Nusz v. Health Care Service Corporation
Filing
22
ORDER denying 9 Motion to Dismiss. Signed by Judge Charles Goodwin on 01/27/2025. (jb)
UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
RUSSELL NUSZ,
)
)
Plaintiff,
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)
v.
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)
HEALTH CARE SERVICE
)
CORPORATION, a Mutual Legal
)
Reserve Company, d/b/a BLUE CROSS )
BLUE SHIELD OF OKLAHOMA,
)
)
Defendant.
)
Case No. CIV-24-467-G
ORDER
Plaintiff Russell Nusz brings this diversity action against Defendant Health Care
Service Corporation d/b/a Blue Cross Blue Shield of Oklahoma, seeking relief under
Oklahoma law. Defendant has filed a Motion to Dismiss (Doc. No. 9) pursuant to Rule
12(b)(6) of the Federal Rules of Civil Procedure. Plaintiff has responded (Doc. No. 10)
and Defendant has replied (Doc. No. 17).
I.
Summary of the Pleadings
In this action, Plaintiff alleges that he was insured under Defendant’s
Comprehensive Health Service Benefits policy (the “Policy”). See Compl. ¶ 5. Plaintiff
was diagnosed with prostate cancer and, in May of 2022, was prescribed proton therapy
(also referred to as “proton beam therapy” or “PBT”) by his oncologist. Id. ¶ 6.
Outpatient therapy services and radiation therapy are covered services under the
Policy. Id. ¶ 15(a); see id. Ex. 1, Policy (Doc. No. 1-1) at p. 24.1 The Policy requires that
the insured obtain prior authorization for coverage of such radiation therapy. Compl. ¶
15(a); see Policy at p. 5. The Policy provides that it does not provide benefits for services
that “the Plan determines are not Medically Necessary, except as specified.” Policy at p.
46. “Medically Necessary” services are defined as:
Health care services that the Plan determines a Hospital, Physician, or other
Provider, exercising prudent clinical judgment, would provide to a patient
for the purpose of preventing, evaluating, diagnosing or treating an illness,
injury, disease or its symptoms and that are:
• in accordance with generally accepted standards of medical practice;
• clinically appropriate, in terms of type, frequency, extent, site and
duration, and considered effective for the patient’s illness, injury or
disease; and
• not primarily for the convenience of the patient, Physician, or other health
care Provider, and not more costly than an alternative service or sequence
of services as least as likely to produce equivalent therapeutic or
diagnostic results as to the diagnosis or treatment of that patient’s illness,
injury or disease.
Id. at p. 78.
Plaintiff submitted a claim to Defendant for authorization of the prescribed proton
therapy treatment, as required under the Policy. Compl. ¶ 7. Beginning in June of 2022,
Defendant denied benefits for the treatment and refused to authorize or cover the cost of
the treatment under the Policy. Id. ¶ 8. Defendant’s stated basis for the denial of Plaintiff’s
claim was: “Medical studies have not shown that PBT is better than other treatments for
this type of cancer. Therefore, PBT is not medically necessary.” Id. ¶ 9 (“The denials are
1
Plaintiff referred to and attached excerpts from the Policy to the Complaint; Defendant
supplied the entire Policy as an exhibit to the Motion. See Doc. No. 9-1.
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specifically based upon the stated basis that PBT is not medically necessary.”). Plaintiff
therefore “was compelled to pay for his own proton therapy treatment and underwent the
treatment to eradicate his prostate cancer.” Id. ¶ 10.
II.
Relevant Standard
In analyzing a motion to dismiss for failure to state a claim upon which relief can
be granted, the court “accept[s] as true all well-pleaded factual allegations in the complaint
and view[s] them in the light most favorable to the plaintiff.” Burnett v. Mortg. Elec.
Registration Sys., Inc., 706 F.3d 1231, 1235 (10th Cir. 2013). “[T]o withstand a Rule
12(b)(6) motion to dismiss, a complaint must contain enough allegations of fact, taken as
true, ‘to state a claim to relief that is plausible on its face.’” Khalik v. United Air Lines,
671 F.3d 1188, 1190 (10th Cir. 2012) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007)). While the Rule 12(b)(6) standard does not require that a plaintiff establish a
prima facie case in the pleading, the court discusses the essential elements of each alleged
cause of action to better “determine whether [the plaintiff] has set forth a plausible claim.”
Id. at 1192.
A complaint fails to state a claim on which relief may be granted when it lacks
factual allegations sufficient “to raise a right to relief above the speculative level on the
assumption that all the allegations in the complaint are true (even if doubtful in fact).”
Twombly, 550 U.S. at 555 (footnote and citation omitted). Bare legal conclusions in a
complaint are not entitled to the assumption of truth: “they must be supported by factual
allegations” to state a claim for relief. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).
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III.
Discussion
Plaintiff contends that Defendant’s handling of Plaintiff’s claim and, specifically,
its refusal to authorize or pay for the PBT constituted a breach of Defendant’s duty to
Plaintiff of good faith and fair dealing (commonly referred to as a “bad-faith claim”). See
Compl. ¶¶ 11-18.2
“Under Oklahoma law, ‘[e]very contract . . . contains an implied duty of good faith
and fair dealing.’” Combs v. Shelter Mut. Ins. Co., 551 F.3d 991, 998-99 (10th Cir. 2008)
(alteration and omission in original) (quoting Wathor v. Mut. Assurance Adm’rs, Inc., 87
P.3d 559, 561 (Okla. 2004)). The gravamen of an action for breach of this duty “is the
insurer’s unreasonable, bad-faith conduct.” Badillo v. Mid Century Ins. Co., 121 P.3d
1080, 1093 (Okla. 2005) (internal quotation marks omitted).
To state a claim of bad faith against an insurer under Oklahoma law, the
claimant must plead the following elements: (1) he was covered under the
insurance policy and the insurer was required to take reasonable actions in
handling the claim; (2) the insurer’s actions were unreasonable under the
circumstances; (3) the insurer failed to deal fairly and in good faith toward
the insured in the handling of the claim; and (4) the breach of the duty of
good faith and fair dealing was the direct cause of any damages sustained by
the insured.
Mass. Bay Ins. Co. v. Langager, No. 16-CV-685, 2017 WL 3586862, at *2 (N.D. Okla.
Aug. 18, 2017) (citing Edens v. The Neth. Ins. Co., 834 F.3d 1116, 1128 (10th Cir. 2016);
Badillo, 121 P.3d at 1093).
“[A] claim must be promptly paid unless the insurer has a reasonable belief the
2
Although Plaintiff attached additional materials to the Response, the Court declines to
consider matters outside of the pleadings or to convert the Motion into one for summary
judgment. See Fed. R. Civ. P. 12(d).
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claim is either legally or factually insufficient.” Shotts v. GEICO Gen. Ins. Co., 943 F.3d
1304, 1316 (10th Cir. 2019) (internal quotation marks omitted). But “[a]n insurer does not
breach its implied duty to deal fairly and act in good faith with its insured merely by
refusing to pay a claim or by litigating a dispute with its insured, so long as there is a
legitimate dispute as to coverage or the amount of the claim, and the insurer’s position is
reasonable and legitimate.” K2 Groceries, Inc. v. Emps. Mut. Cas. Co., No. CIV-14-1235HE, 2015 WL 1015325, at *2 (W.D. Okla. Mar. 9, 2015). The Oklahoma Supreme Court
has recognized that there may be legitimate disagreement between insurer and insured “on
a variety of matters such as insurable interest, extent of coverage, cause of loss, amount of
loss, or breach of policy conditions.” Christian v. Am. Home Assurance Co., 577 P.2d 899,
905 (Okla. 1977).
Defendant challenges Plaintiff’s pleading of the second and third elements, arguing
that Plaintiff’s allegations reflect only a legitimate coverage dispute, rather than a wellpled allegation reflecting that Defendant’s conduct was “unreasonable under the
circumstances” and that Defendant did not “deal fairly and in good faith” with Plaintiff.
Mass. Bay Ins. Co., 2017 WL 3586862, at *2; see Def.’s Mot. to Dismiss at 11-14; Def.’s
Reply at 3-6. The Court disagrees.
Relevant to the handling of the claim, Plaintiff alleges:
• Defendant denied Plaintiff’s claim pursuant to a scheme intentionally
implemented years ago whereby Defendant, either on its own or through the use
of an entity named AIM, denies all PBT coverage on a widespread basis and
asserts that the alternative treatment of photon/X-ray radiation (“IMRT”) is
effective, despite IMRT having higher levels of harmful radiation to the healthy
tissues and organs surrounding the cancer tumor. See Compl. ¶¶ 11-15.
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• Pursuant to this scheme, Defendant’s medical review “involve[s] simply looking
at the Defendant’s own internal claim directives and verifying that the condition
is diagnosed prostate cancer and, therefore, mandating that proton therapy is not
medically necessary.” Id. ¶ 15.
• “The actual medically necessary language of the policy is wholly ignored and
not addressed at all in these claim denials.” Id.
• “Defendant . . . does not investigate, []or properly evaluate, whether or not [PBT]
meets the actual policy language of medically necessary.” Id. ¶ 15(a).
• Defendant ignores the fact “that less radiation to healthy tissues is better” “in
hopes of avoiding any expense for the insured’s cancer treatment” and that “the
insured will . . . pay for their own treatment.” Id. ¶ 13.
• Defendant knows that PBT “is therapeutically better than other radiation
treatment,” “can be provided for the same cost,” and “was medically necessary
under the [Policy].” Id. ¶ 14.
• In denying Plaintiff’s claim, Defendant intentionally ignored Oklahoma law that
requires a denial letter to “specif[y] the precise basis for the denial and the
involved policy provisions.” Id. ¶ 15(b). Defendant’s actions left Plaintiff “to
speculate as to what actual policy language is being relied upon by the
Defendant.” Id. ¶ 15(c).
Taken as true, these factual assertions are sufficient to establish Defendant’s
unreasonable conduct and failure to deal fairly and in good faith with Plaintiff in
withholding payment on the June 2022 PBT claim. The allegations of the Complaint
plausibly reflect, for example, that “material facts were overlooked” in Defendant’s
investigation of the claim and that Defendant “failed to treat the insured fairly.” Shotts,
943 F.3d at 1315, 1317 (internal quotation marks omitted). “[A] plaintiff may . . . show
bad faith by providing evidence that the insurer performed an inadequate investigation of
the claim.” Id. at 1315. Further, Defendant’s suggestion that Plaintiff cannot show
unreasonableness because lack of medical necessity “is a valid coverage exclusion,” and
determinations as to medical necessity are left to Defendant’s discretion, is meritless: the
Complaint also plausibly pleads that Defendant “did not actually rely on the legitimate
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dispute to deny coverage.” Def.’s Mot. at 11-12; Shotts, 943 F.3d at 1315 (alterations and
internal quotation marks omitted); see also Def.’s Reply at 3-5.
Because Plaintiff’s allegations offer sufficient facts to allow one “to draw the
reasonable inference that [Defendant] is liable for the misconduct alleged,” dismissal is not
warranted at this early pleading stage. Iqbal, 556 U.S. at 678.
CONCLUSION
For the foregoing reasons, Defendant’s Motion to Dismiss (Doc. No. 9) is DENIED.
IT IS SO ORDERED this 27th day of January, 2025.
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