MED-X GLOBAL, LLC v. WORLDWIDE INSURANCE SERVICES, LLC (T/N GEOBLUE) et al

REPLY BRIEF to Opposition to Motion

D.N.J.March 28, 2019

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY MED-X GLOBAL, LLC Plaintiff, v. WORLDWIDE INSURANCE SERVICES, LLC (T/N GEOBLUE), et al, Defendants. Case No.: 3:17-cv-11742 Civil Action BECKER DEFENDANTS’ BRIEF IN FURTHER SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT AND IN REPLY TO PLAINTIFF’S OPPOSITION BECKER LLC Michael E. Holzapfel, Esq. (031022002) Eisenhower Plaza II 354 Eisenhower Parkway, Suite 1500 Livingston, New Jersey 07039 meholzapfel@becker.legal (973) 422-1100 Attorneys for Becker Defendants Case 3:17-cv-11742-PGS-TJB Document 176 Filed 03/28/19 Page 1 of 21 PageID: 958 i TABLE OF CONTENTS PRELIMINARY STATEMENT ................................................................................................. 1 LEGAL ARGUMENT .................................................................................................................. 2 POINT I ......................................................................................................................................... 2 PLAINTIFF MISSTATES THE STANDARD OF REVIEW AND IGNORES THE LAW OF THE CASE DOCTRINE ............................................................ 2 POINT II ........................................................................................................................................ 6 THE SAC FAILS TO PLEAD THE ESSENTIAL ELEMENTS OF A CLAIM FOR STATUTORY PENALTIES UNDER ERISA §§ 104(b) AND 502(c) .................................................................................................. 6 A. The SAC Fails to Plead Facts Demonstrating that the Becker Defendants are Plan Administrators ................................................................................................. 6 B. The SAC Fails to Plead Facts Demonstrating that Plaintiff is a Plan Participant or Beneficiary ..................................................................................... 9 C. The SAC Fails to Allege An Enforceable Request for “Administrative Records” Under ERISA §104(b) ................................................................................................... 12 D. ERISA’s Administrative Penalty Provision Does Not Exist for Plaintiff’s Protection ............................................................................................... 13 POINT III .................................................................................................................................... 14 PLAINTIFF IMPROPERLY ATTEMPTS TO USE EQUITABLE DEFENSES TO DEFEAT A MOTION TO DISMISS ........................................................ 14 Case 3:17-cv-11742-PGS-TJB Document 176 Filed 03/28/19 Page 2 of 21 PageID: 959 ii POINT IV .................................................................................................................................... 15 PLAINTIFF CANNOT AMEND THE SAC THROUGH AN OPPOSITION TO A MOTION TO DISMISS ................................................................ 15 CONCLUSION ........................................................................................................................... 16 Case 3:17-cv-11742-PGS-TJB Document 176 Filed 03/28/19 Page 3 of 21 PageID: 960 iii TABLE OF AUTHORITIES Cases Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) .......................................................................................................... 2,3,4 Automated Salvage Transport, Inc. v. NV Koninklijke KNP BT, 106 F.Supp.2d 606 (D.N.J. 1999) ................................................................................................... 8 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) .......................................................................................................... 2, 3, 4, 14 Branch v. Tower Air, Inc., 1995 W.L. 649935 (S.D.N.Y. Nov. 3, 1995) ................................................................................ 15 Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101 (7th Cir. 1984) ........................................................................................................ 3 Colarusso v. Transcapital Fiscal Sys., Inc., 227 F. Supp.2d 243 (D.N.J. 2002) ................................................................................................ 13 Conley v. Gibson, 355 U.S. 41 (1957) .......................................................................................................................... 2 Conn. Gen. Life Ins. Co. v. Humble Surgical Hospital, L.L.C., 878 F.3d 478 (5th Cir. 2017) .......................................................................................................... 7 Elite Center for Minimally Invasive Surgery, LLC v. Health Care Serv. Corp., 221 F. Supp. 3d 853 (S.D. Tex. 2016) ............................................................................................ 8 Faircloth v. Lundy Packing Co., 91 F.3d 648 (4th Cir.1996) ........................................................................................................... 13 Kollman v. Hewitt Assocs., LLC, 487 F.3d 139 (3d Cir. 2007)..................................................................................................... 12,13 Law v. Ernst & Young, 956 F.2d 364 (1st Cir. 1992)).......................................................................................................... 8 Massari v. Einsiedler, 6 N.J. 303 (1951) .......................................................................................................................... 14 McMahon v. General Dynamics Corp, 933 F.Supp.2d 682 (D.N.J. 2013) ................................................................................................. 15 Case 3:17-cv-11742-PGS-TJB Document 176 Filed 03/28/19 Page 4 of 21 PageID: 961 iv Prod. Source Int’l, LLC v. Foremost Signature Ins. Co., 234 F.Supp.3d 619 (D.N.J. 2017) ................................................................................................... 5 Rahul Shah, M.D. v. Horizon Blue Cross Blue Shield, 2016 W.L. 4499551 (D.N.J. Aug. 25, 2016) ................................................................................ 11 Rosen v. TRW, Inc., 979 F.2d 919 (11th Cir. 1992) ........................................................................................................ 8 Simon v. Value Behavioral Health, Inc., 208 F.3d 1073 (9th Cir. 2000)) ..................................................................................................... 10 Zapiach v. Horizon Blue Cross Blue Shield of New Jersey, 2016 W.L. 796891 (D.N.J. Feb. 29, 2016) ................................................................................... 11 Statutes 29 U.S.C. § 1002 ............................................................................................................................. 6 29 U.S.C. § 1024 ............................................................................................................... 11, 12, 13 29 U.S.C. § 1132 ..................................................................................................................... 11, 13 Rules and Regulations 29 C.F.R. § 2575.502c-1 ............................................................................................................... 13 Fed. R. Civ. P. 8 ........................................................................................................................ 9, 14 Fed. R. Civ. P. 12 .......................................................................................................................... 14 Case 3:17-cv-11742-PGS-TJB Document 176 Filed 03/28/19 Page 5 of 21 PageID: 962 1 PRELIMINARY STATEMENT The Becker Defendants respectfully submit this brief in reply to Plaintiff’s opposition (“Opposition”) to the Becker Defendants’ motion to dismiss the SAC pursuant to Fed. R. Civ. P. 12(b)(6). Unless otherwise defined, all abbreviated terms used herein have the same meaning given them in the supporting brief (“Moving Brief”) [Docket No. 142-1] to the Becker Defendants’ motion.1 At this juncture, there is little left to say about the SAC’s many flaws, not the least of which is that, for all practical purposes, the Court has already rejected the pleading. When it issued its Opinion in April 2018, the Court clearly described several areas in which the FAC was deficient as a matter of fact, and in which Plaintiff’s legal theory was faulty as a matter of law. It then took Plaintiff the better part of a year to file the SAC. Despite having been handed a blueprint from the Court of the deficiencies in its prior pleading, Plaintiff did not even attempt to cure those deficiencies, and instead filed literally the exact same pleading against the Becker Defendants. Amazingly, nowhere in the Opposition’s directionless discourse does Plaintiff even mention the Opinion, let alone address the Becker Defendants’ argument that the law of the case doctrine bars 1 At this juncture, only two Becker Defendants remain in this lawsuit: Horizon Blue Cross Blue Shield of New Jersey (“Horizon”) and Premera Blue Cross (“Premera”). The remaining Becker Defendants (to wit, CareFirst of Maryland, Inc.; Regence BlueShield of Idaho, Inc.; Blue Cross and Blue Shield of Massachusetts, Inc.; Blue Cross Blue Shield of North Carolina; and Excellus Health Plan, Inc.) have been dismissed by stipulation. However, Plaintiff falsely states in footnote 1 of the Opposition that “[s]ettlements were achieved (and all appropriate dismissal stipulations filed) as to all of these defendants.” That is not true. Only one Becker Defendant entered into a settlement agreement with Plaintiff, and for a de minimis amount. Plaintiff dismissed the other Becker Defendants with prejudice voluntarily, which Plaintiff has done with many other defendants, according to the docket. This in itself belies the Opposition’s central theme that Plaintiff is completely “in the dark” and has no way of truly gauging the merits of its position. Plaintiffs rarely release defendants from a lawsuit voluntarily without having at least some sense of the nature of their claims. Case 3:17-cv-11742-PGS-TJB Document 176 Filed 03/28/19 Page 6 of 21 PageID: 963 2 the SAC. For all of the Opposition’s colloquial editorializing, the reality is that the Court finds itself presented with the exact same complaint that it dismissed a year ago as insufficiently pleaded. On this basis alone the Court must grant the Becker Defendants’ motion. To the extent the Court is inclined to go further and once again examine the merits of Plaintiff’s claim for administrative penalties under ERISA, that claim remains as unsound and unsupported today as it was a year ago. Plaintiff simply does not, and cannot, support a claim that the Becker Defendants committed a disclosure violation under ERISA § 104(b) for which administrative penalties under ERISA § 502(c) may be imposed. The SAC therefore fails. LEGAL ARGUMENT POINT I PLAINTIFF MISSTATES THE STANDARD OF REVIEW AND IGNORES THE LAW OF THE CASE DOCTRINE. The Opposition opens by flatly misstating the standard of review on a motion to dismiss. As it previously did in opposition to the prior motions to dismiss the FAC, Plaintiff relies solely on pre-Twombly/Iqbal case law. Plaintiff incorrectly states that “a claim will be dismissed on the pleadings only if it appears beyond doubt that the claimant can prove no set of facts consistent with the allegations of the claim that would entitle him to relief.” Opposition, p. 5-6. The “no set of facts” standard is a relic of the since-abrogated Conley v. Gibson, 355 U.S. 41 (1957). The Conley “no set of facts” standard was displaced more than ten years ago by the Twombly/Iqbal “plausibility” standard, which requires a claimant to plead facts sufficient to establish a claim that is plausible on its face. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 563 (2007) (“The [‘no set of facts’] phrase is best forgotten as an incomplete, negative gloss on an accepted pleading standard: Case 3:17-cv-11742-PGS-TJB Document 176 Filed 03/28/19 Page 7 of 21 PageID: 964 3 once a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint.”).2 In addition to invoking an abrogated standard of review, Plaintiff also embarks on a lengthy, confusing dissertation in which it attempts to argue that dismissal of the SAC is inappropriate because this is really a motion for judgment on the pleadings that implicates “matters outside the [SAC].” See Opposition, p. 7-9. It is unclear what Plaintiff means by this, as the Becker Defendants’ pending motion does not offer extraneous evidence or rely upon anything other than the SAC, the express terms of ERISA, and applicable case law. Plaintiff appears to direct its argument to the Becker Defendants’ observation that the SAC concedes (in footnote 1) that ERISA does not even apply to some of the health benefit plans related to which Plaintiff seeks ERISA penalties. See Moving Brief, p. 9-10. Plaintiff appears to suggest that its concession that the only law under which it is attempting to proceed does not uniformly apply in the first instance somehow opens the door to full blown discovery as to all underlying plans, and hence invokes “matters outside the pleadings.” See Opposition, p. 7-11. It does not work that way. The Federal Rules of Civil Procedure do “not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions….[O]nly a complaint that states a plausible claim for relief survives a motion to dismiss.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). Here, Plaintiff has chosen (for the third time) not to plead in the alternative, and to stake its entire dispute against all Non-GeoBlue Defendants on ERISA §§ 104(b) and 502(c). Yet, 2 Even before Twombly, “Conley ha[d] never been interpreted literally.” See Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1106 (7th Cir. 1984). Indeed, the Twombly Court noted “that there is no need to pile up further citations to show that Conley's ‘no set of facts’ language has been questioned, criticized, and explained away long enough.” Twombly, 550 U.S. at 562. Case 3:17-cv-11742-PGS-TJB Document 176 Filed 03/28/19 Page 8 of 21 PageID: 965 4 in the same breath, Plaintiff’s pleading also concedes (again, for the third-time), that ERISA is inapplicable across-the-board. Recognizing a pleading deficiency does not cure it. The fact that the Becker Defendants have called attention to this deficiency does not trigger “matters outside the pleadings,” and Plaintiff cites no cases supporting this proposition. The reality is that after eighteen months and three complaints, Plaintiff has been unable to articulate a cogent theory of recovery against the Becker Defendants.3 But Plaintiff’s misapprehension of the law does not lighten its burden under Twombly and Iqbal. The pending motion to dismiss is based solely on the four corners of the SAC and well-established ERISA law, much which the Court has already applied in its Opinion. Which brings the Becker Defendants to the proverbial elephant in the room in terms of obstacles to the SAC. For all intents and purposes, this motion is already decided. The SAC is a virtual carbon copy of the FAC insofar as allegations against the Becker Defendants are concerned. In dismissing the FAC for failure to state a claim, the Court made a number of findings and conclusions. For example:  The Court found that the FAC failed to specify exactly which documents Plaintiff requested of which defendants at which times. Opinion, p. 6. The Court noted that, according to the FAC, the only direct requests Plaintiff ever made were to GeoBlue, not the other defendants. Id., p. 5-6. In dismissing the FAC, the Court held, correctly, that “[i]n a case such as this, where Plaintiff is seeking a per diem penalty for the failure to provide a document, the specifics of the underlying facts in support of a penalty should be set forth.” Id., p. 5. Plaintiff failed to cure this deficiency, as the SAC says the exact same thing; the only direct requests referenced in the SAC were sent to GeoBlue only. See SAC ¶¶ 28-32.  The Court correctly noted that ERISA imposes statutory penalties for disclosure violations only on “plan administrators,” which has a specific, statutory definition. Opinion, p. 6. Based on the facts pleaded in the FAC, the Court 3 The garrulous, colloquial tone that emanates throughout the Opposition (and which is especially prominent from pages 7-13) embodies Plaintiff’s obvious lack of direction. Case 3:17-cv-11742-PGS-TJB Document 176 Filed 03/28/19 Page 9 of 21 PageID: 966 5 found that GeoBlue was not a plan administrator for the other “Blue” plans, and it further held, correctly, that there is no such thing under applicable case law as a “de facto administrator.” See id., p. 6-7. Yet, the SAC doubles-down on this same faulty “de facto administrator” premise. Indeed, the operative paragraph of the SAC (¶ 37) reads: “Although GeoBlue was is/the plan and/or clam administrator (directly or de facto) and accordingly was obligated to undertake the administrative record request production, it did not and instead passed (or at least so said GeoBlue’s counsel in writing) the administrative record requests along to all the other Blue entities captions as defendants above.” This is, verbatim, the same paragraph that appeared in the FAC (¶ 57), and which the Court found failed to state a claim. See Opinion, p. 7.  The Court correctly noted that Plaintiff, a third-party medical billing company, is not a “participant” under ERISA. Opinion, p. 8. The Court found that, although the FAC appeared to allege that Plaintiff was a “beneficiary” by assignment, the only factual assertion in the FAC supporting this argument (¶ 42) was that some of the providers may have taken assignments of benefits from the patients. Id., p. 8-9. The FAC contained no allegation that Plaintiff itself had taken an assignment. “Further proof as to the relationship between Plaintiff and each participant is necessary to support this blanket statement,” the Court held. Id., p. 9. Yet, the SAC simply cut-and-pasted ¶ 42 of the FAC word-for- word, offering none of the proof the Court found lacking. See SAC, ¶ 22. Incredibly, the Opposition contains not one single reference to the Opinion, and it ignores entirely the Becker Defendants’ argument that the SAC is barred by the law of the case doctrine. See Moving Brief, p. 12-13. Under that doctrine, Plaintiff is foreclosed from re-litigating that which the Court has already decided in earlier stages of this litigation. See Prod. Source Int’l, LLC v. Foremost Signature Ins. Co., 234 F.Supp.3d 619, 624 (D.N.J. 2017). “The rationale behind the doctrine is that a disappointed litigant should not be given a second opportunity to litigate a matter that has been fully considered by a court of coordinate jurisdiction, absent unusual circumstances.” Id. (citations omitted). Such “unusual circumstances” include situations in which: (1) new evidence is available; (2) a supervening new law has been announced; or (3) the earlier decision was clearly erroneous or would create manifest injustice. Case 3:17-cv-11742-PGS-TJB Document 176 Filed 03/28/19 Page 10 of 21 PageID: 967 6 None of those circumstances apply. The SAC’s allegations are unchanged from the FAC. The Court has no more or better information than it did when it decided the Becker Defendants’ first motion to dismiss. The SAC alleges no new facts against the Becker Defendants, and there has been no change in the law. Finally, the Opposition does not even mention the Opinion, let alone attempt to establish that the Court’s previous decision was “clearly erroneous or would create manifest injustice.” Based on the law of the case doctrine alone, the SAC requires dismissal. POINT II THE SAC FAILS TO PLEAD THE ESSENTIAL ELEMENTS OF A CLAIM FOR STATUTORY PENALTIES UNDER ERISA §§ 104(b) AND 502(c). To the extent the Court feels compelled to go further and examine (once again) the legal elements of Plaintiff’s claims and why Plaintiff’s pleading fails to support those elements, the Becker Defendants again address this subject matter. As noted in the Moving Brief, it is firmly established under the case law that a statutory penalty under ERISA § 502(c) for a disclosure violation under ERISA § 104(b) may not be imposed unless the words of the statute plainly require it. Moving Brief, p. 10-11 (collecting cases). It is a strictly-construed, “all or nothing” proposition; either a plaintiff demonstrates compliance with each statutory requirement, or there is no claim. See id. Once again, Plaintiff’s pleading fails to support a plausible inference that any statutory requirement is met. A. The SAC Fails to Plead Facts Demonstrating that the Becker Defendants are Plan Administrators. As the Court has already observed, ERISA precisely defines “administrator” as “the person specifically so designated by the terms of the instrument under which the plan is operated,” or if there is no such designation, the plan “sponsor” (i.e., the employer), or “such other person as the Secretary may by regulation prescribe.” 29 U.S.C. §1002(16)(A); Opinion, p. 6. And as the Court Case 3:17-cv-11742-PGS-TJB Document 176 Filed 03/28/19 Page 11 of 21 PageID: 968 7 has also correctly concluded, a person or entity who does not qualify as an “administrator” cannot be held liable for statutory penalties. Opinion, p. 6. As a threshold matter, the SAC does not attempt to establish that the Becker Defendants, who are not employer-sponsors of any health benefit plan, qualify as “administrators” in any case, nor could Plaintiff do so in light of the law cited in the Moving Brief. See Moving Brief, p. 13-14 (collecting cases holding that insurance companies who process and pay claims and handle administrative functions of a plan, while they may qualify as plan “fiduciaries,” do not also qualify as plan “administrators” under ERISA § 104(b)). But even if the Becker Defendants could be considered “administrators,” Plaintiff admits that the only direct requests for records it made were made to GeoBlue, not to any other defendant. See SAC ¶¶ 28-32. This concession forces Plaintiff to once again argue that GeoBlue is some sort of proxy or “de facto” administrator for the Becker Defendants. See SAC, ¶ 37. The Court has already rejected Plaintiff’s “de facto administrator” argument as a matter of law, and the SAC’s operative paragraph on this point (¶ 37) is the same as the FAC’s operative paragraph (¶ 57). Opinion, p. 7-8. The Court’s rejection of the de facto administrator theory, which is now the law of the case, is consistent with the District of New Jersey case law cited in the Opinion and the Moving Brief. See Moving Brief, p. 12-14. Rejection of the de facto administrator theory is also the overwhelming majority view held by nine of the country’s twelve geographic U.S. Circuit Courts of Appeal. See Conn. Gen. Life Ins. Co. v. Humble Surgical Hospital, L.L.C., 878 F.3d 478, 486 (5th Cir. 2017)(citing Elite Center for Minimally Invasive Surgery, LLC v. Case 3:17-cv-11742-PGS-TJB Document 176 Filed 03/28/19 Page 12 of 21 PageID: 969 8 Health Care Serv. Corp., 221 F. Supp. 3d 853, 861 (S.D. Tex. 2016)(collecting cases from the Second, Fourth, Sixth, Seventh, Eighth, Ninth, Tenth, and District of Columbia Circuits)).4 Unable to get around this legal obstacle, Plaintiff grasps by suggesting that, perhaps, GeoBlue was not really a “de facto administrator,” but that GeoBlue’s lawyer (referenced in the SAC) was an “agent” of the various “Blues” who would pass through any record requests to local carriers. Opposition, p. 12-15. This alternative spin, which Plaintiff does not support with any legal citations, does not change the reality that Plaintiff did not make any record requests directly of any Becker Defendant.5 Further, this bare bones agency allegation is not supported by any factual predicates in the SAC, which does not even plead an agency theory of recovery vis à vis GeoBlue (or its lawyer) and any particular “Blue.” Whether or not an agency relationship exists is dictated by the actions of the principal, not the alleged agent. See, e.g., Automated Salvage Transport, Inc. v. NV Koninklijke KNP BT, 106 F.Supp.2d 606 (D.N.J. 1999). The SAC contains zero factual predicates suggesting that the Becker Defendants delegated “administrator” functions to GeoBlue’s lawyer as their agent. On this point, it is important to note that, in its Opinion, the Court cited the operative paragraphs of the FAC which the Court found insufficient to establish that Plaintiff had made any bona fide requests of an actual plan administrator. Those paragraphs of the FAC read as follows: 4 The Third Circuit is the only U.S. Court of Appeals that has yet to address the issue. Further, although two circuits (the First and the Eleventh) have held that a plan sponsor (i.e., employer) may be held liable for statutory penalties when it acts as a plan administrator, even those courts have refused to extend the de facto administrator doctrine to an insurance company involved in claims handling. See Elite, 221 F.Supp.3d at 861 (citing Rosen v. TRW, Inc., 979 F.2d 919 (11th Cir. 1992) and Law v. Ernst & Young, 956 F.2d 364 (1st Cir. 1992)). 5 GeoBlue, who has since settled with Plaintiff, noted in its prior brief that “while GeoBlue initially told Med-X’s counsel it would ‘pass along’ the requests, it later determined, upon further, careful consideration, that this was not the prudent course of action.” See Docket No. 98 [page 6 of 16]. Case 3:17-cv-11742-PGS-TJB Document 176 Filed 03/28/19 Page 13 of 21 PageID: 970 9 56. By June 28, 2017, and June 29, 2017, letters [...] Med-X (via undersigned counsel) asked Blue to provide the administrative record for every single patient with respect to whom Blue was denying, underpaying, or delaying payment of the related claims that Med-X was processing in the routine course of Med-X’s billing agent business for foreign medical providers. 57. Although GeoBlue was/is absolutely the plan and/or claim administrator (directly or de facto) and accordingly was obligated to undertake the administrative record request production, it did not and instead pushed (or at least so says Geoblue in writing) the administrative record requests along to all the other Blue entities captioned as Defendants above. Plaintiff repeated those two paragraphs, verbatim, in the SAC. See SAC ¶¶ 36-37. And, in its Opinion, the Court found these generic allegations pertaining to GeoBlue’s counsel insufficient to establish a claim against the Becker Defendants or any other “Blue” defendant. In dismissing the FAC, the Court held: As it stands, Plaintiff mailed written requests for documents and information to GeoBlue. The only cause of action pled against non- GeoBlue Defendant is that they failed to timely produce documents required by ERISA 104(b) and are thus liable for administrative penalties. Yet the Complaint fails to specify which documents were requested, or the dates of each request….Plaintiff brought claims against more than 25 Defendants but the Complaint fails to identify the specific document not produced by each defendant, or the specific information of when and to whom the request for documents was made. In a case such as this where Plaintiff is seeking a per diem penalty for the failure to provide a document, the specifics of the underlying facts in support of a penalty should be set forth. As such, the Court finds that there is a lack of factual support setting forth a plain clear statement of a cause of action. Fed. R. Civ. P. 8(a). Nothing has changed. If such generic allegations were insufficient to save the FAC from dismissal, there is no reason why those same allegations should somehow suffice now. B. The SAC Fails to Plead Facts Demonstrating that Plaintiff is a Plan Participant or Beneficiary. Case 3:17-cv-11742-PGS-TJB Document 176 Filed 03/28/19 Page 14 of 21 PageID: 971 10 As noted in the Moving Brief, ERISA § 104(b) is only triggered when a “participant” or a “beneficiary” makes a request for a required document. Moving Brief, p. 14-15. Plaintiff does not dispute that it does not qualify as either in its own right. Rather, the SAC argues that Plaintiff has standing to make an ERISA § 104(b) request, and seek associated per diem penalties under ERISA § 502(c), in a derivative capacity by virtue of an alleged assignment of benefits given by patients. See SAC ¶ 22. According to the SAC, however, and as the Court observed when it dismissed the identical FAC, the assignments in question were given by patients to hospitals and ambulance service companies in Mexico. The FAC did not mention anything about assignments given by the patients to Plaintiff directly, and neither does the SAC. Opinion, p. 8-9. When it dismissed FAC, the Court found that “[f]urther proof as to the relationship between Plaintiff and each participant is necessary to support this blanket statement” that Plaintiff itself is a bona fide assignee Id., p. 9. Plaintiff has failed to provide that proof. The standing-by-assignment paragraph of the SAC is a verbatim repetition of what Plaintiff alleged in the FAC. Compare FAC, ¶ 42 with SAC, ¶ 22. Once again, nothing has changed, and on this basis Plaintiff fails to prove standing. Further, to the extent the Opposition contends that the providers might have re-assigned the patients’ plan rights and benefits to Plaintiff (although the SAC contains no allegations suggesting that that occurred), this type of “flipping” is antithetical to the ERISA statutory scheme. See Moving Brief, p. 15-16 (“If the rule permitting ERISA assignments of benefits were extended down to a third level or below (i.e., from the patient, to the patient’s provider, to some other third party), it would be tantamount to transforming health benefit claims into a freely tradable commodity. It could lead to endless reassignment of claims, and it would allow third parties with no relationship to the beneficiary to acquire claims solely for the purpose of litigating them.”)(citing Simon v. Value Behavioral Health, Inc., 208 F.3d 1073, 1080-81 (9th Cir. 2000)). Case 3:17-cv-11742-PGS-TJB Document 176 Filed 03/28/19 Page 15 of 21 PageID: 972 11 Plaintiff also suggests (again without legal support) that it does not need an assignment of benefits to pursue ERISA statutory claims, and that assignments are only required in ERISA § 502(a) actions for benefits. Opposition, p. 20. Not so. By the statutes’ terms, only “participants” and “beneficiaries” may make requests under ERISA § 104(b)(4), and an administrator who fails to respond to a valid request may only be liable to “such participant or beneficiary.” 29 U.S.C. § 1024(b)(4)(“The administrator shall, upon written request of any participant or beneficiary, furnish a copy of the latest updated summary, plan description, and the latest annual report, any terminal report, the bargaining agreement, trust agreement, contract, or other instruments under which the plan is established or operated”)(emphasis added); 29 U.S.C. § 1132(c)(1)(an administrator “who fails or refuses to comply with a request for any information which such administrator is required by this subchapter to furnish to a participant or beneficiary… may in the court’s discretion be personally liable to such participant or beneficiary in the amount of up to $100 a day”)(emphasis added). Accordingly, and as the Court has already concluded, unless Plaintiff show that it is a participant or beneficiary, it has no claim. See Opinion, p. 5. It is not disputed that Plaintiff does not qualify as a “participant” or “beneficiary” in its own right, according to the statutory definitions of those terms. See Moving Brief, p. 14. Therefore, the only way Plaintiff could assert a claim for statutory penalties based on an alleged ERISA § 104(b) disclosure violation (or any statutory ERISA claim otherwise belonging to the plan participant or beneficiary for that matter) is through an assignment of benefits. See, e.g., Zapiach v. Horizon Blue Cross Blue Shield of New Jersey, 2016 W.L. 796891, at *4 (D.N.J. Feb. 29, 2016); Rahul Shah, M.D. v. Horizon Blue Cross Blue Shield, 2016 W.L. 4499551, at *9 (D.N.J. Aug. 25, 2016). Contrary to Plaintiff’s assertion, ERISA § 502(c) is not a statutory free-for-all that opens administrators and fiduciaries up to claims by anyone in the world. Case 3:17-cv-11742-PGS-TJB Document 176 Filed 03/28/19 Page 16 of 21 PageID: 973 12 C. The SAC Fails to Allege An Enforceable Request for “Administrative Records” Under ERISA §104(b). The Moving Brief explains that ERISA does not require the disclosure of “administrative records,” which are the documents which the SAC alleges “Blue” failed to produce. Rather, ERISA § 104(b) requires a “plan administrator,” “upon written request of any participant or beneficiary,” to “furnish a copy of the latest updated summary plan description, and the latest annual report, any terminal report, the bargaining agreement, trust agreement, contract, or other instruments under which the plan is established or operated.” 29 U.S.C. § 1024(b)(4); Moving Brief, p. 16-17. The SAC does not establish that Plaintiff made a “clear notice” request for any of this information to any Becker Defendant. See Moving Brief, p. 17. Third Circuit case law applies the “clear notice test” when it comes to ERISA § 104(b) requests, and “the touchstone is whether the request provides the necessary clear notice to a reasonable plan administrator of the documents which, given the context of the request, should be provided.” Kollman v. Hewitt Assocs., LLC, 487 F.3d 139, 146 (3d Cir. 2007). The SAC confirms that Plaintiff never made a “clear notice request” for any information required to be produced under ERISA § 104(b). All the SAC says is that during 2017 Plaintiff sent “hundreds” of rambling form letters regarding “hundreds” of claims to GeoBlue’s attorney. These letters were effectively requests for “document dumps” - document dumps which Plaintiff considered “administrative records.” See SAC ¶¶ 28, 38. As explained in the Moving Brief, ERISA does not require administrators to produce “administrative records,” or ninety-nine percent of the material recited in Plaintiff’s form letters. Moving Brief, p. 16-17. And although the form letter contains a fleeting reference to “summary plan descriptions,” which is one of the documents referenced in ERISA § 104(b)(4), the SAC does not support an inference that Plaintiff made a “clear notice request” given that the context in which it sent the letters to GeoBlue’s counsel did Case 3:17-cv-11742-PGS-TJB Document 176 Filed 03/28/19 Page 17 of 21 PageID: 974 13 not have anything to do with any local carrier’s processing or handling of claims, but with Plaintiff’s frustration with the change in GeoBlue’s business model. See SAC, ¶¶ 26-27. Neither a summary plan description nor any other document listed in ERISA § 104(b), even if they had been produced, would have provided information along the lines of Plaintiff’s interest. See Kollman, 487 F.3d at 146. It therefore follows that Plaintiff’s form letter did not pass the clear notice test, id., and the SAC contains no factual predicates supporting a contrary conclusion. D. ERISA’s Administrative Penalty Provision Does Not Exist for Plaintiff’s Protection. A general theme of the Opposition is that ERISA §§ 104(b) and 502(c) exist for the benefit of medical billing agencies like Plaintiff. Plaintiff argues, among other things: “These kinds of things are the reasons why Title 29, United States Code, Sec. 1024(B), Title 29, United States Code Sec. 1132(c)(1), and Title 29 Code of Federal Regulations Sec. 2575.502c-1 were put on the legal books, my most insurance contracts track same, and why many states have statutes on the books to this effect. This is the law[.]” Opposition, p. 4. No, it is not. Not only does Plaintiff fail to recognize when ERISA §§ 104(b) and 502(c) apply and who they apply to, Plaintiff distorts the purpose of ERISA’s administrative penalty provision in general. The purpose of § 502(c)(1)(B) is “not to compensate participants for injuries, but to punish noncompliance with ERISA.” Faircloth v. Lundy Packing Co., 91 F.3d 648, 659 (4th Cir.1996); see also Colarusso v. Transcapital Fiscal Sys., Inc., 227 F. Supp. 2d 243, 261 (D.N.J. 2002). If Congress did not enact ERISA § 502(c) to benefit actual plan participants, clearly it did not enact the provision for the benefit of medical billing agencies such as Plaintiff, who is a complete stranger to the participant-plan statutory dynamic. Case 3:17-cv-11742-PGS-TJB Document 176 Filed 03/28/19 Page 18 of 21 PageID: 975 14 POINT III PLAINTIFF IMPROPERLY ATTEMPTS TO USE EQUITABLE DEFENSES TO DEFEAT A MOTION TO DISMISS. Instead of addressing the SAC’s pleading deficiencies, Plaintiff postures itself as the victim of the defendants’ alleged refusal to provide information. The Opposition even goes so far as to assume a defensive posture by asserting traditional Rule 8(c)(1) “affirmative defenses” (unclean hands, estoppel, waiver, and laches) as a basis to oppose a Rule 12(b)(6) motion. Opposition, p. 21-23. This is improper. Equitable defenses are just that - defenses to claims. See Massari v. Einsiedler, 6 N.J. 303, 312 (1951)(“It is important to determine, in the first place, the nature and meaning of an ‘equitable defense’. A defense is a right possessed by the defendant, arising from the facts alleged in his pleadings, which defeats the plaintiff's cause of action or claim for the remedy demanded by his action.”). Here, the Becker Defendants contend that the SAC fails under federal pleading standards; they are not asserting claims against Plaintiff. Further, Plaintiff’s argument that equitable defenses preclude the Court from granting this motion because the Becker Defendants “refused to provide Med-X with the documentation/information they are rightfully entitled to,” Opposition, p. 21, is circular. Plaintiff has failed to demonstrate, let alone plead, that any Becker Defendant was required by ERISA to fulfill Plaintiff’s document requests or provide Plaintiff with any information at all. Plaintiff bears the burden under Twombly and Iqbal to plead facts sufficient to support a claim that is plausible on its face; the Becker Defendants do not bear the burden to prove the converse. The Opposition continues to blame the defendants for the continued gaps in Plaintiff’s pleadings, and simply posits that the Court should overlook it. Such finger pointing turns the law on its head by imposing on defendants a duty to help Plaintiff state a claim. No such duty exists in the Federal Rules of Civil Procedure or in ERISA. Case 3:17-cv-11742-PGS-TJB Document 176 Filed 03/28/19 Page 19 of 21 PageID: 976 15 POINT IV PLAINTIFF CANNOT AMEND THE SAC THROUGH AN OPPOSITION TO A MOTION TO DISMISS. Perhaps aware that the SAC is doomed, the Opposition scrambles by stating that this case is not just about ERISA § 104(b) claim, but also the “federal code, insurance contract, and/or state statutes.” The Opposition also purports to inject new theories of the case, such as breach of contract, respondeat superior, agency, and estoppel. See Opposition, p. 11-12, 15. And, for good measure, to deflect the Court’s attention from the obvious holes in the SAC, Plaintiff’s counsel editorializes about his experience reading insurance contracts and offers some background on his dealings with the Florida Unfair Claim Settlement Practices Act. Opposition, p. 14-15. None of this is in, or relevant to, the SAC. The SAC’s only allegation against the Becker Defendants is that these defendants allegedly failed to produce documents duly required to be disclosed under ERISA § 104(b), for which Plaintiff seeks per diem administrative penalties under ERISA § 502(c) See SAC, ¶ 35. Plaintiff is bound by its pleading, and it cannot use an opposition to a motion to dismiss to amend or cure an obviously deficient complaint. See, e.g., McMahon v. General Dynamics Corp, 933 F.Supp.2d 682, 696 (D.N.J. 2013); Branch v. Tower Air, Inc., 1995 W.L. 649935, at * 6 (S.D.N.Y. Nov. 3, 1995). The Court should reject out of hand Plaintiff’s eleventh-hour effort to paint this case as something other than what was pleaded. Case 3:17-cv-11742-PGS-TJB Document 176 Filed 03/28/19 Page 20 of 21 PageID: 977 16 CONCLUSION For all of the foregoing reasons, the Court should dismiss the SAC as to the Becker Defendants. And because Plaintiff has already amended twice before, this should be Plaintiff’s third and final strike. There is no reason to allow Plaintiff, who delayed filing the SAC for almost a year, a fourth bite at the apple through yet another amended pleading. The SAC should be dismissed with prejudice. BECKER LLC Attorneys for Becker Defendants By: /s/ Michael E. Holzapfel Michael E. Holzapfel Dated: March 28, 2019 Case 3:17-cv-11742-PGS-TJB Document 176 Filed 03/28/19 Page 21 of 21 PageID: 978