Merrick, D.C. et al v. UnitedHealth Group Incorporated et al
Filing
77
OPINION AND ORDER re: 63 MOTION to Dismiss THE AMENDED COMPLAINT AS TO PLAINTIFFS KANTOR, PIKEN, AND FISHEL filed by UnitedHealth Group Incorporated, UnitedHealthcare, Inc., UnitedHealthcare Services, Inc., Optum Inc., Optum health, Inc. For the reasons set forth above, United's motion to dismiss is GRANTED with prejudice. The Clerk of the Court is respectfully directed to terminate the motion, Doc. 63, and to close the case. It is SO ORDERED. (As further set forth in this Order.) (Signed by Judge Edgardo Ramos on 3/25/2016) (kko) (Main Document 77 replaced on 3/25/2016) (kko).
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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TIMOTHY MERRICK, D.C. d/b/a ALIVE &
:
WELL CHIROPRACTIC, JOSHUA I.
:
KANTOR, D.C., JASON PIKEN, D.C. d/b/a
:
INNATE CHIROPRACTIC OF
:
MANHATTAN, and CRAIG FISHEL, D.C.,
:
on behalf of themselves and all others similarly
:
situated,
:
:
Plaintiffs,
:
:
- against :
:
UNITEDHEALTH GROUP INCORPORATED, :
UNITEDHEALTHCARE, INC.,
:
UNITEDHEALTHCARE SERVICES, INC.,
:
OPTUM INC., and OPTUMHEALTH, INC.,
:
:
Defendants.
:
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Ramos, D.J.:
OPINION AND ORDER
14 Civ. 8071 (ER)
Four Chiropractors, Timothy Merrick, D.C. (“Merrick”), Joshua Kantor D.C. (“Kantor”),
Jason Piken, D.C. (“Piken”), and Craig Fishel D.C. (“Fishel,” and collectively “Plaintiffs”),
assert a class action on behalf of themselves and others similarly situated, against UnitedHealth
Group Incorporated, UnitedHealthcare, Inc., UnitedHealthcare Services, Inc., Optum, Inc., and
OptumHealth, Inc. (collectively, “Defendants” or “United”), asserting violations of the
Employee Retirement Income Security Act of 1974 (“ERISA”). In the instant motion, United
moves to dismiss Kantor, Piken, and Fishel. For the reasons set forth below, United’s motion is
GRANTED.
I. Factual Background 1
Plaintiffs are healthcare providers licensed to provide chiropractic services in New York.
Am. Compl. ¶¶ 1, 4-6. Plaintiffs provide healthcare services to patients covered under United
healthcare plans governed by ERISA (“Covered Patients”). Id. ¶¶ 1, 14, 19, 53. Three Plaintiffs,
Kantor, Piken, and Fishel, are “out-of-network providers,” while Merrick is an “in-network”
healthcare provider. Id. ¶ 19. “An ‘out-of-network’ provider has no contract with United,”
while “[a]n ‘in-network’ provider is a provider who has entered into a contractual agreement
with United . . . under which the provider has agreed to accept reduced benefits under the Plans
for providing healthcare services to Covered [Patients] (‘Provider Agreements’).” Id. ¶ 18. The
instant motion involves only the out-of-network Plaintiffs. According to Plaintiffs, Covered
Patients routinely authorize them, as providers, to receive payments from United. Id. ¶ 65-69,
97-101, 142-148. As a result, Plaintiffs bill directly to and receive payments directly from
United for services provided to Covered Patients. Id. ¶¶ 19, 67-69, 99-101, 146-148.
UnitedHealth Group Incorporated is a health care company incorporated in Delaware. Id.
¶ 7. UnitedHealthcare, Inc., UnitedHealthcare Services, Inc., Optum, Inc., and OptumHealth,
Inc., doing business as OptumHealth Care Solutions Inc., are wholly owned subsidiaries of
UnitedHealth Group Incorporated. Id. ¶¶ 8-11. Plaintiffs allege that United is a Plan and/or
Claims Administrator as defined by ERISA, and is therefore, responsible for determining
1
The following factual background is based on the allegations in the Amended Complaint, Doc. 52, which the Court
accepts as true for purposes of the instant motion. See Koch v. Christie’s Int’l PLC, 699 F.3d 141, 145 (2d Cir.
2012). In addition, the Court considers documents incorporated by reference and any documents that Plaintiffs
relied upon in bringing the instant action. See ATSI Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir.
2007) (citing Rothman v. Gregor, 220 F.3d 81, 88 (2d Cir. 2000)).
2
whether a given claim is covered under the healthcare plans and effectuating payment for any
covered services. Id. ¶¶ 7, 17.
Plaintiffs assert putative class action claims against United for purported violations of the
ERISA claims regulation, 29 C.F.R. §2560.503-1 (“Claims Regulation”). Id. ¶ 46. According to
Plaintiffs, when a Plan or Claim Administrator renders an initial decision on claims, “meaning
the decision rendered before any appeal of a claim determination,” the Claims Regulation
requires claimant, in this case Plaintiffs, to be notified of an “adverse benefit determination” 2
made by the Plan “no[] later than 30 days after receipt of the claim.” Id. ¶ 25 (citing 29 C.F.R.
§2560.503-1(f)(2)(iii)(B)). This time period “may be extended one time by the plan for up to 15
days, provided the plan administrator determines such an extension is necessary . . . and notifies
the claimant, prior to the expiration of the initial 30-day period[.]” Id. Plaintiffs claim that
United originally “voluntarily paid . . . benefits within the required time limits set out in the
Claims Regulation” but then reversed its initial benefit determination on numerous occasions
after the thirty-day time period passed, and, without requesting an extension, requested that
Plaintiffs refund the amount allegedly overpaid by United for these benefits. Id. ¶¶ 1, 60-62,
187. Specifically, Plaintiffs allege that United sent them letters requesting patient’s clinical
records after the thirty-day period had passed, and then recouped the allegedly overpaid amounts
when Plaintiffs declined to provide clinical records on the basis that United could no longer
2
The Claims Regulation defines “Adverse Benefit Determination,” in relevant part, as:
[A] denial, reduction, or termination of, or a failure to provide or make payment
(in whole or in part) for, a benefit, including any such denial, reduction, or
termination, or failure to provide or make payment that is based on a
determination of a participant’s or beneficiary’s eligibility to participate in a
plan . . . .
Id. ¶ 26 (citing 29 C.F.R. §2560.503-1(m)(4)).
3
question the claims. Id. ¶¶ 60, 62, 73-69, 105-120, 152-165. United allegedly recouped the
overpaid amounts by offsetting these amounts from approved claim payments owed to the same
providers for services provided to different patients under different healthcare plans. Id. ¶¶ 62,
91, 96, 116, 120, 160, 165, 187. Plaintiffs assert that United’s recoupment of previously paid
claims amount to an “Adverse Benefit Determination” as defined in the Claims Regulation. Id.
¶¶ 26, 169, 173.
Plaintiffs allege that they have standing to sue for ERISA benefits as plan designated
beneficiaries (asserting “rights to receive benefits as expressly designated pursuant to the terms
of” the plan), or as assignees asserting ERISA claims on behalf of Covered Patients as
participant designated beneficiaries (asserting rights transferred by their patients), or assignees of
their patients (same). Id. ¶¶ 54-59. Specifically at issue in the instant motion are Covered
Patients’ alleged assignments of their ERISA benefits to out-of-network Plaintiffs, Kantor, Piken
and Fishel, samples of which are attached to the Amended Complaint. See id. ¶¶ 65 (“I . . .
assign directly to Dr. Kantor all insurance benefits, if any, otherwise payable to me for services
rendered. . . .”); 66; 97 (“I . . . assign directly to Dr. [Piken] all insurance benefits, if any,
otherwise payable to me for services rendered . . . .”); 98; 142 (“I hereby convey to [Dr. Fishel] .
. . any claim, chose in action, or other right I may have to such insurance and/or employee health
care benefit coverage . . . .”); 143 (“I hereby authorize payment to be made directly to Dr. Craig
Fishel D.C., P.C. of all benefits which may be due and payable under insurance coverage for the
above named patient. . . .”); 144 (“I authorize and request my insurance company to pay directly
to the chiropractic group [Dr. Fishel] insurance benefits otherwise payable to me . . . .”); see also
id. Exs. 5-7 (alleged assignments by Kantor’s patients); 8-12 (same from Piken’s patients); 18-21
(same from Fishel’s patients). In other words, Plaintiffs claim that, as a result of the forgoing
4
assignments, they are entitled to sue United for “benefits” under the plan. However, the
applicable healthcare plans contain the following prohibition on assignments:
You may not assign your Benefits under the Policy to a nonNetwork provider without our consent. When an assignment is not
obtained, we will send the reimbursement directly to you (the
Subscriber) for you to reimburse them upon receipt of their bill.
We may, however, in our discretion, pay a non-Network provider
directly for services rendered to you. In the case of any such
assignment of Benefits or payment to a non-Network provider, we
reserve the right to offset Benefits to be paid to the provider by any
amounts that the provider owes us.
Am. Compl. Ex. 1 at 66; see also Ex. 2 at 67; Ex. 3 at 67; Ex. 4 at 68. 3 Plaintiffs do not allege
that they sought United’s consent to their assignments. Instead, Plaintiffs assert that United’s
course of conduct, including making payments directly to Plaintiffs, may be interpreted as
United’s consent or alternatively, as evidence that United waived, or is estopped from relying on,
the anti-assignment provision. Id. ¶¶ 68-72; 100-104; 147-151.
Pursuant to ERISA Section 502(a)(1)(B), 4 Plaintiffs request declaratory relief that (a)
Defendants have no legal authority, after the time set forth in the Claims Regulation, to reverse
benefit determinations it previously made, (b) “cannot recoup monies that have been previously
paid[,]” and (c) future payments owed by United for covered services “shall not be reduced—or
offset—by any amounts” past the time period allotted in the Claims Regulation. Id. ¶¶ 192-194.
Plaintiffs also request monetary judgment and reimbursement under Section 502(a)(1)(B), for
“all amounts . . . taken from Plaintiffs . . . via offsetting.” Id. ¶ 195. Pursuant to Section
3
Plaintiffs represent that the plans attached to the Amended Complaint, see Am. Compl. Exs. 1-4, are “sample
plans” and “the fully-insured and self-insured ERISA-governed United Administered Plans at issue in this matter are
similar or identical in their salient features to the four samples annexed hereto.” Id. ¶ 23.
4
Section 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), states: “A civil action may be brought by a participant or
beneficiary to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the
plan, or to clarify his rights to future benefits under the terms of the plan.”
5
502(a)(3), 5 Plaintiffs request injunctive relief enjoining United from reversing previously made
benefit determinations and offsetting amounts previously paid in violation of the Claims
Regulation or, alternatively, requiring United to comply with the Claims Regulation. Id. ¶¶ 197200.
II.
Procedural Background
On October 7, 2014, Plaintiffs filed their Complaint against United. Doc. 2. At a
conference held before this Court on January 22, 2015, United was granted leave to file motions
to compel arbitration of Plaintiff Merrick’s claims and to dismiss the claims of the other three
out-of-network Plaintiffs. On February 27, 2015, United filed the two motions. 6 Docs. 41, 43.
On April 29, 2015, Plaintiffs filed an Amended Complaint. Docs. 52. At a conference held
before this Court on June 24, 2015, United was granted leave to file the instant motion to dismiss
the out-of-network Plaintiffs’ claims. 7
III. Legal Standard
When ruling on a motion to dismiss pursuant to the Federal Rule of Civil Procedure
12(b)(6), the court must accept all factual allegations in the complaint as true and draw all
reasonable inferences in the plaintiff’s favor. Nielsen v. Rabin, 746 F.3d 58, 62 (2d Cir. 2014);
Koch, 699 F.3d at 145. The court is not required to credit “mere conclusory statements” or
“threadbare recitals of the elements of a cause of action.” Ashcroft v. Iqbal, 556 U.S. 662, 678
5
Section 502(a)(3), 29 U.S.C. § 1132(a)(3), states: “A civil action may be brought by a participant, beneficiary, or
fiduciary (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[.]”
6
On August 31, 2015, the Court granted United’s motion to compel arbitration of Plaintiff Merrick’s claims and
stayed Merrick’s action. Doc. 67.
7
By Order dated July 27, 2015, United’s motion to dismiss the original Complaint was terminated. Doc. 65.
6
(2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)); see also id. at 681 (citing
Twombly, 550 U.S. at 551). “To survive a motion to dismiss, a complaint must contain sufficient
factual matter . . . to ‘state a claim to relief that is plausible on its face.’” Id. at 678 (quoting
Twombly, 550 U.S. at 570). A claim is facially plausible “when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). More specifically, the plaintiff
must allege sufficient facts to show “more than a sheer possibility that a defendant has acted
unlawfully.” Id. If the plaintiff has not “nudged [his] claims across the line from conceivable to
plausible, [the] complaint must be dismissed.” Twombly, 550 U.S. at 570; Iqbal, 556 U.S. at
680.
The question in a Rule 12 motion to dismiss “‘is not whether a plaintiff will ultimately
prevail but whether the claimant is entitled to offer evidence to support the claims.’” Sikhs for
Justice v. Nath, 893 F. Supp. 2d 598, 615 (S.D.N.Y. 2012) (quoting Villager Pond, Inc. v. Town
of Darien, 56 F.3d 375, 278 (2d Cir. 1995)). “[T]he purpose of Federal Rule of Civil Procedure
12(b)(6) ‘is to test, in a streamlined fashion, the formal sufficiency of the plaintiff’s statement of
a claim for relief without resolving a contest regarding its substantive merits,’” and without
regard for the weight of the evidence that might be offered in support of Plaintiffs’ claims.
Halebian v. Berv, 644 F.3d 122, 130 (2d Cir. 2011) (quoting Global Network Commc’ns, Inc. v.
City of New York, 458 F.3d 150, 155 (2d Cir. 2006)).
IV. Discussion
a. Plaintiffs’ Standing to Bring ERISA Claims
“Section 502(a)(1)(B) limits the class of individuals who can sue to recover benefits due,
enforce rights, or clarify rights to future benefits to those individuals who are ‘participants’ or
7
‘beneficiaries’ of a benefits plan.” Simon v. Gen. Elec. Co., 263 F.3d 176, 176 (2d Cir. 2001)
(per curiam). Individuals that may sue under Section 502(a)(3) are similarly limited to
“participants” and “beneficiaries.” 8 See 29 U.S.C. § 1132(a)(3). Under ERISA, a “beneficiary”
is defined as “a person designated by a participant, or by the terms of an employee benefit plan,
who is or may become entitled to a benefit thereunder.” 29 U.S.C. § 1002(8). Likewise, a
“participant” is defined as “any employee or former employee . . . who is or may become eligible
to receive a benefit of any type from an employee benefit plan.” Id. at § 1002(7). Only the
parties enumerated in Section 502 may sue directly for relief. Simon, 263 F.3d at 177 (citing
Franchise Tax Bd. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 27 (1983);
Chemung Canal Trust Co. v. Sovran Bank/Maryland, 939 F.2d 12, 14 (2d Cir. 1991)). However,
the Second Circuit has “joined the Fifth, Sixth, Seventh, and Ninth circuits in carving out a
narrow exception to the ERISA standing requirements,” which “grants standing only to
healthcare providers to whom a beneficiary has assigned his claim in exchange for health care.”
Simon, 263 F.3d at 178 (internal citations omitted); I.V. Services of Am., Inc. v. Trustees of Am.
Consulting Eng’rs Council Ins. Trust Fund, 136 F.3d 114, 117 n.2 (2d Cir. 1998) (“We agree
with our sister circuits that, under federal common law, the assignees of beneficiaries to an
ERISA-governed insurance plan have standing to sue under ERISA.”); Mbody Minimally
Invasive Surgery, P.C. v. Empire Healthchoice HMO, Inc., No. 13 Civ. 6551 (TPG), 2014 WL
4058321, at *3 (S.D.N.Y. Aug. 15, 2014) (“It is well-established in this Circuit that the assignees
of beneficiaries to an ERISA-governed insurance plan have standing to sue under ERISA.”),
reconsideration denied, No. 13 Civ. 6551 (TPG), 2015 WL 798082 (S.D.N.Y. Feb. 25, 2015).
8
Section 502(a)(3) also includes “fiduciary” as a class of individuals that may sue under that section, see 29 U.S.C.
§ 1132(a)(3), however, Plaintiffs do not assert standing on this basis.
8
Plaintiffs assert that they have standing to bring these ERISA claims as statutory beneficiaries
and as assignees of their patient’s benefits. Am. Compl. ¶¶ 54-58. United, unsurprisingly,
disagrees. 9
i. Statutory Beneficiaries
Plaintiffs contend that they are statutory beneficiaries with the authority to bring ERISA
claims because they are designated under the plan to receive payment directly from United for
services provided to Covered Patients. See Am. Compl. ¶ 54. The Second Circuit, however,
recently held that “[h]ealthcare providers are not ‘beneficiaries’ of an ERISA welfare plan by
virtue of their . . . their entitlement to payment[,]” Rojas v. Cigna Health and Life Ins. Co., 793
F.3d 253, 259 (2d Cir. 2015), finding that “‘beneficiary’ as it is used in ERISA, does not without
more encompass healthcare providers.” Id. at 257. The court was “persuaded that Congress did
not intend to include doctors in the category of ‘beneficiaries,’” explaining that “‘[b]eneficiary,’
clearly refers to those individuals who share in the benefits of coverage—medical services and
supplies covered under their health care policy” and that a provider’s “right to payment” under
the plan “does not a beneficiary make.” Id. Accordingly, Plaintiffs’ argument that they have
standing to sue United as a plan designated beneficiary fails. 10
9
United does not claim that Plaintiffs lack Article III standing, but instead asserts that Plaintiffs lack statutory
standing to bring a claim for ERISA benefits. See Am. Psychiatric Assoc. v. Anthem Health Plans, 50 F. Supp. 3d
157, 165 n.6 (D. Conn. 2014) (distinguishing between a challenge to the plaintiff’s statutory standing and Article III
standing); see also Griffin v. Gen. Mills, Inc., No. 15 Civ. 12157, 2015 WL 9466979, at *2 (11th Cir. Dec. 29, 2015)
(“Although courts have long applied the label of ‘statutory standing’ to the basis for decisions such as the district
court’s here, that [the plaintiff] lacked standing under ERISA, the Supreme Court has cautioned that this label is
‘misleading’ because the court is not deciding whether there is subject matter jurisdiction but rather whether the
plaintiff ‘has a cause of action under the statute.’ Put differently, we understand the district court’s decision that [the
plaintiff] lacked statutory standing to be a determination that she failed to state a claim under Federal Rule of Civil
Procedure 12(b)(6).” (citing Lexmark Int'l, Inc. v. Static Control Components, Inc., 134 S.Ct. 1377, 1387 n.4
(2014)).
10
Plaintiffs suggest that this Court can ignore the clear holding of Rojas, 793 F.3d at 259, in favor of the Circuit’s
prior ruling in Montefiore Med. Ctr. v. Teamsters Local 272, 642 F.3d 321, 329-30 (2d Cir. 2011). Plaintiffs,
however, are incorrect in their assertion that these decisions are inconsistent. Rojas found that providers are not plan
9
ii. Beneficiaries By Assignment
As stated, “[i]t is well-established in this Circuit that ‘the assignees of beneficiaries to an
ERISA-governed insurance plan have standing to sue under ERISA.’” Mbody Minimally
Invasive Surgery, P.C., 2014 WL 4058321, at *3 (citing I.V. Servs. of Am., Inc., 136 F.3d at 117
n.2); see also Simon, 263 F.3d at 178. Plaintiffs claim that they obtained valid assignments from
their patients in exchange for the provision of healthcare services and thus, have standing to sue.
Am. Compl. ¶¶ 54-58. However, the applicable healthcare plans contain an anti-assignment
provision that bar assignments made without the consent of United: “You may not assign your
Benefits under the Policy to a non-Network provider without our consent.” See id. Ex. 1 at 66,
Ex. 2 at 67 (same), Ex. 3 at 67 (same), Ex. 4 at 68 (same). Accordingly, the Court must
determine the effect of such a provision on the validity of Plaintiffs’ purported assignments.
“[T]he validity of assignments for ERISA purposes is a question of federal common
law[.]” Weisenthal v. United Health Care Ins. Co. of New York, No. 07 Civ. 0945 (LAP), 2007
WL 4292039, at *4 (S.D.N.Y. Nov. 29, 2007) (citing I.V. Servs., 136 F.3d at 117 n.2)); see also
Devlin v. Empire Blue Cross and Blue Shield, 274 F.3d 76, 85 n.5 (2d Cir. 2001) (“in ERISA
cases, state law does not control. Instead, general common law principles apply.”); Schonholz v.
Long Is. Jewish Med. Ctr., 87 F.3d 72, 79 (2d Cir. 1996) (“ERISA is a federal law regime for
designated beneficiaries where the plan provides that they may receive, but are not guaranteed, direct payments
because the term “benefit” refers to “medical services and supplies,” not payment. 793 F.3d at 257, 259; see also
Grasso Enterprises, LLC v. Express Scripts, Inc., 809 F.3d 1033, 1040-41 (8th Cir. 2016) (citing Rojas
approvingly); Pa. Chiropractic Ass'n v. Indep. Hosp. Indem. Plan, Inc., 802 F.3d 926, 929 (7th Cir. 2015) (same).
Montefiore recognized that where a healthcare provider obtains a valid assignment it may pursue ERISA benefit
claims as a beneficiary by assignment but does not discuss a providers’ ability to bring an action as a statutory
beneficiary. 642 F.3d at 229-30. Accordingly, the presumption that “[w]here a second panel’s decision seems to
contradict the first, and there is no basis on which to distinguish the two cases, we have no choice but to follow the
rule announced by the first panel” is inapplicable. Tanasi v. New All. Bank, 786 F.3d 195, 200 n.6 (2d Cir. 2015), as
amended (May 21, 2015), cert denied, 136 S.Ct. 979 (2016). Additionally, after Plaintiffs submitted their
memorandum in opposition to United’s motion (“Opposition”), the Second Circuit voted to deny en banc review of
the Rojas decision. No. 14 Civ. 3455 (2d Cir. Sept. 24, 2015) (Doc. 173).
10
regulating employee benefits designed to eliminate the threat of conflicting state and local
regulation of benefit plans . . . . We are not bound by New York law”). 11 To determine “whether
contract language prohibits assignment to a healthcare provider, courts apply traditional
principles of contract interpretation” and “interpret ERISA plans in an ordinary and popular
sense as would a person of average intelligence and experience.” Neuroaxis Neurosurgical
Assoc., PC v. Costco Wholesale Co., 919 F. Supp. 2d 345, 352 (S.D.N.Y. 2013) (citing
Critchlow v. First UNUM Life Ins. Co. of Am., 378 F.3d 246, 256 (2d Cir. 2004)); Am.
Psychiatric Assoc., 50 F. Supp. 3d at 163 (courts “apply traditional principles of contract
interpretation to anti-assignment provisions.”). Because the “rules of contract law [apply] to
ERISA plans, a court must not rewrite, under the guise of interpretation, a term of the contract
when the term is clear and unambiguous.” Neuroaxis Neurosurgical Assoc., 919 F. Supp. 2d at
352 (quoting Burke v. PriceWaterHouseCoopers LLP Long Term Disability Plan, 572 F.3d 76,
11
Plaintiffs imply that New York law governs the validity of these assignments and that pursuant to New York law
the assignments here are valid because “anti-assignment clauses do not render assignments void absent words
specifically stating an assignment is ‘void.’” Pls.’ Opp’n at 10 (citing Pravin Banker Assoc., Ltd. v. Banco Popular
Del Peru, 109 F.3d 850, 856 (2d Cir. 1997); Mosdos Chofetz Chaim, Inc. v. RBS Citizens, N.A., 14 F. Supp. 3d 191,
226 (S.D.N.Y. 2014)). In Pravin, the Second Circuit held that “[u]nder New York law, only express limitations on
assignability are enforceable. [T]o reveal the intent necessary to preclude the power to assign, or cause an
assignment violative of contractual provisions to be wholly void, [a contractual] clause must contain express
provisions that any assignment shall be void or invalid if not made in a certain specified way.” 109 F.3d at 856
(emphasis and alterations in original); see also Mosdos Chofetz Chaim, Inc., 14 F. Supp. 3d at 226-27 (“Under New
York law, an assignment is valid even where an agreement generally prohibits assignments, unless the agreement
specifies that an assignment would be invalid or void. . . . a contract lacks the requisite clear, definite, and
appropriate language when it ‘contain[s] no provision that the assignment made without consent should be void, . . .
that an assignee would acquire no rights by reason of such assignment, [or] that the contractor shall not be required
to recognize or accept any such assignment.” (internal quotations and citations omitted)); Semente v. Empire
Healthchoice Assur., Inc., No. 14 Civ. 5823 (DRH) (SIL), 2015 WL 7953939, at *3 (E.D.N.Y. Dec. 4, 2015)
(finding that an anti-assignment provision in an ERISA plan stating, “[a]ssignment of benefits to a non-network
provider is not permitted,” did not void such assignments because the “clause at issue here does not contain a
definite declaration of the invalidity of an assignment”).
The Court notes that neither Pravin nor Mosdos involved ERISA claims. While Semente did involve ERISA claims,
both parties agreed that New York law governed the plan, and therefore, the court did not analyze the antiassignment provisions at issue there by reference to federal common law. 2015 WL 7953939, at *3, *3 n.3.
11
81 (2d Cir. 2009)). Courts, however, may “draw inspiration from state law” “in discerning the
content of federal common law . . . to the extent that state law is not inconsistent with the federal
policies underlying ERISA.” Id. at 351.
The Second Circuit has not yet spoken on the effect of assignments made in violation of
anti-assignment provisions in ERISA plans. Other Circuit Courts, however, have concluded that
where an ERISA-governed plan contains an unambiguous anti-assignment provision,
assignments under that plan are invalid. See Physicians Multispecialty Grp. v. Health Care Plan
of Horton Homes, Inc., 371 F.3d 1291, 1295 (11th Cir. 2004) (“we are persuaded by the
reasoning of the majority of federal courts that have concluded that an assignment is ineffectual
if the plan contains an unambiguous anti-assignment provision”); LeTourneau Lifelike Orthotics
& Prosthetics, Inc. v. Wal-Mart Stores, Inc., 298 F.3d 348, 349, 352 (5th Cir. 2002) (“Applying
universally recognized canons of contract interpretation to the plain wording of the instant antiassignment clause[,]” which stated “[e]xcept as permitted by the Plan or as required by state
Medicaid law, no attempted assignments of benefits will be recognized by the Plan,” “leads
inexorably to the conclusion that any purported assignment of benefits . . . would be void.”); City
of Hope Nat. Med. Ctr. v. HealthPlus, Inc., 156 F.3d 223, 229 (1st Cir. 1998) (“Consistent with
the other circuits which have addressed this issue, we hold that ERISA leaves the assignability or
non-assignability of health care benefits under ERISA-regulated welfare plans to the negotiations
of the contracting parties . . . . [S]traightforward language in an ERISA-regulated insurance
policy should be given its natural meaning.”); Davidowitz v. Delta Dental Plan of California,
Inc., 946 F.2d 1476, 1481 (9th Cir. 1991) (“conclud[ing] that ERISA welfare plan payments are
not assignable in the face of an express non-assignment clause in the plan.”).
12
District courts in this Circuit have followed this reasoning and, applying federal common
law, have found that “where plan language unambiguously prohibits assignment, an attempted
assignment will be ineffectual. . . [and] . . . a healthcare provider who has attempted to obtain an
assignment in contravention of a plan’s terms is not entitled to recover under ERISA.”
Neuroaxis Neurosurgical Assoc., 919 F. Supp. 2d at 351-52; see also Mbody Minimally Invasive
Surgery, P.C., 2014 WL 4058321, at *3 (finding the anti-assignment provision, which stated that
“any attempt to assign benefits or payments for benefits will be void” was unambiguous and
thus, the plaintiffs’ alleged assignments were invalid); Am. Psychiatric Assoc., 50 F. Supp. 3d at
162-63, 164 n.4 (“[i]t appears that the anti-assignment provisions in the . . . healthcare plans,”
which “prohibit assignment [of] . . . the right ‘to receive benefits under the Benefit Program’ and
. . . [to] ‘rights, benefits or obligations,’” “may preclude this type of assignment, because ERISA
instructs courts to enforce strictly the terms of plans and an assignee cannot collect unless he
establishes that the assignment comports with the plan.” (emphasis in original)).
The Neuroaxis decision is particularly instructive because it upheld an anti-assignment
clause that is substantially similar to the clause here. Compare Neuroaxis Neurosurgical Assoc.,
919 F. Supp. 2d at 353 (“[a] covered person may assign his or her right to receive plan benefits
to a health care provider only with the consent of the benefits administrator, in its sole discretion,
except as may be required by applicable law” (the “Consent Clause”)), with Am. Compl. Ex. 1 at
66 (“You may not assign your Benefits under the Policy to a non-Network provider without our
consent.”). 12 The Neuroaxis court found that “[t]he plain meaning of the Consent Clause[] is
that assignments are prohibited without the consent of the administrator” and that in the absence
12
Plaintiffs contend that Neuroaxis is less persuasive because it “failed to consider the Second Circuit’s decision in
Pravin.” Pls.’ Opp’n at 10 n.12. However, the Neuroaxis court’s purported “failure” to address the Pravin decision
is entirely consistent with the requirement that federal common law, not New York law, governs ERISA actions.
13
of consent the clause unambiguously prohibited assignments. Id. at 354, 356. The Neuroaxis
court also rejected the argument urged by Plaintiffs here—“that the breach of anti-assignment
clause[] by the Plan members entitles the defendants to damages from the Plan members, but
does not affect the validity of the assignments to” the plaintiffs. Id. at 356 (internal quotations
omitted). The court explained that this argument “relies on the principle under New York law
that covenants not to assign [are treated] as personal covenants . . . , unless the language of the
covenant clearly indicates a stronger intent[,]” while “federal courts routinely enforce antiassignment clauses in ERISA-governed welfare plans.” Id. The Neuroaxis court concluded that
if consent was not obtained, the assignments would be void based on the plain meaning of the
Consent Clause. See id. 13
The anti-assignment provision here is similarly unambiguous. Accordingly, the patients’
assignments to Plaintiffs are void pursuant to the unambiguous language of the provision. This
does not end the inquiry, however. Plaintiffs may yet have standing if United waived or is
estopped from relying on the provision.
iii. Enforceability of the Anti-Assignment Provision
According to Plaintiffs, United’s long-standing pattern and practice of directly paying
Plaintiffs for services provided under the plans is sufficient to show that United consented to the
assignments, or is estopped from or waived its reliance on the anti-assignment clause. Pls.’
Opp’n at 10-11. Plaintiffs allege that “[e]ach out-of-network Plaintiff directly submitted the
claims electronically or via a claim form to United, and United routinely paid the Plaintiffs
13
Instead of finding the assignments void, however, the Neuroaxis court granted the plaintiff’s request to take
discovery to determine whether the plaintiffs sought and received consent even though “[t]he plaintiff ha[d] offered
no evidence that consent was requested or received for any assignment[.]” Id. at 354. Here, however, Plaintiffs do
not allege that they sought and received consent and do not request discovery to determine whether such consent
was sought and received. Instead, Plaintiffs contend that United’s direct payment to and course of conduct with
Plaintiffs establishes that United consented to the assignments, or waived or is estopped from relying on the antiassignment provision as a matter of law.
14
directly.” Pls.’ Opp’n at 11; Am. Compl. ¶¶ 67-69, 99-101, 146-148. Plaintiffs also allege that
United sent Plaintiffs letters requesting that they provide documentation to support previously
paid claims, which Plaintiffs refused to comply with on the basis that United had no legal right to
make such requests beyond the Claims Regulation thirty-day time period. See Am. Comp. ¶¶
73-74, 82, 105-106, 152. After Plaintiffs’ refusal, United reiterated its requests, notified
Plaintiffs that it considered payments for undocumented services to be overpayments, and
requested Plaintiffs refund the allegedly overpaid amounts. Id. ¶¶ 62, 75-88, 107-110, 116, 153157, 160. United then recouped the allegedly overpaid amounts by offsetting these amounts
from approved claim payments owed to the same providers for services provided to different
patients under different healthcare plans. Id. ¶¶ 62, 91, 116, 160. United does not dispute these
facts but instead contends that these actions cannot be interpreted as its consent or waiver, and do
not require that it be estopped from relying on the anti-assignment provision. Defs.’ R. Mem. at
4. The Court finds that United is neither estopped from enforcing the anti-assignment provision,
nor waived its rights under it.
Although the Second Circuit has not yet addressed whether a healthcare company may be
estopped from relying on or waive its right to enforce an anti-assignment provision, it has found
the equitable doctrines of estoppel and waiver are applicable to ERISA actions. See Ludwig v.
NYNEX Serv. Co., a wholly owned subsidiary of NYNEX Corp., 838 F. Supp. 769, 793 (S.D.N.Y.
1993) (noting that the Second Circuit Court has recognized that principles of estoppel can apply
in ERISA cases under “extraordinary circumstances” (citing Lee v. Burkhart, 991 F.2d 1004,
1009 (2d Cir. 1993)); Lauder v. First Unum Life Ins. Co., 284 F.3d 375, 382 (2d Cir. 2002)
(finding “that waiver applies in the particular situation presented by this ERISA case” where the
defendant “knew of [the plaintiff’s] claim of disability, chose not to investigate it, and chose not
15
to challenge it”); Ludwig, 838 F. Supp. at 796 (“the doctrine of waiver is applicable to ERISA
cases as a matter of federal common law” (citing Masella v. Blue Cross & Blue Shield, 936 F.2d
98, 107-08 (2d Cir. 1991)); see also Mbody Minimally Invasive Surgery, P.C., 2014 WL
4058321, at *3 (“estoppel can only be applied in the ERISA context in ‘extraordinary
circumstances.’”); Neuroaxis Neurosurgical Assoc., PC, 919 F. Supp. 2d at 355.
1. Estoppel
To establish estoppel in an ERISA action, a party must sufficiently allege “(1) a promise,
(2) reliance on the promise, (3) injury caused by the reliance, and (4) an injustice if the promise
is not enforced, and, as stated, must adduce [ ] . . . facts sufficient to [satisfy an] ‘extraordinary
circumstances’ requirement as well.” Paneccasio v. Unisource Worldwide, Inc., 532 F.3d 101,
109 (2d Cir. 2008) (alterations in original) (internal quotations omitted); see also Neuroaxis
Neurosurgical Assoc., PC, 919 F. Supp. 2d at 355. Plaintiffs here have not alleged
“extraordinary circumstances” necessary to invoke estoppel relief. While the “Second Circuit
has not enunciated what facts are required for ‘extraordinary circumstances,’” Kosswig v. Timken
Co., No. 06 Civ. 499 (PCD), 2007 WL 2320537, at *10 (D. Conn. Aug. 10, 2007), courts have
found that “intentional inducement and deception” and “[w]ritten or oral interpretation of an
ambiguous term may . . . satisfy this requirement where circumstances are ‘beyond the
ordinary[,]’” such as “where an employer promises severance benefits to persuade an employee
to retire and then reneges.” Ramos v. SEIU Local 74 Welfare Fund, No. 01 Civ. 2700 (SAS),
20002 WL 519731, at *6 (S.D.N.Y. Apr. 5, 2002) (citing Schonholz, 87 F.3d at 78; Devlin, 173
F.3d at 102). Here, however, Plaintiffs fail to allege intentional inducement or deception by
United or any other conduct that may be considered “beyond the ordinary.” In fact, in Mbody
Minimally Invasive Surgery, P.C., 2014 WL 4058321, at *3, the court found that it is entirely
16
routine for a health insurance company to pay a healthcare provider directly for services rendered
under the plan. Accordingly, Plaintiffs have not sufficiently alleged that United should be
estopped from relying on the anti-assignment provision to void Plaintiffs’ assignments, and thus
their standing. 14
Moreover, the plain language of the anti-assignment provision allows United, in its
discretion, to pay out-of-Network providers directly even where no valid assignment exists. See
Am. Compl. Ex. 1 at 66. The fact that United made direct payments to Plaintiffs, as it was
explicitly authorized to do under the plan, does not estop it from raising the anti-assignment
provision to challenge Plaintiffs’ standing. See Neuroaxis Neurosurgical Assoc., PC, 919 F.
Supp. 2d at 355-56 (finding that “[p]rior payments to healthcare providers do not create a viable
estoppel claim . . . where ERISA plans unambiguously prohibit assignments.” (citing Riverview
Health Inst. LLC, 601 F.3d at 521)); Renfrew Ctr. v. Blue Cross and Blue Shield of Cent. New
York, Inc., No. 94 Civ. 1527 (RSP) (GJD), 1997 WL 204309, at *4 (N.D.N.Y. Apr. 10, 1997)
(“[the defendant’s] retention of discretion to make direct payment is in no way inconsistent with
disallowing patient assignment. . . . It is untenable to read this direct payment provision as
undermining the very anti-assignment clause that makes [the defendant’s] direct payment
14
The plan documents, which Plaintiffs attach to their Amended Complaint, see Exs. 1-4, further supports Plaintiffs
inability to establish estoppel because United’s actions allegedly supporting Plaintiffs’ estoppel argument are
expressly authorized by the plans. See Riverview Health Inst. LLC v. Med. Mut. of Ohio, 601 F.3d 505, 521 (6th Cir.
2010) (denying the plaintiffs leave to amend their complaint to add a federal estoppel claim because the “[p]rinciples
of estoppel . . . cannot be applied to vary the terms of unambiguous plan documents . . . . estoppel requires
reasonable or justifiable reliance by the party asserting the estoppel [and a] . . . party’s reliance can seldom, if ever,
be reasonable or justifiable if it is inconsistent with the clear and unambiguous terms of plan documents available to
or furnished to the party” (internal citations and quotations omitted)).
17
discretion meaningful.”); see also Mbody Minimally Invasive Surgery, P.C., 2014 WL 4058321,
at *3. 15
2. Waiver
“Waiver arises when a party has voluntarily or intentionally relinquished a known right.”
Ludwig, 838 F. Supp. at 796; see also Beth Israel Med. Ctr. v. Horizon Blue Cross and Blue
Shield of New Jersey, Inc., 448 F.3d 573, 585 (2d Cir. 2006) (“waiver of a contract right must be
proved to be intentional, the defense of waiver requires a clear manifestation of an intent by
plaintiff to relinquish her known right and mere silence, oversight or thoughtlessness in failing to
object to a breach of the contract will not support a finding of waiver.”); Marvel Entertainment
Group, Inc. v. ARP Films, Inc., 684 F. Supp. 818, 821 (S.D.N.Y. 1988) (“a stipulation against
assignment may be waived or modified by a course of business dealings.”). Here, Plaintiffs’
argument that United waived the anti-assignment provision by its direct payment to Plaintiffs
also fails because United was explicitly permitted to pay Plaintiffs directly under the plan in its
discretion. See Mbody Minimally Invasive Surgery, P.C., 2014 WL 4058321, at *3 (rejecting the
plaintiff’s argument that the defendants waived the anti-assignment provision by providing direct
payment to the plaintiffs because “[h]ealth insurance companies routinely make direct payments
to healthcare providers without waiving anti-assignment provisions.”); Advanced Orthopedics
and Sports Medicine v. Blue Cross Blue Shield of Mass., No. 14 Civ. 7280 (FLW), 2015 WL
4430488, at *7 (D.N.J. July 20, 2015) (finding “a direct payment does not constitute a waiver of
15
Plaintiffs reliance on Lutheran Med. Ctr. of Omaha, Neb. v Contractors, Laborers, Teamsters and Eng’rs Health
and Welfare Plan, 25 F.3d 616, 619 (8th Cir. 1994) abrogated on other grounds by Martin v. Arkansas Blue Cross
and Blue Shield, 299 F.3d 966 (8th Cir. 2002), is misplaced. There, the Eighth Circuit found that in addition to the
defendant paying providers directly for several years, the Summary Plan Description stated “that a participant ‘may
assign benefits to a hospital or doctor, if you wish[,]’” which together established that “the Plan’s actual practice is
not in conformity with its strict anti-assignment provision.” Here, Plaintiffs have identified no similar provision
allowing assignment without consent.
18
the anti-assignment clause” where “the terms of the Plan permit direct payment to healthcare
providers”).
“[U]nambiguous language in an ERISA plan must be interpreted and enforced according
to its plain meaning [and w]hen the language of an ERISA plan is unambiguous, [the court] will
not read additional terms into the contract.” Connors v. Conn. General Life Ins. Co., 272 F.3d
127, 137 (2d Cir. 2001); see also CIGNA Life Ins. Co. of New York v. Gambuti, No. 09 Civ.
10147 (KMK), 2011 WL 3424106, at *3 (S.D.N.Y. Jan. 3, 2011), report and recommendation
adopted, No. 09 Civ. 10147 (RO), 2011 WL 3370351 (S.D.N.Y. Aug. 2, 2011). Language “is
ambiguous when it is capable of more than one meaning when viewed objectively by a
reasonably intelligent person who has examined the context of the entire . . . agreement.”
Critchlow, 378 F.3d at 256. To find that United implicitly waived the anti-assignment provision
by acting pursuant to the direct payment provision is to create an ambiguity where none exists.
See Aviation W. Charters, Inc. v. United Healthcare Ins. Co., No. 14 Civ. (00338) (PHX)
(NVW), 2014 WL 5814232, at *3 (D. Ariz. Nov. 10, 2014) (“The provision states that any
assignment requires United’s consent and, without an assignment, United may choose to pay the
claim through the beneficiary or directly to the non-Network provider.”); but see Premier Health
Ctr., P.C. v. UnitedHealth Group, No. 11 Civ. 425 (ES), 2014 WL 4271970, at *15 (D.N.J. Aug.
28, 2014) (“Defendants are correct that a direct payment of benefits to a non-network provider
and a subsequent repayment demand for all or some of those benefits is completely consistent
with the language of United’s anti-assignment provisions. . . . This language merely makes clear
that United may, in its discretion, unilaterally waive the anti-assignment provision and pay
benefits directly to the provider.”), reconsideration denied, No. 11 Civ. 425 (ES), 2014 WL
7073439 (D.N.J. Dec. 15, 2014).
19
The Court acknowledges that other courts in this District have interpreted facts and
language similar to that at issue here as establishing consent, estoppel, and/or waiver. See
Neuroaxis Neurosurgical Assoc., PC v. Cigna Healthcare of New York, Inc., No. 11 Civ. 8517
(BSJ) (AJP), 2012 WL 4840807, at *3 (S.D.N.Y. Oct. 4, 2012) (finding that the defendant’s
“long-standing pattern and practice of direct payment to [the plaintiff] is sufficient to show its
consent to [the plaintiff’s] assignments” notwithstanding the plan’s anti-assignment provision);
Biomed Pharm., Inc. v. Oxford Health Plans (NY), Inc., No. 10 Civ. 7427 (JSR), 2011 WL
803097, at *5 (S.D.N.Y. Feb. 18, 2011) (finding the defendant was “estopped from relying on
the anti-assignment provision in light of [their] own long-term pattern and practice of accepting
and paying on [the plaintiff’s] direct billing” because the plan “either expressly authorizes
patients to assign their claims to healthcare providers without [the defendant’s] consent, or, at the
very least, creates an ambiguity within the contract that should be construed against the
drafter.”); Protocare of Metro. N.Y., Inc. v. Mut. Ass’n Adm’rs, Inc., 866 F. Supp. 757, 761-62
(S.D.N.Y. 1994) (“[a]lthough the Plan does contain an anti-assignment provision, it also
provides for the possibility of direct payment to the health care provider [and i]f the Plan had
intended to prevent all assignments . . . then it would not have preserved the discretion to pay
[the plaintiff] directly.”). 16 However, the Court finds more persuasive those decision that give
effect to the plain language of anti-assignment provisions.
16
District courts outside of this Circuit have likewise reached different outcomes. See, e.g., Advanced Orthopedics
and Sports Medicine, 2015 WL 4430488, at *7 (finding “a direct payment does not constitute a waiver of the antiassignment clause” (citing Mbody Minimally Invasive Surgery, P.C., 2014 WL 4058321, at *3)); Aviation W.
Charters, Inc., 2014 WL 5814232, at *3 (rejecting the plaintiff’s argument on summary judgment that “United
waived its right to enforce the anti-assignment provision by making direct payment to Plaintiff and by
communicating directly with Plaintiff”); but see DeMaria v. Horizon Healthcare Services, Inc., No. 11 Civ. 7298
(WJM), 2015 WL 3460997, at *8 (D.N.J. June 1, 2015) (applying New Jersey contract law and finding that “a party
may waive an anti-assignment provision via a course of dealing that renders the anti-assignment provision
inequitable.”); Productive MD, LLC v. Aetna Health, Inc., 969 F. Supp. 2d 901, 922-23 (M.D. Tenn. 2013) (finding
on a motion to dismiss the defendant was estopped from relying on the anti-assignment provision where the
20
Beyond direct payments to Plaintiffs, a closer question is whether United’s
communications with Plaintiffs requesting documentation and eventual reimbursement is
sufficient to allege waiver. 17 Plaintiffs do not affirmatively allege that United failed to raise the
anti-assignment provision in its post-payment communications with Plaintiffs, which may in and
of itself be reason to grant United’s motion. See Care First Surgical Center v. ILWU-PMA
Welfare Plan, No. 14 Civ. 1480 (MMM), 2014 WL 6603761 at *20 (C.D. Cal. July 28, 2014).
However, United’s letters attached to Plaintiffs’ Opposition 18 include no reference to the antiassignment provision; nor do Plaintiffs’ descriptions of United’s communications with them.
See Am. Compl. ¶¶ 73, 75, 77-88, 105, 107, 109-112, 115, 152, 153, 155-157. Even if United
never raised the anti-assignment provision, nothing in these communications plausibly suggests
that United intended to waive its right under the provision. See Mbody Minimally Invasive
Surgery, P.C., 2014 WL 4058321, at *3 (“That defendants did not raise the anti-assignment
provision at the time they denied or reduced payment is irrelevant because the anti-assignment
provision was not a factor [in] determining the payment amount. Plaintiffs’ argument is simply
another way of re-arguing that defendants waived the anti-assignment provision by making direct
payments to plaintiffs—an argument courts have repeatedly rejected.”). As alleged, the dispute
defendant “was on notice that [the plaintiff] sought payment pursuant to a patient assignment, [the plaintiff] was not
privy to and had no legal right to access the underlying plan terms” while the defendant “possessed the underlying
plans (and therefore knew their terms), . . . denied [the plaintiff’s] technical component claims . . . for reasons other
than validity of assignment . . . paid the physicians who sought payment . . . pursuant to assignments from the same
patients . . . [and] regularly paid [the plaintiff’s] claims made pursuant to patient assignments.”) (emphasis in
original).
17
Unlike estoppel, courts have not required “extraordinary circumstances” to find waiver.
18
Plaintiffs attach two of United’s letters to Kantor requesting medical records and recoupment. Declaration of
Richard J. Quadrino in Support of Pls.’ Mem. in Opp’n to Defs.’ Mot. to Dismiss (“Quadrino Decl.”) ¶¶ 2, 4, Exs. 1,
3. Plaintiffs also attach Piken’s response, through counsel, to a letter from United substantial similar to the one sent
to Kantor. Id. ¶ 3, Ex. 2. Plaintiffs represent that United’s letters to Kantor requesting medical records and
recoupment “contain the same language” or “are identical” as the letters sent to other Plaintiffs. Id. ¶¶ 2, 4.
Plaintiffs also represent that Piken’s response letter to United is “similar in content” as Plaintiffs’ other letters sent to
United. Id. ¶ 3.
21
between the parties giving rise to the post-payment communications implicates only payments
made to Plaintiffs, allowed under the plan, and United’s ability to audit and recoup these
payments. While United requested documentation to support its previous payments and
ultimately recouped payments from Plaintiffs for their failure to comply, nothing about these
requests suggest that Plaintiffs were being treated as assignees of their patients’ benefits rather
than as providers United has the discretion to pay directly. 19
However, some courts outside of this District have reached a different conclusion based
on the parties “course of dealing.” See DeMaria, 2015 WL 3460997, at *8 (D.N.J. June 1,
2015); Premier Health Ctr., P.C. v. UnitedHealth Group, No. 11 Civ. 425 (ES), 2012 WL
1135608, at *2 (D.N.J. Apr. 4, 2012); Gregory Surgical Services, LLC v. Horizon Blue Cross
Blue Shield of New Jersey, Inc., No. 06 Civ. (0462) (JAG), 2007 WL 4570323, at *4 (D.N.J.
Dec. 26, 2007). In Premier Health, the plaintiffs made similar allegations to those raised here—
that the defendants, United and its subsidiaries, engaged in improper post-payment auditing of
previously paid claims and demanded repayment for alleged overpayments in violation of the
procedures established by ERISA. 2012 WL 1135608, at *2. When the defendants moved to
19
Nor do Plaintiffs’ responses suggest that they were acting as assignees. Quadrino Decl. Ex. 2. While Plaintiffs’
letters discuss Plaintiffs’ ability to bring an ERISA action pursuant to Section 502 for United’s purported violation
of the Claims Regulation and recoupment of alleged overpayments, this does not plausibly allege that Plaintiffs’
were asserting their rights as assignees for two reasons. First, according to the letter from Piken’s counsel, United
never responded to counsel’s previous letters and mere silence may not establish waiver. See id. (“We have been
repeatedly informing Optum, through letters to you on behalf of various clients of our firm, that our clients object to
such audits and we have fully explained our client’s legal positions, grounded in ERISA. No response was ever
received from you or from anyone else whom you stated your [sic] forwarded our letters to.”); see also Am. Compl.
¶¶ 90 (“Defendants refused to and failed to produce any of the requested documents or data requested” in counsel’s
letter), 114 (same), 159 (same). The only allegation that United responded to counsel’s letter—“Optum responded .
. . stating that because Dr. Piken did not submit the medical records requested, Defendants determined that the paid
services at issue were ‘not documented’ and, therefore, Dr. Piken must repay to Defendants the payments he
received for those services[,]” Am. Compl. ¶ 115—is, as already stated, insufficient to establish that United intended
to waive its rights. Second, the letter asserts Dr. Piken’s rights, not the patient’s rights. See id. (asserting that
United’s purported violations of the Claims Regulation “has triggered numerous rights of Dr. Piken, including the
right to obtain various types of documentation . . .”) (emphasis added).
22
dismiss the complaint based on, inter alia, the plaintiffs’ lack of statutory standing pursuant to
the anti-assignment provision, the plaintiffs contended that the defendants had waived or were
estopped from asserting the provision based on their course of conduct towards the plaintiffs. Id.
at *3, *9. The court found that under New Jersey law, which states that “an anti-assignment
clause may be waived by . . . a course of dealing, or even passive conduct,” that the defendants
waived the anti-assignment provision through its course of conduct, which went “beyond direct
reimbursement for medical services” and involved “regular interaction between United and
Premier prior to and after claim forms were submitted, without mention of United’s invocation
of the anti-assignment clause . . . includ[ing]: letters from [United’s subsidiary] notifying
Premier of overpayments, demanding a refund, and notifying Premier of the proper procedure to
dispute [its] decision; telephone calls between [United’s subsidiary] and Premier about Premier’s
appeals; and communications with Premier via e-mail regarding recoupments for the
overpayments.” Id. at *9-10 (citing Gregory Surgical Services, LLC, 2007 WL 4570323, at *4).
As a preliminary matter, Premier Health applied New Jersey law, not federal common
law, which as discussed above requires giving effect to the plain language of the plan. See 2012
WL 1135608, at *9; see also DeMaria, 2015 WL 3460997, at *8; Gregory Surgical Services,
LLC, 2007 WL 4570323, at *3. Moreover, by Plaintiffs’ own reckoning, Fishel and Kantor did
not engage in the appeals process—Plaintiffs simply denied United’s request for information and
filed this suit to challenge United’s post-payment audit practices. See Am. Compl. ¶¶ 65-96,
142-165. While Piken appealed some of the alleged overpayments identified by United, the only
allegations regarding the parties’ communications were that United acknowledged an appeal was
filed but determined that “the overpayment refund request remains valid.” Id. ¶¶ 111, 112. To
the extent that the Premier Health court’s decision would remain the same had the plaintiffs in
23
that case not engaged in the appeals process, this Court respectfully disagrees for the reasons
already discussed supra. See also Aviation W. Charters, Inc., 2014 WL 5814232, at *3 (finding
on summary judgment that “Plaintiff has submitted no evidence of United’s alleged actions
constituting waiver” because the “other actions [beyond direct payment and communications]
claimed to be inconsistent with intent to enforce the anti-assignment provision . . . . appear to be
communications regarding claims made by Plaintiff, payments made to Plaintiff, and recoupment
from Plaintiff, which likely would not show that United dealt with Plaintiff as though it were
‘standing in the shoes’ of the Beneficiary.”).
Accordingly, the Court finds that United did not waive, nor is United estopped from
relying on the anti-assignment provision. Because the anti-assignment provision is valid and
enforceable, Plaintiffs lack statutory standing to bring these claims, and thus United’s motion to
dismiss is GRANTED. 20
b. Leave to Amend
United requested in its opening brief that the Court grant its motion with prejudice. Pls.’
Mem. at 1, 2, 25; see also Pls.’ R. at 1. Plaintiffs, in response, did not request leave to amend in
the event the Court granted United’s motion, nor did Plaintiffs suggest that any additional
allegations that may be added to the Amended Complaint would address United’s challenges.
See Pls.’ Opp’n Mem. Amendment is generally “not warranted absent some indication as to
what appellants might add to their complaint in order to make it viable.” Shemian v. Research In
Motion Ltd., 570 Fed. App’x 32, 37 (2d Cir. 2014) (summary order); Porat v. Lincoln Towers
Community Ass'n, 464 F.3d 274, 276 (2d Cir. 2006) (“Especially given that plaintiff’s counsel
20
Because the Court finds Plaintiffs do not have statutory standing to bring the claims asserted in the Amended
Complaint, the Court need not address United’s other arguments for dismissal, including that United is not a proper
defendant in the action or that United’s post-payment audit practice is lawful under the Claims Regulation.
24
2016
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