Bloomfield Surgical Center v. Cigna Health And Life Insurance Company et alBRIEF in OppositionD.N.J.March 6, 2017 UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY BLOOMFIELD SURGICAL CENTER on assignment of ENA R., Plaintiff, v. CIGNA HEALTH AND LIFE INSURANCE COMPANY and BUILDING SERVICE 32BJ BENEFIT FUND, Defendants. Civil Action No.: 2:16-cv-08645-SDC-LDW PLAINTIFF’S MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS PLAINTIFF’S COMPLAINT CALLAGY LAW, PC Michael Gottlieb, Esq. 650 From Road, Suite 565 Paramus, New Jersey 07652 Tel: (201) 261-1700 Attorneys for Plaintiff, Bloomfield Surgical Center On the Brief: Michael Gottlieb, Esq Case 2:16-cv-08645-SDW-LDW Document 14 Filed 03/06/17 Page 1 of 10 PageID: 187 PRELIMINARY STATEMENT Plaintiff, Bloomfield Surgical Center (“Plaintiff”), by and through its attorneys, Callagy Law, P.C., respectfully submits this Brief in Opposition to Building Service 32BJ Benefit Fund (“Defendant Building Service”) and Cigna Health and Life Insurance Company’s (“Defendant Cigna”) (collectively, “Defendants”) Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(6) (“Motion”).1 This action arose from Defendants’ failure to properly reimburse Plaintiff for medical facility services provided to patient Ena R. (“Patient”), who duly assigned her benefits to Plaintiff. As Defendants have conceded the case is governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1002, et seq. (“ERISA”), Plaintiff agrees to voluntarily dismiss the state law breach of contract claim in Count One. The remainder of Defendants’ Motion, however, is without merit. The Assignment of Benefits (“AOB”) validly transfers the Patient’s insurance benefits and related ERISA rights and remedies including Plaintiff’s right to allege ERISA violations contained in Defendants’ summary plan description. In that regard, Defendants’ summary plan description clearly failed to apprise the patient of her rights and obligations under her health benefits plan. Additionally, Count Four should not be dismissed until the Court determines whether Plaintiff succeeds on its claims under 29 U.S.C. § 1132(a)(1). If Plaintiff is not entitled to benefits under the Plan, Plaintiff might still be entitled to “other appropriate equitable relief’ to remedy any breaches of fiduciary duty. Count Five likewise should not be dismissed because whether extra-contractual relief is allowed in this District under 29 U.S.C. § 1133 and 29 C.F.R. 1 Defendants’ have filed two independent motions to dismiss with the same or substantially similar arguments. Accordingly, Plaintiff is opposing both Motions in the within opposition. For the sake of clarity, when citing to a page number in Defendants’ Motion, Plaintiff is referencing Defendant Building Service’s papers and not Cigna’s. 1 Case 2:16-cv-08645-SDW-LDW Document 14 Filed 03/06/17 Page 2 of 10 PageID: 188 2560.503-1, at least insofar as Plaintiff’s right to non-monetary equitable relief, is an issue of first impression. Accordingly, Defendants’ Motion must be denied. STATEMENT OF FACTS Patient is insured as a participant in a health benefits plan (“Plan”) provided or administered by Defendants. Complaint (“Complt.”), ¶ 2-3. On September 25, 2013, Patient underwent spinal surgery in Plaintiff’s facility. Complt., ¶ 5-6. Plaintiff obtained an AOB from Patient, bringing this claim under ERISA. Id., ¶ 7. Subsequently, Plaintiff prepared and submitted a Health Insurance Claim Form (“HICF”) demanding reimbursement in the amount of $184,654 for the medically necessary services rendered to Patient. Id., ¶ 8. In response to the HICF, Defendant issued payment in the amount of only $48,464.32. Id ¶ 9. Taking into account any known deductibles, copayments, and coinsurance, this resulted in an underpayment of $136,189.68. Id., ¶ 12. Plaintiff adhered to the proper appeals process to no avail, giving rise to this action for relief. Id., ¶ 10. LEGAL ARGUMENT I. Standard of review Defendants moves to dismiss under Fed. R. Civ. P. 12(b)(6), arguing that Plaintiff has failed to state a claim upon which relief can be granted. Defendant’s Motion to Dismiss (“Def. Mtn.”), p. 11. When reviewing a 12(b)(6) motion to dismiss on the pleadings, courts “accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir.2008). 2 Case 2:16-cv-08645-SDW-LDW Document 14 Filed 03/06/17 Page 3 of 10 PageID: 189 The Supreme Court further clarified the Rule 12(b)(6) standard noting that the factual allegations set forth in the complaint “must be enough to raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). The allegations in the complaint must “raise a reasonable expectation that discovery will reveal evidence of the necessary element,” thereby justifying the advancement of “the case beyond the pleadings to the next stage of litigation.” Phillips, 515 F.3d at 234-235. II. Plaintiff agrees to voluntarily dismiss Count I Count One of the Complaint is a state law breach of contract claim. This claim was included in the event that the Plan was not governed by ERISA. As Defendants have conceded that the Plan is indeed governed by ERISA, Plaintiff agrees to voluntarily dismiss Count I. III. Plaintiff is entitled to relief under Count III based on Defendants’ failure to establish a summary plan description in accordance with 29 U.S.C.A. § 1022 Defendants’ argue that Plaintiff is not entitled to relief under Count III in which Plaintiff alleged that Defendants failed to establish a summary plan description in accordance with 29 USCA 29 U.S.C.A. § 1022. Def. Mtn., p. 5. However, none of Defendants’ arguments hold up to scrutiny. A. The AOB not only confers standing to sue for benefits under ERISA but also confers standing to sue for equitable relief under ERISA The scope of the AOB in question covers both monetary and equitable relief, as it expressly states that Patient assigns both her rights and benefits under his insurance contract. See Ctr. for Orthopedics & Sports Med. v. Horizon, 2015 WL 5770385, at *4 (D.N.J. Sept. 30, 2015)2 (“In determining what claims a healthcare provider may bring under ERISA, courts look to the language of the assignment.”) (internal citations omitted). 2 A copy of this unpublished opinion is attached as Exhibit A to the Gottlieb Cert. 3 Case 2:16-cv-08645-SDW-LDW Document 14 Filed 03/06/17 Page 4 of 10 PageID: 190 The AOB at issue clearly states that the Patient assigns all of his rights and benefits under his insurance contract to Plaintiff. Compl., Ex. B. It also states that the patient authorizes Plaintiff to file insurance claims on his behalf for services rendered, including obtaining counsel to enter legal proceedings on the patient’s behalf or in the patient’s name. Id. This language plainly manifests the “assignor’s intention to transfer” all of his rights under his health insurance contract “by virtue of which the assignor’s right to performance by the obligor is extinguished in whole or in part and the assignee acquires a right to such performance.” Restatement (Second) of Contracts § 317 (1981); see also MHA, LLC v. Aetna Health, Inc., 2013 W.L. 705612, at * 7 (D.N.J. Feb. 25, 2013)3 (citing Blacks Law Dictionary (9th ed. 2009) and In re Jason Realty, L.P., 59 F.3d 423, 427 (3d Cir. 1995)). Because the plain language of the AOB expressly refers to “rights” in addition to “benefits,” it confers standing on Plaintiff to sue for equitable relief, in addition to monetary relief, under ERISA. See Ctr. for Orthopedics & Sports Med. v. Horizon, 2015 WL 5770385, at *5 (D.N.J. Sept. 30, 2015). There is simply no reason such rights do not include those set forth in 29 U.S.C.A. § 1022. Accordingly, Plaintiff has standing to pursue its claim that Defendants failed to furnish a summary plan description in accordance with 29 U.S.C.A. § 1022. B. Defendants have clearly failed to furnish an ERISA complaint summary plan description in accordance with ERISA’s requirement to reasonably apprise beneficiaries of their rights and obligations under the plan Defendants further argue that Count III is defective because, while Plaintiff merely alleges that the plan does not specify how the allowable amount is calculated, such is not required by ERISA.4 Def. Mtn., p. 6. However, Defendants are vastly underestimating the extent 3 A copy of this unpublished opinion is attached as Exhibit B to the Gottlieb Cert. 4 Defendants actually begin this assertion by stating “there is, as a rule, no private right of action for participants and beneficiaries under Section 1022, and for this reason, Count Three of the 4 Case 2:16-cv-08645-SDW-LDW Document 14 Filed 03/06/17 Page 5 of 10 PageID: 191 to which its plan is non-compliant with the relevant ERISA provision. Specifically, as set forth in the Complaint allegations, Defendants furnished a summary plan description which states that out-of-network treatment is reimbursed at the “allowed amount” and the patient is responsible for payments in excess of that amount. See Exhibit F of Plaintiff’s Complaint. “Allowed amount” is then defined simply as “the maximum the Fund will pay for a covered service.” Defendants argue that the above provisions in no way violate ERISA’s requirement for carriers to reasonably apprise their beneficiaries of their rights and obligations under the plan. Moreover, per Defendants’ position, their lack of culpability is so blatant that Plaintiff’s Count III should be dismissed. In truth, Defendants’ position is absurd. As noted, the summary plan description contains no information as to how out-of- network benefits are paid other than by stating they are subject to a mysterious “allowed amount.” Pursuant to these terms, the allowed amount can, quite literally, be any existing number. For example, Defendants would not be violating the plan’s terms if it set forth an allowable amount of one dollar leaving the patient responsible for everything above one dollar. And yet, Defendants’ take the position that this summary plan description reasonably apprised the patient of her rights and obligations under the plan, as required by ERISA. Such a position lacks all common sense and must fail. Defendants rely upon the unpublished McCarthy v. Dun & Bradstreet Corp., WL 2743569, at (D. Conn. Nov. 30, 2004)5 to support its position that ERISA does not require a Complaint should be dismissed.” Def. Mtn., p. 6. However, Defendants do not provide any support for this assertion as a procedural matter, but rather delve into an argument defending their summary plan description. Thus, it is not clear whether Defendants allege no private right of action on procedural grounds or whether they allege that there is no right of action here due to the substance of their summary plan description. Because Defendants’ merely address the substance, Plaintiff limits its response accordingly. 5 A copy of this unpublished opinion is attached as Exhibit C to the Gottlieb Cert. 5 Case 2:16-cv-08645-SDW-LDW Document 14 Filed 03/06/17 Page 6 of 10 PageID: 192 summary plan description to disclose how a benefit reduction is calculated. Def. Mtn., p. 6. Aside from the fact that McCarthy is not binding on this Court, it is wholly distinguishable from this case, does not involve health benefits, and does not even support Defendants’ underlying position. In McCarthy, the summary plan description at issue related to the plaintiff’s retirement benefits. McCarthy v. Dun & Bradstreet Corp., WL 2743569, at *4 (D. Conn. Nov. 30, 2004). The dispute between the parties pertained to a provision in the summary plan description addressing the plaintiff’s right to receive benefits upon an early retirement. Id. That provision stated that the plaintiff could retire as early as 55 but the benefit would be “reduced actuarially.” Id. The Court ruled that ERISA did not require the plan to state the precise amount by which benefits would be reduced upon early retirement. Id. However, the ruling in McCarthy is easily distinguishable from our case because the dispute pertained to a provision reducing benefits, not the benefits themselves. In other words, the plaintiff was seemingly made aware of the amount she would receive in retirement and was then made aware that early retirement results in a reduction in those benefits, without specifying the reduction percentage. Here, Defendants have not proffered an iota of information as to what the patient is entitled to in the form of out-of-network benefits. In that regard, the summary plan description in McCarthy is seemingly substantially more informative than the summary plan in this case. Accordingly, Defendants’ reliance on McCarthy is misguided and Defendants’ motion should be denied. 6 Case 2:16-cv-08645-SDW-LDW Document 14 Filed 03/06/17 Page 7 of 10 PageID: 193 IV. Plaintiff is Entitled to Relief under § 1132(a)(3) as requested in Count Four Defendants’ argue that Plaintiff is not entitled to the relief sought in Count Four, first by stating that it is outside the scope of the AOB and therefore Plaintiff lacks standing. To avoid repetition, Plaintiff, in response, relies on the arguments set forth in Section III, subsection A of this brief which adequately addresses this issue. Defendants also argue that Plaintiff’s Count Four is inherently defective, relying on the United State Supreme Court Case Varity Corp. v. Howe, 516 U.S. 489 (1996) to assert that claims under § 1132(a)(3) are only appropriate “where 502 offers no alternative relief.” Def. Mtn., p. 8. However, as this Court has previously noted, “Varity does not propose a bright-line rule that a claim for equitable relief under § 1132(a)(3) should be dismissed when a plaintiff also brings a claim under § 1132(a)(1)(B).” DeVito v. Aetna, Inc., 536 F. Supp. 2d 523, 534 (D.N.J. 2008); see also Beye v. Horizon Blue Cross Blue Shield of New Jersey, 568 F. Supp. 2d 556 (D.N.J. 2008) (“Varity does not mandate dismissal of that claim at the motion-to-dismiss stage simply because Plaintiff also brought a § 502(a)(1)(B) claim.”). More important, since Varity, the Third Circuit, Sister Circuits, and this Court have held a plaintiff who has been denied benefits can, at the pleading stage, maintain an action for benefits under § 1132(a)(1)(B) and an action for “other appropriate equitable relief” under § 1132(a)(3)(B). See Tannenbaum v. UNUM Life Ins. Co. of Am., 2004 WL 1084658 (E.D. Pa. Feb. 27, 2004) (“It is too early in these proceedings to decide whether Plaintiff is contractually entitled to benefits under the Plan. If Plaintiff is not entitled to benefits under the Plan, Plaintiff might still be entitled to ‘other appropriate equitable relief’ to remedy any breaches of fiduciary duty by Defendants.”)6; see also 6 A copy of this unpublished opinion is attached as Exhibit D to the Gottlieb Cert. 7 Case 2:16-cv-08645-SDW-LDW Document 14 Filed 03/06/17 Page 8 of 10 PageID: 194 Lipstein v. UnitedHealth Grp., 296 F.R.D. 279, 298 (D.N.J. 2013) (citing Lipstein v. United Healthcare Ins. Co., 2011 WL 5881925, at *2 (D.N.J. Nov. 22, 2011)).7 Likewise, it is improper at this stage to dismiss this claim until it can be determined if Plaintiff can and will succeed on claims asserted under § 1132(a)(1). Indeed, in finding that a direct cause of action for breach of fiduciary duty against administrators of ERISA plans existed, the Third Circuit noted that “the fundamental purpose of the statute is the ‘enforcement of strict fiduciary standards of care in the administration of all aspects of pension plans and promotion of the best interests of participants and beneficiaries.’” Bixler v. Cent. Pennsylvania Teamsters Health & Welfare Fund, 12 F.3d 1292, 1299 (3d Cir. 1993) (quoting Massachusetts Mutual Life Ins. Co. v. Russell, 473 U.S. 134, 157 (1985)). A cause of action related to the fundamental purpose of ERISA should not be dismissed over a questionable reading of Varity. V. Plaintiff has a private right of action under 29 C.F.R. 2560.503-1 As to Count Four, Defendant’s argument that 29 U.S.C. § 1133 and 29 C.F.R. 2560.503-1 does not provide for a private rights of action is superficial as Defendants do not distinguish between monetary and equitable relief. Although Plaintiff in Count V does seek monetary relief, as in Count IV it also seeks equitable relief: subsection (a) of the “wherefore clause” requests “an Order that...Plaintiff is deemed to have exhausted all required administrative remedies...” and subsection (d) of same requests “such other and further relief as the Court may deem just and equitable.” In that regard, the case law Defendants rely on is not quite on point. Moreover, in Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134 (1985),relied upon by Defendants. the Supreme Court limited its holding to whether or not § 409(a) provided a cause of action, not the entirety of the statute. Id. at 158 (“Because respondent relies entirely on § 409(a), and expressly disclaims reliance on § 502(a)(3), we have no occasion to consider 7 A copy of this unpublished opinion is attached as Exhibit E to the Gottlieb Cert. 8 Case 2:16-cv-08645-SDW-LDW Document 14 Filed 03/06/17 Page 9 of 10 PageID: 195 whether any other provision of ERISA authorizes recovery of extracontractual damages.”). At this stage, then, dismissal of this claim is likewise unwarranted and Defendants’ motion should be denied. CONCLUSION For the foregoing reasons, Defendants’ Motion to Dismiss should be denied in its entirety, with the exception of Count I which Plaintiff voluntarily dismisses. Respectfully submitted, Dated: Paramus, New Jersey March 6, 2017 By: s/ Michael Gottlieb Michael Gottlieb, Esq. Callagy Law, P.C. 650 From Road, Suite 565 Paramus, New Jersey 07652 Telephone: (201) 261-1700 Email: mgottlieb@callagylaw.com Attorneys for Plaintiff, Bloomfield Surgical Center ORIGINAL of the foregoing filed this 6th Day of March, 2017 through ECF with the Clerk of the United States District Court for the District of New Jersey 9 Case 2:16-cv-08645-SDW-LDW Document 14 Filed 03/06/17 Page 10 of 10 PageID: 196 1 UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY BLOOMFIELD SURGICAL CENTER on assignment of ENA R., Plaintiff, v. CIGNA HEALTH AND LIFE INSURANCE COMPANY and BUILDING SERVICE 32BJ BENEFIT FUND, Defendants. Civil Action No.: 2:16-cv-08645-SDW-LDW CERTIFICATION OF MICHAEL GOTTLIEB, ESQ. I, Michael Gottlieb, Esq., of full age, do hereby certify as follows: 1. I am an attorney-at-law in the State of New Jersey and an Associate with Callagy Law, P.C., attorneys for Plaintiff in the above-captioned matter. I make this certification in support of Plaintiff’s opposition (“Opposition”) to Defendant CIGNA Health and Life Insurance Company (“Defendant CIGNA”) and Defendant Building Service 32BJ Benefit Fund (“Defendant Building Service”)’s motion to dismiss Plaintiff’s complaint pursuant to Rule 12(b)(6). 2. Annexed hereto as Exhibit A is a true and correct copy of the unpublished opinion in Ctr. for Orthopedics & Sports Med. v. Horizon. Case 2:16-cv-08645-SDW-LDW Document 14-1 Filed 03/06/17 Page 1 of 2 PageID: 197 2 3. Annexed hereto as Exhibit B is a true and correct copy of the unpublished opinion in MHA, LLC v. Aetna Health, Inc. 4. Annexed hereto as Exhibit C is a true and correct copy of the unpublished opinion in McCarthy v. Dun & Bradstreet Corp. 5. Annexed hereto as Exhibit D is a true and correct copy of the unpublished opinion in Tannenbaum v. UNUM Life Ins. Co. of Am. 6. Annexed hereto as Exhibit E is a true and correct copy of the unpublished opinion in Lipstein v. United Healthcare Ins. Co. I certify that the foregoing statements made by me are true. I am aware that if any of the foregoing statements made by me are willfully false, I am subject to punishment. Respectfully submitted, CALLAGY LAW, P.C. By: _s/ Michael Gottlieb___________ Michael Gottlieb, Esq. Mack-Cali Centre II 650 From Road, Suite 565 Paramus, New Jersey 07652 Telephone: (201) 261-1700 Facsimile: (201) 549-6236 Email: mgottlieb@callagylaw.com Attorneys for Plaintiff, Bloomfield Surgical Center Date: March 6, 2017 Case 2:16-cv-08645-SDW-LDW Document 14-1 Filed 03/06/17 Page 2 of 2 PageID: 198 EXHIBIT “A” Case 2:16-cv-08645-SDW-LDW Document 14-2 Filed 03/06/17 Page 1 of 7 PageID: 199 Center for Orthopedics and Sports Medicine v. Horizon, Not Reported in F.Supp.3d (2015) 2015 WL 5770385 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 KeyCite Yellow Flag - Negative Treatment Distinguished by Rahul Shah, M.D. v. Horizon Blue Cross Blue Shield, D.N.J., August 25, 2016 2015 WL 5770385 Only the Westlaw citation is currently available. NOT FOR PUBLICATION United States District Court, D. New Jersey. Center for Orthopedics and Sports Medicine, Plaintiff, v. Horizon; ABC Benefit Plans 1-10; and John/ Jane Does Inc./LLC 1-10, Defendants. Civil No.: 13-1963 (KSH) (CLW) | Signed 09/30/2015 Attorneys and Law Firms Matthew Richard Major, Samuel S. Saltman, Callagy Law, P.C., Sean R. Callagy, Law Office of Sean R. Callagy, Esq., Paramus, NJ, for Plaintiff. Evan Neadel, Becker Meisel LLC, Livingston, NJ, Michael E. Holzapfel, Becker Meisel LLC, Shrewsbury, NJ, for Defendants. Opinion Katharine S. Hayden, U.S.D.J. I. Introduction *1 Center for Orthopedics and Sports Medicine (“Center”) sued Horizon in state court, bringing claims for breach of contract and violations of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001, et seq. (D.E. 1-1 (“Compl.”).) Horizon removed the lawsuit to this Court pursuant to 28 U.S.C. § 1441, relying on its federal question jurisdiction under 28 U.S.C. § 1331. (D.E.1.) Both parties have filed competing motions for summary judgment, which are now before the Court. (D.E. 18; D.E. 21.) As set forth below, both motions will be granted in part and denied in part. II. Background Center is a health services provider located in Toms River, New Jersey, and Horizon is a “not-for-profit health services corporation” with a principal place of business in Newark, New Jersey. (D.E. 17 (“Joint Statement of Undisputed Facts”), ¶¶ 1, 2.) Two physicians associated with Center, Dr. Daniel Fox, a primary surgeon, and Dr. Manooj Prasad, an assistant surgeon, performed right elbow surgery on Adam M., 1 who had health insurance through a health benefit plan issued by Horizon to Monmouth Telecom (“the Monmouth Plan”), his employer. (Id. ¶¶ 4, 5, 13.) The Monmouth Plan, which is governed by ERISA, reimburses “covered services” that are “medically necessary and appropriate to diagnose or treat an illness or injury.” (Id. ¶ 14; see also D.E. 18-3 (“Monmouth Plan”) at 119.) Prior to the surgery, Adam M. executed an “Assignment of Benefits Form” for Center, stating: “I hereby instruct and direct ... Insurance Company to pay [benefits] by check made out and mailed to” Center. (D.E. 18-8 (“Assignment”).) It also provides, in capital letters, “THIS IS A DIRECT ASSIGNMENT OF MY RIGHTS AND BENEFITS UNDER THIS POLICY.” (Id.) Center, as an out-of-network provider, 2 submitted a request for reimbursement to Horizon for charges related to the services of both doctors, but only Dr. Prasad's charges are at issue in the present litigation. (Joint Statement of Undisputed Facts, ¶ 5.) Center sought reimbursement in the amount of $22,030 for Dr. Prasad's services. 3 (Id. ¶ 5.) Horizon denied reimbursement, and Center appealed the decision using Horizon's internal review procedure. (D.E.18-15.) Horizon denied the appeal stating in an explanation of benefits that “the service of an assistant surgeon is not required for this procedure.” (Id. ¶ 17 (internal quotation marks omitted); see also D.E. 1816.) Center continued to challenge Horizon's refusal to pay for Dr. Prasad's services through its internal appeals process, and Horizon continued to deny the claim. *2 While Center appealed, it had Adam M. execute a second assignment titled “Assignment of Benefits & Power of Attorney” dated July 18, 2012. (D.E. 18-13 (“Second Assignment”).) In it, he assigned to Center all of his rights and benefits under his insurance contract for payment for services rendered to him, and authorized Center to file insurance claims with Horizon on his behalf for the services it provided. (Id.) Case 2:16-cv-08645- DW-LDW Document 14-2 Filed 03/06/17 Page 2 of 7 PageID: 200 Center for Orthopedics and Sports Medicine v. Horizon, Not Reported in F.Supp.3d (2015) 2015 WL 5770385 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 Ultimately, Center sued Horizon in state court, bringing a breach of contract claim in count 1, and in counts 2, 3, and 4, raising claims under ERISA, relying on the assignment it received from Adam M. to provide it with derivative standing to pursue the claims on his behalf. (Id.) The ERISA causes of action, more specifically, seek in count 2, the unpaid benefits for Dr. Prasad's services under § 502(a)(1)(B) of ERISA (id. ¶¶ 19-26.); in count 3, statutory penalties pursuant to § 502(c)(1)(B) for Horizon's alleged failure to provide it with required information when requested (id. ¶¶ 27-34.); and in count 4, an order stating, along with compensatory damages and other equitable relief, that Horizon failed to maintain claims procedures that comply with 29 C.F.R. § 2560.503-1. (Id. ¶¶ 35-43.) Horizon removed the action, relying on this Court's federal question jurisdiction under 28 U.S.C. § 1331 because Center sought relief under ERISA's civil enforcement mechanism, 29 U.S.C. § 1132(a). (D.E.1, ¶ 13.) Center subsequently dropped its breach of contract claim, conceding that it was preempted by ERISA. Following discovery, both sides moved for summary judgment. (D.E. 18; D.E. 21.) Center has withdrawn its claim for benefits under § 502(a)(1)(B) of ERISA in count 2. The Court addresses parties' motions for summary judgment on the remaining counts 3 and 4. III. Discussion A. Standard of Review A court must grant summary judgment “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The parties agree that there are no disputed material facts, and because contract interpretation is question of law, whether the assignment encompasses the right to bring a claim under § 502(c)(1) (B) is ripe for summary judgment. See Dome Petroleum Ltd. v. Emp'rs Mut. Ins. Co. of Wis., 767 F.2d 43, 47 (3d Cir.1985). B. Center's Voluntary Dismissal of Count 1 and Count 2 As already indicated, Center withdrew its claims in count 1 and count 2 and requests that they be voluntarily dismissed without prejudice. Horizon argues that Center is precluded from withdrawing those claims without prejudice because it answered Center's complaint and filed a motion for summary judgment. Under those circumstances, Horizon argues, Center is barred from obtaining a dismissal without prejudice, absent a court order or consent, pursuant to Fed.R.Civ.P. 41(a). Horizon naturally does not consent. According to Fed.R.Civ.P. 41(a)(1)(A)(i), a “plaintiff may dismiss an action without a court order by filing a notice of dismissal before the opposing party serves either an answer or a motion for summary judgment. Such a dismissal is deemed to be without prejudice unless stated otherwise.” Fed.R.Civ.P. 41(a)(1)(B) (emphasis added). Contrary to Horizon's argument, Fed.R.Civ.P. 41's title, “Dismissal of Actions,” and the use of the term “action” in the text, rather than “claim,” makes clear that the rule “governs dismissal of entire actions, not of individual claims.” Hells Canyon Preservation Council v. U.S. Forest Serv., 403 F.3d 683, 687 (9th Cir.2005); see also Chan v. Cnty. of Lancaster, 2013 WL 2412168, at *16 (E.D. Pa. June 4, 2013) (“[V]oluntary dismissal of some, but not all claims against a single defendants is not permitted under Rule 41(a).”). Instead, a plaintiff wishing to withdraw particular claims without prejudice must amend the complaint pursuant to Fed.R.Civ.P. 15(a). Klay v. United Healthgroup, Inc., 376 F.3d 1092, 1106 (11th Cir.2004). *3 Center did not seek leave of the Court to file an amended complaint under Fed.R.Civ.P. 15(a). 4 Rather, it withdraws count 1 and count 2 in its brief supporting its motion for summary judgment and says that it does so without prejudice. The Court is therefore faced with two options: it can dismiss those claims with prejudice, see Gyda v. Temple Univ., 2000 WL 675722, at *4 (E.D.Pa. May 23, 2000) (dismissing plaintiff's claims with prejudice that were withdrawn via a summary judgment motion), or the Court can treat the request in Center's brief as a motion to amend its complaint. See Chan, 2013 WL 2412168, at *16 (construing plaintiff's request to withdraw certain claims in response to the defendants' summary judgment motion as a motion to amend the complaint). Leave should be freely given to amend a complaint “when justice so requires.” Fed.R.Civ.P. 15(a)(2). The Court finds, however, that justice does not require leave in this instance. In making its request to dismiss these particular claims, Center concedes that both lack merit. It implies that its § 502(a)(1)(B) claim is futile Case 2:16-cv-08645- DW-LDW Document 14-2 Filed 03/06/17 Page 3 of 7 PageID: 201 Center for Orthopedics and Sports Medicine v. Horizon, Not Reported in F.Supp.3d (2015) 2015 WL 5770385 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 by stating that “it appears that Horizon maintains a Uniform Evidence-Based Medical Policy [ (“UEMP 2”) ] on surgical assistants.” A “UEMP 2 includes a list of procedures memorialized by specific [Current Procedural Terminology (‘CPT’) ] codes for which the services of an assistant surgeon are not considered medically necessary.” 5 (Joint Statement of Undisputed Facts, ¶ 15.) On the Health Insurance Claim Form for Dr. Prasad's services, Center sought payment for services designated by CPT codes 24140, 24359, and 24102 (D.E.18-9), which Horizon lists as assistant surgeon services deemed not medically necessary in its UEMP 2. (D.E. 18-2 at 5.) Center's recognition that Horizon maintains UEMP 2 in withdrawing the claim indicates that it is aware that Horizon will not reimburse it for the services designated by the CPT codes for which billed. And, with count 1, Center has previously acknowledged that its breach of contract claim is preempted by ERISA. In short, Center all but concedes that count 2 is doomed and has already conceded that count 1 is legally impermissible. On that basis, both counts are dismissed with prejudice. C. Mootness of Count 3 and Count 4 Horizon argues that because Center withdrew its claim for benefits under § 502(a)(1)(B) of ERISA, its remaining ERISA claims in count 3 and count 4 are moot. As indicated above, count 3 seeks statutory penalties pursuant to § 502(c)(1)(B) for Horizon's alleged failure to provide Center with required information when requested and count 4 seeks, along with compensatory damages and other equitable relief, an order stating that Horizon failed to maintain claims procedures that comply with 29 C.F.R. § 2560.503-1. Horizon's contention is that the parties' joint statement of undisputed facts framed the litigation's primary issue as Center's § 502(a)(1)(B) claim for payment of Dr. Prasad's bill and, since that is no longer at issue, the Court has no controversy to resolve. Horizon also argues that Center is precluded from pursuing statutory damages under § 502(c)(1)(B) without a related claim under § 502(a)(1)(B) because there can be no injury from a failed disclosure without a corresponding injury arising from the nonpayment of benefits. *4 Center's § 502(c)(1)(B) ERISA claim in count 3 is not moot. District courts within the Third Circuit have permitted plaintiffs to seek statutory penalties under § 502(c)(1)(B) without also bringing a claim for benefits pursuant to § 502(a)(1)(B). See, e.g., Colarusso v. Transcapital Fiscal Sys., Inc., 227 F.Supp.2d 243, 249 (D.N.J.2002) (Bissell, J.) (deciding only a claim brought under 29 U.S.C. § 1132(c)(1)(B) alleging that a plan administrator failed to provide information requested by the plaintiff regarding an ERISA-governed health plan); Fox v. Law Offices of Shapiro & Kreisman, 1998 WL 175865, at *5 (E.D.Pa. Apr. 13, 1998) (allowing the plaintiff to pursue a claim under § 502(c)(1)(B) of ERISA without also raising a claim for benefits under § 502(a)(1)(B)). Albeit the primary controversy was over benefits payable, the parties continue to take opposing positions on Horizon's obligations to disclose, keeping controversy alive. Horizon contends that it did not fail to provide Center anything that it is required to under ERISA, whereas Center maintains that Horizon refused to provide it with documents that ERISA mandates be disclosed, primarily a Summary Plan Description (“SPD”) and the identification of the Plan Sponsor. And Center is not without injury because the injury for a § 502(c)(1) (B) is defined by the statute as the plan administrator's failure or refusal to supply information requested within 30 days as required. See 29 U.S.C. § 1132(c)(1)(B); see also Colarusso, 227 F.Supp.2d at 263 (awarding the plaintiff $46,400.00 for the defendant's violation of § 502(c)(1)(B) ERISA when it failed to provide the plaintiff with the sought after information within 30 days). Count 4, however, is moot. Center argues that Horizon's appeals process fails to comply with 29 C.F.R. 2560.503- 1(g)(1)(iv) and 11 U.S.C. § 1133 because its October 5, 2012 appeal response did not contain the time limit for initiating an appeal. Having withdrawn its claim for benefits under ERISA in count 2, there is no reason for the Court to decide whether Horizon's appeal procedure complied with ERISA because any deviation from ERISA's regulations would factor into the determination of whether Horizon's denial of Center's claim for reimbursement was arbitrary and capricious. See Morrison v. PNC Fin. Servs. Grp., Inc., 2015 WL 1471865, at *8 (D.N.J. Mar. 31, 2015) (Irenas, J.) (finding that a failure to abide by ERISA's prescribed claim procedure bears consideration when determining whether a denial of benefits was arbitrary and capricious). And damages, which Center requests in count 4, are not available for a violation of 29 C.F.R. § 2560.503-1. Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 144 (1985); see also Syed v. Hercules, Inc., 214 F.3d 155, 162 (3d Cir.2000) (Alito, J.) (“[T]he remedy for a violation of § 503 is to remand to the plan administrator so the claimant gets the benefit of Case 2:16-cv-08645- DW-LDW Document 14-2 Filed 03/06/17 Page 4 of 7 PageID: 202 Center for Orthopedics and Sports Medicine v. Horizon, Not Reported in F.Supp.3d (2015) 2015 WL 5770385 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 a full and fair review.”). Horizon's motion for summary judgment on count 4 is granted. D. Count 3-Statutory Penalties Under § 502(c)(1) (B) 1. Center's Derivative Standing Horizon moves for summary judgment on count 3, contending that Center's assignment from Adam M. is insufficient to confer it with derivative standing to bring a cause of action under § 502(c)(1)(B) of ERISA. It asserts that in order to possess standing a healthcare provider must receive a “full, express, and irrevocable” assignment of a plan participant's complete bundle of ERISA rights. The Court disagrees. The Third Circuit recently held that, “when a patient assigns payment of insurance benefits to a healthcare provider, that provider gains standing to sue for that payment under ERISA § 502(a).” N. Jersey Brain & Spine Ctr. v. Aetna, Inc., 2015 WL 5295125, at *2 (3d Cir.2015). The parties agree that, at a minimum, Adam M.'s assignment granted Center the right to receive payment of his insurance benefits under the Monmouth Plan, and as such, Center at least has standing to assert a claim for benefits under § 502(a)(1)(B) of ERISA. Horizon, anticipating the Third Circuit's decision, argues that a healthcare provider may only pursue a claim for benefits under § 502(a)(1)(B) and not statutory penalties under § 502(c)(1)(B).Center counters, asserting that a claim for benefits naturally encompasses the right to request documents relevant to the claims procedure and calculation of benefits. In determining what claims a healthcare provider may bring under ERISA, courts look to the language of the assignment. See Eden Surgical Ctr. v. B. Braun Med., Inc., 420 F. App'x 696, 697 (9th Cir.2011) (holding that the plaintiff did not have a right to pursue statutory penalties under § 502(c)(1)(B) without also bringing a claim under § 502(a)(1)(B) because the assignment was limited to lawsuits to collect unpaid insurance benefits); In re WellPoint, Inc. Out-of-Network Litig., 903 F.Supp.2d 880, 896 (C.D.Cal.2012) (“[C]ourts must look to the language of an ERISA assignment itself to determine the scope of the assigned claims.”); Biomed Pharm., Inc. v. Oxford Health Plans (N.Y.), Inc., 775 F.Supp.2d 730, 736 (S.D.N.Y.2011) (finding that an assignment did not afford a plaintiff the right to seek equitable relief because the assignment was limited to the right to pursue damages). *5 The first assignment executed by Adam M. directs Horizon to mail checks for Dr. Prasad's services directly to Center and states, in capital letters, that “THIS IS A DIRECT ASSIGNMENT OF MY RIGHTS AND BENEFITS UNDER THIS POLICY.” 6 (Assignment.) If the assignment only directed Horizon to send checks to Center, the assignment would only include the right to receive the payment of insurance benefits. The language below that, however, states that Adam M. assigns his “RIGHTS AND BENEFITS” under the Monmouth Plan without any limiting language. The Monmouth Plan, being governed by ERISA, would provide him with the right to request documents and bring a claim under § 502(c)(1)(B) should he receive no response to a request. Under the broad assignment, so could Center. See generally Mirza v. Ins. Adm'r of Am., Inc., 2015 WL 5024159 (3d Cir.2015) (discussing whether a health plan complied with 29 C.F.R. § 2560.503-1 when sued by a healthcare provider, who was assigned any and all rights under an insurance policy). The Court therefore finds that Center has derivative standing to pursue its claim under § 502(c)(1)(B) of ERISA for statutory penalties. 2. The Claim for Statutory Penalties Center seeks statutory penalties in the amount of $28,490.00 pursuant to § 502(c)(1)(B) of ERISA in its third count. (See Compl., ¶ 34.) Section 502(c)(1)(B) provides: Any administrator ... who fails or refuses to comply with a request for any information which such administrator is required by [Subchapter I of ERISA] to furnish to a participant or beneficiary (unless such failure or refusal results from matters reasonably beyond the control of the administrator) by mailing the material requested to the last known address of the requesting participant or beneficiary within 30 days after such request may in the court's discretion be Case 2:16-cv-08645- DW-LDW Document 14-2 Filed 03/06/17 Page 5 of 7 PageID: 203 Center for Orthopedics and Sports Medicine v. Horizon, Not Reported in F.Supp.3d (2015) 2015 WL 5770385 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 personally liable to such participant or beneficiary in the amount of up to $[110] a day from the date of such failure or refusal, and the court may in its discretion order such other relief as it deems proper. 29 U.S.C. § 1132(c)(1)(B). 7 Center argues that there is no genuine issue of material fact that Horizon failed to provide it with required information under § 502(c)(1)(B) of within 30 days of its request. 8 It contends that Horizon never responded to its demand for the SPD or identification of the Plan Sponsor, which it made when initiating its second and third administrative appeals. 9 [D.E. 21-3, Exs. B, C.] According to Center, it suffered prejudice because it was unable “to identify the Plan Sponsor or to assess the application of the terms of the [SPD] prior to asserting its claim for benefits under” § 502(a)(1)(B) or whether it should even raise such a claim. *6 When receiving a request in writing, an administrator is required to furnish a participant or beneficiary with the most recent SPD, 29 U.S.C. § 1024(b)(4), but nothing in Subchapter I of ERISA requires disclosure of the Plan Sponsor. See Gorini v. AMP Inc., 94 F. App'x 913, 919 (3d Cir.2004) (stating that under § 502(c)(1)(B) an administrator must disclose plan descriptions, SPDs, and annual reports). Horizon does not deny that it never gave Center a copy of the SPD. But Horizon moves for summary judgment, asserting that Center has failed to demonstrate a basis for the Court to award the $28,490.00 penalty. The purpose of § 502(c)(1) (B) is “not to compensate participants with their injuries, but to punish noncompliance with ERISA.” Faircloth v. Lundy Packing Co., 91 F.3d 648, 659 (4th Cir.1996); see also Daughtrey v. Honeywell, Inc., 3 F.2d 1488, 1494 (Oct. 7, 1993). The considerations a court should take into account in exercising its discretion to impose statutory penalties “include bad faith or intentional conduct on the part of the administrator, the length of the delay, the number of requests made and documents withheld, and the existence of any prejudice to the participant or beneficiary.” Romero, 309 F.3d at 120 (citation and internal quotation marks omitted). Prejudice or damages are not a prerequisite to statutory damages because § 502(c)(1)(B) is intended to be punitive and the focus should be on the motivations for the administrator's denial. See Fama v. Design Assistance Corp., 520 F. App'x 119, 123-124 (3d Cir.2013) (affirming district court's award of $10.00 per day for violation of § 502(c)(1)(B) because of the minimal deterrent effect when defendant did not act in bad faith); McCollum v. Life Ins. Co. of N. Am., 495 F. App'x 694, 707 (6th Cir.2012) (finding that nominal penalties were sufficient under § 502(c)(1) (B) for defendant's failure to respond to a request for information because there was no showing of malfeasance or bad faith); Porcellini v. Strassheim Printing Co., Inc., 578 F.Supp. 605, 614 (E.D.Pa.1983) (“If a plan administrator in good faith is unable to comply with a request for information within the thirty (30) day period, the assessment of the statutory penalty would not further the statute's purpose.”). In the circumstances here, the Court finds that statutory penalties are not warranted. Whether an assignment of the right to receive payment of insurance benefits conferred a health care provider with derivative standing under ERISA, has been a hotly contested issue in this district and nationally. Prior to the Third Circuit's decision in favor of standing, some courts within this district had held that such an assignment was insufficient. See, e.g., Franco v. Conn. Gen. Life Ins. Co., 818 F.Supp.2d 792, 809 (D.N.J.2011); N. Jersey Brain & Spine Ctr. v. Aetna, Inc., 2014 WL 895407, at *2 (D.N.J. Mar. 6, 2014). Horizon therefore did not act in bad faith in relying on those decisions and maintaining that Center received a limited assignment of the right to receive payment of insurance benefits. As it turned out, Horizon provided Center with the requested plan documents during the course of discovery in this litigation prior to the Circuit's ruling. This is not the type of conduct that earned statutory penalties in reported decisions this Court has reviewed. See Gorini, 94 F. App'x at 920 (affirming award of statutory penalties when district court found that the defendant's conduct evidenced a pattern of “conscious choices to decline to disclose” and “recalcitrance,” in the face of a request by the plan participant); Boyadjian v. Cigna Cos., 973 F. Supp. 500, 506 (D.N.J.1997) (imposing statutory penalties against the defendant after it failed to provide any reason for denying the named beneficiary's request for documents). In contrast, courts have declined to impose statutory penalties where bad faith was not evident. See McGowan v. NJR Serv. Corp., 423 F.3d 241, 250 (3d Cir.2005) (affirming district court's decision not to impose statutory penalties because defendant Case 2:16-cv-08645- DW-LDW Document 14-2 Filed 03/06/17 Page 6 of 7 PageID: 204 Center for Orthopedics and Sports Medicine v. Horizon, Not Reported in F.Supp.3d (2015) 2015 WL 5770385 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 6 acted in good faith believing it had no legal duty to provide the requested information), abrogated on other grounds, Kennedy v. Plan Adm'r for DuPont Sav. & Inv. Plan, 555 U.S. 285 (2009); Tucker v. Gen. Motors Ret. Program, 949 F.Supp. 47, 56 (D.Mass.1996) (declining to impose statutory penalties under § 502(c)(1)(B) because the defendant did not act in bad faith and because the plaintiff's claim for benefits would have been unsuccessful even if the information was disclosed). Horizon's conduct falls within the latter category, and the Court grant's its motion for summary judgment on count 3. IV. Conclusion *7 Horizon's motion for summary judgment on counts 3 and 4 of the complaint is granted and Center's motion for summary judgment on those counts is denied. An appropriate order will be entered. All Citations Not Reported in F.Supp.3d, 2015 WL 5770385 Footnotes 1 An alias is used to protect the anonymity of the insured. 2 Both in-network and out-of-network providers receive reimbursement from Horizon based on a fee schedule in a member's plan. (Joint Statement of Undisputed Facts, ¶¶ 8,9) In-network providers accept the fixed fee as payment in full and may not balance bill the member for any additional costs above the fixed fee. (Id. ¶ 8.) Out-of-network providers may bill the member for any additional charges not covered by his or her insurance. (Id. ¶ 9.) 3 Center requested payment for Dr. Fox's services in the same amount as Dr. Prasad's, of which Horizon paid $8,593.50. (Joint Statement of Undisputed Facts, ¶ 5; Compl., ¶ 10.) 4 The time has passed for Center to amend its complaint as a matter of course without seeking leave of the Court. Fed.R.Civ.P. 15(a)(1)(A) provides that a party may amend a complaint as a matter of course within 21 days after its service. After that, the plaintiff must either obtain “the opposing party's written consent or the court's leave.” Fed.R.Civ.P. 15(a)(2). 5 A CPT code is a coding system created by the American Medical Association, with each code representing a distinct medical service. (Joint Statement of Undisputed Facts, ¶ 11.) They are used by physicians to designate the service for which reimbursement is requested on a Health Insurance Claim Form. (Id. ¶ 11.) 6 Center had Adam M. sign a second document that contains much broader language assigning it his rights under the Monmouth Plan on July 18, 2012, but it did so after Horizon claims to have begun reviewing the claim for benefits. (See Second Assignment.) The Court will not allow Center to use the second assignment as the basis for asserting derivative standing when Horizon could not consider it at the time it began to review its claim. Cf. Loretto Hosp. v. Local 100-A Health & Welfare Fund, No. 97-1353, 1998 WL 852878, at *1 (N.D.Ill.Dec. 4, 1998) (noting that the health fund could review the language of an assignment of benefits from a participant to a health care provider because it received it before reviewing the provider's appeal from the denial of benefits). In any event, the Court finds that first assignment confers Center with derivative standing to pursue its claims under § 502(c)(1)(B). 7 Section 502(c)(1)(B) actually states that the daily penalty for an administrator's failure to respond to a request for information is up to $100 per day, but it was increased to $110 per day by regulation. See 29 C.F.R. § 2575.502c-1. 8 In arguing that it is entitled to summary judgment on count 3, Center appears to raise a claim for breach of fiduciary duty for the first time, but a plaintiff is precluded from a raising a claim in a motion for summary judgment not brought in its complaint, and therefore, the Court will not consider these arguments. See Josko v. New World Sys. Grp., No. 05-4013, 2006 WL 2524169, at *7 (D.N.J. Aug. 29, 2006) (Kugler, J.) (“[A] plaintiff may not raise new claims for the first time in response to a motion to dismiss or other dispositive motion.”); see also Hang On, Inc. v. City of Arlington, 65 F.3d 1248, 1255-56 (5th Cir.1995) (refusing to address a claim raised for first time in a response to a motion for summary judgment). 9 Center also demanded several other documents and additional information, but it does not claim that it was prejudiced by Horizon's failure to provide them such that it would be entitled to statutory penalties under § 502(c)(1)(B) of ERISA. See Romero v. SmithKline Beecham, 309 F.3d 113, 120 (3d Cir.2002) (stating that one of factors a court considers in determining whether to impose statutory penalties under § 502(c)(1)(B) is whether the plan participant or beneficiary suffered prejudice). End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 2:16-cv-08645- DW-LDW Document 14-2 Filed 03/06/17 Page 7 of 7 PageID: 205 EXHIBIT “B” Case 2:16-cv-08645-SDW-LDW Document 14-3 Filed 03/06/17 Page 1 of 9 PageID: 206 MHA, LLC v. Aetna Health, Inc., Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 KeyCite Red Flag - Severe Negative Treatment Abrogated by North Jersey Brain & Spine Center v. Aetna, Inc., 3rd Cir. (N.J.), September 11, 2015 2013 WL 705612 Only the Westlaw citation is currently available. NOT FOR PUBLICATION United States District Court, D. New Jersey. MHA, LLC, d/b/a “Meadowlands Hospital Medical Center” and d/b/a “Meadowlands Hospital Rehabilitation Institute,” Plaintiff, v. AETNA HEALTH, INC. and John Does 1-10, Defendants. Civil Action No. 12-2984 (SRC). | Feb. 25, 2013. Attorneys and Law Firms A. Ross Pearlson, Daniel D. Barnes, Wolff & Samson, West Orange, NJ, for Plaintiff. Edward S. Wardell, Connell Foley LLP, Cherry Hill, NJ, Tricia B. O'Reilly, Patricia A. Lee, Connell Foley LLP, Roseland, NJ, for Defendants. OPINION CHESLER, District Judge. *1 This matter comes before the Court on Defendant Aetna Health, Inc.'s (“Defendant” or “Aetna”) motion to dismiss the Complaint. (Docket Entry 8) Plaintiff MHA, LLC (“MHA” or “Plaintiff”) has opposed the motion. (Docket Entry 16) The Court will rule on the papers submitted, and without oral argument, pursuant to Federal Rule of Civil Procedure 78. For the reasons that follow, the Court will grant the motion and dismiss the Complaint with prejudice. I. THE FACTS 1 This lawsuit arises out of a billing dispute between a hospital and a health insurance company over the rate at which the hospital should be reimbursed for services provided to the insurer's plan participants and beneficiaries. Plaintiff MHA is the current owner of Meadowlands Hospital Medical Center and Meadowlands Hospital Rehabilitation Center (collectively “Meadowlands Hospital” or “Meadowlands”) located in Secaucus, New Jersey. Meadowlands Hospital, founded in 1976, is an acute care facility with approximately 230 beds. Meadowlands Rehabilitation Institute is housed within Meadowlands Hospital and provides rehabilitation treatment to patients. Pursuant to an Asset Purchase Agreement (“APA”), MHA purchased Meadowlands Hospital from Liberty Healthcare System, Inc. and Liberty Riverside Healthcare, Inc. (collectively “Liberty”) on December 7, 2010. Defendant Aetna is a health insurance company providing health benefits to plan participants and beneficiaries who received health care services at Meadowlands after that date. The crux of the dispute between the parties is whether, after the December 2010 sale of Meadowlands, MHA was bound, either contractually or by operation of law, to continue to provide services to Aetna plan members and beneficiaries at the reduced in-network (“INET”) rates negotiated between Aetna and Liberty. In August 1996, Liberty entered into a Managed Care Agreement (“MCA”) with Aetna, pursuant to which Aetna agreed to provide INET benefits to its participants and beneficiaries who received medical services at Meadowlands. Liberty agreed to provide hospital care and other services to Aetna's plan participants and beneficiaries in accordance with a fee schedule incorporated into the MCA. The INET fee schedule generally provides for rates substantially lower than what Meadowlands would have charged as an ONET provider. The MCA was amended at various times, most recently in 2010, before MHA purchased Meadowlands. According to Plaintiff, the APA between Liberty and MHA specifically excluded the MCA from the list of assets being transferred. Plaintiff maintains that, aside from the APA, which conveyed some but not all of Liberty's assets to MHA, the two entities have no legal relationship. Plaintiff alleges that Aetna has conceded as much by denying MHA access to the MCA it now argues is binding upon it. Plaintiff further contends that the MCA itself specifically prohibits Liberty from assigning its rights and Case 2:16-cv-08645-SDW-LDW Document 14-3 Filed 03/06/17 Page 2 of 9 PageID: 207 MHA, LLC v. Aetna Health, Inc., Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 obligations under the agreement without Aetna's prior written consent, which was neither requested nor granted. *2 Since the sale of Meadowlands Hospital, Aetna has continued to reimburse MHA at the INET rates provided in the MCA. Plaintiff claims that it should be reimbursed as an ONET provider. According to Plaintiff, the INET rates are drastically lower than what MHA receives from health insurers and other payors for the same services, typically consisting of 0-15% of the billed charges. Plaintiff maintains that, since the onset of this dispute, Aetna has underreimbursed MHA by over $39 million. For its part, Aetna contends that MHA is legally bound to provide services as an INET provider and has refused to reimburse MHA for claims that exceed those allowed by the MCA fee schedule for INET providers. Plaintiff has brought suit, asserting both federal and state law causes of action. 2 Aetna has moved to dismiss the Complaint on a number of grounds, including that Plaintiff lacks standing to sue under ERISA. II. DISCUSSION A. Standard of Review A complaint will survive a motion under Rule 12(b)(6) only if it states “sufficient factual allegations, accepted as true, to ‘state a claim for relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). The complaint must contain sufficient factual allegations to raise a right to relief above the speculative level, assuming the factual allegations are true. Twombly, 550 U.S. at 555; Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir.2008). The Supreme Court has made clear that “a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555; see also Iqbal, 556 U.S. at 679 (“While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.”). The Third Circuit, following Twombly and Iqbal, has held that the pleading standard of Rule 8(a) “requires not merely a short and plain statement, but instead mandates a statement ‘showing that the pleader is entitled to relief.’ ” Phillips, 515 F.3d at 234. In a Rule 12(b)(6) motion, the Court is limited in its review to a few basic documents: the complaint, exhibits attached to the complaint, matters of public record, and undisputedly authentic documents if the complainant's claims are based upon those documents. See White Consol. Indus., 998 F.2d at 1196. B. ERISA Claims Defendant argues that Plaintiff has no power to sue under § 502 of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, et seq. It is well- established that standing to sue under ERISA § 502(a), the statute's civil enforcement mechanism, is generally limited to participants or beneficiaries of ERISA plans. 29 U.S.C. § 1132(a); Pascack Valley Hosp., Inc. v. Local 464A UFCW Welfare Reimbursement Plan, 388 F.3d 393, 399- 400 (3d Cir.2004). Plaintiff, who is neither a participant nor a beneficiary, argues that it may sue as an assignee. In short, Plaintiff alleges that it received assignments from participants/beneficiaries of ERISA-covered Aetna benefits plans that allow it to “stand in the shoes” of those patients and pursue the instant action. As this Court recognized in Franco v. Conn. Gen. Life Ins. Co., “the Third Circuit has not settled the question of standing to sue under ERISA § 502 by assignment.” 818 F.Supp.2d 792, 808 (D.N.J.2011) (citing Pascack Valley Hosp., 388 F.3d at 401; Cmty. Med. Ctr. v. Local 464A UFCW Welfare Reimbursement Plan, 143 F.App'x 433, 435 (3d Cir.2005)). But a number of other circuits have recognized a plaintiff's right to sue under § 502 by assignment. Tango Transport v. Healthcare Fin. Servs., 322 F.3d 888, 891 (5th Cir.2003); Morlan v. Universal Guar. Lif. Ins. Co., 298 F.3d 609, 614-15 (7th Cir.2002); Sys. Council Em-3 v. AT & T Corp., 333 U.S.App. D.C. 63, 159 F.3d 1376, 1383 (D.C. Circuit 1998); City of Hope Nat'l Med. Ctr. v. Healthplus, Inc., 156 F.3d 223, 226 (1 st Circ.1998); St. Francis Reg'l Med. Ctr. v. Blue Cross and Blue Shield of Kan., 49 F.3d 1460, 1464-65 (10th Cir.1995); see also Pascack Valley Hosp., 388 F.3d at 401 (stating that “almost every circuit that has addressed the issue has ruled that a health care provider can assert a claim under § 502(a) when a beneficiary or participant has assigned to the provider the individual's benefits under the plan”). Courts within the District of New Jersey have also concluded that a provider may have derivative standing under § 502. Wayne Surgical Ctr., LLC v. Concentra Preferred Sys., No. 06- 928, 2007 U .S. Dist. LEXIS 61137, *9-10, 2007 WL 2416428 (D.N.J. Aug. 20, 2007); Ambulatory Surgical Ctr. of N.J. v. Horizon Healthcare Servs., No. 07-2538, 2008 U.S. Dist. LEXIS 13370, 2008 WL 8874292 (D.N.J. Feb. 21, 2008). This Court will therefore assume, as it did in Franco, “that providers may assert such a claim ‘where a beneficiary or participant has assigned to the provider Case 2:16-cv-08645-SDW-LDW Document 14-3 Filed 03/06/17 Page 3 of 9 PageID: 208 MHA, LLC v. Aetna Health, Inc., Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 that individual's right to benefits under the plan.’ ” 818 F.Supp.2d at 808 (quoting Pascack Valley Hosp., 388 F.3d at 401). *3 In Franco, this Court stated that, in order to confer ERISA standing upon a putative assignee, “the assignment must encompass the patient's legal claim to benefits under the plan.” 818 F.Supp.2d at 808. The question before the Court, then, is whether Plaintiff has adequately pled that it received at least one such assignment sufficient to confer Plaintiff with ERISA standing. Plaintiff makes a number of arguments in support of its claim to ERISA standing. First, Plaintiff offers a narrow interpretation of Franco, seeking to distinguish it on factual grounds. Second, Plaintiff argues that the assignment at issue in this case satisfies even a broad reading of Franco. 3 Third, Plaintiff points to cases from within this District, the Third Circuit, and elsewhere that it suggests are contrary to Franco. Fourth, Plaintiff argues that Defendant has waived any standing defense it may have through its conduct. The Court will consider each of Plaintiff's arguments in turn. The essential facts in Franco are, on their face, very similar to the facts of this case. In relevant part, Franco involved ERISA claims brought by several ONET providers and associations whose members consisted of physicians and non-physicians who provided ONET services to patients insured by defendant CIGNA. Id. at 803. The defendant moved to dismiss the complaint on the grounds that the provider plaintiffs were neither “beneficiaries” nor “participants” of the ERISA covered CIGNA health plans and thus lacked standing to bring suit under § 502(a). Id. at 807. The provider plaintiffs argued that they had properly alleged standing based upon “assignments” from ERISA participants and beneficiaries. Id. The complaints, which varied from each other only slightly, made allegations such as “patients sign a form assigning their health benefits .... in advance of treatment” and “patients sign a form fully assigning their health benefits within the meaning of ERISA.” Id. at 810. The Court held that the provider plaintiffs failed to establish their standing to sue under ERISA, because their assignment allegations fell short of the requirements of Federal Rule of Civil Procedure 8(a), as construed by the Supreme Court in Iqbal and Twombly. Id. The Court stated: At best, the allegations provide only the most ambiguous and conclusory information about what the purported assignments entail. At worst for Provider Plaintiffs, they indicate that the assignments were limited to a patient's assigning his or her right to receive reimbursement from CIGNA for the covered portion of the service bill, which in no way can be construed as tantamount to assigning the right [to] enforce his or her rights under the plan. Id. at 811. In Franco, the Court made clear that, in cases where a purported assignment “is limited to direct receipt of the ONET reimbursement and/or is qualified by the provider's reservation of his or her right to collect the entire charge for the service from the patient, the claim for ONET benefits .... continues to run to the patient- insured,” and there has been no complete, standing- conferring assignment under ERISA. Id. In other words, there can be no standing-conferring assignment if the patient-insured ultimately remains “on the hook” for the services rendered. *4 Plaintiff seeks to distinguish Franco on three factual grounds: First, unlike the plaintiff in Franco, MHA included the language of its alleged assignment in its pleading rather than merely relying on general and conclusory allegations that an assignment existed, see 818 F.Supp.2d at 810. Second, Plaintiff argues that the scope of the assignment at issue in this case is broader than that considered in Franco. Third, MHA argues that the danger of double recovery that existed in Franco is not present here, because MHA is the sole plaintiff in this case. It is true that, in Franco, the plaintiffs could not establish standing in part because they failed to provide the specific language of the purported assignments. Id. But, as stated above, the Court also held that “the assignment must encompass the patient's legal claim to benefits under the plan.” Id. at 808. In other words, alleging the specific language of the purported assignment is a necessary, not sufficient, condition. A plaintiff cannot satisfy his burden to establish ERISA standing merely by quoting the language of the purported assignment in the complaint- he must allege specific facts that show that the “alleged assignments encompass the patients' rights to receive the benefits of their health plan's .... coverage.” Id. at 808 (citing Cmty. Med. Ctr. v. Local 464A UFCW Case 2:16-cv-08645-SDW-LDW Document 14-3 Filed 03/06/17 Page 4 of 9 PageID: 209 MHA, LLC v. Aetna Health, Inc., Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 Welfare Reimbursement Plan, 143 Fed. Appx. 433, 435 (3d Cir.2005)). Therefore, the fact that MHA has alleged the specific contractual language on which it relies does not, by itself, bring this case outside Franco's domain. The Court is equally unpersuaded by Plaintiff's argument that the scope of the assignment at issue here is broader than that hinted at in Franco. There, though the complaint did not contain the language of the purported assignment, there was an indication that the patients involved had only transferred the “right to reimbursement by the insurer for an ONET service, such that the provider would submit a claim for reimbursement and the insurer would be authorized to send this payment directly to the provider.” Id. at 811. The contract language MHA relies on provides: I authorize payment directly to Meadowlands Hospital Medical Center for hospital medical insurance benefits (from Medicare, Medicaid, commercial insurance, worker's compensation, auto insurance, etc.) that I may be entitled to for the charges of the care/ treatment provided to me. (Compl.¶ 51) MHA argues that this authorization, unlike the one at issue in Franco, “unambiguously consists of an assignment of all of the patient's health insurance benefits, including a right to sue for those benefits.” (P.'s Opp. Br. 17) (emphasis in original) MHA supports its broad construction of the provision by pointing to the phrase “might be entitled to,” which it argues “contemplates an assignment of benefits beyond that of mere payment, but also of the patient's right to enforce his/her entitlement to that payment, including .... disputing a deficient payment directly with the insurer or via litigation.” (Id.) MHA further argues that the Court's duty, under Rule 12(b)(6), to accept all factual allegations in the Complaint as true and view them in the light most favorable to the non- moving party requires the Court to resolve any doubt as to the scope of the purported assignment in favor of MHA's interpretation. But the Court does not agree that it is faced with more than one “plausible, competing interpretation[ ]” of the contractual language at issue. See Devcon Int'l Corp. v. Reliance Ins. Co., 609 F.3d 214, 220 (3d Cir.2010). It is plain to the Court that the quoted General Consent/Authorization language merely authorizes an insurer to make payments to MHA directly rather than through the patient as an intermediary. See Franco, 818 F.Supp.2d at 811. As such, this authorization is precisely the kind this Court regarded as insufficient to confer ERISA standing upon a provider in Franco. *5 The Court also rejects Plaintiff's contention that this case does not raise the same possibility of double recovery that concerned the Court in Franco. There, the Court stated that the plaintiffs' pleading deficiencies were “particularly glaring in light of the fact that .... plan subscribers also assert[ed] ERISA § 502 claims themselves seeking to recover for the very same type of injuries.” Id. at 811. The Court noted that “[t]he inherent tension in the pursuit of ERISA claims by both plan subscribers and providers who claim standing as assignees of the subscribers renders the need for the exact language of the applicable assignment provisions that much more crucial to sorting out the standing issue.” Id. But Defendant is correct that MHA's status as the sole plaintiff in this action does not eliminate concern about double recovery and overlapping claims. In the Complaint, Plaintiff concedes that it has “balance billed” 4 Aetna's plan participants for the amount that Aetna has refused to pay. Contrary to Plaintiff's argument, recognizing MHA's standing to assert the ERISA rights of plan participants whom it has held personally responsible for balances unpaid by Aetna would pose the same threat of overlapping claims and double recovery this Court warned of in Franco. Plaintiff also argues that following Franco would put this Court at odds with the majority of courts from around the country and within the District of New Jersey “that have repeatedly held that assignment language similar to that used here confers standing.” (P.'s Opp. Br. 10) Plaintiff relies upon Sportscare of Am., P.C. v. Multiplan, Inc ., which arose in the context of a motion to remand an action initiated in New Jersey Superior Court and pleading only state law claims. 2011 U.S. Dist. LEXIS 6295, at *3, 2011 WL 223724 (D.N.J. Jan. 24, 2011). Magistrate Judge Falk issued a Report and Recommendation (“R & R”) urging the District Court to deny remand on the grounds that the state law claims were preempted by ERISA. Id. at * 15. This Court concludes that Sportscare's unusual procedural context distinguishes it from the present case. In Sportscare, the plaintiff arguing against the presence of a valid assignment had specifically alleged the presence of such an assignment in the complaint. Id. at * 10. Accordingly, the Court treated the plaintiff's allegation as a judicial admission. Case 2:16-cv-08645-SDW-LDW Document 14-3 Filed 03/06/17 Page 5 of 9 PageID: 210 MHA, LLC v. Aetna Health, Inc., Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 Id. at * 11. The Court stated that it would be unfair for the plaintiff, at the remand stage, to disclaim an allegation expressly made in the complaint. See id. at *11- 12 (“There are strict time limits for removal, see 28 U.S.C. § 1446(b), and Defendants have a right to rely on the allegations of the complaint in removing a case, which are assumed as true for removal purposes.”). The case at bar does not involve the same element of estoppel that was present in Sportscare. 5 Here, the Provider Plaintiff brought suit in federal court alleging standing as an assignee. Accordingly, Plaintiff has the burden of proving that the alleged assignments “encompass the patient's legal claim to benefits under the plan.” Franco, 818 F.Supp.2d at 808. *6 Plaintiff also relies upon Wayne Surgical Ctr., LLC v. Concentra Preferred Sys., No. 06-928, 2007 U.S. Dist. LEXIS 61137, 2007 WL 2416428 (D.N.J. Aug. 20, 2007). In Wayne Surgical, an ambulatory surgical care provider brought suit against a health care management company in New Jersey Superior Court, alleging a number of state law causes of action. Id. at *2-3. The defendant insurer removed the case to federal court, arguing, among other things, that plaintiff's state law claims were preempted by ERISA. Id. at *5. Plaintiff moved to remand, and the Court was forced to consider whether, despite the absence of a federal claim on the face of the complaint, ERISA displaced the state law causes of action and stated a federal question. Id. at *5. Under the Third Circuit's decision in Pascack Valley Hosp., supra, the preemption question hinged in part on whether the plaintiff could have brought its breach of contract claim under § 502(a) of ERISA in the first instance, which in turn implicated the plaintiff's hypothetical ERISA standing. Id. at *7. But Wayne Surgical does little to advance Plaintiff's argument that the purported assignment in this case constitutes a complete assignment of benefits sufficient to confer Plaintiff with ERISA standing, because in Wayne Surgical, the scope of the assignment was not disputed by the parties. Id. at *9. Indeed, the central focus of Wayne Surgical is on the threshold question of whether ERISA allows for assignee standing, assuming the existence of a valid assignment. Id. at *8-14 (following Tango Transport v. Healthcare Financial Services, 322 F.3d 888, 891 (5th Cir.2003), to hold that ERISA benefits can be assigned because, although Congress included an anti-assignment provision pertaining to pension plans under ERISA, it did not include such a provision for health care benefits). Therefore Wayne Surgical does not undermine this Court's conclusion that the assignment at issue in this case falls short of what is necessary to constitute a valid assignment of benefits under ERISA. Another recent authority relied upon by Plaintiff is Premier Health Ctr., P.C. v. UnitedHealth Group, No. 11- 425, 2012 U.S. Dist. LEXIS 44878, 2012 WL 1098543 (D.N.J. Mar. 30, 2012). There, the Court held that the provider plaintiffs' quotation of assignment language in the complaint was sufficient to establish derivative standing to sue under § 502 of ERISA. Id. at * 19. Plaintiff argues that the language of the assignment in Premier was similar to the purported assignment in this case. But that is not so. Unlike the provision in this case, the assignment considered in Premier expressly stated that “THIS IS A DIRECT ASSIGNMENT OF MY RIGHTS AND BENEFITS UNDER THIS POLICY.” Id. at * 18. Plaintiff is correct, however, that the assignment considered in Premier also contained language expressly reserving the provider's right to payment from the patient for any balance “over and above” the insurance payment. Id. Premier also casts doubt on the view that an assignment is only effective to establish derivative standing where there is a complete assignment of benefits. See id . at *20. In Franco, this Court rejected the view that a purported assignment is effective to confer standing under § 502 where it “is limited to direct receipt of the ONET reimbursement and/or is qualified by the provider's reservation of his or her right to collect the entire charge for the service from the patient.” 818 F.Supp.2d at 811. This Court respectfully disagrees with Premier to the extent it can be read as in conflict with that holding. *7 Plaintiff also relies heavily upon North Jersey Brain & Spine Ctr. v. Conn. Gen. Life Ins. Co., No. 10- 4260, 2011 U.S. Dist. LEXIS 119762, 2011 WL 4737067 (D.N.J. June 30, 2011), a case similar in many respects to Wayne Surgical, supra. In North Jersey Brain, a plaintiff neurosurgical medical provider brought suit against a health insurer and plan administrator in New Jersey Superior Court, alleging various state common law causes of action. Id. at *3. The defendant insurer removed the case to federal court, arguing, among other things, that plaintiff's state law claims were preempted by ERISA. Id. at *5. As with Wayne Surgical, the preemption question in North Jersey Brain implicated whether the plaintiff would have had standing to bring suit under ERISA. Id. at * 10-11. The defendant insurer argued that the plaintiff provider had standing to bring suit under Case 2:16-cv-08645-SDW-LDW Document 14-3 Filed 03/06/17 Page 6 of 9 PageID: 211 MHA, LLC v. Aetna Health, Inc., Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 6 ERISA pursuant to patient assignments, which stated “I hereby assign to North Jersey Brain & Spine Center all payments for medical services rendered to myself or my dependents.” Id. at * 14. The Court held that the executed form “unequivocally establishe[d] that an assignment of the only plan benefit at issue (i.e., the benefit of reimbursement) was in fact made.” Id. at *17-18. The court went on to hold that no other legal duty supported the plaintiff provider's claim, and remand was therefore unwarranted. Id. at *25. Judge Arleo's R & R denying the plaintiff's motion to remand was adopted by Judge Wigenton. N. Jersey Brain & Spine Ctr. v. Conn. Gen. Life Ins. Co ., No. 10-4260, 2011 U.S. Dist. LEXIS 115757, 2011 WL 4737063 (D.N.J. Oct. 6, 2011). MHA argues that a rejection of plaintiff's standing in this case would be at odds with the reasoning in North Jersey Brain. Defendant distinguishes North Jersey Brain on the grounds that the language of the provision considered in that case was an express assignment of benefits in a way that the provision at issue in this case is not. While it is true that the language of the authorization at issue in North Jersey Brain has a stronger claim to status as a valid assignment, it must also be conceded that this Court's view of what constitutes a valid assignment of rights under § 502 is fundamentally at odds with the opinions of Judge Arleo and Judge Wigenton. In particular, the Court respectfully disagrees with the view that there is “no distinction between an assignment of a right to payment and an assignment of plan benefits.” 2011 U.S. Dist. LEXIS 119762 at * 15, 2011 WL 4737067. It is only the latter that creates derivative standing in a provider assignee to sue under § 502. Franco, 818 F.Supp.2d at 811; N. Jersey Ctr. for Surgery, P.A. v. Horizon Blue Cross Blue Shield of N.J., Inc., 2008 U.S. Dist. LEXIS 71231, at *10-11, 2008 WL 4371754 (D.N.J. Sept. 17, 2008); Cooper Hosp. Univ. Med. Ctr. v. Seafarers Health & Benefits Plan, 2007 U.S. Dist. LEXIS 71358, at *8-9, 2007 WL 2793372 (D.N.J. Sept. 25, 2007). Notwithstanding the considered opinions of other courts that may be to the contrary, this Court concludes that the authorization provision in this case does not rise to the level of an assignment of rights under ERISA. According to Black's Law Dictionary (9th ed.2009), “assignment” is a term of art meaning the “transfer of rights or property.” The Third Circuit, providing a statement of New Jersey law, held that “[a]n assignment of a right is a manifestation of the assignor's intention to transfer it by virtue of which the assignor's right to performance by the obligor is extinguished in whole or in part and the assignee acquires right to such performance.” In re Jason Realty, L.P., 59 F.3d 423, 427 (3d Cir.1995) (citing Restatement (Second) of Contracts § 317 (1981) and Aronsohn v. Mandara, 98 N.J. 92, 98, 484 A.2d 675 (1984)). According to the leading treatise on contract law, “the elements of an effective assignment include a sufficient description of the subject matter to render it capable of identification, and delivery of the subject matter, with the intent to make an immediate and complete transfer of all right, title, and interest in and to the subject matter to the assignee.” 29 Williston on Contracts § 74:3 (4th ed.2012); see also K. Woodmere Assocs., L.P. v. Menk Corp., 316 N.J.Super. 306, 314, 720 A.2d 386 (App.Div.1998) (quoting Williston for the elements of a valid assignment). A valid assignment “transfers the whole of the interest in the right.” Presley's Estate v. Russen, 513 F.Supp. 1339, 1350 (D.N.J.1981). Only an assignment that clearly reflects the assignor's intent to transfer his rights will be effective. Tirgan v. Mega Life & Health Ins., 304 N.J.Super. 385, 390, 700 A.2d 1239 (App.Div.1997); Restatement (Second) of Contracts § 324 (1981). Moreover, “[f]or an assignment to be created [under New Jersey law], the effect must be that the assignor retains no power to revoke the assignment.” In re Fontaine, 231 B.R. 1, 4 (Bankr.D.N.J.1999) (quoting Sheeran v. Sitren,168 N.J.Super. 402, 414, 403 A.2d 53 (Law Div.1979)). In other words, as a result of a valid assignment, the assignor loses all control over the subject matter of the assignment and all interest in the right assigned. Sheeran, 168 N.J.Super. at 414, 403 A.2d 53. To determine the patient-assignor's intent, the Court applies an objective standard and properly looks to the language of the intake form provision as the “strongest objective manifestation of intent.” Baldwin v. Univ. of Pittsburgh Med. Ctr., 636 F.3d 69, 76 (3d Cir.2011); see also In re Jason Realty, 59 F.3d at 427 (holding that “[t]he precise wording determines the effect of the assignment.”). *8 Plaintiff argues that it has standing to sue under ERISA because it received valid assignments of benefits from Aetna plan beneficiaries and participants. If Plaintiff were correct, that would mean the beneficiaries retained no legal rights to pursue Aetna for benefits regardless of what actions it took with regard to the claims. In theory, under such a scenario, if Aetna fully rejected a valid claim, only MHA would have the legal right to pursue Aetna, regardless of whether or not MHA balance billed the patient-insured. There is simply nothing in the Case 2:16-cv-08645-SDW-LDW Document 14-3 Filed 03/06/17 Page 7 of 9 PageID: 212 MHA, LLC v. Aetna Health, Inc., Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 7 language cited by Plaintiff that suggest that the parties intended such a full transfer to take place. Rather, the only reasonable interpretation is that the parties, for convenience, anticipated that the provider would be able to receive payment directly from the insurer without the beneficiary relinquishing his or her rights. Finally, Plaintiff has argued that Aetna has waived, by its conduct, any defense that MHA lacks standing to pursue this action in federal court. Plaintiff argues that Aetna and MHA engaged in a claims review process for hundreds of claims, and Aetna never once asserted that MHA was not entitled to file claims on behalf of Aetna plan participants. According to Plaintiff, Aetna's omission constitutes a knowing waiver of any objection to MHA's ERISA standing. This argument deserves short shrift. Even assuming § 502(a) permits “standing by waiver,” there is nothing inconsistent about Aetna objecting to MHA's ability to sue under ERISA after having engaged with MHA in presuit claims reviews. Whether Aetna might somehow be estopped from refusing to recognize MHA's rights to file claims on behalf of Aetna plan participants is a separate matter entirely from whether MHA has satisfied a necessary element of an ERISA claim. Aetna's position is that the authorization form only granted MHA the right to collect reimbursements directly from Aetna but did not rise to the level of a full assignment of ERISA benefits. Not only is Aetna's position internally consistent, it is strongly supported by the plain language of the authorization form. C. State Law Claims Defendant argues that Plaintiff's state law claims for breach of contract and violation of the duty of good faith and fair dealing (Count VII), punitive damages (Count VIII), quantum meruit (Count IX), and unjust enrichment (Count X) are fully preempted by the ERISA claims. The Court agrees. ERISA preemption of state law causes of action is well- established. See Aetna Health, Inc. v. Davila, 542 U.S. 200, 209, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004). ERISA § 502(a) is the statute's civil enforcement mechanism, and subsection (1)(B) expressly grants a plan participant or beneficiary the right to bring a civil action “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.” 29 U.S.C. § 1132(a) (1)(B). The Supreme Court has held that “the ERISA civil enforcement mechanism is one of those provisions with such ‘extraordinary pre-emptive power’ that it ‘converts an ordinary state common law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule.’ ” Davila, 542 U.S. at 209 (quoting Metropolitan Life, 481 U.S. at 65-66). Indeed, the statute itself contains a preemption provision. ERISA § 514(a) provides that ERISA “shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan.” 29 U.S.C. § 1144(a). Suits brought by participants or beneficiaries of ERISA plans concerning matters that “relate to” those plans are governed by the cause of action provided by ERISA § 502(a). Davila, 542 U.S. at 208-09. *9 In this case, MHA is suing not as a participant or beneficiary, but as an assignee. Nevertheless, all of the state law causes of action seek to recover the benefits to which MHA claims it is entitled under the assignors' ERISA covered plans. Clearly, the claims “relate to” the plans. See id. As such, they must be dismissed. III. CONCLUSION For the foregoing reasons, the Court will dismiss the entire Complaint for failure to state a claim upon which relief can be granted. See Fed.R.Civ.P. 12(b)(6). The Court will issue an Order dismissing the Complaint with prejudice. 6 All Citations Not Reported in F.Supp.2d, 2013 WL 705612 Footnotes 1 In a Rule 12(b)(6) motion, the Court is limited in its review primarily to the complaint and a few basic documents. See Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir.1993). Accordingly, the Court's statement of the facts is derived entirely from the allegations contained in the Complaint (Docket Entry 8) and does not represent factual findings by the Court. Case 2:16-cv-08645-SDW-LDW Document 14-3 Filed 03/06/17 Page 8 of 9 PageID: 213 MHA, LLC v. Aetna Health, Inc., Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 8 2 The counts in the Complaint are as follows: (1) violation of ERISA § 502(a); (2) violation of ERISA § 502(a)(3) fiduciary duties; (3) failure to provide “full and fair review” under ERISA § 502(a)(3); (4) failure to comply with federal claims regulations under ERISA § 502(a)(3); (5) request for information pursuant to ERISA § 502(c); (6) declaratory relief relating to Aetna's violation of ERISA; (7) breach of contract and violation of the duty of good faith and fair dealing; (8) punitive damages; (9) quantum meruit; and (10) unjust enrichment. 3 This argument is, in all important respects, conceptually identical to a section of Plaintiff's argument seeking to distinguish Franco factually. Accordingly, the Court will address Plaintiff's argument only in the context of whether or not Franco should be distinguished on factual grounds. 4 In the context of the healthcare industry, balance billing is the practice by a medical provider of billing a patient for the difference between the provider's actual charge and the amount reimbursed under the patient's health insurance benefits plan. Under balance billing, the patient is financially responsible to the provider for his or her co-payment obligation under the plan, plus any amount of the actual charge that exceeds the covered amount under the plan. 5 Although Judge Martini adopted Judge Falk's R & R in full, Sportscare of Am., P.C. v. Multiplan, Inc., No. 10-4414, 2011 U.S. Dist. LEXIS 14251, at *2, 2011 WL 589955 (D.N.J. Feb. 10, 2011), the Court notes that, in a later case more procedurally akin to the case at bar, Demaria v. Horizon Healthcare Servs., Judge Martini expressly followed Franco to hold that “[a]t best, the allegations provide only the most ambiguous and conclusory information about what the purported assignments entail. At worst for Plaintiffs, they indicate that the assignments were limited to a patient's assigning his or her right to receive reimbursement from Horizon for the covered portion of the service bill, which in no way can be construed as tantamount to assigning the right enforce his or her rights under the plan.” 2012 U.S. Dist. LEXIS 161241, at *13-14, 2012 WL 5472116 (D.N.J. Nov. 9, 2012) (quoting Franco, 818 F.Supp.2d at 811-12). 6 The Court notes that, to the extent that Plaintiff seeks to pursue the limited issue of whether or not it is covered by the Managed Care Agreement negotiated between Aetna and Liberty, without seeking reimbursement as an ERISA assignee, such a dispute is purely a matter of contract law and is not governed by ERISA. See Pascack Valley Hosp., 388 F.3d at 401. End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 2:16-cv-08645-SDW-LDW Document 14-3 Filed 03/06/17 Page 9 of 9 PageID: 214 EXHIBIT “C” Case 2:16-cv-08645-SDW-LDW Document 14-4 Filed 03/06/17 Page 1 of 6 PageID: 215 McCarthy v. Dun & Bradstreet Corp., Not Reported in F.Supp.2d (2004) 34 Employee Benefits Cas. 1649 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2004 WL 2743569 United States District Court, D. Connecticut. Mary MCCARTHY, Clayton Borowski, et al., Plaintiffs, v. THE DUN & BRADSTREET CORPORATION, The Dun & Bradstreet Corporation Retirement Account, and The Dun & Bradstreet Career Transition Plan, Defendants. No. Civ.A.3:03CV431(SRU). | Nov. 30, 2004. Attorneys and Law Firms Thomas G. Moukawsher, Moukawsher & Walsh Capitol Place, Hartford, CT, for Plaintiffs. Carla R. Walworth, Zachary R. Osborne, Paul, Hastings, Janofsky & Walker, Stamford, CT, for Defendants. RULING ON DEFENDANTS' MOTION TO DISMISS UNDERHILL, J. *1 This case arises out of a sale by The Dun & Bradstreet Corporation (“Dun & Bradstreet” or “the Corporation”) of its Receivable Management Services (“RMS”) division to a group of that division's managers. The sale resulted in the nominal termination of all the RMS division's employees, though they were immediately re-employed by the spun-off company. Plaintiffs, a group of those former employees, brought this lawsuit claiming that their termination improperly deprived them of all or part of the benefits to which they were entitled under two Dun & Bradstreet plans in which they participated. Defendants have moved to dismiss two of the four counts of this complaint, namely, Count One-alleging a failure to pay plaintiffs their severance benefits-and Count Three- alleging an improper reduction of plaintiffs' retirement benefits. 1 For the reasons set forth below, defendants' motion is granted, and those two counts are dismissed. I. Statement of Facts 2 Plaintiffs are forty-six individuals who were formerly employed by Dun & Bradstreet. As employees of the Corporation they participated in a variety of benefits plans, two of which are at issue in this litigation. The first, called the Career Transition Plan (“CTP”), provided severance benefits. The second, called the Master Retirement Plan (“MRP”), provided retirement benefits. Both plans are governed by the Employee Retirement Income Security Act of 1974 (“ERISA”). Both plans, in their current incarnations, are defendants in this lawsuit. 3 A. Career Transition Plan Terms The CTP provides for severance benefits to participating employees upon the occurrence of an “Eligible Termination.” Section 1.4 of the CTP provides: “Eligible Termination” shall mean (a) an involuntary termination of employment with a Participating Company by reason of a reduction in force program, job elimination or unsatisfactory performance in the execution of an Eligible Employee's duties or (b) a resignation mutually agreed to in writing by the Participating Company and the Eligible Employee. Notwithstanding the foregoing, an Eligible Termination shall not include (w) a unilateral resignation, (x) a termination by a Participating Company for Cause, (y) a termination as a result of a sale (whether in whole or in part, of stock or assets), merger or other combination, spinoff, reorganization or liquidation, dissolution or other winding up or other similar transaction involving a Participating Company; or (z) any termination where an offer of employment is made to the Eligible Employee of a comparable position at a Participating Company concurrently with his or her Eligible Termination. B. Master Retirement Plan Terms Case 2:16-cv-08645-SDW-LDW Document 14-4 Filed 03/06/17 Page 2 of 6 PageID: 216 McCarthy v. Dun & Bradstreet Corp., Not Reported in F.Supp.2d (2004) 34 Employee Benefits Cas. 1649 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 The MRP provides participants with retirement benefits upon reaching the normal retirement age of 65. It also allows employees to retire as early as age 55 and receive their normal retirement benefits discounted at a rate of 3% a year. Former employees, whose benefits under the MRP vested before they left the Corporation, are entitled to the same benefits upon retirement at 65 as current employees. Like current employees, former employees can also receive benefits if they retire early. 4 Unlike early retiring current employees, early retiring former employees do not receive their normal benefit reduced annually by 3%, instead they receive the “actuarial equivalent” of their normal benefit. Actuarial equivalence is defined under the MRP as a participant's normal retirement benefit, discounted by an annual rate of 6.5% and a mortality factor. The appropriate mortality factors are set forth in detail in the MRP. *2 As required by ERISA, Dun & Bradstreet provided MRP participants with a Summary Plan Description (“SPD”). The SPD describes the early retirement benefits of both current and former employees. In a section entitled “Early Retirement Benefit,” the SPD explains that current employees can retire as early as age 55. It explains that, if they do, their benefit will be “reduced 3% for each year that payments begin before age 65.” The SPD then sets out a chart showing what percentage of normal benefits an employee would receive for all retirement ages between 55 and 65. Later, in a section entitled “Vesting,” the SPD explains that vested employees are entitled to retirement benefits even if they have left the company. It then explains that: If you choose, the payment of your deferred vested benefit can begin as early as age 55, but the amount of the benefit will be reduced actuarially, resulting in a lower Plan benefit than if the reduction table in the ‘Early Retirement Benefit’ section was used. C. Sale of RMS Division In 2001 Dun & Bradstreet sold its RMS division to a group of that division's managers. Though, as a practical matter, the plaintiffs did not lose their jobs, after the sale they were employees of the RMS spin-off, not Dun & Bradstreet. Thus, at least nominally, all the plaintiffs had been terminated from Dun & Bradstreet's employment. The CTP, however, did not pay plaintiffs severance benefits because their termination was deemed to fall under the section 1.4 subsection (y) exception to “Eligible Terminations”-termination as a result of sale. Furthermore, under the MRP, plaintiffs were no longer current employees. Consequently, if they chose to retire early, they were not entitled to receive their normal retirement benefit discounted by the favorable 3% discount rate, but instead would receive it discounted by 6.5% per year plus a mortality factor. II. Discussion A. Standard of Review As a preliminary matter, there is some question about what standard of review to apply in resolving this matter. Defendants contend that, because plaintiffs' claims for benefits were denied by an authorized representative of each plan, the court only reviews this denial to determine whether it was arbitrary or capricious. Plaintiffs disagree; they believe that this court's review is de novo. They present a number of arguments in support of this position, including: (a) that one of the plan's decisions was not timely, (b) that the person who denied the benefits was not authorized, (c) that some of the issues are purely legal, and (d) that the plans' decisions were tainted by conflict of interest. None of these issues needs to be addressed because under either standard my decision would be the same. B. CTP Benefits In the absence of any limiting provision, plaintiffs would presumably be entitled to severance benefits under the CTP because they were terminated without cause. The CTP, however, excludes benefits for employees whose termination is “as a result of a sale (whether in whole or in part, of stock or assets), merger or other combination, spinoff, reorganization or liquidation, dissolution or other winding up or other similar transaction involving a Participating Company.” A Participating Company is Case 2:16-cv-08645-SDW-LDW Document 14-4 Filed 03/06/17 Page 3 of 6 PageID: 217 McCarthy v. Dun & Bradstreet Corp., Not Reported in F.Supp.2d (2004) 34 Employee Benefits Cas. 1649 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 defined as any of a number of listed companies, including Dun & Bradstreet. *3 Plaintiffs argue that this exception is inapplicable to them. They argue that the phrase “involving a Participating Company” means that all parties to the specified transaction must be Participating Companies. Specifically plaintiffs contend that, although the RMS division was sold by a Participating Company (Dun & Bradstreet), because it was not sold to a Participating Company (but instead to a group of managers), terminations resulting from that sale are not excepted from the definition of eligible terminations. In other words, plaintiffs contend that the word “involving,” in this context, means “consisting only of.” The word plainly has no such meaning in ordinary usage, and there is nothing that indicates the parties intended the word to have that meaning in the CTP. On the contrary, when the drafters of the CTP wished to express the meaning “by” or “to,” they simply used those prepositions. In short, the CTP is unambiguous; terminations as a result of the sale by Dun & Bradstreet (a Participating Company) of its RMS division-a sale that involved Dun & Bradstreet-are not “Eligible Terminations.” Plaintiffs are entitled to no severance benefits under the plain language of the CTP. Consequently, Count One of the Amended Complaint is dismissed. C. MRP Benefits As former employees, plaintiffs are entitled to receive all of their vested retirement benefits upon retirement at age 65. They can also retire as early as age 55, but their benefit amount will be “actuarially reduced” by 6.5% per year plus a mortality factor. Thus, they will receive a lower benefit than early retiring current employees, who only have their benefits reduced by 3% per year. For example, a current employee who retires at age 60 would receive 85% of his age-65 retirement payout. A former employee retiring at the same age would receive approximately 60% of his age-65 retirement payout. Plaintiffs do not dispute this interpretation of the MRP. Neither do they dispute that they are former employees for the purpose of an MRP payout. They argue that the provision of the plan that provides for “actuarial reduction” of benefits for early retiring former employees cannot be enforced against them, because it was not adequately disclosed in the Summary Plan Description. Instead, they contend, they should receive the same discounted payout as current employees, a payout discounted using the more favorable rate of 3% per year. ERISA requires that all participants in covered plans be provided with Summary Plan Descriptions describing the terms of the plan. 29 U.S.C. § 1022. To the extent an SPD conflicts with its plan, the SPD controls. See Heidgerd v. Olin, 906 F.2d 903, 908 (2d Cir.1990). ERISA provides some guidance concerning what constitutes adequate disclosure in an SPD. It must, among other things, set out “circumstances which may result in disqualification, ineligibility, or denial or loss of benefits.” 29 U.S.C. § 1002(b). Labor Department regulations further explain that the SPD must not be “misleading” or “misinform” participants, and that “[a]ny descriptions of exceptions, limitations, reductions, and other restrictions of plan benefits shall not be minimized, rendered obscure or otherwise made to appear unimportant.” 29 C.F.R. § 2420.102-2(b). *4 The question before the court is whether the following sentence from the SPD, describing benefits available to former employees, satisfies ERISA's requirements: “If you choose, the payment of your deferred vested benefit can begin as early as age 55, but the amount of the benefit will be reduced actuarially, resulting in a lower Plan benefit than if the reduction table in the ‘Early Retirement Benefit’ section was used.” Plaintiffs contend that this disclosure is inadequate. They argue that ERISA requires that the SPD give a more detailed explanation of how the reduction of benefits would be calculated, and not merely the general statement that benefits will be “actuarially reduced.” There is nothing in the language of the relevant ERISA statute indicating that an SPD must disclose how a benefit reduction is calculated. On the contrary, the statute specifically says that the SPD must set out “circumstances which may result in ... loss of benefits.” 29 U.S.C. § 1022 (emphasis added). Perhaps acknowledging this, plaintiffs point, not to the statute, but to interpretive case law that they believe imposes a more stringent disclosure requirement on SPDs. Case 2:16-cv-08645-SDW-LDW Document 14-4 Filed 03/06/17 Page 4 of 6 PageID: 218 McCarthy v. Dun & Bradstreet Corp., Not Reported in F.Supp.2d (2004) 34 Employee Benefits Cas. 1649 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 Plaintiffs rely primarily on the case of Layaou v. Xerox, 238 F.3d 205 (2d Cir.2001). Though I agree that this case is on point, it does not support plaintiffs' position. Layou had left his employment at Xerox, received a lump- sum distribution, and later been re-employed. Under the terms of Xerox's retirement plan, when he finally retired, Layou's ultimate payout was offset by a “phantom account.” The “phantom account” offset was basically equal to the amount his initial payout (from when he first left Xerox) would have been had it been left in the plan. The Layou Court identified two problems with the way the offset was described in the SPD. First, the SPD only stated that benefits “may be reduced if you receive amounts before age 65 or receive amounts from another Xerox retirement plan” (emphasis added). This, the Court held, was insufficient to apprise Layou of the fact that his benefits would be reduced. Second, Layou had received an estimate from Xerox stating that his benefits would be $924 per month when, in fact, he was only to receive $145 per month, after the “phantom account” offset. The Court determined that this compounded the confusion caused by the SPD disclosure. This case is quite different. The MRP's SPD states that benefits for early retiring former employees “will be reduced ... resulting in a lower Plan benefit.” There is simply no way that a former employee reading that section could be under the impression that he was to receive the same benefits as current employees. Additionally, unlike in Layou, there is no indication here that plaintiffs who requested estimates of their benefit reductions were provided with inaccurate disclosures. In fact, plaintiffs do not dispute that at least one of them did request such an estimate and was given a correct description of his benefits. *5 The Layou Court also provided an example of what it would consider to be an adequate disclosure. It indicated that the following would suffice: “Any future benefit will be offset by the appreciated value of any prior distribution assuming that amount remained in the plan” (emphasis in original). This language is similar to the language actually used in the MRP's SPD, specifically that “the amount of the benefit will be reduced actuarially, resulting in a lower Plan benefit than if the reduction table ... was used.” Both statements inform participants that their benefits will certainly be reduced, and both generally describe how they will be reduced, neither providing much detail about the latter step (compare “offset by the appreciated value” with “actuarially reduced, resulting in a lower Plan benefit”). Other cases in which courts have found summary disclosures inadequate all deal with much more serious omissions. See, e.g., Burke v. Kodak Retirement Income Plan, 336 F.3d 103, 111 (2d Cir.2003) (failure to disclose that domestic partnership affidavit was required); Ruotolo v. Sherwin-Williams Co., 622 F.Supp. 546, 549 (D.Conn.1985) (failure to disclose that disability benefits would be reduced by 70% of earnings received from paid employment). No case has ever held that a mere failure to include the specific methodology used to calculate a benefit is an ERISA violation. Cases in this Circuit have all consistently interpreted ERISA's requirements as meaning what they say, that an SPD must disclose the circumstances under which a benefit may be reduced or lost. Because the MRP's SPD complied with that requirement, Count Three of the Amended Complaint is dismissed. Defendants' motion to dismiss Counts One and Three (doc. # 18) of the Amended Complaint is GRANTED. It is so ordered. All Citations Not Reported in F.Supp.2d, 2004 WL 2743569, 34 Employee Benefits Cas. 1649 Footnotes 1 Defendants also moved to dismiss Count Four of the complaint, a count alleging that one of the plans used an unreasonably high interest rate. At oral argument, both parties agreed it would be appropriate for the court to convert that motion into one for summary judgment, with both sides being granted additional time to provide the court with relevant evidence. 2 This statement of facts is drawn-as it must be-from the allegations of plaintiffs' complaint and the text of the benefit plans referenced therein. Case 2:16-cv-08645-SDW-LDW Document 14-4 Filed 03/06/17 Page 5 of 6 PageID: 219 McCarthy v. Dun & Bradstreet Corp., Not Reported in F.Supp.2d (2004) 34 Employee Benefits Cas. 1649 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 3 The Master Retirement Plan was replaced by The Dun & Bradstreet Corporation Retirement Account. This new Account is still responsible for the payment of benefits due under the MRP, and so is named as a defendant in this case. 4 This result is mandated by ERISA. See 29 U.S.C. § 1056(a) ( “In the case of a plan which provides for the payment of an early retirement benefit, such plan shall provide that a participant who satisfied the service requirements for such early retirement benefit, but separated from service (with any noforfeitable right to an accrued benefit) before satisfying the age requirement for such early retirement benefit, is entitled upon satisfaction of such age requirement to receive a benefit not less than the benefit to which he would be entitled at the normal retirement age, actuarially reduced under regulations prescribed by the Secretary of the Treasury.”). End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 2:16-cv-08645-SDW-LDW Document 14-4 Filed 03/06/17 Page 6 of 6 PageID: 220 EXHIBIT “D” Case 2:16-cv-08645-SDW-LDW Document 14-5 Filed 03/06/17 Page 1 of 9 PageID: 221 Tannenbaum v. UNUM Life Ins. Co. of America, Not Reported in F.Supp.2d (2004) 2004 WL 1084658 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2004 WL 1084658 Only the Westlaw citation is currently available. United States District Court, E.D. Pennsylvania. Alan TANNENBAUM, M.D. v. UNUM LIFE INSURANCE CO. OF AMERICAN, and Albert Einstein Healthcare Foundation No. Civ.A. 03-CV-1410. | Feb. 27, 2004. | file March 4, 2003. | of last filing May 6, 2004. Attorneys and Law Firms Alan H. Casper, Philadelphia, PA, Lead Attorney, Attorney to be Noticed, representing Alan Tannenbaum, (Plaintiff). Edward J. Foley, Jr., Conshohocken, PA, Lead Attorney, Attorney to be Noticed, representing Alan Tannenbaum, (Plaintiff). Marc A. Weinberg, Saffren and Weinberg, Jenkintown, PA, Lead Attorney, Attorney to be Noticed, representing Alan Tannenbaum, (Plaintiff). Kirk L. Wolgemuth, Stevens & Lee, Reading, PA, Lead Attorney, Attorney to be Noticed, representing UNUM Life Insurance Company of America, (Defendant). MEMORANDUM & ORDER SURRICK, J. *1 Presently before the Court is Defendant UNUM Life Insurance Company of America's (“UNUM”) Motion to Dismiss Counts I, II, III, and VI of Plaintiff's Amended Complaint (Doc. No. 3.), and Plaintiff's Request to File a Sur Reply to Defendants' Reply Brief in Support of Motion to Dismiss Counts I, II, III, and VI of Complaint (Doc. No. 6). Plaintiff's Request to File a Sur Reply is granted. For the following reasons, Defendants' Motion to Dismiss 1 will be granted in part and denied in part. A. Background 2 Plaintiff Alan Tannenbaum, M.D., brings this action against Defendants UNUM Life Insurance Company of America and Albert Einstein Healthcare Foundation (“Einstein”) for relief pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended, 28 U.S.C. § 1001, et seq., and Pennsylvania state law. Plaintiff is employed by the Einstein Community Health Associates as a pediatrician and as such became a participant in the Albert Einstein Healthcare Foundation Plan (the “Plan”). (Id. ¶ 11.) The Plan is an employee welfare benefit plan established pursuant to ERISA and Plaintiff was at all relevant times a participant in the Plan. (Id. ¶¶ 2-3.) The Plan was created to maintain and provide disability income to employees pursuant to ERISA. (Id. ¶ 4.) Defendants are administrators of the Plan and fiduciaries with respect to the Plan. (Id. ¶¶ 5- 6.) UNUM is also a disability insurance company with whom Plaintiff has contracted for two additional private disability insurance policies. (Id. ¶ 7.) Plaintiff generally alleges that Defendants failed to pay him certain disability benefits that he was due after a traumatic injury ended his career. Plaintiff was injured on December 1, 2000, in a motor vehicle accident. (Id. ¶ 12.) As of April 1, 2001, Plaintiff could no longer perform his duties as a pediatrician and has been unable to return to work since then. (Id. ¶ 17.) Plaintiff contacted the Plan to apply for disability benefits on or about April 1, 2002, but was incorrectly advised by the Plan administrator that he could not apply for benefits until after the elimination period. (Id. ¶¶ 19-20.) Based on this false information, Plaintiff was not provided a benefit application until on or about June 6, 2002. (Id . ¶ 21.) At or about the same time Plaintiff completed the application and forwarded a copy to UNUM and the Plan. (Id. ¶ 22.) The Plan and UNUM made no effort to investigate Plaintiff's claim until August 22, 2002, more than 60 days after Plaintiff submitted his application. (Id. ¶ 23.) UNUM denied Plaintiff's application on October 4, 2002. (Id. ¶ 24.) Plaintiff alleges that this denial was without support in the record and/or relied upon evidence that had been manipulated, altered, and fabricated. (Id. ¶ 26.) On November 11, 2002, Plaintiff appealed UNUM's decision and requested a copy of the documents that it Case 2:16-cv-08645-SDW-LDW Document 14-5 Filed 03/06/17 Page 2 of 9 PageID: 222 Tannenbaum v. UNUM Life Ins. Co. of America, Not Reported in F.Supp.2d (2004) 2004 WL 1084658 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 used in its review. (Id. ¶ 27.) Plaintiff also submitted an application for Social Security Disability Benefits as required under the Plan and was awarded total disability benefits on December 17, 2002. As required under the Plan, Plaintiff forwarded a copy of this award to UNUM. (Id. ¶ 29.) On January 6, 2003, more than forty-five days after Plaintiff appealed the denial of benefits, UNUM requested an additional forty-five days for review. (Id. ¶ 30.) On January 31, 2003, eight months after Plaintiff first applied for benefits, UNUM requested that Plaintiff undergo two medical examinations by physicians of their choosing so that UNUM could “make a more informed determination.” (Id. ¶ 31.) On February 6, 2003, UNUM denied Plaintiff's request for the documents contained in the administrative record and upon which it relied in making its decision to deny Plaintiff benefits. (Id. ¶ 32.) As of the date of the amended complaint, Plaintiff still had not received a decision on his appeal to the Plan and UNUM. (Id. ¶ 35.) *2 Plaintiff's amended complaint is divided into six counts. Counts I and III of the amended complaint primarily seek to recover the past and future disability benefits that Plaintiff claims he is due under the Plan. Count II seeks penalties for Defendants' failure to provide certain documents that Plaintiff claims he was entitled to under ERISA. Count IV asserts a state law contract claim alleging that UNUM breached the two private disability insurance policies it issued Plaintiff. Count V asserts a bad faith claim under state law. Count VI asserts a bad faith claim under ERISA. Defendants originally argued that Counts I and III should be dismissed for Plaintiff's failure to exhaust his administrative remedies. However, in their reply brief in support of their motion to dismiss, Defendants abandoned that argument. Thus, the only remaining arguments for us to consider are Defendants' motion to dismiss Counts I (on grounds other than exhaustion), II, and VI. B. Count I - ERISA Breach of Fiduciary Duty Claim ERISA's civil enforcement provision, 29 U.S.C. § 1132, 3 sets forth the kinds of actions that may be brought to remedy violations of ERISA. Count I, entitled “ERISA Breach of Fiduciary Duty,” invokes one subsection of that provision, § 1132(a)(3)(B), as its basis for relief. 4 Section 1132(a)(3)(B) permits a participant in an ERISA plan to bring a civil action “to enjoin any act or practice which violates any provision of [ERISA] 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 [ERISA] or the terms of the plan.” (emphasis added). Defendants, citing Varity Corp. v. Howe, 516 U.S. 489 (1996), argue that § 1132(a)(3)(B) is a catchall remedial section that may only be invoked to remedy violations of ERISA when no other provision of ERISA's civil enforcement provision applies. Defendants argue that Plaintiff may not sue to recover ERISA benefits under § 1132(a)(3)(B) because he may recover any benefits he is owed under § 1132(a)(1)(B). In Count I Plaintiff seeks, among other things, “restitution in an amount equal to the benefits he should have received from the date of [his] application and to otherwise make Plaintiff whole for the fiduciary breaches.” In Count III, which invokes § 1132(a)(1)(B), Plaintiff also seeks to recover the benefits he believes he is due under the Plan. Section 1132(a)(1)(B) allows plan participants to sue “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 .” Since Plaintiff can recover any benefits he is due under § 1132(a)(1)(B), Defendant argues that Count I of the amended complaint, which seeks benefits under the catchall remedial section, must be dismissed. In arguing for dismissal of Count I Defendants also cite Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002). They argue that Plaintiff may only obtain equitable relief under § 1132(a)(3)(B), and that following the Supreme Court's decision in Great West, restitution of benefits should not be considered an equitable remedy. Thus, Defendants argue that Count I of the amended complaint must be dismissed on the additional grounds that seeks relief not authorized by § 1132(a)(3)(B). We will separately address each of these arguments. 1. The impact of Varity Corp. v. Howe *3 In Varity Corp. v. Howe, the Supreme Court held that a group of beneficiaries who were denied benefits under an ERISA plan could bring an individual action for breach of fiduciary duty under § 1132(a)(3)(B). 516 U.S. at 515. The plaintiff beneficiaries were former employees of the defendant. Soon after the defendant assigned its former employees to a new benefit plan, the new plan entered into a receivership, and the former employees lost their benefits. The former employees then sued the defendant under ERISA for breach of fiduciary duty Case 2:16-cv-08645-SDW-LDW Document 14-5 Filed 03/06/17 Page 3 of 9 PageID: 223 Tannenbaum v. UNUM Life Ins. Co. of America, Not Reported in F.Supp.2d (2004) 2004 WL 1084658 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 and sought to be reinstated into their former benefit plan. The Court held that the former employees' suit was proper under § 1132(a)(3)(B), which entitles beneficiaries to seek “other appropriate equitable relief” to redress violations of ERISA. The Court stated that § 1132(a) (3)(B) was a “ ‘catchall’ remedial section” that afforded litigants equitable relief for violations of ERISA when no other remedial section applied. Varity, 515 U.S. at 511. However, the Court cautioned that: [w]e should expect that courts, in fashioning ‘appropriate’ equitable relief, will keep in mind the ‘special nature and purpose of employee benefit plans,’ and will respect the ‘policy choices reflected in the inclusion of certain remedies and the exclusion of others.’ ... Thus, we should expect that where Congress elsewhere provided adequate relief for a beneficiary's injury, there will likely be no need for further equitable relief, in which case such relief normally would not be ‘appropriate.’ Id. at 515 (citations omitted). In Varity, the former employees could not obtain relief under the first two subsections of § 1132(a). They could not sue under § 1132(a)(1)(B), which is the ERISA provision that specifically allows plan participants and beneficiaries to sue to recover the benefits they are due, because, as former employees, they were not due any benefits “under the terms of [the] plan.” Therefore, § 1132(a)(1) (B) did not apply. Section 1132(a)(2), which permits suits for “appropriate relief” for breaches of fiduciary duty, only allows plaintiffs to recover on behalf of the plan. Because the former employees were seeking to recover individually, § 1132(a)(2) did not apply. Thus, the former employees had to rely on § 1132(a)(3)(B) or they would have no remedy at all. Under these circumstances, the Court allowed the former employees to invoke § 1132(a)(3) (B). However, as mentioned above, the Court cautioned that “where Congress elsewhere provided adequate relief for a beneficiary's injury,” § 1132(a)(3)(B) “normally” would not apply. Varity, 515 U.S. at 515. The courts of appeals are split over whether Varity ever permits a plaintiff who has been denied benefits to simultaneously bring an action for benefits under § 1132(a)(1)(B) and an action for breach of fiduciary duty under § 1132(a)(3)(B). Compare, e.g., Katz v. Comprehensive Plan of Group Ins., 197 F.3d 1084, 1088- 89 (11th Cir.1999) (holding that a plaintiff with a right to bring a claim for benefits under § 1132(a)(1)(B) cannot bring an action under § 1132(a)(3)(B)); Rhorer v. Raytheon Eng'rs & Constructors, Inc., 181 F.3d 634, 639 (5th Cir.1999) (same); Wald v. Southwestern Bell Corp. Customcare Med. Plan, 83 F.3d 1002, 1006 (8th Cir.1996) (same); with Larocca v. Borden, Inc., 276 F.3d 22, 28 (1st Cir.2002) (affirming district court's decision to constructively reinstate plaintiffs to benefit plan under § 1132(a)(3)(B), and then award plaintiffs benefits under § 1132(a)(1)(B)); Devlin v. Empire Blue Cross & Blue Shield, 274 F .3d 76, 89-90 (2d Cir.2001) (holding that Varity did not eliminate a private cause of action for breach of fiduciary duty when another potential remedy is available; instead, in such situations the district court may only award such equitable relief as it considers appropriate). Defendants assert that this issue was resolved in the Third Circuit in Ream v. Frey, 107 F.3d 147, 152-53 (3d Cir.1997). We disagree. The plaintiff in Ream was in a situation similar to that of the plaintiffs in Varity, in that he was seeking lost benefits but had no cause of action against the defendant under § 1132(a)(1)(B). The court, relying on Varity, held that the plaintiff was entitled to pursue a private breach of fiduciary duty claim against the defendant under § 1132(a)(3)(B), the catchall remedial section. In dicta the court stated that “[w]here Congress otherwise has provided for appropriate relief for the injury suffered by a beneficiary, further equitable relief ought not be provided.” Ream, 107 F.3d at 152. The court did not decide whether a plaintiff who has been denied benefits can, at the pleading stage, maintain an action for benefits under § 1132(a)(1)(B) and an action for “other appropriate equitable relief” under § 1132(a)(3)(B). That is the question before this Court. *4 The district courts within this circuit are split over the issue presently before us. Compare, e.g., Doyle v. Nationwide Ins. Cos. & Affiliates Employee Health Care Plan, 240 F.Supp.2d 328, 349-50 (E.D.Pa.2003) (rejecting view that Varity set a bright-line rule that a claim for equitable relief under § 1132(a)(3) should be dismissed when a plaintiff also brings a claim under § 1132(a)(1)(B)); Moore v. First Union Corp., C.A. No. 00-2512, 2000 WL 1052140, at *1 (E.D.Pa. July 24, 2000) (same); Parente v. Bell Atlantic-Pa., C.A. No. 99-5478, 2000 WL 419981, at *4 (E.D.Pa. Apr. 18, 2000) (permitting plaintiff to proceed under both § 1132(a)(1)(B) and (a)(3) until it can be determined whether § 1132(a)(1)(B) in fact provides plaintiff appropriate relief from her injuries), with Emil v. UNUM Life Ins. Co. of Am., C.A. No. 02-2019, 2003 Case 2:16-cv-08645-SDW-LDW Document 14-5 Filed 03/06/17 Page 4 of 9 PageID: 224 Tannenbaum v. UNUM Life Ins. Co. of America, Not Reported in F.Supp.2d (2004) 2004 WL 1084658 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 U.S. Dist. LEXIS, at *7 (M.D.Pa. Feb. 4, 2003) (holding “Congress' creation of a specific remedy for the wrongful denial of benefits in § 1132(a)(1) makes it inappropriate for Plaintiff to pursue an overlapping claim for breach of fiduciary duty”); Post v. Hartford Life & Accident Ins. Co., C.A. No. 02-1917, 2002 WL 31741470, at *3 (E.D.Pa. Dec. 6, 2002) (dismissing plaintiff's fiduciary duty claim because “a claim for wrongful denial of benefits cannot be maintained under § 1132(a)(3).”) (quoting Blahuta-Glover v. Cyanamid Long Term Disability Plan, No. 95-7069, 1996 WL 220977, at *5 (E.D.Pa. Apr. 30, 1996)). Under the circumstances of this case, we conclude that at this juncture, consistent with Varity, Plaintiff can simultaneously seek benefits under § 1132(a)(1)(B) and “other appropriate equitable relief” under § 1132(a)(3) (B). 5 At this stage, we cannot know whether Plaintiff will be able to prove his entitlement to benefits under § 1132(a)(1)(B). If it is later apparent that Plaintiff is ineligible to pursue a claim for benefits under § 1132(a)(1) (B), then Plaintiff's only remedy may be to pursue his claim for breach of fiduciary duty and seek “other appropriate equitable relief” under the catchall remedial section, § 1132(a)(3)(B). Therefore, Plaintiff will be permitted to maintain his claim under § 1132(a)(3)(B). See Varity, 516 U.S. at 515 (upholding the right of plaintiffs seeking benefits to state a claim under § 1132(a)(3)(B) when they have no other remedy). Of course, if it is determined that Plaintiff can obtain “adequate relief” under § 1132(a)(1) (B), then “further equitable relief ought not be provided.” Ream, 107 F.3d at 152. Our conclusion is supported by Int'l Union, United Auto., Aerospace & Agric. Implement Workers of Am., U.A.W. v. Skinner Engine Co., 188 F.3d 130 (3d Cir.1999), a case that is somewhat similar to this case. In Skinner, the plaintiffs asserted simultaneous claims under §§ 1132(a)(1) (B) and (3)(B). The plaintiffs' § 1132(a)(1)(B) claim was based on the theory that they were contractually owed benefits under their benefit plan, and their § 1132(a)(3)(B) claim was based on the theory that they were damaged by the defendant's affirmative misrepresentations. In a footnote, the Third Circuit stated that “[i]t is clear that even if a court rejects a breach of contract claim, a party may nevertheless pursue a breach of fiduciary duty cause of action.” Skinner, 188 F.3d at 148 n. 6 (citing In re Unisys Corp. Retiree Med. Benefit “ERISA” Litig., 57 F.3d 1255, 1264 n. 13 (3d Cir.1995)). Interestingly, the district courts within this circuit that have considered whether plaintiffs can simultaneously bring claims for benefits under §§ 1132(a)(1)(B) and (3)(B) have not cited Skinner as controlling on this issue. However, we think that Skinner demonstrates that a plaintiff who fails to prove that he is contractually entitled to benefits may nevertheless pursue a breach of fiduciary duty claim under ERISA, a result that is consistent with Varity. It is too early in these proceedings to decide whether Plaintiff is contractually entitled to benefits under the Plan. If Plaintiff is not entitled to benefits under the Plan, Plaintiff might still be entitled to “other appropriate equitable relief” to remedy any breaches of fiduciary duty by Defendants. For all of the above reasons, we reject Defendants' argument that Varity mandates dismissal of Count I. 2. The impact of Great-West Life & Annuity Ins. Co. v. Knudson *5 In Great-West, the Supreme Court found that an insurance company who had sued to enforce a reimbursement provision in an ERISA plan was not seeking “other appropriate equitable relief” authorized by § 1132(a)(3)(B). The insurance company, Great West, claimed to seek restitution, which it characterized as an equitable remedy. However, the Supreme Court concluded that not “all relief falling under the rubric of restitution is available in equity.” Great-West, 534 U.S. at 212. Whether restitution is a legal or equitable remedy depends on the basis for the plaintiff's claim and the nature of the underlying remedies sought. Id. at 213. Because Great-West sought to impose personal liability on the defendants for a contractual obligation to pay money, the Supreme Court concluded that it was seeking a legal remedy not authorized by § 1132(a)(3)(B). Courts applying Great-West are split over whether a plaintiff alleging a breach of fiduciary duty and seeking benefits is seeking a legal or equitable remedy. Compare, e.g., Godshall v. Franklin Mint Co., 285 F.Supp.2d 628, 634 (E.D.Pa.2003) (permitting plaintiffs to seek restitution of benefits owed under § 1132(a)(3)(B)), with Kishter v. Principal Life Ins. Co., 186 F.Supp.2d 438, 445 (S.D.N.Y.2002) (holding Great-West barred beneficiary's claim for insurance money that she would have received if not for the fiduciary's breach). In this case, Plaintiff seeks a variety of remedies for Defendants' purported breach of their fiduciary duties. Some of the remedies Plaintiff seeks are legal, and some are equitable. For example, Plaintiff seeks “compensatory damages,” clearly a legal remedy barred by Great- Case 2:16-cv-08645-SDW-LDW Document 14-5 Filed 03/06/17 Page 5 of 9 PageID: 225 Tannenbaum v. UNUM Life Ins. Co. of America, Not Reported in F.Supp.2d (2004) 2004 WL 1084658 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 West. On the other hand, Plaintiff also seeks an award of prejudgment interest, an equitable remedy that is authorized by § 1132(a)(3)(B). See Fotta v. Trustees of United Mine Workers of Am., Health & Ret. Fund of 1974, 165 F.3d 209, 213 (3d Cir.1998). With respect to Plaintiff's claim for restitution, we conclude that Plaintiff is seeking a legal remedy that is barred by Great-West. The theory of Plaintiff's case is that Defendants wrongfully failed to pay him the benefits he was due under the Plan. “A claim for money due and owing under a contract is ‘quintessentially an action at law.” ’ Great-West, 534 U.S. at 210 (quoting Wal-Mart Stores, Inc. v. Wells, 213 F.3d 398, 401 (7th Cir.2000)); see also Great-West, 534 U.S. at 210 (“Almost invariably ... suits seeking (whether by judgment, injunction, or declaration) to compel the defendant to pay a sum of money to the plaintiff are suits for ‘money damages,’ as that phrase has traditionally been applied, since they seek no more than compensation for loss resulting from the defendant's breach of legal duty.” (quoting Bowen v. Massachusetts, 487 U.S. 879, 918-919 (1988) (Scalia, J., dissenting)). We conclude that Plaintiff's claim for restitution seeks a legal remedy. Our conclusion is also supported by dicta in a recent Third Circuit case, suggesting that a claim for restitution of benefits under § 1132(a)(3)(B) would be barred by Great- West. See Horvath v. Keystone Health Plan East, Inc., 333 F.3d 450, 457 n. 3 (3d Cir.2003). Thus, we will grant Defendants' motion to dismiss Count I to the extent Plaintiff seeks restitution of benefits and compensatory damages. C. Count II-ERISA's Penalty Provision 6 *6 In Count II Plaintiff seeks an award of penalties pursuant to 29 U.S.C. § 1132(c) for Defendants' failure to turn over certain Plan documents that Plaintiff requested. Defendants move to dismiss Count II on the grounds that they provided all the documents they were required to disclose under ERISA. It is axiomatic that we may not consider materials outside the complaint when ruling on a motion to dismiss unless we convert that motion to one for summary judgment. See Boyle v. Governer's Veterans Outreach & Assistant Ctr., 925 F.2d 71, 74-75 (3d Cir.1991). Plaintiff has not had an opportunity to conduct discovery or submit evidence in support of its claim that Defendants failed to turn over certain Plan documents that he requested. Accordingly, it would be premature for us to assess Plaintiff's claim at this time. We will therefore deny Defendants' motion to dismiss Count II. D. Count VI-ERISA Bad Faith Claim Count VI asserts “a claim for bad faith under ERISA,” but does not cite any provision of ERISA authorizing a cause of action for bad faith denial of benefits. We will construe this claim as though Plaintiff is asserting that Defendants are liable for bad faith under Pennsylvania state law for violating ERISA. Defendants move to dismiss this claim on two grounds. First, they claim that the Pennsylvania bad faith statute, 42 PA. CONS.STAT. ANN. § 8371, does not fall within ERISA's savings clause, 29 U.S.C. § 1144(b). ERISA provides that “[e]xcept as provided in subsection (b) of this section, the provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan....” 29 U.S.C. § 1144(a). Thus, a state law relating to an employee benefit plan is preempted by ERISA unless it falls within ERISA's savings clause, which exempts from preemption “any law of any State which regulates insurance, banking, or securities.” 29 U.S.C. § 1144(b). In Kentucky Assoc. of Health Plans v. Miller, 123 S.Ct. 1471 (2003), the Supreme Court set forth a two-part test to determine whether a state law regulates insurance for purposes of ERISA's savings clause. Plaintiff and Defendants disagree about whether section 8371 regulates insurance, and therefore whether it falls within ERISA's savings clause. Defendants claim that even if section 8371 regulates insurance, it is still preempted by ERISA because it enlarges the remedies that are otherwise available under ERISA. The Supreme Court has stated that Congress intended ERISA's civil enforcement provisions to “be the exclusive vehicle for actions by ERISA-plan participants and beneficiaries asserting improper processing of a claim for benefits....” Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 52 (1987). “The policy choices reflected in the inclusion of certain remedies and the exclusion of others under the federal scheme would be completely undermined if ERISA-plan participants and beneficiaries were free to obtain remedies under state law that Congress rejected in ERISA.” Id. at 54. Thus, state statutes that act to enlarge the remedies that are not otherwise available to plaintiffs under ERISA are preempted. See Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 145 (1990) (finding a Texas state cause of action preempted by ERISA because it duplicated a cause of action under ERISA and provided Case 2:16-cv-08645-SDW-LDW Document 14-5 Filed 03/06/17 Page 6 of 9 PageID: 226 Tannenbaum v. UNUM Life Ins. Co. of America, Not Reported in F.Supp.2d (2004) 2004 WL 1084658 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 6 remedies not available under ERISA); Pilot Life, 481 U.S. at 56 (finding Mississippi state causes of action preempted by ERISA and noting that Congress' “expectations that a federal common law of rights and obligations under ERISA-regulated plans would develop ... would make little sense if the remedies available to ERISA participants and beneficiaries ... could be supplemented or supplanted by varying state laws”); see also Pane v. RCA Corp., 868 F.2d 631, 635 & n. 2 (3d Cir.1989) (finding Pennsylvania causes of action preempted by ERISA to the extent they would support an award of punitive damages because punitive damages are not available under ERISA). *7 We agree that section 8371 enlarges the remedies that are otherwise available to plaintiffs under ERISA. We also agree that because section 8371 enlarges ERISA's remedies, it is preempted even if it falls within ERISA's savings clause. Accordingly, we need not decide whether or not section 8371 regulates insurance for purposes of ERISA's savings clause. Generally, if a state statute falls within ERISA's savings clause, it is “saved” from preemption. However, the Supreme Court has “recognized a limited exception from the savings clause for alternative causes of action and alternative remedies.” Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 381 (2002). Thus, if a state statute falling within ERISA's savings clause “allows plan participants ‘to obtain remedies ... that Congress rejected in ERISA,” it is preempted. Rush, 536 U.S. at 378 (quoting Pilot Life, 481 U.S. at 54). The Supreme Court has described this limited exception to ERISA's savings clause as “Pilot Life's categorical preemption.” Id. at 380. It is clear that section 8371 provides relief to plaintiffs that is not available under ERISA. For example, section 8371 “allows an ERISA-plan participant to recover punitive damages for bad faith conduct, thus ‘expand [ing] the potential scope of ultimate liability imposed upon employers by the ERISA scheme.” ’ Dolce v. Hercules Inc. Ins. Plan, C.A. No. 03-cv-1747, 2003 WL 22992148, at *4 (E.D.Pa. Dec. 15, 2003) (quoting Sprecher v. Aetna U.S. Healthcare, Inc ., C.A. No. 02-cv-580, 2002 WL 1917711, at *7 (E.D.Pa. Aug. 19, 2002)). A number of district courts within this circuit have found that section 8371 is preempted by ERISA, regardless of whether it falls within ERISA's savings clause. See, e.g., Dolce, 2003 WL 22992148, at *4; Nguyen v. Healthguard of Lancaster, Inc., 282 F.Supp.2d 296, 306-7 (E.D.Pa.2003); Morales v. First UNUM Life Ins. Co. of Am., C.A. No. 03-cv-925, 2003 WL 22097493, at *2 (E.D.Pa. May 27, 2003); Snook v. Penn State Geisinger Health Plan, 241 F.Supp.2d 485, 493 (M.D.Pa.2003); Emil v. UNUM Life Ins. Co. of Am., C.A. No. 02-2019, 2003 WL 256781, at *3 (M.D.Pa. Feb. 5, 2003); McGuigan v. Reliance Standard Life Ins. Co., 256 F.Supp.2d 345, 348-49 (E.D.Pa.2003); Sprecher, 2002 WL 1917711, at *7; Kirkhuff v. Lincoln Technical Inst., Inc., 221 F.Supp.2d 572, 576 (E.D.Pa.2002). Two district judges within this circuit have come to a different conclusion, namely, that if a state statute falls within ERISA's savings clause, it is “saved” from preemption even if it expands the remedies available to plaintiffs under ERISA. See Stone v. Disability Mgmt. Servs., Inc., 288 F.Supp.2d 684, 695-96 (M.D.Pa.2003); Rosenbaum v. UNUM Life Ins. Co. of Am., C.A. No. 01-6758, 2003 WL 22078557, *7-*9 (E.D.Pa. Sept. 8, 2003). In Rosenbaum, the court examined the Supreme Court's decisions in Rush and Pilot Life and found that the portions of those opinions addressing conflict preemption were dicta and therefore not binding. The Rosenbaum court then examined ERISA's savings clause and found that in writing the savings clause, “Congress' intent was clear, it wanted all state laws which regulate insurance to be exempt from preemption under ERISA.” Id. at *8. In sum, the Rosenbaum court held that if a state statute regulates insurance and qualifies for ERISA's savings clause, it is not subject to preemption under Pilot Life. Id. at *9. *8 We conclude that we are not free to disregard those portions of the Rush and Pilot Life opinions addressing preemption. In Pilot Life, an employee brought common law contract and tort claims against the insurance company that issued his employer's group insurance policy. Two years after the employee was injured in a work related accident, the insurance company terminated his benefits under his employer's disability benefit plan. The plaintiff employee then sued under state law for both compensatory and punitive damages. The insurance company moved for summary judgment, arguing that ERISA preempted the plaintiff's common law claims. The district court agreed with the insurance company's preemption argument, but the court of appeals reversed. The Supreme Court then granted certiorari to determine whether or not the plaintiff's state law claims were preempted by ERISA. Case 2:16-cv-08645-SDW-LDW Document 14-5 Filed 03/06/17 Page 7 of 9 PageID: 227 Tannenbaum v. UNUM Life Ins. Co. of America, Not Reported in F.Supp.2d (2004) 2004 WL 1084658 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 7 In answering this question, the Supreme Court first concluded that each of the plaintiff's claims met the criteria for preemption under ERISA's preemption provision, 29 U.S.C. § 1144(a). Pilot Life, 481 U.S. at 48. Thus, unless those claims fell within an exception to that provision, they were preempted. Id. The Court then considered whether or not those claims fell within ERISA's savings clause. It concluded that the claims did not regulate insurance and therefore did not qualify for the savings clause. The Court stated that it was “obliged in interpreting the saving clause to consider ... the role of the saving clause in ERISA as a whole.” Id. at 51. Thus, an “understanding of the saving clause must be informed by the legislative intent concerning [ERISA's] civil enforcement provisions,” which, the Court said, were “intended to be exclusive.” Id. at 52. Those provisions allow persons alleging violations of ERISA to “sue to recover benefits due under the plan, to enforce the participant's rights under the plan, or to clarify rights to future benefits.” Id. at 53. No provision, however, authorizes plaintiffs to recover punitive damages. Id. Accordingly, the Court found the state claims (which authorized both punitive and compensatory damages) were preempted by ERISA. In Rush, the Court again considered whether a state statute was preempted by ERISA. The statute under review required health maintenance organizations (HMOs) to provide an independent review of disputes between primary care physicians and HMOs, and to cover services deemed medically necessary by the independent reviewer. The Court agreed with Rush, the HMO, that the statute was subject to preemption under § 1144(a). However, the Court also held that the statute fell within ERISA's savings clause because it regulated insurance. Rush, 536 U.S. at 373. Citing Pilot Life, Rush argued that even if the statute fell within ERISA's savings clause, it was still preempted because it expanded the remedies that are otherwise available to plaintiffs under ERISA. Rush claimed that the independent review procedure was a form of binding arbitration that supplemented or supplanted the remedies available under ERISA. The Court concluded that “Rush overstate[d] the rule expressed in Pilot Life.” Rush, 536 U.S. at 378. In both Pilot Life and Ingersoll-Rand, the Court had found state laws preempted by ERISA because they “provided a form of ultimate relief in a judicial forum that added to the judicial remedies provided by ERISA.” Id. at 379. In Rush, however, the state regulatory scheme under consideration “provide[d] no new cause of action under state law and authorize[d] no new form of ultimate relief.” Id. In other words, a plaintiff utilizing the state scheme in Rush could obtain nothing more than the benefits available in any action brought under § 1132(a). For this reason, the Court held that the statute in Rush did “not fall within Pilot Life's categorical preemption.” Id. at 380. *9 Reading Rush and Pilot Life together, we conclude that there are a class of state statutes that are categorically preempted by ERISA, regardless of whether those statutes otherwise qualify for ERISA's savings clause. The class of statutes that are categorically preempted are those that “provide[ ] a form of ultimate relief in a judicial forum that add[s] to the judicial remedies provided by ERISA.” Rush, 536 U.S. at 379. Section 8371 is just such a statute. It “allows an ERISA-plan participant to recover punitive damages for bad faith conduct, thus ‘expand[ing] the potential scope of ultimate liability imposed upon employers by the ERISA scheme.” ’ Dolce, 2003 WL 22992148, at *4. Accordingly, it is subject to Pilot Life's categorical preemption. We note that the courts of appeals that have considered this issue have unanimously concluded that that state statutes that fall within ERISA's savings clause may still be preempted if they run afoul of Pilot Life. See Conover v. Aetna U.S. Health Care, Inc., 320 F.3d 1076, 1078 (10th Cir.2003) (“A state law otherwise regulating insurance within the meaning of [ERISA's savings clause] may still be preempted if it allows plan participants and beneficiaries ‘to obtain remedies under state law that Congress rejected in [ERISA]” ’) (citations omitted); Singh v. Prudential Health Care Plan, Inc., 335 F.3d 278, 286 (4th Cir.2003) (holding that though state statute fell within ERISA's savings clause, “courts must still assess whether the otherwise saved State law nonetheless frustrates the overall purposes of ERISA by inappropriately supplementing or supplanting ERISA's exclusive remedies”); Elliot v. Fortis Benefits Ins. Co., 337 F.3d 1138, 1144 (9th Cir.2003) (declining to consider whether state statute fell within ERISA's savings clause because the statute was preempted by Pilot Life ). Accordingly, we will dismiss Plaintiff's claim for bad faith under Count VI. An appropriate order follows. Case 2:16-cv-08645-SDW-LDW Document 14-5 Filed 03/06/17 Page 8 of 9 PageID: 228 Tannenbaum v. UNUM Life Ins. Co. of America, Not Reported in F.Supp.2d (2004) 2004 WL 1084658 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 8 ORDER AND NOW, this 27 th day of February, 2004, upon consideration of Defendant UNUM Life Insurance Company of America's Motion to Dismiss Counts I, II, III, and VI of Plaintiff's Amended Complaint (Doc. No. 3.), and Plaintiff's Request to File a Sur Reply to Defendants' Reply Brief in Support of Motion to Dismiss Counts I, II, III, and VI of Complaint (Doc. No. 6), and all papers filed in support thereof or opposition thereto, it is ORDERED that: 1. Plaintiff's Request to File a Sur Reply is GRANTED; 2. Defendants' Motion to Dismiss is GRANTED in part and DENIED in part. To the extent Plaintiff seeks restitution of benefits or compensatory damages under Count I, those claims are dismissed. Count VI is dismissed in its entirety. In all other respects, Defendants' Motion is DENIED. IT IS SO ORDERED. All Citations Not Reported in F.Supp.2d, 2004 WL 1084658 Footnotes 1 While only UNUM originally moved to dismiss the amended complaint, both Defendants joined the reply brief in support of that motion. (Doc. No. 5.) We will therefore consider the motion to dismiss as if it were filed by both Defendants. 2 Because Defendants moved to dismiss the amended complaint, we must “accept as true the facts alleged in the [amended] complaint and all reasonable inferences that can be drawn from them.” Markowitz v. Northeast Land Co., 906 F.2d 100, 103 (3d Cir.1990) (citing Ransom v. Marrazzo, 848 F.2d 398, 401 (3d Cir.1988)). We will only dismiss the amended complaint if “it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.” H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 249-50 (1989) (quoting Hishon v. King & Spalding, 467 U.S. 69, 73 (1984)). 3 29 U.S.C. § 1132 provides, in relevant part: (a) Persons empowered to bring a civil action A civil action may be brought- (1) by a participant or beneficiary- (A) for the relief provided for in subsection (c) of this section, or (B) 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; (2) by the Secretary, or by a participant, beneficiary or fiduciary for appropriate relief under section 1109 of this title; (3) 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; 4 Plaintiff's brief in opposition to the motion to dismiss makes clear that Count I invokes § 1132(a)(3)(B). 5 In so holding, we express no opinion whether or not, in different circumstances, it might be appropriate to dismiss a claim on the pleadings for breach of fiduciary duty under § 1132(a)(3)(B) when a plaintiff brings a parallel claim for benefits under § 1132(a)(1)(B). 6 Defendants do not seek dismissal of Count V which states a claim for bad faith under Pennsylvania law based upon UNUM's alleged breach of Plaintiff's individual policies. End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 2:16-cv-08645-SDW-LDW Document 14-5 Filed 03/06/17 Page 9 of 9 PageID: 229 EXHIBIT “E” Case 2:16-cv-08645-SDW-LDW Document 14-6 Filed 03/06/17 Page 1 of 4 PageID: 230 Lipstein v. United Healthcare Ins. Co., Not Reported in F.Supp.2d (2011) 2011 WL 5881925 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2011 WL 5881925 Only the Westlaw citation is currently available. NOT FOR PUBLICATION United States District Court, D. New Jersey. Mark LIPSTEIN, Plaintiff, v. UNITED HEALTHCARE INSURANCE COMPANY, et al., Defendants. Civil Case No. 11-1185 (FSH)(PS). | Nov. 22, 2011. Attorneys and Law Firms John W. Leardi, Paul D. Werner, Vincent Norman Buttaci, Buttaci & Leardi, LLC, Princeton, NJ, James E. Cecchi, Lindsey H. Taylor, Carella Byrne Cecchi Olstein Brody & Agnello, P.C., Roseland, NJ, D. Brian Hufford, Pomerantz Haudek Grossman & Goss LLP, New York, NY, Plaintiff. Thomas R. Curtin, George C. Jones, Graham Curtin, PA, Morristown, NJ, for Defendants. OPINION & ORDER HOCHBERG, District Judge. I. INTRODUCTION *1 Plaintiff, Mark Lipstein, brings this action challenging the determination of benefits payments for his health care plan, in which defendants serve as a secondary payor to Medicare. Plaintiff alleges that defendants improperly reduce benefits payments in violation of the Employee Retirement Income Security Act of 1974 (“ERISA”). The Amended Complaint contains three counts. In Counts I and II, plaintiff asserts claims for plan benefits under ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a) (1)(B). In Count III, plaintiff seeks equitable relief for an alleged breach of fiduciary duty by defendants under ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3). Defendants seek the dismissal of Count III pursuant to Federal Rule of Civil Procedure 12(b)(6). II. ALLEGATIONS Plaintiff is a participant in a health care plan administered by defendants. Plaintiff's wife is a beneficiary under the plan and has received various services from a provider who does not accept Medicare. Under the terms of plaintiff's health care plan, defendants serve as a secondary payor to Medicare, with the result that defendants are responsible for paying certain benefits above and beyond the benefit structure provided by Medicare. Plaintiff alleges that defendants improperly reduce plan payments in situations where a plan participant receives services from a provider that does not participate in Medicare, by estimating the amount that Medicare would have paid if the participant had visited a provider who participated in Medicare. Plaintiff alleges that under his health plan, defendants owe in benefits the difference between what Medicare actually paid and what defendants would pay to a traditional subscriber where Medicare is not at issue. Accordingly, plaintiff first contends that defendants are obligated to pay full benefits when a subscriber visits a provider who does not accept Medicare. 1 Plaintiff further alleges that even if defendants are entitled to estimate the amount that Medicare would have paid when a subscriber visits a provider who does not accept Medicare, they do so improperly by estimating what Medicare would have paid by using billed charges instead of the Medicare fee schedule and by overstating the percentage of the allowed amount under the Medicare fee schedule that Medicare would pay. Accordingly, plaintiff contends that his wife was improperly denied benefits to which she was entitled when defendants estimated the amount that Medicare would have paid if she had visited a provider who accepted Medicare. III. STANDARD OF REVIEW “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ “ Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)); see also Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir.2008) (“[S]tating ... a claim requires a complaint with enough factual matter (taken as true) to suggest the required element. This does not impose a probability requirement at the pleading stage, but instead simply calls Case 2:16-cv-08645-SDW-LDW Document 14-6 Filed 03/06/17 Page 2 of 4 PageID: 231 Lipstein v. United Healthcare Ins. Co., Not Reported in F.Supp.2d (2011) 2011 WL 5881925 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 for enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element.”) (internal quotations omitted). *2 When considering a motion to dismiss under Iqbal, the Court must conduct a two-part analysis. “First, the factual and legal elements of a claim should be separated. The District Court must accept all of the complaint's well-pleaded facts as true, but may disregard any legal conclusions. Second, a District Court must then determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a plausible claim for relief.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir.2009) (internal citations and quotations omitted). “A pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do. Nor does a complaint suffice if it tenders naked assertions devoid of further factual enhancement.” Iqbal, 129 S.Ct. at 1949 (internal quotations and alterations omitted). IV. DISCUSSION Defendants seek the dismissal of Count III of the complaint on the theory that it impermissibly duplicates the benefits claims in Counts I and II. Defendants argue primarily that equitable relief under § 502(a) (3) is not available because plaintiff's alleged injuries can be addressed in a benefits claim under § 502(a) (1)(B). Defendants specifically argue that § 502(a)(3) is a “catchall” provision that allows a plaintiff to seek “appropriate equitable relief for injuries caused by [ERISA] violations that § 502 does not elsewhere adequately remedy.” Varity Corp. v. Howe, 516 U.S. 489, 512, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996). In Varity, the Supreme Court concluded that: [§ 502(a)(3) ] authorizes appropriate equitable relief. We should expect that courts, in fashioning appropriate equitable relief, will keep in mind the special nature and purpose of employee benefit plans and will respect the policy choices reflected in the inclusion of certain remedies and the exclusion of others .... Thus, we should expect that where Congress elsewhere provided adequate relief for a beneficiary's injury, there will likely be no need for further equitable relief, in which case such relief normally would not be appropriate. Id. at 515 (quotations and citations omitted). In Counts I and II, plaintiff seeks unpaid benefits, interest, and clarification of his right to future benefits based on a proper calculation of benefits. In Count III, plaintiff seeks declaratory and injunctive relief requiring United to recalculate benefits and to pay restitution necessary to make plaintiff whole for the reduced benefits he received. Defendants argue, citing Varity, that to the extent that plaintiff has viable claims, § 502(a)(1) (B) provides an adequate remedy, making § 502(a)(3) unavailable to plaintiff. Defendants' core argument is that the relief sought by plaintiff in Count III is not appropriate equitable relief because Congress has provided plaintiff with an explicit remedy for the recovery of contractually- owed benefits in § 502(a)(1)(B). Plaintiff responds that defendants' motion is premature, because the Court has yet to determine whether plaintiff's claimed injuries can be adequately remedied or otherwise addressed through the benefits claims asserted under § 502(a)(1)(B) in Counts I and II. Plaintiff argues that he is entitled to seek non-monetary declaratory relief pursuant to § 502(a)(3), including relief that would define the parties' rights and obligations and prevent the types of breaches of fiduciary duty alleged by plaintiff. See Smith v. Medical Benefit Adm'rs Group, Inc., 639 F.3d 277, 284 (7th Cir.2011). Plaintiff further argues that he may seek monetary relief for a breach of fiduciary duty by defendants under § 502(a) (3). See Cigna Corp. v. Amara, ---U.S. ----, ----, 131 S.Ct. 1866, 1880, 179 L.Ed.2d 843 (2011) (concluding that “for a loss resulting from a trustee's breach of fiduciary duty, or to prevent the trustee's unjust enrichment” monetary relief in the form of a surcharge could fall within the scope of the term “appropriate equitable relief” under ERISA § 502(a)(3)). Accordingly, plaintiff contends that a proper determination of whether he is entitled to relief “for an improper denial of benefits under ERISA § 502(a)(1)(B) or for breach of fiduciary duty under ERISA § 502(a)(3), is a matter to be resolved after discovery.” *3 There is a split among circuits and within this district regarding the effect of Varity on a plaintiff's ability to simultaneously pursue claims for benefits under § 502(a) (1)(B) and for breach of fiduciary duty under § 502(a)(3). Compare e.g., Zebrowski v. Evonik Degussa Corp. Admin. Case 2:16-cv-08645-SDW-LDW Document 14-6 Filed 03/06/17 Page 3 of 4 PageID: 232 Lipstein v. United Healthcare Ins. Co., Not Reported in F.Supp.2d (2011) 2011 WL 5881925 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 Comm., 2011 U.S. Dist. LEXIS 18596, at *11-13, 2011 WL 767444 (E.D.Pa. Feb. 24, 2011) (“[A]t this early stage of the litigation, a complaint in an ERISA action may contain alternative claims under §§ 502(a)(1)(B) and 502(a) (3).... Before discovery, plaintiffs should not be forced to choose between their claims for benefits and their claims for equitable relief.”) and DeVito v. Aetna, Inc., 536 F.Supp.2d 523, 533-34 (D.N.J.2008); with Stallings v. IBM Corp., 2009 WL 2905471, at *9-10, 2009 U.S. Dist. LEXIS 81963, at *28-29, 2009 WL 2905471 (D.N.J. Sept. 8, 2009) and Chang v. Life Ins. Co. of N. Am., 2008 WL 2478379, at *2-4, 2008 U.S. Dist. LEXIS 46815, at *7-11 (D.N.J. June 17, 2008). The Court is persuaded by the reasoning of those courts that have found that Varity does not establish a bright line rule precluding the assertion of alternative claims under §§ 502(a)(1) (B) and 502(a)(3) at the motion to dismiss stage. However, the Court will not permit a § 502(a)(3) claim to duplicate the relief theories of § 502(a)(1)(B) at the appropriate stage of this litigation. See e.g., Zebowski, 2011 U.S. Dist. LEXIS 18596, at *11, *13, 2011 WL 766584 (“[A]t this early stage of the litigation, a complaint in an ERISA action may contain alternative claims under §§ 502(a)(1) (B) and 502(a)(3) ... Before discovery, plaintiffs should not be forced to choose between their claims for benefits and their claims for equitable relief.”); De Vito, 536 F.Supp.2d at 533-34 (“The Court is persuaded by the reasoning of those courts that have found that Varity does not establish a bright-line rule at the motion to dismiss stage of the case.”); Parente v. Bell Atlantic-Pa., 2000 U.S. Dist. LEXIS 4851, at *11, 2000 WL 419981 (E.D. Pa. April 18, 2000) (“Instead of a bright-line rule, Varity requires an inquiry into whether Congress provided adequate relief for a beneficiary's injury.”) (quotations omitted). V. ORDER For the foregoing reasons, it is on this 22nd day of November, 2011, ORDERED that defendants' motion to dismiss Count III of plaintiff's first amended complaint is DENIED as premature at this time. Defendants may renew their argument that Count III impermissibly duplicates the benefits claims contained in Counts I and II in a summary judgment motion after the completion of discovery. All Citations Not Reported in F.Supp.2d, 2011 WL 5881925 Footnotes 1 This theory of liability would effectively allow a beneficiary participating in a secondary coverage plan to elect to convert the plan into a primary coverage plan by choosing a provider who does not participate in Medicare. Plaintiff does not explain how this theory can be reconciled with plaintiff's affirmative allegations that under the terms of his plan, the coverage provided by defendants is secondary to Medicare. See e.g., Amended Complaint at ¶¶ 5, 12-14. Because this apparent conflict is not squarely addressed by the briefing of the parties, the Court declines to rule on it at this time, except to note that imposing primary coverage responsibility on a plan intended to provide only secondary coverage would appear to improperly shift substantial unanticipated costs to that plan. See McGurl v. Trucking Employees of North Jersey Welfare Fund, Inc., 124 F.3d 471, 478 (3d Cir.1997) (observing that “there would be substantial and adverse fiscal consequences were a court to impose primary coverage on a plan ... which intended to provide ... nominal secondary coverage for [a] group of claimants merely because the plan provides primary coverage for certain other claimants”). End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 2:16-cv-08645-SDW-LDW Document 14-6 Filed 03/06/17 Page 4 of 4 PageID: 233
