terms for the various health plans could vary year
to year, as could the relevant claims administrator. See id. at *2. Thus, “narrowing the
subset further to include plans issued in the same year w[ou]ld better serve the interests
of judicial economy, as well as ensur[e] that the surviving claims [we]re logically related.”
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Id. at *1. The court reasoned that adopting the magistrate judge’s recommendation of
severing the claims according to their common plan terms “may prolong the litigation
through additional motion practice on motions to sever,” especially because, at that
juncture, the court was unaware of “what [health] plan terms might be sufficiently
common or analogous such that permissive joinder [wa]s appropriate.” Id. at *3. The
court also observed that it was unclear which “specific groupings of claims might yield the
efficiencies contemplated by the [magistrate judge’s] proposal” given the lack of clarity as
to “which of the 291 different medical services claims may share overlapping witnesses.”
Id.
The Court finds this reasoning persuasive here. As explained in the Court’s Order
dismissing the second amended complaint, plaintiff failed to state claims for relief under
ERISA because, among other reasons, it “fail[ed] to properly plead exhaustion with
respect to each [reimbursement] claim,” and it “failed to tie its claims for reimbursement
to specific plan terms.” M&O 7. Any possibility of remedying those deficiencies will
necessarily require plaintiff to “provide the relevant plans’ exhaustion requirements,”
M&O 10, and to “specify provisions at issue and plausibly allege any specific provision
was violated,” M&O 14. Therefore, the “logical relationship” amongst plaintiff’s claims—
should they survive a motion to dismiss—are the specific plan terms from the relevant
health plans. See Gordon III, 2024 WL 3012637, at *1–3. And because plan terms vary
year to year, grouping together only those reimbursement claims pursuant to specific
health plans in specific years both “serve[s] the interests of judicial economy,” and
“ensure[s] that the surviving claims are logically related.” Id. at *1.
To the extent plaintiff suggests that fewer lawsuits will necessarily promote judicial
efficiency, see Pl.’s Mem. of Law in Opp’n to Defs.’ Mot. to Dismiss (“Opp’n”) 39, ECF No.
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57, the Court disagrees. Plaintiff seeks relief for more than 1,000 reimbursement claims
for medical services provided to more than 300 patients subject to more than 140
different health plans. See M&O 1. Nothing in plaintiff’s proposal nor prior complaint
indicates which of its hundreds of reimbursement claims will have overlapping
documents or fact witnesses aside from those claims brought pursuant to the same health
plan in the same year. See N. Jersey Media Grp. Inc. v. Fox News Network, LLC, 312
F.R.D. 111, 118 (S.D.N.Y. Nov. 20, 2015) (“Even accepting that efficiencies may be gained
by having one trial, the impact of those efficiencies is significantly lessened when the lack
of overlap in the documentary evidence and witness testimony between the claims is
taken into account.”). At bottom, there is a “lack of clarity” as to how plaintiff’s proposal
will “yield the efficiencies contemplated” by the proposed groupings of claims. Gordon
III, 2024 WL 3012637, at *3.
Furthermore, other factors also weigh against plaintiff’s proposal and in favor of
defendants’ proposal. For instance, plaintiff proposes severing its claims based on what it
appears to suggest are common questions of law or fact, including whether a
reimbursement claim is timely or whether an otherwise precluded claim is rendered
recoverable by a health plan’s surprise bill provisions. See Pl.’s Proposal 1–2. However,
though these questions may loom broadly over some of plaintiff’s claims, the question of
whether a particular reimbursement claim is timely or recoverable will turn on the
provisions of the specific health plan it was brought under. See M&O 25–27. Put
differently, although these questions “are generally similar, that high level of generality
is inadequate.” M&O 26. A more tailored grouping—such as grouping together
reimbursement claims whose timeliness or recoverability can be determined by reference
to the same health plan terms—would better serve judicial efficiency and permit plaintiff’s
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claims to be resolved by “overarching” legal or factual questions. See M&O 26 (quoting
Gordon II, 2024 WL 3387345, at *3).
Plaintiff’s argument that “it would be fundamentally unfair to force Da Silva, a
small independent medical practice, to commence multiple lawsuits . . . against Empire,
a multi-billion [dollar] company,” does not compel a different conclusion. Opp’n 40. To
begin, plaintiff’s suggestion that it would suffer prejudice simply because it would incur
additional expense is unavailing. See Opp’n 40. Litigation-related expenses are a
consideration any plaintiff must weigh before bringing suit. See Moore v. Caledonia Cent.
Supervisory Union, No. 11-cv-00276, 2012 WL 4815529, at *1 (D. Vt. Oct. 10, 2012) (“The
cost, burden and pressure associated with litigation is a fact of pursuing any litigation and
does not suffice to show prejudice simply because a plaintiff will have to prove his case on
the merits.”). Moreover, the Federal Rules of Civil Procedure “do not permit a party to
glom together numerous disparate claims just because it saves them money.” Gordon III,
2024 WL 3012637, at *4. Finally, plaintiff disregards the potential prejudice its proposal
would cause defendants, namely, being forced to defend against more than 1,000
reimbursement claims governed by more than 140 health plans for more than 300
patients, shoehorned into a handful of lawsuits with no clear overlap. See id. at *4 (noting
that consolidating “291 medical services claims, arising under 72 separate health
insurance plans, affecting over a hundred different patients, into a single federal action .
. . impose[d] a tremendous burden upon [the] [d]efendants and the [c]ourt”).
Additionally, as the Court previously explained, there is no common “transaction
or occurrence” giving rise to a majority of plaintiff’s separate reimbursement claims. See
M&O 24. Indeed, nothing in plaintiff’s proposal even purports to identify the contours of
what transactions or occurrences give rise to the, at minimum, six separate lawsuits it
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proposes filing. See Pl.’s Proposal 1–2. And to the extent plaintiff sought reimbursement
for medical services and was denied, each reimbursement claim arose out of a distinct
factual scenario, including the specific services a patient received, when they received
treatment, the specific health plan they received benefits under, and what administrative
remedies were pursued. See Preferred Med., P.C. v. Geico Gen. Ins. Co., No. 03-cv-08516,
2005 WL 2777309, at *3 (S.D.N.Y. Oct. 21, 2005) (concluding that denials of 49 separate
insurance claims “d[id] not arise out of the same transaction or occurrence,” because each
claim “involve[ed] a particular automobile accident, resulting in a particular alleged
injury”).
Finally, as discussed above, because of the strong possibility different witnesses
and documentary proof will be required for the separate claims—except potentially for
those reimbursement claims brought pursuant to the same health plan in the same year—
this factor also weighs in favor of adopting defendants’ proposed method of
severance. See M&O 26; see also Salaman v. Semple, No. 20-cv-00032, 2020 WL
6729417, at *18 (D. Conn. Nov. 16, 2020) (severing claims where “different
witnesses/testimony and documentary evidence would be required to prove the separate
sets of claims at trial”).

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CONCLUSION
For the reasons stated above, the Court grants plaintiff leave to file a third amended
complaint solely for those claims involving a singular ERISA healthcare plan in a singular
year, without prejudice to refiling plaintiff’s remaining claims in separate civil actions.
Plaintiff shall file its third amended complaint no later than May 23, 2025.

SO ORDERED.
Dated:

April 23, 2025
Brooklyn, NY

/s/ Natasha C. Merle
NATASHA C. MERLE
United States District Judge

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