Alliancemed Llc v. Premera Blue Cross And Blue Shield of Alaska et al

MOTION to Dismiss for Lack of Jurisdiction

D. Ariz.November 18, 2016

100407.0505/6797083.3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANT PREMERA BLUE CROSS BLUE SHIELD OF ALASKA’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS FOR LACK OF SUBJECT-MATTER JURISDICTION PURSUANT TO FRCP 12(B)(1) LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4200 P.O. BOX 91302 SEATTLE, WA 98111-9402 206.223.7000 FAX: 206.223.7107 Gwendolyn C. Payton Jessica N. Walder LANE POWELL PC 1420 Fifth Avenue, Suite 4200 P.O. Box 91302 Seattle, WA 98111-9402 Telephone: 206.223.7000 Facsimile: 206.223.7107 Attorneys for Premera Blue Cross Blue Shield of Alaska THE HONORABLE DOUGLAS RAYES UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA AllianceMed, LLC, as authorized representative of L.R., Plaintiff, v. Premera Blue Cross Blue Shield of Alaska; Blue Cross and Blue Shield of Arizona, Inc., and Blue Cross Blue Shield Association, Defendant. ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 2:16-CV-03103-DLR DEFENDANT PREMERA BLUE CROSS BLUE SHIELD OF ALASKA’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS FOR LACK OF SUBJECT-MATTER JURISDICTION PURSUANT TO FRCP 12(B)(1) Case 2:16-cv-03103-DLR Document 22 Filed 11/18/16 Page 1 of 9 100407.0505/6797083.3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANT PREMERA BLUE CROSS BLUE SHIELD OF ALASKA’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS FOR LACK OF SUBJECT-MATTER JURISDICTION PURSUANT TO FRCP 12(B)(1) - i LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4200 P.O. BOX 91302 SEATTLE, WA 98111-9402 206.223.7000 FAX: 206.223.7107 TABLE OF CONTENTS Page Table of Authorities ............................................................................................................. ii Introduction ......................................................................................................................... 1 Facts .................................................................................................................................. 1 Argument ............................................................................................................................. 2 I. Standard of Review ....................................................................................... 2 II. As a Medical Services Billing Company, AllianceMed Lacks Standing to Pursue a Claim for Benefits under ERISA ................................ 2 III. AllianceMed Is Not the Assignee of L.R. ..................................................... 4 Conclusion ........................................................................................................................... 5 Case 2:16-cv-03103-DLR Document 22 Filed 11/18/16 Page 2 of 9 100407.0505/6797083.3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANT PREMERA BLUE CROSS BLUE SHIELD OF ALASKA’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS FOR LACK OF SUBJECT-MATTER JURISDICTION PURSUANT TO FRCP 12(B)(1) - ii LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4200 P.O. BOX 91302 SEATTLE, WA 98111-9402 206.223.7000 FAX: 206.223.7107 TABLE OF AUTHORITIES Page(s) Cases Ali v. USAA Fed. Sav. Bank, No. CV-16-00420-PHX-JAT, 2016 WL 5464602 (D. Ariz. Sept. 29, 2016) ............................2 Almont Ambulatory Surgery Ctr., LLC v. UnitedHealth Grp., Inc., 99 F. Supp. 3d 1110, 1146 (C.D. Cal. 2015) .............................................................................4 Angel Jet Servs., LLC v. Giant Eagle, Inc., No. CV09-01489-PHX-MHM, 2010 WL 1266831 (D. Ariz. Mar. 29, 2010) ...........................3 Lujan v. Defs. of Wildlife, 504 U.S. 555, 112 S. Ct. 2130, 119 L. Ed. 2d 351 (1992) .........................................................2 Menkowitz v. Blue Cross Blue Shield of Illinois, No. CIV. 14-2946, 2014 WL 5392063 (D.N.J. Oct. 23, 2014) .................................................5 Misic v. Bldg. Serv. Employees Health & Welfare Trust, 789 F.2d 1374 (9th Cir. 1986) ...............................................................................................2, 3 Schmier v. U.S. Court of Appeals for Ninth Circuit, 279 F.3d 817 (9th Cir. 2002) .....................................................................................................2 Simon v. Value Behavioral Health, Inc., 208 F.3d 1073 (9th Cir.), amended, 234 F.3d 428 (9th Cir. 2000) overruled on other grounds by Odom v. Microsoft Corp., 486 F.3d 541 (9th Cir. 2007) ...............................3 Torpey v. Blue Cross Blue Shield of Texas, No. 12-CV-7618 JAP, 2014 WL 346593 (D.N.J. Jan. 30, 2014) ..............................................4 White v. Lee, 227 F.3d 1214 (9th Cir. 2000) ...................................................................................................2 Statutes and Court Rules 29 C.F.R. § 2560.503-1 ....................................................................................................................5 29 C.F.R. 2560.503-1(b)(4) .............................................................................................................5 9 C.F.R. § 2560.503-1(4) .................................................................................................................5 ERISA ......................................................................................................................................1, 2, 3 Fed. R. Civ. P. 12(b)(1)................................................................................................................1, 2 Case 2:16-cv-03103-DLR Document 22 Filed 11/18/16 Page 3 of 9 100407.0505/6797083.3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANT PREMERA BLUE CROSS BLUE SHIELD OF ALASKA’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS FOR LACK OF SUBJECT-MATTER JURISDICTION PURSUANT TO FRCP 12(B)(1) - 1 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4200 P.O. BOX 91302 SEATTLE, WA 98111-9402 206.223.7000 FAX: 206.223.7107 Pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure (“Fed. R. Civ. P.”), Defendant Premera Blue Cross Blue Shield of Alaska (“Premera”) respectfully moves to dismiss with prejudice the complaint filed by Plaintiff AllianceMed, LLC’s (“AllianceMed”). Introduction This case involves a medical services billing company who is suing Premera to recover health care benefits on behalf of a provider that performed surgical services on a beneficiary of an employee benefit plan administered by Premera. Under clear Ninth Circuit law, however, only the beneficiary himself or the medical provider who performed the surgical services have standing to pursue a claim for benefits under ERISA. As such, AllianceMed lacks standing to pursue this claim, and this suit must be dismissed. Facts Plaintiff AllianceMed, a medical services billing company, is, in its own words, “a Revenue Generating Service Company that Works with Surgery Centers to help increase revenue by taking on the insurance carriers on their behalf.” See http://www.alliancemedllc.com/about- us/ (last visited Nov. 18, 2016). AllianceMed brought this lawsuit to recover health care benefits supposedly owed by Premera to Doctors Outpatient Surgery Center (“Doctors Outpatient”). Comp. ¶ 19. Doctors Outpatient performed surgery on L.R., a beneficiary of a self-funded employee health benefit plan administered by Premera. Comp. ¶ 5, 11. Doctors Outpatient charged Premera $74,575.38 for L.R.’s surgery. Compl. ¶ 14. Premera denied the claim. Comp. ¶ 15. AllianceMed now sues, claiming the right to recover as L.R.’s authorized representative. Comp. ¶¶ 12-13, 19. Per the Court’s instructions, counsel for Premera met and conferred with counsel for AllianceMed on November 2, 2016. See Ex. A. The parties agreed that this motion to dismiss cannot be cured by an amended complaint as it is Premera’s position that AllianceMed does not, nor will ever have, standing to pursue benefits under ERISA as it is neither a medical provider nor a beneficiary. Id. Case 2:16-cv-03103-DLR Document 22 Filed 11/18/16 Page 4 of 9 100407.0505/6797083.3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANT PREMERA BLUE CROSS BLUE SHIELD OF ALASKA’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS FOR LACK OF SUBJECT-MATTER JURISDICTION PURSUANT TO FRCP 12(B)(1) - 2 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4200 P.O. BOX 91302 SEATTLE, WA 98111-9402 206.223.7000 FAX: 206.223.7107 Argument I. Standard of Review Premera brings this suit as a motion to dismiss under Rule 12(b)(1), which allows a defendant to move to dismiss for lack of subject matter jurisdiction. Fed. R. Civ. P. 12(b)(1). As standing “pertain(s) to a federal court’s subject-matter jurisdiction under Article III, [it is] properly raised in a motion to dismiss under Federal Rule of Civil Procedure 12(b)(1), not Rule 12(b)(6).” White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). “With a factual Rule 12(b)(1) attack, however, a court may look beyond the complaint to matters of public record without having to convert the motion into one for summary judgment.” Id. The Court is “free to hear evidence regarding jurisdiction and to rule on that issue prior to trial, resolving factual disputes where necessary. In such circumstances, no presumptive truthfulness attaches to [a claimant's] allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims.” Ali v. USAA Fed. Sav. Bank, No. CV- 16-00420-PHX-JAT, 2016 WL 5464602, at *2 (D. Ariz. Sept. 29, 2016) (internal citations omitted). The plaintiff has the burden of establishing that it has standing. Schmier v. U.S. Court of Appeals for Ninth Circuit, 279 F.3d 817, 821 (9th Cir. 2002); see also Lujan v. Defs. of Wildlife, 504 U.S. 555, 561, 112 S. Ct. 2130, 2136, 119 L. Ed. 2d 351 (1992) (explaining that “[t]he party invoking federal jurisdiction bears the burden of establishing these elements [of standing]”). II. As a Medical Services Billing Company, AllianceMed Lacks Standing to Pursue a Claim for Benefits under ERISA. AllianceMed is a medical billing company, and, as such, does not have nor will ever have standing to bring a claim for health care benefits under ERISA. See http://www.alliancemedllc.com/about-us/ (last visited Nov. 18, 2016). Under well-established Ninth Circuit precedent, only a beneficiary or a medical provider may pursue a claim for benefits under ERISA. “ERISA provides civil actions may be brought under the statute by participants, beneficiaries, fiduciaries, and the Secretary of Labor.” Misic v. Bldg. Serv. Employees Health & Case 2:16-cv-03103-DLR Document 22 Filed 11/18/16 Page 5 of 9 100407.0505/6797083.3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANT PREMERA BLUE CROSS BLUE SHIELD OF ALASKA’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS FOR LACK OF SUBJECT-MATTER JURISDICTION PURSUANT TO FRCP 12(B)(1) - 3 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4200 P.O. BOX 91302 SEATTLE, WA 98111-9402 206.223.7000 FAX: 206.223.7107 Welfare Trust, 789 F.2d 1374, 1378 (9th Cir. 1986). In Misic, the Ninth Circuit held that in addition to the categories of people expressly designated to bring ERISA actions for health benefits, Dr. Misic, a dentist who provided services to the ERISA beneficiary, had standing to pursue those claims as the beneficiary’s assignee. Id. (holding “as assignee of beneficiaries pursuant to assignments valid under ERISA, has standing to assert the claims of his assignors”). Misic made clear that allowing providers to bring ERISA claims for benefits as assignees was in line with ERISA’s purpose, and therefore Misic’s holding extends only to the assignment of claims to health care providers. Specifically, Misic writes, “Health and welfare benefit trust funds are designed to finance health care. Assignment of trust monies to health care providers results in precisely the benefit the trust is designed to provide and the statute is designed to protect. Such assignments also protect beneficiaries by making it unnecessary for health care providers to evaluate the solvency of patients before commencing medical treatment, and by eliminating the necessity for beneficiaries to pay potentially large medical bills and await compensation from the plan.” Id. at 1377 (emphasis added). The Ninth Circuit later affirmed the policy behind Misic, expressly asserting that only medical providers were proper assignees for purpose of pursuing health care benefits under ERISA. Simon v. Value Behavioral Health, Inc., 208 F.3d 1073, 1081 (9th Cir.), amended, 234 F.3d 428 (9th Cir. 2000) overruled on other grounds by Odom v. Microsoft Corp., 486 F.3d 541 (9th Cir. 2007). In Simon, the Ninth Circuit held that an attorney - despite being the assignee for several medical providers - did not have standing to pursue a claim for benefits under ERISA. Id. Specifically, the court held, “we granted derivative standing to health care providers not because we believed that federal common law on derivative standing trumps the plain language of Section 502. We granted it because permitting health care providers to sue in place of the beneficiaries they had treated was consistent with Congressional intent in enacting ERISA.” Id. (emphasis in original); see also Angel Jet Servs., LLC v. Giant Eagle, Inc., No. CV09-01489- PHX-MHM, 2010 WL 1266831, at *4 (D. Ariz. Mar. 29, 2010) (citing Simon with approval). AllianceMed, therefore, does not have standing to bring this action as it is neither the Case 2:16-cv-03103-DLR Document 22 Filed 11/18/16 Page 6 of 9 100407.0505/6797083.3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANT PREMERA BLUE CROSS BLUE SHIELD OF ALASKA’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS FOR LACK OF SUBJECT-MATTER JURISDICTION PURSUANT TO FRCP 12(B)(1) - 4 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4200 P.O. BOX 91302 SEATTLE, WA 98111-9402 206.223.7000 FAX: 206.223.7107 beneficiary nor the medical provider. As the Complaint avers, “AllianceMed performs medical billing services on behalf of Doctors Outpatient.” Comp. at ¶ 1. Doctors Outpatient is the provider that performed the surgery on L.R. Comp. at ¶ 11. This action, and the prayer for relief, seeks damages for AllianceMed. See Comp. at Prayer for Relief ¶ B (“Plaintiff AllianceMed . . . demands judgment . . . [d]irecting Defendants to pay benefits to AllianceMed relating to the services provided to L.R.”). Thus, even if AllianceMed did have a proper assignment, which it does not as discussed below, AllianceMed lacks standing to bring this claim as it is neither the beneficiary nor the medical provider. As such, AllianceMed’s claims must be dismissed for lack of standing. III. AllianceMed Is Not the Assignee of L.R. Even if the Ninth Circuit were to allow AllianceMed - an entity that is neither the medical provider nor the beneficiary -- to pursue these claims, AllianceMed would still lack standing as it does not have a proper assignment from L.R. AllianceMed claims that it has standing to bring this claim as the “authorized representative of L.R.” Comp. at ¶ 22. AllianceMed does not claim to be the assignee of L.R.’s claims. Tellingly, AllianceMed sidesteps this key language, and instead argues that its standing is derived from its designation as L.R.’s authorized representative. Comp. ¶ 9. However, designating a party as the “authorized representative” is not the same as assigning one’s claims. AllianceMed confuses these two concepts. An authorized representative is a person or entity that is designated by the beneficiary to communicate with the plan on the beneficiary’s behalf; an assignee is a person or entity who has been assigned the rights to receive the benefits. See Almont Ambulatory Surgery Ctr., LLC v. UnitedHealth Grp., Inc., 99 F. Supp. 3d 1110, 1146 (C.D. Cal. 2015) (distinguishing authorized representative from assignee, and holding that a defendant’s allowing an authorized representative to pursue plaintiff’s claims internally with the plan did not waive the plan’s anti- assignment clause); Torpey v. Blue Cross Blue Shield of Texas, No. 12-CV-7618 JAP, 2014 WL 346593, at *4 (D.N.J. Jan. 30, 2014) (explaining that designating an entity as an “authorized representative” “applies to the administrative claims review process and does not confer standing Case 2:16-cv-03103-DLR Document 22 Filed 11/18/16 Page 7 of 9 100407.0505/6797083.3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANT PREMERA BLUE CROSS BLUE SHIELD OF ALASKA’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS FOR LACK OF SUBJECT-MATTER JURISDICTION PURSUANT TO FRCP 12(B)(1) - 5 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4200 P.O. BOX 91302 SEATTLE, WA 98111-9402 206.223.7000 FAX: 206.223.7107 to bring a civil action”). Thus, even though L.R. may have designated AllianceMed as its authorized representative, L.R. has not assigned his claims to AllianceMed. To support its contention that it has standing to pursue L.R.’s health benefit claims in court, AllianceMed erroneously relies on 9 C.F.R. § 2560.503-1(4). However, 29 C.F.R. § 2560.503-1 is a regulation that governs the “requirements for employee benefit plan procedures pertaining to claims for benefits by participants and beneficiaries.” In other words, the regulation pertains to the internal claims and appeals procedures by the plans themselves, not legal actions maintained in a court of law. See Menkowitz v. Blue Cross Blue Shield of Illinois, No. CIV. 14-2946, 2014 WL 5392063, at *3 (D.N.J. Oct. 23, 2014) (explaining 29 C.F.R. 2560.503-1(b)(4) “applies to internal submission of claims and appeals on behalf of beneficiaries, not civil lawsuits in federal courts.”). Conclusion For these reasons, the complaint should be dismissed for lack of subject-matter jurisdiction because AllianceMed does not have standing to maintain the action. DATED: November 18, 2016 LANE POWELL PC By /s/ Gwendolyn C. Payton Gwendolyn C. Payton, WSBA # 26752, pro hac vice Jessica N. Walder, WSBA # 47676 Attorneys for Premera Blue Cross Blue Shield of Alaska Case 2:16-cv-03103-DLR Document 22 Filed 11/18/16 Page 8 of 9 100407.0505/6797083.3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANT PREMERA BLUE CROSS BLUE SHIELD OF ALASKA’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS FOR LACK OF SUBJECT-MATTER JURISDICTION PURSUANT TO FRCP 12(B)(1) - 6 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4200 P.O. BOX 91302 SEATTLE, WA 98111-9402 206.223.7000 FAX: 206.223.7107 CERTIFICATE OF SERVICE Pursuant to F.R.Civ.P. 5(d), the undersigned certifies under penalty of perjury under the laws of the State of Arizona, that on the 18th day of November, 2016, the document attached hereto was presented to the Clerk of the Court for filing and uploading to the CM/ECF system. In accordance with their ECF registration agreement and the Court's rules, the Clerk of the Court will send e-mail notification of such filing to the following persons: Matthew K LaVelle LaVelle & LaVelle PLC 5060 N 40th St., Ste. 210 Phoenix, AZ 85018 602-279-2100 Fax: 602-279-2114 Email: matt@LaVelle-LaVelle.com By /s/ Gwendolyn C. Payton Gwendolyn C. Payton Case 2:16-cv-03103-DLR Document 22 Filed 11/18/16 Page 9 of 9 EXHIBIT A Case 2:16-cv-03103-DLR Document 22-1 Filed 11/18/16 Page 1 of 2 From: Matt LaVelle To: Walder, Jessica N. Subject: Re: AllianceMed v. Premera, BCBSA, BCBSAZ Date: Wednesday, November 2, 2016 2:06:15 PM Hi Jessica, You are correct. Matt On Nov 2, 2016, at 1:40 PM, Walder, Jessica N. wrote: Hi Matt, Thanks for speaking with me just now. To confirm, AllianceMed has agreed to dismiss BCBSA and BCBSAZ from the case without prejudice as it is Premera that is the proper defendant. We have met and conferred on the motion to dismiss that Premera intends to bring on lack of standing, and we were not able to reach an agreement. As such, Premera will plan to file its motion to dismiss by our deadline of November 18. Best, Jessica Jessica N. Walder | Lane Powell PC Attorney at Law | Bio | vCard 1420 Fifth Avenue, Suite 4200 P.O. Box 91302 | Seattle, WA 98111-9402 Direct: 206.223.6282 | Mobile: 310.413.3152 WalderJ@LanePowell.com | www.lanepowell.com This message is private or privileged. If you are not the person for whom this message is intended, please delete it and notify me immediately, and please do not copy or send this message to anyone else. Case 2:16-cv-03103-DLR Document 22-1 Filed 11/18/16 Page 2 of 2 100407.0505/6813674.1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Gwendolyn C. Payton Jessica N. Walder LANE POWELL PC 1420 Fifth Avenue, Suite 4200 P.O. Box 91302 Seattle, WA 98111-9402 Telephone: 206.223.7000 Facsimile: 206.223.7107 Attorneys for Premera Blue Cross Blue Shield of Alaska THE HONORABLE DOUGLAS RAYES UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA AllianceMed, LLC, as authorized representative of L.R., Plaintiff, v. Premera Blue Cross Blue Shield of Alaska; Blue Cross and Blue Shield of Arizona, Inc., and Blue Cross Blue Shield Association, Defendant. ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 2:16-CV-03103-DLR [PROPOSED] ORDER ON DEFENDANT PREMERA BLUE CROSS BLUE SHIELD OF ALASKA’S MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION PURSUANT TO FRCP 12(B)(1) Action Filed: November 18, 2016 Upon consideration of Defendant, Premera Blue Cross Blue Shield of Alaska’s motion to dismiss the complaint filed by Plaintiff AllianceMed, LLC, and upon good cause shown: IT IS HEREBY ORDERED that Defendant’s Motion to Dismiss Plaintiff’s Complaint is GRANTED. Plaintiff’s Complaint is dismissed with prejudice. IT IS SO ORDERED. DATED: November 18, 2016 Case 2:16-cv-03103-DLR Document 22-2 Filed 11/18/16 Page 1 of 1