Hudson Hospital Opco, Llc et al v. Horizon Healthcare Services, Inc.BRIEF in OppositionD.N.J.May 1, 2017UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY HUDSON HOSPITAL OPCO, LLC-d/b/a CAREPOINT HEALTH-CHRIST HOSPITAL, IJKG, LLC, IJKG PROPCO LLC and IJKG OPCO LLC d/b/a CAREPOINT HEALTH BAYONNE MEDICAL CENTER, and HUMC OPCO LLC d/b/a CAREPOINT HEALTH- HOBOKEN UNIVERSITY MEDICAL CENTER, Plaintiffs, v. HORIZON HEALTHCARE SERVICES, INC. d/b/a HORIZON BLUE CROSS BLUE SHIELD OF NEW JERSEY, Defendants. Hon. John Michael Vazquez, U.S.D.J. Hon. James B. Clark, III, U.S.M.J. Civil Action No. 2:16-cv-05922- JMV-JBC __________________________________________________________________ BRIEF IN OPPOSITION TO DEFENDANT’S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT __________________________________________________________________ K&L GATES LLP One Newark Center Tenth Floor Newark, New Jersey 07102 Anthony P. La Rocco (973) 848-4000 Of Counsel George P. Barbatsuly Robert Pawlowski Stacey Hyman On the Brief Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 1 of 84 PageID: 1281 ii TABLE OF CONTENTS TABLE OF AUTHORITIES ................................................................................... iii PRELIMINARY STATEMENT ............................................................................... 1 BACKGROUND ....................................................................................................... 3 A. Overview of Underpayment Claims ................................................................ 3 B. Overview of RICO Claims .............................................................................. 3 C. The Proposed Second Amended Complaint .................................................... 6 POINT ONE ............................................................................................................... 7 THE MOTION TO DISMISS MUST BE DENIED ................................................. 7 POINT TWO .............................................................................................................. 8 THE AMENDED COMPLAINT SUFFICIENTLY PLEADS RICO CLAIMS ...... 8 A. Introduction ...................................................................................................... 8 B. Plaintiffs Plead Actionable Mail and Wire Fraud, not a Mere Business Dispute .......................................................................................................... 10 C. DOBI’s Alleged “Express Approval” of OMNIA and Other Tiered Products Does Not Insulate Horizon from Plaintiffs’ RICO Claims ............ 18 D. Plaintiffs Plead Viable Association-In-Fact Enterprises ............................... 20 E. Plaintiffs Sufficiently Allege Conduct of the Affairs of the RICO Enterprises ........................................................................................... 27 F. Plaintiffs Plead Valid RICO Conspiracy Claims........................................... 33 POINT THREE ........................................................................................................ 38 THE AMENDED COMPLAINT SUFFICIENTLY PLEADS ERISA CLAIMS AGAINST HORIZON ............................................................................................. 38 Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 2 of 84 PageID: 1282 iii A. Plaintiffs Plead Valid Denial of Benefits Claims under ERISA Section 502(a)(1)(B) ................................................................................................... 38 B. Plaintiffs Sufficiently Allege that Horizon’s Plans Require Horizon to Pay Plaintiffs’ Full Billed Charges Less Patient Responsibility .......................... 43 C. To Protect Horizon Subscribers from Balance Bills, New Jersey Law Requires Horizon to Pay Plaintiffs their Billed Charges Minus In-Network Patient Responsibility for Emergent and Urgent Care .............. 47 D. Plaintiffs’ AOB Contracts with Horizon’s Subscribers Do Not Independently Protect Horizon’s Subscribers from Balance Bills ................ 49 E. Alleged Anti-Assignment Clauses Do Not Foreclose Plaintiffs’ Claims ..... 51 1. Anti-assignment clauses are now unenforceable in New Jersey ........ 51 2. Even if anti-assignment clauses were enforceable in New Jersey, Plaintiffs have sufficiently pled waiver ............................................... 53 3. Dismissal based on the purported existence of anti-assignment clauses in an unspecified “many” of Horizon’s plans is premature .... 56 F. Plaintiffs Plead a Viable ERISA Breach of Fiduciary Duty Claim in Count Two ..................................................................................................... 57 G. Plaintiffs Plead a Viable Claim in Count Three based on Horizon’s Failure to Provide a Full and Fair Review ................................................................. 60 POINT FOUR .......................................................................................................... 62 PLAINTIFFS SUFFICIENTLY PLEAD THEIR COMMON LAW CLAIMS ...... 62 A. Plaintiffs Sufficiently Plead a Common Law Claim for Breach of the Covenant of Good Faith and Fair Dealing .................................................... 62 B. Plaintiffs Plead Viable Claims for Declaratory and Injunctive Relief .......... 64 C. Plaintiffs Plead a Viable State Law Claim for Breach of Fiduciary Duty .... 65 Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 3 of 84 PageID: 1283 iv D. Plaintiffs Plead a Viable State Law Promissory Estoppel Claim .................. 67 E. ERISA Preemption Does Not Bar Plaintiffs Claims for Promissory Estoppel or for Injunctive Relief ................................................................................. 69 POINT FIVE ............................................................................................................ 70 IF THE AMENDED COMPLAINT IS DEEMED INSUFFICIENTLY PLED, THE COURT SHOULD GRANT PLAINTIFFS’ CROSS-MOTION FOR LEAVE TO FILE A SECOND AMENDED COMPLAINT ................................................ 70 CONCLUSION ........................................................................................................ 70 Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 4 of 84 PageID: 1284 v TABLE OF AUTHORITIES CASES Aetna Health Inc. v. Srinivasan, No. A-2035-14T2, 2016 N.J. Super. Unpub. LEXIS 1515 (App. Div. June 29, 2016) ................... 48, 49 Advanced Orthopedics & Sports v. Blue Cross Blue Shield of Mass., 2015 U.S. Dist. LEXIS 93855 (D.N.J. Jul. 20, 2015) .............................................. 55 Almont Ambulatory Surgery Ctr., LLC v. UnitedHealth Grp., Inc., 99 F. Supp. 3d 1110 (C.D. Cal. 2015) ............................................................... 41, 42 Ambulatory Surgical Center of N.J. v. Horizon Healthcare Services, Inc., 2008 U.S. Dist. LEXIS 13370 (D.N.J. Feb. 21, 2008) ............................................ 54 Ashcroft v. Iqbal, 556 U.S. 662 (2009) ................................................................................................... 7 Bak-A-Lum Corp. v. Alcoa Bldg. Prod., 69 N.J. 123 (1976) .................................................................................................... 63 Bauer v. Summit Bancorp, 325 F.3d 155 (3d Cir. 2003) ..................................................................................... 43 Beck v. Prupis, 529 U.S. 494 (2000) ................................................................................................. 34 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ................................................................................................... 7 Boyle v. United States, 556 U.S. 938 (2009) .........................................................................21, 22, 23, 25, 26 Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008) ............................................................................... 13, 14, 15, 16 Broad St. Surgical Ctr., LLC v. UnitedHealth Group, Inc., 2012 U.S. Dist. LEXIS 30466 (D.N.J. Mar. 6, 2012) .............................................. 68 Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 5 of 84 PageID: 1285 vi Capital Health Sys. v. New Jersey Dep’t of Banking & Ins., 445 N.J. Super. 522 (App. Div. 2016) ..................................................................... 18 Care One Mgmt., LLC v. United Healthcare Workers East, SEIU 1199, No. 12-6371, 2013 U.S. Dist. LEXIS 147119 (D.N.J. Oct. 10, 2013) .............. 11, 17 Care One Mgmt., LLC v. United Healthcare Workers East, SEIU 1199, No. 12-6371, ECF No. 269 (D.N.J. Dec. 10, 2015) ................................................ 17 CardioNet, Inc. v. Cigna Health Corp., 751 F.3d 165 (3d Cir. 2014) ..................................................................................... 39 DiCarlo v. St. Mary Hospital, 530 F.3d 255 (3d Cir. 2008) ..................................................................................... 49 Doug Grant, Inc. v. Greate Bay Casino Corp., 232 F.3d 173 (3d Cir. 2000) .................................................................................... 17 Exact Sciences Corp. v. Blue Cross Blue Shield of North Carolina, 1:16CV125, 2017 WL 1155807 (M.D.N.C. Mar. 27, 2017) ............................. 56, 57 First Choice Fed. Credit Union v. Wendy’s Co., 2017 U.S. Dist. LEXIS 20754 (W.D. Pa. Feb. 13, 2017) ........................................ 65 F.G. v. MacDonell, 150 N.J. 550 (1997) .................................................................................................. 66 Franco v. Conn. Gen. Life Ins. Co., 818 F. Supp. 2d 792 (D.N.J. 2011) .......................................................................... 27 Galerie Furstenberg v. Coffaro, 697 F. Supp. 1282 (S.D.N.Y. 1988) ........................................................................ 12 Garden State Buildings v. First Fidelity Bank, 305 N.J. Super 510 (App. Div. 1997) ...................................................................... 53 Giblin v. United States, No. 09-1286 (RBK), 2010 WL 3039992 (D.N.J. Aug. 3, 2010) ............................. 10 Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 6 of 84 PageID: 1286 vii Goldenstein v. Repossessors Inc., 815 F.3d 142 (3d Cir. 2016) ........................................................................ 18, 19, 20 Grand Parkway Surgery Ctr., LLC v. Health Care Serv. Corp., No. H-15-0297, 2015 WL 3756492 (S.D. Tex. June 16, 2015) .............................. 42 Gregory Surgical Serv., LLC v. Horizon Blue Cross Blue Shield of N.J., Inc., No. 06-0462, 2007 WL 4570323 (D.N.J. Dec. 26, 2007) ....................................... 54 Hahnemann Univ. Hosp. v. All Shore, Inc., 514 F.3d 300 (3d Cir. 2008) ..................................................................................... 59 Heasley v. Belden & Blake Corp., 2 F.3d 1249 (3d Cir. 1993) ....................................................................................... 44 Hermann Hosp. v. MEBA Med. & Benefits Plan, 845 F.2d 1286 (5th Cir. 1988) ................................................................................. 39 H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229 (1989) ..................................................................................... 19, 28, 33 HUMC Opco LLC v. United Benefit Fund, Civ. No. 16-168, 2016 WL 6634878 (D.N.J. Nov. 7, 2016) ............................. 59, 61 IJKG OPCO LLC v. EmblemHealth, Inc., No. 2:12-cv-02032, ECF No. 20 (D.N.J. Oct. 19, 2012) ......................................... 40 In re Aetna UCR Litig., 2015 U.S. Dist. LEXIS 84600 (D.N.J. Jun. 30, 2015) ....................................... 32, 33 In re Insurance Brokerage Antitrust Litigation, 618 F.3d 300 (3d Cir. 2010) ...................................... 9, 19, 23, 24, 25, 26, 27, 35, 37 Israel Travel Advisory Serv. v. Israel Identity Tours, 61 F.3d 1250 (7th Cir. 1995) ................................................................................... 13 Jewish Lifeline Network, Inc. v. Oxford Health Plans (NJ), Inc., 2015 U.S. Dist. LEXIS 64297 (D.N.J. May 18, 2015) ............................................ 69 Kaul v. Horizon Blue Cross Blue Shield, 2016 U.S. Dist. LEXIS 99322 (D.N.J. Jul. 29, 2016) .............................................. 55 Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 7 of 84 PageID: 1287 viii Kentucky Ass’n of Health Plans Inc. v. Miller, 538 U.S. 329 (2003) ................................................................................................. 52 Kolar v. Preferred Real Estate Investments, Inc., 361 Fed. Appx. 354 (3d Cir. 2010) .......................................................................... 34 Kredietbank N.V. v. Joyce Morris, Inc., No. 84-1903, 1986 U.S. Dist. LEXIS 30653 (D.N.J. Jan. 9, 1986) ................... 16, 17 Kronfeld v. First Jersey Nat’l Bank, 638 F. Supp. 1454 (D.N.J. 1986) ....................................................................... 10, 18 Kunin v. Benefit Trust Life Ins. Co., 910 F.2d 534 (9th Cir. 1990) ................................................................................... 44 Lancaster Community Hosp. v. Antelope Valley Hosp. Dist., 940 F.2d 397 (9th Cir. 1991) ................................................................................... 16 Levine v. United Healthcare Corp., 402 F.3d 156 (3d Cir. 2005) ..................................................................................... 52 Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153 (3d Cir. 1993) ....................................................................................... 34 Manax v. McNamara, 660 F. Supp. 657 (W.D. Tex. 1987) ........................................................................ 12 Masella v. Blue Cross & Blue Shield, 936 F.2d 98 (2d Cir. 1991) ....................................................................................... 44 Matter of Final Agency Decision by New Jersey Dept. of Health Regarding Utilization and Quality Review for Calendar Year 1993, 273 N.J. Super. 205 (App. Div. 1994) ..................................................................... 49 McGee v. Cont’l Tire N. Am., Inc., 2007 U.S. Dist. LEXIS 62869 (D.N.J. Aug. 27, 2007) ........................................... 64 McKelvey v. Pierce, 173 N.J. 26 (2002) .................................................................................................... 66 Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 8 of 84 PageID: 1288 ix Midwest Grinding Co. v. Spitz, 976 F.2d 1016 (7th Cir. 1992) ..................................................................... 13, 14, 15 National Beverage Systems, Inc. v. Leonard Fountain Specialties, Inc., No. 12-10658, 2012 WL 2389870 (E.D. Mich. Jun. 25, 2012) ............................... 11 Nat’l Org. for Women, Inc. v. Scheidler, 510 U.S. 249 (1994) ................................................................................................. 36 New Jersey Dental Ass’n v. Horizon Blue Cross Blue Shield of N.J., No. A-4449-10T1, 2011 N.J. Super. Unpub. LEXIS 3076 (App. Div. Dec. 20, 2011) ........................................................................................ 52 Nolan v. Lee Ho, 120 N.J. 465 (1990) .................................................................................................. 29 North Jersey Brain & Spine Ctr. v. Aetna, Inc., 801 F.3d 369 (3d Cir. 2015) ............................................................................... 38, 39 Pascack Valley Hosp. v. Local 464A UFCW Welfare Reimbursement Plant, 388 F.3d 393 (3d Cir. 2004) ..................................................................................... 38 Pell v. E. I. DuPont De Nemours & Co., 539 F.3d 292 (3d Cir. 2008) ..................................................................................... 69 Premier Health Ctr., P.C. v. UnitedHealth Group, No. 11-425, 2012 U.S. Dist. LEXIS 44878 (D.N.J. Apr. 4, 2012) .......................... 54 Procter & Gamble Co. v. Amway Corp., 242 F.3d 539 (5th Cir. 2001) ................................................................................... 11 Rehkop v. Berwick Healthcare Corp., 95 F.3d 285 (3d Cir. 1996) ....................................................................................... 34 Reifer v. Westport Ins. Corp., 751 F.3d 129 (3d Cir. 2014) ..................................................................................... 64 Reves v. Ernst & Young, 507 U.S. 170 (1993) ................................................................................................. 27 Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 9 of 84 PageID: 1289 x Rezner v. Bayerische Hypo-Und Vereinsbank AG, 2009 U.S. Dist. LEXIS 129189 (N.D. Cal. May 1, 2009), rev’d on other grounds, 630 F.3d 866 (9th Cir. 2010) ............................................. 20 Ross v. Bolton, 1991 U.S. Dist. LEXIS 18717 (S.D.N.Y. Dec. 27, 1991) ....................................... 20 Salinas v. United States, 522 U.S. 52 (1997) ......................................................................................... 9, 34, 35 Sanctuary Surgical Ctr., Inc. v. UnitedHealth Grp., Inc., 2011 WL 6935289 (S.D. Fla. Dec. 30, 2011) .......................................................... 40 Schwartz v. Lawyers Title Ins. Co., 970 F. Supp. 2d 395 (E.D. Pa. 2013) ................................................................. 25, 26 Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 (1985) ................................................................................................. 18 Seidenberg v. Summit Bank, 348 N.J. Super. 243 (App. Div. 2002) ..................................................................... 63 Shah v. Horizon Blue Cross Blue Shield, Civ. No. 15-8590, 2016 WL 4499551 (D.N.J. Aug. 25, 2016) ......................... 59, 60 Shaw v. Rolex Watch U.S.A., Inc., 726 F. Supp. 969 (S.D.N.Y. Dec. 21, 1989) ............................................................ 11 Somerset Orthopedic Assoc.’s, P.A. v. Horizon, 345 N.J. Super. 410 (App. Div. 2001) ..................................................................... 51 Sons of Thunder v. Borden, Inc., 148 N.J. 396 (1997) .................................................................................................. 62 Texas Air Corp. v. Air Line Pilots Ass’n Int’l, No. 88-0804, 1989 WL 146414 (S.D. Fla. Jul. 14, 1989) ....................................... 12 Texas Gen. Hosp., LP v. United Healthcare Serv’s, Inc., No. 3:15-CV-02096-M, 2016 WL 3541828 (N.D. Tex. June 28, 2016) ........... 39, 42 Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 10 of 84 PageID: 1290 xi Titan Global LLC v. Organo Gold Int’l, Inc., No. 12-2104, 2012 WL 6019285 (N.D. Cal. Dec. 2, 2012) .................................... 11 Toll Bros., Inc. v. Board of Chosen Freeholders of County of Burlington, 194 N.J. 223 (2008) .................................................................................................. 67 United Food & Commercial Workers Union v. Walgreen Co., 719 F.3d 849 (7th Cir. 2013) ............................................................................. 32, 33 United Surgical Assistants, LLC v. Aetna Life Ins. Co., No. 8:14-cv-211, 2014 WL 5420801 (M.D. Fla. Oct. 22, 2014) ............................. 40 United States v. Bergrin, 650 F.3d 257 (3d Cir. 2011) ............................................................................... 26, 33 United States v. Turkette, 452 U.S. 576 (1981) ................................................................................................. 19 Varity Corp. v. Howe, 516 U.S. 489 (1996) ............................................................................... 58, 59, 60, 61 Vibra-Tech Eng'rs, Inc. v. Kavalek, 849 F. Supp. 2d 462 (D.N.J. 2012) .......................................................................... 62 Wade v. Kessler Institute, 172 N.J. 327 (2002) .................................................................................................. 63 Wilson v. Amerada Hess Corp., 168 N.J. 236 (2001) .................................................................................................. 63 STATUTES 18 U.S.C. § 1341 ............................................................................................ 9, 10, 18 18 U.S.C. § 1343 ............................................................................................ 9, 10, 18 18 U.S.C. §§ 1961-1968 ............................................................................................ 2 18 U.S.C. § 1961(1) ................................................................................................... 3 18 U.S.C. § 1961(4) ........................................................................................... 21, 37 Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 11 of 84 PageID: 1291 xii 18 U.S.C. § 1961(5) ............................................................................................. 3, 10 18 U.S.C. § 1962(b) ............................................................................... 5, 8, 9, 36, 37 18 U.S.C. § 1962(c) ...................................................... 5, 8, 9, 15, 18, 20, 27, 33, 35 18 U.S.C. § 1962(d) .........................................................................5, 8, 9, 33, 34, 35 18 U.S.C. § 1964(c) ....................................................................................... 8, 15, 34 28 U.S.C. § 2201(a) ................................................................................................. 64 29 U.S.C. § 1001 et seq. ............................................................................................ 1 29 U.S.C. § 1001(b) ........................................................................................... 39, 59 29 U.S.C. § 1104(a) ................................................................................................. 59 29 U.S.C. § 1104(a)(1)(A) ....................................................................................... 58 29 U.S.C. § 1132(a)(1)(B) ........................................................................... 38, 58, 61 29 U.S.C. § 1132(a)(3) ...................................................................................... 58, 61 29 U.S.C. § 1133(2) ................................................................................................. 60 29 U.S.C. § 1144(a) ................................................................................................. 52 29 U.S.C. § 1144(b)(2)(A) ....................................................................................... 52 29 U.S.C. § 1144(b)(2)(B) ................................................................................. 52, 53 N.J.S.A. 17B:30-23 et seq. ....................................................................................... 51 N.J.S.A. 26:2H-18.51 ............................................................................................... 49 N.J.S.A. 26:2S-6.1(c) ......................................................................................... 52, 53 Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 12 of 84 PageID: 1292 xiii RULES Fed. R. Civ. P. 8 ....................................................................................................... 40 Fed. R. Civ. P. 8(d)(3) .............................................................................................. 68 Fed. R. Civ. P. 10 ..................................................................................................... 40 Fed. R. Civ. P. 10(b) ................................................................................................ 39 Fed. R. Civ. P. 12(b)(6) .................................................................................. 7, 59, 70 REGULATIONS N.J.A.C. 11:20-3A.3 ................................................................................................ 46 N.J.A.C. 11:20 Appx. Exh. F ................................................................................... 46 N.J.S.A. 11:21-4.1 .................................................................................................... 46 N.J.A.C. 11:21 Appx. Exh. F ................................................................................... 46 N.J.A.C. 11:24-5.3 ................................................................................................... 47 N.J.A.C. 11:24-9.1(d)(9) .......................................................................................... 47 N.J.A.C. 13:35-6.11(a) ............................................................................................. 49 Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 13 of 84 PageID: 1293 PRELIMINARY STATEMENT Plaintiffs1 are three affiliated acute care hospitals that have fallen victim to the unscrupulous conduct of defendant Horizon Healthcare Services, Inc. (“Defendant” or “Horizon”), New Jersey’s largest health care insurer. Since Plaintiffs were forced out of Horizon’s network of participating providers, patients insured by Horizon (“Horizon Subscribers”) have continued to seek treatment at Plaintiffs’ hospitals. Plaintiffs are required by law to treat all patients who seek emergent/urgent care at their hospitals. Yet Horizon refuses to comply with its corresponding obligation to pay Plaintiffs in full for the health care services as required by the plans or policies of insurance (“Plans”) covering Horizon Subscribers. Through January 2017, Horizon had underpaid Plaintiffs by more than $125 million for out-of-network treatment Plaintiffs have provided to Horizon Subscribers, and the underpayments continue to grow. Horizon’s conduct violates its obligations under Employee Retirement Income Security Act 29 U.S.C. § 1001 et seq. (“ERISA”), and corresponding state law duties. Even worse, Horizon has made numerous false and misleading statements designed to harm Plaintiffs’ business. These statements, sent over the mails and 1 The plaintiffs (collectively, “Plaintiffs” or the “CarePoint Hospitals”) are: (i) Hudson Hospital OPCO, LLC d/b/a CarePoint Health-Christ Hospital (“Christ Hospital”); (ii) IJKG, LLC, PROPCO LLC and IJKG OPCO LLC d/b/a CarePoint Health-Bayonne Medical Center (“BMC”); and (iii) and HUMC OPCO LLC d/b/a CarePoint Health-Hoboken University Medical Center (“HUMC”). Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 14 of 84 PageID: 1294 2 wires, are part of a relenting and ongoing pattern directed toward Plaintiffs and rise to the level of an unlawful pattern of racketeering activity under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1968 (“RICO”). In seeking dismissal of the Amended Complaint, Horizon mischaracterizes Plaintiffs’ factual and legal claims, and the law, in a futile attempt to justify its unlawful and duplicitous behavior. But contrary to Horizon’s position, the Amended Complaint plausibly alleges that Horizon violated RICO by: (i) engaging in a pattern of racketeering comprising multiple and repeated acts of mail and wire fraud relating to Plaintiffs; (ii) conducting the affairs of two distinct RICO enterprises - its network participating hospitals (“the Network Enterprise”) and its subnetwork of “Tier 1” providers in its so-called “OMNIA” plan (the “OMNIA Tier 1 Enterprise”) - through this pattern of racketeering activity; and (iii) conspiring with others to do so and acquire control over Plaintiffs. It also plausibly allege that Horizon violated its duties under ERISA, or alternatively, state law, inter alia, by failing to pay Plaintiffs properly under the Plans. And even if Plaintiffs’ claims were insufficiently pled, the case is in the early pleading stage and a curative amendment would be neither inequitable nor futile. For these reasons and others, described more fully below, the Court should deny Horizon’s motion to dismiss and grant its cross-motion for leave to file a Second Amended Complaint. Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 15 of 84 PageID: 1295 3 BACKGROUND A. Overview of Underpayment Claims The allegations of the Amended Complaint, which must be accepted as true for purposes of this motion, demonstrate that since Plaintiffs have been forced out of Horizon’s network, Horizon has continuously failed and refused to pay in full for health care services that the CarePoint Hospitals provided to Horizon Subscribers. (ECF No. 20 (“Am. Compl.”) ¶¶3-12, 98-105). Between June 1, 2015, and January 13, 2017, Horizon underpaid the CarePoint Hospitals by over $125 million for treatment that Plaintiffs provided to nearly 11,000 Horizon Subscribers, excluding those covered by the New Jersey State Health Benefit Plan (“SHBP”). (Id. ¶¶4, 7-9, 98-105). Because Horizon Subscribers continue to seek treatment the CarePoint Hospitals, the underpayment amounts continue to grow by $4-6 million per week. (Id. ¶10). Horizon’s underpayments violate the terms of the Plans, which have been fully assigned to Plaintiffs through valid assignments of benefit (“AOBs”) executed by Horizon Subscribers. (Id. ¶¶11, 85-97, 106-114). B. Overview of RICO Claims Making matters worse, Horizon has conducted the affairs of the Network Enterprise and the OMNIA Tier 1 Enterprise through a pattern of racketeering activity within the meaning of 18 U.S.C. § 1961(1) and (5). (Am. Compl. ¶¶2, 13- 20, 156-59, 162-303). The pattern includes Horizon’s multiple and repeated uses Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 16 of 84 PageID: 1296 4 of the mails and wires in furtherance of two distinct but interrelated schemes to defraud aimed at harming Plaintiffs’ business. (Id. ¶¶185-303). The first such scheme involves Horizon’s attempt to mislead the public in general, as well as the patients and physicians of the Plaintiffs, into believing that the Plaintiffs are greedy, overbill their patients, and provide substandard healthcare. (Id. ¶¶15, 199). The second such scheme involves Horizon’s attempt to mislead its subscribers, the public, the SHBP, and regulators into believing that Horizon pays Plaintiffs what it is legally obligated to pay healthcare providers for services rendered to its subscribers; and that any additional amounts charged by Plaintiffs must be the result of greed and overbilling. (Id. ¶¶16, 199). Horizon has repeatedly used the mails and wires in furtherance of both schemes to defraud, including, among other things, by issuing electronic and print letters and advertisements falsely accusing Plaintiffs of engaging in “price gouging”; falsely implying that Plaintiffs are of inferior quality; falsely blaming Plaintiffs for the failure of negotiations leading to the CarePoint Hospitals’ current out-of-network status; and falsely informing Horizon Subscribers that the paltry amounts paid to the CarePoint Hospitals represent the full extent of Horizon’s responsibility, and that the balance is the patient’s responsibility. (Id. ¶¶207-303). Through its schemes to defraud, Horizon has been able to steer patients away from Plaintiffs and to its in-network providers, including certain in-network Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 17 of 84 PageID: 1297 5 providers Horizon arbitrarily selected and designated as “Tier 1” providers under its so-called “OMNIA” plan. (Id. ¶¶18, 171, 183). The ultimate goal of Horizon’s conduct is to marginalize Plaintiffs and drive them into bankruptcy. (Id. ¶¶19, 200). If successful, Horizon will be able to acquire control over the CarePoint Hospitals by purchasing them out of bankruptcy at drastically below-market prices, or by inducing one of its favored in-network providers to do so. (Id. ¶¶20, 200). In carrying out its schemes to defraud, Horizon has conspired with one or more in-network health care providers, including Barnabas Health (“Barnabas”), a health care system that competes with the CarePoint Hospitals. (Id. ¶¶21, 304-20). Not surprisingly, Horizon has designated the hospitals in the Barnabas system as “Tier 1” under its OMNIA plan. (Id. ¶¶21, 310). Through its conduct, Horizon has: (1) participated in the management and operation of the affairs of the Network Enterprise and the OMNIA Tier 1 Enterprise - through a pattern of racketeering activity, in violation of 18 U.S.C. § 1962(c); (2) conspired with Barnabas and other in-network hospitals to do so, in violation of 18 U.S.C. § 1962(d); and (3) conspired with Barnabas and other in- network hospitals to violate 18 U.S.C. § 1962(b), by seeking to acquire control over the CarePoint Hospitals, the Network Enterprise, and the OMNIA Tier 1 Enterprise, also in violation of 18 U.S.C. § 1962(d). (Am. Compl. ¶¶22, 353-83). Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 18 of 84 PageID: 1298 6 C. The Proposed Second Amended Complaint In response to some of the arguments Horizon makes for dismissal, Plaintiffs are seeking leave to file a proposed Second Amended Complaint (“2d Am. Compl.”).2 This proposed amendment does not change the legal theories upon which Plaintiffs’ claims in this action are based. Nor does it suggest that the Amended Complaint is in any way deficient, for the reasons discussed more fully in the argument that follows. But it details even more factual support for Plaintiffs’ claims. Among other things, the proposed Second Amended Complaint: (1) Pleads additional facts detailing Horizon’s extensive coordination with Barnabas in furtherance of this plan which, if successful, will enable Horizon indirectly to gain control over Plaintiffs through Barnabas’s acquisition of them. (2d Am. Compl. ¶¶193-216, 350); (2) Includes additional detail describing the hierarchical structure of the Network Enterprise, and additional detail describing coordination among the hospital members of both the Network Enterprise and the OMNIA Tier 1 Enterprise. (2d Am. Compl. ¶¶175, 176, 188); (3) Pleads a smaller-scale bilateral association-in-fact enterprise comprised of Barnabas and Horizon formed for the purpose, inter alia, of acquiring 2 A redlined version of the Proposed Second Amended Complaint, compared against the Amended Complaint, is annexed as Exhibit A to the Declaration of Anthony P. La Rocco (“La Rocco Decl.”). A clean version is annexed as Exhibit B to the LaRocco Decl. Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 19 of 84 PageID: 1299 7 the CarePoint Hospitals. (2d Am. Compl. ¶¶193-216); (4) Pleads additional facts demonstrating Horizon’s bad motive and ill will toward Plaintiffs, including its ongoing pattern of intimidation of Plaintiffs’ patients (2d Am. Compl. ¶¶146-50); and (5) Identifies an additional plausible motivation for Horizon’s conduct - its desire to support pending legislation that, if passed, would give Horizon unfettered control over its insurance networks (2d Am. Compl. ¶¶340-45). POINT ONE THE MOTION TO DISMISS MUST BE DENIED On a motion to dismiss under Fed. R. Civ. P. 12(b)(6), the Court accepts the complaint’s factual allegations as true and construes it in the light most favorable to the plaintiff. Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008). A complaint attacked by a Rule 12(b)(6) motion to dismiss “does not need detailed factual allegations” or “heightened fact pleading of specifics.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Rather, courts require “only enough facts to state a claim to relief that is plausible on its face.” Id., 550 U.S. at 555. A claim is plausible on its face “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Twombly, 550 U.S. at 556. Contrary to Horizon’s arguments in its moving brief (ECF No. 28) Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 20 of 84 PageID: 1300 8 (hereinafter “Db”), and as shown further below, the detailed allegations of the Amended Complaint are more than sufficient to state viable RICO, ERISA, and state law claims. Thus, the motion to dismiss must be denied. POINT TWO THE AMENDED COMPLAINT SUFFICIENTLY PLEADS RICO CLAIMS A. Introduction Plaintiffs more than sufficiently plead their RICO claims against Horizon. RICO authorizes a civil action for damages by “any person injured in his business or property by reason of a violation of [18 U.S.C. §1962].” Tabas v. Tabas, 47 F.3d 1280, 1289 (3d Cir. 1995) (quoting 18 U.S.C. § 1964(c)). Under 18 U.S.C. § 1962(c), it is unlawful “for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity.” 18 U.S.C. § 1962(c). Under 18 U.S.C. § 1962(b), it is unlawful “for any person through a pattern of racketeering activity ... to acquire or maintain, directly or indirectly, any interest in or control of any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce.” 18 U.S.C. § 1962(b). And under 18 U.S.C. § 1962(d), it is unlawful for any person to conspire to violate one of RICO’s substantive provisions, including 18 U.S.C. § 1962(b) and (c). Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 21 of 84 PageID: 1301 9 Thus, to plead a violation of 18 U.S.C. § 1962(c), a plaintiff need only allege that the defendant engaged in the “(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity.” In re Insurance Brokerage Antitrust Litigation, 618 F.3d 300, 362 (3d Cir. 2010) (quoting Lum v. Bank of Am., 361 F.3d 217, 223 (3d Cir. 2004)). And to plead a violation of 18 U.S.C. § 1962(d), a plaintiff need only allege a conspiracy that has as its object acts which, if completed, would constitute a violation of one of RICO’s substantive provisions. Salinas v. United States, 522 U.S. 52, 65 (1997). Here, the Amended Complaint properly alleges that Horizon violated 18 U.S.C. § 1962(c) by conducting the affairs of two distinct enterprises - the Network Enterprise and the OMNIA Tier 1 Enterprise - through a pattern of racketeering comprised of multiple acts of mail and wire fraud in violation of 18 U.S.C. §§1341 and 1343. (Am. Compl. ¶¶358-59). Plaintiffs also properly allege in Count Five that Horizon conspired with others to do so, in violation of 18 U.S.C. § 1962(d). (Am. Compl. ¶¶367-68). And Plaintiffs properly allege in Count Six that Horizon separately violated 18 U.S.C. § 1962(d) by conspiring to acquire or maintain an interest in or control of Plaintiffs through a pattern of racketeering activity - a goal which, if achieved, would violate 18 U.S.C. § 1962(b). (Am. Compl. ¶¶378-79). All of Horizon’s arguments for dismissal fail. Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 22 of 84 PageID: 1302 10 B. Plaintiffs Plead Actionable Mail and Wire Fraud, not a Mere Business Dispute At the outset, Plaintiffs sufficiently plead RICO predicate acts of mail and wire fraud in violation of 18 U.S.C. §§ 1341 and 1343. To state a claim under either statute, Plaintiffs must allege (1) the existence of a scheme to defraud, (2) the use of the mails or wires in furtherance of the fraudulent scheme, and (3) culpable participation by the defendant. See United States v. Dobson, 419 F.3d 231, 237 (3d Cir. 2005). The Third Circuit has broadly defined a “scheme to defraud” as any effort at deceit which aims, in part, to deprive another of money or property. United States v. Hedaithy, 392 F.3d 580, 590 (3d Cir. 2004) (noting that legislative history of mail fraud statute indicates that it was intended to “‘protect the people from schemes to deprive them of their money or property’”) (quoting McNally v. United States, 483 U.S. 350, 352 (1987)).3 In arguing that Plaintiffs’ mail and wire fraud allegations are insufficient, Horizon contends that “the law simply does not permit Plaintiffs to shoehorn this ordinary business dispute into a civil RICO claim.” (Db15-16). It is Horizon that misapplies the law. While merely alleging conduct comprising a business tort, 3 Notably, each use of the mails and wires is a separate violation of the mail and wire fraud statutes, even if in furtherance of the same scheme or artifice to defraud. Giblin v. United States, No. 09-1286 (RBK), 2010 WL 3039992, *8 (D.N.J. Aug. 3, 2010); see also Kronfeld v. First Jersey Nat’l Bank, 638 F. Supp. 1454, 1472 (D.N.J. 1986) (“The complaint clearly alleges more than one telephone or mail communication and thus sufficiently alleges two or more predicate offenses of mail and/or wire fraud which meet the requirements of [18 U.S.C.] § 1961(5).”). Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 23 of 84 PageID: 1303 11 such as defamation, does not, by itself, constitute actionable mail or wire fraud, a scheme that happens to involve defamatory statements may still be actionable under the mail and wire fraud statutes. See, e.g., Procter & Gamble Co. v. Amway Corp., 242 F.3d 539, 565 (5th Cir. 2001) (allegations that defendants spread false rumors to lure customers away from plaintiff sufficiently pled RICO predicate act under federal fraud statutes); Care One Mgmt., LLC v. United Healthcare Workers East, SEIU 1199, No. 12-6371, 2013 U.S. Dist. LEXIS 147119, *32 (D.N.J. Oct. 10, 2013) (“Here, Plaintiffs do not just assert defamation, but rather that defamatory statements and misrepresentations were part of a multifaceted scheme to defraud”); Titan Global LLC v. Organo Gold Int’l, Inc., No. 12-2104, 2012 WL 6019285, *5 (N.D. Cal. Dec. 2, 2012) (plaintiffs sufficiently alleged mail and wire fraud where defendants engaged in a deliberate strategy to recruit talent away from Plaintiffs by “praising [defendants] and denigrating [plaintiffs] to the point of slander”); National Beverage Systems, Inc. v. Leonard Fountain Specialties, Inc., No. 12-10658, 2012 WL 2389870, *6 (E.D. Mich. Jun. 25, 2012) (allegations that competitor made defamatory statements to plaintiff’s customers through a telephone campaign were sufficient to state wire fraud claims); Shaw v. Rolex Watch U.S.A., Inc., 726 F. Supp. 969, 972 (S.D.N.Y. Dec. 21, 1989) (allegations that defendants made fraudulent statements to customs officers in order to preclude plaintiff from importing watches sufficiently stated predicate act of mail and wire Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 24 of 84 PageID: 1304 12 fraud); Texas Air Corp. v. Air Line Pilots Ass’n Int’l, No. 88-0804, 1989 WL 146414, *4-5 (S.D. Fla. Jul. 14, 1989) (defendants’ scheme of disseminating false information to deceive government and public into believing plaintiff is an unsafe airline and thus inflicting economic injury on plaintiff constituted RICO predicate act of mail and wire fraud); Galerie Furstenberg v. Coffaro, 697 F. Supp. 1282 (S.D.N.Y. 1988) (mail fraud complaint sufficient where art publisher alleged injury caused by art merchants and retail outfits’ fraudulent mailings regarding counterfeit artwork to customers); Manax v. McNamara, 660 F. Supp. 657, 660 (W.D. Tex. 1987) (“actionable mail fraud occurs when there is an actual identifiable scheme to defraud which results in reputational injury”). Here, Plaintiffs sufficiently allege that Horizon made multiple false statements over the mails and wires in furtherance of two separate fraudulent schemes: (i) to mislead the public in general, as well as the patients and physicians of the Plaintiffs, into believing that the Plaintiffs are greedy, overbill their patients, and provide substandard healthcare (Am. Compl. ¶¶15, 159); and (ii) to mislead Horizon’s Subscribers, the public, the SHBP, and regulators into believing that Horizon pays Plaintiffs what it is legally obligated to pay healthcare providers for services rendered to its subscribers; and that any additional amounts charged by Plaintiffs must be the result of greed and overbilling (Am. Compl. ¶¶16, 159). Through both schemes, Horizon has deprived Plaintiffs of property by causing Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 25 of 84 PageID: 1305 13 their patients to discontinue and/or refuse to receive medical treatment from the Plaintiffs, thus causing the Plaintiffs to lose money, patient volume, and business opportunities and relationships with persons deceived into believing Horizon’s lies - a direct and intended result of Horizon’s schemes to defraud. (Am. Compl. ¶¶202-03). These acts do not merely state a claim for defamation. They also satisfy the additional legal elements of a claim for mail and wire fraud because Defendants’ false and misleading statements were in furtherance of a scheme to defraud - namely, an effort at deceit aimed at depriving Plaintiffs of their money or property. See Hedaithy, 392 F.3d at 590. In support of its argument that business disputes cannot constitute actionable mail and wire fraud, Horizon relies primarily on two Seventh Circuit cases - Israel Travel Advisory Serv. v. Israel Identity Tours, 61 F.3d 1250 (7th Cir. 1995), and Midwest Grinding Co. v. Spitz, 976 F.2d 1016, 1025 (7th Cir. 1992). Horizon’s reliance on these cases is misplaced. In Israel Travel Advisory, the Court held that “business rivals may not use RICO to complain about injuries derivatively caused by mail frauds perpetrated against customers, because only the customers are the beneficiaries of statutory protection.” 61 F.3d at 1058. But that holding is no longer good law in light of the Supreme Court’s opinion in Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008), which held that “a plaintiff asserting a RICO claim predicated on mail fraud need not show, either as an Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 26 of 84 PageID: 1306 14 element of its claim or as a prerequisite to establishing proximate causation, that it relied on the defendant’s alleged misrepresentations.” Id. at 661. Importantly, the Supreme Court in Bridge explicitly acknowledged the availability of such a RICO claim in the context of a business dispute: Or, to take another example, suppose an enterprise that wants to get rid of rival businesses mails misrepresentations about them to their customers and suppliers, but not to the rivals themselves. If the rival businesses lose money as a result of the misrepresentations, it would certainly seem that they were injured in their business “by reason of” a pattern of mail fraud, even though they never received, and therefore never relied on, the fraudulent mailings. Bridge, 553 U.S. at 649-50 (emphasis added). In fact, the Supreme Court described the contrary position as “counterintuitive.” Id. at 650. In Midwest Grinding, the Court, in dicta, observed that “civil RICO plaintiffs persist in trying to fit a square peg in a round hole by squeezing garden- variety business disputes into civil RICO actions,” and that “RICO has not federalized every state common-law cause of action available to remedy business deals gone sour.” 976 F.2d at 1025.4 But again, those observations are of limited applicability in light of Bridge, which, as just noted, recognized the availability of a RICO claim in the context of a business dispute. Bridge, 553 U.S. at 649-50. Importantly, whereas the Court in Midwest Grinding commented on what it 4 The Court in Midwest Grinding made these observations in the context of its holding that the plaintiff had not satisfied RICO’s “continuity” requirement. Id. at 1022-26. Horizon does not contend that Plaintiffs failed to sufficiently allege the continuity requirement here. Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 27 of 84 PageID: 1307 15 characterized as “[t]he widespread abuse of civil RICO” as a reason for limiting the applicability of the statute in the business context, Midwest Grinding, 976 F.2d at 1025, the Supreme Court in Bridge later made the following contrary observation: RICO’s text provides no basis for imposing a first-party reliance requirement. If the absence of such a requirement leads to the undue proliferation of RICO suits, the correction must lie with Congress. It is not for the judiciary to eliminate the private action in situations where Congress has provided it. Bridge, 553 U.S. at 661 (citations and internal quotation marks omitted). Horizon further argues that Plaintiffs have not sufficiently alleged that third parties “actually relied on Horizon’s alleged misrepresentations that Plaintiffs are ‘overpriced, pedestrian or substandard healthcare providers.’” (Db16 n.7) (citing Am. Compl. ¶360). This is false. Plaintiffs specifically allege, among other things, that “many deceived third parties have relied on Horizon’s material misrepresentations to the Plaintiffs’ detriment, precisely as Horizon intended,” and that “based on Horizon’s factual misrepresentations about the Plaintiffs and their businesses, patients have disrupted their continuity of care and selected other medical providers.” (Am. Compl. ¶203). Plaintiffs also allege that, “[a]s a direct result of Horizon’s violation of 18 U.S.C. § 1962(c), the Plaintiffs have suffered substantial injury to their business or property within the meaning of 18 U.S.C. § 1964(c), including, but not limited to: (i) lost revenue from patients ceasing their Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 28 of 84 PageID: 1308 16 relationship with Plaintiffs; (ii) lost revenue from patients being dissuaded from seeking healthcare from Plaintiffs; and (iii) the costs in time, person-hours, and other administrative expense incurred because of Horizon’s unlawful conduct.” Id. ¶362. In any event, under the mail and wire fraud statutes, unlike the common law, there is no required element of reliance. See Bridge, 553 U.S. at 648-49. At most, the Supreme Court explained that “the complete absence of reliance may prevent the plaintiff from establishing proximate cause,” but it is not an element of the mail fraud statute. See id. at 658-59. The remaining cases relied on by Horizon (Db17-19), do not help its arguments. In Lancaster Community Hosp. v. Antelope Valley Hosp. Dist., 940 F.2d 397 (9th Cir. 1991), the mail and wire fraud claims failed because the false statements were not part of an attempt to deprive another of property, but were part of an attempt to increase the defendants’ market share. Id. at 405-06. Here, the CarePoint Hospitals specifically allege that Horizon has sought to deprive them of property. (Am. Compl. ¶¶186, 204). Horizon also relies on Kredietbank N.V. v. Joyce Morris, Inc., No. 84-1903, 1986 U.S. Dist. LEXIS 30653 (D.N.J. Jan. 9, 1986), but this reliance is misplaced for at least two reasons. First, it is a pre-Bridge case and thus is no longer good law to the extent that it relies on first-party reliance. See Kredietbank, 1986 U.S. Dist. LEXIS 30653, *12. Moreover, the counterclaimants in Kredietbank failed to Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 29 of 84 PageID: 1309 17 properly allege a scheme to deprive the victim of its property by means of false or fraudulent pretenses. At most, they pled the more general “intent to injure,” which “is not the equivalent of intent to defraud.” Kredietbank, 1986 U.S. Dist. LEXIS 30653, *13. Here, by contrast, Plaintiffs have alleged that Horizon used the mails and wires in furtherance of two distinct fraudulent schemes intended to deprive them of revenue. (Am. Compl. ¶¶185-303). In Care One, the Court granted the plaintiffs leave to amend so that plaintiffs would “clearly inform Defendants of the misrepresentations alleged to support a specific scheme for fraud, beyond general allegations of defamatory statements.” Care One, 2013 U.S. Dist. LEXIS 147119, *33. Importantly, following amendment, the Court in Care One found that the plaintiffs had sufficiently pled predicate acts of mail and wire fraud and denied the defendant’s motion to dismiss the Second Amended Complaint. See Care One Mgmt., LLC v. United Healthcare Workers East, SEIU 1199, No. 12-6371, ECF No. 269 (D.N.J. Dec. 10, 2015). Finally, Horizon’s reliance on Doug Grant, Inc. v. Greate Bay Casino Corp., 232 F.3d 173 (3d Cir. 2000) is misplaced, because that case did not involve allegations of mail and wire fraud at all. The plaintiffs simply failed to allege a single predicate act sufficient to support their RICO case. Doug Grant, 232 F.3d at 184-88. Here, as noted above, Plaintiffs plead multiple instances in which Horizon used the mails and wires in furtherance of their scheme to defraud. Each of these Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 30 of 84 PageID: 1310 18 instances constitutes a separate predicate act of racketeering. See Kronfeld, 638 F. Supp. at 1472. Thus, Plaintiffs sufficiently plead predicate RICO acts of mail and wire fraud in violation of 18 U.S.C. §§ 1341 and 1343. C. DOBI’s Alleged “Express Approval” of OMNIA and Other Tiered Products Does Not Insulate Horizon from Plaintiffs’ RICO Claims Next, Horizon contends that the “express approval” of the OMNIA network by the New Jersey Department of Banking and Insurance (“DOBI”) is somehow “indicative” of the “unviability” of Plaintiffs’ claim in Count Four under 18 U.S.C. § 1962(c). Despite acknowledging that the circumstances surrounding DOBI’s approval are “not attendant to a specific element of a RICO cause of action,” Horizon insists that it is “ludicrous” in these circumstances to characterize the Network Enterprise and the OMNIA Tier 1 Enterprise as “criminal enterprises.” (Db19-20).5 But this argument overlooks that the RICO enterprise need not be characterized as “criminal,” since “Congress intended RICO to reach both legitimate and illegitimate enterprises.” Goldenstein v. Repossessors Inc., 815 F.3d 142, 149 (3d Cir. 2016) (citing Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 5 In fact, DOBI’s “approval” of the OMNIA program was limited to the narrow issue of “ensuring subscribers have sufficient access to care under the plan because the network is adequate.” Beyond that limited scope, DOBI lacked statutory authority to review an insurance carrier’s “hospital selection criteria for a tiered benefit network.” Capital Health Sys. v. New Jersey Dep’t of Banking & Ins., 445 N.J. Super. 522, 542 (App. Div. 2016). What is more, even that limited review by DOBI was an “iterative and continual process.” Id. at 531. Given DOBI’s limited role, its involvement can in no way be seen as an endorsement of Horizon’s overall conduct in carrying out the affairs of the OMNIA Tier 1 Enterprise. Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 31 of 84 PageID: 1311 19 499-500 (1985) and United States v. Turkette, 452 U.S. 576, 584-85 (1981)); Insurance Brokerage, 618 F.3d at 364 (RICO’s definition of “enterprise” “appears to include both legitimate and illegitimate enterprises within its scope”) (citations and internal quotation marks omitted); Tabas, 47 F.3d at 1293. Thus, “the ambit of RICO may encompass a ‘legitimate’ businessman who regularly conducts his business through illegitimate means, that is, who repeatedly defrauds those with whom he deals and in the process commits predicate acts, for instance by using the postal service as a means of accomplishing his scheme.” Tabas, 47 F.3d at 1293 (citing H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 243 (1989)); cf. Goldenstein, 815 F.3d at 149 (“RICO’s prohibition on the ‘collection of unlawful debt’ can reach even a legitimate repossession company that forfeits on collateral for a usurious loan - assuming, that is, that the plaintiff can establish the other elements of the violation”). Here, Plaintiffs allege that “[t]he Network Enterprise ostensibly exists for the legitimate purpose of providing a network of healthcare providers united for the purpose of providing healthcare at lower costs than their competitors,” and that “the OMNIA Tier 1 Enterprise may appear to be a legitimate association of Horizon and healthcare providers united for the purpose of providing healthcare at lower costs than their competitors.” (Am. Compl. ¶¶169, 181). The unlawful conduct is not the mere existence of the enterprises, but Horizon’s conduct of the Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 32 of 84 PageID: 1312 20 affairs of these enterprises through its pattern of racketeering activity comprising repeated acts of mail and wire fraud. (Id. ¶¶170, 181). Lastly, relying on Plaintiffs’ acknowledgment that “at various times, all of the Plaintiffs have been In-Network Providers with respect to Horizon” (Am. Compl. ¶169), Horizon contends that a RICO co-conspirator may not sue a member of the same conspiracy for RICO violations. (Db21) (citing Ross v. Bolton, 1991 U.S. Dist. LEXIS 18717, *7 (S.D.N.Y. Dec. 27, 1991) and Rezner v. Bayerische Hypo-Und Vereinsbank AG, 2009 U.S. Dist. LEXIS 129189, *23 (N.D. Cal. May 1, 2009), rev’d on other grounds, 630 F.3d 866 (9th Cir. 2010)). But Plaintiffs have never alleged that they are co-conspirators with Horizon or any of the other participants in the Network Enterprise or OMNIA Tier 1 Enterprise. Instead, as just noted, they take issue with the manner in which Horizon has conducted the affairs of these enterprises. (Id. ¶¶170, 181). Under governing case law, these allegations are sufficient to state RICO violations. See Tabas, 47 F.3d at 1293; Goldenstein, 815 F.3d at 149. D. Plaintiffs Plead Viable Association-In-Fact Enterprises Next, Horizon contends that Plaintiffs have not sufficiently pled viable association-in-fact enterprises underlying its Section 1962(c) claim in Count Four. Horizon maintains that the Network Enterprise and the OMNIA Tier 1 Enterprise supposedly lack “the necessary structural attributes of a RICO section 1962(c) Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 33 of 84 PageID: 1313 21 association-in-fact enterprise.” (Db21-22). This argument also fails. In Boyle v. United States, 556 U.S. 938 (2009), the Supreme Court explained that RICO “does not specifically define the outer boundaries of the ‘enterprise’ concept but states that the term ‘includes any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.’” Boyle, 556 U.S. at 944 (quoting 18 U.S.C. § 1961(4)). The Court noted that “[t]he term ‘any’ ensures that the definition has a wide reach.” Id. Thus, while an association-in-fact enterprise must have a “structure,” the structure need only amount to “a purpose, relationships among those associated with the enterprise, and longevity sufficient to permit these associates to pursue the enterprise’s purpose.” Boyle, 556 U.S. at 946. The Court rejected the notion that “a RICO enterprise must have structural features in addition to those that we think can be fairly inferred from the language of the statute.” Id. at 947-48. Indeed, as the Court noted, “an association-in-fact enterprise may be an ‘informal’ group and … ‘not much’ structure is needed.” Id. at 948. In short, “an association-in-fact enterprise is simply a continuing unit that functions with a common purpose.” Id. Here, Plaintiffs amply plead that the Network Enterprise and the OMNIA Tier 1 Enterprise are associations-in-fact under Boyle. Each enterprise has operated as a continuing unit - the Network Enterprise has operated since at least 1985, and the OMNIA Tier 1 Enterprise has operated since at least 2015. (Am. Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 34 of 84 PageID: 1314 22 Compl. ¶¶166, 172). There is no foreseeable end to either enterprise. (Id. ¶¶166, 184). The members of each enterprise function for a common purpose. For the Network Enterprise, the purpose is to increase its members’ patient volume and provide a network of healthcare providers united for the purpose of providing healthcare at lower costs than their competitors (Id. ¶¶167, 169). For the OMNIA Tier 1 Enterprise, the purpose is to make money for its members at the expense of providers that Horizon has designated as “Tier 2” under its OMNIA product, as well as out-of-network hospitals like the Plaintiffs and other stand-alone, independent hospitals in New Jersey, by increasing its members’ patient volume. (Id. ¶179). And the members of each enterprise perform roles in the groups consistent with their organizational structures. For example, the In-Network Providers treat Horizon Subscribers at discounted rates, whereas Horizon steers its subscribers to the In-Network Providers and away from out-of-network providers in order to generate the increased volume necessary to maintain the Network Enterprise. (Id. ¶171). Meanwhile, the OMNIA Tier 1 Providers treat Horizon Subscribers at discounted rates and accept, quid pro quo, a share in Horizon’s savings, whereas Horizon steers its subscribers to the OMNIA Tier 1 Providers and away from Tier 2 and out-of-network providers in order to generate the increased volume necessary to maintain the OMNIA Tier 1 Enterprise. (Id. ¶183). Thus, the Amended Complaint meets Boyle’s requirement of pleading that the Network Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 35 of 84 PageID: 1315 23 Enterprise and OMNIA Tier 1 Enterprise each has “a purpose, relationships among those associated with the enterprise, and longevity sufficient to permit these associates to pursue the enterprise’s purpose.” Boyle, 556 U.S. at 946. In arguing that Plaintiffs’ alleged association-in-fact enterprises are deficient, Horizon contends that they are similar to certain “broker-centered” enterprises that the Third Circuit found insufficiently pled in Insurance Brokerage. (Db22-23). But merely asserting that Plaintiffs’ alleged association-in-fact enterprises are deficient does not make it so, even where, as here, Horizon seeks to support these assertions with diagrams. (See Db, Exhs. E, F). The “broker centered” enterprises at issue in Insurance Brokerage involved “hub-and-spokes” enterprises, with insurance broker defendants as “hubs” and numerous insurers as “spokes.” The Court deemed these enterprises insufficient because the allegations did not “plausibly imply concerted action-as opposed to merely parallel conduct-by the insurers, and therefore cannot provide a ‘rim’ enclosing the ‘spokes’ of these alleged ‘hub-and-spoke’ enterprises.” Insurance Brokerage, 618 F.3d at 374. Here, by contrast, even assuming that the Network Enterprise and the OMNIA Tier 1 Enterprise can be fairly characterized as “hub-and-spokes” enterprises,6 Plaintiffs plausibly allege “rims” enclosing the “spokes” of both enterprises. Plaintiffs allege that relationships exist among the In-Network 6 As described below, in the case of at least the Network Enterprise, it has a more hierarchical structure and is not a true “hub-and-spokes” enterprise. Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 36 of 84 PageID: 1316 24 Providers which cooperate with one another to handle the increased patient volume designed to benefit the members of the Network Enterprise and thus carry on the purpose of the Network Enterprise - to benefit each of its participants at the expense of out-of-network providers like the Plaintiffs by increasing its members’ patient volume. (Am. Compl. ¶¶167-68). Similarly, Plaintiffs allege that relationships exist among the OMNIA Tier 1 Providers which cooperate with one another to handle the increased patient volume designed to benefit the members of the OMNIA Tier 1 Enterprise and thus carry on the purpose of the OMNIA Tier 1 Enterprise - which is to make money for its members at the expense of providers that Horizon has designated as “Tier 2” under its OMNIA product, as well as out- of-network hospitals like the Plaintiffs and other stand-alone, independent hospitals in New Jersey, by increasing its members’ patient volume. (Am. Compl. ¶¶179-80). Thus, the Amended Complaint more than sufficiently alleges concerted action among the members of both the Network Enterprise and the OMNIA Tier 1 Enterprise. Importantly, in a section of its opinion wholly ignored by Horizon, the Third Circuit in Insurance Brokerage found that one of the alleged “hub-and-spokes” enterprises-the “Marsh-centered enterprise”- sufficiently alleged a “rim” surrounding the hub-and-spokes enterprise. 618 F.3d at 375-78. In that configuration, Marsh prepared brokering plans that governed the placement of Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 37 of 84 PageID: 1317 25 insurance contracts up for renewal and assigned businesses to specific insurers at target prices. Id. at 377. The Third Circuit held that this “plausibly evinces an expectation of reciprocity and cooperation among the insurers.” Id. at 376. The Third Circuit continued: Since Boyle disavowed the need for any particular hierarchical or organizational structure, the members of the scheme were not required to have fixed roles. Instead, the reciprocal bid-rigging adequately suggested relationships among the insurers: In our view, the alleged agreement by insurers to provide sham bids plausibly suggests an interrelationship among the insurers - mediated through Marsh - in pursuit of achieving greater business and profits by means of deceiving insurance purchasers. Through this interrelationship, the insurers were allegedly able to advance this common interest to a greater extent than would have been possible on the strength of the bilateral relationships between Marsh and each broker alone. Id. at 377. Similarly, here, as set forth above, the Amended Complaint plausibly alleges an interrelationship among the participants in the Network Enterprise and the OMNIA Tier 1 Enterprise that enabled the hospital members to advance the common interests of those enterprises to a greater extent than would have been possible on the strength of bilateral relationships between Horizon and each individual provider. Thus, Plaintiffs more than sufficiently plead these two enterprises as association-in-fact enterprises under Boyle and Insurance Brokerage. What is more, “a RICO enterprise may be shown through proof of a hierarchical structure and without evidence that the lower level members of the enterprise collaborated directly with each other.” Schwartz v. Lawyers Title Ins. Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 38 of 84 PageID: 1318 26 Co., 970 F. Supp. 2d 395, 404 (E.D. Pa. 2013). Here, in the case of the Network Enterprise, the Amended Complaint sufficiently pleads a hierarchical structure comprising of multiple subnetworks - including, most recently, its subnetwork of “Tier 1” providers in its so-called “OMNIA” plan at the highest level. (Am. Compl. ¶¶13, 22, 156, 174). In a hierarchical configuration, Plaintiffs need not plead additional facts to show coordination among lower levels of the Network Enterprise. It suffices that each member “had a role in furtherance of the enterprise’s affairs.” Schwartz, 970 F. Supp. 2d at 405 (quoting United States v. Bergrin, 650 F.3d 257, 271 (3d Cir. 2011)). For this additional reason, Plaintiffs sufficiently plead the Network Enterprise as a viable association-in-fact enterprise under Boyle.7 7 Moreover, the Third Circuit in Insurance Brokerage noted that it was possible that the plaintiffs’ factual allegations “would provide a plausible basis for the assertion of a number of bilateral enterprises, each encompassing a broker and one of its insurer-partners, or even the assertion that individual brokers or insurers each constituted an enterprise,” but that the plaintiffs had failed to assert such smaller- scale enterprises through three prior rounds of pleading. 618 F.3d at 374. Here, in addition to the Network Enterprise and the OMNIA Tier 1 Enterprise, the factual allegations provide a plausible basis for the assertion of at least one additional smaller-scale bilateral association-in-fact enterprise consisting of Horizon and Barnabas. Thus, to the extent that the Court finds that Plaintiffs’ allegations relating to Network Enterprise and the OMNIA Tier 1 Enterprise are insufficient to allege an association-in-fact under Boyle, leave to replead should be granted to allow Plaintiffs to plead this smaller-scale enterprise. Plaintiffs’ proposed Second Amended Complaint, filed herewith, pleads such a smaller-scale enterprise (“the Horizon Barnabas Enterprise”), as well as additional facts demonstrating concerted action among the members of the Network Enterprise and the OMNIA Tier 1 Enterprise. (See 2d Am. Compl. ¶¶175, 176, 188, 193-216). Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 39 of 84 PageID: 1319 27 E. Plaintiffs Sufficiently Allege Conduct of the Affairs of the RICO Enterprises Horizon also wrongly insists that Plaintiffs “only allege conduct by Horizon in its own affairs,” not the affairs of the Network Enterprise or the OMNIA Tier 1 Enterprise. (Db25-30). This argument also fails. To be liable under Section 1962(c), “a defendant must ‘conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity.’” Insurance Brokerage, 618 F.3d at 370-71 (quoting 18 U.S.C. § 1962(c)). But RICO liability under 18 U.S.C. § 1962(c) “is not limited to those with primary responsibility for the enterprise’s affairs.” Reves v. Ernst & Young, 507 U.S. 170, 179 (1993). “[M]erely playing some part in the direction of affairs suffices.” Franco v. Conn. Gen. Life Ins. Co., 818 F. Supp. 2d 792, 826-27 (D.N.J. 2011) (citing Reves, 507 U.S. at 179). Here, Plaintiffs amply allege that Horizon played at least some part in the direction of the affairs of the Network Enterprise and the OMNIA Tier 1 Enterprise through its pattern of racketeering activity. Horizon alleges, in conclusory fashion, that the predicate acts of racketeering underlying their RICO claims “all were allegedly undertaken solely by Horizon for its own purposes.” (Db27) (emphasis in original). But the actual allegations of the Amended Complaint confirm that all of Horizon’s predicate acts of mail and wire fraud played a part in the affairs of the Network Enterprise, the OMNIA Tier 1 Enterprise, or both. (Am. Compl. ¶188). Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 40 of 84 PageID: 1320 28 Plaintiffs plausibly allege that whenever they have given notice to Horizon that they were terminating their membership in Horizon’s networks in order to negotiate more sustainable in-network rates, Horizon has “sought to punish Plaintiffs for leaving Horizon’s networks through a mail and wire fraud scheme, the intent of which was to divert business from Plaintiffs and to damage Plaintiffs economically for their choice.” (Am. Compl. ¶190). This furthers the goals of the Network Enterprise by ensuring that other members are deterred from leaving it (see id.), while also steering patients to other hospital members of the Network Enterprise and away from out-of-network providers in order to generate the increased volume necessary to maintain the Network Enterprise. (See id. ¶171). For example, in 2009, after plaintiff BMC terminated its then-existing in- network agreement with Horizon as a necessary step to negotiate a sustainable in- network arrangement with Horizon, Horizon retaliated against BMC by embarking on its campaign of false and misleading statements about BMC to its patients and the public at large, over the mails and wires. (Id. ¶¶207-08).8 These included: 8 Horizon argues that the Court should not consider these predicate acts because they pre-dated a 2011 Settlement Agreement and Release between BMC and Horizon (“Settlement Agreement”). (Db27-28 n.10). But these pre-2011 acts are relevant to establishing the “continuity” requirement of RICO’s “pattern” element. H.J. Inc., 492 U.S. at 243 (continuity may be established, inter alia, “where it is shown that the predicates are a regular way of conducting defendant's ongoing legitimate business ... or of conducting or participating in an ongoing and legitimate RICO `enterprise”); see also Tabas, 47 F.3d at 1295 (“if the predicate acts have been a regular way of conducting defendant’s legitimate business over a Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 41 of 84 PageID: 1321 29 • Correspondence to BMC’s patients while they were in the hospital, falsely stating that patients were “medically stable and [able to] be safely transferred to a par [participating] facility for evaluation and continued care,” and falsely stating that the patients “will incur substantially higher out-of-pocket financial liability” if they remained at BMC (Id. ¶¶209-11); • Placing an advertisement in the February 7, 2009 edition of the Jersey Journal falsely stating, “If you continue to use BMC Medical Center, the bottom line will be higher health care costs and higher health insurance premiums.” (Id. ¶¶212-17); and • Mailing a letter to Horizon Subscribers who had recently received care at BMC, designed to mislead subscribers into thinking that BMC was not entitled to any payment for its services and confuse its subscribers into questioning whether they will have insurance coverage if they receive future services at BMC while litigation is pending. (Id. ¶¶219-23). Then again in 2015 - after plaintiffs necessarily terminated their then- existing in-network agreements with Horizon as a necessary step to renegotiating sustainable in-network arrangements - Horizon renewed its campaign of mail and wire fraud against Plaintiffs in earnest, consistent with the goals of the Network Enterprise and Horizon’s role in it. (Id. ¶229). This campaign included: • Engaging in bad faith negotiations with Christ Hospital for renewal in- network rates after Christ Hospital issued a termination notice, followed by a disparaging notice in January 2015 falsely blaming Christ Hospital’s long period in the past, the RICO pattern has been satisfied”). Whether Plaintiffs can recover damages for these pre-2011 acts is a matter that need not be addressed on this motion and must abide further discovery to determine, inter alia, whether Horizon’s material breaches of the Settlement Agreement preclude enforcement of the release against Plaintiffs. See, e.g., Nolan v. Lee Ho, 120 N.J. 465, 472 (1990) (“When there is a breach of a material term of an agreement, the non-breaching party is relieved of its obligations under the agreement.”). Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 42 of 84 PageID: 1322 30 impending out-of-network status on “demands for rate increases made by Christ Hospital” - deliberately ignoring the facts that Horizon had offered essentially no increase in rates - and encouraging its members to transition immediately to other in-network hospitals. (Id. ¶¶231-37); • Issuing a disparaging guest Op-Ed piece dated March 23, 2015, accusing “a few hospitals and doctors” of “abuse” of a “well-intended out-of-network (OON) regulation” and of charging “exorbitant prices,” and making a thinly veiled reference to BMC (which was still in-network with Horizon at the time) as one of the “few hospitals” engaged in this alleged “abuse” and of charging “exorbitant prices.” (Id. ¶¶238-40); • Issuing a disparaging press release dated March 25, 2015, making another thinly veiled reference to BMC as among the health care providers engaged in “gouging the health care system - and all New Jersey residents - by charging prices that bear no relation whatsoever to the cost of treatment.” (Id. ¶¶242-43); • Publishing a document on its website that same date, entitled, “An Analysis of Policy Options for Involuntary Out-of-Network Charges in New Jersey,” specifically referring to BMC and linking the website to a disparaging 2013 New York Times article about BMC. (Id. ¶244); • “Ghost-writing” testimony that New Jersey Senate President Stephen Sweeney presented on March 7, 2016, stating, “here in New Jersey we have … for-profit hospital systems like CarePoint that are ripping off New Jersey consumers” and that “CarePoint has a hospital that has the highest billing rates in the United States of America, according to the New York Times.” (Id. ¶247); • Engaging in bad faith negotiating tactics prior to the scheduled terminations of its network arrangements with BMC on May 1, 2016, and with HUMC on June 2, 2016, followed by an online press release dated April 26, 2016, falsely blaming the CarePoint Hospitals for their impending out-of-network status by stating that they “refused reimbursement increases offered by Horizon BCBSNJ, the state’s largest health insurer,” and falsely stating that Horizon put forward a “number of reasonable offers” to CarePoint. (Id. ¶¶246, 248-49); • Playing an active role in the preparation of a June 2, 2016, press release Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 43 of 84 PageID: 1323 31 from the New Jersey Association of Health Plans (“NJAHP”), of which Horizon is an active member, falsely accusing the CarePoint Hospitals of misleading consumers about their network status, and stating the following in response to BMC’s out-of-network status: “The problem of price gouging and surprise billing just got bigger for New Jersey consumers, the State Health Benefits Program, the State Treasury and public employees…. The governor’s proposed 2017 budget calls for $250 million in health care cost savings, yet CarePoint’s departure from the Horizon network will only exacerbate the challenges of rising health care costs for the state and other employers.” (Id. ¶¶250-51). Meanwhile, following its rollout of its OMNIA plan, Horizon engaged in further predicate acts of mail and wire fraud in furtherance of the purpose of the OMNIA Tier 1 Enterprise - to make money for its members at the expense of “Tier 2” and out-of-network providers. (Id. ¶179). These predicate acts were consistent with Horizon’s role in that enterprise - to steer its subscribers to the OMNIA Tier 1 Providers and away from Tier 2 and out-of-network providers in order to generate the increased volume necessary to maintain the OMNIA Tier 1 Enterprise. (Id. ¶183). These predicate acts included: • Public statements falsely describing the OMNIA Tier 1 Providers as “the top health care organizations in the state,” and thus falsely suggesting that Tier 2 and out-of-network hospitals are pedestrian or substandard. (Id. ¶¶258-59); • Publishing on its website, www.whathealthcarecostsnj.com, statements that misleadingly state, among other things, that Horizon chose the OMNIA Tier 1 Providers based, inter alia, on “Clinical quality, which is composed of performance on standardized, publicly available ratings of clinical processes and outcomes.” (Id. ¶278); • Sending a mailer to homes in or around October 2015, stating that OMNIA offers “Better care, lower costs and more options for more people” - again falsely implying that Tier 1 hospitals offer superior care than Tier 2 or out- Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 44 of 84 PageID: 1324 32 of-network providers. (Id. ¶281); • Stating on its website that “OMNIA Health Plans have lower premiums and do not limit access,” and that “Members will have access to the largest network in the state whether they keep their current health insurance plan or select an OMNIA Health Plan.” Contrary to these statements, OMNIA does in fact limit access to providers by providing incentives to patients who use Tier 1 hospitals and punishing those who choose Tier 2 or out-of-network hospitals with substantially increased out-of-pocket costs. (Id. ¶284); • Stating on its website that Horizon took a “disciplined approach…when selecting Tier 1 hospitals and doctors;” and selected them “based on a commitment to value-based care, strong clinical quality, consumer preference and multiple service offerings.” In fact, Horizon’s CEO Robert Marino testified that at least 25% of the metrics used to determine tier status were subjective and Horizon omitted other criteria it relied upon. (Id. ¶285). Thus, this case is distinguishable from the two cases chiefly relied on by Horizon, United Food & Commercial Workers Union v. Walgreen Co., 719 F.3d 849 (7th Cir. 2013), and In re Aetna UCR Litig., 2015 U.S. Dist. LEXIS 84600 (D.N.J. Jun. 30, 2015). In United Food, the alleged actions “show[ed] only that the defendants had a commercial relationship, not that they had joined together to create a distinct entity” for purposes of the alleged unlawful activity. 719 F.3d at 855. And in In re Aetna UCR Litig., the Court found that the plaintiffs likewise had not made factual allegations demonstrating that the defendants knowingly conducted or participated in the conduct of the enterprise’s (as opposed to its own) affairs through a pattern of racketeering activity, “particularly where, even in the absence of coordination, each defendant maintained an independent incentive to engage in the conduct alleged.” 2015 U.S. Dist. LEXIS 84600, *96. Here, Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 45 of 84 PageID: 1325 33 Plaintiffs plausibly allege that each of Horizon’s predicate acts furthered the goals of the Network Enterprise and the OMNIA Tier 1 Enterprise, inter alia, by punishing Plaintiffs for leaving the Network Enterprise, and by steering patients to both enterprises. (Am. Compl. ¶¶171, 179, 183, 190). Moreover, unlike United Food and In re Aetna UCR Litig., Horizon would have no independent incentive to engage in the acts of racketeering but for the fact that they advanced the goals and purposes of the Network Enterprise and the OMNIA Tier 1 Enterprise. Lastly, Horizon finds it “most telling” that “Plaintiffs’ express allegation that every purported predicate act was committed by Horizon alone.” (Db30). But as the Third Circuit has made clear, “‘[i]t is the ‘person’ charged with the racketeering offense - not the entire enterprise - who must engage in the ‘pattern of racketeering activity.’” Bergrin, 650 F.3d at 267 (citing H.J. Inc., 492 U.S. at 244). Thus, the fact that Plaintiffs plead that Horizon engaged in all of the predicate acts of racketeering identified in the Amended Complaint in no way suggests that Horizon was conducting only its own affairs rather than those of the two RICO enterprises, as Horizon argues. Instead, it only confirms that Plaintiffs properly plead their Section 1962(c) claim. F. Plaintiffs Plead Valid RICO Conspiracy Claims Finally, Plaintiffs plead viable RICO conspiracy claims in Counts Five and Six of the Amended Complaint in violation of 18 U.S.C. § 1962(d). “It is Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 46 of 84 PageID: 1326 34 elementary that a conspiracy may exist and be punished whether or not the substantive crime ensues.” Salinas, 522 U.S. at 65. Horizon cites Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153 (3d Cir. 1993), for the proposition that a “claim under section 1962(d) based on a conspiracy to violate the other subsections of section 1962 necessarily must fail if the substantive claims are themselves deficient.” (Db30) (quoting Lightning Lube, 4 F.3d at 1192). However, in Rehkop v. Berwick Healthcare Corp., 95 F.3d 285, 290 (3d Cir. 1996), the Third Circuit made an important clarification to Lightning Lube and held that a plaintiff may plead a RICO conspiracy count without pleading a completed violation of the substantive section, as long as the plaintiff alleges that it was harmed in furtherance of the conspiracy. Rehkop, 95 F.3d at 290.9 Thus, “[a] conspirator [under RICO] must intend to further an endeavor which, if completed, would satisfy all of the elements of a substantive criminal offense, but it suffices that he 9 While the Supreme Court, in Beck v. Prupis, 529 U.S. 494 (2000), later rejected Rehkop’s premise that a person injured by a non-racketeering act can bring a RICO conspiracy claim (holding instead that a plaintiff must allege injury from an overt conspiratorial act that is independently wrongful under RICO), it expressly left open the question “whether a plaintiff suing under [18 U.S.C.] § 1964(c) for a RICO conspiracy must allege an actionable violation under §§ 1962(a)-(c), or whether it is sufficient for the plaintiff to allege an agreement to complete a substantive violation and the commission of at least one act of racketeering that caused him injury.” Beck, 529 U.S. at 506 n. 10. Thus, it remains the law in this Circuit that “a plaintiff may plead a RICO conspiracy in the absence of an actionable claim under §§ 1962(a)-(c) so long as the complaint complies with Beck and the substantive claims fail only for lack of a causative injury.” Kolar v. Preferred Real Estate Investments, Inc., 361 Fed. Appx. 354, n.13 (3d Cir. 2010). Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 47 of 84 PageID: 1327 35 adopt the goal of furthering or facilitating the criminal endeavor.” Salinas, 522 U.S. at 65 (emphasis added); see also Insurance Brokerage, 618 F.3d 300, 374 n.72 (3d Cir. 2010) (noting that Salinas “appears to hold that a violation of § 1962(d) does not require a consummated violation of a substantive RICO provision; it is sufficient that the conspiracy have as its object acts which, if completed, would constitute a substantive violation.”). Here, in Count Five, Plaintiffs allege that Horizon conspired to violate 18 U.S.C. § 1962(c) by seeking to conduct the affairs of the Network Enterprise and the OMNIA Tier 1 Enterprise through a pattern of racketeering activity. (Am. Compl. ¶¶363-72). Horizon argues that Plaintiffs’ conspiracy claim in Count Five must be dismissed because Plaintiffs fail to allege an endeavor which, if completed, would constitute a substantive violation of 18 U.S.C. § 1962(c). (Db31). To the contrary, as described more fully above, Plaintiffs more than sufficiently allege: (i) a pattern of racketeering consisting of repeated acts of mail and wire fraud; (ii) the existence of two viable association-in-fact enterprises - the Network Enterprise and the OMNIA Tier 1 Enterprise; and (iii) Horizon’s conduct of the affairs of these enterprises through the pattern of racketeering activity. (Points II.B, D, and E, supra). Thus, Plaintiffs sufficiently allege a conspiracy to violate Section 1962(c) in Count Five. In Count Six, Plaintiffs allege that Horizon conspired to violate 18 U.S.C. § Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 48 of 84 PageID: 1328 36 1962(b) by seeking to acquire control of the Plaintiffs, as well as the Network Enterprise and the OMNIA Tier 1 Enterprise, through a pattern of racketeering activity. (Am. Compl. ¶¶373-83). This section makes it unlawful “for any person through a pattern of racketeering activity … to acquire or maintain, directly or indirectly, an interest in or control of any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce.” 18 U.S.C. §1962(b). In Nat’l Org. for Women, Inc. v. Scheidler, 510 U.S. 249 (1994), the Supreme Court explained that the “enterprise” within the meaning of Sections 1962(a) and (b) is “something acquired through the use of illegal activities or by money obtained from illegal activities” and thus is “the victim of unlawful activity.” 510 U.S. at 259. Here, Plaintiffs allege that Horizon conspired to acquire control over the following enterprises through a pattern of racketeering activity: (i) each of the plaintiffs; (ii) the Network Enterprise; and (iii) the OMNIA Tier 1 Enterprise. (Am. Compl. ¶¶374-76, 379). Horizon asserts that Plaintiffs allegedly fail to plead “the existence of a section 1962(b) enterprise” because, as to the Network Enterprise and OMNIA Tier 1 Enterprise, Plaintiffs do not allege that they “are the victims of Horizon’s unlawful activity or that Horizon acquired an interest or control over either of them through racketeering activity.” (Db32). But as noted above, to plead their conspiracy claim in Count Six, Plaintiffs need not allege a completed violation of Section 1962(b); it suffices that Plaintiffs allege that the Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 49 of 84 PageID: 1329 37 conspiracy has “as its object acts which, if completed, would constitute a substantive violation.” Insurance Brokerage, 618 F.3d at 374 n.72. Here, Plaintiffs specifically allege that one of the objects of Horizon’s conspiracy is to acquire or maintain, directly or indirectly, an interest in or control over these enterprises and through a pattern of racketeering activity. (Am. Compl. ¶379). What is more, Plaintiffs allege that another object of the conspiracy is to indirectly acquire or maintain control over Plaintiffs (also enterprises within the meaning of 18 U.S.C. §§ 1961(4) and 1962(b)) through a pattern of racketeering activity by driving them into bankruptcy and inducing one of its preferred in- network providers (such as Barnabas) to acquire them. (Am. Compl. ¶¶ ¶¶19, 20, 200, 304-320, 379). Horizon does not substantively address these allegations, instead, labeling them as “wholly speculative” and “conclusory.” (Db32 n.11). But on this motion, these allegations must be accepted as true and construed in the light most favorably to Plaintiffs. See Phillips, 515 F.3d at 233.10 Thus, Plaintiffs sufficiently plead a conspiracy claim in Count Six. 10 The proposed Second Amended Complaint pleads even more factual support for Plaintiffs’ allegations that Horizon and Barnabas have conspired in an effort to drive Plaintiffs into bankruptcy so that Barnabas can acquire them and Horizon can indirectly control them. (2d Am. Compl. ¶¶193-216, 350). Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 50 of 84 PageID: 1330 38 POINT THREE THE AMENDED COMPLAINT SUFFICIENTLY PLEADS ERISA CLAIMS AGAINST HORIZON A. Plaintiffs Plead Valid Denial of Benefits Claims under ERISA Section 502(a)(1)(B) Contrary to Horizon’s position (Db33-60), Plaintiffs also sufficiently allege that Horizon failed to properly pay Plaintiffs the amounts required by the Plans for the treatment Plaintiffs provided to Horizon Subscribers, in violation of ERISA Section 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B). At the outset, ERISA is the appropriate vehicle by which a health care provider may sue an insurer for benefits due under the terms of an ERISA plan. Section 502(a) of ERISA provides that a “participant” or “beneficiary” may bring a civil action “to recover benefits due to him under the terms of his plan.” See North Jersey Brain & Spine Ctr. v. Aetna, Inc., 801 F.3d 369, 372 (3d Cir. 2015) (quoting Pascack Valley Hosp. v. Local 464A UFCW Welfare Reimbursement Plant, 388 F.3d 393, 400 (3d Cir. 2004)). While a healthcare provider does not have direct standing to bring a claim for benefits under ERISA, every Court of Appeals to have addressed the issue, including the Third Circuit, has recognized that an assignment of benefits gives the healthcare provider derivative standing under ERISA. North Jersey Brain & Spine, 801 F.3d at 372-73. Recognizing such derivative standing is guided by Congress’s intent that ERISA “protect ... the interests of participants in employee benefit Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 51 of 84 PageID: 1331 39 plans” (29 U.S.C. § 1001(b)), and the assignment of ERISA claims to providers “serves the interests of patients by increasing their access to care.” North Jersey Brain & Spine, 801 F.3d at 373 (quoting CardioNet, Inc. v. Cigna Health Corp., 751 F.3d 165, 179 (3d Cir. 2014)). “The value of such assignments lies in the fact that providers, confident in their right to reimbursement and ability to enforce that right against insurers, can treat patients without demanding they prove their ability to pay up front.” North Jersey Brain & Spine, 801 F.3d at 373. Further, “[p]atients increase their access to healthcare and transfer responsibility for litigating unpaid claims to the provider, which will ordinarily be better positioned to pursue those claims.” Id. (citing Hermann Hosp. v. MEBA Med. & Benefits Plan, 845 F.2d 1286, 1289 n.13 (5th Cir.1988)). Horizon criticizes the alleged “kitchen sink” approach to Plaintiffs’ denial of benefits claims under ERISA claims by combining multiple underpayment claims in one suit, and suggests that such an approach violates Fed. R. Civ. P. 10(b). (Db 34, 35). But courts routinely permit health care provider plaintiffs to combine multiple such claims in a single suit against the same insurer defendant, so long as the plaintiff provides sufficient detail to enable the insurer to identify the claims at issue and the specific plans on which they were based. See, e.g., Texas Gen. Hosp., LP v. United Healthcare Serv’s, Inc., No. 3:15-CV-02096-M, 2016 WL 3541828, *4 (N.D. Tex. June 28, 2016) (finding that hospital plaintiff sufficiently Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 52 of 84 PageID: 1332 40 stated a plausible claim for recovery of benefits under ERISA § 502(a)(1)(B), based on allegations, inter alia, that insurance carrier underpaid hospital for the “services provided to the 1,969 United subscribers from approximately February 11, 2012, to June 30, 2015”); United Surgical Assistants, LLC v. Aetna Life Ins. Co., No. 8:14-cv-211, 2014 WL 5420801, *3 (M.D. Fla. Oct. 22, 2014) (permitting plaintiff to combine multiple claims in one suit but noting that the plaintiff, at a minimum, “should provide information identifying the patient, procedure performed, date of the procedure, and transaction amount to allow Aetna to identify health plans at issue.”); Sanctuary Surgical Ctr., Inc. v. UnitedHealth Grp., Inc., 2011 WL 6935289, *3 (S.D. Fla. Dec. 30, 2011) (explaining that to comply with Fed. R. Civ. P. 8 and 10, the Plaintiffs should identify specific claim information for each patient, which “would be best presented in a spreadsheet format, with all the information relating to a particular patient contained in a single row. The spreadsheet can be placed inside the complaint, or attached to the complaint and incorporated by reference.”); accord IJKG OPCO LLC v. EmblemHealth, Inc., No. 2:12-cv-02032, ECF No. 20 (D.N.J. Oct. 19, 2012) (annexed as Exh. C to the La Rocco Decl.) (entering an order requiring the plaintiff initially to provide “member identification numbers, patient names and dates of service” for those patients referenced in the Complaint; once plaintiff had provided that basic information, the defendants were then directed to “provide Plaintiff Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 53 of 84 PageID: 1333 41 copies of the applicable health and benefit plans for the patients identified in the Complaint”). Plaintiffs follow that approach here. Plaintiffs attach to their Amended Complaint spreadsheets providing claim-specific information as to each of the claims, including the specific hospital facility, account number, admit date, discharge date, “IPOP Flag” (inpatient/outpatient/same day service), service type, total charges, total payments, total adjustments, and outstanding amounts due for all claims. (Am. Compl. ¶105 & Exhs. 1-5). With this and other detail, Horizon is on notice of the Subscribers at issue and the bases for each of Plaintiffs’ claims in this case. Horizon does not contend otherwise. Horizon further argues that “Plaintiffs fail to cite even one specific contract provision on which their claims are based and instead rely on unnecessary ‘information and belief’ allegations.” (Db 34). But again, courts routinely permit health care provider plaintiffs to proceed exactly as Plaintiffs do here. For example, in Almont Ambulatory Surgery Ctr., LLC v. UnitedHealth Grp., Inc., 99 F. Supp. 3d 1110 (C.D. Cal. 2015), the Court held that, for a health care provider to state an ERISA claim against an insurer, the provider must allege that “the terms of the plan: (1) provide coverage for each of the procedures at issue in this case; and (2) dictate that these covered services would be paid according to a specific reimbursement rate (such as the reasonable and customary fees for services Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 54 of 84 PageID: 1334 42 charged by outpatient surgical centers), which must be specified.” Almont, 99 F. Supp. 3d at 1159. The Court stated that the plaintiffs “should then allege that Defendants failed to reimburse for the covered services provided by Plaintiffs according to this reimbursement rate provided in the plans.” Id. Importantly, the Almont Court stated that “[g]iven the allegations in this case regarding absence of access to plan documents, the Court will permit these allegations to be made ‘on information and belief.’” Id. Similarly, in Grand Parkway Surgery Ctr., LLC v. Health Care Serv. Corp., No. H-15-0297, 2015 WL 3756492, *4 (S.D. Tex. June 16, 2015), the Court found that the health care provider sufficiently alleged the specific plan terms that conferred the benefits in question, reasoning that: HCSC argues that Count 1 should be dismissed because Plaintiff failed to allege the specific plan terms that confer the benefits in question. Plaintiff, however, alleges that the plan terms ‘allow for reimbursement of reasonable and necessary medical expenses at usual and customary rates’ and that HCSC made reimbursement at drastically reduced rates…. This adequately identifies the plan terms which Plaintiff asserts confers the benefits it seeks to recover under § 502. Whether the terms of the plans at issue in this case actually confer the benefits Plaintiff alleges can be raised on a motion for summary judgment. Id., *4; accord Texas Gen. Hosp., 2016 WL 3541828, * 4 (finding that plaintiff hospital sufficiently pled Plan terms where it alleged, inter alia, that “‘[a]ll of the Plans require reimbursement of medical expenses incurred by United [s]ubscribers at usual, customary, and reasonable rates’”; and that “‘Defendants breached the Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 55 of 84 PageID: 1335 43 terms of the plans by refusing to make proper out-of-network reimbursements for charges covered by the plans’”). Here, as described more fully in Point III.B, infra, Plaintiffs plausibly allege that each of the Plans at issue require Horizon to pay Plaintiffs for their billed charges, less the applicable share of the Horizon Subscriber’s patient responsibility under the terms of each specific Plan. (See also Am. Compl. ¶¶75-84). Plaintiffs further allege that Horizon’s payments to the Plaintiffs fall far short of what is required under each Plan. (Am. Compl. ¶¶106-13). Thus, Plaintiffs plead viable denial of benefits claims against Horizon under ERISA Section 502(a)(1)(B). B. Plaintiffs Sufficiently Allege that Horizon’s Plans Require Horizon to Pay Plaintiffs’ Full Billed Charges Less Patient Responsibility Next, Plaintiffs argue that the language of its Plans does not support Plaintiffs’ claims for payment of billed charges less applicable patient responsibility. (Db36-43). To the contrary, Plaintiffs plausibly allege that, upon information and belief, all of Plaintiffs’ Plans require Horizon to pay the CarePoint Hospitals for their total billed charges, less applicable in-network patient responsibility, for emergency or urgent care that the CarePoint Hospitals provide to Horizon Subscribers; and at usual and customary rates, less applicable out-of- network patient responsibility, for elective care. (Am. Compl. ¶¶75-84). This is consistent with the select Plan language that Horizon attaches to its motion papers. In ERISA plans, a court is “required to enforce the Plan as written.” Bauer Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 56 of 84 PageID: 1336 44 v. Summit Bancorp, 325 F.3d 155, 160 (3d Cir. 2003). Moreover, in interpreting such plans, the Third Circuit applies the principle of contra proferentem, which means that “if, after applying the normal principles of contractual construction, [an] insurance contract is fairly susceptible of two different interpretations, . . . the interpretation that is most favorable to the insured will be adopted.” Heasley v. Belden & Blake Corp., 2 F.3d 1249, 1257 (3d Cir. 1993) (quoting Kunin v. Benefit Trust Life Ins. Co., 910 F.2d 534, 539 (9th Cir. 1990) (internal quotations omitted). The Third Circuit in Heasley explained: Insurance policies are almost always drafted by specialists employed by the insurer. In light of the drafters’ expertise and experience, the insurer should be expected to set forth any limitations on its liability clearly enough for a common layperson to understand; if it fails to do this, it should not be allowed to take advantage of the very ambiguities that it could have prevented with greater diligence. Id. (quoting Kunin, 910 F.2d at 540). The Heasely court reasoned that not applying contra proferentem would “afford less protection to employees and their beneficiaries than they enjoyed before ERISA was enacted, ‘a result that would be at odds with the congressional purposes of promoting the interests of employees and beneficiaries and protecting contractually defined benefits.’” Id. (quoting Masella v. Blue Cross & Blue Shield, 936 F.2d 98, 107 (2d Cir. 1991)). Applying these principles, the select Plan language that Horizon includes with its motion papers plainly supports Plaintiffs’ claims for payment of billed charges less applicable patient responsibility. Regardless of Plan type, all of the Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 57 of 84 PageID: 1337 45 Plans cited by Horizon provide for payment of out-of-network benefits in accordance with the “Allowance” or “Allowed Charge” definition found in each Plan. (Am. Compl. ¶79). In emergency and urgent care situations, the “Allowance” or “Allowed Charge” definition mandates that Horizon pay out-of- network providers for their full billed charges, less the amounts that the subscribers would have paid had they received treatment from an in-network facility. (Am. Compl. ¶¶80-84). Specifically: • In the case of Horizon’s Indemnity and Health Maintenance Organization (“HMO”) Plans, the “Allowance” is a dollar amount Horizon determines to be “reasonable, customary and appropriate for Covered Services and Supplies unless required by law.” (Am. Compl. ¶80; Affidavit of Kristen Jarosz (ECF No. 28-1) (“Jarosz Aff.”) ¶5) (emphasis added). As noted in Point III.C, below, in emergency or urgent care situations, New Jersey law requires insurers to pay out-of-network providers for their full billed charges, less the amounts that the subscribers would have paid had they received treatment from an in-network facility. (Am. Compl. ¶¶73, 80). • Under Horizon’s Managed Care (“MC”) Plans and self-insured Plans administered by Horizon, the “Allowance” for emergency care at an out-of- network provider “shall be increased as needed to ensure that the Covered Person has no greater liability than he/she would have if they were provided by In-Network Providers.” (Am. Compl. ¶¶81, 84; Jarosz Aff. ¶¶8, 15 & Exh. 1). • And for its Small Group (“SMG”) and Individual Health Insurance (“IHC”) Plans, benefits are covered for urgent care or emergency treatment at an out- of-network provider to the same extent as would have been provided if care and treatment were provided by an in-network provider. (Am. Compl. ¶¶82, 83; Jarosz Aff. ¶¶10, 13). Horizon has utterly failed to reimburse Plaintiffs in accordance with any of these Plan provisions. (Am. Compl. ¶¶98-105). Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 58 of 84 PageID: 1338 46 Moreover, according to Horizon, all of Horizon’s Plans except for its HMO plans provide out-of-network coverage in non-emergent (i.e., elective) situations. In those situations, the “Allowance” or “Allowed Charges” for out-of-network providers is calculated as follows: • For Indemnity Plans, the “Allowance” is a dollar amount Horizon determines to be “reasonable, customary and appropriate for Covered Services and Supplies unless required by law.” (Am. Compl. ¶80; Jarosz Aff. ¶5); • For MC Plans and many self-insured Plans administered by Horizon, the “Allowance” means the lesser of the provider’s (i) actual charges or (ii) a percentage of the rates of the Centers for Medicare & Medicaid Services (“CMS”), rates specified in databases developed by an outside company (FAIR Health, Inc.); or an amount “based on Horizon BCBSNJ’s usual and prevailing payments made to providers for similar services or supplies.” (Am. Compl. ¶¶81, 84; Jarosz Aff. ¶¶8, 15, & Exh. 1); • For SMG Plans, “Allowed Charge” is based on a standard approved by the New Jersey Small Employer Health Coverage Program Board, representing the “usual or customary charge for the service or supply as determined by [Carrier], based on a standard which is most often charged for a given service by a Provider within the same geographic area.” (Am. Compl. ¶82; N.J.S.A. 11:21-4.1; N.J.A.C. 11:21 Appx. Exh. F at 74); • For IHC Plans, “Allowed Charge” for out-of-network providers is based on a standard approved by the New Jersey Individual Health Coverage Program Board, which typically represents the amount “most often charged for a given service by a Provider within the same geographic area.” (Am. Compl. ¶83; N.J.A.C. 11:20-3A.3; N.J.A.C. 11:20 Appx. Exh. F at 23). Here, Plaintiffs’ charges reflect their usual and customary rates for the particular medical services provided, and are otherwise consistent with the standards applicable for elective out-of-network treatment. (Am. Compl. ¶¶8, 99). Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 59 of 84 PageID: 1339 47 As just noted, this rate is consistent with the rates specified in the applicable Plans. Thus, whether or not the treatment is for emergent/urgent or elective care, Plaintiffs sufficiently allege that Horizon’s Plans require payment of Plaintiffs’ full billed charges less applicable patient responsibility. C. To Protect Horizon Subscribers from Balance Bills, New Jersey Law Requires Horizon to Pay Plaintiffs their Billed Charges, Minus In- Network Patient Responsibility for Emergent and Urgent Care New Jersey regulations require insurance carriers to “reimburse hospitals and physicians for all medically necessary emergency and urgent health care services covered under the health benefits plan, including all tests necessary to determine the nature of an illness or injury, in accordance with the provider agreement when applicable.” N.J.A.C. 11:24-5.3. Further, New Jersey regulations also provide that patients have the right to “be free from balance billing by providers for medically necessary services that were authorized or covered by the HMO except as permitted for copayments, coinsurance and deductibles by contract.” N.J.A.C. 11:24-9.1(d)(9). Horizon argues that these regulations do not require a hospital to be reimbursed at a particular rate. (Db54). However, in In the Matter of Violations of the Laws of New Jersey by Aetna Health Inc., Order No. A07-59) (hereinafter “Aetna Order”) (annexed as Exh. D to the La Rocco Decl.), DOBI held that when a patient seeks emergency treatment with an out-of-network provider, the patient’s insurer “must pay the non-participating provider a benefit Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 60 of 84 PageID: 1340 48 large enough to insure that the non-participating provider does not balance bill the member for the difference between his billed charges and the Aetna payment, even if it means that [the insurer] must pay the provider’s billed charges less the member’s network copayment, coinsurance or deductible.” (Aetna Order at 3, ¶ 20) (emphasis added).11 Following the Aetna Order, the New Jersey Appellate Division, in Aetna Health Inc. v. Srinivasan, No. A-2035-14T2, 2016 N.J. Super. Unpub. LEXIS 1515 (App. Div. June 29, 2016), rejected an insurer’s claim seeking a declaratory judgment that it had no duty to pay an out-of-network provider its full billed charges less in-network patient cost sharing responsibility for emergency services. Id., *8. The Appellate Division noted that if the insurer did not wish to pay the out-of-network provider its full billed charges, “[a]s instructed by the DOBI [in the Aetna Order], Aetna may either negotiate with defendant to bring him in-network; negotiate with defendant to reach a settlement for a lesser amount, as other companies have done; or, if it feels the rates are an ethical issue, report the doctor 11 The matter was later resolved in a 2009 consent decree, which provides that “Aetna shall cease and desist from engaging in the conduct that gave rise to [the Aetna Order] and hereafter comply in all respects with New Jersey insurance laws and regulations.” (La Rocco Decl., Exh. E at 10). Aetna was ordered to reprocess the claims of all of the out-of-network providers found to have been adversely affected by Aetna’s unlawful conduct, and to pay the affected providers 12% interest on all amounts underpaid by Aetna. (Id. at 7-8). Aetna also was directed to pay a $2.5 million administrative penalty. (Id. at 9). Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 61 of 84 PageID: 1341 49 to the Board of Medical Examiners” under N.J.A.C. 13:35-6.11(a). Id., *10.12 D. Plaintiffs’ AOB Contracts with Horizon’s Subscribers Do Not Independently Protect Horizon’s Subscribers from Balance Bills Horizon seeks to avoid application of New Jersey’s coverage and payment mandates in emergency situations by arguing, in essence, that Plaintiffs’ AOB contracts with their patients independently protect Horizon’s subscribers from balance bills. (Db47-50). Specifically, Horizon maintains that Plaintiffs’ AOB contracts supposedly assign to Plaintiffs their patient’s rights in “all charges for services” rendered by Plaintiffs, and that Horizon’s members “have no further obligations to Plaintiffs” after assigning their benefits to Plaintiffs. (Db47-48). (emphasis in original). This argument seriously misconstrues the scope of 12 N.J.A.C. 13:35-6.11(a) is a regulation applicable to physicians authorizing the Board of Medical Examiners to review complaints alleging “excessive” fees by physicians. It does not apply to hospitals such as Plaintiffs. Importantly, and contrary to Horizon’s position (Db51-52), under New Jersey law, hospitals are permitted to set charges for various services and products as they see fit, N.J.S.A. 26:2H-18.51, and a court lacks authority to review and adjust a hospital’s set charges. DiCarlo v. St. Mary Hospital, 530 F.3d 255, 262 (3d Cir. 2008) (“a court could not possibly determine what a “reasonable charge” for hospital services would be without wading into the entire structure of providing hospital care and the means of dealing with hospital solvency”); Matter of Final Agency Decision by New Jersey Dept. of Health Regarding Utilization and Quality Review for Calendar Year 1993, 273 N.J. Super. 205, 226 (App. Div. 1994) (noting that the Health Care Reform Act of 1992 “deregulated the hospital rate-setting system and eliminated the [Diagnosis Related Group] methodology in favor of the demands of a competitive market”). And while Horizon points to the fact that the Court in Srinivasan upheld the jury’s determination that the physician was entitled to $2 million out of $8 million in billed charges” (Db54), the physician there was proceeding on an unjust enrichment theory, not as here, an assignee of benefits under a particular Plan. Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 62 of 84 PageID: 1342 50 Plaintiffs’ AOB contracts. The AOB contracts do not apply to “all charges for services,” but rather, to all “rights, benefits, privileges, protections, claims, causes of action, interests or recovery” arising out of “any policy of insurance, plan, trust, fund, or otherwise providing health care coverage of any type to me (or to any other third party responsible for me) for the charges for services rendered to me by the hospital.” (Am. Compl. ¶89) (emphasis added). Stated differently, the AOB Contracts assign to the CarePoint Hospitals the patients’ rights under the Plan. (Id.). If the Plan does not provide coverage, then the patient is legally responsible for the difference between Plaintiffs’ billed charges and the amounts that are payable under the Plan. The AOB contracts confirm this, expressly providing that the patient is responsible for the payment of deductibles, copayments, coinsurance, and other charges not covered by the assignment: I understand that I am financially and legally responsible for charges not covered in full by the assignment of benefits …, including, but not limited to, any deductibles, copayments, and coinsurance amounts provided under any coverage source; and charges for which there is no Coverage Source. (Am. Compl. ¶92). Consequently, nothing in the AOB contracts in any way limits Horizon’s obligation to protect its patients from balance bills in emergency/urgent situations as set forth in Part III.C, above. In order to comply with this obligation, Horizon must pay the CarePoint Hospitals for the difference between their billed charges Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 63 of 84 PageID: 1343 51 and the amounts Horizon’s Subscribers would have paid had they received treatment from an in-network facility for emergent/urgent treatment that the CarePoint Hospitals provide to Horizon Subscribers. (See Am. Compl. ¶93). E. Alleged Anti-Assignment Clauses Do Not Foreclose Plaintiffs’ Claims Horizon seeks to foreclose Plaintiffs’ ERISA claims by arguing that “several applicable Horizon plans” contain anti-assignment clauses. (Db43). Horizon’s reliance on these alleged anti-assignment clauses is wholly misplaced. 1. Anti-assignment clauses are now unenforceable in New Jersey At the outset, Horizon cites Somerset Orthopedic Assoc.’s, P.A. v. Horizon, 345 N.J. Super. 410, 415-18 (App. Div. 2001), for the proposition that anti- assignment clauses are favored under New Jersey law. (Db44). But Somerset has been supplanted by a 2011 New Jersey statute that now requires insurers to honor assignments of benefits: With respect to a carrier which offers a managed care plan that provides for both in-network and out-of-network benefits, in the event that the covered person assigns, through an assignment of benefits, his right to receive reimbursement for medically necessary health care services to an out-of-network health care provider, the carrier shall remit payment for the reimbursement directly to the health care provider in the form of a check payable to the health care provider, or in the alternative, to the health care provider and the covered person as joint payees, with a signature line for each of the payees. Payment shall be made in accordance with the provisions of this section and [N.J.S.A. 17B:30-23 et seq.]. Any payment made only to the covered person rather than the health care provider under these circumstances shall be considered unpaid, and unless remitted to the health care provider within the time frames established by [N.J.S.A. 17B:30-23 et Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 64 of 84 PageID: 1344 52 seq.], shall be considered overdue and subject to an interest charge as provided in that act. N.J.S.A. 26:2S-6.1(c) (emphasis added). This statute prevents enforcement of the anti-assignment clauses upon which Defendant relies as a matter of law. See New Jersey Dental Ass’n v. Horizon Blue Cross Blue Shield of N.J., No. A-4449-10T1, 2011 N.J. Super. Unpub. LEXIS 3076, * 7 (App. Div. Dec. 20, 2011) (“A fair reading of N.J.S.A. 26:2S-6.1(c) suggests that anti-assignment clauses in medical plans may not be enforced as a general matter”).13 Although ERISA preempts state laws relating to employee benefit plans, see 29 U.S.C. § 1144(a), it excludes state laws that “regulate insurance, banking, or securities” from the scope of its express preemption clause, see 29 U.S.C. § 1144(b)(2)(A), other than self-funded employee benefit plans. 29 U.S.C. § 1144(b)(2)(B). A state law regulates insurance if it is (1) “‘specifically directed towards entities engaged in insurance,” and (2) “substantially affect the risk pooling arrangement between the insurer and the insured.’” Levine v. United Healthcare Corp., 402 F.3d 156, 164-65 (3d Cir. 2005) (citing Kentucky Ass’n of Health Plans Inc. v. Miller, 538 U.S. 329, 341-42 (2003)). N.J.S.A. 26:2S-6.1(c) 13 The court in New Jersey Dental Ass’n held that this statute did not bar anti- assignment clauses under the facts of that case because another statute, N.J.S.A. 17:48E-10.2, specifically permitted anti-assignment clauses in the stand-alone dental plans provided by Horizon. 2011 N.J. Super. Unpub. LEXIS 3076, *7. The Plans at issue here, however, are not stand-alone dental plans. Thus, the general prohibition of anti-assignment clauses in medical plans applies here. See New Jersey Dental Ass’n, 2011 N.J. Super. Unpub. LEXIS 3076, *7. Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 65 of 84 PageID: 1345 53 satisfies both requirements and thus is excluded from ERISA preemption. By its terms, it is specifically addressed to “carriers” - i.e., insurance companies - that offer managed care plans providing in-network and out-of-network benefits. N.J.S.A. 26:2S-6.1(c). Thus, it is specifically addressed to entities engaged in insurance. Moreover, by invalidating anti-assignment clauses in health insurance plans, N.J.S.A. 26:2S-6.1(c) expands the number of providers that may assert valid claims for reimbursement against the insurance companies. Thus, it substantially affects the risk pooling agreement between insurer and insured. Cf. Miller, 538 U.S. at 338-39 (state statute prohibiting health insurer from discriminating against provider willing to meet insurer’s conditions for participation affects risk pooling arrangements “[b]y expanding the number of providers from whom an insured may receive health services”). Since the purported anti-assignment clauses here are invalid as a matter of New Jersey law, they cannot deprive Plaintiffs of standing to under ERISA other than claims arising exclusively under self-funded employee benefit plans. 29 U.S.C. § 1144(b)(2)(B). 2. Even if anti-assignment clauses were enforceable in New Jersey, Plaintiffs have sufficiently pled waiver What is more, to the extent that Horizon had valid anti-assignment provisions in any of its Plans, it has waived them. Under New Jersey law, an anti- assignment clause may be waived by a course of business dealing. Garden State Buildings v. First Fidelity Bank, 305 N.J. Super 510, 524 (App. Div. 1997) (“an Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 66 of 84 PageID: 1346 54 anti-assignment clause may be waived by a written instrument, a course of dealing, or even passive conduct, i.e., taking no action to invalidate the assignment vis-a-vis the assignee”). Likewise, anti-assignment clauses in ERISA plans can be waived by a course of business dealing. See, e.g., Premier Health Ctr., P.C. v. UnitedHealth Group, No. 11-425, 2012 U.S. Dist. LEXIS 44878, *22-23, *28 (D.N.J. Apr. 4, 2012) (holding that “Defendants have waived any right to enforce the anti-assignment provision,” and noting that “Defendants cannot act as though valid assignments exist through course of conduct and then challenge the assignment’s very existence in litigation,”); Gregory Surgical Serv., LLC v. Horizon Blue Cross Blue Shield of N.J., Inc., No. 06-0462, 2007 WL 4570323, *4 (D.N.J. Dec. 26, 2007) (course of dealing including “regular interaction between [insurer] and [provider] prior to and after claim forms are submitted, without mention of [insurer’s] invocation of the anti-assignment clause,” prevented defendant from relying on anti-assignment provisions); Ambulatory Surgical Center of N.J. v. Horizon Healthcare Services, Inc., 2008 U.S. Dist. LEXIS 13370, *8-9 (D.N.J. Feb. 21, 2008) (describing “an extensive course of dealings with [the insurer] that constitute[d] a waiver of the anti-assignment provision and estop[ped] [the insurer] from disavowing” plaintiff’s standing to pursue ERISA claims based on these assignment of benefits, including “patient coverage discussions under health care policies, direct submission of claim forms, direct reimbursement of Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 67 of 84 PageID: 1347 55 medical costs, and engagement in appeal processes”). Defendant’s reliance on Kaul v. Horizon Blue Cross Blue Shield, 2016 U.S. Dist. LEXIS 99322 (D.N.J. Jul. 29, 2016) and Advanced Orthopedics & Sports v. Blue Cross Blue Shield of Mass., 2015 U.S. Dist. LEXIS 93855 (D.N.J. Jul. 20, 2015), is misplaced, because these cases are distinguishable. In both cases, the plaintiffs argued that their plan’s anti-assignment clauses were waived through course of dealing, namely because they received direct reimbursement from the plan/insurer. See Kaul, 2016 U.S. Dist. LEXIS 99322, *7; Advanced Orthopedics & Sports, 2015 U.S. Dist. LEXIS 93855, *15. The Court in both cases held that a pleading of direct reimbursement was alone sufficient to demonstrate a course of dealing that amounted to a waiver of an anti-assignment clause. Id. Here, by contrast, Plaintiffs have pleaded ample facts to demonstrate that Horizon waived its alleged anti-assignment clauses through a course of dealing. Among other things, Plaintiffs submitted nearly 10,680 claims for medically necessary services provided to non-SHBP Horizon Subscribers directly to Horizon for reimbursement; Horizon provided direct reimbursement to Plaintiffs, albeit at rate substantially below the legally required or usual and customary rate for such services; providing written notification to the CarePoint Hospitals that Horizon denied coverage for emergency/urgent care patients while the patients were still in the hospitals receiving emergency/urgent care; sending formal correspondence to Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 68 of 84 PageID: 1348 56 the attending physician and CarePoint Hospital case management staff downgrading the patient’s emergency status without the attending physician’s input; advising in these downgrade letters that if the patient remains in the hospital, the patient’s treatment will only be covered at out-of-network rates and that the patient should be made aware that their patient responsibility would be substantially higher; and through the CarePoint Hospitals’ interactions with Horizon related to its reconsideration process. (Am. Compl. ¶¶99, 105, 107, 115- 17; 121-22; and 125-27). This course of conduct is inconsistent with the alleged anti-assignment provisions. At a minimum, whether Horizon has acted in a manner consistent with these provisions is a fact-sensitive inquiry that must await further discovery. Thus, Horizon may not now rely on its purported anti- assignment provisions to defeat Plaintiffs’ claims at the pleading stage. 3. Dismissal based on the purported existence of anti-assignment clauses in an unspecified “many” of Horizon’s plans is premature Horizon’s reliance on purported anti-assignment clauses fails for the further reason that it has not come forward with a single anti-assignment clause in any of its Plans related to the non-SHBP Horizon Subscribers. Instead, Horizon references several purported “sample” anti-assignment provisions it maintains prohibit Horizon Subscribers from assigning their rights and benefits to Plaintiffs. (Db45-46). However, in Exact Sciences Corp. v. Blue Cross Blue Shield of North Carolina, 1:16CV125, 2017 WL 1155807, *4 (M.D.N.C. Mar. 27, 2017), the Court Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 69 of 84 PageID: 1349 57 rejected the insurer’s reliance on “sample” anti-assignment clauses as a basis for dismissal at the pleading stage. The Court reasoned that because the anti- assignment clauses were admittedly only samples, and because discovery had not yet commenced, reliance on the samples would be inappropriate. Id., *4. The same reasoning applies here. Horizon cannot rely on “sample” anti-assignment clauses as a basis for dismissal of Plaintiffs’ claims at the pleading stage, before Plaintiffs have had the opportunity to obtain discovery regarding the terms of each of the Plans at issue. Moreover, all but one of the “sample” anti-assignment clauses identified by Horizon explicitly state that they can be waived with Horizon’s consent. (Db45). Plaintiffs plausibly allege that Horizon has consented to the assignment in this case through an extended course of dealing discussed more fully above, including Defendant’s direct communication and correspondence with the CarePoint Hospitals and physicians through their emergency/urgent treatment denials, downgrades and reconsideration processes, and refusal to correct EOBs after the CarePoint Hospitals balance bill patients, without reliance on any purported anti- assignment clause. (Am. Compl. ¶96). For this additional reason, reliance on the “sample” anti-assignment clauses is inappropriate. E. Plaintiffs Plead a Viable ERISA Breach of Fiduciary Duty Claim in Count Two Horizon argues that Plaintiffs cannot state a viable equitable claim for relief Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 70 of 84 PageID: 1350 58 under ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3), because they have an adequate remedy on their denial of benefits claim under ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B). (Db55-58). In Varity Corp. v. Howe, 516 U.S. 489 (1996), the Supreme Court held that an ERISA beneficiary could pursue a breach of fiduciary duty claim for appropriate equitable relief under Section 502(a)(3). Varity, 516 U.S. at 507-15. Section 502(a)(3) authorizes a civil action “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.” 29 U.S.C. § 1132(a)(3). The plaintiffs in Varity alleged breaches of fiduciary duties in violation of ERISA Section 404, 29 U.S.C. § 1104(a)(1)(A). The Varity Court noted that the words of Section 502(b)(3) - “appropriate equitable relief” to “redress” any “act or practice which violates any provision of this title” - “are broad enough to cover individual relief for breach of a fiduciary obligation.” Varity, 516 U.S. at 510. The Court further reasoned that ERISA’s “basic purpose favors a reading of [Section 502(a)(3)] that provides plaintiffs with a remedy.” Varity, 516 U.S. at 513. The Court noted that the statute itself provides that it seeks “‘to protect … the interests of participants ... and ... beneficiaries ... by establishing standards of conduct, responsibility, and obligation for fiduciaries ... and ... providing for Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 71 of 84 PageID: 1351 59 appropriate remedies ... and ready access to the Federal courts.’” Id. (quoting 29 U.S.C. § 1001(b)). The Court added that “Section 404(a), in furtherance of this general objective, requires fiduciaries to discharge their duties ‘solely in the interest of the participants and beneficiaries.’” Id. (quoting 29 U.S.C. § 1104(a)). The Court concluded, “[g]iven these objectives, it is hard to imagine why Congress would want to immunize breaches of fiduciary obligations that harm individuals by denying injured beneficiaries a remedy.” Id.; accord HUMC Opco LLC v. United Benefit Fund, Civ. No. 16-168, 2016 WL 6634878, at 7 (D.N.J. Nov. 7, 2016) (holding that Varity does not preclude the assertion of alternative claims or require dismissal at the Rule 12(b)(6) stage of duplicative claims under ERISA §§ 502(a)(1)(B) and 502(a)(3), and noting that “[t]his claim of redundancy may be dealt with more soundly on a developed factual record, whether on summary judgment or in connection with focusing the issues preliminary to trial”); see also Shah v. Horizon Blue Cross Blue Shield, Civ. No. 15-8590, 2016 WL 4499551, *10 (D.N.J. Aug. 25, 2016) (same). Here, Plaintiffs allege that Horizon owed fiduciary duties to Plaintiffs as an assignee of the Horizon Subscribers’ rights under the Plan.14 Plaintiffs further allege that Horizon breached its fiduciary duties to Plaintiffs under ERISA Section 14 A health care provider with a valid AOB stands in the shoes of the beneficiary and may assert ERISA claims against plan fiduciaries. Hahnemann Univ. Hosp. v. All Shore, Inc., 514 F.3d 300, 310 (3d Cir. 2008). Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 72 of 84 PageID: 1352 60 404 by, among other things: refusing to make out-of-network payments for hospital services provided at the CarePoint Hospitals for Horizon’s own benefit and at the expense of Horizon Subscribers and failing to inform the CarePoint Hospitals, as assignees of the Horizon Subscribers, of information material to the claims and Horizon’s handling of the claims. (Am. Compl. ¶¶343). Plaintiffs seek a judgment declaring that Horizon violated Section 404 and “awarding injunctive, declaratory and other equitable relief to ensure compliance with ERISA.” (Id., Prayer for Relief, ¶C). Consistent with Varity, HUMC and Shah, Plaintiffs may, at this stage of the litigation, pursue individual claims for appropriate equitable relief against ERISA fiduciaries to redress Section 404 violations under the catchall remedial provision of Section 502(a)(3). G. Plaintiffs Plead a Viable Claim in Count Three based on Horizon’s Failure to Provide a Full and Fair Review The Court should also deny Horizon’s motion to dismiss Plaintiffs’ claim in Count Three, alleging that Horizon violated ERISA Section 503. Section 503 requires every employee benefit plan, inter alia, to “afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim.” 29 U.S.C. § 1133(2). Plaintiffs allege a series of actions by Defendant in violation of this duty. (Am. Compl. ¶348). Defendant argues that Section 503 does not provide an independent cause of action. (Motion at 58-59). However, consistent Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 73 of 84 PageID: 1353 61 with Varity’s rationale, Plaintiffs may pursue a claim for appropriate equitable relief to redress Section 503 violations through the catchall remedial provision of Section 502(a)(3). See Varity, 516 U.S. at 512 (noting that ERISA Sections 502(a)(3) and 502(a)(5) create “two ‘catchalls,’ providing ‘appropriate equitable relief’ for ‘any’ statutory violation”). See also HUMC, 2016 WL 6634878, *4 (“I do not read Count III as attempting to assert a right of action under ERISA § 503 as such. It does allege that § 503 is the source of the duty to provide full and fair review.... The actual claim, however, is asserted under the catchall civil enforcement provision, ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3). I cannot say at this stage that such a theory is precluded as a matter of law.”). Plaintiffs’ claim in Count Three seeks equitable relief to remedy Horizon’s violations of Section 503. (Am. Compl. ¶348, Prayer for Relief, ¶B). Under Varity, this is appropriate. To the extent that Horizon also argues that Plaintiffs should not be permitted to invoke Section 502(a)(3) to redress Horizon’s violations of Section 503 because such a claim would duplicate Plaintiffs’ denial of benefits claim in Count One under ERISA Section 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), Plaintiffs again pleaded this claim in the alternative to account for the scenario in which Horizon may contend that it is not liable for unpaid or underpaid benefits under ERISA § 502(a)(1)(B) because it does not sponsor a particular self-funded plan. See HUMC, 2016 WL 6634878, *4 (refusing to prematurely limit the scope of Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 74 of 84 PageID: 1354 62 available relief by dismissing HUMC’s denial of full and fair review claim at the pleading stage without further discovery or finding of liability). Accordingly, Horizon’s motion to dismiss Plaintiffs’ denial of full and fair review claim should be denied.15 POINT FOUR PLAINTIFFS SUFFICIENTLY PLEAD THEIR COMMON LAW CLAIMS A. Plaintiffs Sufficiently Plead a Common Law Claim for Breach of the Covenant of Good Faith and Fair Dealing Next, Horizon alleges that Plaintiffs have not sufficiently pled their state law claim in Count Eight for breach of the implied covenant of good faith and fair dealing. (Db60-62). This argument also fails. In New Jersey, the covenant of good faith and fair dealing is implied in all contracts and mandates that “neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract.” Sons of Thunder v. Borden, Inc., 148 N.J. 396, 420 (1997). The guiding principle in the application of the implied covenant of good faith and fair dealing emanates from the fundamental notion that a party to a contract may not unreasonably frustrate its purpose. 15 Horizon claims that Plaintiffs’ prayer for relief improperly seeks “compensatory, consequential, and exemplary damages [that] are unavailable under § 502(a) of ERISA.” (Db60). However, such damages are available, inter alia, on Plaintiffs’ state law claim for breach of fiduciary duty. Vibra-Tech Eng'rs, Inc. v. Kavalek, 849 F. Supp. 2d 462, 499 (D.N.J. 2012) (punitive damages are available under New Jersey law for breach of fiduciary duty, among other tort claims). Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 75 of 84 PageID: 1355 63 Seidenberg v. Summit Bank, 348 N.J. Super. 243, 257 (App. Div. 2002). Citing Wade v. Kessler Institute, 172 N.J. 327 (2002), Horizon argues that “a breach of the implied covenant of good faith and fair dealing does not offer a cause of action separate from a breach of contract claim.” (Db61). That is not what Wade held. Rather, Wade held that “[a] breach of the implied covenant of good faith and fair dealing differs from a ‘literal violation of a contract.’” Wade, 172 N.J. at 340 (quoting Bak-A-Lum Corp. v. Alcoa Bldg. Prod., 69 N.J. 123, 130 (1976)). The Court in Wade added that “‘[a]lthough the implied covenant of good faith and fair dealing cannot override an express term in a contract, a party’s performance under a contract may breach that implied covenant even though that performance does not violate a pertinent express term.’” Wade, 172 N.J. at 341 (quoting Wilson v. Amerada Hess Corp., 168 N.J. 236, 244 (2001)). Here, Plaintiffs allege many ways in which Horizon breached the implied covenant of good faith and fair dealing, including by using arbitrary reimbursement methodologies, providing patently inadequate explanations for its underpayments, and other bad faith claims handling and processing practices. (Am. Compl. ¶397). Horizon further argues that “Plaintiffs do not plead facts to support any allegation that Horizon had a bad motive or ill will towards them.” (Db62). To the contrary, the Amended Complaint is replete with allegations demonstrating Horizon’s bad faith and ill will toward Plaintiffs. (See, e.g., Am. Compl. ¶¶15, 16, Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 76 of 84 PageID: 1356 64 17, 170, 185-320). Thus, Plaintiffs sufficiently plead their claim for breach of the implied covenant of good faith and fair dealing. B. Plaintiffs Plead Viable Claims for Declaratory and Injunctive Relief Moreover, Plaintiffs sufficiently plead claims in Counts Nine and Thirteen for declaratory and injunctive relief, respectively. Horizon argues that Plaintiffs’ declaratory judgment claim fails because they seek to redress past wrongs, and that the relief sought is available through its other causes of action. (Db62). However, “simply because additional recovery would likely flow to [the plaintiff] as a result of a declaration in her favor does not preclude applicability of the [Declaratory Judgment Act (‘DJA’)].” Reifer v. Westport Ins. Corp., 751 F.3d 129, 136-137 (3d Cir. 2014). Importantly, “Courts ‘may’ grant declaratory judgments ‘whether or not further relief is or could be sought.’” Id. (quoting 28 U.S.C. § 2201(a)). Moreover, district courts have “unique and substantial discretion” in deciding whether to declare the rights of litigants, because “the district court is presented with facts during the litigation that indicate whether a declaratory judgment will be a useful remedy and whether the case is fit for resolution.” McGee v. Cont’l Tire N. Am., Inc., 2007 U.S. Dist. LEXIS 62869, *13 (D.N.J. Aug. 27, 2007). Accordingly, dismissal of Plaintiffs’ declaratory judgment claim at the early stages of this litigation, before the Court is presented with a developed factual record, would be premature. See id. (“The Court concludes that dismissal of the Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 77 of 84 PageID: 1357 65 declaratory judgment claim would be inappropriate at this early stage in the litigation.”). For similar reasons, the Court should not dismiss Plaintiffs’ claim for injunctive relief at this time. Plaintiffs seek injunctive relief in Count thirteen as an ancillary remedy for its DJA claim. (Am. Compl. ¶¶429-32). As Plaintiffs allege, “[a] monetary judgment in this case will only compensate the CarePoint Hospitals for past losses, and will not stop Horizon from continuing to confiscate the money earned by the CarePoint Hospitals and necessary to maintain their medical facilities.” (Id. ¶432). Under these circumstances, dismissal of Plaintiffs’ claim for injunctive relief in Count Thirteen would be premature and inappropriate. Cf. First Choice Fed. Credit Union v. Wendy’s Co., 2017 U.S. Dist. LEXIS 20754, *16-17 (W.D. Pa. Feb. 13, 2017) (As to the injunctive relief sought, Plaintiffs assert that they are seeking injunctive relief as an ancillary remedy under the Declaratory Judgment Act and that they do lack an adequate remedy at law…. At this early stage of this litigation and based on these allegations, the Court is not inclined to foreclose injunctive relief as a possible remedy”). C. Plaintiffs Plead a Viable State Law Claim for Breach of Fiduciary Duty Next, Horizon argues that Plaintiffs cannot plead a viable fiduciary duty claim in Count Ten (Db64-66), but this argument also fails. Under New Jersey law, “[a] fiduciary relationship arises between two persons when one person is Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 78 of 84 PageID: 1358 66 under a duty to act for or give advice for the benefit of another on matters within the scope of their relationship.” F.G. v. MacDonell, 150 N.J. 550, 563-64 (1997). The essence of a fiduciary relationship is that one party places trust and confidence in the other party, and the second party is in a dominant or superior position. McKelvey v. Pierce, 173 N.J. 26, 57 (2002). Horizon argues that “Plaintiffs offer no facts to support the existence of a fiduciary relationship.” (Db65). To the contrary, Plaintiffs allege that “Horizon acted as the Plan administrator and as fiduciary to the Horizon Subscribers for each of the claims at issue in this case, and that it exercised discretion, authority, control and oversight in determining if Plan benefits would be paid and the amounts of Plan benefits that would be paid.” (Am. Compl. ¶114). Horizon further argues that Plaintiffs fail to sufficiently allege a breach of the fiduciary relationship. (Db65). To the contrary, Plaintiffs allege that Horizon breached the fiduciary relationship in numerous ways, including, inter alia, by acting in Horizon’s self-interest at the expense of Horizon Subscribers; by failing to inform the CarePoint Hospitals, as assignees of the Horizon Subscribers, of information material to the claims and Horizon’s handling of the claims; and by engaging in other improper conduct designed to delay payment and avoid its obligations under the Plans and New Jersey Emergency care mandates. (Am. Compl. ¶¶115-43, 343, 415). Dismissal of this claim is also unwarranted. Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 79 of 84 PageID: 1359 67 D. Plaintiffs Plead a Viable State Law Promissory Estoppel Claim Nor is there a basis for dismissal of Plaintiffs’ promissory estoppel claim in Count Twelve of the Amended Complaint, as Horizon argues. (Db67-68). To establish such a claim, a Plaintiff must establish: (1) a clear and definite promise; (2) made with the expectation that the promisee would rely upon it; (3) reasonable reliance; and (4) definite and substantial detriment. Toll Bros., Inc. v. Board of Chosen Freeholders of County of Burlington, 194 N.J. 223, 253 (2008). The Amended Complaint pleads such elements here. Specifically, Plaintiffs allege that Horizon represented to the CarePoint Hospitals that the medical treatment sought by the Horizon Subscribers as patients at the CarePoint Hospitals were covered procedures under the Plans, and that the fees associated with that treatment were covered charges under the Plans. (Am. Compl. ¶423). Plaintiffs further allege that the CarePoint Hospitals reasonably understood that some payment would be forthcoming for the hospital services provided at the CarePoint Hospitals related to these procedures. (Id.). Moreover, the reliance was reasonable, in that Horizon’s representations were made in the context of telephone calls from the CarePoint Hospitals’ billing agents to verify, confirm, and pre-certify coverage prior to the hospital services being provided, and there was no ability for the CarePoint Hospitals to learn, separate and apart from Horizon’s representations, whether Horizon considered the fees related to these hospital Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 80 of 84 PageID: 1360 68 services to be covered charges under the relevant Plans. (Id. ¶426). Finally, the reliance has been to Plaintiffs’ detriment, in that Plaintiffs have not been paid or been substantially underpaid for the services Plaintiffs provided to Horizon Subscribers. (Am. Compl. ¶¶424, 425, 428). Horizon maintains that the promissory estoppel claim is deficient because the doctrine of promissory estoppel is a theory of quasi-contract that is only available where no valid contract exists to enforce the promise. (Db67). But Plaintiffs may properly plead such a claim in the alternative to their breach of contract claim to the extent that the Plaintiffs may not be recognized as the assignees and/or the contract claims are not cognizable. See Broad St. Surgical Ctr., LLC v. UnitedHealth Group, Inc., 2012 U.S. Dist. LEXIS 30466, *24-26 (D.N.J. Mar. 6, 2012) (holding that health care provider may plead promissory estoppel claim as an alternative to its claim as assignee of patients’ plan benefits) (citing Fed. R. Civ. P. 8(d)(3)). Horizon further argues that “Plaintiffs fail to sufficiently allege that Horizon made express promises regarding the amount of reimbursement it would provide in exchange for care rendered to particular Horizon members and that Plaintiffs relied on such promises to their detriment.” (Db68). But that is exactly what Plaintiffs allege in the Amended Complaint. (See, e.g., Am. Compl. ¶¶422-28); cf. Broad St., 2012 U.S. Dist. LEXIS 30466, *25. Thus, Plaintiffs sufficiently state their promissory estoppel claim. Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 81 of 84 PageID: 1361 69 E. ERISA Preemption Does Not Bar Plaintiffs Claims for Promissory Estoppel or for Injunctive Relief Finally, Horizon wrongly argues that ERISA preemption bars Plaintiffs’ claims in Count Twelve and Thirteen, for promissory estoppel and injunctive relief, respectively, insofar as they are directed against ERISA plans. (Db69-70). ERISA preemption does not apply to Plaintiffs’ promissory estoppel claim in Count Twelve because it is premised on a legal duty wholly independent of ERISA. Jewish Lifeline Network, Inc. v. Oxford Health Plans (NJ), Inc., 2015 U.S. Dist. LEXIS 64297, *11 (D.N.J. May 18, 2015) (finding that “ERISA does not preempt Plaintiff’s claims” because “[a]t the heart of Plaintiff's state-law claims is an allegation that Defendant must pay for the costs of [emergency treatment]; not because the … Plan or ERISA require Defendant to do so, but because Defendant promised that it would”). And ERISA preemption does not apply to Plaintiffs’ claim for injunctive relief in Count Thirteen because injunctive relief is available under ERISA. Pell v. E. I. DuPont De Nemours & Co., 539 F.3d 292, 307 (3d Cir. 2008) (forward looking injunction entitling the plaintiff to an amount of money that cannot be calculated with specificity “is an equitable remedy that is permissible under ERISA”).16 16 Upon consideration of Horizon’s motion, Plaintiffs have determined that their quantum meruit claim in Count Eleven should be withdrawn. Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 82 of 84 PageID: 1362 70 POINT FIVE IF THE AMENDED COMPLAINT IS DEEMED INSUFFICIENTLY PLED, THE COURT SHOULD GRANT PLAINTIFFS’ CROSS-MOTION FOR LEAVE TO FILE A SECOND AMENDED COMPLAINT If the Court finds that Plaintiffs have not sufficiently pled their claims, there is no basis to dismiss them with prejudice as Horizon requests. (Db70). The Third Circuit has held that “if a complaint is subject to a Rule 12(b)(6) dismissal, a district court must permit a curative amendment unless such an amendment would be inequitable or futile.” Phillips, 515 F.3d at 245 (3d Cir. 2008). A curative amendment would be neither inequitable nor futile here. The case is in the early pleading stage and, as detailed in Points I-IV above, Plaintiffs plead viable legal theories against Horizon. Thus, if the Amended Complaint is deemed insufficient, leave to file a curative amendment would certainly be appropriate. Out of an abundance of caution, Plaintiffs include with these papers their proposed Second Amended Complaint, detailing additional factual allegations in support of their claims. (See La Rocco Decl., Exhs. A (redlined version) and B (clean version)). CONCLUSION For the foregoing reasons, Plaintiffs respectfully request that the Court deny Horizon’s motion to dismiss in its entirety, and grant Plaintiffs’ cross-motion for leave to file a Second Amended Complaint. Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 83 of 84 PageID: 1363 71 Respectfully submitted, K&L GATES LLP One Newark Center, Tenth Floor Newark, New Jersey 07102 Tel: (973) 848-4000 Fax: (973) 848-4001 Attorneys for Plaintiffs By: /s/ Anthony P. La Rocco____ Anthony P. La Rocco Dated: May 1, 2017 Case 2:16-cv-05922-JMV-JBC Document 31 Filed 05/01/17 Page 84 of 84 PageID: 1364 K&L GATES LLP One Newark Center, Tenth Floor Newark, New Jersey 07102 Tel: (973) 848-4000 Fax: (973) 848-4001 Attorneys for Plaintiffs Hudson Hospital OPCO, LLC--d/b/a CarePoint Health--Christ Hospital, IJKG, LLC, PROPCO LLC and IJKG OPCO LLC d/b/a CarePoint Health--Bayonne Medical Center, and HUMC OPCO LLC d/b/a CarePoint Health--Hoboken University Medical Center UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY HUDSON HOSPITAL OPCO, LLC--d/b/a CAREPOINT HEALTH--CHRIST HOSPITAL, IJKG, LLC, IJKG PROPCO LLC and IJKG OPCO LLC d/b/a CAREPOINT HEALTH--BAYONNE MEDICAL CENTER, and HUMC OPCO LLC d/b/a CAREPOINT HEALTH--HOBOKEN UNIVERSITY MEDICAL CENTER, Plaintiffs, v. HORIZON HEALTHCARE SERVICES, INC. d/b/a HORIZON BLUE CROSS BLUE SHIELD OF NEW JERSEY, Defendant. Civil Action No.: 2:16-cv-5922 Honorable John Michael Vazquez, U.S.D.J. Honorable Judge James B. Clark, U.S.M.J. Document Filed Electronically DECLARATION OF ANTHONY P. LA ROCCO I, ANTHONY P. LA ROCCO, declare under penalty of perjury as follows: 1. I am an attorney admitted to practice law in this Court and a member of the law firm of K&L Gates LLP, attorneys for Hudson Hospital Opco, LLC-- Case 2:16-cv-05922-JMV-JBC Document 31-1 Filed 05/01/17 Page 1 of 3 PageID: 1365 - 2 - d/b/a CarePoint Health--Christ Hospital, IJKG, LLC, IJKG Propco LLC and IJKG Opco LLC d/b/a CarePoint Health--Bayonne Medical Center, and HUMC Opco LLC d/b/a CarePoint Health--Hoboken University Medical Center (the “CarePoint Hospitals”). I have personal knowledge of the facts set forth herein and submit this Declaration in opposition to the Motion of Defendant Horizon Healthcare Services, Inc. (“Horizon” or “Defendant”) to Dismiss Plaintiffs’ First Amended Complaint, and in support of Plaintiffs’ Cross-Motion for Leave to File a Second Amended Complaint. 2. Annexed hereto as Exhibit A is a true copy of a “redlined” version of Plaintiffs’ proposed Second Amended Complaint, showing the proposed changes from the Amended Complaint. 3. Annexed hereto as Exhibit B is a true copy of a “clean” version of Plaintiffs’ proposed Second Amended Complaint. 4. Annexed hereto as Exhibit C is a true copy of the Court’s order dated October 19, 2012, in IJKG OPCO LLC v. EmblemHealth, Inc., No. 2:12-cv-02032, ECF No. 20 (D.N.J. Oct. 19, 2012), cited in Plaintiffs’ brief in opposition to Defendant’s Motion to Dismiss. 5. Attached hereto as Exhibit D is a true copy of an order of the New Jersey Department of Banking and Insurance (“DOBI”) dated July 23, 2007, entitled, In the Matter of Violations of the Laws of New Jersey by Aetna Health Case 2:16-cv-05922-JMV-JBC Document 31-1 Filed 05/01/17 Page 2 of 3 PageID: 1366 - 3 - Inc., Order No. A07-59, cited in Plaintiffs’ brief in opposition to Defendant’s Motion to Dismiss. 6. Attached hereto as Exhibit E is a true copy of a Settlement Agreement and Consent Order, dated March 25, 2009, in In the Matter of Violations of the Laws of New Jersey by Aetna Health Inc., Consent Order No. 09- 14, cited in Plaintiffs’ brief in opposition to Defendant’s Motion to Dismiss. I declare under penalty of perjury that the foregoing statements are true and correct to the best of my knowledge and belief. Respectfully submitted, K&L GATES LLP By: s/Anthony P. La Rocco Anthony P. La Rocco One Newark Center - Tenth Floor Newark, New Jersey 07102 (973) 848-4000 anthony.larocco@klgates.com Attorneys for Plaintiffs Hudson Hospital OPCO, LLC--d/b/a CarePoint Health--Christ Hospital, IJKG, LLC, PROPCO LLC and IJKG OPCO LLC d/b/a CarePoint Health--Bayonne Medical Center, and HUMC OPCO LLC d/b/a CarePoint Health--Hoboken University Medical Center Dated: May 1, 2017 Case 2:16-cv-05922-JMV-JBC Document 31-1 Filed 05/01/17 Page 3 of 3 PageID: 1367 EXHIBIT A Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 1 of 156 PageID: 1368 K&L GATES LLP One Newark Center, Tenth Floor Newark, New Jersey 07102 Tel: (973) 848-4000 Fax: (973) 848-4001 Attorneys for Plaintiffs Hudson Hospital OPCO, LLC, d/b/a CarePoint Health-Christ Hospital; IJKG, LLC, IJKG PROPCO LLC and IJKG OPCO LLC, d/b/a CarePoint Health- Bayonne Medical Center; and HUMC OPCO LLC, d/b/a CarePoint Health- Hoboken University Medical Center UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY HUDSON HOSPITAL OPCO, LLC-d/b/a CAREPOINT HEALTH-CHRIST HOSPITAL, IJKG, LLC, IJKG PROPCO LLC and IJKG OPCO LLC d/b/a CAREPOINT HEALTH-BAYONNE MEDICAL CENTER, and HUMC OPCO LLC d/b/a CAREPOINT HEALTH- HOBOKEN UNIVERSITY MEDICAL CENTER, Plaintiffs, v. HORIZON HEALTHCARE SERVICES, INC. d/b/a HORIZON BLUE CROSS BLUE SHIELD OF NEW JERSEY, Defendant. Hon. John Michael Vazquez, U.S.D.J. Hon. James B. Clark, III, U.S.M.J. Civil Action No. 2:16-cv-05922-JMV-JBC FIRST[PROPOSED] SECOND AMENDED COMPLAINT AND JURY DEMAND Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 2 of 156 PageID: 1369 TABLE OF CONTENTS NATURE OF THE CLAIMS .................................................................................... 1 Overview of Underpayment Claims ................................................................ 2 Overview of RICO Claims .............................................................................. 6 THE PARTIES ....................................................................................................... 910 JURISDICTION AND VENUE ............................................................ 11 FACTUAL ALLEGATIONS .......................................................................... 12 I. Horizon Underpays the CarePoint Hospitals in Violation of Federal and State Law ................................................................................................ 12 A. The CarePoint Hospitals ...................................................................... 12 B. The CarePoint Hospitals’ Out-of-Network Status .............................. 17 C. The CarePoint Hospitals’ Out-of-Network Status is Well Known to Patients and the Public .................................................................... 22 D. New Jersey’s Coverage and Payment Mandates ................................. 22 E. Horizon Subscribers Regularly Seek Treatment at the CarePoint Hospitals, for which Horizon Must Pay Plaintiffs under the Terms of its Plans and State Emergency Care Mandates ............................... 25 F. The CarePoint Hospitals Receive Complete Assignments of Benefits under Horizon Plans for Treatment Provided to Horizon Subscribers ............................................................................ 29 G. Horizon Drastically and Unlawfully Underpays the CarePoint Hospitals’ Claims ................................................................................ 34 H. Horizon Violates the Terms of the Applicable Plans and the Emergency Care Mandate ................................................................... 37 Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 3 of 156 PageID: 1370 - ii - I. Other Improper Actions by Horizon to Delay Payment and/or Refuse to Comply With its Obligations Under the Plans and the Emergency Care Mandates ................................................................................. 4041 1. In-Hospital Denials and Downgrades .................................. 4041 2. Refusing to Make Direct Payments to the CarePoint Hospitals and Refusing to Provide Claims Information ....................... 4344 3. Issuing and Refusing to Correct Erroneous EOBs or Process Appeals ...................................................................................... 45 4. Patient Intimidation and After-the-Fact Patient Steering ........ 48 J. The CarePoint Hospitals Exhaust Available Internal Appeals Remedies ......................................................................................... 4749 II. Horizon’s Multiple RICO Violations ........................................................ 5153 A. Overview ......................................................................................... 5153 B. The RICO Enterprises ..................................................................... 5355 1. The Network Enterprise ........................................................ 5355 2. The OMNIA Tier 1 Enterprise .............................................. 5658 3. The Horizon-Barnabas Enterprise ............................................ 61 C. Horizon’s Pattern of Racketeering Activity .................................... 5966 1. Relatedness ............................................................................ 6067 2. Continuity .............................................................................. 6169 D. The Schemes to Defraud ................................................................. 6270 E. Horizon Repeatedly Uses the Mails and Wires in Furtherance of its Schemes to Defraud......................................................................... 6573 Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 4 of 156 PageID: 1371 - iii - 1. 2009 - BMC leaves Horizon’s network and Horizon begins its campaign of mail and wire fraud against BMC ................... 6573 2. 2009-11 - Horizon commences the 2009 Lawsuit and continues its mail and wire fraud campaign ......................... 6876 3. 2011-15 - Horizon’s case is dismissed and Plaintiffs join Horizon’s network ................................................................. 7077 4. 2015-present - the mail and wire fraud resumes ............... 7178 a. Bad faith negotiations with and disparaging online statements about Christ Hospital ............................... 7179 b. Disparaging online articles accusing BMC of “price gouging” ..................................................................... 7482 c. Bad faith negotiations with and further disparaging statements about BMC and HUMC ............................ 7684 5. Horizon secretly develops the OMNIA Tier 1 Enterprise ..... 7987 6. Horizon targets a physician group affiliated with Plaintiffs 72101 7. 2017- Horizon’s blacklisting of Plaintiffs, ongoing illegal pre- authorization denials, and related disparagement ............. 93102 8. Other uses of the mails and wires in furtherance of their fraudulent schemes .............................................................. 95104 FF. Additional Motivation for Horizon’s Misconduct ....................................... 105 G. Horizon Conspires with Tier 1 Providers to Accomplish its Goals ........ 96107 GH. The Effects of Horizon’s Conduct ......................................................... 103113 CAUSES OF ACTION .................................................................................... 104115 Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 5 of 156 PageID: 1372 - iv - COUNT ONE (Breach of Plan Provisions for Benefits in Violation of ERISA § 502(a)(1)(B)) ................................................................ 104115 COUNT TWO (Breach of Fiduciary Duties of Loyalty and Due Care in Violation of ERISA) ............................................................ 107117 COUNT THREE (Denial of Full and Fair Review in Violation of ERISA § 503) ......................................................................... 109119 COUNT FOUR (Violation of 18 U.S.C. §1962(c)) ................................................................... 111121 COUNT FIVE (Violation of 18 U.S.C. § 1962(d) by conspiring to violate 18 U.S.C. § 1962(c)) ............................................................................ 114125 COUNT SIX (Violation of 18 U.S.C. § 1962(d) by conspiring to violate 18 U.S.C. § 1962(b)) ............................................................................ 116127 COUNT SEVEN (Breach of Contract - non-ERISA).................................................................. 119130 COUNT EIGHT (Breach of the Duty of Good Faith and Fair Dealing - non-ERISA) ............................................................................. 120132 COUNT NINE (Declaratory Judgment - 28 U.S.C. § 2201) .................................................... 123134 COUNT TEN (Breach of Fiduciary Duty - non-ERISA) ....................................................... 125136 COUNT ELEVEN (Quantum Meruit) .................................................................................................. 127 COUNT TWELVE ELEVEN Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 6 of 156 PageID: 1373 - v - (Promissory Estoppel)........................................................................................... 128 COUNT THIRTEEN TWELVE (Temporary and Permanent Injunctive Relief) ....................................... 129140 CONDITIONS PRECEDENT ................................................................ 130141 JURY DEMAND ............................................................................................ 130141 PRAYER FOR RELIEF ........................................................................ 130141 CERTIFICATION OF SERVICE ......................................................... 134145 Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 7 of 156 PageID: 1374 FIRST SECOND AMENDED COMPLAINT AND JURY DEMAND Plaintiffs Hudson Hospital OPCO, LLC d/b/a CarePoint Health-Christ Hospital (“Christ Hospital”), IJKG, LLC, PROPCO LLC and IJKG OPCO LLC d/b/a CarePoint Health-Bayonne Medical Center (collectively, “BMC”) and HUMC OPCO LLC d/b/a CarePoint Health-Hoboken University Medical Center (“HUMC”) (all plaintiffs collectively, “Plaintiffs” or the “CarePoint Hospitals”), by and through their attorneys, K&L Gates LLP, for their FirstSecond Amended Complaint against defendant, Horizon Healthcare Services, Inc. d/b/a Horizon Blue Cross Blue Shield of New Jersey (“Horizon”), allege as follows: NATURE OF THE CLAIMS 1. This is an action under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq., and state law, based on Horizon failure and ongoing refusal to pay in full for health care services that the CarePoint Hospitals provided to patients covered by the Plans provided or administered by Horizon (“Horizon Subscribers”). 2. This is also an action under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1968 (“RICO”), based, inter alia, on Horizon’s operation and maintenance of its network of participating providers and subnetworks - including, most recently, the Tier 1 providers of its so-called “OMNIA” plan - through a pattern of racketeering activity. The pattern of Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 8 of 156 PageID: 1375 - 2 - racketeering activity, described more fully below, involves Horizon’s repeated and continuous use of the mails and wires in furtherance of multiple schemes to defraud. Overview of Underpayment Claims 3. The CarePoint Hospitals’ claims arise in part from Horizon’s intentional and unlawful pattern of drastically underpaying and/or refusing to pay the CarePoint Hospitals for claims submitted to Horizon for medical treatment provided to patients when the CarePoint Hospital was out-of-network with Horizon. 4. From June 1, 2015, through January 31, 2017, Horizon has underpaid the CarePoint Hospitals by at least one hundred twenty five million nine hundred seventy-five thousand seven hundred fifty-three and 06/100 dollars ($125,975,753.06) on Plaintiffs’ claims for emergency and elective treatment, excluding claims under the New Jersey State Health Benefit Plan (“SHBP”). 5. Horizon provides health care insurance, administration, and/or benefits to insureds or plan participants pursuant to a variety of health care benefit plans and policies of insurance, including employer-sponsored benefit plans and individual health benefit plans (“Plans”). Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 9 of 156 PageID: 1376 - 3 - 6. As shown further below, in violation of its duties under ERISA and state law, Horizon has failed and refused to pay in full for health care services that the CarePoint Hospitals provided to Horizon Subscribers. 7. Specifically, the CarePoint Hospitals provided hospital services in connection with ten thousand six hundred eighty (10,680) patient visits by non- SHBP Horizon Subscribers as follows: a. During the period from June 1, 2015, to January 31, 2017, Christ Hospital provided hospital services relating to approximately five thousand five hundred ninety (5,590) patient visits by non-SHBP Horizon Subscribers. Of those patient visits: two thousand nine hundred sixty-five (2,965) were for emergency/urgent care; and two thousand six hundred twenty-five (2,625) were for non-emergency/non-urgent (“Elective”) care within the scope of the out-of- network benefits provided under the patients’ Plans. b. During the period from May 1, 2016, to January 31, 2017, BMC provided hospital services relating to approximately two thousand five hundred forty-five (2,545) patient visits by non-SHBP Horizon Subscribers. Of those patient visits: one thousand four hundred eighty-eight (1,488) were for emergency/urgent care; and one thousand fifty-seven (1,057) were for Elective care within the scope of the out-of-network benefits provided under the patients’ Plans. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 10 of 156 PageID: 1377 - 4 - c. During the period from June 1, 2016, to January 31, 2017, HUMC provided hospital services relating to approximately two thousand five hundred forty five (2,545) patient visits by non-SHBP Horizon Subscribers. Of those patient visits: one thousand six hundred seventy-six (1,676) were for emergency/urgent care; and eight hundred sixty-nine (869) were for Elective care within the scope of the out-of-network benefits provided under the patients’ Plans. 8. The CarePoint Hospitals’ billed charges for these claims total approximately two hundred twenty-two million eight hundred twenty-seven thousand two-hundred fifty-nine and 13/100 ($223,827,259.13), reflecting the CarePoint Hospitals’ usual and customary rates for the particular medical services provided. Assuming an average patient responsibility (i.e., copayments, coinsurance, and deductibles) under the applicable Plans of ten percent (10%) of the charges for emergency/urgent care and thirty-percent (30%) of the charges for Elective care, then Horizon is responsible for one hundred ninety-two million seven hundred fifty one thousand two hundred thirty-four and 25/100 dollars ($192,751,234.25) of the total charges. 9. However, to date, Horizon has paid the CarePoint Hospitals for only a small fraction of this amount - sixty-six million seven hundred seventy-five thousand four hundred eighty-one and 19/100 ($66,775,481.19) or only thirty-four and six tenths percent (34.6%) of its responsibility. The current unpaid balance Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 11 of 156 PageID: 1378 - 5 - due to the CarePoint Hospitals is at least one hundred twenty five million nine hundred seventy-five thousand seven hundred fifty-three and 06/100 dollars ($125,975,753.06) with respect to these ten thousand six hundred eighty (10,680) claims. 10. Because Horizon Subscribers continue to seek treatment at all the CarePoint Hospitals, the underpayment amounts are expected to continue to increase at the rate of approximately two hundred forty (240) patient visits per week (for all three CarePoint Hospitals combined) or an estimated four to six million dollars ($4-6 million) per week. 11. Horizon’s pattern of denying or dramatically underpaying the CarePoint Hospitals is in clear violation of the terms of the Plans, as well as federal and state law. 12. For example, the CarePoint Hospitals, like all hospitals, are prohibited by the Emergency Medical Treatment and Active Labor Act of 1986 (“EMTALA”), 42 U.S.C. § 1395dd, from turning away women who are in active labor or any other persons in need of emergent/urgent medical treatment because of inability to pay or unavailability of insurance. One of the claims at issue here arises from Christ Hospital providing medical services to a woman who was already in an advanced stage of labor when she arrived at Christ Hospital’s emergency room late in the evening. Due to concern for the fetus with Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 12 of 156 PageID: 1379 - 6 - nonreassuring fetal heart rate tracing and other complications, a cesarean delivery was performed and the patient’s baby boy was delivered with the umbilical cord wrapped tightly around his neck. Christ Hospital’s claim was denied by Horizon for the stated reasons that the patient “does not have out of network benefits as part of her policy,” the “delivery was not emergent,” and the patient could have been “transferred to a participating hospital within the time frame for her delivery.” Horizon’s position that Christ Hospital should have turned this patient away and subjected her to the risks of being transported to another hospital while in an advanced stage of labor is clearly illegal and abhorrent to good medical practice and any sense of common decency and consideration for this patient’s and her child’s circumstances. Overview of RICO Claims 13. Plaintiffs’ claims also arise out of Horizon’s participation in the management and operation of the affairs of its network of participating providers and subnetworks - including its subnetwork of “Tier 1” providers in its so-called “OMNIA” plan - through a pattern of racketeering activity within the meaning of 18 U.S.C. § 1961(1) and (5). Plaintiffs’ claims also involve conspiracies by Horizon to do so and to acquire control over the CarePoint Hospitals through a pattern of racketeering activity. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 13 of 156 PageID: 1380 - 7 - 14. The pattern of racketeering activity includes Horizon’s multiple and repeated uses of the mails and wires in furtherance of two distinct but interrelated schemes to defraud. 15. The first such scheme involves Horizon’s attempt to mislead the public in general, as well as the patients and physicians of the Plaintiffs, into believing that the Plaintiffs are greedy, overbill their patients, and provide substandard healthcare. 16. The second such scheme involves Horizon’s attempt to mislead its subscribers, the public, the New Jersey State Health Benefits Plan, and regulators into believing that Horizon pays Plaintiffs what it is legally obligated to pay healthcare providers for services rendered to its subscribers; and that any additional amounts charged by Plaintiffs must be the result of greed and overbilling. 17. Horizon has repeatedly used the mails and wires in furtherance of both schemes to defraud. As described more fully below, this use of the mails and wires includes, among other things: • Issuing electronic and print letters and advertisements falsely accusing Plaintiffs of engaging in “price gouging” and similar conduct; • Issuing electronic and print letters and advertisements promoting Horizon’s “OMNIA” plan, under which Horizon relegated BMC and HUMC to “Tier 2” status - thus falsely implying that Plaintiffs were of inferior quality to “Tier 1” hospitals; Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 14 of 156 PageID: 1381 - 8 - • Engaging in bad faith negotiations with each CarePoint Hospital for renewal network hospital agreements; and then issuing electronic and print letters and advertisements falsely blaming Plaintiffs for the failure of negotiations leading to the CarePoint Hospitals’ current out-of-network status; • Electronically processing of thousands of Plaintiffs’ claims for emergency treatment that Plaintiffs provided to Horizon Subscribers at a fraction of Plaintiffs’ billed charges, and falsely informing Horizon Subscribers that the payments represent the extent of Horizon’s legal responsibility for the services rendered and that the balance due is the subscribers’ responsibility. 18. Through its schemes to defraud, Horizon is able to steer patients to its in-network providers, including certain in-network providers Horizon arbitrarily selected and designated as “Tier 1” providers under its so-called “OMNIA” plan, and away from the rest of Horizon’s other in-network providers, designated as “Tier 2” and out-of-network providers. 19. The ultimate goal of these schemes is to marginalize Tier 2 and out- of-network providers, specifically including and especially Plaintiffs, and drive them into bankruptcy. 20. If successful in its schemes to defraud, Horizon will be able to acquire control over the CarePoint Hospitals by purchasing them out of bankruptcy at drastically below-market prices, or by inducing one of its favored in-network providers to do so., specifically including Barnabas Health, n/k/a RWJ Barnabas Health (“Barnabas”), to do so. Upon information and belief, this would further a Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 15 of 156 PageID: 1382 - 9 - broader goal of Horizon - to completely dominate the health insurance market in New Jersey. 21. In carrying out its schemes to defraud, as described more fully below, Horizon has conspired with one or more in-network health care providers, including Barnabas Health (“Barnabas”),, a health care system that competes with the CarePoint Hospitals. Not surprisingly, Horizon has designated the hospitals in the Barnabas system as “Tier 1” under its OMNIA plan. 22. The foregoing conduct violates RICO in that Horizon has: (1) participated in the management and operation of the affairs of its network of participating providers and subnetworks - including its so-called “OMNIA” alliance - through a pattern of racketeering activity, in violation of RICO Section 1962(c), 18 U.S.C. § 1962(c); (2) conspired with Barnabas and other in-network hospitals to do so, in violation of RICO Section 1962(d), 18 U.S.C. § 1962(d); and (3) conspired with Barnabas and other in-network hospitals to violate RICO Section 1962(b), 18 U.S.C. § 1962(b), by seeking to acquire control over the CarePoint Hospitals, also in violation of RICO Section 1962(d), 18 U.S.C. § 1962(d). Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 16 of 156 PageID: 1383 - 10 - THE PARTIES 23. BMC is a privately held, limited liability company, organized under the laws of the State of New Jersey, with its principal place of business at 29th Street and Avenue E, Bayonne, New Jersey. 24. Christ Hospital is a privately held, limited liability company, organized under the laws of the State of New Jersey, with its principal place of business at 176 Palisade Avenue, Jersey City, NJ 07306. 25. HUMC is a privately held, limited liability company, organized under the laws of the State of New Jersey, with its principal place of business at 308 Willow Avenue, Hoboken, NJ 07030. 26. Horizon is a not-for-profit health services corporation in the State of New Jersey, formed pursuant to the Health Services Corporation Act, with its principal place of business at Three Penn Plaza East, Newark, New Jersey. 27. Horizon is in the business of providing health benefit plans and policies of health insurance. According to Horizon, it provides benefits under a variety of health benefit plans, including individual health benefit plans and group plans, including employer-sponsored plans and government-sponsored health benefit plans. 28. Horizon is the only health services corporation in New Jersey. It is declared by statute, N.J.S.A. 17:48E-41, to be a charitable and benevolent Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 17 of 156 PageID: 1384 - 11 - institution exempt from all New Jersey taxes except real property taxes and the tax on insurance premiums. It is required by statute, N.J.S.A. 17:48E-3(a), to be operated for the benefit of its subscribers. 29. Although declared by statute to be a non-profit, charitable organization, Horizon has generated enormous profits and accumulated, as of December 31, 2014, capital reserves of $2.81 billion. 30. Horizon is the largest private health insurer in New Jersey, with a more than 50% share of the state’s commercial market. Horizon has stated that it insures approximately 2.1 million lives through its commercial products. Horizon administers the State Health Benefits Program, which includes approximately 750,000 insured lives. In total, including Medicare, Medicaid, and governmental employee coverage, Horizon provides health insurance to approximately 3.8 million people in New Jersey. JURISDICTION AND VENUE 31. This Court has federal question subject matter jurisdiction over this matter pursuant to 28 U.S.C. § 1331, as the CarePoint Hospitals assert federal claims against Horizon, in Counts One, Two, and Three, under ERISA. 32. This Court also has federal question subject matter jurisdiction over this matter pursuant to 28 U.S.C. § 1331, as the CarePoint Hospitals assert federal claims against Horizon, in Counts Four, Five, and Six, under RICO. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 18 of 156 PageID: 1385 - 12 - 33. This Court also has supplemental jurisdiction over the CarePoint Hospitals’ state law claims against Horizon, in Counts Seven through Twelve, because these claims are so related to the CarePoint Hospitals’ federal claims that the state law claims form a part of the same case or controversy under Article III of the United States Constitution. The Court has supplemental jurisdiction over these claims pursuant to 28 U.S.C. § 1367(a). 34. This Court has personal jurisdiction over Horizon because Horizon is incorporated and has its principal place of business in New Jersey and carries on one or more businesses or business ventures in this judicial district; there is the requisite nexus between the business(es) and this action; and Horizon engages in substantial and not isolated activity within this judicial district. 35. Venue is proper in this District pursuant to 28 U.S.C. § 1391(b)(2), because a substantial portion of the events giving rise to this action arose in this District. FACTUAL ALLEGATIONS I. Horizon Underpays the CarePoint Hospitals in Violation of Federal and State Law. A. The CarePoint Hospitals. 36. BMC is a 278-bed, fully accredited, acute care hospital that provides quality, comprehensive, community-based health care services to more than 70,000 people annually. Its facilities include 19 full-service emergency room bays, 205 Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 19 of 156 PageID: 1386 - 13 - medical/surgical beds, 10 obstetrical beds, 17 pediatric beds, 14 adult ICU/CCU beds, and 15 adult, acute psychiatric beds. The service complement consists of six inpatient operating rooms, two cystoscopy rooms, one full-service cardiac catheterization lab, 12 chronic hemodialysis stations, one MRI unit, emergency angioplasty services, elective angioplasty, two hyperbaric chamber units, and a PET-CT diagnostic imaging unit. 37. Christ Hospital is a 376-bed fully accredited acute care hospital. With a highly-qualified medical team - including more than 500 doctors with specialties ranging from allergies to vascular surgery - Christ Hospital offers a full spectrum of services and has been recognized for excellence in cardiovascular, respiratory, and newborn care. As a state-certified Stroke Center and Primary Angioplasty Center, Christ Hospital provides lifesaving emergency interventions with outcomes that rank among the best in New Jersey. Christ Hospital is affiliated by common ownership with the principal owners of BMC. 38. HUMC is a 333-bed fully accredited general acute care hospital. HUMC provides advanced medical technologies in support of its medical staff, nursing team, and other caregivers, to enable state-of-the-art care to citizens of Hoboken and the surrounding communities. HUMC offers excellence in emergency medicine in the 34-bay emergency room and the dedicated OB/GYN ED; inpatient rehabilitation; transitional care; child and adult behavioral health; Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 20 of 156 PageID: 1387 - 14 - women’s care; wound care; and numerous surgical subspecialties. The American Heart and Stroke Association awarded the Silver Award to HUMC for its dedication to improving quality of care for stroke patients. Overall, HUMC was ranked in the top ten hospitals in New Jersey for care quality among all hospitals in the state with 350 beds or fewer. HUMC is also affiliated by common ownership with the principal owners of BMC. 39. Between 2008 and 2012, each of the CarePoint Hospitals was purchased out of bankruptcy by the current owners. The owners then invested substantial time, effort and capital into improving the hospitals’ finances, physical plant, equipment, and overall quality of the healthcare services they provide. For example, the CarePoint Hospitals’ actual and projected capital expenditures for the years 2014-2017 total $117.8 million, of which $5.1 million relates to equipment purchases and $97.9 million relates to construction and renovation of facilities. In addition, the CarePoint Hospitals’ annual operating expenditures total several hundred million dollars, e.g. $384 million in operating expenditures in 2014. 40. Setting aside the immeasurable benefit of improved health care for the patient communities, the new owners’ efforts to rescue these hospitals from bankruptcy have generated huge economic benefits to Hudson County and the State. The economic impacts for New Jersey of the CarePoint Hospitals’ estimated Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 21 of 156 PageID: 1388 - 15 - annual in-state operating expenditures of $384 million and capital expenditures of $117.8 million include: a. 8,167 direct and indirect jobs or job-years (one job lasting more than one-year); b. $815.2 million in gross domestic product; c. $653.9 million in compensation to employees; d. $23.5 million in state government revenues; and e. $8.7 million in local government (county, municipal, school district) revenues outside Hudson County. 41. The CarePoint Hospitals currently operate as for-profit hospitals. As such, they are not eligible for tax exempt status as charitable organizations. 42. The CarePoint Hospitals also receive no federal or state government payments for patients who are undocumented aliens, the vast majority of whom are treated at urban hospitals. The hospitals may be able to obtain partial payment for undocumented patients who agree to file a charity application, but many resist out of fear of deportation. 43. The CarePoint Hospitals are also paid far less than their costs for services provided to Medicare, Medicaid and Charity Care patients. For example, at BMC, Medicaid only covers 66 percent of its costs and only 29 percent of its charity care costs for those who qualify. For care provided to uninsured patients whose gross income is less than 500 percent of the federal poverty level, hospitals Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 22 of 156 PageID: 1389 - 16 - are required to limit charges at the rate of 115% of Medicare (and still below costs) but the majority of these uninsured patients still do not pay anything on that reduced amount. 44. In 2015, for all CarePoint Hospitals combined, the uninsured, charity care, and Medicaid patients comprised: a. 60.3 percent of all emergency room visits; b. 45.1 percent of all other outpatient visits; and c. 40.5 percent of admissions. 45. The percentages for charity care, Medicaid and uninsured patients at the individual hospitals during 2015 were as follows: Charity Care, Medicaid, Uninsured Patients 2015 BMC Christ HUMC Admissions 22.2% 50.1% 44.3% ER Visits 55.1% 66.0% 57.0% All Other Outpatient 24.5% 42.2% 61.8% Combined, Charity Care, Medicare, Uninsured 33.6% 48.8% 59.0% 46. In contrast, patients who had commercial insurance represented much smaller percentages of the patients treated at the CarePoint Hospitals in 2015. Commercially Insured Patients 2015 BC/BS Other Total BMC Admissions 10.2% 4.5% 14.7% ER Visits 15.5% 10.1% 25.6% All Other Outpatient 21.3% 5.8% 27.1% Christ Hospital Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 23 of 156 PageID: 1390 - 17 - Admissions 6.1% 5.3% 11.4% ER Visits 7.1% 7.2% 14.3% All Other Outpatient 5.7% 25.5% 31.2% HUMC Admissions 12.4% 8.8% 21.2% ER Visits 12.0% 12.0% 24.0% All Other Outpatient 7.9% 2.9% 10.7% 47. According to 2015 figures recently released by the State of New Jersey, the CarePoint Hospitals ranked 2nd (Christ Hospital), 4th (HUMC), and 13th (BMC) in the State of New Jersey in charity care as a percentage of total care provided. This data also reflected that the CarePoint Health System was the largest Charity Care provider in Hudson County. 48. The CarePoint Hospitals and the independent physicians attending to patients at the hospitals are required by law to provide emergency/urgent care to any patient regardless of the patient’s ability to pay and regardless of source of insurance payment. A patient’s ability to pay in no way affects or impedes the CarePoint Hospitals’ delivery of emergency health care. B. The CarePoint Hospitals’ Out-of-Network Status. 49. Health care providers are either “in-network” or “out-of-network” with respect to insurance carriers. “In-network” or “participating” providers are those who contract with health insurers that require them to accept discounted negotiated rates as payment in full for covered services. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 24 of 156 PageID: 1391 - 18 - 50. “Out-of-network” or “non-participating” providers are those that do not have contracts with insurance carriers to accept discounted rates and instead set their own fees for services based on a percentage of charges. 51. Christ Hospital, BMC and HUMC were formerly in-network providers with Horizon but became out-of-network providers as to Horizon on June 1, 2015, May 1, 2016, and June 1, 2016, respectively. 52. New Jersey law does not specify how a hospital’s out-of-network charges must be determined. Rather, under New Jersey law, hospitals are permitted to set charges for various services and products as they see fit. N.J.S.A. 26:2H-18.51. Moreover, courts lack authority to review and adjust a hospital’s set charges under New Jersey law. DiCarlo v. St. Mary Hospital, 530 F.3d 255 (3d Cir. 2008); Matter of Final Agency Decision by New Jersey Dep’t of Health Regarding Utilization and Quality Review for Calendar Year 1993, 273 N.J. Super. 205, 226 (App. Div. 1994). 53. The CarePoint Hospitals have been and remain willing to again become in-network providers with Horizon provided that Horizon is willing to provide in-network rates that would be sufficient to allow the hospitals to sustain themselves, meet their continuing obligations to provide community access to quality healthcare services, and generate a reasonable profit. To date, however, the Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 25 of 156 PageID: 1392 - 19 - CarePoint Hospitals have been unable to negotiate sustainable in-network rates with Horizon. 54. Notably, all three of the CarePoint Hospitals were previously forced to seek bankruptcy protection because of inadequate in-network arrangements. BMC, HUMC, and Christ Hospital were purchased out of bankruptcy by their current owners in 2008, 2011 and 2012, respectively. During the first twelve months after acquiring BMC and as a necessary step to negotiate more adequate in- network arrangements, the current owners terminated BMC’s then existing in- network agreements with 20 insurers, including Horizon. 55. Horizon retaliated not only by refusing to pay BMC fully for medical services provided to Horizon Subscribers at out-of-network charges but also, inter alia, by filing a lawsuit against BMC (the “2009 Lawsuit”). In the 2009 Lawsuit, Horizon alleged, inter alia, that BMC knowingly submitted false insurance claims to Horizon in violation of the New Jersey Insurance Fraud Prevention Act (“IFPA”), and engaged in common law fraud, negligent misrepresentation, and tortious interference. BMC filed counterclaims arising out of Horizon’s pattern of grossly under-paying BMC for the services it provided to Horizon Subscribers, attempting to steer patients away from BMC, and refusing to pay BMC for more than $100 million for medical services BMC provided to Horizon Subscribers. These counterclaims included claims arising under New Jersey’s insurance Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 26 of 156 PageID: 1393 - 20 - coverage and payment mandates; claims arising under the benefit plans underwritten or administered by Horizon for which BMC held valid assignments of benefits; and claims for tortious interference, defamation, and injurious falsehood. 56. By September 2011 and after two years of costly litigation, Horizon’s claims were dismissed with prejudice and BMC’s counterclaims were the only remaining claims to be resolved. At that point, BMC and Horizon entered into a Settlement Agreement that resolved BMC’s counterclaims, which by that time totaled in excess of $110 million, and also established terms under which BMC would operate as a Horizon in-network provider for 4 years. Those same rates were later incorporated into in-network agreements between Horizon and HUMC and Christ Hospital that were in effect when those two hospitals were purchased out of bankruptcy in 2011 and 2012, respectively. 57. The in-network agreements with Horizon are evergreen contracts that will automatically renew at essentially the same rates (with some rates adjusted based on the consumer price index). As a result, to obtain any increase over the auto-renew rates, the hospital must first issue a notice to terminate the agreement. 58. After acquiring Christ Hospital, it soon became apparent that the rates under the in-network agreement with Horizon were not adequate to meet Christ Hospital’s costs. Based on the percentages of charity care, Medicaid and uninsured patients in relation to commercially insured patients, Christ Hospital Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 27 of 156 PageID: 1394 - 21 - requires higher reimbursement rates than the other two CarePoint Hospitals to meet its costs. In fact, there are significant differences in the rates paid to the three hospitals under various government programs because of the differing percentages of charity care, Medicaid and uninsured patients in relation to commercially insured patients. This fact was necessarily known to Horizon at the time it proposed and obtained the consent of the new owners to apply the same rates to all three hospitals. 59. Although the rates were not adequate to meet its costs, Christ Hospital honored the in-network agreement with Horizon and accepted those rates until the time it was able to issue a notice of termination and begin the process of negotiating new rates for the renewal agreement that would fairly meet its costs and sustain the viability of the hospital. 60. Because Horizon refused to negotiate new rates that were anywhere near sustainable rates, Christ Hospital was forced out-of-network with Horizon on June 1, 2015. 61. As the in-network agreements with Horizon for BMC and HUMC were nearing the end of their initial 4-year terms, those hospitals also issued notices of termination in order to commence negotiations of new rates. Thereafter, these hospitals also sought to conduct contract renewal negotiations with Horizon, but Horizon again refused to offer new rates that would sustain the viability of Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 28 of 156 PageID: 1395 - 22 - each hospital. As a result, BMC and HUMC were also forced out-of-network with Horizon as of May 1, 2016, and June 1, 2016, respectively. 62. As soon as each of the CarePoint Hospitals became out-of-network, Horizon immediately reinstituted its practice of unlawfully underpaying and refusing to pay the hospitals for health insurance claims, as Horizon had done when BMC went out-of-network in 2009. C. The CarePoint Hospitals’ Out-of-Network Status is Well Known to Patients and the Public. 63. The CarePoint Hospitals prominently advise their patients and the public of their out-of-network status. The hospitals’ websites currently direct patients to a webpage that lists the insurers with whom the hospitals are in-network and explains the difference between in-network and out-of-network providers, and how the hospitals bill insurers and patients. 64. The CarePoint Hospitals’ Insurance Help Desk is available to answer questions from patients and their billing department is available to explain and review a patient’s bill, and discuss payment options. 65. The CarePoint Hospitals also direct patients to contact their carrier to understand their out-of-network benefits. D. New Jersey’s Coverage and Payment Mandates. 66. New Jersey law requires that hospitals provide emergency/urgent care to all patients, regardless of ability to pay. This “take-all-comers” statute mandates Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 29 of 156 PageID: 1396 - 23 - that “[n]o hospital shall deny any admission or appropriate service to a Patient on the basis of that Patient’s ability to pay or source of payment.” N.J.S.A. 26:2H- 18.64. Violation of this provision subjects a hospital to a civil penalty of $10,000 for each violation. 67. New Jersey regulations mandate that a hospital provide an appropriate medical screening examination to all individuals who come to an emergency department with what they believe to be an emergent or urgent condition. N.J.A.C. 8:43G-12.7(c). 68. To ensure access to emergency care regardless of a patient’s type of insurance, New Jersey law requires healthcare insurers to specifically notify their subscribers that they are entitled to have “access” and “payment of appropriate benefits” for emergency conditions on a “24 hours a day” and “seven days a week” basis. N.J.A.C. 11:24A-2.5(b)(2). 69. New Jersey law also provides that an insurance carrier must pay for the services provided by the hospital and do so promptly. This process begins with the requirement that the insurance carrier acknowledge receipt of all claims within two (2) working days, if the claim is submitted electronically, or within fifteen (15) working days, if the claim is submitted by way of written notice. See N.J.S.A. 17:48E-10.1(d)(1). Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 30 of 156 PageID: 1397 - 24 - 70. New Jersey law provides that an insurance carrier must pay claims within thirty (30) days after the insurance carrier receives the claim when submitted electronically, or forty (40) days after received non-electronically, provided the following conditions apply: (a) the health care provider is eligible at the date of service; (b) the person who received the health care service was covered on the date of service; (c) the claim is for a service or supply covered under the health benefits plan; (d) the claim is submitted with all the information requested by the payer on the claim form or in other instructions that were distributed in advance to the health care provider or covered person in accordance with the provisions of section 4 of P.L.2005, c. 352 (C.17B:30-51); and (e) the payer has no reason to believe that the claim has been submitted fraudulently. N.J.S.A. 17:48E-10.1(d)(1)(a)-(e). 71. Accordingly, when a nonparticipating provider - for example, an out- of-network hospital - receives an assignment of the right to payment from a covered person, the insurance carrier is required by law to pay the hospital. See N.J.S.A. 17:48E-10.1(d)(1). 72. An insurance carrier’s dispute of a portion of the claim does not excuse the carrier from payment of the entire claim: “(4) Any portion of a claim that meets the criteria established in paragraph (1) of this subsection shall be paid Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 31 of 156 PageID: 1398 - 25 - by the payer in accordance with the time limit established in paragraph (1) of this subsection.” N.J.S.A. 17:48E-10.1(d)(4). Horizon has not disputed any portion of the CarePoint Hospitals’ claims but simply chose not to pay the full amount of the claims. 73. Moreover, for emergency or urgent care situations, New Jersey law requires insurers such as Horizon to limit their subscribers’ responsibility to the amounts they would have paid had they received treatment from an in-network facility, and pay out-of-network providers for the difference between that amount and the out-of-network providers’ billed charges. See, e.g., Aetna Health, Inc. v. Srinivasan, 2016 N.J. Super. Unpub. LEXIS 1515 (App. Div. June 29, 2016); N.J.S.A. 26:2S-6.1(a); N.J.A.C. 11:24-5.3(b). E. Horizon Subscribers Regularly Seek Treatment at the CarePoint Hospitals, for which Horizon Must Pay Plaintiffs under the Terms of its Plans and State Emergency Care Mandates. 74. As noted above, since June 1, 2015, the CarePoint Hospitals have provided hospital services to Horizon Subscribers in connection with approximately ten thousand six hundred eighty (10,680) patient visits to a CarePoint Hospital when it was out-of-network with Horizon, excluding patients who participate in the SHBP. 75. Upon information and belief, all of the Plans require Horizon to pay the CarePoint Hospitals for their total billed charges, less applicable in-network Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 32 of 156 PageID: 1399 - 26 - patient responsibility, for emergency or urgent care that the CarePoint Hospitals provide to Horizon Subscribers, consistent with the requirements of New Jersey’s coverage and payment mandates set forth above. 76. Moreover, many of the Plans covering Horizon Subscribers specifically provide “out-of-network” benefits for services rendered by out-of- network hospitals, such as the CarePoint Hospitals. Upon information and belief, these Plans require Horizon to pay the CarePoint Hospitals for Elective care that the CarePoint Hospitals provide to Horizon Subscribers at the usual or customary rates for such Elective care. The Horizon Subscribers are responsible for the balance, if any, of CarePoint Hospitals’ billed charges for such Elective care. 77. Importantly, patients pay significantly higher health care premiums in order to have access to out-of-network medical providers. Patients pay the higher premiums to ensure that they will be able to obtain necessary medical services from the medical providers and medical facilities of their choice. 78. More particularly, according to papers Horizon submitted in support of its motion to dismiss the original Complaint in this action (ECF No. 16), Horizon’s fully-insured Plans derive from various “contract types” approved by the New Jersey Department of Banking and Insurance (“DOBI”): Indemnity, Health Maintenance Organization (“HMO”), Managed Care (“MC”), Small Group (“SMG”), and Individual Health Insurance (“IHC”) Plans. Horizon also Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 33 of 156 PageID: 1400 - 27 - administers self-funded Plans that are also based upon contract templates issued by DOBI. 79. Upon information and belief, regardless of the Plan type, all of Horizon’s insured Plans provide for payment of out-of-network benefits in accordance with the “Allowance” or “Allowed Charge” definition found in each Plan. 80. For its Indemnity and HMO Plans, according to Horizon, the “Allowance” is a dollar amount Horizon determines to be “reasonable, customary and appropriate for Covered Services and Supplies unless required by law.” (emphasis added). As noted above, in emergency or urgent care situations, Horizon is required by law to pay out-of-network providers for their full billed charges, less the amounts that the subscribers would have paid had they received treatment from an in-network facility. 81. For its MC Plans, according to Horizon, the “Allowance” for out-of- network providers means the lesser of Horizon’s (i) actual charges or (ii) a percentage of the rates of the Centers for Medicare & Medicaid Services (“CMS”), rates specified in databases developed by an outside company (FAIR Health, Inc.); or an amount “based on Horizon BCBSNJ’s usual and prevailing payments made to providers for similar services or supplies.” However, for emergency services, the “Allowance” under Horizon’s MC Plans for out-of-network providers “shall be Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 34 of 156 PageID: 1401 - 28 - increased as needed to ensure that the Covered Person has no greater liability than he/she would have if they were provided by In-Network Providers.” 82. For its SMG Plans, according to Horizon, “Allowed Charge” for out- of-network providers is based on a standard approved by the New Jersey Small Employer Health Coverage Program Board. For non-emergent treatment, this standard represents the “usual or customary charge for the service or supply.” For urgent care or emergency treatment, benefits are covered “to the same extent as would have been provided if care and treatment were provided by” an in-network provider. 83. For its IHG Plans, according to Horizon, “Allowed Charge” for out- of-network providers is based on a standard approved by the New Jersey Individual Health Coverage Program Board. For non-emergent treatment, this standard typically represents the usual or customary charges for the services or treatment provided, or the amount “most often charged for a given service by a Provider within the same geographic area.” For urgent care or emergency treatment, benefits are covered to the same extent as would have been provided if care and treatment were provided by an in-network provider. 84. For self-insured Plans, for which Horizon provides administrative services and serves as a Plan fiduciary, according to Horizon, the “Allowance” under the Plan mirrors the definition in the Horizon Managed Care Plans (i.e., the Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 35 of 156 PageID: 1402 - 29 - lesser of Horizon’s (i) actual charges or (ii) a percentage of some external standard (e.g., rates of CMS, Fair Health, or some other standard). However, for emergency services, the “Allowance” under these self-insured plans likewise is increased as needed to ensure that the Covered Person has no greater liability than he/she would have if they were provided by In-Network Providers. F. The CarePoint Hospitals Receive Complete Assignments of Benefits under Horizon Plans for Treatment Provided to Horizon Subscribers. 85. While out-of-network with Horizon, each CarePoint Hospital had no contract with Horizon setting forth the terms under which Horizon would pay for services that the CarePoint Hospital provide to patients who are Horizon Subscribers. 86. Rather, as out-of-network providers, the CarePoint Hospitals provide healthcare services to all persons, including, but not limited to, those persons whose Plans allow them to receive services from providers who do not participate in their respective carrier’s insurance network. 87. Under the terms of most Plans that provide coverage for out-of- network care, a patient is responsible for the payment of “coinsurance,” a percentage of the out-of-network provider’s charge for which the patient is responsible. 88. Upon registration at a CarePoint Hospital, all patients, including Horizon Subscribers, execute a form titled “Assignment of Insurance Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 36 of 156 PageID: 1403 - 30 - Benefits/Direct Payment/Authorized Representative/Agent” (the “AOB Contract”), among other documents. In the AOB Contract, Horizon Subscribers assign to the CarePoint Hospital their rights to benefits under Horizon’s Plans. 89. These AOB Contracts provide for the assignment to the CarePoint Hospital of all rights, benefits, and causes of action under a Horizon Plan: I hereby assign to the Hospital, all of my rights, benefits, privileges, protections, claims, causes of action, interests or recovery, to any and all rights, benefits, privileges, protections, claims, causes of action, interests, or recovery of any type whatsoever receivable by me or on my behalf arising out of any policy of insurance, plan, trust, fund, or otherwise providing health care coverage of any type to me (or to any other third party responsible for me) for the charges for services rendered to me by the hospital. This includes, without limitation, any private or group health/hospitalization plan, automobile liability, general liability, personal injury protection, medical payments, uninsured or underinsured motor vehicle benefits, settlements/ judgments/verdicts, self-funded plan, trust, workers compensation, MEWA, collective, or any other third-party payor providing health care coverage of any type to me (or to any other third party responsible for me) for the charges for services rendered to me by the hospital [collectively, "Coverage Source"]. This is a direct assignment to the Hospital of any and all of my rights to receive benefits arising out of any Coverage Source. I understand that this assignment of benefits is irrevocable. This assignment of benefits fully and completely encompasses any legal claim I may have against any Coverage Source, including, but not limited to, my rights to appeal any denial of benefits on my behalf, to request and obtain plan documents, to pursue legal action against any coverage source, and/or to file a complaint with the New Jersey Department of Banking and Insurance. 90. The AOB Contracts also provide for payment of any benefits directly to the CarePoint Hospital: Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 37 of 156 PageID: 1404 - 31 - I authorize and direct payment be made by any and all coverage source directly to the hospital of all benefits, payments, monies, checks, funds, wire transfers or recovery of any kind whatsoever from any coverage source. I also agree to assist the hospital in pursuing payment from any coverage source. This includes, without limitation, signing documents requested or needed to pursue claims and appeals, getting documents from coverage source, or otherwise to support payment to the hospital. 91. The AOB Contracts also provide for the CarePoint Hospital to act as the Horizon Subscriber/Patient’s authorized agent and representative to pursue actions to recover benefits under a Horizon Plan: I hereby authorize and designate the Hospital as my authorized agent and representative to act on my behalf with respect to all matters related to all of my rights, benefits, privileges, protections, claims, causes of action, interests or recovery arising out of any Coverage Source. This includes, without limitation, the Hospital requesting verification of coverage/pre-certification/authorization, filing pre- service and post-service claims and appeals, receiving all information, documentation, summary plan descriptions, bargaining agreements, trust agreements, contracts, and any instruments under which the plan is established or operated, as well as receiving any policies, procedures, rules, guidelines, protocols or other criteria considered by the coverage source, in connection with any claims, appeals, or notifications related to claims or appeals. 92. These AOB Contracts provide, in part, that the patient is responsible for the payment of deductibles, copayments, coinsurance, and other charges not covered by the assignment: I understand that I am financially and legally responsible for charges not covered in full by the assignment of benefits …, including, but not limited to, any deductibles, copayments, and coinsurance amounts provided under any coverage source; and charges for which there is no Coverage Source. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 38 of 156 PageID: 1405 - 32 - 93. Thus, by the express language of the AOB Contracts, Plaintiffs may balance bill patients for amounts not covered by the assignments. Consequently, in order to satisfy its obligations under New Jersey’s coverage and payment mandates, described more fully above, Horizon must pay the CarePoint Hospitals for the difference between their billed charges and the amounts Horizon’s subscribers would have paid had they received treatment from an in-network facility for emergent/urgent treatment that the CarePoint Hospitals provide to Horizon Subscribers. 94. Upon information and belief, most of Horizon’s Plans contain no anti- assignment provisions that would preclude subscribers from assigning their Plan benefits to the CarePoint Hospitals. 95. In particular, upon information and belief and based on Horizon’s motion to dismiss papers, none of Horizon’s MC Plans contain such anti- assignment clauses. While Horizon has alleged that some of its Indemnity, HMO, SMG, and IHC Plans contain alleged anti-assignment clauses, to the extent that such clauses are present in any of the Plans, most expressly permit the subscribers to assign Plan benefits to health care providers with Horizon’s consent. 96. Horizon has consented to the assignments, or otherwise waived the applicability of the anti-assignment clauses, through an extended course of dealing, described more fully below. Among other things, when it decides to pay a claim, Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 39 of 156 PageID: 1406 - 33 - Horizon often remits payment directly to the CarePoint Hospitals, without reliance on any purported anti-assignment clauses, albeit in amounts grossly inadequate relative to Plaintiffs’ actual charges. Horizon also forces Plaintiffs to pursue Horizon’s internal appeals process, only to frustrate Plaintiffs once they are engaged in that process, but again, without citing to any purported anti-assignment clauses. This and other conduct described more fully below amounts to Horizon’s consent to its subscribers’ assignments of Plan benefits to the CarePoint Hospitals, or at a minimum, is an extended course of dealing that is inconsistent with any alleged anti-assignment clauses. 97. Further, to the extent that any of the Plans have anti-assignment clauses, they are barred by New Jersey’s Assignment of Benefits Law, which provides: With respect to a carrier which offers a managed care plan that provides for both in-network and out-of-network benefits, in the event that the covered person assigns, through an assignment of benefits, his right to receive reimbursement for medically necessary health care services to an out-of-network health care provider, the carrier shall remit payment for the reimbursement directly to the health care provider in the form of a check payable to the health care provider, or in the alternative, to the health care provider and the covered person as joint payees, with a signature line for each of the payees. Payment shall be made in accordance with the provisions of this section and [N.J.S.A. 17B:30-23 et seq.]. Any payment made only to the covered person rather than the health care provider under these circumstances shall be considered unpaid, and unless remitted to the health care provider within the time frames established by [N.J.S.A. 17B:30-23 et seq.], shall be considered overdue and subject to an interest charge as provided in that act. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 40 of 156 PageID: 1407 - 34 - N.J.S.A. 26:2S-6.1(c) (emphasis added). G. Horizon Drastically and Unlawfully Underpays the CarePoint Hospitals’ Claims. 98. During the period from June 1, 2015, to January 31, 2017, the CarePoint Hospitals, as out-of-network providers, rendered medical services in connection with approximately ten thousand six hundred eighty (10,680) patient visits by Horizon Subscribers (excluding patients insured under the SHBP). The CarePoint Hospitals promptly filed claims with Horizon for the medical services provided to these Horizon Subscribers. 99. The CarePoint Hospitals’ total billed charges for these claims were approximately $223.8 million reflecting the CarePoint Hospitals’ usual and customary rates for the particular medical services provided. The $223.8 million in total charges is comprised of approximately $180.4 million in charges for emergency/urgent care and approximately $43.5 million in charges for Elective care. 100. The charges billed by the CarePoint Hospitals were especially reasonable, inter alia, in light of the hospitals’ costs and the low percentage of the hospitals’ patients who are insured by commercial insurance carriers, yet the hospitals must provide emergency care to any patient regardless of the patient’s ability to pay and regardless of source of insurance payment. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 41 of 156 PageID: 1408 - 35 - 101. Horizon is responsible for the total charges except for the amounts for which the patient is responsible under the Plans (e.g., deductible, copayments, and coinsurance). 102. With respect to the approximately $180.4 million total charges for emergency/urgent care, the patient responsibility on average is less than ten percent (10%). Even assuming, conservatively, that the patient responsibility averages a full ten percent (10%), Horizon is responsible for the remaining 90% or approximately $162.3 million. However, to date, Horizon has paid the CarePoint Hospitals for only a small fraction of that amount - less than $56.0 million, or approximately thirty four and a half percent (34.5%) - leaving a balance due to the CarePoint Hospitals as of January 31, 2017, of approximately $106.4 million with respect to charges for emergency/urgent care. 103. With respect to the approximately $43.5 million total charges for Elective care, upon information and belief, Horizon’s responsibility under the Plans is approximately seventy percent (70%) of the CarePoint Hospital’s billed charges. Applying those percentages, Horizon is responsible for at least approximately $30.5 million but Horizon has paid only part of that amount - $10.8 million, or 35 and four tenths of a percent (35.4%) - leaving a balance due to the CarePoint Hospitals as of January 31, 2017, of approximately $19.6 million with respect to charges for Elective care. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 42 of 156 PageID: 1409 - 36 - 104. With respect to all of the CarePoint Hospitals’ total charges of $223.8 million for both emergency/urgent care and Elective care, Horizon is responsible for approximately $192.8 million but has paid only part of that amount - $66.8 million or approximately thirty-four and six tenths of a percent (34.6%) - leaving a balance due to the CarePoint Hospitals as of January 31, 2017, of approximately $126.0 million with respect to the total charges for both emergency/urgent care and Elective care provided to Horizon Subscribers. 105. Exhibits 1 through 5, which are attached hereto and incorporated herein by reference, are spreadsheets detailing the following information relating to the non-payments and underpayments by Horizon for the 10,680 claims submitted by the CarePoint Hospitals for emergency/urgent care and Elective care provided to Horizon Subscribers by the CarePoint Hospitals as out-of-network providers with Horizon through January 31, 2017: a. Exhibit 1 provides a summary, for all CarePoint Hospitals combined, of the total charges, total receipts, total adjustments, and outstanding amounts due for all claims, broken down by claims relating to emergency/urgent care (designated as “ER” or “Emergency”) and non-emergency/elective care (designated as “Elective”). b. Exhibits 2 through 4 provide as to Christ Hospital, BMC, and HUMC, respectively, each hospital’s total charges, total receipts, total adjustments, Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 43 of 156 PageID: 1410 - 37 - and outstanding amounts due for all claims, broken down between ER and Elective. c. Exhibit 5 provides claim-specific information as to each of the claims, including the Facility, Account Number, Admit Date, Discharge Date, IPOP Flag (inpatient/outpatient/same day service), Service Type, Total Charges, Total Payments, and Policy Number. Because Exhibit 5 contains information regarding medical treatment provided to specific patients (although patient names and other personal identifiers were excluded), the CarePoint Hospitals have filed Exhibit 5 under seal. H. Horizon Violates the Terms of the Applicable Plans and the Emergency Care Mandate. 106. As noted above, for emergent/urgent care, New Jersey law requires Horizon to pay the CarePoint Hospitals for the difference between their billed charges and the amounts Horizon Subscribers would have paid had they received treatment from an in-network facility. As described above, this requirement is incorporated into all of Horizon’s fully-insured Plans and the self-insured Plans for which Horizon is a fiduciary. 107. The CarePoint Hospitals submitted to Horizon claims totaling $180.4 million for emergency/urgent care provided to non-SHBP Horizon Subscribers through January 31, 2017. Horizon has paid less than $56.0 million on account of Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 44 of 156 PageID: 1411 - 38 - those claims, or less than 30% of the CarePoint Hospitals’ total billed charges for those claims. 108. Upon information and belief, it is Horizon’s general business practice not to pay fully out-of-network providers’ charges for emergency/urgent care. Instead, Horizon pays a lesser amount by (a) multiplying the applicable Medicare rates by a percentage which is unilaterally and arbitrarily selected by Horizon and may range anywhere from 150% to 325% ; or (b) multiplying Horizon’s in- network rates by a percentage which is unilaterally and arbitrarily selected by Horizon. Using the amounts so calculated, instead of the provider’s charges, Horizon then applies the in-network level of benefits under the Plan. 109. Indeed, former Horizon Senior Director in the Service Division, a twenty (20) year veteran of Horizon and/or Horizon BCBSNJ, Kim Dans has alleged that “Horizon knowingly and systematically underpaid claims for out-of- network urgent ane emergent care under fully insured plans written in New Jersey causing insureds to suffer balance billing and collections.” Kim Dans v. Horizon Healthcare Services, et al., Docket No. ESX-L-2132-16 (Superior Court of New Jersey, Essex Vicinage) at ¶22. 110. Ms. Dans went on to allege that “[o]ne Senior Vice President openly admitted in meetings that, because only a subset of members ever called the Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 45 of 156 PageID: 1412 - 39 - company to complain, the company was going to turn a blind eye to systematic under-payments.” Id. at ¶23. 109.111. Horizon’s practice of underpaying claims for emergency care provided by out-of-network providers is contrary to the Plans and law. 110.112. Horizon’s practice is also contrary to what BlueCross Blue Shield insurers in other states (“BCBCS Insurers”) regularly pay the CarePoint Hospitals. When the CarePoint Hospitals provide emergency/urgent care to patients who have coverage with BCBS Insurers, the CarePoint Hospitals’ claims pass through the local plan (Horizon) but they are submitted to the responsible home plan BCBS Insurer (e.g., Anthem Blue Cross, or Capitol Blue Cross). Unlike Horizon, the out of state BCBS Insurers process and pay the claims in compliance with their obligation to assure that their subscribers pay no more that they would have paid for the same care at an in-network hospital. None of those BCBS Insurers process such claims based upon a unilaterally and arbitrarily chosen percentage of Medicare or in-network rates. 111.113. Moreover, as noted above, for elective and other non-emergent care, Plans containing out-of-network benefits require payment of medical expenses incurred by Horizon Subscribers at usual and customary rates, or an equivalent standard. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 46 of 156 PageID: 1413 - 40 - 112.114. The CarePoint Hospitals’ total billed charges for elective treatment reflect their usual and customary rates for the particular medical services provided. The amounts paid by Horizon (even after factoring in amounts that Horizon contends are the patients’ responsibility under the applicable Plans, e.g., copayments, coinsurance, and deductibles) fall far short of the usual and customary rates required under the Plans. 113.115. Significantly, Horizon Subscribers who seek treatment at CarePoint Hospitals pay higher premiums, at times substantially higher premiums, for the right under the Plans to receive medical treatment from the provider of their choice, including from out-of-network providers such as the CarePoint Hospitals. The Horizon Subscribers bargain for and expect that payment will be made at the providers’ usual and customary rates. Horizon’s practice of paying the CarePoint Hospitals a mere 30% of these rates for the rendering of medical treatment for Horizon Subscribers falls far below these reasonable expectations. 114.116. Upon information and belief, Horizon acted as the Plan administrator and as fiduciary to the Horizon Subscribers for each of the claims at issue in this case. Horizon exercised discretion, authority, control and oversight in determining if Plan benefits would be paid and the amounts of Plan benefits that would be paid. Horizon’s improper administration of these claims resulted in the payment of a mere 30% of the usual and customary rates for the medical services Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 47 of 156 PageID: 1414 - 41 - rendered. It is a gross abuse of any discretionary authority that Horizon may be granted under any Plan. I. Other Improper Actions by Horizon to Delay Payment and/or Refuse to Comply With its Obligations Under the Plans and the Emergency Care Mandates. 1. In-Hospital Denials and Downgrades 115.117. When a patient presents at a CarePoint Hospital for emergency/urgent care, the hospital will ordinarily obtain the patient’s insurance information (if any), notify the patient’s insurer, and provide the insurer with basic information about the patient’s condition, diagnoses, and course of treatment. 116.118. After the CarePoint Hospitals became out-of-network providers, Horizon commenced a practice of giving written notification that it had denied coverage (albeit wrongfully) for emergency/urgent care patients while the patients were still in the hospital receiving emergency/urgent care. 117.119. Horizon’s ongoing practice of issuing in-hospital denials occurs before the patient’s course of emergency/urgent treatment is complete, without the benefit of sufficient medical information or consultation with the attending physician and often without consultation with the attending physician at all. 118.120. Horizon’s in-hospital denials are arbitrary, capricious, and self- evidently unlawful. 119.121. Horizon continues this unlawful practice to this very day. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 48 of 156 PageID: 1415 - 42 - 120.122. In addition to in-hospital denials, Horizon also routinely engages in in-hospital downgrades of coverage. 121.123. Horizon’s common practice in this regard is as follows: While the patient is being treated in the hospital, Horizon sends formal correspondence to the attending physician and to the CarePoint Hospital’s case management staff advising that Horizon has determined that the patient is “medically stable and [able to] be safely transferred to a par [i.e., participating] facility for evaluation and continued care,” although the patient is in fact not medically stable and should not be transferred. Federal and state laws require that determinations of medical stability and fitness for transfer be made by the patient’s attending physician, not by a health insurer, like Horizon. 122.124. Horizon’s correspondence routinely advises that the patient’s continued stay in the CarePoint Hospital will result in the remainder of the patient’s stay being covered only at the patient’s out-of-network rate, and that the patient “should be aware that, generally, when you elect to receive in-patient services from non-participating hospitals, you will incur substantially higher out- of-pocket financial liability because your out-of-network benefits apply, including higher deductible and coinsurance costs.” 123.125. This advice is given even though emergency services, whether zrenderedrendered in an emergency room or following admission to the hospital, Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 49 of 156 PageID: 1416 - 43 - are not considered services “elected” by the patient but rather are services obtained because the patient, acting as a “prudent layperson,” seeks immediate medical attention for a problem perceived to be a serious threat to a patient’s life or continued health. 124.126. Horizon’s in-hospital downgrade letters are typically sent within twenty-four (24) hours after a patient has been admitted through the CarePoint Hospital’s emergency department. 125.127. Moreover, Horizon has deliberately structured its reconsideration procedures relevant to emergency/urgent cases to frustrate legitimate attempts to timely reverse the erroneous denials and downgrades described above. 126.128. Specifically, Horizon only entertains one request for reconsideration of an in-patient denial per day, and only if made within three days after the denial. 127.129. Thus, for example, if a patient is admitted on a Monday and Horizon erroneously denies the claim that day, the CarePoint Hospital may request reconsideration of Monday’s admission no later than Thursday of the same week. If, on the Friday of that week, information is determined that validates the hospital’s decision to admit the patient (for example, a test result), Horizon will not Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 50 of 156 PageID: 1417 - 44 - reconsider its denial for the preceding Monday - even though the hospital would now possess the relevant information to demonstrate that that denial is invalid. 128.130. Instead, the hospital will then be forced to utilize Horizon’s internal appeals process for the erroneously denied days, thus delaying payment. 2. Refusing to Make Direct Payments to the CarePoint Hospitals and Refusing to Provide Claims Information 129.131. Despite the Horizon Subscribers’ having executed the AOB Agreements that direct to the contrary, Horizon routinely sends payments for out- of-network services under some Plans directly to the Horizon Subscribers, particularly where the amount paid is $8,500 or less. 130.132. Upon issuing a check to a Horizon Subscriber, Horizon often fails to send an explanation of benefits (“EOB”) to the provider - because doing so would alert the provider that the payment had been made directly to the Subscriber and would allow the provider to seek the appropriate payment from the Subscriber. 131.133. Moreover, upon information and belief, many Horizon Subscribers do not cash the checks they receive from Horizon at all, out of fear that doing so would have some perceived adverse legal consequence or the belief that the check is a refund for premiums paid. Other Horizon Subscribers do cash the checks, but do not remit payment to their providers out of confusion as to which provider is owed what amount. Still other Horizon Subscribers fail to cash the Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 51 of 156 PageID: 1418 - 45 - check and fail to forward the check to any of their respective providers. Still others cash the checks and later cannot be found. 132.134. Horizon knows, or reasonably should know, that its practice of sending checks to its subscribers routinely prevents the CarePoint Hospitals from receiving payment for healthcare services rendered to patients who have health insurance with Horizon. Moreover, that practice is prohibited by statute for fully insured plans (see N.J.S.A. 26:2S-6.1(c)) and is contrary to Department of Banking and Insurance’s policy and guidance documents. 133.135. Horizon also refuses to provide information to assist the CarePoint Hospitals in their efforts to collect on payments Horizon has made directly to Horizon Subscribers as the result of services rendered by the CarePoint Hospitals. 134.136. Horizon’s malfeasance in this regard has a direct financial benefit to Horizon. Upon information and belief, Horizon books its issuance of a check as an expense, helping Horizon to meet its minimum medical loss ratio, as is required by law. Many of the checks, however, indicate that they are void after 180 days. Upon the expiry of the 180 days if the check is not cashed, Horizon may book an increase in its cash reserves without correspondingly reducing the amount credited to its minimum medical loss ratio. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 52 of 156 PageID: 1419 - 46 - 3. Issuing and Refusing to Correct Erroneous EOBs or Process Appeals 135.137. In addition, Horizon has refused to properly pay claims - either directly to Horizon Subscribers or to the CarePoint Hospitals on the Subscribers’ behalf - arising from emergency/urgent care, thus significantly delaying payment to the CarePoint Hospitals. 136.138. When a Horizon Subscriber arrives at a CarePoint Hospital for emergency/urgent care, Horizon is required by state and federal law to limit the Subscriber’s responsibility for payment to what the Subscriber would be responsible for had the Subscriber sought treatment from an in-network facility. 137.139. The purpose of this requirement is to allow individuals to seek the most expeditious medical care possible when they are experiencing a medical emergency, without regard to the in-network or out-of-network status of the facility at which they are seeking emergency treatment. Upon information and belief, Horizon reaffirms this obligation in member handbooks, benefit booklets, and similar documents provided to subscribers. 138.140. Notwithstanding these legal requirements, Horizon regularly fails to limit Subscriber responsibility to the amount the Subscriber would have paid had he or she received treatment from an in-network facility. Instead, Horizon sends an EOB to the Subscriber reflecting that the Subscriber is obligated to pay the CarePoint Hospitals the difference between Horizon’s “allowed” Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 53 of 156 PageID: 1420 - 47 - amount, and the balance of the CarePoint Hospitals’ charges. Thus, Horizon is in fact refusing to pay the CarePoint Hospitals’ charges incurred by a Horizon Subscriber that Horizon is otherwise required to pay pursuant to its contract with that Subscriber, and under applicable law. 139.141. In addition, Horizon has taken the position that in order for it to correct an erroneous determination of Subscriber responsibility (e.g., where the Subscriber presented as an emergency/urgent case but Horizon failed to honor its obligation to limit the Subscriber’s responsibility to the same amount as they would have paid had they been treated at an in-network hospital), the CarePoint Hospital must first “balance bill” the Subscriber for the amount that Horizon has erroneously determined to be the Subscriber’s responsibility. Here, Horizon places the burden on the CarePoint Hospitals even though Horizon readily acknowledges that its determination was erroneous in the first instance. 140.142. Moreover, even after the CarePoint Hospital has issued a “balance bill,” Horizon has refused to correct its erroneous determination. 141.143. In short, Horizon’s general practice is to force the CarePoint Hospitals to bill Horizon Subscribers for amounts that Horizon is actually required by law and contract to pay. 142.144. Upon information and belief, the overarching purpose of this unlawful practice is to mislead Plaintiffs’ patients and the public into believing that Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 54 of 156 PageID: 1421 - 48 - Horizon pays Plaintiffs what it is legally required to do, and deter Horizon Subscribers from seeking care at the CarePoint Hospitals, even when the need for care is based on an emergency/urgent condition. 143.145. As part and parcel of these obstructionist tactics, Horizon has unlawfully refused to take action with respect to appeals that the CarePoint Hospitals have lodged, including the most basic action of commencing the appeal process. J4. Patient Intimidation and After-the-Fact Patient Steering 146. On at least one occasion, Horizon has contacted a HUMC patient during her hospital stay, which stemmed from a medical emergency, in an attempt to intimidate her and steer her to another hospital to complete her stay and/or in the case of future emergencies. 147. The occasion of which CarePoint is aware occurred during the first week of April 2017. At that time, a patient of Dr. Raul F. Aguilar went into labor and began having painful contractions. She went to HUMC, where Dr. Aguilar has privileges, through the emergency department as it was the closest and most appropriate hospital under the circumstances. 148. While the patient was recovering in her postpartum room, and while HUMC’s lactation consultant was meeting with her, the patient received a call on her cell phone from Horizon which she did not answer. The patient then received a Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 55 of 156 PageID: 1422 - 49 - call on her hospital room phone from a Horizon representative who called to ask if she was aware that HUMC is out-of-network. 149. According to the lactation consultant, who was present during the call, the patient confirmed that HUMC admitted her through the emergency department. According to the patient, she felt very nervous about the call, but confirmed to the Horizon representative that she went through the emergency department because she had painful contractions. In essence, the patient had an emergency and went to the emergency department at the closest hospital where her obstetrician had privileges. 150. CarePoint has concerns that this was not an isolated incident and intends to pursue any other instances of patient intimidation and attempted patient steering in discovery. K. The CarePoint Hospitals Exhaust Available Internal Appeals Remedies. 144.151. Upon information and belief, all available appeals avenues under the Plans applicable to the claims at issue have either been exhausted or rendered futile by Horizon’s refusal to process appeals. 145.152. Upon information and belief, such Plans generally provide for administrative appeal of claim decisions to be processed by Horizon. The CarePoint Hospitals routinely file such internal appeals with the result that Horizon adheres to its initial decision. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 56 of 156 PageID: 1423 - 50 - 146.153. For claims under Plans that are fully insured by Horizon, the Plans generally provide two levels of administrative appeals, both of which are internal appeals within Horizon. The CarePoint Hospitals have timely requested such Level 1 and Level 2 internal appeals for the claims under the fully insured Plans at issue, with the exception of recent claims for which the CarePoint Hospitals have not yet received Horizon’s initial claims decision or the time for filing a request for a Level 1, internal appeal has not yet expired. 147.154. After the Level 1 and Level 2 internal Horizon appeals are exhausted, although not required by the Plans, CarePoint nonetheless routinely seeks further review from the New Jersey Department of Banking and Insurance (“DOBI”) in an effort to avoid the need to seek judicial intervention. However, since the CarePoint Hospitals have been out-of-network with Horizon, with the exception of a few claims, DOBI has refused to consider any of CarePoint’s claims. In some instances, DOBI has cited separate pending litigation between CarePoint and Horizon. In others, DOBI has taken the position that “Provider appeals are not eligible for processing as stage 3 appeals.” As a result, all conceivable available administrative remedies under the fully-insured Plans are effectively exhausted at the conclusion of the Level 2 internal appeal. 148.155. What is more, nearly all of the claims under fully insured Plans for which the CarePoint Hospitals have completed the Level 1 and Level 2 internal Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 57 of 156 PageID: 1424 - 51 - appeals with Horizon have resulted in Horizon simply affirming its initial decision with little or no analysis. Accordingly, it would be futile for the CarePoint Hospitals to continue to even pursue the Level 1 and Level 2 internal appeals process with Horizon for any further claims. 149.156. Plans that are self-funded by the employer or other organization likewise include provisions for appealing claims decisions. The CarePoint Hospitals obtain copies of the summary plan descriptions to identify the appeals process under the Plan that applies to each claim and routinely files appeals in accordance with the Plan’s prescribed procedure. 150.157. Like fully insured Plans, the self-funded plans typically provide for Level 1 and/or Level 2 internal appeals with Horizon and, where required, a Level 3 external appeal per the summary plan description or to the Department of Labor (ERISA). The CarePoint Hospitals have timely requested such Level 1 and Level 2 internal appeals for the claims under the self-funded Plans at issue, with the exception of recent claims for which the CarePoint Hospitals have not yet received Horizon’s initial claims decision or the time for filing a request for a Level 1, internal appeal has not yet expired. 151.158. With the exception of a few claims, the CarePoint Hospitals have been unable to file and prosecute Level 3 external appeals because Horizon has recently initiated a practice of sending its decision letter regarding the Level 2 Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 58 of 156 PageID: 1425 - 52 - appeals only to the Plan member with the result that the CarePoint Hospitals are denied prompt notice of the decision and must attempt to obtain copies of the decisions directly from the Plan member. When the CarePoint Hospitals have been able to submit Level 3 external appeals, they have often been told summarily that providers are ineligible to submit such appeals. 152.159. Again, nearly all of the claims under self-funded Plans for which the CarePoint Hospitals have completed the Level 1 and/or Level 2 internal appeals with Horizon have likewise resulted in Horizon simply affirming its initial decision with little or no analysis. Accordingly, it would be futile for the CarePoint Hospitals to continue to seek Level 1 and Level 2 internal appeals with Horizon for any further claims. Given the above, it would also be futile for the CarePoint Hospitals to continue to request Level 3 external appeals for future claims. 153.160. Regardless of whether Horizon has conducted or refused to conduct the appeal procedures set forth in Horizon’s own documents, Horizon has failed to fully pay the CarePoint Hospitals for the health care services they have provided to Horizon Subscribers, and nearly $126.0 million remains due and owing to the CarePoint Hospitals for these services provided to Horizon Subscribers who are non-SHBP-members from June 1, 2015 to January 31, 2017. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 59 of 156 PageID: 1426 - 53 - 154.161. Moreover, Horizon has failed to adequately explain the basis for its dramatic underpayments to the CarePoint Hospitals. In particular, Horizon has failed or refused to: (a) provide the specific reason or reasons for the denial of claims; (b) provide the specific Plan provisions relied upon to support the denials; (c) provide the specific rule, guideline or protocol relied upon in making the decision to deny claims; (d) describe any additional material or information necessary to perfect a claim, such as the appropriate diagnosis/treatment code; and (e) notify the relevant parties that they are entitled to have, free of charge, all documents, records and other information relevant to the claims for benefits. 155.162. This action is timely commenced well within six years after the CarePoint Hospitals were notified by Horizon that Horizon was rejecting or dramatically underpaying the CarePoint Hospitals’ claims for the services that the CarePoint Hospitals provided to Horizon Subscribers, and otherwise within six (6) years after each of the CarePoint Hospitals’ claims against Horizon accrued. II. Horizon’s Multiple RICO Violations. A. Overview. 156.163. Even worse than Horizon’s simple refusal to pay Plaintiffs, as required by the terms of its Plans and applicable law, are the fraudulent tactics that Horizon has used to conduct and participate in the affairs of its insurance networks and subnetworks - including the Tier 1 members of its so-called “OMNIA” Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 60 of 156 PageID: 1427 - 54 - alliance. As described more fully below, in doing so, Horizon has engaged in multiple violations of RICO, 18 U.S.C. §§ 1961-1968. 157.164. As set out more fully below, Horizon’s network of participating providers and its subnetworks, including its so-called “OMNIA” subnetwork of Tier 1 providers, as well as its union with Barnabas, are association-in-fact enterprises within the meaning of 18 U.S.C. § 1961(4). 158.165. Moreover, as set out more fully below, Horizon has conducted or participated in the affairs of these enterprises through a pattern of racketeering activity within the meaning of 18 U.S.C. §§ 1961(1) and (5). In doing so, Horizon has violated 18 U.S.C. § 1962(c). 159.166. As described more fully below, the pattern of racketeering activity involves Horizon’s multiple and repeated violations of 18 U.S.C. §§ 1341 and 1343. Specifically, Horizon has repeatedly used the mails and wires in furtherance of two distinct but interrelated schemes to defraud: (i) Horizon’s attempt to mislead the public in general, and the patients and physicians of the Plaintiffs in particular, into believing that the Plaintiffs are greedy, overbill their patients, and provide substandard healthcare; and (ii) Horizon’s attempt to mislead its subscribers, the public, regulators, and others into believing that Horizon pays Plaintiffs what it is legally obligated to pay healthcare providers for services Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 61 of 156 PageID: 1428 - 55 - rendered to Horizon Subscribers; and that any additional amounts charged by Plaintiffs must be the result of greed and overbilling. 160.167. Not only has Horizon conducted and participated in the management of its networks and subnetworks through a pattern of racketeering activity, it has conspired with one or more competitors of the CarePoint Hospitals, including Barnabas (now known as RWJ Barnabas following a merger),, to do so. In doing so, Horizon has violated 18 U.S.C. § 1962(d). 161.168. As described more fully above and below, the CarePoint Hospitals have been injured in their business and property through Horizon’s multiple RICO violations and, thus, have standing to bring this action under RICO’s civil enforcement provision, 18 U.S.C. § 1964(c). B. The RICO Enterprises. 1. The Network Enterprise 162.169. At all relevant times, Horizon has conducted or participated in the conduct of the affairs of an association-in-fact enterprise within the meaning of 18 U.S.C. §1961(4): Horizon’s network of contracted hospitals, referred to herein as the “Network Enterprise.” 163.170. Numerous entities have and do make up the Network Enterprise. In addition to Horizon, its current members include, but are not limited to: (a) Atlantic Health System; (b) Barnabas and Robert Wood Johnson Health Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 62 of 156 PageID: 1429 - 56 - System, now known as RWJ Barnabas after their merger in 2016; (c) Hackensack University Health Network; (d) Hunterdon Healthcare; (e) Inspira Health Network; (f) Summit Medical Group; (g) each of the individual hospitals within each of the foregoing health systems; and (h) at various times, numerous other hospitals and medical providers (including the Plaintiffs for a portion of the relevant period) ((a) through (h) are collectively referred to herein as the “In-Network Providers”). 164.171. At all relevant times, the Network Enterprise has been and continues to be engaged in activities affecting interstate commerce, including but not limited to advertising products and services across state lines, selling insurance to the residents of various states, and providing medical care to the residents of various states. 165.172. The Network Enterprise is separate and distinct from the members of the Network Enterprise. The Network Enterprise is an ongoing organization that exists to advance the interests of the individual entities that comprise its membership. 166.173. The Network Enterprise has operated as a continuing unit since at least Horizon’s formation in or around 1985. 167.174. A principal purpose of the Network Enterprise is to benefit each of its participants at the expense of out-of-network providers like the Plaintiffs, as Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 63 of 156 PageID: 1430 - 57 - well as the majority of other stand-alone, independent hospitals in New Jersey, by increasing its members’ patient volume. 168.175. Relationships exist among the In-Network Providers which have agreed amongst themselves which In-Network Provider will service which geographic region. Moreover, the In-Network Providers cooperate with one another to handle the increased patient volume designed to benefit the members of the Network Enterprise and thus carry on the purpose of the Network Enterprise. Healthcare providers who are members of the Network Enterprise contract with Horizon to accept discounted negotiated rates as payment in full for covered services. 176. Throughout its existence, the Network Enterprise has had a hierarchical structure comprised of higher-level and lower-level subnetworks. Those at the higher-level tiers have agreed among themselves and with Horizon to cover specific geographic regions. Currently, the members of the “OMNIA Tier 1 Enterprise” (described below) are at the highest-level tier of the Network Enterprise. 169.177. The Network Enterprise ostensibly exists for the legitimate purpose of providing a network of healthcare providers united for the purpose of providing healthcare at lower costs than their competitors. Indeed, at various times, all of the Plaintiffs have been In-Network Providers with respect to Horizon. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 64 of 156 PageID: 1431 - 58 - 170.178. However, driven by personal animus toward Plaintiffs, and its insatiable desire for greater profits and domination of the health insurance market in New Jersey, Horizon has conducted or participated in the conduct of the affairs of the Network Enterprise in relation to Plaintiffs through a separate and distinct “pattern of racketeering activity” within the meaning of 18 U.S.C. § 1961(5), described more fully below. 171.179. Each member of the Network Enterprise performs a role in the group consistent with its organizational structure, which furthers the activities of the Network Enterprise. For example, the In-Network Providers treat Horizon Subscribers at discounted rates. Likewise, Horizon steers its subscribers to the In- Network Providers and away from out-of-network providers in order to generate the increased volume necessary to maintain the Network Enterprise. 172.180. The Network Enterprise is an ongoing enterprise with no foreseeable end. 2. The OMNIA Tier 1 Enterprise 173.181. Since at least September 2015, Horizon has conducted or participated in the conduct of the affairs of another association-in-fact enterprise within the meaning of 18 U.S.C. § 1961(4): the “OMNIA Tier 1 Enterprise” (the OMNIA Tier 1 Enterprise and the Network Enterprise are collectively referred to herein as the “RICO Enterprises”). .” Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 65 of 156 PageID: 1432 - 59 - 174.182. The OMNIA Tier 1 Enterprise is a subnetwork within the Network Enterprise and comprises Horizon and other health care providers whom Horizon has designated as “Tier 1” under Horizon’s so-called OMNIA Health Alliance (“OMNIA”) product. 175.183. For more than two years, while Plaintiffs were all in-network with Horizon, Horizon was covertly developing the OMNIA product, in which it would subdivide its network of participating providers into two subnetworks, “Tier 1” and “Tier 2,” and provide substantial financial incentives for subscribers to obtain health care at Tier 1 providers instead of Tier 2 providers. 176.184. The following entities, in addition to Horizon, are current “Tier 1” members of Horizon’s OMNIA product and, thus, participants in the OMNIA Tier 1 Enterprise: (a) Atlantic Health System; (b) Barnabas and Robert Wood Johnson Health Systems (now known as RWJ Barnabas after their merger in 2016); (c) Hackensack University Health Network; (d) Hunterdon Healthcare; (e) Inspira Health Network; (f) Summit Medical Group; and (g) each of the individual hospitals within each of the foregoing health systems ((a) through (g) are collectively referred to herein as the “OMNIA Tier 1 Providers”). 177.185. At all relevant times, the OMNIA Tier 1 Enterprise has been and continues to be engaged in activities affecting interstate commerce, including but not limited to advertising its products and services across state lines, selling Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 66 of 156 PageID: 1433 - 60 - insurance to the residents of various states, and providing medical care to the residents of various states. 178.186. The OMNIA Tier 1 Enterprise is separate and distinct from each of the members of the OMNIA Tier 1 Enterprise. The OMNIA Tier 1 Enterprise is an ongoing organization that exists to advance the interests of the individual entities that comprise its membership. 179.187. A principal purpose of the OMNIA Tier 1 Enterprise is to make money for its members at the expense of providers that Horizon has designated as “Tier 2” under its OMNIA product, as well as out-of-network hospitals like the Plaintiffs and other stand-alone, independent hospitals in New Jersey, by increasing its members’ patient volume. 180.188. Relationships exist among the OMNIA Tier 1 Providers which have agreed amongst themselves which In-Network Provider will cover which geographic region. Moreover, the In-Network Providers cooperate with one another to handle the increased patient volume designed to benefit the members of the OMNIA Tier 1 Enterprise and thus carry on the purpose of the OMNIA Tier 1 Enterprise. In this way, as Horizon has acknowledged in an affidavit from Robert Franzoi, Vice President of Health Delivery for Horizon, dated March 13, 2017, “Horizon has partnered with certain providers to manage a population of Horizon members.” Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 67 of 156 PageID: 1434 - 61 - 181.189. On the surface, the OMNIA Tier 1 Enterprise may appear to be a legitimate association of Horizon and healthcare providers united for the purpose of providing healthcare at lower costs than their competitors. But they are able to do so profitably only because of the increased volume Horizon has secured through Horizon’s pattern of racketeering activity within the meaning of 18 U.S.C. § 1961(5), described more fully in Parts II.C-E below. 182.190. The OMNIA Tier 1 Enterprise has operated as a continuing unit since at least September 2015, the date on which Horizon announced the OMNIA Insurance Product and the original Tier 1 members of the OMNIA Tier 1 Enterprise. 183.191. Each member of the OMNIA Tier 1 Enterprise performs a role in the group consistent with its organizational structure, which furthers the activities of the OMNIA Tier 1 Enterprise. For example, the OMNIA Tier 1 Providers treat Horizon Subscribers at discounted rates and accept, quid pro quo, a share in Horizon’s savings. Likewise, Horizon steers its subscribers to the OMNIA Tier 1 Providers and away from Tier 2 and out-of-network providers in order to generate the increased volume necessary to maintain the OMNIA Tier 1 Enterprise. 184.192. The OMNIA Tier 1 Enterprise is an ongoing enterprise with no foreseeable end. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 68 of 156 PageID: 1435 - 62 - 3. The Horizon-Barnabas Enterprise 193. Since at least May 2014, and, upon information and belief dating back earlier, Horizon has conducted or participated in the conduct of the affairs of another association-in-fact enterprise within the meaning of 18 U.S.C. § 1961(4): the “Horizon-Barnabas Enterprise” (the Horizon-Barnabas Enterprise, OMNIA Tier 1 Enterprise, and the Network Enterprise are collectively referred to herein as the “RICO Enterprises”). 194. The Horizon-Barnabas Enterprise is a bilateral enterprise comprised of Horizon and Barnabas, including the hospitals within the Barnabas health system. 195. At all relevant times, the Horizon-Barnabas Enterprise has been and continues to be engaged in activities affecting interstate commerce, including but not limited to advertising its products and services across state lines, selling insurance to the residents of various states, and providing medical care to the residents of various states. 196. The Horizon-Barnabas Enterprise is separate and distinct from each of the members of the Horizon-Barnabas Enterprise. The Horizon-Barnabas Enterprise is an ongoing organization that exists to advance the interests of the individual entities that comprise its membership. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 69 of 156 PageID: 1436 - 63 - 197. A principal purpose of the Horizon-Barnabas Enterprise is to make money for its members at the expense of out-of-network hospitals like the Plaintiffs and other stand-alone, independent hospitals in New Jersey, by increasing its members’ patient volume. 198. Another purpose of the Horizon-Barnabas Enterprise is to acquire control over CarePoint and the CarePoint Hospitals, both of which are engaged in activities which affect interstate commerce. 199. Relationships exist between Barnabas and Horizon which have agreed amongst themselves to work together to destroy BMC and, upon information and belief, other CarePoint Hospitals. 200. Specifically, regarding BMC, high level executives at Barnabas had, and upon information and belief continue to have, discussions about how overtake emergency medical services and, ultimately, the hospital market in Bayonne and to acquire control over BMC. 201. Upon information and belief, at the time Barnabas purchased Jersey City Medical Center (“JCMC”), high level executives from both entities conducted a series of transition meetings. 202. Upon information and belief, among other business and integration strategies, these high-level executives discussed Barnabas’ plans to overtake the Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 70 of 156 PageID: 1437 - 64 - emergency medical services (“EMS”) and, ultimately, the hospital market, in Bayonne at the expense of BMC. 203. Upon information and belief, the first step in the process discussed by these high-level executives was the development of a satellite emergency department (“SED”) in Bayonne to be run by JCMC and entering into EMS contracts with insurers and ambulance providers for that region. 204. Upon information and belief, Horizon was actively pushing what became known as the “Horizon/Bayonne” strategy. 205. Upon information and belief, during the transition, Dr. Garay, JCMC’s Chief Medical Officer, communicated with representatives at Horizon about accepting “enhanced rates,” that is, rates substantially higher than what JCMC understood to be Horizon’s prevailing in-network rates, in order to take over BMC’s market share in Bayonne. 206. Upon information and belief, at this time, Jay Picerno, Barnabas’s Chief Financial Officer, and a Horizon representative communicated about Barnabas taking over the Bayonne market, Horizon’s offer to give some hospital in the Barnabas system enhanced rates to start a free-standing emergency room, Barnabas’ strong support of the plan. 207. Consistently, upon information and belief, Picerno raised the issue of opening a SED on several occasions during transition meetings as part of the Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 71 of 156 PageID: 1438 - 65 - “Horizon/Bayonne” strategy and confirmed that Horizon was actively supporting, encouraging, and directing Barnabas’ development of the SED. 208. Upon information and belief, Barry H. Ostrowsky, President and Chief Executive Officer of RWJ Barnabas, was also involved directly in conversations with Horizon regarding the “Horizon/Bayonne” strategy. 209. Upon information and belief, the objective of the “Horizon/Bayonne” strategy was to “choke BMC out of the market,” and Horizon shared this goal. 210. In fact, upon information and belief, Picerno, on behalf of Barnabas, had discussions with the new Mayor of Bayonne’s, Jimmy Davis, incoming chief of staff, Mary Jane Desmond, that she questioned what would happen if the SED came through, that Bayonne might close, and that Picerno responded that if that happened, Barnabas would “buy it up.” 211. Moreover, upon information and belief, Picerno had other meetings with the Mayor of Bayonne around the time the Bayonne planning board gave Barnabas approval for the SED and the Mayor expressed concerns that BMC would close its doors in response to which Picerno replied “don’t worry, we’ll buy it.” Upon information and belief, Mayor Davis then asked “why would Barnabas buy BMC?” and Picerno responded that Barnabas would “strip the place,” that “our [Barnabas’] goal is to kill CarePoint, and Horizon is helping us!” Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 72 of 156 PageID: 1439 - 66 - 212. Indeed, since at least the Fall of 2015, Barnabas “has touted a 24/7 emergency department as a main feature of its medical facility planned for Broadway and 24th Street” in Bayonne. See “Battle looms between CarePoint and Barnabas Health over proposed Bayonne ER.” http://www.nj.com/hudson/index.ssf/2016/11/battle_looms_between_carepoint_an d_barnabas_health.html 213. Upon information and belief, Barnabas has nearly completed construction of the facilty, a satellite emergency facility or “SED” pursuant to N.J.A.C. 8:43G-36.1, to be known as Barnabas Health at Bayonne. Id. 214. The Horizon-Barnabas Enterprise has operated as a continuing unit since at least May 2014. 215. Both members of the Horizon-Barnabas Enterprise perform a role in the group consistent with its organizational structure, which furthers the activities of the Horizon-Barnabas Enterprise. For example, Barnabas has spent significant sums to construct an SED the purpose of which is to drive BMC into bankruptcy so that it or Horizon can acquire control over BMC. Likewise, Horizon has offered to pay Barnabas enhanced rates at its Bayonne SED in order for the endeavor to be profitable. Integral to the purpose of the Horizon-Barnabas Enterprise is the steering of patients from CarePoint Hospitals, especially including BMC. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 73 of 156 PageID: 1440 - 67 - 216. The Horizon-Barnabas Enterprise is an ongoing enterprise with no end foreseeable prior to “killing” CarePoint or “choking it out of the market.” C. Horizon’s Pattern of Racketeering Activity. 185.217. Since at least February 2009, and continuing through the present, Horizon has conducted and participated in the conduct of the affairs of its Network Enterprise through a pattern of racketeering within the meaning of 18 U.S.C. § 1961(5), and conspired to do so. Since at least September 2015, and continuing through the present, Horizon has likewise conducted and participated in the conduct of the affairs of the OMNIA Tier 1 Enterprise through a pattern of racketeering within the meaning of 18 U.S.C. § 1961(5), and conspired to do so. Since at least May 2014, and continuing through the present, Horizon has conducted and participated in the affairs of the Horizon-Barnabas Enterprise through a pattern of racketeering within the meaning of 18 U.S.C. § 1961(5), and conspired to do so. 186.218. The pattern of racketeering activity includes multiple acts of mail and wire fraud in violation of 18 U.S.C. §§ 1341 and 1343. As set forth below, Horizon (a) used the mails and wires; (b) in the foreseeable furtherance of; (c) a scheme or artifice to defraud; (d) involving material deceptions; (e) with the intent to deprive the Plaintiffs and other similarly situated hospitals of property. 187.219. Horizon’s schemes to defraud are described in detail in Section Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 74 of 156 PageID: 1441 - 68 - II.D below. Horizon’s predicate acts of mail and wire fraud in furtherance of these schemes to defraud are described in detail in Section II.E below. Horizon’s racketeering acts together have the following features: 1. Relatedness 188.220. Horizon’s acts of racketeering are not isolated events. Rather, all are related to each other in that they have similar purposes, results, participants, victims, methods of commission, and other distinguishing characteristics. All of the acts were done for the benefit and furtherance of Horizon’s and the RICO Enterprises’ agendas. 189.221. Horizon’s predicate acts of racketeering were and continue to be directed at the same overarching goals of greatly harming Plaintiffs financially by deceiving Plaintiffs’ patients, the public, and other third parties into believing that: (a) the Plaintiffs are greedy, overbill their patients, and provide substandard healthcare; and (b) Horizon pays what it is legally obligated to pay providers for services rendered to Horizon Subscribers. 190.222. Horizon has specifically targeted Plaintiffs in pursuit of their goals. It sought to punish Plaintiffs for leaving Horizon’s networks through a mail and wire fraud scheme, the intent of which was to divert business from Plaintiffs and to damage Plaintiffs economically for their choice. Plaintiffs are the intended and actual victims of each separate act of racketeering described herein. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 75 of 156 PageID: 1442 - 69 - 191.223. Horizon has participated in, authorized, and/or ratified the specific acts of mail and wire fraud alleged. It has issued false and misleading public statements over the mails and wires designed to mislead Plaintiffs’ patients, physicians, and the public at large into believing that Plaintiffs are greedy, overbill their patients, and provide substandard healthcare. It has also used the mails and wires to create the false impression that Horizon pays what it is legally obligated to pay providers for services rendered to Horizon Subscribers, to the significant financial detriment of Plaintiffs. 192.224. Horizon and its officers and employees expressly authorized the racketeering acts and participated actively in them. Indeed, Horizon expressly takes credit for much of the public statements and other uses of the mails and wires that comprise predicate acts of racketeering. With respect to other acts, the evidence overwhelmingly demonstrates Horizon’s involvement and coordination. 2. Continuity 193.225. Horizon’s related racketeering acts have extended over a substantial period of time, beginning in at least February 2009, as described herein. 194.226. Horizon’s related predicate acts also involve a continued threat of long-term racketeering activity. 195.227. Upon information and belief, Horizon’s schemes to defraud have generated hundreds of millions of dollars in revenue for itself and members of Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 76 of 156 PageID: 1443 - 70 - the RICO Enterprises, as well as in substantial savings by underpaying out-of- network providers such as Plaintiffs. 196.228. Upon information and belief, Horizon has increased the number of OMNIA subscribers from approximately 250,000 in 2015 to approximately 280,000 in 2016, and this number is expected to grow further in 2017 so long as Horizon is able to continue its pattern of racketeering activity. 197.229. The related predicate acts therefore involve a continued threat of long-term racketeering activity. There is no foreseeable ending point to Horizon’s acts of racketeering against the Plaintiffs and similarly situated hospitals, many of which are “safety net” hospitals located in urban areas that provide essential medical services to patient populations with a disproportionately large percentage of Medicaid, under-insured, uninsured or charity patients 198.230. In addition, as described in greater detail herein, the predicate acts and offenses described herein are Horizon’s regular way of doing business and thereby threaten long-term illegal conduct against the public at large. D. The Schemes to Defraud. 199.231. Horizon’s schemes to defraud have operated to deceive third parties into believing: (a) that the Plaintiffs are greedy, overbill their patients, and provide substandard healthcare; and (b) that Horizon pays what it is legally Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 77 of 156 PageID: 1444 - 71 - obligated to pay providers for services rendered to Horizon Subscribers, to Plaintiffs’ great financial detriment. 200.232. These schemes to defraud advance Horizon’s overarching goal of maximizing its market share in the health insurance market in New Jersey. They do so by, among other things, diverting the existing and future patients of the Plaintiffs and other similarly situated hospitals to Horizon’sfHorizon’s preferred In-Network Providers and OMNIA Tier 1 Providers, and decreasing the market share and profits of the Plaintiffs and other similarly situated hospitals to the point of driving them out into bankruptcy so that they can be acquired by Horizon or one of its preferred In-Network providers and the OMNIA Tier 1 Providers. 201.233. Horizon, and its officers and agents, have used the wires and mails to effectuate its schemes to defraud by transmitting material misrepresentations and/or omissions about the Plaintiffs to third parties in furtherance of these schemes. These misrepresentations include, but are not limited to, claims that the Plaintiffs are greedy, overbill their patients, and provide substandard health care. Likewise, these misrepresentations include, but are not limited to, claims that Horizon always pays what it is legally obligated to pay for services rendered to Horizon Subscribers, including for emergency medical services. Horizon has disseminated such misrepresentations in furtherance of its schemes to defraud on numerous occasions, including the perpetual publication of Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 78 of 156 PageID: 1445 - 72 - many on its website. The time, place, and nature of these misrepresentations are described more fully in Section II.E, below. 202.234. Horizon’s false representations were material in that they were capable of influencing the decisions of those to whom the statements were directed in ways having an adverse financial impact on the Plaintiffs. At all relevant times, such adverse financial impact was not only foreseeable, but also was and is the specifically intended result of Horizon’s fraudulent schemes. Horizon intended and intends for its subscribers to act in reliance on Horizon’s material misrepresentations by discontinuing and/or refusing to receive medical treatment from the Plaintiffs. 203.235. In fact, many deceived third parties have relied on Horizon’s material misrepresentations to the Plaintiffs’ detriment, precisely as Horizon intended. Based on Horizon’s factual misrepresentations about the Plaintiffs and their businesses, patients have disrupted their continuity of care and selected other medical providers. The Plaintiffs thereby have lost money, patient volume, and business opportunities and relationships with persons deceived into believing Horizon’s lies - a direct and intended result of Horizon’s schemes to defraud. 204.236. Horizon acted: (a) with the specific intent to deceive, and (b) for the purpose of depriving the Plaintiffs of property. Horizon’s schemes to defraud not only injured Plaintiffs’ reputation, but also injured the Plaintiffs in Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 79 of 156 PageID: 1446 - 73 - their other legal rights and interests, such as their right of prospective economic advantage. Horizon specifically intended to cause the Plaintiffs such injuries. 205.237. All acts of mail and wire fraud alleged herein were ordered by Horizon and performed by persons acting as agents on behalf of Horizon. In fact, Horizon’s name is on the various communications, advertisements, web pages, and other publications made in furtherance of Horizon’s schemes to defraud. 206.238. Horizon’s acts in furtherance of its schemes to defraud, described in greater detail in Section II.E below, represent a pattern of racketeering activity within the meaning of 18 U.S.C. § 1961(5). E. Horizon Repeatedly Uses the Mails and Wires in Furtherance of its Schemes to Defraud. 1. 2009 - BMC leaves Horizon’s network and Horizon begins its campaign of mail and wire fraud against BMC 207.239. In 2009, approximately a year after acquiring BMC out of bankruptcy, its current owners terminated BMC’s then existing in-network agreement with Horizon as a necessary step to negotiate a sustainable in-network arrangement with Horizon. 208.240. Horizon retaliated against BMC by embarking on its campaign of false and misleading statements about BMC to its patients and the public at large. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 80 of 156 PageID: 1447 - 74 - 209.241. Among other things, Horizon began sending formal correspondence to BMC’s patients through the mails, across the wires, or both, while the patients were being treated in the hospital, to the patient’s home, to the attending physician, and to the relevant BMC case management staff. In these letters, Horizon stated that it had determined that the patient is “medically stable and [able to] be safely transferred to a par [participating] facility for evaluation and continued care,” notwithstanding that the patient is in fact not medically stable and should not be transferred. Federal and state laws require that determinations of medical stability and fitness for transfer be made by the Patient’s attending physician, not by a health insurer like Horizon. 210.242. Horizon’s correspondence stated that the patient’s continued stay at BMC would result in the remainder of the patient’s stay being covered only at the patient’s out-of-network rate, and that the patient “should be aware that, generally, when you elect to receive inpatient services from non-participating hospitals, you will incur substantially higher out-of-pocket financial liability because your out-of-network benefits apply, including higher deductible and coinsurance costs.” Horizon made these statements despite the fact that emergency services, whether rendered in an emergency room or following admission to the hospital, are not considered services “elected” by the patient but, rather, are services obtained because the patient, acting as a “prudent layperson,” Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 81 of 156 PageID: 1448 - 75 - seeks immediate medical attention for a problem perceived to be a serious threat to a patient’s life or continued health. 211.243. Horizon’s misrepresentations had the effect of frightening patients who still required emergency care into removing themselves from Plaintiffs’ care, jeopardizing their health and, in some instances, their lives. It also frightened patients who resided in the vicinity of BMC and require emergency care into using a hospital other than BMC. 212.244. Then, beginning as early as February 2009, Horizon falsely advised its subscribers in the City of Bayonne and the greater surrounding area that, in the event the subscriber has a medical emergency, the subscriber would be responsible for amounts greater than those actually provided by the relevant insurance plan or New Jersey law. 213.245. For example, Horizon placed an advertisement in the February 7, 2009 edition of the Jersey Journal stating, “If you continue to use BMC Medical Center, the bottom line will be higher health care costs and higher health insurance premiums.” This advertisement appeared the day after the 2009 termination of the Participating Provider Agreement between BMC and Horizon. 214.246. Upon information and belief, Horizon used the mails and/or wires to place this false and misleading advertisement. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 82 of 156 PageID: 1449 - 76 - 215.247. In addition, the Jersey Journal was distributed through the mails and/or the wires and Horizon intended its advertisement likewise to be distributed to Horizon Subscribers through the mails and/or the wires. 216.248. Horizon knew, or reasonably should have known, that the “information” it disseminated in this regard was false and/or misleading, and calculated to harm BMC. 217.249. What is more, the so-called “information” it disseminated put the lives of its own subscribers at risk. Based on the information Horizon disseminated, a Horizon Subscriber experiencing a medical emergency or urgent problem would be encouraged to seek treatment at a facility other than BMC - even if BMC was the closest hospital - with the inevitable effect of delaying the subscriber’s evaluation and treatment, and putting the subscriber’s life and/or health at risk. 2. 2009-11 - Horizon commences the 2009 Lawsuit and continues its mail and wire fraud campaign 218.250. Horizon then filed the 2009 Lawsuit against BMC in the Superior Court of New Jersey, Chancery Division, Essex County, described above, in which Horizon alleged, inter alia, that BMC violated the IFPA and engaged in common law fraud, negligent misrepresentation, and tortious interference. BMC filed counterclaims in the 2009 Lawsuit arising out of Horizon’s pattern of underpayments to BMC and attempts to steer BMC’s patients away from BMC. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 83 of 156 PageID: 1450 - 77 - 219.251. While the 2009 Lawsuit was pending, Horizon continued to disseminate false and misleading statements about BMC over the mails and wires. For example, on December 5, 2009, Horizon sent a letter, through the mails, to subscribers who had recently received care at BMC stating in part: We understand there may be some confusion over recent communications from Bayonne Medical Center regarding your financial obligations for the services you received there. We are currently involved in litigation and whether or not Bayonne Medical Center is entitled to additional payment is a subject of the litigation. If you receive a bill or any other communication from the hospital regarding Horizon BCBSNJ’s payments, or the hospital’s charges, we request that you contact us immediately. 220.252. Horizon knew, or reasonably should have known, that the “information” it disseminated in this regard was false and/or misleading because Horizon incorrectly advised its subscribers that all claims for healthcare services rendered by BMC were at issue in the 2009 Lawsuit. 221.253. Upon information and belief, Horizon intended this communication to confuse subscribers into thinking that BMC was not entitled to any payment for its services, and therefore incentivize its subscribers to not forward any payments to BMC. 222.254. Upon information and belief, Horizon intended this communication to confuse its subscribers into questioning whether they will have insurance coverage if they receive future services at BMC while litigation is pending. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 84 of 156 PageID: 1451 - 78 - 223.255. Upon information and belief, Horizon’s statements were made with the intent to discourage its subscribers from receiving future services from BMC in violation of its own contracts with its subscribers and applicable law. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 85 of 156 PageID: 1452 - 79 - 3. 2011-15 - Horizon’s case is dismissed and Plaintiffs join Horizon’s network 224.256. On August 12, 2011, this Court granted summary judgment in BMC’s favor and dismissed Horizon’s claims in the 2009 Lawsuit against BMC under the IFPA, and for common law fraud, negligent misrepresentation, tortious interference, and conversion. At that point, the only claims that remained in the 2009 Lawsuit were BMC’s counterclaims and Horizon’s declaratory judgment count asking this Court to declare, inter alia, that BMC was not entitled to further payment from Horizon. 225.257. On September 9, 2011, BMC and Horizon entered into the above-described Settlement Agreement. The purpose of the Settlement Agreement was to fully resolve all claims in the 2009 Lawsuit and all disputes between BMC and Horizon in accordance with the terms set forth in the Settlement Agreement. 226.258. Under the Settlement Agreement, BMC entered into a Network Hospital Agreement and related agreements with Horizon. By virtue of those agreements, BMC was entitled to be considered an in-network provider with respect to Horizon for a period of four years - i.e., through September 10, 2015. 227.259. The Settlement Agreement provided that “Acquired Hospitals” hospitals acquired by BMC’s ownership after the settlement agreement took effect - would also be participants in Horizon’s network. HUMC and Christ Hospital Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 86 of 156 PageID: 1453 - 80 - are “Acquired Hospitals” within the meaning of the Settlement Agreement and became In Network providers with respect to Horizon. 228.260. The Settlement Agreement, resulting in Plaintiffs becoming in- network providers with respect to Horizon, put a temporary halt on Horizon’s campaign of mail and wire fraud directed to Plaintiffs. 4. 2015-present - the mail and wire fraud resumes 229.261. However, as the date approached for Plaintiffs to negotiate sustainable renewal network agreements with Horizon - which required Plaintiffs to follow the termination procedures of the applicable network hospital agreements to prevent the agreements from automatically renewing at unsustainable in- network rates - Horizon’s renewed its campaign of mail and wire fraud against Plaintiffs in earnest. a. Bad faith negotiations with and disparaging online statements about Christ Hospital 230.262. Pursuant to the Settlement Agreement, BMC was an in-network hospital with Horizon through on or about September 30, 2015. Christ Hospital, an “Acquired Hospital” under the Settlement Agreement, was in-network with Horizon through on or about October 31, 2014. HUMC, another “Acquired Hospital” within the meaning of the Settlement Agreement, was in-network with Horizon through on or about November 4, 2015. By virtue of 90-day contractual notice periods and an additional, legally-mandated four-month cooling off period, Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 87 of 156 PageID: 1454 - 81 - Christ Hospital remained in-network with Horizon through on or about May 31, 2015; BMC remained in-network with Horizon through on or about May 1, 2016; and HUMC remained in-network with Horizon through on or about June 2, 2016. 231.263. In the months leading up to Christ Hospital’s going out-of- network with Horizon effective June 1, 2015, Christ Hospital attempted to negotiate with Horizon in good faith to renew the in-network relationship. However, Horizon refused to offer Christ Hospital anything close to sustainable in- network rates. Horizon’s last and best offer, made shortly before the expiration of the network relationship, amounted to an effective overall increase in the proposed in-network rates of 4%. This was effectively no offer at all since it equated to increases that Horizon was already obligated to provide to account for increases in the consumer price index. 232.264. Horizon’s proposal for Christ Hospital was particularly unreasonable given that the in-network rates then in place were the result of an agreement with Horizon that the current owners of Christ Hospital inherited upon purchasing the hospital out of bankruptcy in 2012. 233.265. Horizon’s proposed new rates also failed to take into account Christ Hospital’s unique patient mix comprising a large percentage of uninsured and underinsured patients, and may very well have led Christ Hospital back into bankruptcy. Thus, it was apparent that Horizon was negotiating with the owners of Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 88 of 156 PageID: 1455 - 82 - Christ Hospital in bad faith in an effort to drive the hospital out of Horizon’s network. 234.266. Making Horizon’s bad faith conduct all the more egregious, Horizon’s refusal to offer rate increases to Christ Hospital came at a time when Horizon was secretly planning to roll out its OMNIA product just a few months later. Thus, as described more fully in Part II.E.5, infra, Horizon was refusing to offer any rate increase to Christ Hospital at a time when it was secretly projecting that Christ Hospital would lose at least $1.1 million in revenue in 2016 as a result of its rollout of the OMNIA. 235.267. Even worse, while Christ Hospital was in the midst of negotiations for a successor network agreement with Horizon during the statutory- mandated cooling off period, Horizon embarked on a publicity campaign against Christ Hospital designed to confuse and discourage members from seeking treatment at Christ Hospital and the other CarePoint Hospitals. 236.268. For example, commencing in January 2015, Horizon posted a notice on its website entitled, “CarePoint Health - Christ Hospital has terminated its hospital contract with Horizon Blue Cross Blue Shield of New Jersey,” accompanied by a set of responses to “Frequently Asked Questions.” In the notice and responses to the “Frequently Asked Questions,” Horizon blamed CarePoint’s impending out-of-network status on “demands for rate increases made by Christ Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 89 of 156 PageID: 1456 - 83 - Hospital” - deliberately ignoring the facts that Horizon had offered essentially no increase in rates and that the rates then in place were those that Christ Hospital’s owners had inherited when purchasing the hospital out of bankruptcy. 237.269. Horizon also encouraged its members to transition immediately to other in-network hospitals, even though Christ Hospital remained in-network with Horizon for another four months by virtue of the statutory cooling off period, see, e.g., N.J.S.A. 26:2J-11.1, and BMC’s and HUMC’s Network Hospital Agreements remained in place. b. Disparaging online articles accusing BMC of “price gouging” 238.270. On the heels of Horizon’s bad faith negotiations with and disparaging statements about Christ Hospital, Horizon also targeted BMC in public statements sent over the mails and wires. For example, on March 23, 2015, Robert Marino, Horizon’s Chairman and CEO, authored a guest Op-Ed piece in the online publication, NJ.com, entitled, “New Jersey needs stricter regulation to curb out-of- network health care charges” (the “Horizon Op-Ed Article”). In the Horizon Op- Ed Article, Mr. Marino accuses “a few hospitals and doctors” of “abuse” of a “well-intended out-of-network (OON) regulation” and of charging “exorbitant prices.” Mr. Marino, on behalf of Horizon, made a thinly veiled reference to BMC as one of the “few hospitals” engaged in this alleged “abuse” and of charging “exorbitant prices.” Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 90 of 156 PageID: 1457 - 84 - 239.271. The paragraph immediately preceding those allegations explicitly refers to a 2013 New York Times article identifying BMC as the hospital “with the highest billing rate in the nation” and one “that is four times higher than the national average.” The Horizon Op-Ed Article even provided a link to the New York Times article. 240.272. Moreover, the initial version of the Horizon Op-Ed Article on NJ.com was accompanied by a photograph of the front entrance of BMC and a caption that read, “New Jersey does not regulate what out-of-network hospitals and doctors can charge for their services, which means facilities like Bayonne Medical Center can set high fees for common hospital treatments.” This is especially misleading in that BMC was at that time an in-network hospital with respect to Horizon. 241.273. Only after representatives of BMC contacted NJ.com on March 24, 2015, was the photograph and caption changed, although the Horizon Op-Ed Article with the link to the New York Times article remains online and accessible. 242.274. Then, on March 25, 2015, Horizon issued a press release announcing a supposedly “educational” website. This website, entitled, “Did you know that New Jersey residents pay some of the highest health care costs in the country?”, accuses “some providers” of “gouging the health care system - and all Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 91 of 156 PageID: 1458 - 85 - New Jersey residents - by charging prices that bear no relation whatsoever to the cost of treatment.” 243.275. As with the Horizon Op-Ed Article, Horizon’s website associated those allegations to BMC by citing and linking to the 2013 New York Times article about BMC. 244.276. A document available on Horizon’s website, entitled, “An Analysis of Policy Options for Involuntary Out-of-Network Charges in New Jersey,” also made reference to BMC by citing and linking to the 2013 New York Times article about BMC. 245.277. When a New Jersey state court ordered Horizon to take down these disparaging articles from its website, Horizon violated the Order. In fact, Horizon did not remove the links and references to the New York Times article from its own website until nearly two weeks after the Order. Horizon subsequently made only half-hearted, if any, efforts to have NJ.com, which published the Horizon Op-Ed Article, remove the link and reference to the New York Times article from the Op-Ed piece, and it remains in public view. c. Bad faith negotiations with and further disparaging statements about BMC and HUMC 246.278. Horizon also engaged in bad faith negotiating tactics prior to the scheduled terminations of its network arrangements with BMC on May 1, 2016, and with HUMC on June 2, 2016. In fact, rather than engage in Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 92 of 156 PageID: 1459 - 86 - negotiations, Horizon stopped negotiations dead in their tracks for weeks on end by refusing even to respond to CarePoint’s proposals. For example, after BMC made a rate increase proposals in January 2016, Horizon waited over two months before making any response. In mid-March, Horizon finally responded by stating only that it rejected BMC’s proposal and was not in a position to make a counter- proposal for at least two more weeks or the beginning of April 2016. As result, Horizon completely suspended negotiations for more than half of the four month cooling off period and withheld making any counter-proposals until the last remaining month before BMC would be forced out-of-network on May 1, 2016. 247.279. Meanwhile, on March 7, 2016, New Jersey Senate President Stephen Sweeney’s press office e-mailed a copy of testimony the Senator was expected to present supporting Horizon’s OMNIA Plan during New Jersey Senate hearings that day. Among other things, Senator Sweeney was quoted as saying: “here in New Jersey we have … for-profit hospital systems like CarePoint that are ripping off New Jersey consumers” and that “CarePoint has a hospital that has the highest billing rates in the United States of America, according to the New York Times.” News reporters who received by email a copy of the Senator’s remarks/testimony, later discovered that “Bill Castner” of “Horizon-BCBSNJ” was listed as the “author” in a drop-down menu of information about the file. Later, it was revealed that Horizon had actually been provided an advance draft of Senator Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 93 of 156 PageID: 1460 - 87 - Sweeney’s testimony and reviewed and recommended changes, and forwarded the draft back to Senator Sweeney’s staff by e-mail. 248.280. Then, beginning in April 2016, Horizon also made public statements over the mails and wires forecasting that BMC and HUMC would soon be out-of-network with Horizon, and falsely blaming the CarePoint Hospitals for their impending out-of-network status. 249.281. For example, in a press release issued online on April 26, 2016, Horizon made the following statements: Two hospitals owned by the for-profit CarePoint Health company, Bayonne Hospital and Hoboken University Medical Center, will end their longstanding relationship with Horizon Blue Cross Blue Shield New Jersey (Horizon BCBSNJ) in the next 45 days. CarePoint Health terminated, without cause, both contracts and refused reimbursement increases offered by Horizon BCBSNJ, the state’s largest health insurer. … We have put forward a number of reasonable offers to CarePoint and continue to hope that they will return to the negotiating table. 250.282. Horizon did not stop there. On June 2, 2016, the day after BMC’s out-of-network status with Horizon became effective, Ward Sanders of the New Jersey Association of Health Plans (“NJAHP”) published highly disparaging statements accusing the CarePoint Hospitals of misleading consumers about their network status, and stating the following in response to BMC’s out-of-network status: “The problem of price gouging and surprise billing just got bigger for New Jersey consumers, the State Health Benefits Program, the State Treasury and public Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 94 of 156 PageID: 1461 - 88 - employees. . . The governor’s proposed 2017 budget calls for $250 million in health care cost savings, yet CarePoint’s departure from the Horizon network will only exacerbate the challenges of rising health care costs for the state and other employers.” 251.283. Upon information and belief, Horizon played an active role in the formulation of the NJAHP’s press release. Indeed, given Horizon’s active membership in the NJAHP and the timing of the NJAHP’s statements in relation to the effective date of BMC’s out-of-network status, there can be no question that Horizon was involved. 5. Horizon secretly develops the OMNIA Tier 1 Enterprise 252.284. Upon information and belief, as early as 2014, Horizon began taking steps to develop the OMNIA Tier 1 Enterprise with the intent to exclude the CarePoint Hospitals as well as the majority of other stand-alone, independent hospitals in New Jersey, many of which are “safety net” hospitals located in urban areas and provide essential medical services to patient populations with a disproportionately large percentage of Medicaid, under-insured, uninsured or charity patients. 253.285. In furtherance of this plan, Horizon commissioned consultant, McKinsey & Co., to conduct a study and prepare a report (the “McKinsey Report”) which, upon information and belief, included among other things: (a) developing Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 95 of 156 PageID: 1462 - 89 - quality scores for New Jersey hospitals; (b) comparing the hospitals’ costs; (c) projecting how many patients would stop going to the non-preferred, or Tier 2, hospitals and shift to Tier 1 facilities; (d) projecting the revenues Tier 1 hospitals would gain and Tier 2 hospitals would lose if the OMNIA Plan performed as projected; and (e) estimating what profits Horizon could expect, depending on how it grouped the hospitals. 254.286. Upon information and belief, McKinsey & Co. completed its study and issued the McKinsey Report to Horizon on or about May 20, 2014. 255.287. Upon information and belief, sometime after receiving the McKinsey Report in 2014 and long before announcing the OMNIA Plan in September 2015, Horizon secretly identified a group of hospitals it wanted to include in the top tier (i.e., the members of the OMNIA Tier 1 Enterprise) and excluded the CarePoint Hospitals from that group. This group comprised seven large health care systems, representing approximately 25 hospitals and one medical group, to participate as OMNIA Tier 1 providers and to share in any cost-savings Horizon realized in providing healthcare coverage to OMNIA-insureds as members of the OMNIA Alliance Providers. 256.288. The OMNIA Tier 1 Providers reportedly agreed to reduce their current reimbursement rates with Horizon in return for receiving “exclusivity” arrangements that would drive more revenue to those hospitals as patients migrated Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 96 of 156 PageID: 1463 - 90 - away from Tier 2 hospitals, and a share of any cost-savings realized by Horizon in providing healthcare coverage for OMNIA insureds. 257.289. Horizon announced its new OMNIA Plan to the public on September 10, 2015. According to Horizon, the OMNIA Plan provides reduced premiums to Horizon Insureds and provides substantial financial incentives for them to obtain health care at Tier 1 providers instead of Tier 2 providers. 258.290. On its website, Horizon describes the OMNIA Tier 1 Providers as: a. “a first-of-its-kind collaboration between some of the top health care organizations across the state dedicated to accelerating the transformation of the state’s health care system to one that rewards high quality health care;” b. “a powerful collaboration of the top health care organizations in the state focused on helping consumers experience health care in a new, more effective and efficient way;” and c. an “unprecedented collaboration between top health care organizations in New Jersey.” 259.291. On its website, Horizon describes the healthcare provider members of the OMNIA Alliance Providers not only as “Tier 1” but also as “the top health care organizations in the state,” suggesting that Tier 2 and out-of- network hospitals are either pedestrian or substandard. 260.292. Because the hospitals operated by the members of the OMNIA Alliance Providers did not provide all the geographic coverage required to meet Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 97 of 156 PageID: 1464 - 91 - regulatory requirements, Horizon sought to fill the gaps in geographic coverage for the Tier 1 network by soliciting strategically located hospitals to participate as Tier 1 providers (“Other Tier 1 Hospitals”). Unlike the OMNIA Alliance Providers, the Other Tier 1 Hospitals will not receive a share of any cost-savings realized by Horizon. 261.293. Horizon originally designated approximately 34 hospitals as “Tier 1” hospitals. It designated approximately 23 hospitals as “Tier 2” hospitals. BMC and HUMC, which were in-network with Horizon when OMNIA was announced, were relegated to “Tier 2” hospital status. 262.294. Horizon gave BMC and HUMC no notice of the creation of OMNIA or the preferred Tier 1 subnetwork associated with it before the September 10, 2015, public announcement. Nor did Horizon give BMC or HUMC any opportunity to participate in OMNIA prior to the public announcement. This is so, even though, according to the testimony of Horizon CEO Robert Marino before committees of the New Jersey Senate, Horizon had conducted “a very deliberate internal process to evaluate potential partners” for the OMNIA Alliance Providers, had begun its evaluation more than two years earlier, and, as noted above, had received the McKinsey Report in or about May 2014. 263.295. All the OMNIA insurance policies are designed to incentivize Horizon Subscribers to use Tier 1 hospitals. In an interview given to Health Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 98 of 156 PageID: 1465 - 92 - Leaders Media on September 28, 2015, CEO Marino stated that OMNIA coverage for services at Tier 2 hospitals will continue at “existing levels” but that members who use Tier 1 hospitals will obtain substantial savings: Members who choose to use a Tier 1 facility will see substantial savings in their out-of-pocket cost in the form of lower deductibles [and] in some cases no deductibles. Members still are going to have access to the broad network. There isn’t any disincentive to use a Tier 2 provider. The benefits will be essentially the same as they are today. It is basically an incentive-based product design[ed] for Tier 1 while still providing broad access to the wider network with essentially the same product design as today. 264.296. This statement by Horizon is self-contradictory and disingenuous. An incentive to use Tier 1 hospitals is a corresponding disincentive to use Tier 2 hospitals. If Horizon Subscribers using a Tier 1 hospital will receive “substantial savings in their out of pocket costs in the form of lower deductibles and, in some cases no deductibles,” those subscribers will necessarily have a financial disincentive to use the Tier 2 hospitals at a higher cost. 265.297. In its Senate Testimony, Horizon admitted that it expected approximately 250,000 members would enroll in OMNIA during its first year, which would result in an estimated loss of 365 inpatient admissions per year, on average, to each Tier 2 hospital, for a loss in revenue of $1.1 million per year for each Tier 2 hospital. As of March 10, 2016, Horizon announced that OMNIA enrollment had reached 234,000 members, including approximately 40,000 members who previously had no health insurance. By October 2016, OMNIA Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 99 of 156 PageID: 1466 - 93 - enrollment reportedly had reached 280,000, or 30,000 more than Horizon had projected. 266.298. A further disincentive to use Tier 2 hospitals was revealed in Horizon’s Senate testimony that OMNIA Plan members who go to a “Tier 2” hospital emergency room and are admitted to that hospital will only receive “Tier 2” benefits, i.e., they will have to pay higher deductibles and out of pocket costs than if they were treated in the emergency room and then admitted to a “Tier 1” hospital. 267.299. Horizon admits that it designated hospitals as Tier 2 without giving those hospitals any notice or opportunity to demonstrate that they satisfy Horizon’s criteria and standards for Tier 1 status. In the Health Leaders Media interview, CEO Marino not only acknowledged but trumpeted this lack of transparency: The process that we used to prioritize and ultimately select our hospital partners was a very deliberate, strategic, almost proprietary process. No hospital was invited into something that resembles an RFP-like process. There were six broad categories that we used in the prioritization process, including: clinical quality, the service offering across the continuum of care, consumer preference data from publicly available sources, value-base care capabilities, scale of the organizations we selected, and their commitment to value. There is a misconception that we didn’t ask certain hospitals to participate. We asked no hospitals to participate. We identified the potential partners we wanted and we approached them. They had no knowledge that they were being prioritized in this process. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 100 of 156 PageID: 1467 - 94 - 268.300. Because the designation of Tier 2 hospitals is skewed toward the hospitals with the highest levels of charity care, the projected loss of over a million dollars in revenue per year is directed at the hospitals that can least afford it. Even if the hospitals could survive such losses, the quality of care they can provide would deteriorate over time. As the director of the Center for State Health Policy has commented: But over time, if nearby tier 2 hospitals lose significant revenue as well-insured patients shift to other facilities, it will become increasingly difficult for them to sustain high-quality care and meet the needs of the most-vulnerable local patients. This is especially troubling for the large population of low-income patients in the Trenton area. Joel C. Cantor, Opinion: “The Omnia Alliance and the Future of New Jersey Safety-Net Hospitals,” Oct. 21, 2015 (http://www.njspotlight.com/stories/15/10/19/opinion-the-omnia-alliance-and-the- future-of-new-jersey-safety-net-hospitals/) (last accessed January 20, 2017). Jeopardizing the financial viability of 23 of its participating hospitals is wholly at odds with Horizon’s mandate as an HSC to serve the needs of the New Jersey hospitals and communities as a whole. 269.301. Further, Horizon’s OMNIA plan provides full benefits (and lower out-of-pocket costs to the patient) for emergency care only when the patient is treated at a Tier 1 hospital irrespective of whether it was the nearest appropriate facility and provides lower benefits (and higher out-of-pocket costs to the patient) Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 101 of 156 PageID: 1468 - 95 - for emergency care when the patient is treated at a Tier 2 or out-of-network hospital. Accordingly, the OMNIA plan circumvents New Jersey’s coverage and payment mandates, described more fully in Part I.D, above, by failing to limit Horizon Subscribers’ financial responsibility, when seeking emergency or urgent care at a Tier 2 or out-of-network facility, to the amounts that they would have paid had they received treatment from a Tier 1 facility. 270.302. Horizon’s refusal to disclose concrete standards and criteria and the weight it gave them, it is apparent that Horizon’s exclusion of BMC and HUMC from Tier 1 status was arbitrary and not based on quality or scope of care or any other objective criteria. Indeed, in its Senate Testimony, Horizon admitted that all hospitals in the Horizon Hospital Network are of high quality. 271.303. In fact, because Horizon failed to consult with the CarePoint Hospitals before unilaterally selecting the members of the OMNIA Tier 1 Enterprise, it could not have accurately assessed whether any of the CarePoint Hospitals qualified for Tier 1 status under the “six broad categories” Horizon allegedly considered. Just by way of example, Horizon would have had no way of accurately assessing the CarePoint Hospital’s “value-based care capabilities” without consulting with them. 272.304. Further, contrary to the suggestion that “clinical quality” was a factor in Horizon’s selection process, the Plaintiffs are equal or superior to many Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 102 of 156 PageID: 1469 - 96 - Tier 1 hospitals in objective measures of quality of care and patient satisfaction, including the nationally recognized Leapfrog metric, which Horizon admits it did not consider, and measures of quality and satisfaction used by the federal Center for Medicare and Medicaid Services (“CMS”) for the Medicaid program. 273.305. In the Fall 2015 Leapfrog Hospital Safety Ratings, all three Plaintiffs received the top “A” safety rating while at least 16 of the Tier 1 hospitals received lower ratings of B (13 of the Tier 1 hospitals) or C (3 of the Tier 1 hospitals). Horizon itself cited and gave monetary awards to BMC and HUMC for quality based upon their “A” safety scores as part of the 2014 Leapfrog Hospital Survey. 274.306. Overall, 60% of the hospitals designated by Horizon as “Tier 2” hospitals received “A” safety scores under the Leapfrog metric. In contrast, two- thirds or 66% of the hospitals designated by Horizon as “Tier 1” hospitals were graded “B” or below. 275.307. In a recent survey of more than two thousand physicians, New Jersey Hospitals were rated for quality in overall care and treatment for various medical conditions. http://www.nj.com/inside- jersey/index.ssf/2016/03/inside_jerseys_top_hospitals_2016.html. To avoid an unfair advantage for larger academic or tertiary care hospitals, the voting was divided into two categories: hospitals with more than 350 beds and those with 350 Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 103 of 156 PageID: 1470 - 97 - or fewer beds. All three CarePoint Hospitals ranked among the top 15 hospitals in their respective size categories for overall care and for treatment of breast cancer, prostate cancer and congestive heart failure. In addition, Christ Hospital was ranked among the top hospitals (more than 350 beds) for the treatment of strokes and HUMC was ranked among the top hospitals (350 beds or fewer) for the treatment of strokes, hip and knee repairs, and neurological disorders. 276.308. Of the fifteen top overall hospitals in the more than 350 beds category, only eleven were initially designated as OMNIA Tier 1, while three were designated as Tier 2 and one (Christ Hospital) is out-of-network with Horizon. Of the fifteen top overall hospitals in the 350 beds or fewer category, only eight were initially designated as OMNIA Tier 1, while six were designated as Tier 2 and one (HUMC) is out-of-network with Horizon. 309. Horizon has actually provided discovery in another matter relating to OMNIA in which the Appellate Division recently sustained two Law Division Orders rejecting Horizon arguments for dismissal. See Hospitals’ suit over OMNIA health plan can continue, Appellate Division says, by Anjalee Khemiani, http://www.njbiz.com/article/20170413/NJBIZ01/170419895/hospitals-suit-over- omnia-health-plan-can-continue-appellate-division-says. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 104 of 156 PageID: 1471 - 98 - 310. Counsel for Centra State Healtcare System, Holy Name Medical Center, and Valley Health System in that matter,1 Michael Furey, commented: “What we believe the documents show is the decisions to partner with the hospitals was based on the size and not the quality of care provided,” Furey said. “The documents tell a much different story than the public statements of Horizon.” Id. 311. Furey further commented that this “ruling is an important step in moving this case forward and unraveling the secrecy surrounding Horizon's ill- conceived OMNIA plan,” Furey said. “We remain confident that ultimately the public will learn the truth about OMNIA and that the court will rule in favor of the hospitals.” Id. 277.312. Yet, in promoting the OMNIA Plan and its Tier 1 hospitals, Horizon has marketed the OMNIA Plan and Tier 1 hospitals as providing superior quality of care. This representation is false and disparaging as to the Plaintiffs and is causing injury to their reputation. 278.313. For example, Horizon published on www.whathealthcarecostsnj.com, a website that, upon information and belief, was created and is maintained by Horizon, two publications titled “Setting the Record 1 Capital Health System, Inc., et al. v. Horizon Healthcare Services, Inc., Superior Court of New Jersey, Bergen Vicinage, Docket No.: BER-C-369-15. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 105 of 156 PageID: 1472 - 99 - Straight” and “Separating truth from fiction regarding the OMNIA Health Plans.” On the “Setting the Record Straight” page, Horizon falsely and misleadingly states: THE FACTS The criteria Horizon BCBSNJ used to create the OMNIA Health Alliance were released on its website and provided to Committees of the New Jersey Senate and media outlets. Cost and value, while important elements, were not the only evaluation criteria for member organizations. The evaluation criteria included: Clinical quality, which is composed of performance on standardized, publicly available ratings of clinical processes and outcomes; Service offering across continuum of care, representing the range of clinical services offered by hospitals (including inpatient, outpatient, post-acute, ambulatory and other ancillary care), and specialties and range of admitting privileges of physician groups; Consumer preference data, strength of reputation and performance on patient surveys as proxy for how attractive inclusion would be for current or potential customers; Value-based care capabilities including current, or demonstrated investments in, capabilities required for value-based care and capacity of financial resources to support a transition from a volume-based reimbursement model to a value-based model; OSC scale, encompassing the current system’s size and scale and the share of Horizon BCBSNJ membership served; Commitment to value-based care based on a willingness and long- term commitment of leadership to change their business models from fee-for-volume to fee-for-value. All of these factors were considered to design a fee-for-value model that leads to better patient outcomes, an enhanced patient experience and lower overall costs. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 106 of 156 PageID: 1473 - 100 - 279.314. Horizon thus claimed that it utilized six criteria in evaluating providers to determine their status for OMNIA. These statements are false and misleading because Horizon fails to fully disclose: (1) the evaluation process; (2) the weight it gave to each criterion; (3) that its criteria is 25% subjective; (4) that Horizon limited the number of Tier 1 hospitals to one per geographic area; and (5) that Horizon utilized additional criteria not disclosed on its website. 280.315. Horizon also states on the “Setting the Record Straight” page: THE FACTS Horizon BCBSNJ never stated that Tier 2 hospitals were of inferior quality. To the contrary, the company has repeatedly stated that it considers all of its network doctors and hospitals quality providers; otherwise they would not be in its networks. The only organizations making claims that Tier 1 means hospitals are of lower quality are the Tier 2 Hospitals themselves. Horizon BCBSNJ has never said so and has even awarded a number of Tier 2 hospitals for their quality. 281.316. These statements are false and misleading. For example, Horizon sent a mailer to homes in approximately October 2015, that OMNIA offers “Better care, lower costs and more options for more people.” This false statement clearly implies that Tier 1 hospitals offer superior care than Tier 2 or out-of-network providers. 282.317. By promoting OMNIA Tier 1 providers as offering “better care” at lower cost, Horizon strongly suggests the opposite is true of Tier 2 providers - “inferior care” at “higher cost.” As is set forth above, this is a false and Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 107 of 156 PageID: 1474 - 101 - misleading statement as the Plaintiffs are rated higher than many of the Tier 1 hospitals. 283.318. On the “Separating truth from fiction regarding the OMNIA Health Plans,” Horizon presents two columns - one “fiction” and one “fact” - purporting to clarify the record regarding OMNIA. Horizon again makes patent misrepresentations through the wires. 284.319. For example, Horizon claims that “OMNIA Health Plans have lower premiums and do not limit access;” and “Members will have access to the largest network in the state whether they keep their current health insurance plan or select an OMNIA Health Plan.” This Statement is false and misleading because OMNIA does in fact limit access to providers. Indeed, OMNIA limits consumer access by providing incentives to patients who use Tier 1 hospitals and punishing those who choose Tier 2 or out-of-network hospitals with substantially increased out-of-pocket costs. 285.320. Horizon also claims to have taken a “disciplined approach…when selecting Tier 1 hospitals and doctors;” and selected them “based on a commitment to value-based care, strong clinical quality, consumer preference and multiple service offerings.” This statement is false and misleading because, as set forth above, Horizon’s CEO Robert Marino testified that at least 25% of the Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 108 of 156 PageID: 1475 - 102 - metrics used to determine tier status were subjective and Horizon omits other criteria it relied upon. 286.321. Horizon further claims that the OMNIA Plan will have little impact on hospitals designated as Tier 2. This statement is false and misleading because Horizon has admitted that it designed OMNIA to steer patients to Tier 1 providers at an estimated cost in OMNIA’s first year alone of more than $25.3 million to the 23 Tier 2 hospitals or a projected loss of an average of over $1.1 million per hospital. 287.322. Plaintiffs’ have maintained the same high quality of care described above from the time OMNIA was introduced through the present. Nonetheless, Horizon not only has relegated them to Tier 2 status and then forced the Plaintiffs out-of-network, but also has disparaged them in order to continue steering patients to the OMNIA Tier 1 Providers in general and In-Network Providers in particular. 6. Horizon targets a physician group affiliated with Plaintiffs 288.323. Not only has Horizon directed its campaign of mail and wire fraud against Plaintiffs, but it has also done so against entities affiliated with Plaintiffs. For example, New Jersey Medical and Health Associates, LLC, d/b/a CarePoint Health Medical Group (“CHMG”) is a physician group affiliated with Plaintiffs. When Horizon announced the OMNIA plan in September 2015, CHMG Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 109 of 156 PageID: 1476 - 103 - was the only plaintiff-affiliated entity that Horizon designated as a “Tier 1” provider. 289.324. However, that is about to change. Specifically, in the Fall of 2016, Horizon mailed letters to CHMG’s patients stating that at the beginning of 2017, CHMG doctors will be relegated to OMNIA Tier 2 status. In these letters, Horizon admonished the patients that they will “pay less out-of-pocket when you use OMNIA Tier 1-designated doctors … and hospitals.” Importantly, the only reason Horizon gave in the letter for the change was that the decision was “based on eligibility criteria.” This misleadingly suggests that CHMG’s doctors cannot provide Tier 1 quality care. 290.325. Upon information and belief, Horizon has sent numerous other communications to its subscribers suggesting that the Plaintiffs and CHMG doctors are subpar. 326. Despite Horizon’s repeated representations to DOBI and the New Jersey State Legislature that its tier designations would be based on quality of care and merit-based criteria, Horizon has admitted that CHMG was changed to Tier 2 for one reason and one reason only: “[d]ue to the fact that [CHMG] is owned by CarePoint, a for-profit hospital system that is now out-of-network (OON), [CHMG] no longer participated in any value based programs with Horizon. Due to [CHMG]’s change in circumstances they are no longer eligible to be a Tier 1 Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 110 of 156 PageID: 1477 - 104 - Provider.” See Defendant Horizon Healthcare Services, Inc.’s Opposition to Plaintiffs’ Order to Show Cause, IJKG, LLC, et al. v. Horizon Healthcare Services, Inc., Super Court of New Jersey, Docket ESX-C-95-15, at 4, attached hereto at Exhibit ___. 7. 2017 - Horizon’s Blacklisting of Plaintiffs, Ongoing Illegal Pre-Authorization Denials, and Related Disparagement 291.327. Horizon’s campaign of mail and wire fraud against Plaintiffs has continued into 2017 and is ongoing. 292.328. In response to multiple pre-authorization requests from Plaintiffs’ representatives in late 2016 and early 2017, Horizon representatives repeatedly responded that Horizon has flagged the CarePoint Hospitals as “Restricted” and as a result: a. any patient with no out-of-network benefits could not be authorized and Horizon personnel would not start or even entertain a single case agreement; and b. as to one patient who has out-of-network benefits, Horizon personnel refused to provide authorization for a screening colonoscopy that would be a wellness benefit for many patients. 293.329. Upon information and belief, Horizon is using the same “Restricted” terminology in response to all inquiries from patients, physicians, or other sources as to whether Horizon will acknowledge and provide coverage for pre-authorization for procedures to be performed at the CarePoint Hospitals. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 111 of 156 PageID: 1478 - 105 - 294.330. Upon information and belief, Horizon has done so through the mails and/or through the wires by telephone and/or over the Internet by email or otherwise. 295.331. As noted above, Horizon is legally required to provide coverage for emergency care that the CarePoint Hospitals or any other out-of-network hospital provides to Horizon Subscribers, irrespective of whether the patients do or do not have out-of-network benefits. And for patients who purchased insurance plans with out-of-network benefits, Horizon is contractually obligated to honor the patient’s choice of facility. 296.332. As a result, Horizon may not lawfully place the CarePoint Hospitals on a “Restricted” list and flatly deny coverage by refusing to provide any and all pre-authorization requests made by CarePoint personnel or others. 297.333. By placing the CarePoint Hospitals on a so-called “Restricted” list and using that term as an explanation for denying coverage, Horizon is also disparaging the CarePoint Hospitals. The practice falsely portrays the CarePoint Hospitals as either being unavailable to Horizon Subscribers or as being constrained or delimited in the range of services the hospitals can provide or are qualified to provide. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 112 of 156 PageID: 1479 - 106 - 298.334. Moreover, the unquestionably negative connotation of “Restricted” implies that the CarePoint Hospitals have somehow been “blacklisted” by Horizon and other payers. 299.335. Horizon’s misrepresentations in this regard falsely represent the coverage available under Horizon plans and plans administered by Horizon and applicable law. Horizon’s misrepresentations leave doctors and patients with the incorrect impression that there exist no covered services that the Plaintiffs may provide to Horizon Subscribers and others, steering them to other providers in furtherance of Horizon’s schemes to defraud. 8. Other uses of the mails and wires in furtherance of their fraudulent schemes 300.336. In addition to the foregoing, Horizon has repeatedly made other uses of the mails and wires in furtherance of their fraudulent schemes. This includes Horizon’s ongoing practice, described more fully in Part I.I.1 above, of issuing letters by mail and over the wires communicating in-hospital denials to Plaintiffs’ patients before the patient’s course of emergency/urgent treatment is complete, without the benefit of sufficient medical information or consultation with the attending physician and often without consultation with the attending physician at all. 301.337. It also includes Horizon’s ongoing practice, described more fully in Part I.I.2 above, of sending checks for certain claims by mail directly to Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 113 of 156 PageID: 1480 - 107 - patients rather than to Plaintiffs, and then refusing to provide information to assist the CarePoint Hospitals in their efforts to collect the payments. This practice impedes and prevents Plaintiffs from being paid for the services it provides to patients insured by Horizon. 302.338. It also includes Horizon’s ongoing practice, described more fully in Part I.I.3 above, of electronically processing claims and issuing and/or mailing EOBs for Plaintiffs’ claims listed on Exhibit 5 hereto, purporting to portray the patients’ financial responsibility as much higher than it is legally required to be under the Plans and under federal and state law. 303.339. All of this conduct is designed to advance Horizon’s schemes to defraud by convincing Plaintiffs’ patients and the public that Horizon pays Plaintiffs what it is legally required to do, and deter Horizon Subscribers from seeking care at the CarePoint Hospitals, even when the need for care is based on an emergency or urgent condition. FF. Additional Motivation for Horizon’s Misconduct 340. Horizon’s public support of a piece of legislation in Trenton, Bill A- 4444/S-20, called the “Out-of-network Consumer Protection, Transparency, Cost Containment and Accountability Act” (the “OON Act”), reveals another motive of Horizon to publicly disparage CarePoint. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 114 of 156 PageID: 1481 - 108 - 341. On May 14, 2015, the legislative sponsors introduced Bill A-4444/S- 20 and the proposed legislation was referred to the Senate Commerce Committee. 342. In support of the bill, upon information and belief, Horizon continuously referred to the Op-Ed article and “educational” website containing disparaging statements about BMC in an effort to obtain legislative support for the Bill. The Bill remains pending in the New Jersey Legislature. 343. Passage of the OON Act, as proposed, would result in dramatically reduced reimbursements payable to out-of-network hospitals. Thus, passage of the OON Act would eliminate the only effective bargaining power hospitals now have of going out of network or threatening to go out-of-network if Horizon refuses to negotiate fair reimbursement rates for in-network services.. 344. In this way, passage of the OON Act would solidify Horizon’s control over the Network Enterprise and OMNIA Tier 1 Enterprise by making it much more difficult for other hospital members to leave those Enterprises. 345. With CarePoint having been forced out of Horizon’s networks, Horizon had an ongoing incentive to continue its pattern of mail and wire fraud aimed at misleading the public into believing that Plaintiffs are greedy, overbill their patients, and provide substandard healthcare -- to portray Plaintiffs as the “poster child” in its efforts to demonstrate the need for the proposed OON Act. G. Horizon Conspires with Tier 1 Providers to Accomplish its Goals. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 115 of 156 PageID: 1482 - 109 - 304.346. In conducting the affairs of the Network Enterprise and the OMNIA Tier 1 EnterpriseRICO Enterprises through a pattern of racketeering activity, Horizon has conspired with one or more members of the Tier 1 Enterprise, including Barnabas (now known as RWJ BarnabasRWJBarnabas following a merger), a health care system that competes directly with the CarePoint Hospitals. A principal purpose of the conspiracy is to drive Plaintiffs into bankruptcy so that Horizon can directly or indirectly acquire control over Plaintiffs’ hospitals. Upon information and belief, this would advance Horizon’s long-term goal of completely dominating the health insurance market in New Jersey. 305.347. As part of the conspiracy, commencing in 2014, Horizon actively encouraged Barnabas to begin construction of a satellite emergency department (“SED”)sSED to be operated by JCMC and constructed at Broadway and West 23rd and 24th Street in Bayonne, New Jersey - five blocks from BMC. 306.348. The proposed new SED will have four evaluation rooms, five observation bays, ten minor (fast track) treatment bays, and ten emergency treatment bays, inclusive of two isolation rooms, one secure room, and one resuscitation/procedure room. 307.349. In materials submitted to the NJDOH in support of its proposal, Barnabas specifically noted BMC’s presence in the Bayonne market and touted the Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 116 of 156 PageID: 1483 - 110 - proposed SED as an “in-network option” for emergency care in the City of Bayonne - a direct reference to Barnabas’s network relationship with Horizon. 350. Given that the SED has not yet opened, Horizon’s reference to its SED as an “in-network option,” two years before BMC lost Horizon in-network status, strongly suggests that Barnabas and Horizon agreed long ago that if Barnabas opened the SED, Horizon would make it an in-network facility and that it would force BMC into OON status. 308.351. In fact, upon information and belief, Jay Picerno, Chief Operating Officer and Chief Financial Officer of Barnabas, had several conversations with Horizon’s leadership about Horizon’s support of who actively supported Barnabas creating the proposed SED at the Broadway and West 23rd and 24th Street location in Bayonne. Among other things, Horizon offered to provide Barnabas with “enhanced rates” to encourage Barnabas’s development of this SED. In the course of these discussions, Horizon’s leadership conveyed to Mr. Picerno and others Horizon’s animosity toward the owners of the CarePoint Hospitals. Horizon’s offer of such enhanced rates to Barnabas was a major driving factor in Barnabas’s decision to establish the SED in the Bayonne market. 309.352. Although the proposed SED remains under consideration by the New Jersey Department of Health, Barnabas has already commenced and, upon information and belief, has nearly completed construction. If approved, the SED Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 117 of 156 PageID: 1484 - 111 - will result in a dramatic decrease in patient volume at BMC and threaten the hospital’s financial viability. 310.353. Not surprisingly, following Horizon’s announcement of its OMNIA plan, all of Barnabas’s hospitals, including JCMC, were designated as “Tier 1” providers. 311.354. Beginning in mid-February 2016, Barnabas in conjunction with Horizon launched a campaign of sending letters (the “Barnabas Letter”) to physicians who are on the medical staffs of the CarePoint Hospitals and have, over the years, referred many patients to those hospitals for treatment (hereinafter the “CarePoint Referring Physicians”). 312.355. The Barnabas Letter makes the following statements, among others, regarding Barnabas’s relationship with Horizon and their joint new initiatives under the OMNIA Plan: .a. Barnabas Health is collaborating with Horizon Blue Cross Blue Shield of New Jersey to change the way healthcare is delivered in New Jersey as the OMNIA Health Alliance. .b. As part of the Alliance, Barnabas Health facilities have been designated as Tier 1 for all Horizon products. .c. The focus of the OMNIA Plans is to keep individuals healthy through increased population health management and more integrated, coordinated care that rewards better health outcomes, an enhanced patient experience, and lower cost care. .d. If you have privileges at a Barnabas Health facility, you are eligible to join Barnabas Health Care Network (ACO). Through this network, you may receive enhanced fee-for- Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 118 of 156 PageID: 1485 - 112 - service fees, be eligible for patient management fees and have the ability to participate in shared savings for most Horizon patients. e. This will provide significant improvement in reimbursement for your Horizon patients as well as help to improve patient care by participating in the programs for care management which will be developed jointly by Horizon and Barnabas Health f. Barnabas Health would like to work with your practice and invite you to join the Barnabas Health Care Network (ACO). Physicians who become part of the Barnabas Health Care Network will receive support from both Barnabas Health and Horizon to actively participate in the new care model. g. Physicians who have been designated as Tier 1 by Horizon can maximize that opportunity by becoming part of our network. h. Those physicians designated as Tier 2 can become Tier 1 by joining our network and participating in our programs. i. We will work with those physicians to understand the practice patterns that caused the Tier 2 designation. We will create action steps to help their practices remain in Tier 1 so they may enjoy enhanced fee for service, be eligible for patient management fees as well as shared savings when attained. j. If you do not know into which Tier you have been placed or have other questions regarding OMNIA you can visit https://www. horizonblue.com/providers/products- programs/products/omniahealthplans to obtain that information. k. We will be visiting each of the Medical Centers to meet with physicians within the Barnabas Health community to explain the value to of participating in this program. Horizon will be the first of many companies who will follow this type payment scenario as we move forward. Learning how to function and prosper in these novel reimbursement programs will stabilize and reverse the recent and relentless downward trend of physician reimbursement. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 119 of 156 PageID: 1486 - 113 - 313.356. The Barnabas Letter misleadingly suggests that “enhanced fee- for-service fees,” are available to physicians who join an ACO, when in reality many ACOs (and the OMNIA Plan in particular) are modelled around participants accepting lower “fee-for-service fees” with the difference being recouped only if and to the extent that the ACO meets its targeted reduction in paid claims and generates any “shared savings” that are divided among the participants and, often, the insurer. 314.357. In effect, Horizon, in conjunction with Barnabas, is seeking to lure CarePoint Referring Physicians into cooperating with Horizon’s scheme, and linchpin to the success of the OMNIA Plan, to steer paying, insured patients to Tier 1 hospitals at the expense of the CarePoint Hospitals. 315.358. In tandem with the Barnabas Letters, Horizon has also contacted CarePoint Referring Physicians directly. One of those physicians, a busy practitioner who typically admits a substantial number of patients to Christ Hospital each year, is being actively pressured to join the Barnabas ACO. This physician received a call from a Horizon representative who inquired about specific patients recently admitted to Christ Hospital via its emergency department. The Horizon representative stated that those patients should have gone to an in- network hospital instead. When the physician advised Horizon that it lacked control over which emergency department a patient may use, the Horizon Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 120 of 156 PageID: 1487 - 114 - representative insisted that the physician needed to make sure that the physician’s patients go to an in-network hospital. 316.359. Upon information and belief, Horizon has contacted other CarePoint Referring Physicians, inquired about their recent admissions of patients to Christ Hospital, and admonished them to make sure their patients go to an in- network hospital for emergency care. 317.360. To date, Horizon has designated only one Tier 1 hospital in all of Hudson County, JCMC. Thus, in telling physicians whose practice and patients are located in Hudson County to “make sure” that their patients seek emergency treatment at a Tier 1 hospital, Horizon is pressuring the physicians to direct their patients to seek emergency medical treatment at JCMC, a hospital that recently represented to the NJDOH that its emergency room (“ER”) was overburdened and needed to decrease ER visits by at least 30,000 because its ER “was designed for 57,000 visits (38 bays), utilization was more than 80,000 in 2012.” 318.361. Physicians, in choosing to admit a patient to a hospital, must exercise his/her medical judgment as to the hospital that is best suited to meet the patient’s needs. Physicians must exercise that judgment independently of the desires of any hospital or insurer and take into account a number of factors, one of which is the patient’s preference. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 121 of 156 PageID: 1488 - 115 - 319.362. Horizon, by insisting that CarePoint Referring Physicians need to “make sure” that all their patients are admitted to an in-network hospital, i.e., JCMC, and particularly in the case of an emergency, is wrongfully attempting to interfere with the physicians’ medical judgment. 320.363. Horizon’s campaign of mail and wire fraud described in Part II.E above advances all of the goals of its conspiracies with Barnabas, including, among other things, to (i) continue conducting the affairs of the RICO enterprises through Horizon’s pattern of racketeering; and (ii) drive Plaintiffs into bankruptcy to enable Horizon to directly or indirectly acquire control over the Plaintiffs. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 122 of 156 PageID: 1489 - 116 - GH. The Effects of Horizon’s Conduct 321.364. Horizon’s campaign against Plaintiffs has caused Plaintiffs to suffer significant financial harm. In addition to other pecuniary losses described above, Plaintiffs have suffered millions of dollars in lost revenues. 322.365. In this regard, an untold number of prospective patients have declined to seek treatment at Plaintiffs’ hospitals as a result of Horizon’s campaign of false and misleading statements about Plaintiffs. Horizon’s bad faith claims processing tactics and campaign of false and misleading statements about Plaintiffs have also damaged and disrupted Plaintiffs’ relationships with their existing patients. 323.366. The effects of Horizon’s misconduct are magnified by the fact that, as noted above, Plaintiffs are required by federal and state law to provide emergency/urgent care to all patients, regardless of a patient’s ability to pay. As a consequence, even while Horizon is discouraging its subscribers from seeking treatment at the CarePoint Hospitals and otherwise interfering with Plaintiffs’ relationships with commercially-insured patients, the CarePoint Hospitals must still incur substantial costs in continuing to provide essential health care services to the uninsured and underinsured patient populations they serve. 324.367. Worst of all, there is no end in sight to Horizon’s campaign against Plaintiffs. So long as Plaintiffs stand up to Horizon and refuse to become Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 123 of 156 PageID: 1490 - 117 - part of Horizon’s insurance networks unless they are treated fairly and receive sustainable reimbursements, Horizon’s wrongful tactics will continue unless and until the Courts compel an end to it. 325.368. And even if Horizon is successful in forcing the Plaintiffs into bankruptcy and acquiring direct or indirect control over the hospitals, Horizon’s conduct will not end. Inadequate payments from private insurers have contributed to a raft of bankruptcies among New Jersey hospitals. Thus, it is only a matter of time before another hospital or group of hospitals demands fair and sustainable rates as a condition of remaining in Horizon’s network. When Horizon inevitably refuses to give in to such demands, it will simply direct its tactics to that other hospital or group of hospitals. CAUSES OF ACTION COUNT ONE (Breach of Plan Provisions for Benefits in Violation of ERISA § 502(a)(1)(B)) 326.369. The foregoing allegations are re-alleged and incorporated by reference as if fully set forth herein. 327.370. The CarePoint Hospitals have standing to pursue claims under ERISA as the assignees and authorized representatives of the Horizon Subscribers’ claims under the Plans. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 124 of 156 PageID: 1491 - 118 - 328.371. As the assignees of the Horizon Subscribers, the CarePoint Hospitals are entitled to payment under the ERISA Plans for the hospital services provided to the Horizon Subscribers at the CarePoint Hospitals. 329.372. Upon information and belief, the Plans did not prohibit the Horizon Subscribers from assigning their rights to benefits under the Plans to the CarePoint Hospitals, including the right of direct payment of benefits under the Plans to the CarePoint Hospitals. 330.373. Moreover, to the extent that the Plans prohibited the assignment of benefits to the CarePoint Hospitals, Horizon has waived any purported anti- assignment provisions, has ratified the assignment of benefits to the CarePoint Hospitals, and/or is estopped from using any purported anti-assignment provisions against the CarePoint Hospitals due to Horizon’s course of dealing with and statements to the CarePoint Hospitals as out-of-network providers, discussed more fully above. 331.374. Moreover, to the extent that the Plans prohibited the assignment of benefits to the CarePoint Hospitals, any such purported anti-assignment prohibitions are unenforceable as, among other things, contrary to public policy, as adhesion contracts, and/or due to a lack of privity with the CarePoint Hospitals. 332.375. All of the Plans require payment of medical expenses incurred by Horizon Subscribers at the rate of the CarePoint Hospitals’ full billed charges Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 125 of 156 PageID: 1492 - 119 - (less in-network patient responsibility) for emergency/urgent care, and at the usual or customary rates for Elective care. 333.376. The CarePoint Hospitals’ billed charges represent the hospitals’ usual and customary rates for the treatment provided to Horizon Subscribers. 334.377. Horizon breached the terms of the Plans by refusing to make out-of-network payments for charges covered by the Plans, in violation of ERISA 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B). These breaches include, among other things, refusing to pay the CarePoint Hospitals’ billed charges (less in- network patient responsibility) for emergency/urgent care that the CarePoint Hospitals provided to Horizon Subscribers, as required by the Plans; refusing to pay the CarePoint Hospitals the usual and customary charges for Elective care provided to Horizon Subscribers, as required by the Plans; and otherwise refusing to pay the CarePoint Hospitals the amounts due under the Plans for the medically necessary procedures and services performed at the CarePoint Hospitals. 335.378. As a result of, among other acts, Horizon’s numerous procedural and substantive violations of ERISA, any appeals are deemed exhausted or excused, and the CarePoint Hospitals are entitled to have this Court undertake a de novo review of the issues raised herein. 336.379. Under 29 U.S.C. § 1132(a)(1)(B), the CarePoint Hospitals are entitled to recover unpaid/underpaid benefits from Horizon. The CarePoint Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 126 of 156 PageID: 1493 - 120 - Hospitals are also entitled to declaratory and injunctive relief to enforce the terms of the Plans and to clarify their right to future benefits under such Plans, as well as attorneys’ fees. COUNT TWO (Breach of Fiduciary Duties of Loyalty and Due Care in Violation of ERISA) 337.380. The foregoing allegations are re-alleged and incorporated by reference as if fully set forth herein. 338.381. Pursuant to 29 U.S.C. § 1132(a)(3), a civil action may be brought by “a participant, beneficiary, or fiduciary to (A) 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.” 339.382. The CarePoint Hospitals, as the assignees of ERISA members and beneficiaries under the Plans, are entitled to assert a claim for relief for Horizon’s breach of fiduciary duties of loyalty and care and for failure to follow Plan documents under 29 U.S.C. § 1104(a)(1)(B) and (D). 340.383. Horizon exercised discretion, control, authority and oversight in determining whether Plan benefits would be paid and the amounts of Plan benefits that would be paid. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 127 of 156 PageID: 1494 - 121 - 341.384. As an ERISA fiduciary, Horizon owed the CarePoint Hospitals a duty of care, defined as an obligation to act prudently, with the care, skill, prudence and diligence that a prudent fiduciary would use in the conduct of an enterprise of like character. Further, as a fiduciary, Horizon was required to ensure that it was acting in accordance with the documents and instruments governing the Plans, and in accordance with ERISA § 404(a)(l)(B) and (D), 29 U.S.C. § 1104(a)(l)(B) and (D). In failing to act prudently, and in failing to act in accordance with the documents governing the Plans, Horizon has violated its fiduciary duty of care. 342.385. As a fiduciary, Horizon also owed the CarePoint Hospitals a duty of loyalty, defined as an obligation to make decisions in the interest of its beneficiaries and to avoid self-dealing or financial arrangements that benefit the fiduciary at the expense of members, in accordance with ERISA § 404(a) (l) (A), 29 U.S.C. § 1104(a)(l)(A) and ERISA § 406, 29 U.S.C. § 1106. Thus, Horizon could not make benefit determinations for the purpose of saving money at the expense of the Horizon Subscribers. 343.386. Horizon violated its fiduciary duty of loyalty to the CarePoint Hospitals by, among other things, refusing to make out-of-network payments for hospital services provided at the CarePoint Hospitals for Horizon’s own benefit and at the expense of Horizon Subscribers. In addition, Horizon Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 128 of 156 PageID: 1495 - 122 - violated its fiduciary duty of loyalty by failing to inform the CarePoint Hospitals, as assignees of the Horizon Subscribers, of information material to the claims and Horizon’s handling of the claims. 344.387. The CarePoint Hospitals have standing to pursue claims under ERISA as assignees and authorized representatives of the Horizon Subscribers. 345.388. The CarePoint Hospitals are entitled to relief to remedy Horizon’s violation of its fiduciary duties under ERISA § 502(a)(3), 29 U.S.C. § 1132(a) (3), including declaratory and injunctive relief. COUNT THREE (Denial of Full and Fair Review in Violation of ERISA § 503) 346.389. The foregoing allegations are re-alleged and incorporated by reference as if fully set forth herein. 347.390. As assignees and authorized representatives of the Horizon Subscribers’ claims, the CarePoint Hospitals are entitled to receive protection under ERISA, including (a) a “full and fair review” of all claims denied by Horizon; and (b) compliance by Horizon with applicable claims procedure regulations. 348.391. Although Horizon is obligated to provide a “full and fair review” of denied claims pursuant to ERISA § 503, 29 U.S.C. § 1133 and applicable Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 129 of 156 PageID: 1496 - 123 - regulations, including 29 C.F.R. § 2560.503-1 and 29 C.F.R. § 2590.715- 2719, Horizon has failed to do so by, among other actions: a. refusing to provide the specific reason or reasons for the denial of claims; b. refusing to provide the specific Plan provisions relied upon to support its denials; c. refusing to provide the specific rule, guideline or protocol relied upon in making the decisions to deny claims; d. refusing to describe any additional material or information necessary to perfect a claim, such as the appropriate diagnosis/treatment code; e. refusing to notify the relevant parties that they are entitled to have, free of charge, all documents, records and other information relevant to the claims for benefits; and f. refusing to provide a statement describing any voluntary appeals procedure available, or a description of all required information to be given in connection with that procedure. 349.392. By failing to comply with the ERISA claims procedure regulations, Horizon failed to provide a reasonable claims procedure. 350.393. Because Horizon has failed to comply with the substantive and procedural requirements of ERISA, any administrative remedies are deemed exhausted pursuant to 29 C.F.R. § 2560.503-1(l) and 29 C.F.R. § 2590.715- 2719(b)(2)(ii)(F)(1). Exhaustion is also excused because it would be futile to pursue administrative remedies, as Horizon does not acknowledge any basis for its Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 130 of 156 PageID: 1497 - 124 - denials and thus offers no meaningful administrative process for challenging its denials. 351.394. The CarePoint Hospitals have been harmed by Horizon’s failure to provide a full and fair review of appeals submitted under ERISA § 503, 29 U.S.C. § 1133, and by Horizon’s failures to disclose information relevant to appeals and to comply with applicable claims procedure regulations. 352.395. The CarePoint Hospitals are entitled to relief under ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3), including declaratory and injunctive relief, to remedy Horizon’s failures to provide a full and fair review, to disclose information relevant to appeals, and to comply with applicable claims procedure regulations. COUNT FOUR (Violation of 18 U.S.C. § 1962(c)) 353.396. The foregoing allegations are re-alleged and incorporated by reference as if fully set forth herein. 354.397. Each of the Plaintiffs and Horizon are entities “capable of holding a legal or beneficial interest in property” and thus, each is a “person” within the meaning of 18 U.S.C. § 1961(3). 355.398. The Network Enterprise is an ongoing, associated-in-fact group of individual entities and thus is an “enterprise” within the meaning of 18 U.S.C. § 1961(4) and 1962(c). Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 131 of 156 PageID: 1498 - 125 - 399. The OMNIA Tier 1 Enterprise is also an ongoing, associated-in-fact group of individual entities and thus is an “enterprise” within the meaning of 18 U.S.C. § 1961(4) and 1962(c). 356.400. The Horizon-Barnabas Enterprise is an ongoing, associated-in- fact pair of individual entities and thus is an “enterprise” within the meaning of 18 U.S.C. § 1961(4) and 1962(c). 357.401. The activities of the RICO Enterprises affect interstate commerce within the meaning of 18 U.S.C. § 1962(c). Horizon’s activities have obstructed, delayed, or otherwise affected commerce. 358.402. Horizon has conducted or participated, directly or indirectly, in the conduct of the Network Enterprise and the OMNIA Tier 1 EnterpriseRICO EnterpriseS through a pattern of racketeering activity within the meaning of 18 U.S.C. § 1962(c). 359.403. The pattern of racketeering activity under 18 U.S.C. § 1961(1) and (5) includes the multiple, repeated, and continuous acts of mail fraud and wire fraud, in violation of 18 U.S.C. §§ 1341 and 1343. As set forth more fully above, Horizon has engaged in a scheme to disseminate false, fraudulent, and misleading information about Plaintiffs, the In-Network Providers, OMNIA, OMNIA Tier 1 providers, the OMNIA Alliance Providers, and its claims handling practices to a large number of recipients. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 132 of 156 PageID: 1499 - 126 - 360.404. Horizon has engaged in these racketeering activities with the specific intent to defraud, described more fully above. Among other things, Horizon seeks to deceive the public, patients, prospective patients, and others into believing that Plaintiffs are overpriced, pedestrian or substandard healthcare providers and that members of the RICO Enterprises, including but not limited to the Tier 1 OMNIA Alliance Providers, give “better care at lower prices.” Horizon also seeks to mislead the public, patients, prospective patients, and others into believing that Horizon pays Plaintiffs what it is legally obligated to pay healthcare providers for services rendered to its subscribers; and that any additional amounts charged by Plaintiffs must be the result of greed and overbilling. 361.405. As described more fully above, Horizon has committed these activities in furtherance of its schemes to defraud and for the express purpose of depriving Plaintiffs of money and other property. Horizon has used the wires and mails in furtherance of its schemes to defraud by, among other things, disseminating false and misleading information over the wires (for example, by facsimile, by e-mail, over the internet, and over the radio), and by mail. 362.406. As a direct result of Horizon’s violation of 18 U.S.C. § 1962(c), the Plaintiffs have suffered substantial injury to their business or property within the meaning of 18 U.S.C. § 1964(c), including, but not limited to: (i) lost revenue from patients ceasing their relationship with Plaintiffs; (ii) lost revenue from Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 133 of 156 PageID: 1500 - 127 - patients being dissuaded from seeking healthcare from Plaintiffs; and (iii) the costs in time, person-hours, and other administrative expense incurred because of Horizon’s unlawful conduct. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 134 of 156 PageID: 1501 - 128 - COUNT FIVE (Violation of 18 U.S.C. § 1962(d) by conspiring to violate 18 U.S.C. § 1962(c)) 363.407. The foregoing allegations are re-alleged and incorporated by reference as if fully set forth herein. 364.408. The Network Enterprise is an ongoing, associated-in-fact group of individual entities and thus is an “enterprise” within the meaning of 18 U.S.C. §§ 1961(4) and 1962(c). 409. The OMNIA Tier 1 Enterprise is also an ongoing, associated-in-fact group of individual entities and thus is an “enterprise” within the meaning of 18 U.S.C. § 1961(4) and 1962(c). 365.410. The Horizon-Barnabas Enterprise is an ongoing, associated-in- fact pair of individual entities and thus is an “enterprise” within the meaning of 18 U.S.C. § 1961(4) and 1962(c). 366.411. The activities of the RICO Enterprises affect interstate commerce within the meaning of 18 U.S.C. § 1962(c). Horizon’s activities have obstructed, delayed, or otherwise affected commerce. 367.412. Horizon has conspired with one or more members of the RICO Enterprises, including Barnabas, to violate the provisions of 18 U.S.C. § 1962(c). 368.413. Specifically, Horizon and one or more members of the RICO Enterprises, including Barnabas, each agreed and intended, and/or adopted the goal Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 135 of 156 PageID: 1502 - 129 - of furthering or facilitating, the following endeavor: to conduct or participate, directly or indirectly, in the management and operation of the affairs of the RICO Enterprises through a pattern of racketeering activity in violation of 18 U.S.C. § 1962(c). 369.414. The pattern of racketeering activity under 18 U.S.C. § 1961(1) and (5) includes the multiple, repeated, and continuous acts of mail fraud and wire fraud, in violation of 18 U.S.C. §§ 1341 and 1343. As set forth more fully above, Horizon has engaged in a scheme to disseminate false, fraudulent, and misleading information about Plaintiffs, the In-Network Providers, OMNIA, OMNIA Tier 1 providers, the OMNIA Alliance Providers, and its claims handling practices to a large number of recipients. 370.415. Horizon has engaged in these racketeering activities with the specific intent to defraud, described more fully above. Among other things, Horizon seeks to deceive the public, patients, prospective patients, and others into believing that Plaintiffs are overpriced, pedestrian or substandard healthcare providers and that members of the RICO Enterprises, including but not limited to the Tier 1 OMNIA Alliance Providers, give “better care at lower prices.” Horizon also seeks to mislead the public, patients, prospective patients, and others into believing that Horizon pays Plaintiffs what it is legally obligated to pay healthcare Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 136 of 156 PageID: 1503 - 130 - providers for services rendered to its subscribers; and that any additional amounts charged by Plaintiffs must be the result of greed and overbilling. 371.416. As described more fully above, Horizon has committed these activities in furtherance of its schemes to defraud and for the express purpose of depriving Plaintiffs of money and other property. Horizon has used the wires and mails in furtherance of its schemes to defraud by, among other things, disseminating false and misleading information over the wires (for example, by facsimile, by e-mail, over the internet, and over the radio), and by mail. 372.417. As a direct result of Horizon’s violation of 18 U.S.C. § 1962(d) by conspiring to violate 18 U.S.C. § 1962(c) , the Plaintiffs have suffered substantial injury to their business or property within the meaning of 18 U.S.C. § 1964(c), including, but not limited to: (i) lost revenue from patients ceasing their relationship with Plaintiffs; (ii) lost revenue from patients being dissuaded from seeking healthcare from Plaintiffs; and (iii) the costs in time, person-hours, and other administrative expense incurred because of Horizon’s unlawful conduct. COUNT SIX (Violation of 18 U.S.C. § 1962(d) by conspiring to violate 18 U.S.C. § 1962(b)) 373.418. The foregoing allegations are re-alleged and incorporated by reference as if fully set forth herein. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 137 of 156 PageID: 1504 - 131 - 374.419. Each of the Plaintiffs is a privately held, limited liability company, and thus, is an “enterprise” within the meaning of 18 U.S.C. §§ 1961(4) and 1962(b). Each was engaged in activities affecting interstate commerce at all times relevant to this Complaint by, among other things, treating patients who are residents of various states. In harming the Plaintiffs, Horizon’s activities have obstructed, delayed, or otherwise affected commerce. 375.420. The Network Enterprise is an ongoing, associated-in-fact group of individual entities and thus is an “enterprise” within the meaning of 18 U.S.C. § 1961(4) and 1962(c). 421. The OMNIA Tier 1 Enterprise is also an ongoing, associated-in-fact group of individual entities and thus is an “enterprise” within the meaning of 18 U.S.C. § 1961(4) and 1962(c). 376.422. The Horizon-Barnabas Enterprise is an ongoing, associated-in- fact pair of individual entities and thus is an “enterprise” within the meaning of 18 U.S.C. § 1961(4) and 1962(c). 377.423. The activities of the RICO Enterprises affect interstate commerce within the meaning of 18 U.S.C. § 1962(c). Horizon’s activities have obstructed, delayed, or otherwise affected commerce. 378.424. Horizon has conspired with one or more members of the RICO Enterprises, including Barnabas, to violate the provisions of 18 U.S.C. § 1962(b). Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 138 of 156 PageID: 1505 - 132 - 379.425. Specifically, Horizon and one or more members of the RICO Enterprises, including Barnabas, each agreed and intended, and/or adopted the goal of furthering or facilitating, the following endeavor: to acquire or maintain, directly or indirectly, an interest in or control of Plaintiffs and/or the RICO Enterprises through a pattern of racketeering activity under 18 U.S.C. § 1961(1) and (5). 380.426. The pattern of racketeering activity under 18 U.S.C. § 1961(1) and (5) includes the multiple, repeated, and continuous acts of mail fraud and wire fraud, in violation of 18 U.S.C. §§ 1341 and 1343. As set forth more fully above, Horizon has engaged in a scheme to disseminate false, fraudulent, and misleading information about Plaintiffs, the In-Network Providers, OMNIA, OMNIA Tier 1 providers, the OMNIA Alliance Providers, and its claims handling practices to a large number of recipients. 381.427. Horizon has engaged in these racketeering activities with the specific intent to defraud, described more fully above. Among other things, Horizon seeks to deceive the public, patients, prospective patients, and others into believing that Plaintiffs are overpriced, pedestrian or substandard healthcare providers and that members of the RICO Enterprises, including but not limited to the Tier 1 OMNIA Alliance Providers, give “better care at lower prices.” Horizon also seeks to mislead the public, patients, prospective patients, and others into Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 139 of 156 PageID: 1506 - 133 - believing that Horizon pays Plaintiffs what it is legally obligated to pay healthcare providers for services rendered to its subscribers; and that any additional amounts charged by Plaintiffs must be the result of greed and overbilling. 382.428. As described more fully above, Horizon has committed these activities in furtherance of its schemes to defraud and for the express purpose of depriving Plaintiffs of money and other property. Horizon has used the wires and mails in furtherance of its schemes to defraud by, among other things, disseminating false and misleading information over the wires (for example, by facsimile, by e-mail, over the internet, and over the radio), and by mail. 383.429. As a direct result of Horizon’s violation of 18 U.S.C. § 1962(d) by conspiring to violate 18 U.S.C. § 1962(b) , the Plaintiffs have suffered substantial injury to their business or property within the meaning of 18 U.S.C. § 1964(c), including, but not limited to: (i) lost revenue from patients ceasing their relationship with Plaintiffs; (ii) lost revenue from patients being dissuaded from seeking healthcare from Plaintiffs; and (iii) the costs in time, person-hours, and other administrative expense incurred because of Horizon’s unlawful conduct. COUNT SEVEN (Breach of Contract - non-ERISA) 384.430. The foregoing allegations are re-alleged and incorporated by reference as if fully set forth herein. 385.431. To the extent that some of the Plans are not employee welfare Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 140 of 156 PageID: 1507 - 134 - benefit plans governed by ERISA, they are nonetheless valid and enforceable insurance contracts. 386.432. As set forth more fully above, upon information and belief, all of the Plans require payment of medical expenses incurred by Horizon Subscribers at usual or customary rates. Further, under the terms of the Plans, Horizon Subscribers are entitled to coverage for the services that they received from the CarePoint Hospitals. 387.433. By virtue of the AOB Contracts executed by Horizon Subscribers, the CarePoint Hospitals were assigned the right to receive payment under the Plans for the services rendered to the Horizon Subscribers. Pursuant to said AOB Contracts, Horizon is contractually obligated to pay the CarePoint Hospitals for these services. 388.434. Horizon failed to make payment of benefits to the CarePoint Hospitals in the manner and amounts required under the terms of the Plans. 389.435. As the result of Horizon’s failures to comply with the terms of the Plans, the CarePoint Hospitals, as assignees, have suffered damages and lost benefits for which they are entitled to recover damages from Horizon, including unpaid benefits, restitution, interest, and other contractual damages sustained by the CarePoint Hospitals. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 141 of 156 PageID: 1508 - 135 - COUNT EIGHT (Breach of the Duty of Good Faith and Fair Dealing - non-ERISA) 390.436. The foregoing allegations are re-alleged and incorporated by reference as if fully set forth herein. 391.437. As set forth more fully above, if any of the Plans are not employee welfare benefit plans governed by ERISA, they are nonetheless valid and enforceable insurance contracts. As such, the Plans contain an implied duty of good faith and fair dealing. 392.438. Horizon, as the obligor under the Plans, owed the Horizon Subscribers a duty of good faith and fair dealing with respect to said Plans. 393.439. As set forth more fully above, the Horizon Subscribers received health care services at the CarePoint Hospitals and executed AOB Contracts, among other documents, in which they assigned to the CarePoint Hospitals their right to benefits under the Plans for the services that the CarePoint Hospitals provided to the Horizon Subscribers. 394.440. By virtue of these assignments, Horizon also owes this duty of good faith and fair dealing to the CarePoint Hospitals. 395.441. Horizon breached its duty of good faith and fair dealing owed to the CarePoint Hospitals, as assignees of rights and benefits under the Plans, in a number of ways, described more fully above. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 142 of 156 PageID: 1509 - 136 - 396.442. Moreover, N.J.S.A. 17:29B-3, et seq., defines the public interests of New Jersey and prohibits unfair methods of competition and unfair or deceptive acts or practices in the business of insurance. 397.443. Without limitation, Horizon’s breaches include, but are not limited to, Horizon: a. using unilaterally and arbitrarily selected percentages of Medicare or in-network rates in determining amounts it will pay to out-of-network providers for emergency/urgent care provided to Horizon Subscribers, when Horizon’s liability for the full charges was reasonably clear; b. failing to provide the CarePoint Hospitals with adequate written explanations for the failure to pay all or a portion of the CarePoint Hospitals’ claims for the services provided to Horizon Subscribers; c. failing to pay the CarePoint Hospitals’ charges for the health care services provided to Horizon Subscribers, and failing to provide adequate written explanations for the refusal to pay all or a portion of such claims, within the statutorily prescribed time frames; d. using arbitrary methodology for determining whether to pay and, if so, the amount to pay the CarePoint Hospitals for the services the CarePoint Hospitals provided to Horizon Subscribers; e. providing patently inadequate explanations for its under- payments of the CarePoint Hospitals; f. not attempting in good faith to effectuate prompt, fair and equitable settlement of claims for which liability had become reasonably clear; Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 143 of 156 PageID: 1510 - 137 - g. compelling the CarePoint Hospitals to institute litigation to recover amounts due under the Plans by refusing to pay claims properly; h. failing to promptly provide a reasonable explanation of the basis in the Plans in relation to the facts or applicable law for nonpayment and underpayment of the CarePoint Hospital’s claims; i. violating applicable statutory and regulatory provisions governing the business of insurance; j. committing unfair and deceptive acts and practices in handling the CarePoint Hospitals’ claims; k. making use of funds which should have been paid to the CarePoint Hospitals pursuant to their claims for benefits under the Plans; and l. ignoring its own ethical standards and claims-handling procedures, which require that a claims-handler discover and disclose all bases for finding - not avoiding - insurance coverage. 398.444. Horizon’s conduct in derogation of its duty of good faith and fair dealing under the Plans has deprived the CarePoint Hospitals of their reasonable expectations and benefits as assignees of benefits under the Plans. COUNT NINE (Declaratory Judgment - 28 U.S.C. § 2201) 399.445. The foregoing allegations are re-alleged and incorporated by reference as if fully set forth herein. 400.446. This is a count for declaratory relief pursuant to 28 U.S.C. § 2201. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 144 of 156 PageID: 1511 - 138 - 401.447. Horizon claims that the Plans may be interpreted as permitting Horizon to unilaterally and arbitrarily establish an allowed amount that it will pay for claims for treatment provided by out-of-network providers. 402.448. Upon information and belief, none of the Plans allows Horizon to unilaterally and arbitrarily establish allowed amounts payable with respect to treatment provided by out-of-network providers. 403.449. Likewise, on information and belief, none of the Plans contains any formula or other methodology for determining an “allowed amount” that is payable under the Plan with respect to treatment provided by out-of-network providers. 404.450. Under New Jersey law, insurers who provide coverage for emergency/urgent care and receive a claim for emergency/urgent care provided by an out-of-network hospital are required to pay an amount sufficient to protect the patient/insured from being balance billed. To protect its insureds against balance billing, an insurer may (a) pay the full amount of the charges, (b) negotiate a settlement of the claim with the provider or (c) negotiate an in-network agreement with the provider. Aetna Health, Inc. v. Srinivasan, 2016 N.J. Super. Unpub. LEXIS 1515 (App. Div., June 29, 2016). The insurer may not unilaterally and arbitrarily decide whether it will pay the out-of-network provider’s claim and, if so, how much of the claim it will pay. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 145 of 156 PageID: 1512 - 139 - 405.451. As a direct and proximate result of Horizon’s acts and omissions, including, but not limited to, its use of a non-disclosed, arbitrary methodology to calculate “allowed amounts” it will pay for treatment provided by out-of-network providers, failure to comply with the terms of the Plans and statutory requirements to pay claims timely, the CarePoint Hospitals have sustained and will continue to sustain damages and have been deprived of and will continue to be deprived of the compensation to which they are entitled for providing covered hospital services to Horizon Subscribers. 406.452. The existence of another potentially adequate remedy does not preclude a judgment for declaratory relief. See Federal Rules of Civil Procedure, Rule 57. 407.453. The CarePoint Hospitals are entitled to supplemental relief pursuant to 28 U.S.C. § 2201, including the payment of all money that was not paid by Horizon to the CarePoint Hospitals for providing the covered hospital services described in this Complaint. COUNT TEN (Breach of Fiduciary Duty - non-ERISA) 408.454. The foregoing allegations are re-alleged and incorporated by reference as if fully set forth herein. 409.455. At all relevant times, Horizon was the plan administrator, fiduciary, relevant party-in-interest, and/or the obligor for the Plans. As such, even Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 146 of 156 PageID: 1513 - 140 - if some of the Plans are not employee welfare benefit plans governed by ERISA, Horizon nonetheless owed and owes the Horizon Subscribers fiduciary duties under the Plans. 410.456. As set forth more fully above, Horizon Subscribers have received health care services at the CarePoint Hospitals and executed AOB Contracts, among other documents, in which they assigned to the CarePoint Hospitals all rights to benefits under the Plans for the services that the CarePoint Hospitals provided to the Horizon Subscribers. 411.457. By virtue of these assignments, Horizon also owed and owes this fiduciary duty to the CarePoint Hospitals, as the assignees of beneficiaries under the Plans. 412.458. As set forth more fully above, upon information and belief, the Plans did not prohibit Horizon Subscribers from assigning their rights to benefits under the Plans to the CarePoint Hospitals, including the right of direct payment of benefits under the Plans to the CarePoint Hospitals. 413.459. Moreover, as set forth more fully above, to the extent that the Plans prohibited the assignment of benefits to the CarePoint Hospitals, Horizon has waived any purported anti-assignment provisions, has ratified the assignment of benefits to the CarePoint Hospitals, and/or is estopped from using any purported anti-assignment provisions against the CarePoint Hospitals due to its Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 147 of 156 PageID: 1514 - 141 - course of dealing with and statements to the CarePoint Hospitals as out-of- network providers, discussed more fully above. 414.460. Moreover, as set forth more fully above, to the extent that the Plans prohibited the assignment of benefits to the CarePoint Hospitals, any such purported anti-assignment prohibitions are unenforceable as, among other things, contrary to public policy, as adhesion contracts, and/or due to a lack of privity with the CarePoint Hospitals. 415.461. Horizon breached the fiduciary duties owed to the CarePoint Hospitals in a number of ways, described more fully above. 416.462. As the result of Horizon’s violations of its fiduciary duties to the CarePoint Hospitals, the CarePoint Hospitals have suffered, and continue to suffer, substantial damages. COUNT ELEVEN (Quantum Meruit) 417. The foregoing allegations are re-alleged and incorporated by reference as if fully set forth herein. 418. The CarePoint Hospitals have conferred upon Horizon the benefit of providing treatment to Horizon Subscribers. 419. At the times the CarePoint Hospitals treated the Horizon Subscribers, the CarePoint Hospitals reasonably expected remuneration from Horizon in the form of the full billed charges minus any applicable patient responsibilities. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 148 of 156 PageID: 1515 - 142 - 420. By underpaying the CarePoint Hospitals for the treatment that the CarePoint Hospitals provided to Horizon Subscribers, Horizon has been unjustly enriched. 421. As the result of Horizon’s unlawful, unjust and wrongful acts, the CarePoint Hospitals suffered and continue to suffer damages, and they are owed restitution from Horizon. COUNT TWELVE ELEVEN (Promissory Estoppel) 422.463. The foregoing allegations are re-alleged and incorporated by reference as if fully set forth herein. 423.464. Horizon represented to the CarePoint Hospitals that the medical treatment sought by the Horizon Subscribers as patients at the CarePoint Hospitals was a covered procedure under the Plans, and that the fees associated with that treatment were covered charges under the Plans. Based on Horizon’s statements that the patients seeking medical care and treatment had active coverage and benefits, the CarePoint Hospitals reasonably understood that some payment would be forthcoming for the hospital services provided at the CarePoint Hospitals related to these procedures. 424.465. The CarePoint Hospitals provided hospital services to Horizon Subscribers in reliance on Horizon’s statements regarding coverage and benefits. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 149 of 156 PageID: 1516 - 143 - 425.466. The CarePoint Hospitals relied upon Horizon’s representations, authorizations, and promises to their detriment. 426.467. This reliance was foreseeable, as Horizon’s representations were made in the context of telephone calls from the CarePoint Hospitals’ billing agents to verify, confirm, and pre-certify coverage prior to the hospital services being provided, and there was no ability for the CarePoint Hospitals to learn, separate and apart from Horizon’s representations, whether Horizon considered the fees related to these hospital services to be covered charges under the relevant Plans. 427.468. Horizon is now estopped from denying full and complete payment for the claims at issue in this Complaint. 428.469. As a result of the CarePoint Hospitals’ reliance on Horizon’s statements, the CarePoint Hospitals have suffered and continue to suffer injury, including money damages, and injustice can only be avoided by Horizon honoring its previous promises. COUNT THIRTEENTWELVE (Temporary and Permanent Injunctive Relief) 429.470. The foregoing allegations are re-alleged and incorporated by reference as if fully set forth herein. 430.471. Currently, Horizon is wrongfully denying payment in whole or in part for virtually all claims for benefits submitted for hospital services provided Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 150 of 156 PageID: 1517 - 144 - to Horizon Subscribers by the CarePoint Hospitals as out-of-network providers. In so doing, Horizon has failed and is failing to comply with the terms of the Plans and its other obligations, including its obligations under ERISA. 431.472. Unless enjoined from doing so, Horizon will continue not to comply with the terms of the Plans and its other obligations, including under ERISA, to the CarePoint Hospitals’ severe detriment. A monetary judgment in this case will only compensate the CarePoint Hospitals for past losses, and will not stop Horizon from continuing to confiscate the money earned by the CarePoint Hospitals and necessary to maintain their medical facilities. The CarePoint Hospitals have no practical or adequate remedy, either administratively or at law, to avoid these future losses. 432.473. The CarePoint Hospitals are entitled to a preliminary and permanent injunction requiring Horizon to process claims for hospital services provided to Horizon Subscribers at the CarePoint Hospitals in accordance with the terms of the Plans, and requiring Horizon to stop summarily denying claims for medically-necessary services provided by the CarePoint Hospitals to Horizon Subscribers. CONDITIONS PRECEDENT 433.474. All conditions precedent have been performed or have occurred. Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 151 of 156 PageID: 1518 - 145 - JURY DEMAND Pursuant to Rule 38 of the Federal Rules of Civil Procedure, the CarePoint Hospitals hereby request a trial by jury on all issues so triable. PRAYER FOR RELIEF WHEREFORE, the CarePoint Hospitals demand judgment in their favor against Horizon as follows: A. Declaring that Horizon has breached the terms of the Plans with regard to out-of-network benefits and awarding damages for unpaid out-of- network benefits, as well as awarding injunctive and declaratory relief to prevent Horizon’s continuing actions detailed herein that are unauthorized by the Plans; B. Declaring that Horizon failed to provide a “full and fair review” under § 503 of ERISA, 29 U.S.C. § 1133, and applicable claims procedure regulations, and that “deemed exhaustion” under such regulations is in effect as a result of Horizon’s actions, as well as awarding injunctive, declaratory and other equitable relief to ensure compliance with ERISA and its claims procedure regulations; C. Declaring that Horizon violated its fiduciary duties under § 404 of ERISA, 29 U.S.C. § 1104, and awarding injunctive, declaratory and other equitable relief to ensure compliance with ERISA; D. Declaring that under New Jersey law, Horizon is obligated to pay out- of-network providers for emergency/urgent care rendered to Horizon Subscribers Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 152 of 156 PageID: 1519 - 146 - and that Horizon may not refuse to pay or delay paying such claims, unilaterally and arbitrarily set an “allowed amount” it will pay on such claims, or otherwise unilaterally and arbitrarily reduce its obligation to pay for such claims; E. Compensatory and consequential damages resulting from injury to Plaintiffs’ business and property in the millions of dollars, as set forth above and to be further established at trial; F. Treble the damages sustained by Plaintiffs as described above under 18 U.S.C. § 1964(c); G. Awarding damages based on Horizon’s misrepresentations and nondisclosures regarding the existence of benefits for these hospital services based on promissory estoppel, including any exemplary damages permitted by law; H. Temporarily and permanently enjoining Horizon from continuing to pursue its actions detailed herein, and ordering Horizon to pay benefits in accordance with the terms of the Plans and applicable law; I. Awarding lost profits, contractual damages, and compensatory damages in such amounts as the proofs at trial shall show; J. Awarding exemplary damages for Horizon’s intentional and tortious conduct in such amounts as the proofs at trial will show; K. Awarding restitution for payments improperly withheld by Horizon; Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 153 of 156 PageID: 1520 - 147 - L. Declaring that Horizon has violated the terms of the relevant Plans and/or policies of insurance covering the Horizon Subscribers; M. Requiring Horizon to make full payment on all previously denied charges relating to the Horizon Subscribers; N. Requiring Horizon to pay the CarePoint Hospitals the benefit amounts as required under the Plans; O. Awarding reasonable attorneys’ fees, as provided by common law, federal or state statute, or equity, including 29 U.S.C. § 1132(g) and 18 U.S.C. § 1964(c); P. Awarding costs of suit; Q. Awarding pre-judgment and post-judgment interest as provided by common law, federal or state statute or rule, or equity; and R. Awarding all other relief to which Plaintiffs are entitled. Respectfully submitted, K&L GATES, LLP By: __/s/ Anthony P. La Rocco Anthony P. La Rocco anthony.larocco@klgates.com One Newark Center, 10th Floor Newark, New Jersey 07102 (973) 848.4104 Telephone (973) 556.1584 Facsimile Attorneys for Plaintiffs Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 154 of 156 PageID: 1521 - 148 - Hudson Hospital OPCO, LLC, d/b/a CarePoint Health-Christ Hospital; IJKG, LLC, IJKG PROPCO LLC and IJKG OPCO LLC, d/b/a CarePoint Health-Bayonne Medical Center; and HUMC OPCO LLC, d/b/a CarePoint Health- Hoboken University Medical Center Dated: February 3May 1, 2017 Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 155 of 156 PageID: 1522 - 149 - CERTIFICATION OF SERVICE I hereby certify that on this date, I caused the within pleading to be electronically filed and served upon all counsel of record via the Court’s ECF filing system: Respectfully submitted, K&L GATES, LLP By: __/s/ Anthony P. La Rocco Anthony P. La Rocco anthony.larocco@klgates.com One Newark Center, 10th Floor Newark, New Jersey 07102 (973) 848.4104 Telephone (973) 556.1584 Facsimile Attorneys for Plaintiffs Hudson Hospital OPCO, LLC, d/b/a CarePoint Health-Christ Hospital; IJKG, LLC, IJKG PROPCO LLC and IJKG OPCO LLC, d/b/a CarePoint Health-Bayonne Medical Center; and HUMC OPCO LLC, d/b/a CarePoint Health- Hoboken University Medical Center Dated: February 3May 1, 2017 Case 2:16-cv-05922-JMV-JBC Document 31-2 Filed 05/01/17 Page 156 of 156 PageID: 1523 EXHIBIT B Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 1 of 152 PageID: 1524 K&L GATES LLP One Newark Center, Tenth Floor Newark, New Jersey 07102 Tel: (973) 848-4000 Fax: (973) 848-4001 Attorneys for Plaintiffs Hudson Hospital OPCO, LLC, d/b/a CarePoint Health-Christ Hospital; IJKG, LLC, IJKG PROPCO LLC and IJKG OPCO LLC, d/b/a CarePoint Health- Bayonne Medical Center; and HUMC OPCO LLC, d/b/a CarePoint Health- Hoboken University Medical Center UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY HUDSON HOSPITAL OPCO, LLC-d/b/a CAREPOINT HEALTH-CHRIST HOSPITAL, IJKG, LLC, IJKG PROPCO LLC and IJKG OPCO LLC d/b/a CAREPOINT HEALTH-BAYONNE MEDICAL CENTER, and HUMC OPCO LLC d/b/a CAREPOINT HEALTH- HOBOKEN UNIVERSITY MEDICAL CENTER, Plaintiffs, v. HORIZON HEALTHCARE SERVICES, INC. d/b/a HORIZON BLUE CROSS BLUE SHIELD OF NEW JERSEY, Defendant. Hon. John Michael Vazquez, U.S.D.J. Hon. James B. Clark, III, U.S.M.J. Civil Action No. 2:16-cv-05922-JMV-JBC [PROPOSED] SECOND AMENDED COMPLAINT AND JURY DEMAND Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 2 of 152 PageID: 1525 TABLE OF CONTENTS NATURE OF THE CLAIMS .................................................................................... 1 Overview of Underpayment Claims ................................................................ 2 Overview of RICO Claims .............................................................................. 6 THE PARTIES ......................................................................................................... 10 JURISDICTION AND VENUE ............................................................ 11 FACTUAL ALLEGATIONS .......................................................................... 12 I. Horizon Underpays the CarePoint Hospitals in Violation of Federal and State Law ................................................................................................ 12 A. The CarePoint Hospitals ...................................................................... 12 B. The CarePoint Hospitals’ Out-of-Network Status .............................. 17 C. The CarePoint Hospitals’ Out-of-Network Status is Well Known to Patients and the Public .................................................................... 22 D. New Jersey’s Coverage and Payment Mandates ................................. 22 E. Horizon Subscribers Regularly Seek Treatment at the CarePoint Hospitals, for which Horizon Must Pay Plaintiffs under the Terms of its Plans and State Emergency Care Mandates ............................... 25 F. The CarePoint Hospitals Receive Complete Assignments of Benefits under Horizon Plans for Treatment Provided to Horizon Subscribers ............................................................................ 29 G. Horizon Drastically and Unlawfully Underpays the CarePoint Hospitals’ Claims ................................................................................ 34 H. Horizon Violates the Terms of the Applicable Plans and the Emergency Care Mandate ................................................................... 37 Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 3 of 152 PageID: 1526 - ii - I. Other Improper Actions by Horizon to Delay Payment and/or Refuse to Comply With its Obligations Under the Plans and the Emergency Care Mandates ..................................................................................... 41 1. In-Hospital Denials and Downgrades ...................................... 41 2. Refusing to Make Direct Payments to the CarePoint Hospitals and Refusing to Provide Claims Information ........................... 44 3. Issuing and Refusing to Correct Erroneous EOBs or Process Appeals ...................................................................................... 45 4. Patient Intimidation and After-the-Fact Patient Steering ........ 48 J. The CarePoint Hospitals Exhaust Available Internal Appeals Remedies ............................................................................................. 49 II. Horizon’s Multiple RICO Violations ............................................................ 53 A. Overview ............................................................................................. 53 B. The RICO Enterprises ......................................................................... 55 1. The Network Enterprise ............................................................ 55 2. The OMNIA Tier 1 Enterprise .................................................. 58 3. The Horizon-Barnabas Enterprise ............................................ 61 C. Horizon’s Pattern of Racketeering Activity ........................................ 66 1. Relatedness ................................................................................ 67 2. Continuity .................................................................................. 69 D. The Schemes to Defraud ..................................................................... 70 E. Horizon Repeatedly Uses the Mails and Wires in Furtherance of its Schemes to Defraud............................................................................. 73 Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 4 of 152 PageID: 1527 - iii - 1. 2009 - BMC leaves Horizon’s network and Horizon begins its campaign of mail and wire fraud against BMC ....................... 73 2. 2009-11 - Horizon commences the 2009 Lawsuit and continues its mail and wire fraud campaign ............................. 76 3. 2011-15 - Horizon’s case is dismissed and Plaintiffs join Horizon’s network ..................................................................... 77 4. 2015-present - the mail and wire fraud resumes ................... 78 a. Bad faith negotiations with and disparaging online statements about Christ Hospital ................................... 79 b. Disparaging online articles accusing BMC of “price gouging” ......................................................................... 82 c. Bad faith negotiations with and further disparaging statements about BMC and HUMC ................................ 84 5. Horizon secretly develops the OMNIA Tier 1 Enterprise ......... 87 6. Horizon targets a physician group affiliated with Plaintiffs . 101 7. 2017- Horizon’s blacklisting of Plaintiffs, ongoing illegal pre- authorization denials, and related disparagement ................. 102 8. Other uses of the mails and wires in furtherance of their fraudulent schemes .................................................................. 104 F. Additional Motivation for Horizon’s Misconduct ....................................... 105 G. Horizon Conspires with Tier 1 Providers to Accomplish its Goals ............ 107 H. The Effects of Horizon’s Conduct ............................................................... 113 CAUSES OF ACTION .......................................................................................... 115 Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 5 of 152 PageID: 1528 - iv - COUNT ONE (Breach of Plan Provisions for Benefits in Violation of ERISA § 502(a)(1)(B)) ...................................................................... 115 COUNT TWO (Breach of Fiduciary Duties of Loyalty and Due Care in Violation of ERISA) .................................................................. 117 COUNT THREE (Denial of Full and Fair Review in Violation of ERISA § 503) ............................................................................... 119 COUNT FOUR (Violation of 18 U.S.C. §1962(c)) ......................................................................... 121 COUNT FIVE (Violation of 18 U.S.C. § 1962(d) by conspiring to violate 18 U.S.C. § 1962(c)) .................................................................................. 125 COUNT SIX (Violation of 18 U.S.C. § 1962(d) by conspiring to violate 18 U.S.C. § 1962(b)) .................................................................................. 127 COUNT SEVEN (Breach of Contract - non-ERISA)........................................................................ 130 COUNT EIGHT (Breach of the Duty of Good Faith and Fair Dealing - non-ERISA) ................................................................................... 132 COUNT NINE (Declaratory Judgment - 28 U.S.C. § 2201) .......................................................... 134 COUNT TEN (Breach of Fiduciary Duty - non-ERISA) ............................................................. 136 COUNT ELEVEN (Promissory Estoppel)........................................................................................... 138 Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 6 of 152 PageID: 1529 - v - COUNT TWELVE (Temporary and Permanent Injunctive Relief) ............................................. 140 CONDITIONS PRECEDENT ...................................................................... 141 JURY DEMAND .................................................................................................. 141 PRAYER FOR RELIEF .............................................................................. 141 CERTIFICATION OF SERVICE .............................................................. 145 Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 7 of 152 PageID: 1530 SECOND AMENDED COMPLAINT AND JURY DEMAND Plaintiffs Hudson Hospital OPCO, LLC d/b/a CarePoint Health-Christ Hospital (“Christ Hospital”), IJKG, LLC, PROPCO LLC and IJKG OPCO LLC d/b/a CarePoint Health-Bayonne Medical Center (collectively, “BMC”) and HUMC OPCO LLC d/b/a CarePoint Health-Hoboken University Medical Center (“HUMC”) (all plaintiffs collectively, “Plaintiffs” or the “CarePoint Hospitals”), by and through their attorneys, K&L Gates LLP, for their Second Amended Complaint against defendant, Horizon Healthcare Services, Inc. d/b/a Horizon Blue Cross Blue Shield of New Jersey (“Horizon”), allege as follows: NATURE OF THE CLAIMS 1. This is an action under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq., and state law, based on Horizon failure and ongoing refusal to pay in full for health care services that the CarePoint Hospitals provided to patients covered by the Plans provided or administered by Horizon (“Horizon Subscribers”). 2. This is also an action under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1968 (“RICO”), based, inter alia, on Horizon’s operation and maintenance of its network of participating providers and subnetworks - including, most recently, the Tier 1 providers of its so-called “OMNIA” plan - through a pattern of racketeering activity. The pattern of Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 8 of 152 PageID: 1531 - 2 - racketeering activity, described more fully below, involves Horizon’s repeated and continuous use of the mails and wires in furtherance of multiple schemes to defraud. Overview of Underpayment Claims 3. The CarePoint Hospitals’ claims arise in part from Horizon’s intentional and unlawful pattern of drastically underpaying and/or refusing to pay the CarePoint Hospitals for claims submitted to Horizon for medical treatment provided to patients when the CarePoint Hospital was out-of-network with Horizon. 4. From June 1, 2015, through January 31, 2017, Horizon has underpaid the CarePoint Hospitals by at least one hundred twenty five million nine hundred seventy-five thousand seven hundred fifty-three and 06/100 dollars ($125,975,753.06) on Plaintiffs’ claims for emergency and elective treatment, excluding claims under the New Jersey State Health Benefit Plan (“SHBP”). 5. Horizon provides health care insurance, administration, and/or benefits to insureds or plan participants pursuant to a variety of health care benefit plans and policies of insurance, including employer-sponsored benefit plans and individual health benefit plans (“Plans”). Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 9 of 152 PageID: 1532 - 3 - 6. As shown further below, in violation of its duties under ERISA and state law, Horizon has failed and refused to pay in full for health care services that the CarePoint Hospitals provided to Horizon Subscribers. 7. Specifically, the CarePoint Hospitals provided hospital services in connection with ten thousand six hundred eighty (10,680) patient visits by non- SHBP Horizon Subscribers as follows: a. During the period from June 1, 2015, to January 31, 2017, Christ Hospital provided hospital services relating to approximately five thousand five hundred ninety (5,590) patient visits by non-SHBP Horizon Subscribers. Of those patient visits: two thousand nine hundred sixty-five (2,965) were for emergency/urgent care; and two thousand six hundred twenty-five (2,625) were for non-emergency/non-urgent (“Elective”) care within the scope of the out-of- network benefits provided under the patients’ Plans. b. During the period from May 1, 2016, to January 31, 2017, BMC provided hospital services relating to approximately two thousand five hundred forty-five (2,545) patient visits by non-SHBP Horizon Subscribers. Of those patient visits: one thousand four hundred eighty-eight (1,488) were for emergency/urgent care; and one thousand fifty-seven (1,057) were for Elective care within the scope of the out-of-network benefits provided under the patients’ Plans. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 10 of 152 PageID: 1533 - 4 - c. During the period from June 1, 2016, to January 31, 2017, HUMC provided hospital services relating to approximately two thousand five hundred forty five (2,545) patient visits by non-SHBP Horizon Subscribers. Of those patient visits: one thousand six hundred seventy-six (1,676) were for emergency/urgent care; and eight hundred sixty-nine (869) were for Elective care within the scope of the out-of-network benefits provided under the patients’ Plans. 8. The CarePoint Hospitals’ billed charges for these claims total approximately two hundred twenty-two million eight hundred twenty-seven thousand two-hundred fifty-nine and 13/100 ($223,827,259.13), reflecting the CarePoint Hospitals’ usual and customary rates for the particular medical services provided. Assuming an average patient responsibility (i.e., copayments, coinsurance, and deductibles) under the applicable Plans of ten percent (10%) of the charges for emergency/urgent care and thirty-percent (30%) of the charges for Elective care, then Horizon is responsible for one hundred ninety-two million seven hundred fifty one thousand two hundred thirty-four and 25/100 dollars ($192,751,234.25) of the total charges. 9. However, to date, Horizon has paid the CarePoint Hospitals for only a small fraction of this amount - sixty-six million seven hundred seventy-five thousand four hundred eighty-one and 19/100 ($66,775,481.19) or only thirty-four and six tenths percent (34.6%) of its responsibility. The current unpaid balance Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 11 of 152 PageID: 1534 - 5 - due to the CarePoint Hospitals is at least one hundred twenty five million nine hundred seventy-five thousand seven hundred fifty-three and 06/100 dollars ($125,975,753.06) with respect to these ten thousand six hundred eighty (10,680) claims. 10. Because Horizon Subscribers continue to seek treatment at all the CarePoint Hospitals, the underpayment amounts are expected to continue to increase at the rate of approximately two hundred forty (240) patient visits per week (for all three CarePoint Hospitals combined) or an estimated four to six million dollars ($4-6 million) per week. 11. Horizon’s pattern of denying or dramatically underpaying the CarePoint Hospitals is in clear violation of the terms of the Plans, as well as federal and state law. 12. For example, the CarePoint Hospitals, like all hospitals, are prohibited by the Emergency Medical Treatment and Active Labor Act of 1986 (“EMTALA”), 42 U.S.C. § 1395dd, from turning away women who are in active labor or any other persons in need of emergent/urgent medical treatment because of inability to pay or unavailability of insurance. One of the claims at issue here arises from Christ Hospital providing medical services to a woman who was already in an advanced stage of labor when she arrived at Christ Hospital’s emergency room late in the evening. Due to concern for the fetus with Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 12 of 152 PageID: 1535 - 6 - nonreassuring fetal heart rate tracing and other complications, a cesarean delivery was performed and the patient’s baby boy was delivered with the umbilical cord wrapped tightly around his neck. Christ Hospital’s claim was denied by Horizon for the stated reasons that the patient “does not have out of network benefits as part of her policy,” the “delivery was not emergent,” and the patient could have been “transferred to a participating hospital within the time frame for her delivery.” Horizon’s position that Christ Hospital should have turned this patient away and subjected her to the risks of being transported to another hospital while in an advanced stage of labor is clearly illegal and abhorrent to good medical practice and any sense of common decency and consideration for this patient’s and her child’s circumstances. Overview of RICO Claims 13. Plaintiffs’ claims also arise out of Horizon’s participation in the management and operation of the affairs of its network of participating providers and subnetworks - including its subnetwork of “Tier 1” providers in its so-called “OMNIA” plan - through a pattern of racketeering activity within the meaning of 18 U.S.C. § 1961(1) and (5). Plaintiffs’ claims also involve conspiracies by Horizon to do so and to acquire control over the CarePoint Hospitals through a pattern of racketeering activity. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 13 of 152 PageID: 1536 - 7 - 14. The pattern of racketeering activity includes Horizon’s multiple and repeated uses of the mails and wires in furtherance of two distinct but interrelated schemes to defraud. 15. The first such scheme involves Horizon’s attempt to mislead the public in general, as well as the patients and physicians of the Plaintiffs, into believing that the Plaintiffs are greedy, overbill their patients, and provide substandard healthcare. 16. The second such scheme involves Horizon’s attempt to mislead its subscribers, the public, the New Jersey State Health Benefits Plan, and regulators into believing that Horizon pays Plaintiffs what it is legally obligated to pay healthcare providers for services rendered to its subscribers; and that any additional amounts charged by Plaintiffs must be the result of greed and overbilling. 17. Horizon has repeatedly used the mails and wires in furtherance of both schemes to defraud. As described more fully below, this use of the mails and wires includes, among other things: • Issuing electronic and print letters and advertisements falsely accusing Plaintiffs of engaging in “price gouging” and similar conduct; • Issuing electronic and print letters and advertisements promoting Horizon’s “OMNIA” plan, under which Horizon relegated BMC and HUMC to “Tier 2” status - thus falsely implying that Plaintiffs were of inferior quality to “Tier 1” hospitals; Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 14 of 152 PageID: 1537 - 8 - • Engaging in bad faith negotiations with each CarePoint Hospital for renewal network hospital agreements; and then issuing electronic and print letters and advertisements falsely blaming Plaintiffs for the failure of negotiations leading to the CarePoint Hospitals’ current out-of-network status; • Electronically processing of thousands of Plaintiffs’ claims for emergency treatment that Plaintiffs provided to Horizon Subscribers at a fraction of Plaintiffs’ billed charges, and falsely informing Horizon Subscribers that the payments represent the extent of Horizon’s legal responsibility for the services rendered and that the balance due is the subscribers’ responsibility. 18. Through its schemes to defraud, Horizon is able to steer patients to its in-network providers, including certain in-network providers Horizon arbitrarily selected and designated as “Tier 1” providers under its so-called “OMNIA” plan, and away from the rest of Horizon’s other in-network providers, designated as “Tier 2” and out-of-network providers. 19. The ultimate goal of these schemes is to marginalize Tier 2 and out- of-network providers, specifically including and especially Plaintiffs, and drive them into bankruptcy. 20. If successful in its schemes to defraud, Horizon will be able to acquire control over the CarePoint Hospitals by purchasing them out of bankruptcy at drastically below-market prices, or by inducing one of its favored in-network providers, specifically including Barnabas Health, n/k/a RWJ Barnabas Health (“Barnabas”), to do so. Upon information and belief, this would further a broader Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 15 of 152 PageID: 1538 - 9 - goal of Horizon - to completely dominate the health insurance market in New Jersey. 21. In carrying out its schemes to defraud, as described more fully below, Horizon has conspired with one or more in-network health care providers, including Barnabas, a health care system that competes with the CarePoint Hospitals. Not surprisingly, Horizon has designated the hospitals in the Barnabas system as “Tier 1” under its OMNIA plan. 22. The foregoing conduct violates RICO in that Horizon has: (1) participated in the management and operation of the affairs of its network of participating providers and subnetworks - including its so-called “OMNIA” alliance - through a pattern of racketeering activity, in violation of RICO Section 1962(c), 18 U.S.C. § 1962(c); (2) conspired with Barnabas and other in-network hospitals to do so, in violation of RICO Section 1962(d), 18 U.S.C. § 1962(d); and (3) conspired with Barnabas and other in-network hospitals to violate RICO Section 1962(b), 18 U.S.C. § 1962(b), by seeking to acquire control over the CarePoint Hospitals, also in violation of RICO Section 1962(d), 18 U.S.C. § 1962(d). Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 16 of 152 PageID: 1539 - 10 - THE PARTIES 23. BMC is a privately held, limited liability company, organized under the laws of the State of New Jersey, with its principal place of business at 29th Street and Avenue E, Bayonne, New Jersey. 24. Christ Hospital is a privately held, limited liability company, organized under the laws of the State of New Jersey, with its principal place of business at 176 Palisade Avenue, Jersey City, NJ 07306. 25. HUMC is a privately held, limited liability company, organized under the laws of the State of New Jersey, with its principal place of business at 308 Willow Avenue, Hoboken, NJ 07030. 26. Horizon is a not-for-profit health services corporation in the State of New Jersey, formed pursuant to the Health Services Corporation Act, with its principal place of business at Three Penn Plaza East, Newark, New Jersey. 27. Horizon is in the business of providing health benefit plans and policies of health insurance. According to Horizon, it provides benefits under a variety of health benefit plans, including individual health benefit plans and group plans, including employer-sponsored plans and government-sponsored health benefit plans. 28. Horizon is the only health services corporation in New Jersey. It is declared by statute, N.J.S.A. 17:48E-41, to be a charitable and benevolent Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 17 of 152 PageID: 1540 - 11 - institution exempt from all New Jersey taxes except real property taxes and the tax on insurance premiums. It is required by statute, N.J.S.A. 17:48E-3(a), to be operated for the benefit of its subscribers. 29. Although declared by statute to be a non-profit, charitable organization, Horizon has generated enormous profits and accumulated, as of December 31, 2014, capital reserves of $2.81 billion. 30. Horizon is the largest private health insurer in New Jersey, with a more than 50% share of the state’s commercial market. Horizon has stated that it insures approximately 2.1 million lives through its commercial products. Horizon administers the State Health Benefits Program, which includes approximately 750,000 insured lives. In total, including Medicare, Medicaid, and governmental employee coverage, Horizon provides health insurance to approximately 3.8 million people in New Jersey. JURISDICTION AND VENUE 31. This Court has federal question subject matter jurisdiction over this matter pursuant to 28 U.S.C. § 1331, as the CarePoint Hospitals assert federal claims against Horizon, in Counts One, Two, and Three, under ERISA. 32. This Court also has federal question subject matter jurisdiction over this matter pursuant to 28 U.S.C. § 1331, as the CarePoint Hospitals assert federal claims against Horizon, in Counts Four, Five, and Six, under RICO. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 18 of 152 PageID: 1541 - 12 - 33. This Court also has supplemental jurisdiction over the CarePoint Hospitals’ state law claims against Horizon, in Counts Seven through Twelve, because these claims are so related to the CarePoint Hospitals’ federal claims that the state law claims form a part of the same case or controversy under Article III of the United States Constitution. The Court has supplemental jurisdiction over these claims pursuant to 28 U.S.C. § 1367(a). 34. This Court has personal jurisdiction over Horizon because Horizon is incorporated and has its principal place of business in New Jersey and carries on one or more businesses or business ventures in this judicial district; there is the requisite nexus between the business(es) and this action; and Horizon engages in substantial and not isolated activity within this judicial district. 35. Venue is proper in this District pursuant to 28 U.S.C. § 1391(b)(2), because a substantial portion of the events giving rise to this action arose in this District. FACTUAL ALLEGATIONS I. Horizon Underpays the CarePoint Hospitals in Violation of Federal and State Law. A. The CarePoint Hospitals. 36. BMC is a 278-bed, fully accredited, acute care hospital that provides quality, comprehensive, community-based health care services to more than 70,000 people annually. Its facilities include 19 full-service emergency room bays, 205 Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 19 of 152 PageID: 1542 - 13 - medical/surgical beds, 10 obstetrical beds, 17 pediatric beds, 14 adult ICU/CCU beds, and 15 adult, acute psychiatric beds. The service complement consists of six inpatient operating rooms, two cystoscopy rooms, one full-service cardiac catheterization lab, 12 chronic hemodialysis stations, one MRI unit, emergency angioplasty services, elective angioplasty, two hyperbaric chamber units, and a PET-CT diagnostic imaging unit. 37. Christ Hospital is a 376-bed fully accredited acute care hospital. With a highly-qualified medical team - including more than 500 doctors with specialties ranging from allergies to vascular surgery - Christ Hospital offers a full spectrum of services and has been recognized for excellence in cardiovascular, respiratory, and newborn care. As a state-certified Stroke Center and Primary Angioplasty Center, Christ Hospital provides lifesaving emergency interventions with outcomes that rank among the best in New Jersey. Christ Hospital is affiliated by common ownership with the principal owners of BMC. 38. HUMC is a 333-bed fully accredited general acute care hospital. HUMC provides advanced medical technologies in support of its medical staff, nursing team, and other caregivers, to enable state-of-the-art care to citizens of Hoboken and the surrounding communities. HUMC offers excellence in emergency medicine in the 34-bay emergency room and the dedicated OB/GYN ED; inpatient rehabilitation; transitional care; child and adult behavioral health; Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 20 of 152 PageID: 1543 - 14 - women’s care; wound care; and numerous surgical subspecialties. The American Heart and Stroke Association awarded the Silver Award to HUMC for its dedication to improving quality of care for stroke patients. Overall, HUMC was ranked in the top ten hospitals in New Jersey for care quality among all hospitals in the state with 350 beds or fewer. HUMC is also affiliated by common ownership with the principal owners of BMC. 39. Between 2008 and 2012, each of the CarePoint Hospitals was purchased out of bankruptcy by the current owners. The owners then invested substantial time, effort and capital into improving the hospitals’ finances, physical plant, equipment, and overall quality of the healthcare services they provide. For example, the CarePoint Hospitals’ actual and projected capital expenditures for the years 2014-2017 total $117.8 million, of which $5.1 million relates to equipment purchases and $97.9 million relates to construction and renovation of facilities. In addition, the CarePoint Hospitals’ annual operating expenditures total several hundred million dollars, e.g. $384 million in operating expenditures in 2014. 40. Setting aside the immeasurable benefit of improved health care for the patient communities, the new owners’ efforts to rescue these hospitals from bankruptcy have generated huge economic benefits to Hudson County and the State. The economic impacts for New Jersey of the CarePoint Hospitals’ estimated Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 21 of 152 PageID: 1544 - 15 - annual in-state operating expenditures of $384 million and capital expenditures of $117.8 million include: a. 8,167 direct and indirect jobs or job-years (one job lasting more than one-year); b. $815.2 million in gross domestic product; c. $653.9 million in compensation to employees; d. $23.5 million in state government revenues; and e. $8.7 million in local government (county, municipal, school district) revenues outside Hudson County. 41. The CarePoint Hospitals currently operate as for-profit hospitals. As such, they are not eligible for tax exempt status as charitable organizations. 42. The CarePoint Hospitals also receive no federal or state government payments for patients who are undocumented aliens, the vast majority of whom are treated at urban hospitals. The hospitals may be able to obtain partial payment for undocumented patients who agree to file a charity application, but many resist out of fear of deportation. 43. The CarePoint Hospitals are also paid far less than their costs for services provided to Medicare, Medicaid and Charity Care patients. For example, at BMC, Medicaid only covers 66 percent of its costs and only 29 percent of its charity care costs for those who qualify. For care provided to uninsured patients whose gross income is less than 500 percent of the federal poverty level, hospitals Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 22 of 152 PageID: 1545 - 16 - are required to limit charges at the rate of 115% of Medicare (and still below costs) but the majority of these uninsured patients still do not pay anything on that reduced amount. 44. In 2015, for all CarePoint Hospitals combined, the uninsured, charity care, and Medicaid patients comprised: a. 60.3 percent of all emergency room visits; b. 45.1 percent of all other outpatient visits; and c. 40.5 percent of admissions. 45. The percentages for charity care, Medicaid and uninsured patients at the individual hospitals during 2015 were as follows: Charity Care, Medicaid, Uninsured Patients 2015 BMC Christ HUMC Admissions 22.2% 50.1% 44.3% ER Visits 55.1% 66.0% 57.0% All Other Outpatient 24.5% 42.2% 61.8% Combined, Charity Care, Medicare, Uninsured 33.6% 48.8% 59.0% 46. In contrast, patients who had commercial insurance represented much smaller percentages of the patients treated at the CarePoint Hospitals in 2015. Commercially Insured Patients 2015 BC/BS Other Total BMC Admissions 10.2% 4.5% 14.7% ER Visits 15.5% 10.1% 25.6% All Other Outpatient 21.3% 5.8% 27.1% Christ Hospital Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 23 of 152 PageID: 1546 - 17 - Admissions 6.1% 5.3% 11.4% ER Visits 7.1% 7.2% 14.3% All Other Outpatient 5.7% 25.5% 31.2% HUMC Admissions 12.4% 8.8% 21.2% ER Visits 12.0% 12.0% 24.0% All Other Outpatient 7.9% 2.9% 10.7% 47. According to 2015 figures recently released by the State of New Jersey, the CarePoint Hospitals ranked 2nd (Christ Hospital), 4th (HUMC), and 13th (BMC) in the State of New Jersey in charity care as a percentage of total care provided. This data also reflected that the CarePoint Health System was the largest Charity Care provider in Hudson County. 48. The CarePoint Hospitals and the independent physicians attending to patients at the hospitals are required by law to provide emergency/urgent care to any patient regardless of the patient’s ability to pay and regardless of source of insurance payment. A patient’s ability to pay in no way affects or impedes the CarePoint Hospitals’ delivery of emergency health care. B. The CarePoint Hospitals’ Out-of-Network Status. 49. Health care providers are either “in-network” or “out-of-network” with respect to insurance carriers. “In-network” or “participating” providers are those who contract with health insurers that require them to accept discounted negotiated rates as payment in full for covered services. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 24 of 152 PageID: 1547 - 18 - 50. “Out-of-network” or “non-participating” providers are those that do not have contracts with insurance carriers to accept discounted rates and instead set their own fees for services based on a percentage of charges. 51. Christ Hospital, BMC and HUMC were formerly in-network providers with Horizon but became out-of-network providers as to Horizon on June 1, 2015, May 1, 2016, and June 1, 2016, respectively. 52. New Jersey law does not specify how a hospital’s out-of-network charges must be determined. Rather, under New Jersey law, hospitals are permitted to set charges for various services and products as they see fit. N.J.S.A. 26:2H-18.51. Moreover, courts lack authority to review and adjust a hospital’s set charges under New Jersey law. DiCarlo v. St. Mary Hospital, 530 F.3d 255 (3d Cir. 2008); Matter of Final Agency Decision by New Jersey Dep’t of Health Regarding Utilization and Quality Review for Calendar Year 1993, 273 N.J. Super. 205, 226 (App. Div. 1994). 53. The CarePoint Hospitals have been and remain willing to again become in-network providers with Horizon provided that Horizon is willing to provide in-network rates that would be sufficient to allow the hospitals to sustain themselves, meet their continuing obligations to provide community access to quality healthcare services, and generate a reasonable profit. To date, however, the Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 25 of 152 PageID: 1548 - 19 - CarePoint Hospitals have been unable to negotiate sustainable in-network rates with Horizon. 54. Notably, all three of the CarePoint Hospitals were previously forced to seek bankruptcy protection because of inadequate in-network arrangements. BMC, HUMC, and Christ Hospital were purchased out of bankruptcy by their current owners in 2008, 2011 and 2012, respectively. During the first twelve months after acquiring BMC and as a necessary step to negotiate more adequate in- network arrangements, the current owners terminated BMC’s then existing in- network agreements with 20 insurers, including Horizon. 55. Horizon retaliated not only by refusing to pay BMC fully for medical services provided to Horizon Subscribers at out-of-network charges but also, inter alia, by filing a lawsuit against BMC (the “2009 Lawsuit”). In the 2009 Lawsuit, Horizon alleged, inter alia, that BMC knowingly submitted false insurance claims to Horizon in violation of the New Jersey Insurance Fraud Prevention Act (“IFPA”), and engaged in common law fraud, negligent misrepresentation, and tortious interference. BMC filed counterclaims arising out of Horizon’s pattern of grossly under-paying BMC for the services it provided to Horizon Subscribers, attempting to steer patients away from BMC, and refusing to pay BMC for more than $100 million for medical services BMC provided to Horizon Subscribers. These counterclaims included claims arising under New Jersey’s insurance Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 26 of 152 PageID: 1549 - 20 - coverage and payment mandates; claims arising under the benefit plans underwritten or administered by Horizon for which BMC held valid assignments of benefits; and claims for tortious interference, defamation, and injurious falsehood. 56. By September 2011 and after two years of costly litigation, Horizon’s claims were dismissed with prejudice and BMC’s counterclaims were the only remaining claims to be resolved. At that point, BMC and Horizon entered into a Settlement Agreement that resolved BMC’s counterclaims, which by that time totaled in excess of $110 million, and also established terms under which BMC would operate as a Horizon in-network provider for 4 years. Those same rates were later incorporated into in-network agreements between Horizon and HUMC and Christ Hospital that were in effect when those two hospitals were purchased out of bankruptcy in 2011 and 2012, respectively. 57. The in-network agreements with Horizon are evergreen contracts that will automatically renew at essentially the same rates (with some rates adjusted based on the consumer price index). As a result, to obtain any increase over the auto-renew rates, the hospital must first issue a notice to terminate the agreement. 58. After acquiring Christ Hospital, it soon became apparent that the rates under the in-network agreement with Horizon were not adequate to meet Christ Hospital’s costs. Based on the percentages of charity care, Medicaid and uninsured patients in relation to commercially insured patients, Christ Hospital Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 27 of 152 PageID: 1550 - 21 - requires higher reimbursement rates than the other two CarePoint Hospitals to meet its costs. In fact, there are significant differences in the rates paid to the three hospitals under various government programs because of the differing percentages of charity care, Medicaid and uninsured patients in relation to commercially insured patients. This fact was necessarily known to Horizon at the time it proposed and obtained the consent of the new owners to apply the same rates to all three hospitals. 59. Although the rates were not adequate to meet its costs, Christ Hospital honored the in-network agreement with Horizon and accepted those rates until the time it was able to issue a notice of termination and begin the process of negotiating new rates for the renewal agreement that would fairly meet its costs and sustain the viability of the hospital. 60. Because Horizon refused to negotiate new rates that were anywhere near sustainable rates, Christ Hospital was forced out-of-network with Horizon on June 1, 2015. 61. As the in-network agreements with Horizon for BMC and HUMC were nearing the end of their initial 4-year terms, those hospitals also issued notices of termination in order to commence negotiations of new rates. Thereafter, these hospitals also sought to conduct contract renewal negotiations with Horizon, but Horizon again refused to offer new rates that would sustain the viability of Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 28 of 152 PageID: 1551 - 22 - each hospital. As a result, BMC and HUMC were also forced out-of-network with Horizon as of May 1, 2016, and June 1, 2016, respectively. 62. As soon as each of the CarePoint Hospitals became out-of-network, Horizon immediately reinstituted its practice of unlawfully underpaying and refusing to pay the hospitals for health insurance claims, as Horizon had done when BMC went out-of-network in 2009. C. The CarePoint Hospitals’ Out-of-Network Status is Well Known to Patients and the Public. 63. The CarePoint Hospitals prominently advise their patients and the public of their out-of-network status. The hospitals’ websites currently direct patients to a webpage that lists the insurers with whom the hospitals are in-network and explains the difference between in-network and out-of-network providers, and how the hospitals bill insurers and patients. 64. The CarePoint Hospitals’ Insurance Help Desk is available to answer questions from patients and their billing department is available to explain and review a patient’s bill, and discuss payment options. 65. The CarePoint Hospitals also direct patients to contact their carrier to understand their out-of-network benefits. D. New Jersey’s Coverage and Payment Mandates. 66. New Jersey law requires that hospitals provide emergency/urgent care to all patients, regardless of ability to pay. This “take-all-comers” statute mandates Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 29 of 152 PageID: 1552 - 23 - that “[n]o hospital shall deny any admission or appropriate service to a Patient on the basis of that Patient’s ability to pay or source of payment.” N.J.S.A. 26:2H- 18.64. Violation of this provision subjects a hospital to a civil penalty of $10,000 for each violation. 67. New Jersey regulations mandate that a hospital provide an appropriate medical screening examination to all individuals who come to an emergency department with what they believe to be an emergent or urgent condition. N.J.A.C. 8:43G-12.7(c). 68. To ensure access to emergency care regardless of a patient’s type of insurance, New Jersey law requires healthcare insurers to specifically notify their subscribers that they are entitled to have “access” and “payment of appropriate benefits” for emergency conditions on a “24 hours a day” and “seven days a week” basis. N.J.A.C. 11:24A-2.5(b)(2). 69. New Jersey law also provides that an insurance carrier must pay for the services provided by the hospital and do so promptly. This process begins with the requirement that the insurance carrier acknowledge receipt of all claims within two (2) working days, if the claim is submitted electronically, or within fifteen (15) working days, if the claim is submitted by way of written notice. See N.J.S.A. 17:48E-10.1(d)(1). Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 30 of 152 PageID: 1553 - 24 - 70. New Jersey law provides that an insurance carrier must pay claims within thirty (30) days after the insurance carrier receives the claim when submitted electronically, or forty (40) days after received non-electronically, provided the following conditions apply: (a) the health care provider is eligible at the date of service; (b) the person who received the health care service was covered on the date of service; (c) the claim is for a service or supply covered under the health benefits plan; (d) the claim is submitted with all the information requested by the payer on the claim form or in other instructions that were distributed in advance to the health care provider or covered person in accordance with the provisions of section 4 of P.L.2005, c. 352 (C.17B:30-51); and (e) the payer has no reason to believe that the claim has been submitted fraudulently. N.J.S.A. 17:48E-10.1(d)(1)(a)-(e). 71. Accordingly, when a nonparticipating provider - for example, an out- of-network hospital - receives an assignment of the right to payment from a covered person, the insurance carrier is required by law to pay the hospital. See N.J.S.A. 17:48E-10.1(d)(1). 72. An insurance carrier’s dispute of a portion of the claim does not excuse the carrier from payment of the entire claim: “(4) Any portion of a claim that meets the criteria established in paragraph (1) of this subsection shall be paid Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 31 of 152 PageID: 1554 - 25 - by the payer in accordance with the time limit established in paragraph (1) of this subsection.” N.J.S.A. 17:48E-10.1(d)(4). Horizon has not disputed any portion of the CarePoint Hospitals’ claims but simply chose not to pay the full amount of the claims. 73. Moreover, for emergency or urgent care situations, New Jersey law requires insurers such as Horizon to limit their subscribers’ responsibility to the amounts they would have paid had they received treatment from an in-network facility, and pay out-of-network providers for the difference between that amount and the out-of-network providers’ billed charges. See, e.g., Aetna Health, Inc. v. Srinivasan, 2016 N.J. Super. Unpub. LEXIS 1515 (App. Div. June 29, 2016); N.J.S.A. 26:2S-6.1(a); N.J.A.C. 11:24-5.3(b). E. Horizon Subscribers Regularly Seek Treatment at the CarePoint Hospitals, for which Horizon Must Pay Plaintiffs under the Terms of its Plans and State Emergency Care Mandates. 74. As noted above, since June 1, 2015, the CarePoint Hospitals have provided hospital services to Horizon Subscribers in connection with approximately ten thousand six hundred eighty (10,680) patient visits to a CarePoint Hospital when it was out-of-network with Horizon, excluding patients who participate in the SHBP. 75. Upon information and belief, all of the Plans require Horizon to pay the CarePoint Hospitals for their total billed charges, less applicable in-network Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 32 of 152 PageID: 1555 - 26 - patient responsibility, for emergency or urgent care that the CarePoint Hospitals provide to Horizon Subscribers, consistent with the requirements of New Jersey’s coverage and payment mandates set forth above. 76. Moreover, many of the Plans covering Horizon Subscribers specifically provide “out-of-network” benefits for services rendered by out-of- network hospitals, such as the CarePoint Hospitals. Upon information and belief, these Plans require Horizon to pay the CarePoint Hospitals for Elective care that the CarePoint Hospitals provide to Horizon Subscribers at the usual or customary rates for such Elective care. The Horizon Subscribers are responsible for the balance, if any, of CarePoint Hospitals’ billed charges for such Elective care. 77. Importantly, patients pay significantly higher health care premiums in order to have access to out-of-network medical providers. Patients pay the higher premiums to ensure that they will be able to obtain necessary medical services from the medical providers and medical facilities of their choice. 78. More particularly, according to papers Horizon submitted in support of its motion to dismiss the original Complaint in this action (ECF No. 16), Horizon’s fully-insured Plans derive from various “contract types” approved by the New Jersey Department of Banking and Insurance (“DOBI”): Indemnity, Health Maintenance Organization (“HMO”), Managed Care (“MC”), Small Group (“SMG”), and Individual Health Insurance (“IHC”) Plans. Horizon also Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 33 of 152 PageID: 1556 - 27 - administers self-funded Plans that are also based upon contract templates issued by DOBI. 79. Upon information and belief, regardless of the Plan type, all of Horizon’s insured Plans provide for payment of out-of-network benefits in accordance with the “Allowance” or “Allowed Charge” definition found in each Plan. 80. For its Indemnity and HMO Plans, according to Horizon, the “Allowance” is a dollar amount Horizon determines to be “reasonable, customary and appropriate for Covered Services and Supplies unless required by law.” (emphasis added). As noted above, in emergency or urgent care situations, Horizon is required by law to pay out-of-network providers for their full billed charges, less the amounts that the subscribers would have paid had they received treatment from an in-network facility. 81. For its MC Plans, according to Horizon, the “Allowance” for out-of- network providers means the lesser of Horizon’s (i) actual charges or (ii) a percentage of the rates of the Centers for Medicare & Medicaid Services (“CMS”), rates specified in databases developed by an outside company (FAIR Health, Inc.); or an amount “based on Horizon BCBSNJ’s usual and prevailing payments made to providers for similar services or supplies.” However, for emergency services, the “Allowance” under Horizon’s MC Plans for out-of-network providers “shall be Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 34 of 152 PageID: 1557 - 28 - increased as needed to ensure that the Covered Person has no greater liability than he/she would have if they were provided by In-Network Providers.” 82. For its SMG Plans, according to Horizon, “Allowed Charge” for out- of-network providers is based on a standard approved by the New Jersey Small Employer Health Coverage Program Board. For non-emergent treatment, this standard represents the “usual or customary charge for the service or supply.” For urgent care or emergency treatment, benefits are covered “to the same extent as would have been provided if care and treatment were provided by” an in-network provider. 83. For its IHG Plans, according to Horizon, “Allowed Charge” for out- of-network providers is based on a standard approved by the New Jersey Individual Health Coverage Program Board. For non-emergent treatment, this standard typically represents the usual or customary charges for the services or treatment provided, or the amount “most often charged for a given service by a Provider within the same geographic area.” For urgent care or emergency treatment, benefits are covered to the same extent as would have been provided if care and treatment were provided by an in-network provider. 84. For self-insured Plans, for which Horizon provides administrative services and serves as a Plan fiduciary, according to Horizon, the “Allowance” under the Plan mirrors the definition in the Horizon Managed Care Plans (i.e., the Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 35 of 152 PageID: 1558 - 29 - lesser of Horizon’s (i) actual charges or (ii) a percentage of some external standard (e.g., rates of CMS, Fair Health, or some other standard). However, for emergency services, the “Allowance” under these self-insured plans likewise is increased as needed to ensure that the Covered Person has no greater liability than he/she would have if they were provided by In-Network Providers. F. The CarePoint Hospitals Receive Complete Assignments of Benefits under Horizon Plans for Treatment Provided to Horizon Subscribers. 85. While out-of-network with Horizon, each CarePoint Hospital had no contract with Horizon setting forth the terms under which Horizon would pay for services that the CarePoint Hospital provide to patients who are Horizon Subscribers. 86. Rather, as out-of-network providers, the CarePoint Hospitals provide healthcare services to all persons, including, but not limited to, those persons whose Plans allow them to receive services from providers who do not participate in their respective carrier’s insurance network. 87. Under the terms of most Plans that provide coverage for out-of- network care, a patient is responsible for the payment of “coinsurance,” a percentage of the out-of-network provider’s charge for which the patient is responsible. 88. Upon registration at a CarePoint Hospital, all patients, including Horizon Subscribers, execute a form titled “Assignment of Insurance Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 36 of 152 PageID: 1559 - 30 - Benefits/Direct Payment/Authorized Representative/Agent” (the “AOB Contract”), among other documents. In the AOB Contract, Horizon Subscribers assign to the CarePoint Hospital their rights to benefits under Horizon’s Plans. 89. These AOB Contracts provide for the assignment to the CarePoint Hospital of all rights, benefits, and causes of action under a Horizon Plan: I hereby assign to the Hospital, all of my rights, benefits, privileges, protections, claims, causes of action, interests or recovery, to any and all rights, benefits, privileges, protections, claims, causes of action, interests, or recovery of any type whatsoever receivable by me or on my behalf arising out of any policy of insurance, plan, trust, fund, or otherwise providing health care coverage of any type to me (or to any other third party responsible for me) for the charges for services rendered to me by the hospital. This includes, without limitation, any private or group health/hospitalization plan, automobile liability, general liability, personal injury protection, medical payments, uninsured or underinsured motor vehicle benefits, settlements/ judgments/verdicts, self-funded plan, trust, workers compensation, MEWA, collective, or any other third-party payor providing health care coverage of any type to me (or to any other third party responsible for me) for the charges for services rendered to me by the hospital [collectively, "Coverage Source"]. This is a direct assignment to the Hospital of any and all of my rights to receive benefits arising out of any Coverage Source. I understand that this assignment of benefits is irrevocable. This assignment of benefits fully and completely encompasses any legal claim I may have against any Coverage Source, including, but not limited to, my rights to appeal any denial of benefits on my behalf, to request and obtain plan documents, to pursue legal action against any coverage source, and/or to file a complaint with the New Jersey Department of Banking and Insurance. 90. The AOB Contracts also provide for payment of any benefits directly to the CarePoint Hospital: Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 37 of 152 PageID: 1560 - 31 - I authorize and direct payment be made by any and all coverage source directly to the hospital of all benefits, payments, monies, checks, funds, wire transfers or recovery of any kind whatsoever from any coverage source. I also agree to assist the hospital in pursuing payment from any coverage source. This includes, without limitation, signing documents requested or needed to pursue claims and appeals, getting documents from coverage source, or otherwise to support payment to the hospital. 91. The AOB Contracts also provide for the CarePoint Hospital to act as the Horizon Subscriber/Patient’s authorized agent and representative to pursue actions to recover benefits under a Horizon Plan: I hereby authorize and designate the Hospital as my authorized agent and representative to act on my behalf with respect to all matters related to all of my rights, benefits, privileges, protections, claims, causes of action, interests or recovery arising out of any Coverage Source. This includes, without limitation, the Hospital requesting verification of coverage/pre-certification/authorization, filing pre- service and post-service claims and appeals, receiving all information, documentation, summary plan descriptions, bargaining agreements, trust agreements, contracts, and any instruments under which the plan is established or operated, as well as receiving any policies, procedures, rules, guidelines, protocols or other criteria considered by the coverage source, in connection with any claims, appeals, or notifications related to claims or appeals. 92. These AOB Contracts provide, in part, that the patient is responsible for the payment of deductibles, copayments, coinsurance, and other charges not covered by the assignment: I understand that I am financially and legally responsible for charges not covered in full by the assignment of benefits …, including, but not limited to, any deductibles, copayments, and coinsurance amounts provided under any coverage source; and charges for which there is no Coverage Source. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 38 of 152 PageID: 1561 - 32 - 93. Thus, by the express language of the AOB Contracts, Plaintiffs may balance bill patients for amounts not covered by the assignments. Consequently, in order to satisfy its obligations under New Jersey’s coverage and payment mandates, described more fully above, Horizon must pay the CarePoint Hospitals for the difference between their billed charges and the amounts Horizon’s subscribers would have paid had they received treatment from an in-network facility for emergent/urgent treatment that the CarePoint Hospitals provide to Horizon Subscribers. 94. Upon information and belief, most of Horizon’s Plans contain no anti- assignment provisions that would preclude subscribers from assigning their Plan benefits to the CarePoint Hospitals. 95. In particular, upon information and belief and based on Horizon’s motion to dismiss papers, none of Horizon’s MC Plans contain such anti- assignment clauses. While Horizon has alleged that some of its Indemnity, HMO, SMG, and IHC Plans contain alleged anti-assignment clauses, to the extent that such clauses are present in any of the Plans, most expressly permit the subscribers to assign Plan benefits to health care providers with Horizon’s consent. 96. Horizon has consented to the assignments, or otherwise waived the applicability of the anti-assignment clauses, through an extended course of dealing, described more fully below. Among other things, when it decides to pay a claim, Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 39 of 152 PageID: 1562 - 33 - Horizon often remits payment directly to the CarePoint Hospitals, without reliance on any purported anti-assignment clauses, albeit in amounts grossly inadequate relative to Plaintiffs’ actual charges. Horizon also forces Plaintiffs to pursue Horizon’s internal appeals process, only to frustrate Plaintiffs once they are engaged in that process, but again, without citing to any purported anti-assignment clauses. This and other conduct described more fully below amounts to Horizon’s consent to its subscribers’ assignments of Plan benefits to the CarePoint Hospitals, or at a minimum, is an extended course of dealing that is inconsistent with any alleged anti-assignment clauses. 97. Further, to the extent that any of the Plans have anti-assignment clauses, they are barred by New Jersey’s Assignment of Benefits Law, which provides: With respect to a carrier which offers a managed care plan that provides for both in-network and out-of-network benefits, in the event that the covered person assigns, through an assignment of benefits, his right to receive reimbursement for medically necessary health care services to an out-of-network health care provider, the carrier shall remit payment for the reimbursement directly to the health care provider in the form of a check payable to the health care provider, or in the alternative, to the health care provider and the covered person as joint payees, with a signature line for each of the payees. Payment shall be made in accordance with the provisions of this section and [N.J.S.A. 17B:30-23 et seq.]. Any payment made only to the covered person rather than the health care provider under these circumstances shall be considered unpaid, and unless remitted to the health care provider within the time frames established by [N.J.S.A. 17B:30-23 et seq.], shall be considered overdue and subject to an interest charge as provided in that act. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 40 of 152 PageID: 1563 - 34 - N.J.S.A. 26:2S-6.1(c) (emphasis added). G. Horizon Drastically and Unlawfully Underpays the CarePoint Hospitals’ Claims. 98. During the period from June 1, 2015, to January 31, 2017, the CarePoint Hospitals, as out-of-network providers, rendered medical services in connection with approximately ten thousand six hundred eighty (10,680) patient visits by Horizon Subscribers (excluding patients insured under the SHBP). The CarePoint Hospitals promptly filed claims with Horizon for the medical services provided to these Horizon Subscribers. 99. The CarePoint Hospitals’ total billed charges for these claims were approximately $223.8 million reflecting the CarePoint Hospitals’ usual and customary rates for the particular medical services provided. The $223.8 million in total charges is comprised of approximately $180.4 million in charges for emergency/urgent care and approximately $43.5 million in charges for Elective care. 100. The charges billed by the CarePoint Hospitals were especially reasonable, inter alia, in light of the hospitals’ costs and the low percentage of the hospitals’ patients who are insured by commercial insurance carriers, yet the hospitals must provide emergency care to any patient regardless of the patient’s ability to pay and regardless of source of insurance payment. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 41 of 152 PageID: 1564 - 35 - 101. Horizon is responsible for the total charges except for the amounts for which the patient is responsible under the Plans (e.g., deductible, copayments, and coinsurance). 102. With respect to the approximately $180.4 million total charges for emergency/urgent care, the patient responsibility on average is less than ten percent (10%). Even assuming, conservatively, that the patient responsibility averages a full ten percent (10%), Horizon is responsible for the remaining 90% or approximately $162.3 million. However, to date, Horizon has paid the CarePoint Hospitals for only a small fraction of that amount - less than $56.0 million, or approximately thirty four and a half percent (34.5%) - leaving a balance due to the CarePoint Hospitals as of January 31, 2017, of approximately $106.4 million with respect to charges for emergency/urgent care. 103. With respect to the approximately $43.5 million total charges for Elective care, upon information and belief, Horizon’s responsibility under the Plans is approximately seventy percent (70%) of the CarePoint Hospital’s billed charges. Applying those percentages, Horizon is responsible for at least approximately $30.5 million but Horizon has paid only part of that amount - $10.8 million, or 35 and four tenths of a percent (35.4%) - leaving a balance due to the CarePoint Hospitals as of January 31, 2017, of approximately $19.6 million with respect to charges for Elective care. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 42 of 152 PageID: 1565 - 36 - 104. With respect to all of the CarePoint Hospitals’ total charges of $223.8 million for both emergency/urgent care and Elective care, Horizon is responsible for approximately $192.8 million but has paid only part of that amount - $66.8 million or approximately thirty-four and six tenths of a percent (34.6%) - leaving a balance due to the CarePoint Hospitals as of January 31, 2017, of approximately $126.0 million with respect to the total charges for both emergency/urgent care and Elective care provided to Horizon Subscribers. 105. Exhibits 1 through 5, which are attached hereto and incorporated herein by reference, are spreadsheets detailing the following information relating to the non-payments and underpayments by Horizon for the 10,680 claims submitted by the CarePoint Hospitals for emergency/urgent care and Elective care provided to Horizon Subscribers by the CarePoint Hospitals as out-of-network providers with Horizon through January 31, 2017: a. Exhibit 1 provides a summary, for all CarePoint Hospitals combined, of the total charges, total receipts, total adjustments, and outstanding amounts due for all claims, broken down by claims relating to emergency/urgent care (designated as “ER” or “Emergency”) and non-emergency/elective care (designated as “Elective”). b. Exhibits 2 through 4 provide as to Christ Hospital, BMC, and HUMC, respectively, each hospital’s total charges, total receipts, total adjustments, Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 43 of 152 PageID: 1566 - 37 - and outstanding amounts due for all claims, broken down between ER and Elective. c. Exhibit 5 provides claim-specific information as to each of the claims, including the Facility, Account Number, Admit Date, Discharge Date, IPOP Flag (inpatient/outpatient/same day service), Service Type, Total Charges, Total Payments, and Policy Number. Because Exhibit 5 contains information regarding medical treatment provided to specific patients (although patient names and other personal identifiers were excluded), the CarePoint Hospitals have filed Exhibit 5 under seal. H. Horizon Violates the Terms of the Applicable Plans and the Emergency Care Mandate. 106. As noted above, for emergent/urgent care, New Jersey law requires Horizon to pay the CarePoint Hospitals for the difference between their billed charges and the amounts Horizon Subscribers would have paid had they received treatment from an in-network facility. As described above, this requirement is incorporated into all of Horizon’s fully-insured Plans and the self-insured Plans for which Horizon is a fiduciary. 107. The CarePoint Hospitals submitted to Horizon claims totaling $180.4 million for emergency/urgent care provided to non-SHBP Horizon Subscribers through January 31, 2017. Horizon has paid less than $56.0 million on account of Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 44 of 152 PageID: 1567 - 38 - those claims, or less than 30% of the CarePoint Hospitals’ total billed charges for those claims. 108. Upon information and belief, it is Horizon’s general business practice not to pay fully out-of-network providers’ charges for emergency/urgent care. Instead, Horizon pays a lesser amount by (a) multiplying the applicable Medicare rates by a percentage which is unilaterally and arbitrarily selected by Horizon and may range anywhere from 150% to 325% ; or (b) multiplying Horizon’s in- network rates by a percentage which is unilaterally and arbitrarily selected by Horizon. Using the amounts so calculated, instead of the provider’s charges, Horizon then applies the in-network level of benefits under the Plan. 109. Indeed, former Horizon Senior Director in the Service Division, a twenty (20) year veteran of Horizon and/or Horizon BCBSNJ, Kim Dans has alleged that “Horizon knowingly and systematically underpaid claims for out-of- network urgent ane emergent care under fully insured plans written in New Jersey causing insureds to suffer balance billing and collections.” Kim Dans v. Horizon Healthcare Services, et al., Docket No. ESX-L-2132-16 (Superior Court of New Jersey, Essex Vicinage) at ¶22. 110. Ms. Dans went on to allege that “[o]ne Senior Vice President openly admitted in meetings that, because only a subset of members ever called the Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 45 of 152 PageID: 1568 - 39 - company to complain, the company was going to turn a blind eye to systematic under-payments.” Id. at ¶23. 111. Horizon’s practice of underpaying claims for emergency care provided by out-of-network providers is contrary to the Plans and law. 112. Horizon’s practice is also contrary to what BlueCross Blue Shield insurers in other states (“BCBCS Insurers”) regularly pay the CarePoint Hospitals. When the CarePoint Hospitals provide emergency/urgent care to patients who have coverage with BCBS Insurers, the CarePoint Hospitals’ claims pass through the local plan (Horizon) but they are submitted to the responsible home plan BCBS Insurer (e.g., Anthem Blue Cross, or Capitol Blue Cross). Unlike Horizon, the out of state BCBS Insurers process and pay the claims in compliance with their obligation to assure that their subscribers pay no more that they would have paid for the same care at an in-network hospital. None of those BCBS Insurers process such claims based upon a unilaterally and arbitrarily chosen percentage of Medicare or in-network rates. 113. Moreover, as noted above, for elective and other non-emergent care, Plans containing out-of-network benefits require payment of medical expenses incurred by Horizon Subscribers at usual and customary rates, or an equivalent standard. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 46 of 152 PageID: 1569 - 40 - 114. The CarePoint Hospitals’ total billed charges for elective treatment reflect their usual and customary rates for the particular medical services provided. The amounts paid by Horizon (even after factoring in amounts that Horizon contends are the patients’ responsibility under the applicable Plans, e.g., copayments, coinsurance, and deductibles) fall far short of the usual and customary rates required under the Plans. 115. Significantly, Horizon Subscribers who seek treatment at CarePoint Hospitals pay higher premiums, at times substantially higher premiums, for the right under the Plans to receive medical treatment from the provider of their choice, including from out-of-network providers such as the CarePoint Hospitals. The Horizon Subscribers bargain for and expect that payment will be made at the providers’ usual and customary rates. Horizon’s practice of paying the CarePoint Hospitals a mere 30% of these rates for the rendering of medical treatment for Horizon Subscribers falls far below these reasonable expectations. 116. Upon information and belief, Horizon acted as the Plan administrator and as fiduciary to the Horizon Subscribers for each of the claims at issue in this case. Horizon exercised discretion, authority, control and oversight in determining if Plan benefits would be paid and the amounts of Plan benefits that would be paid. Horizon’s improper administration of these claims resulted in the payment of a mere 30% of the usual and customary rates for the medical services rendered. It is Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 47 of 152 PageID: 1570 - 41 - a gross abuse of any discretionary authority that Horizon may be granted under any Plan. I. Other Improper Actions by Horizon to Delay Payment and/or Refuse to Comply With its Obligations Under the Plans and the Emergency Care Mandates. 1. In-Hospital Denials and Downgrades 117. When a patient presents at a CarePoint Hospital for emergency/urgent care, the hospital will ordinarily obtain the patient’s insurance information (if any), notify the patient’s insurer, and provide the insurer with basic information about the patient’s condition, diagnoses, and course of treatment. 118. After the CarePoint Hospitals became out-of-network providers, Horizon commenced a practice of giving written notification that it had denied coverage (albeit wrongfully) for emergency/urgent care patients while the patients were still in the hospital receiving emergency/urgent care. 119. Horizon’s ongoing practice of issuing in-hospital denials occurs before the patient’s course of emergency/urgent treatment is complete, without the benefit of sufficient medical information or consultation with the attending physician and often without consultation with the attending physician at all. 120. Horizon’s in-hospital denials are arbitrary, capricious, and self- evidently unlawful. 121. Horizon continues this unlawful practice to this very day. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 48 of 152 PageID: 1571 - 42 - 122. In addition to in-hospital denials, Horizon also routinely engages in in-hospital downgrades of coverage. 123. Horizon’s common practice in this regard is as follows: While the patient is being treated in the hospital, Horizon sends formal correspondence to the attending physician and to the CarePoint Hospital’s case management staff advising that Horizon has determined that the patient is “medically stable and [able to] be safely transferred to a par [i.e., participating] facility for evaluation and continued care,” although the patient is in fact not medically stable and should not be transferred. Federal and state laws require that determinations of medical stability and fitness for transfer be made by the patient’s attending physician, not by a health insurer, like Horizon. 124. Horizon’s correspondence routinely advises that the patient’s continued stay in the CarePoint Hospital will result in the remainder of the patient’s stay being covered only at the patient’s out-of-network rate, and that the patient “should be aware that, generally, when you elect to receive in-patient services from non-participating hospitals, you will incur substantially higher out- of-pocket financial liability because your out-of-network benefits apply, including higher deductible and coinsurance costs.” 125. This advice is given even though emergency services, whether rendered in an emergency room or following admission to the hospital, are not Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 49 of 152 PageID: 1572 - 43 - considered services “elected” by the patient but rather are services obtained because the patient, acting as a “prudent layperson,” seeks immediate medical attention for a problem perceived to be a serious threat to a patient’s life or continued health. 126. Horizon’s in-hospital downgrade letters are typically sent within twenty-four (24) hours after a patient has been admitted through the CarePoint Hospital’s emergency department. 127. Moreover, Horizon has deliberately structured its reconsideration procedures relevant to emergency/urgent cases to frustrate legitimate attempts to timely reverse the erroneous denials and downgrades described above. 128. Specifically, Horizon only entertains one request for reconsideration of an in-patient denial per day, and only if made within three days after the denial. 129. Thus, for example, if a patient is admitted on a Monday and Horizon erroneously denies the claim that day, the CarePoint Hospital may request reconsideration of Monday’s admission no later than Thursday of the same week. If, on the Friday of that week, information is determined that validates the hospital’s decision to admit the patient (for example, a test result), Horizon will not reconsider its denial for the preceding Monday - even though the hospital would now possess the relevant information to demonstrate that that denial is invalid. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 50 of 152 PageID: 1573 - 44 - 130. Instead, the hospital will then be forced to utilize Horizon’s internal appeals process for the erroneously denied days, thus delaying payment. 2. Refusing to Make Direct Payments to the CarePoint Hospitals and Refusing to Provide Claims Information 131. Despite the Horizon Subscribers’ having executed the AOB Agreements that direct to the contrary, Horizon routinely sends payments for out- of-network services under some Plans directly to the Horizon Subscribers, particularly where the amount paid is $8,500 or less. 132. Upon issuing a check to a Horizon Subscriber, Horizon often fails to send an explanation of benefits (“EOB”) to the provider - because doing so would alert the provider that the payment had been made directly to the Subscriber and would allow the provider to seek the appropriate payment from the Subscriber. 133. Moreover, upon information and belief, many Horizon Subscribers do not cash the checks they receive from Horizon at all, out of fear that doing so would have some perceived adverse legal consequence or the belief that the check is a refund for premiums paid. Other Horizon Subscribers do cash the checks, but do not remit payment to their providers out of confusion as to which provider is owed what amount. Still other Horizon Subscribers fail to cash the check and fail to forward the check to any of their respective providers. Still others cash the checks and later cannot be found. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 51 of 152 PageID: 1574 - 45 - 134. Horizon knows, or reasonably should know, that its practice of sending checks to its subscribers routinely prevents the CarePoint Hospitals from receiving payment for healthcare services rendered to patients who have health insurance with Horizon. Moreover, that practice is prohibited by statute for fully insured plans (see N.J.S.A. 26:2S-6.1(c)) and is contrary to Department of Banking and Insurance’s policy and guidance documents. 135. Horizon also refuses to provide information to assist the CarePoint Hospitals in their efforts to collect on payments Horizon has made directly to Horizon Subscribers as the result of services rendered by the CarePoint Hospitals. 136. Horizon’s malfeasance in this regard has a direct financial benefit to Horizon. Upon information and belief, Horizon books its issuance of a check as an expense, helping Horizon to meet its minimum medical loss ratio, as is required by law. Many of the checks, however, indicate that they are void after 180 days. Upon the expiry of the 180 days if the check is not cashed, Horizon may book an increase in its cash reserves without correspondingly reducing the amount credited to its minimum medical loss ratio. 3. Issuing and Refusing to Correct Erroneous EOBs or Process Appeals 137. In addition, Horizon has refused to properly pay claims - either directly to Horizon Subscribers or to the CarePoint Hospitals on the Subscribers’ Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 52 of 152 PageID: 1575 - 46 - behalf - arising from emergency/urgent care, thus significantly delaying payment to the CarePoint Hospitals. 138. When a Horizon Subscriber arrives at a CarePoint Hospital for emergency/urgent care, Horizon is required by state and federal law to limit the Subscriber’s responsibility for payment to what the Subscriber would be responsible for had the Subscriber sought treatment from an in-network facility. 139. The purpose of this requirement is to allow individuals to seek the most expeditious medical care possible when they are experiencing a medical emergency, without regard to the in-network or out-of-network status of the facility at which they are seeking emergency treatment. Upon information and belief, Horizon reaffirms this obligation in member handbooks, benefit booklets, and similar documents provided to subscribers. 140. Notwithstanding these legal requirements, Horizon regularly fails to limit Subscriber responsibility to the amount the Subscriber would have paid had he or she received treatment from an in-network facility. Instead, Horizon sends an EOB to the Subscriber reflecting that the Subscriber is obligated to pay the CarePoint Hospitals the difference between Horizon’s “allowed” amount, and the balance of the CarePoint Hospitals’ charges. Thus, Horizon is in fact refusing to pay the CarePoint Hospitals’ charges incurred by a Horizon Subscriber that Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 53 of 152 PageID: 1576 - 47 - Horizon is otherwise required to pay pursuant to its contract with that Subscriber, and under applicable law. 141. In addition, Horizon has taken the position that in order for it to correct an erroneous determination of Subscriber responsibility (e.g., where the Subscriber presented as an emergency/urgent case but Horizon failed to honor its obligation to limit the Subscriber’s responsibility to the same amount as they would have paid had they been treated at an in-network hospital), the CarePoint Hospital must first “balance bill” the Subscriber for the amount that Horizon has erroneously determined to be the Subscriber’s responsibility. Here, Horizon places the burden on the CarePoint Hospitals even though Horizon readily acknowledges that its determination was erroneous in the first instance. 142. Moreover, even after the CarePoint Hospital has issued a “balance bill,” Horizon has refused to correct its erroneous determination. 143. In short, Horizon’s general practice is to force the CarePoint Hospitals to bill Horizon Subscribers for amounts that Horizon is actually required by law and contract to pay. 144. Upon information and belief, the overarching purpose of this unlawful practice is to mislead Plaintiffs’ patients and the public into believing that Horizon pays Plaintiffs what it is legally required to do, and deter Horizon Subscribers from Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 54 of 152 PageID: 1577 - 48 - seeking care at the CarePoint Hospitals, even when the need for care is based on an emergency/urgent condition. 145. As part and parcel of these obstructionist tactics, Horizon has unlawfully refused to take action with respect to appeals that the CarePoint Hospitals have lodged, including the most basic action of commencing the appeal process. 4. Patient Intimidation and After-the-Fact Patient Steering 146. On at least one occasion, Horizon has contacted a HUMC patient during her hospital stay, which stemmed from a medical emergency, in an attempt to intimidate her and steer her to another hospital to complete her stay and/or in the case of future emergencies. 147. The occasion of which CarePoint is aware occurred during the first week of April 2017. At that time, a patient of Dr. Raul F. Aguilar went into labor and began having painful contractions. She went to HUMC, where Dr. Aguilar has privileges, through the emergency department as it was the closest and most appropriate hospital under the circumstances. 148. While the patient was recovering in her postpartum room, and while HUMC’s lactation consultant was meeting with her, the patient received a call on her cell phone from Horizon which she did not answer. The patient then received a Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 55 of 152 PageID: 1578 - 49 - call on her hospital room phone from a Horizon representative who called to ask if she was aware that HUMC is out-of-network. 149. According to the lactation consultant, who was present during the call, the patient confirmed that HUMC admitted her through the emergency department. According to the patient, she felt very nervous about the call, but confirmed to the Horizon representative that she went through the emergency department because she had painful contractions. In essence, the patient had an emergency and went to the emergency department at the closest hospital where her obstetrician had privileges. 150. CarePoint has concerns that this was not an isolated incident and intends to pursue any other instances of patient intimidation and attempted patient steering in discovery. K. The CarePoint Hospitals Exhaust Available Internal Appeals Remedies. 151. Upon information and belief, all available appeals avenues under the Plans applicable to the claims at issue have either been exhausted or rendered futile by Horizon’s refusal to process appeals. 152. Upon information and belief, such Plans generally provide for administrative appeal of claim decisions to be processed by Horizon. The CarePoint Hospitals routinely file such internal appeals with the result that Horizon adheres to its initial decision. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 56 of 152 PageID: 1579 - 50 - 153. For claims under Plans that are fully insured by Horizon, the Plans generally provide two levels of administrative appeals, both of which are internal appeals within Horizon. The CarePoint Hospitals have timely requested such Level 1 and Level 2 internal appeals for the claims under the fully insured Plans at issue, with the exception of recent claims for which the CarePoint Hospitals have not yet received Horizon’s initial claims decision or the time for filing a request for a Level 1, internal appeal has not yet expired. 154. After the Level 1 and Level 2 internal Horizon appeals are exhausted, although not required by the Plans, CarePoint nonetheless routinely seeks further review from the New Jersey Department of Banking and Insurance (“DOBI”) in an effort to avoid the need to seek judicial intervention. However, since the CarePoint Hospitals have been out-of-network with Horizon, with the exception of a few claims, DOBI has refused to consider any of CarePoint’s claims. In some instances, DOBI has cited separate pending litigation between CarePoint and Horizon. In others, DOBI has taken the position that “Provider appeals are not eligible for processing as stage 3 appeals.” As a result, all conceivable available administrative remedies under the fully-insured Plans are effectively exhausted at the conclusion of the Level 2 internal appeal. 155. What is more, nearly all of the claims under fully insured Plans for which the CarePoint Hospitals have completed the Level 1 and Level 2 internal Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 57 of 152 PageID: 1580 - 51 - appeals with Horizon have resulted in Horizon simply affirming its initial decision with little or no analysis. Accordingly, it would be futile for the CarePoint Hospitals to continue to even pursue the Level 1 and Level 2 internal appeals process with Horizon for any further claims. 156. Plans that are self-funded by the employer or other organization likewise include provisions for appealing claims decisions. The CarePoint Hospitals obtain copies of the summary plan descriptions to identify the appeals process under the Plan that applies to each claim and routinely files appeals in accordance with the Plan’s prescribed procedure. 157. Like fully insured Plans, the self-funded plans typically provide for Level 1 and/or Level 2 internal appeals with Horizon and, where required, a Level 3 external appeal per the summary plan description or to the Department of Labor (ERISA). The CarePoint Hospitals have timely requested such Level 1 and Level 2 internal appeals for the claims under the self-funded Plans at issue, with the exception of recent claims for which the CarePoint Hospitals have not yet received Horizon’s initial claims decision or the time for filing a request for a Level 1, internal appeal has not yet expired. 158. With the exception of a few claims, the CarePoint Hospitals have been unable to file and prosecute Level 3 external appeals because Horizon has recently initiated a practice of sending its decision letter regarding the Level 2 appeals only Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 58 of 152 PageID: 1581 - 52 - to the Plan member with the result that the CarePoint Hospitals are denied prompt notice of the decision and must attempt to obtain copies of the decisions directly from the Plan member. When the CarePoint Hospitals have been able to submit Level 3 external appeals, they have often been told summarily that providers are ineligible to submit such appeals. 159. Again, nearly all of the claims under self-funded Plans for which the CarePoint Hospitals have completed the Level 1 and/or Level 2 internal appeals with Horizon have likewise resulted in Horizon simply affirming its initial decision with little or no analysis. Accordingly, it would be futile for the CarePoint Hospitals to continue to seek Level 1 and Level 2 internal appeals with Horizon for any further claims. Given the above, it would also be futile for the CarePoint Hospitals to continue to request Level 3 external appeals for future claims. 160. Regardless of whether Horizon has conducted or refused to conduct the appeal procedures set forth in Horizon’s own documents, Horizon has failed to fully pay the CarePoint Hospitals for the health care services they have provided to Horizon Subscribers, and nearly $126.0 million remains due and owing to the CarePoint Hospitals for these services provided to Horizon Subscribers who are non-SHBP-members from June 1, 2015 to January 31, 2017. 161. Moreover, Horizon has failed to adequately explain the basis for its dramatic underpayments to the CarePoint Hospitals. In particular, Horizon has Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 59 of 152 PageID: 1582 - 53 - failed or refused to: (a) provide the specific reason or reasons for the denial of claims; (b) provide the specific Plan provisions relied upon to support the denials; (c) provide the specific rule, guideline or protocol relied upon in making the decision to deny claims; (d) describe any additional material or information necessary to perfect a claim, such as the appropriate diagnosis/treatment code; and (e) notify the relevant parties that they are entitled to have, free of charge, all documents, records and other information relevant to the claims for benefits. 162. This action is timely commenced well within six years after the CarePoint Hospitals were notified by Horizon that Horizon was rejecting or dramatically underpaying the CarePoint Hospitals’ claims for the services that the CarePoint Hospitals provided to Horizon Subscribers, and otherwise within six (6) years after each of the CarePoint Hospitals’ claims against Horizon accrued. II. Horizon’s Multiple RICO Violations. A. Overview. 163. Even worse than Horizon’s simple refusal to pay Plaintiffs, as required by the terms of its Plans and applicable law, are the fraudulent tactics that Horizon has used to conduct and participate in the affairs of its insurance networks and subnetworks - including the Tier 1 members of its so-called “OMNIA” alliance. As described more fully below, in doing so, Horizon has engaged in multiple violations of RICO, 18 U.S.C. §§ 1961-1968. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 60 of 152 PageID: 1583 - 54 - 164. As set out more fully below, Horizon’s network of participating providers and its subnetworks, including its so-called “OMNIA” subnetwork of Tier 1 providers, as well as its union with Barnabas, are association-in-fact enterprises within the meaning of 18 U.S.C. § 1961(4). 165. Moreover, as set out more fully below, Horizon has conducted or participated in the affairs of these enterprises through a pattern of racketeering activity within the meaning of 18 U.S.C. §§ 1961(1) and (5). In doing so, Horizon has violated 18 U.S.C. § 1962(c). 166. As described more fully below, the pattern of racketeering activity involves Horizon’s multiple and repeated violations of 18 U.S.C. §§ 1341 and 1343. Specifically, Horizon has repeatedly used the mails and wires in furtherance of two distinct but interrelated schemes to defraud: (i) Horizon’s attempt to mislead the public in general, and the patients and physicians of the Plaintiffs in particular, into believing that the Plaintiffs are greedy, overbill their patients, and provide substandard healthcare; and (ii) Horizon’s attempt to mislead its subscribers, the public, regulators, and others into believing that Horizon pays Plaintiffs what it is legally obligated to pay healthcare providers for services rendered to Horizon Subscribers; and that any additional amounts charged by Plaintiffs must be the result of greed and overbilling. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 61 of 152 PageID: 1584 - 55 - 167. Not only has Horizon conducted and participated in the management of its networks and subnetworks through a pattern of racketeering activity, it has conspired with one or more competitors of the CarePoint Hospitals, including Barnabas, to do so. In doing so, Horizon has violated 18 U.S.C. § 1962(d). 168. As described more fully above and below, the CarePoint Hospitals have been injured in their business and property through Horizon’s multiple RICO violations and, thus, have standing to bring this action under RICO’s civil enforcement provision, 18 U.S.C. § 1964(c). B. The RICO Enterprises. 1. The Network Enterprise 169. At all relevant times, Horizon has conducted or participated in the conduct of the affairs of an association-in-fact enterprise within the meaning of 18 U.S.C. §1961(4): Horizon’s network of contracted hospitals, referred to herein as the “Network Enterprise.” 170. Numerous entities have and do make up the Network Enterprise. In addition to Horizon, its current members include, but are not limited to: (a) Atlantic Health System; (b) Barnabas and Robert Wood Johnson Health System, now known as RWJ Barnabas after their merger in 2016; (c) Hackensack University Health Network; (d) Hunterdon Healthcare; (e) Inspira Health Network; (f) Summit Medical Group; (g) each of the individual hospitals within each of the Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 62 of 152 PageID: 1585 - 56 - foregoing health systems; and (h) at various times, numerous other hospitals and medical providers (including the Plaintiffs for a portion of the relevant period) ((a) through (h) are collectively referred to herein as the “In-Network Providers”). 171. At all relevant times, the Network Enterprise has been and continues to be engaged in activities affecting interstate commerce, including but not limited to advertising products and services across state lines, selling insurance to the residents of various states, and providing medical care to the residents of various states. 172. The Network Enterprise is separate and distinct from the members of the Network Enterprise. The Network Enterprise is an ongoing organization that exists to advance the interests of the individual entities that comprise its membership. 173. The Network Enterprise has operated as a continuing unit since at least Horizon’s formation in or around 1985. 174. A principal purpose of the Network Enterprise is to benefit each of its participants at the expense of out-of-network providers like the Plaintiffs, as well as the majority of other stand-alone, independent hospitals in New Jersey, by increasing its members’ patient volume. 175. Relationships exist among the In-Network Providers which have agreed amongst themselves which In-Network Provider will service which Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 63 of 152 PageID: 1586 - 57 - geographic region. Moreover, the In-Network Providers cooperate with one another to handle the increased patient volume designed to benefit the members of the Network Enterprise and thus carry on the purpose of the Network Enterprise. Healthcare providers who are members of the Network Enterprise contract with Horizon to accept discounted negotiated rates as payment in full for covered services. 176. Throughout its existence, the Network Enterprise has had a hierarchical structure comprised of higher-level and lower-level subnetworks. Those at the higher-level tiers have agreed among themselves and with Horizon to cover specific geographic regions. Currently, the members of the “OMNIA Tier 1 Enterprise” (described below) are at the highest-level tier of the Network Enterprise. 177. The Network Enterprise ostensibly exists for the legitimate purpose of providing a network of healthcare providers united for the purpose of providing healthcare at lower costs than their competitors. Indeed, at various times, all of the Plaintiffs have been In-Network Providers with respect to Horizon. 178. However, driven by personal animus toward Plaintiffs, and its insatiable desire for greater profits and domination of the health insurance market in New Jersey, Horizon has conducted or participated in the conduct of the affairs of the Network Enterprise in relation to Plaintiffs through a separate and distinct Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 64 of 152 PageID: 1587 - 58 - “pattern of racketeering activity” within the meaning of 18 U.S.C. § 1961(5), described more fully below. 179. Each member of the Network Enterprise performs a role in the group consistent with its organizational structure, which furthers the activities of the Network Enterprise. For example, the In-Network Providers treat Horizon Subscribers at discounted rates. Likewise, Horizon steers its subscribers to the In- Network Providers and away from out-of-network providers in order to generate the increased volume necessary to maintain the Network Enterprise. 180. The Network Enterprise is an ongoing enterprise with no foreseeable end. 2. The OMNIA Tier 1 Enterprise 181. Since at least September 2015, Horizon has conducted or participated in the conduct of the affairs of another association-in-fact enterprise within the meaning of 18 U.S.C. § 1961(4): the “OMNIA Tier 1 Enterprise.” 182. The OMNIA Tier 1 Enterprise is a subnetwork within the Network Enterprise and comprises Horizon and other health care providers whom Horizon has designated as “Tier 1” under Horizon’s so-called OMNIA Health Alliance (“OMNIA”) product. 183. For more than two years, while Plaintiffs were all in-network with Horizon, Horizon was covertly developing the OMNIA product, in which it would Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 65 of 152 PageID: 1588 - 59 - subdivide its network of participating providers into two subnetworks, “Tier 1” and “Tier 2,” and provide substantial financial incentives for subscribers to obtain health care at Tier 1 providers instead of Tier 2 providers. 184. The following entities, in addition to Horizon, are current “Tier 1” members of Horizon’s OMNIA product and, thus, participants in the OMNIA Tier 1 Enterprise: (a) Atlantic Health System; (b) Barnabas and Robert Wood Johnson Health Systems (now known as RWJ Barnabas after their merger in 2016); (c) Hackensack University Health Network; (d) Hunterdon Healthcare; (e) Inspira Health Network; (f) Summit Medical Group; and (g) each of the individual hospitals within each of the foregoing health systems ((a) through (g) are collectively referred to herein as the “OMNIA Tier 1 Providers”). 185. At all relevant times, the OMNIA Tier 1 Enterprise has been and continues to be engaged in activities affecting interstate commerce, including but not limited to advertising its products and services across state lines, selling insurance to the residents of various states, and providing medical care to the residents of various states. 186. The OMNIA Tier 1 Enterprise is separate and distinct from each of the members of the OMNIA Tier 1 Enterprise. The OMNIA Tier 1 Enterprise is an ongoing organization that exists to advance the interests of the individual entities that comprise its membership. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 66 of 152 PageID: 1589 - 60 - 187. A principal purpose of the OMNIA Tier 1 Enterprise is to make money for its members at the expense of providers that Horizon has designated as “Tier 2” under its OMNIA product, as well as out-of-network hospitals like the Plaintiffs and other stand-alone, independent hospitals in New Jersey, by increasing its members’ patient volume. 188. Relationships exist among the OMNIA Tier 1 Providers which have agreed amongst themselves which In-Network Provider will cover which geographic region. Moreover, the In-Network Providers cooperate with one another to handle the increased patient volume designed to benefit the members of the OMNIA Tier 1 Enterprise and thus carry on the purpose of the OMNIA Tier 1 Enterprise. In this way, as Horizon has acknowledged in an affidavit from Robert Franzoi, Vice President of Health Deliveryfor Horizon, dated March 13, 2017, “Horizon has partnered with certain providers to manage a population of Horizon members.” 189. On the surface, the OMNIA Tier 1 Enterprise may appear to be a legitimate association of Horizon and healthcare providers united for the purpose of providing healthcare at lower costs than their competitors. But they are able to do so profitably only because of the increased volume Horizon has secured through Horizon’s pattern of racketeering activity within the meaning of 18 U.S.C. § 1961(5), described more fully in Parts II.C-E below. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 67 of 152 PageID: 1590 - 61 - 190. The OMNIA Tier 1 Enterprise has operated as a continuing unit since at least September 2015, the date on which Horizon announced the OMNIA Insurance Product and the original Tier 1 members of the OMNIA Tier 1 Enterprise. 191. Each member of the OMNIA Tier 1 Enterprise performs a role in the group consistent with its organizational structure, which furthers the activities of the OMNIA Tier 1 Enterprise. For example, the OMNIA Tier 1 Providers treat Horizon Subscribers at discounted rates and accept, quid pro quo, a share in Horizon’s savings. Likewise, Horizon steers its subscribers to the OMNIA Tier 1 Providers and away from Tier 2 and out-of-network providers in order to generate the increased volume necessary to maintain the OMNIA Tier 1 Enterprise. 192. The OMNIA Tier 1 Enterprise is an ongoing enterprise with no foreseeable end. 3. The Horizon-Barnabas Enterprise 193. Since at least May 2014, and, upon information and belief dating back earlier, Horizon has conducted or participated in the conduct of the affairs of another association-in-fact enterprise within the meaning of 18 U.S.C. § 1961(4): the “Horizon-Barnabas Enterprise” (the Horizon-Barnabas Enterprise, OMNIA Tier 1 Enterprise, and the Network Enterprise are collectively referred to herein as the “RICO Enterprises”). Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 68 of 152 PageID: 1591 - 62 - 194. The Horizon-Barnabas Enterprise is a bilateral enterprise comprised of Horizon and Barnabas, including the hospitals within the Barnabas health system. 195. At all relevant times, the Horizon-Barnabas Enterprise has been and continues to be engaged in activities affecting interstate commerce, including but not limited to advertising its products and services across state lines, selling insurance to the residents of various states, and providing medical care to the residents of various states. 196. The Horizon-Barnabas Enterprise is separate and distinct from each of the members of the Horizon-Barnabas Enterprise. The Horizon-Barnabas Enterprise is an ongoing organization that exists to advance the interests of the individual entities that comprise its membership. 197. A principal purpose of the Horizon-Barnabas Enterprise is to make money for its members at the expense of out-of-network hospitals like the Plaintiffs and other stand-alone, independent hospitals in New Jersey, by increasing its members’ patient volume. 198. Another purpose of the Horizon-Barnabas Enterprise is to acquire control over CarePoint and the CarePoint Hospitals, both of which are engaged in activities which affect interstate commerce. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 69 of 152 PageID: 1592 - 63 - 199. Relationships exist between Barnabas and Horizon which have agreed amongst themselves to work together to destroy BMC and, upon information and belief, other CarePoint Hospitals. 200. Specifically, regarding BMC, high level executives at Barnabas had, and upon information and belief continue to have, discussions about how overtake emergency medical services and, ultimately, the hospital market in Bayonne and to acquire control over BMC. 201. Upon information and belief, at the time Barnabas purchased Jersey City Medical Center (“JCMC”), high level executives from both entities conducted a series of transition meetings. 202. Upon information and belief, among other business and integration strategies, these high-level executives discussed Barnabas’ plans to overtake the emergency medical services (“EMS”) and, ultimately, the hospital market, in Bayonne at the expense of BMC. 203. Upon information and belief, the first step in the process discussed by these high-level executives was the development of a satellite emergency department (“SED”) in Bayonne to be run by JCMC and entering into EMS contracts with insurers and ambulance providers for that region. 204. Upon information and belief, Horizon was actively pushing what became known as the “Horizon/Bayonne” strategy. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 70 of 152 PageID: 1593 - 64 - 205. Upon information and belief, during the transition, Dr. Garay, JCMC’s Chief Medical Officer, communicated with representatives at Horizon about accepting “enhanced rates,” that is, rates substantially higher than what JCMC understood to be Horizon’s prevailing in-network rates, in order to take over BMC’s market share in Bayonne. 206. Upon information and belief, at this time, Jay Picerno, Barnabas’s Chief Financial Officer, and a Horizon representative communicated about Barnabas taking over the Bayonne market, Horizon’s offer to give some hospital in the Barnabas system enhanced rates to start a free-standing emergency room, Barnabas’ strong support of the plan. 207. Consistently, upon information and belief, Picerno raised the issue of opening a SED on several occasions during transition meetings as part of the “Horizon/Bayonne” strategy and confirmed that Horizon was actively supporting, encouraging, and directing Barnabas’ development of the SED. 208. Upon information and belief, Barry H. Ostrowsky, President and Chief Executive Officer of RWJ Barnabas, was also involved directly in conversations with Horizon regarding the “Horizon/Bayonne” strategy. 209. Upon information and belief, the objective of the “Horizon/Bayonne” strategy was to “choke BMC out of the market,” and Horizon shared this goal. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 71 of 152 PageID: 1594 - 65 - 210. In fact, upon information and belief, Picerno, on behalf of Barnabas, had discussions with the new Mayor of Bayonne’s, Jimmy Davis, incoming chief of staff, Mary Jane Desmond, that she questioned what would happen if the SED came through, that Bayonne might close, and that Picerno responded that if that happened, Barnabas would “buy it up.” 211. Moreover, upon information and belief, Picerno had other meetings with the Mayor of Bayonne around the time the Bayonne planning board gave Barnabas approval for the SED and the Mayor expressed concerns that BMC would close its doors in response to which Picerno replied “don’t worry, we’ll buy it.” Upon information and belief, Mayor Davis then asked “why would Barnabas buy BMC?” and Picerno responded that Barnabas would “strip the place,” that “our [Barnabas’] goal is to kill CarePoint, and Horizon is helping us!” 212. Indeed, since at least the Fall of 2015, Barnabas “has touted a 24/7 emergency department as a main feature of its medical facility planned for Broadway and 24th Street” in Bayonne. See “Battle looms between CarePoint and Barnabas Health over proposed Bayonne ER.” http://www.nj.com/hudson/index.ssf/2016/11/battle_looms_between_carepoint_an d_barnabas_health.html Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 72 of 152 PageID: 1595 - 66 - 213. Upon information and belief, Barnabas has nearly completed construction of the facilty, a satellite emergency facility or “SED” pursuant to N.J.A.C. 8:43G-36.1, to be known as Barnabas Health at Bayonne. Id. 214. The Horizon-Barnabas Enterprise has operated as a continuing unit since at least May 2014. 215. Both members of the Horizon-Barnabas Enterprise perform a role in the group consistent with its organizational structure, which furthers the activities of the Horizon-Barnabas Enterprise. For example, Barnabas has spent significant sums to construct an SED the purpose of which is to drive BMC into bankruptcy so that it or Horizon can acquire control over BMC. Likewise, Horizon has offered to pay Barnabas enhanced rates at its Bayonne SED in order for the endeavor to be profitable. Integral to the purpose of the Horizon-Barnabas Enterprise is the steering of patients from CarePoint Hospitals, especially including BMC. 216. The Horizon-Barnabas Enterprise is an ongoing enterprise with no end foreseeable prior to “killing” CarePoint or “choking it out of the market.” C. Horizon’s Pattern of Racketeering Activity. 217. Since at least February 2009, and continuing through the present, Horizon has conducted and participated in the conduct of the affairs of its Network Enterprise through a pattern of racketeering within the meaning of 18 U.S.C. § 1961(5), and conspired to do so. Since at least September 2015, and continuing Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 73 of 152 PageID: 1596 - 67 - through the present, Horizon has likewise conducted and participated in the conduct of the affairs of the OMNIA Tier 1 Enterprise through a pattern of racketeering within the meaning of 18 U.S.C. § 1961(5), and conspired to do so. Since at least May 2014, and continuing through the present, Horizon has conducted and participated in the affairs of the Horizon-Barnabas Enterprise through a pattern of racketeering within the meaning of 18 U.S.C. § 1961(5), and conspired to do so. 218. The pattern of racketeering activity includes multiple acts of mail and wire fraud in violation of 18 U.S.C. §§ 1341 and 1343. As set forth below, Horizon (a) used the mails and wires; (b) in the foreseeable furtherance of; (c) a scheme or artifice to defraud; (d) involving material deceptions; (e) with the intent to deprive the Plaintiffs and other similarly situated hospitals of property. 219. Horizon’s schemes to defraud are described in detail in Section II.D below. Horizon’s predicate acts of mail and wire fraud in furtherance of these schemes to defraud are described in detail in Section II.E below. Horizon’s racketeering acts together have the following features: 1. Relatedness 220. Horizon’s acts of racketeering are not isolated events. Rather, all are related to each other in that they have similar purposes, results, participants, victims, methods of commission, and other distinguishing characteristics. All of Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 74 of 152 PageID: 1597 - 68 - the acts were done for the benefit and furtherance of Horizon’s and the RICO Enterprises’ agendas. 221. Horizon’s predicate acts of racketeering were and continue to be directed at the same overarching goals of greatly harming Plaintiffs financially by deceiving Plaintiffs’ patients, the public, and other third parties into believing that: (a) the Plaintiffs are greedy, overbill their patients, and provide substandard healthcare; and (b) Horizon pays what it is legally obligated to pay providers for services rendered to Horizon Subscribers. 222. Horizon has specifically targeted Plaintiffs in pursuit of their goals. It sought to punish Plaintiffs for leaving Horizon’s networks through a mail and wire fraud scheme, the intent of which was to divert business from Plaintiffs and to damage Plaintiffs economically for their choice. Plaintiffs are the intended and actual victims of each separate act of racketeering described herein. 223. Horizon has participated in, authorized, and/or ratified the specific acts of mail and wire fraud alleged. It has issued false and misleading public statements over the mails and wires designed to mislead Plaintiffs’ patients, physicians, and the public at large into believing that Plaintiffs are greedy, overbill their patients, and provide substandard healthcare. It has also used the mails and wires to create the false impression that Horizon pays what it is legally obligated to Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 75 of 152 PageID: 1598 - 69 - pay providers for services rendered to Horizon Subscribers, to the significant financial detriment of Plaintiffs. 224. Horizon and its officers and employees expressly authorized the racketeering acts and participated actively in them. Indeed, Horizon expressly takes credit for much of the public statements and other uses of the mails and wires that comprise predicate acts of racketeering. With respect to other acts, the evidence overwhelmingly demonstrates Horizon’s involvement and coordination. 2. Continuity 225. Horizon’s related racketeering acts have extended over a substantial period of time, beginning in at least February 2009, as described herein. 226. Horizon’s related predicate acts also involve a continued threat of long-term racketeering activity. 227. Upon information and belief, Horizon’s schemes to defraud have generated hundreds of millions of dollars in revenue for itself and members of the RICO Enterprises, as well as in substantial savings by underpaying out-of-network providers such as Plaintiffs. 228. Upon information and belief, Horizon has increased the number of OMNIA subscribers from approximately 250,000 in 2015 to approximately 280,000 in 2016, and this number is expected to grow further in 2017 so long as Horizon is able to continue its pattern of racketeering activity. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 76 of 152 PageID: 1599 - 70 - 229. The related predicate acts therefore involve a continued threat of long- term racketeering activity. There is no foreseeable ending point to Horizon’s acts of racketeering against the Plaintiffs and similarly situated hospitals, many of which are “safety net” hospitals located in urban areas that provide essential medical services to patient populations with a disproportionately large percentage of Medicaid, under-insured, uninsured or charity patients 230. In addition, as described in greater detail herein, the predicate acts and offenses described herein are Horizon’s regular way of doing business and thereby threaten long-term illegal conduct against the public at large. D. The Schemes to Defraud. 231. Horizon’s schemes to defraud have operated to deceive third parties into believing: (a) that the Plaintiffs are greedy, overbill their patients, and provide substandard healthcare; and (b) that Horizon pays what it is legally obligated to pay providers for services rendered to Horizon Subscribers, to Plaintiffs’ great financial detriment. 232. These schemes to defraud advance Horizon’s overarching goal of maximizing its market share in the health insurance market in New Jersey. They do so by, among other things, diverting the existing and future patients of the Plaintiffs and other similarly situated hospitals to Horizon’s preferred In-Network Providers and OMNIA Tier 1 Providers, and decreasing the market share and Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 77 of 152 PageID: 1600 - 71 - profits of the Plaintiffs and other similarly situated hospitals to the point of driving them out into bankruptcy so that they can be acquired by Horizon or one of its preferred In-Network providers and the OMNIA Tier 1 Providers. 233. Horizon, and its officers and agents, have used the wires and mails to effectuate its schemes to defraud by transmitting material misrepresentations and/or omissions about the Plaintiffs to third parties in furtherance of these schemes. These misrepresentations include, but are not limited to, claims that the Plaintiffs are greedy, overbill their patients, and provide substandard health care. Likewise, these misrepresentations include, but are not limited to, claims that Horizon always pays what it is legally obligated to pay for services rendered to Horizon Subscribers, including for emergency medical services. Horizon has disseminated such misrepresentations in furtherance of its schemes to defraud on numerous occasions, including the perpetual publication of many on its website. The time, place, and nature of these misrepresentations are described more fully in Section II.E, below. 234. Horizon’s false representations were material in that they were capable of influencing the decisions of those to whom the statements were directed in ways having an adverse financial impact on the Plaintiffs. At all relevant times, such adverse financial impact was not only foreseeable, but also was and is the specifically intended result of Horizon’s fraudulent schemes. Horizon intended Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 78 of 152 PageID: 1601 - 72 - and intends for its subscribers to act in reliance on Horizon’s material misrepresentations by discontinuing and/or refusing to receive medical treatment from the Plaintiffs. 235. In fact, many deceived third parties have relied on Horizon’s material misrepresentations to the Plaintiffs’ detriment, precisely as Horizon intended. Based on Horizon’s factual misrepresentations about the Plaintiffs and their businesses, patients have disrupted their continuity of care and selected other medical providers. The Plaintiffs thereby have lost money, patient volume, and business opportunities and relationships with persons deceived into believing Horizon’s lies - a direct and intended result of Horizon’s schemes to defraud. 236. Horizon acted: (a) with the specific intent to deceive, and (b) for the purpose of depriving the Plaintiffs of property. Horizon’s schemes to defraud not only injured Plaintiffs’ reputation, but also injured the Plaintiffs in their other legal rights and interests, such as their right of prospective economic advantage. Horizon specifically intended to cause the Plaintiffs such injuries. 237. All acts of mail and wire fraud alleged herein were ordered by Horizon and performed by persons acting as agents on behalf of Horizon. In fact, Horizon’s name is on the various communications, advertisements, web pages, and other publications made in furtherance of Horizon’s schemes to defraud. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 79 of 152 PageID: 1602 - 73 - 238. Horizon’s acts in furtherance of its schemes to defraud, described in greater detail in Section II.E below, represent a pattern of racketeering activity within the meaning of 18 U.S.C. § 1961(5). E. Horizon Repeatedly Uses the Mails and Wires in Furtherance of its Schemes to Defraud. 1. 2009 - BMC leaves Horizon’s network and Horizon begins its campaign of mail and wire fraud against BMC 239. In 2009, approximately a year after acquiring BMC out of bankruptcy, its current owners terminated BMC’s then existing in-network agreement with Horizon as a necessary step to negotiate a sustainable in-network arrangement with Horizon. 240. Horizon retaliated against BMC by embarking on its campaign of false and misleading statements about BMC to its patients and the public at large. 241. Among other things, Horizon began sending formal correspondence to BMC’s patients through the mails, across the wires, or both, while the patients were being treated in the hospital, to the patient’s home, to the attending physician, and to the relevant BMC case management staff. In these letters, Horizon stated that it had determined that the patient is “medically stable and [able to] be safely transferred to a par [participating] facility for evaluation and continued care,” notwithstanding that the patient is in fact not medically stable and should not be transferred. Federal and state laws require that determinations of medical stability Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 80 of 152 PageID: 1603 - 74 - and fitness for transfer be made by the Patient’s attending physician, not by a health insurer like Horizon. 242. Horizon’s correspondence stated that the patient’s continued stay at BMC would result in the remainder of the patient’s stay being covered only at the patient’s out-of-network rate, and that the patient “should be aware that, generally, when you elect to receive inpatient services from non-participating hospitals, you will incur substantially higher out-of-pocket financial liability because your out-of- network benefits apply, including higher deductible and coinsurance costs.” Horizon made these statements despite the fact that emergency services, whether rendered in an emergency room or following admission to the hospital, are not considered services “elected” by the patient but, rather, are services obtained because the patient, acting as a “prudent layperson,” seeks immediate medical attention for a problem perceived to be a serious threat to a patient’s life or continued health. 243. Horizon’s misrepresentations had the effect of frightening patients who still required emergency care into removing themselves from Plaintiffs’ care, jeopardizing their health and, in some instances, their lives. It also frightened patients who resided in the vicinity of BMC and require emergency care into using a hospital other than BMC. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 81 of 152 PageID: 1604 - 75 - 244. Then, beginning as early as February 2009, Horizon falsely advised its subscribers in the City of Bayonne and the greater surrounding area that, in the event the subscriber has a medical emergency, the subscriber would be responsible for amounts greater than those actually provided by the relevant insurance plan or New Jersey law. 245. For example, Horizon placed an advertisement in the February 7, 2009 edition of the Jersey Journal stating, “If you continue to use BMC Medical Center, the bottom line will be higher health care costs and higher health insurance premiums.” This advertisement appeared the day after the 2009 termination of the Participating Provider Agreement between BMC and Horizon. 246. Upon information and belief, Horizon used the mails and/or wires to place this false and misleading advertisement. 247. In addition, the Jersey Journal was distributed through the mails and/or the wires and Horizon intended its advertisement likewise to be distributed to Horizon Subscribers through the mails and/or the wires. 248. Horizon knew, or reasonably should have known, that the “information” it disseminated in this regard was false and/or misleading, and calculated to harm BMC. 249. What is more, the so-called “information” it disseminated put the lives of its own subscribers at risk. Based on the information Horizon disseminated, a Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 82 of 152 PageID: 1605 - 76 - Horizon Subscriber experiencing a medical emergency or urgent problem would be encouraged to seek treatment at a facility other than BMC - even if BMC was the closest hospital - with the inevitable effect of delaying the subscriber’s evaluation and treatment, and putting the subscriber’s life and/or health at risk. 2. 2009-11 - Horizon commences the 2009 Lawsuit and continues its mail and wire fraud campaign 250. Horizon then filed the 2009 Lawsuit against BMC in the Superior Court of New Jersey, Chancery Division, Essex County, described above, in which Horizon alleged, inter alia, that BMC violated the IFPA and engaged in common law fraud, negligent misrepresentation, and tortious interference. BMC filed counterclaims in the 2009 Lawsuit arising out of Horizon’s pattern of underpayments to BMC and attempts to steer BMC’s patients away from BMC. 251. While the 2009 Lawsuit was pending, Horizon continued to disseminate false and misleading statements about BMC over the mails and wires. For example, on December 5, 2009, Horizon sent a letter, through the mails, to subscribers who had recently received care at BMC stating in part: We understand there may be some confusion over recent communications from Bayonne Medical Center regarding your financial obligations for the services you received there. We are currently involved in litigation and whether or not Bayonne Medical Center is entitled to additional payment is a subject of the litigation. If you receive a bill or any other communication from the hospital regarding Horizon BCBSNJ’s payments, or the hospital’s charges, we request that you contact us immediately. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 83 of 152 PageID: 1606 - 77 - 252. Horizon knew, or reasonably should have known, that the “information” it disseminated in this regard was false and/or misleading because Horizon incorrectly advised its subscribers that all claims for healthcare services rendered by BMC were at issue in the 2009 Lawsuit. 253. Upon information and belief, Horizon intended this communication to confuse subscribers into thinking that BMC was not entitled to any payment for its services, and therefore incentivize its subscribers to not forward any payments to BMC. 254. Upon information and belief, Horizon intended this communication to confuse its subscribers into questioning whether they will have insurance coverage if they receive future services at BMC while litigation is pending. 255. Upon information and belief, Horizon’s statements were made with the intent to discourage its subscribers from receiving future services from BMC in violation of its own contracts with its subscribers and applicable law. 3. 2011-15 - Horizon’s case is dismissed and Plaintiffs join Horizon’s network 256. On August 12, 2011, this Court granted summary judgment in BMC’s favor and dismissed Horizon’s claims in the 2009 Lawsuit against BMC under the IFPA, and for common law fraud, negligent misrepresentation, tortious interference, and conversion. At that point, the only claims that remained in the 2009 Lawsuit were BMC’s counterclaims and Horizon’s declaratory judgment Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 84 of 152 PageID: 1607 - 78 - count asking this Court to declare, inter alia, that BMC was not entitled to further payment from Horizon. 257. On September 9, 2011, BMC and Horizon entered into the above- described Settlement Agreement. The purpose of the Settlement Agreement was to fully resolve all claims in the 2009 Lawsuit and all disputes between BMC and Horizon in accordance with the terms set forth in the Settlement Agreement. 258. Under the Settlement Agreement, BMC entered into a Network Hospital Agreement and related agreements with Horizon. By virtue of those agreements, BMC was entitled to be considered an in-network provider with respect to Horizon for a period of four years - i.e., through September 10, 2015. 259. The Settlement Agreement provided that “Acquired Hospitals” hospitals acquired by BMC’s ownership after the settlement agreement took effect - would also be participants in Horizon’s network. HUMC and Christ Hospital are “Acquired Hospitals” within the meaning of the Settlement Agreement and became In Network providers with respect to Horizon. 260. The Settlement Agreement, resulting in Plaintiffs becoming in- network providers with respect to Horizon, put a temporary halt on Horizon’s campaign of mail and wire fraud directed to Plaintiffs. 4. 2015-present - the mail and wire fraud resumes Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 85 of 152 PageID: 1608 - 79 - 261. However, as the date approached for Plaintiffs to negotiate sustainable renewal network agreements with Horizon - which required Plaintiffs to follow the termination procedures of the applicable network hospital agreements to prevent the agreements from automatically renewing at unsustainable in-network rates - Horizon’s renewed its campaign of mail and wire fraud against Plaintiffs in earnest. a. Bad faith negotiations with and disparaging online statements about Christ Hospital 262. Pursuant to the Settlement Agreement, BMC was an in-network hospital with Horizon through on or about September 30, 2015. Christ Hospital, an “Acquired Hospital” under the Settlement Agreement, was in-network with Horizon through on or about October 31, 2014. HUMC, another “Acquired Hospital” within the meaning of the Settlement Agreement, was in-network with Horizon through on or about November 4, 2015. By virtue of 90-day contractual notice periods and an additional, legally-mandated four-month cooling off period, Christ Hospital remained in-network with Horizon through on or about May 31, 2015; BMC remained in-network with Horizon through on or about May 1, 2016; and HUMC remained in-network with Horizon through on or about June 2, 2016. 263. In the months leading up to Christ Hospital’s going out-of-network with Horizon effective June 1, 2015, Christ Hospital attempted to negotiate with Horizon in good faith to renew the in-network relationship. However, Horizon Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 86 of 152 PageID: 1609 - 80 - refused to offer Christ Hospital anything close to sustainable in-network rates. Horizon’s last and best offer, made shortly before the expiration of the network relationship, amounted to an effective overall increase in the proposed in-network rates of 4%. This was effectively no offer at all since it equated to increases that Horizon was already obligated to provide to account for increases in the consumer price index. 264. Horizon’s proposal for Christ Hospital was particularly unreasonable given that the in-network rates then in place were the result of an agreement with Horizon that the current owners of Christ Hospital inherited upon purchasing the hospital out of bankruptcy in 2012. 265. Horizon’s proposed new rates also failed to take into account Christ Hospital’s unique patient mix comprising a large percentage of uninsured and underinsured patients, and may very well have led Christ Hospital back into bankruptcy. Thus, it was apparent that Horizon was negotiating with the owners of Christ Hospital in bad faith in an effort to drive the hospital out of Horizon’s network. 266. Making Horizon’s bad faith conduct all the more egregious, Horizon’s refusal to offer rate increases to Christ Hospital came at a time when Horizon was secretly planning to roll out its OMNIA product just a few months later. Thus, as described more fully in Part II.E.5, infra, Horizon was refusing to offer any rate Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 87 of 152 PageID: 1610 - 81 - increase to Christ Hospital at a time when it was secretly projecting that Christ Hospital would lose at least $1.1 million in revenue in 2016 as a result of its rollout of the OMNIA. 267. Even worse, while Christ Hospital was in the midst of negotiations for a successor network agreement with Horizon during the statutory-mandated cooling off period, Horizon embarked on a publicity campaign against Christ Hospital designed to confuse and discourage members from seeking treatment at Christ Hospital and the other CarePoint Hospitals. 268. For example, commencing in January 2015, Horizon posted a notice on its website entitled, “CarePoint Health - Christ Hospital has terminated its hospital contract with Horizon Blue Cross Blue Shield of New Jersey,” accompanied by a set of responses to “Frequently Asked Questions.” In the notice and responses to the “Frequently Asked Questions,” Horizon blamed CarePoint’s impending out-of-network status on “demands for rate increases made by Christ Hospital” - deliberately ignoring the facts that Horizon had offered essentially no increase in rates and that the rates then in place were those that Christ Hospital’s owners had inherited when purchasing the hospital out of bankruptcy. 269. Horizon also encouraged its members to transition immediately to other in-network hospitals, even though Christ Hospital remained in-network with Horizon for another four months by virtue of the statutory cooling off period, see, Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 88 of 152 PageID: 1611 - 82 - e.g., N.J.S.A. 26:2J-11.1, and BMC’s and HUMC’s Network Hospital Agreements remained in place. b. Disparaging online articles accusing BMC of “price gouging” 270. On the heels of Horizon’s bad faith negotiations with and disparaging statements about Christ Hospital, Horizon also targeted BMC in public statements sent over the mails and wires. For example, on March 23, 2015, Robert Marino, Horizon’s Chairman and CEO, authored a guest Op-Ed piece in the online publication, NJ.com, entitled, “New Jersey needs stricter regulation to curb out-of- network health care charges” (the “Horizon Op-Ed Article”). In the Horizon Op- Ed Article, Mr. Marino accuses “a few hospitals and doctors” of “abuse” of a “well-intended out-of-network (OON) regulation” and of charging “exorbitant prices.” Mr. Marino, on behalf of Horizon, made a thinly veiled reference to BMC as one of the “few hospitals” engaged in this alleged “abuse” and of charging “exorbitant prices.” 271. The paragraph immediately preceding those allegations explicitly refers to a 2013 New York Times article identifying BMC as the hospital “with the highest billing rate in the nation” and one “that is four times higher than the national average.” The Horizon Op-Ed Article even provided a link to the New York Times article. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 89 of 152 PageID: 1612 - 83 - 272. Moreover, the initial version of the Horizon Op-Ed Article on NJ.com was accompanied by a photograph of the front entrance of BMC and a caption that read, “New Jersey does not regulate what out-of-network hospitals and doctors can charge for their services, which means facilities like Bayonne Medical Center can set high fees for common hospital treatments.” This is especially misleading in that BMC was at that time an in-network hospital with respect to Horizon. 273. Only after representatives of BMC contacted NJ.com on March 24, 2015, was the photograph and caption changed, although the Horizon Op-Ed Article with the link to the New York Times article remains online and accessible. 274. Then, on March 25, 2015, Horizon issued a press release announcing a supposedly “educational” website. This website, entitled, “Did you know that New Jersey residents pay some of the highest health care costs in the country?”, accuses “some providers” of “gouging the health care system - and all New Jersey residents - by charging prices that bear no relation whatsoever to the cost of treatment.” 275. As with the Horizon Op-Ed Article, Horizon’s website associated those allegations to BMC by citing and linking to the 2013 New York Times article about BMC. 276. A document available on Horizon’s website, entitled, “An Analysis of Policy Options for Involuntary Out-of-Network Charges in New Jersey,” also Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 90 of 152 PageID: 1613 - 84 - made reference to BMC by citing and linking to the 2013 New York Times article about BMC. 277. When a New Jersey state court ordered Horizon to take down these disparaging articles from its website, Horizon violated the Order. In fact, Horizon did not remove the links and references to the New York Times article from its own website until nearly two weeks after the Order. Horizon subsequently made only half-hearted, if any, efforts to have NJ.com, which published the Horizon Op-Ed Article, remove the link and reference to the New York Times article from the Op- Ed piece, and it remains in public view. c. Bad faith negotiations with and further disparaging statements about BMC and HUMC 278. Horizon also engaged in bad faith negotiating tactics prior to the scheduled terminations of its network arrangements with BMC on May 1, 2016, and with HUMC on June 2, 2016. In fact, rather than engage in negotiations, Horizon stopped negotiations dead in their tracks for weeks on end by refusing even to respond to CarePoint’s proposals. For example, after BMC made a rate increase proposals in January 2016, Horizon waited over two months before making any response. In mid-March, Horizon finally responded by stating only that it rejected BMC’s proposal and was not in a position to make a counter- proposal for at least two more weeks or the beginning of April 2016. As result, Horizon completely suspended negotiations for more than half of the four month Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 91 of 152 PageID: 1614 - 85 - cooling off period and withheld making any counter-proposals until the last remaining month before BMC would be forced out-of-network on May 1, 2016. 279. Meanwhile, on March 7, 2016, New Jersey Senate President Stephen Sweeney’s press office e-mailed a copy of testimony the Senator was expected to present supporting Horizon’s OMNIA Plan during New Jersey Senate hearings that day. Among other things, Senator Sweeney was quoted as saying: “here in New Jersey we have … for-profit hospital systems like CarePoint that are ripping off New Jersey consumers” and that “CarePoint has a hospital that has the highest billing rates in the United States of America, according to the New York Times.” News reporters who received by email a copy of the Senator’s remarks/testimony, later discovered that “Bill Castner” of “Horizon-BCBSNJ” was listed as the “author” in a drop-down menu of information about the file. Later, it was revealed that Horizon had actually been provided an advance draft of Senator Sweeney’s testimony and reviewed and recommended changes, and forwarded the draft back to Senator Sweeney’s staff by e-mail. 280. Then, beginning in April 2016, Horizon also made public statements over the mails and wires forecasting that BMC and HUMC would soon be out-of- network with Horizon, and falsely blaming the CarePoint Hospitals for their impending out-of-network status. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 92 of 152 PageID: 1615 - 86 - 281. For example, in a press release issued online on April 26, 2016, Horizon made the following statements: Two hospitals owned by the for-profit CarePoint Health company, Bayonne Hospital and Hoboken University Medical Center, will end their longstanding relationship with Horizon Blue Cross Blue Shield New Jersey (Horizon BCBSNJ) in the next 45 days. CarePoint Health terminated, without cause, both contracts and refused reimbursement increases offered by Horizon BCBSNJ, the state’s largest health insurer. … We have put forward a number of reasonable offers to CarePoint and continue to hope that they will return to the negotiating table. 282. Horizon did not stop there. On June 2, 2016, the day after BMC’s out- of-network status with Horizon became effective, Ward Sanders of the New Jersey Association of Health Plans (“NJAHP”) published highly disparaging statements accusing the CarePoint Hospitals of misleading consumers about their network status, and stating the following in response to BMC’s out-of-network status: “The problem of price gouging and surprise billing just got bigger for New Jersey consumers, the State Health Benefits Program, the State Treasury and public employees. . . The governor’s proposed 2017 budget calls for $250 million in health care cost savings, yet CarePoint’s departure from the Horizon network will only exacerbate the challenges of rising health care costs for the state and other employers.” 283. Upon information and belief, Horizon played an active role in the formulation of the NJAHP’s press release. Indeed, given Horizon’s active Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 93 of 152 PageID: 1616 - 87 - membership in the NJAHP and the timing of the NJAHP’s statements in relation to the effective date of BMC’s out-of-network status, there can be no question that Horizon was involved. 5. Horizon secretly develops the OMNIA Tier 1 Enterprise 284. Upon information and belief, as early as 2014, Horizon began taking steps to develop the OMNIA Tier 1 Enterprise with the intent to exclude the CarePoint Hospitals as well as the majority of other stand-alone, independent hospitals in New Jersey, many of which are “safety net” hospitals located in urban areas and provide essential medical services to patient populations with a disproportionately large percentage of Medicaid, under-insured, uninsured or charity patients. 285. In furtherance of this plan, Horizon commissioned consultant, McKinsey & Co., to conduct a study and prepare a report (the “McKinsey Report”) which, upon information and belief, included among other things: (a) developing quality scores for New Jersey hospitals; (b) comparing the hospitals’ costs; (c) projecting how many patients would stop going to the non-preferred, or Tier 2, hospitals and shift to Tier 1 facilities; (d) projecting the revenues Tier 1 hospitals would gain and Tier 2 hospitals would lose if the OMNIA Plan performed as projected; and (e) estimating what profits Horizon could expect, depending on how it grouped the hospitals. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 94 of 152 PageID: 1617 - 88 - 286. Upon information and belief, McKinsey & Co. completed its study and issued the McKinsey Report to Horizon on or about May 20, 2014. 287. Upon information and belief, sometime after receiving the McKinsey Report in 2014 and long before announcing the OMNIA Plan in September 2015, Horizon secretly identified a group of hospitals it wanted to include in the top tier (i.e., the members of the OMNIA Tier 1 Enterprise) and excluded the CarePoint Hospitals from that group. This group comprised seven large health care systems, representing approximately 25 hospitals and one medical group, to participate as OMNIA Tier 1 providers and to share in any cost-savings Horizon realized in providing healthcare coverage to OMNIA-insureds as members of the OMNIA Alliance Providers. 288. The OMNIA Tier 1 Providers reportedly agreed to reduce their current reimbursement rates with Horizon in return for receiving “exclusivity” arrangements that would drive more revenue to those hospitals as patients migrated away from Tier 2 hospitals, and a share of any cost-savings realized by Horizon in providing healthcare coverage for OMNIA insureds. 289. Horizon announced its new OMNIA Plan to the public on September 10, 2015. According to Horizon, the OMNIA Plan provides reduced premiums to Horizon Insureds and provides substantial financial incentives for them to obtain health care at Tier 1 providers instead of Tier 2 providers. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 95 of 152 PageID: 1618 - 89 - 290. On its website, Horizon describes the OMNIA Tier 1 Providers as: a. “a first-of-its-kind collaboration between some of the top health care organizations across the state dedicated to accelerating the transformation of the state’s health care system to one that rewards high quality health care;” b. “a powerful collaboration of the top health care organizations in the state focused on helping consumers experience health care in a new, more effective and efficient way;” and c. an “unprecedented collaboration between top health care organizations in New Jersey.” 291. On its website, Horizon describes the healthcare provider members of the OMNIA Alliance Providers not only as “Tier 1” but also as “the top health care organizations in the state,” suggesting that Tier 2 and out-of-network hospitals are either pedestrian or substandard. 292. Because the hospitals operated by the members of the OMNIA Alliance Providers did not provide all the geographic coverage required to meet regulatory requirements, Horizon sought to fill the gaps in geographic coverage for the Tier 1 network by soliciting strategically located hospitals to participate as Tier 1 providers (“Other Tier 1 Hospitals”). Unlike the OMNIA Alliance Providers, the Other Tier 1 Hospitals will not receive a share of any cost-savings realized by Horizon. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 96 of 152 PageID: 1619 - 90 - 293. Horizon originally designated approximately 34 hospitals as “Tier 1” hospitals. It designated approximately 23 hospitals as “Tier 2” hospitals. BMC and HUMC, which were in-network with Horizon when OMNIA was announced, were relegated to “Tier 2” hospital status. 294. Horizon gave BMC and HUMC no notice of the creation of OMNIA or the preferred Tier 1 subnetwork associated with it before the September 10, 2015, public announcement. Nor did Horizon give BMC or HUMC any opportunity to participate in OMNIA prior to the public announcement. This is so, even though, according to the testimony of Horizon CEO Robert Marino before committees of the New Jersey Senate, Horizon had conducted “a very deliberate internal process to evaluate potential partners” for the OMNIA Alliance Providers, had begun its evaluation more than two years earlier, and, as noted above, had received the McKinsey Report in or about May 2014. 295. All the OMNIA insurance policies are designed to incentivize Horizon Subscribers to use Tier 1 hospitals. In an interview given to Health Leaders Media on September 28, 2015, CEO Marino stated that OMNIA coverage for services at Tier 2 hospitals will continue at “existing levels” but that members who use Tier 1 hospitals will obtain substantial savings: Members who choose to use a Tier 1 facility will see substantial savings in their out-of-pocket cost in the form of lower deductibles [and] in some cases no deductibles. Members still are going to have access to the broad network. There isn’t any disincentive to use a Tier Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 97 of 152 PageID: 1620 - 91 - 2 provider. The benefits will be essentially the same as they are today. It is basically an incentive-based product design[ed] for Tier 1 while still providing broad access to the wider network with essentially the same product design as today. 296. This statement by Horizon is self-contradictory and disingenuous. An incentive to use Tier 1 hospitals is a corresponding disincentive to use Tier 2 hospitals. If Horizon Subscribers using a Tier 1 hospital will receive “substantial savings in their out of pocket costs in the form of lower deductibles and, in some cases no deductibles,” those subscribers will necessarily have a financial disincentive to use the Tier 2 hospitals at a higher cost. 297. In its Senate Testimony, Horizon admitted that it expected approximately 250,000 members would enroll in OMNIA during its first year, which would result in an estimated loss of 365 inpatient admissions per year, on average, to each Tier 2 hospital, for a loss in revenue of $1.1 million per year for each Tier 2 hospital. As of March 10, 2016, Horizon announced that OMNIA enrollment had reached 234,000 members, including approximately 40,000 members who previously had no health insurance. By October 2016, OMNIA enrollment reportedly had reached 280,000, or 30,000 more than Horizon had projected. 298. A further disincentive to use Tier 2 hospitals was revealed in Horizon’s Senate testimony that OMNIA Plan members who go to a “Tier 2” hospital emergency room and are admitted to that hospital will only receive “Tier Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 98 of 152 PageID: 1621 - 92 - 2” benefits, i.e., they will have to pay higher deductibles and out of pocket costs than if they were treated in the emergency room and then admitted to a “Tier 1” hospital. 299. Horizon admits that it designated hospitals as Tier 2 without giving those hospitals any notice or opportunity to demonstrate that they satisfy Horizon’s criteria and standards for Tier 1 status. In the Health Leaders Media interview, CEO Marino not only acknowledged but trumpeted this lack of transparency: The process that we used to prioritize and ultimately select our hospital partners was a very deliberate, strategic, almost proprietary process. No hospital was invited into something that resembles an RFP-like process. There were six broad categories that we used in the prioritization process, including: clinical quality, the service offering across the continuum of care, consumer preference data from publicly available sources, value-base care capabilities, scale of the organizations we selected, and their commitment to value. There is a misconception that we didn’t ask certain hospitals to participate. We asked no hospitals to participate. We identified the potential partners we wanted and we approached them. They had no knowledge that they were being prioritized in this process. 300. Because the designation of Tier 2 hospitals is skewed toward the hospitals with the highest levels of charity care, the projected loss of over a million dollars in revenue per year is directed at the hospitals that can least afford it. Even if the hospitals could survive such losses, the quality of care they can provide would deteriorate over time. As the director of the Center for State Health Policy has commented: Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 99 of 152 PageID: 1622 - 93 - But over time, if nearby tier 2 hospitals lose significant revenue as well-insured patients shift to other facilities, it will become increasingly difficult for them to sustain high-quality care and meet the needs of the most-vulnerable local patients. This is especially troubling for the large population of low-income patients in the Trenton area. Joel C. Cantor, Opinion: “The Omnia Alliance and the Future of New Jersey Safety-Net Hospitals,” Oct. 21, 2015 (http://www.njspotlight.com/stories/15/10/19/opinion-the-omnia-alliance-and-the- future-of-new-jersey-safety-net-hospitals/) (last accessed January 20, 2017). Jeopardizing the financial viability of 23 of its participating hospitals is wholly at odds with Horizon’s mandate as an HSC to serve the needs of the New Jersey hospitals and communities as a whole. 301. Further, Horizon’s OMNIA plan provides full benefits (and lower out- of-pocket costs to the patient) for emergency care only when the patient is treated at a Tier 1 hospital irrespective of whether it was the nearest appropriate facility and provides lower benefits (and higher out-of-pocket costs to the patient) for emergency care when the patient is treated at a Tier 2 or out-of-network hospital. Accordingly, the OMNIA plan circumvents New Jersey’s coverage and payment mandates, described more fully in Part I.D, above, by failing to limit Horizon Subscribers’ financial responsibility, when seeking emergency or urgent care at a Tier 2 or out-of-network facility, to the amounts that they would have paid had they received treatment from a Tier 1 facility. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 100 of 152 PageID: 1623 - 94 - 302. Horizon’s refusal to disclose concrete standards and criteria and the weight it gave them, it is apparent that Horizon’s exclusion of BMC and HUMC from Tier 1 status was arbitrary and not based on quality or scope of care or any other objective criteria. Indeed, in its Senate Testimony, Horizon admitted that all hospitals in the Horizon Hospital Network are of high quality. 303. In fact, because Horizon failed to consult with the CarePoint Hospitals before unilaterally selecting the members of the OMNIA Tier 1 Enterprise, it could not have accurately assessed whether any of the CarePoint Hospitals qualified for Tier 1 status under the “six broad categories” Horizon allegedly considered. Just by way of example, Horizon would have had no way of accurately assessing the CarePoint Hospital’s “value-based care capabilities” without consulting with them. 304. Further, contrary to the suggestion that “clinical quality” was a factor in Horizon’s selection process, the Plaintiffs are equal or superior to many Tier 1 hospitals in objective measures of quality of care and patient satisfaction, including the nationally recognized Leapfrog metric, which Horizon admits it did not consider, and measures of quality and satisfaction used by the federal Center for Medicare and Medicaid Services (“CMS”) for the Medicaid program. 305. In the Fall 2015 Leapfrog Hospital Safety Ratings, all three Plaintiffs received the top “A” safety rating while at least 16 of the Tier 1 hospitals received lower ratings of B (13 of the Tier 1 hospitals) or C (3 of the Tier 1 hospitals). Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 101 of 152 PageID: 1624 - 95 - Horizon itself cited and gave monetary awards to BMC and HUMC for quality based upon their “A” safety scores as part of the 2014 Leapfrog Hospital Survey. 306. Overall, 60% of the hospitals designated by Horizon as “Tier 2” hospitals received “A” safety scores under the Leapfrog metric. In contrast, two- thirds or 66% of the hospitals designated by Horizon as “Tier 1” hospitals were graded “B” or below. 307. In a recent survey of more than two thousand physicians, New Jersey Hospitals were rated for quality in overall care and treatment for various medical conditions. http://www.nj.com/inside- jersey/index.ssf/2016/03/inside_jerseys_top_hospitals_2016.html. To avoid an unfair advantage for larger academic or tertiary care hospitals, the voting was divided into two categories: hospitals with more than 350 beds and those with 350 or fewer beds. All three CarePoint Hospitals ranked among the top 15 hospitals in their respective size categories for overall care and for treatment of breast cancer, prostate cancer and congestive heart failure. In addition, Christ Hospital was ranked among the top hospitals (more than 350 beds) for the treatment of strokes and HUMC was ranked among the top hospitals (350 beds or fewer) for the treatment of strokes, hip and knee repairs, and neurological disorders. 308. Of the fifteen top overall hospitals in the more than 350 beds category, only eleven were initially designated as OMNIA Tier 1, while three were Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 102 of 152 PageID: 1625 - 96 - designated as Tier 2 and one (Christ Hospital) is out-of-network with Horizon. Of the fifteen top overall hospitals in the 350 beds or fewer category, only eight were initially designated as OMNIA Tier 1, while six were designated as Tier 2 and one (HUMC) is out-of-network with Horizon. 309. Horizon has actually provided discovery in another matter relating to OMNIA in which the Appellate Division recently sustained two Law Division Orders rejecting Horizon arguments for dismissal. See Hospitals’ suit over OMNIA health plan can continue, Appellate Division says, by Anjalee Khemiani, http://www.njbiz.com/article/20170413/NJBIZ01/170419895/hospitals-suit-over- omnia-health-plan-can-continue-appellate-division-says. 310. Counsel for Centra State Healtcare System, Holy Name Medical Center, and Valley Health System in that matter,1 Michael Furey, commented: “What we believe the documents show is the decisions to partner with the hospitals was based on the size and not the quality of care provided,” Furey said. “The documents tell a much different story than the public statements of Horizon.” Id. 311. Furey further commented that this “ruling is an important step in moving this case forward and unraveling the secrecy surrounding Horizon's ill- conceived OMNIA plan,” Furey said. “We remain confident that ultimately the 1 Capital Health System, Inc., et al. v. Horizon Healthcare Services, Inc., Superior Court of New Jersey, Bergen Vicinage, Docket No.: BER-C-369-15. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 103 of 152 PageID: 1626 - 97 - public will learn the truth about OMNIA and that the court will rule in favor of the hospitals.” Id. 312. Yet, in promoting the OMNIA Plan and its Tier 1 hospitals, Horizon has marketed the OMNIA Plan and Tier 1 hospitals as providing superior quality of care. This representation is false and disparaging as to the Plaintiffs and is causing injury to their reputation. 313. For example, Horizon published on www.whathealthcarecostsnj.com, a website that, upon information and belief, was created and is maintained by Horizon, two publications titled “Setting the Record Straight” and “Separating truth from fiction regarding the OMNIA Health Plans.” On the “Setting the Record Straight” page, Horizon falsely and misleadingly states: THE FACTS The criteria Horizon BCBSNJ used to create the OMNIA Health Alliance were released on its website and provided to Committees of the New Jersey Senate and media outlets. Cost and value, while important elements, were not the only evaluation criteria for member organizations. The evaluation criteria included: Clinical quality, which is composed of performance on standardized, publicly available ratings of clinical processes and outcomes; Service offering across continuum of care, representing the range of clinical services offered by hospitals (including inpatient, outpatient, post-acute, ambulatory and other ancillary care), and specialties and range of admitting privileges of physician groups; Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 104 of 152 PageID: 1627 - 98 - Consumer preference data, strength of reputation and performance on patient surveys as proxy for how attractive inclusion would be for current or potential customers; Value-based care capabilities including current, or demonstrated investments in, capabilities required for value-based care and capacity of financial resources to support a transition from a volume-based reimbursement model to a value-based model; OSC scale, encompassing the current system’s size and scale and the share of Horizon BCBSNJ membership served; Commitment to value-based care based on a willingness and long- term commitment of leadership to change their business models from fee-for-volume to fee-for-value. All of these factors were considered to design a fee-for-value model that leads to better patient outcomes, an enhanced patient experience and lower overall costs. 314. Horizon thus claimed that it utilized six criteria in evaluating providers to determine their status for OMNIA. These statements are false and misleading because Horizon fails to fully disclose: (1) the evaluation process; (2) the weight it gave to each criterion; (3) that its criteria is 25% subjective; (4) that Horizon limited the number of Tier 1 hospitals to one per geographic area; and (5) that Horizon utilized additional criteria not disclosed on its website. 315. Horizon also states on the “Setting the Record Straight” page: THE FACTS Horizon BCBSNJ never stated that Tier 2 hospitals were of inferior quality. To the contrary, the company has repeatedly stated that it considers all of its network doctors and hospitals quality providers; otherwise they would not be in its networks. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 105 of 152 PageID: 1628 - 99 - The only organizations making claims that Tier 1 means hospitals are of lower quality are the Tier 2 Hospitals themselves. Horizon BCBSNJ has never said so and has even awarded a number of Tier 2 hospitals for their quality. 316. These statements are false and misleading. For example, Horizon sent a mailer to homes in approximately October 2015, that OMNIA offers “Better care, lower costs and more options for more people.” This false statement clearly implies that Tier 1 hospitals offer superior care than Tier 2 or out-of-network providers. 317. By promoting OMNIA Tier 1 providers as offering “better care” at lower cost, Horizon strongly suggests the opposite is true of Tier 2 providers - “inferior care” at “higher cost.” As is set forth above, this is a false and misleading statement as the Plaintiffs are rated higher than many of the Tier 1 hospitals. 318. On the “Separating truth from fiction regarding the OMNIA Health Plans,” Horizon presents two columns - one “fiction” and one “fact” - purporting to clarify the record regarding OMNIA. Horizon again makes patent misrepresentations through the wires. 319. For example, Horizon claims that “OMNIA Health Plans have lower premiums and do not limit access;” and “Members will have access to the largest network in the state whether they keep their current health insurance plan or select an OMNIA Health Plan.” This Statement is false and misleading because OMNIA does in fact limit access to providers. Indeed, OMNIA limits consumer Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 106 of 152 PageID: 1629 - 100 - access by providing incentives to patients who use Tier 1 hospitals and punishing those who choose Tier 2 or out-of-network hospitals with substantially increased out-of-pocket costs. 320. Horizon also claims to have taken a “disciplined approach…when selecting Tier 1 hospitals and doctors;” and selected them “based on a commitment to value-based care, strong clinical quality, consumer preference and multiple service offerings.” This statement is false and misleading because, as set forth above, Horizon’s CEO Robert Marino testified that at least 25% of the metrics used to determine tier status were subjective and Horizon omits other criteria it relied upon. 321. Horizon further claims that the OMNIA Plan will have little impact on hospitals designated as Tier 2. This statement is false and misleading because Horizon has admitted that it designed OMNIA to steer patients to Tier 1 providers at an estimated cost in OMNIA’s first year alone of more than $25.3 million to the 23 Tier 2 hospitals or a projected loss of an average of over $1.1 million per hospital. 322. Plaintiffs’ have maintained the same high quality of care described above from the time OMNIA was introduced through the present. Nonetheless, Horizon not only has relegated them to Tier 2 status and then forced the Plaintiffs Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 107 of 152 PageID: 1630 - 101 - out-of-network, but also has disparaged them in order to continue steering patients to the OMNIA Tier 1 Providers in general and In-Network Providers in particular. 6. Horizon targets a physician group affiliated with Plaintiffs 323. Not only has Horizon directed its campaign of mail and wire fraud against Plaintiffs, but it has also done so against entities affiliated with Plaintiffs. For example, New Jersey Medical and Health Associates, LLC, d/b/a CarePoint Health Medical Group (“CHMG”) is a physician group affiliated with Plaintiffs. When Horizon announced the OMNIA plan in September 2015, CHMG was the only plaintiff-affiliated entity that Horizon designated as a “Tier 1” provider. 324. However, that is about to change. Specifically, in the Fall of 2016, Horizon mailed letters to CHMG’s patients stating that at the beginning of 2017, CHMG doctors will be relegated to OMNIA Tier 2 status. In these letters, Horizon admonished the patients that they will “pay less out-of-pocket when you use OMNIA Tier 1-designated doctors … and hospitals.” Importantly, the only reason Horizon gave in the letter for the change was that the decision was “based on eligibility criteria.” This misleadingly suggests that CHMG’s doctors cannot provide Tier 1 quality care. 325. Upon information and belief, Horizon has sent numerous other communications to its subscribers suggesting that the Plaintiffs and CHMG doctors are subpar. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 108 of 152 PageID: 1631 - 102 - 326. Despite Horizon’s repeated representations to DOBI and the New Jersey State Legislature that its tier designations would be based on quality of care and merit-based criteria, Horizon has admitted that CHMG was changed to Tier 2 for one reason and one reason only: “[d]ue to the fact that [CHMG] is owned by CarePoint, a for-profit hospital system that is now out-of-network (OON), [CHMG] no longer participated in any value based programs with Horizon. Due to [CHMG]’s change in circumstances they are no longer eligible to be a Tier 1 Provider.” See Defendant Horizon Healthcare Services, Inc.’s Opposition to Plaintiffs’ Order to Show Cause, IJKG, LLC, et al. v. Horizon Healthcare Services, Inc., Super Court of New Jersey, Docket ESX-C-95-15, at 4, attached hereto at Exhibit ___. 7. 2017 - Horizon’s Blacklisting of Plaintiffs, Ongoing Illegal Pre-Authorization Denials, and Related Disparagement 327. Horizon’s campaign of mail and wire fraud against Plaintiffs has continued into 2017 and is ongoing. 328. In response to multiple pre-authorization requests from Plaintiffs’ representatives in late 2016 and early 2017, Horizon representatives repeatedly responded that Horizon has flagged the CarePoint Hospitals as “Restricted” and as a result: a. any patient with no out-of-network benefits could not be authorized and Horizon personnel would not start or even entertain a single case agreement; and Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 109 of 152 PageID: 1632 - 103 - b. as to one patient who has out-of-network benefits, Horizon personnel refused to provide authorization for a screening colonoscopy that would be a wellness benefit for many patients. 329. Upon information and belief, Horizon is using the same “Restricted” terminology in response to all inquiries from patients, physicians, or other sources as to whether Horizon will acknowledge and provide coverage for pre- authorization for procedures to be performed at the CarePoint Hospitals. 330. Upon information and belief, Horizon has done so through the mails and/or through the wires by telephone and/or over the Internet by email or otherwise. 331. As noted above, Horizon is legally required to provide coverage for emergency care that the CarePoint Hospitals or any other out-of-network hospital provides to Horizon Subscribers, irrespective of whether the patients do or do not have out-of-network benefits. And for patients who purchased insurance plans with out-of-network benefits, Horizon is contractually obligated to honor the patient’s choice of facility. 332. As a result, Horizon may not lawfully place the CarePoint Hospitals on a “Restricted” list and flatly deny coverage by refusing to provide any and all pre-authorization requests made by CarePoint personnel or others. 333. By placing the CarePoint Hospitals on a so-called “Restricted” list and using that term as an explanation for denying coverage, Horizon is also disparaging Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 110 of 152 PageID: 1633 - 104 - the CarePoint Hospitals. The practice falsely portrays the CarePoint Hospitals as either being unavailable to Horizon Subscribers or as being constrained or delimited in the range of services the hospitals can provide or are qualified to provide. 334. Moreover, the unquestionably negative connotation of “Restricted” implies that the CarePoint Hospitals have somehow been “blacklisted” by Horizon and other payers. 335. Horizon’s misrepresentations in this regard falsely represent the coverage available under Horizon plans and plans administered by Horizon and applicable law. Horizon’s misrepresentations leave doctors and patients with the incorrect impression that there exist no covered services that the Plaintiffs may provide to Horizon Subscribers and others, steering them to other providers in furtherance of Horizon’s schemes to defraud. 8. Other uses of the mails and wires in furtherance of their fraudulent schemes 336. In addition to the foregoing, Horizon has repeatedly made other uses of the mails and wires in furtherance of their fraudulent schemes. This includes Horizon’s ongoing practice, described more fully in Part I.I.1 above, of issuing letters by mail and over the wires communicating in-hospital denials to Plaintiffs’ patients before the patient’s course of emergency/urgent treatment is complete, without the benefit of sufficient medical information or consultation with the Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 111 of 152 PageID: 1634 - 105 - attending physician and often without consultation with the attending physician at all. 337. It also includes Horizon’s ongoing practice, described more fully in Part I.I.2 above, of sending checks for certain claims by mail directly to patients rather than to Plaintiffs, and then refusing to provide information to assist the CarePoint Hospitals in their efforts to collect the payments. This practice impedes and prevents Plaintiffs from being paid for the services it provides to patients insured by Horizon. 338. It also includes Horizon’s ongoing practice, described more fully in Part I.I.3 above, of electronically processing claims and issuing and/or mailing EOBs for Plaintiffs’ claims listed on Exhibit 5 hereto, purporting to portray the patients’ financial responsibility as much higher than it is legally required to be under the Plans and under federal and state law. 339. All of this conduct is designed to advance Horizon’s schemes to defraud by convincing Plaintiffs’ patients and the public that Horizon pays Plaintiffs what it is legally required to do, and deter Horizon Subscribers from seeking care at the CarePoint Hospitals, even when the need for care is based on an emergency or urgent condition. F. Additional Motivation for Horizon’s Misconduct Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 112 of 152 PageID: 1635 - 106 - 340. Horizon’s public support of a piece of legislation in Trenton, Bill A- 4444/S-20, called the “Out-of-network Consumer Protection, Transparency, Cost Containment and Accountability Act” (the “OON Act”), reveals another motive of Horizon to publicly disparage CarePoint. 341. On May 14, 2015, the legislative sponsors introduced Bill A-4444/S- 20 and the proposed legislation was referred to the Senate Commerce Committee. 342. In support of the bill, upon information and belief, Horizon continuously referred to the Op-Ed article and “educational” website containing disparaging statements about BMC in an effort to obtain legislative support for the Bill. The Bill remains pending in the New Jersey Legislature. 343. Passage of the OON Act, as proposed, would result in dramatically reduced reimbursements payable to out-of-network hospitals. Thus, passage of the OON Act would eliminate the only effective bargaining power hospitals now have of going out of network or threatening to go out-of-network if Horizon refuses to negotiate fair reimbursement rates for in-network services.. 344. In this way, passage of the OON Act would solidify Horizon’s control over the Network Enterprise and OMNIA Tier 1 Enterprise by making it much more difficult for other hospital members to leave those Enterprises. 345. With CarePoint having been forced out of Horizon’s networks, Horizon had an ongoing incentive to continue its pattern of mail and wire fraud Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 113 of 152 PageID: 1636 - 107 - aimed at misleading the public into believing that Plaintiffs are greedy, overbill their patients, and provide substandard healthcare -- to portray Plaintiffs as the “poster child” in its efforts to demonstrate the need for the proposed OON Act. G. Horizon Conspires with Tier 1 Providers to Accomplish its Goals. 346. In conducting the affairs of the RICO Enterprises through a pattern of racketeering activity, Horizon has conspired with one or more members of the Tier 1 Enterprise, including Barnabas (now known as RWJBarnabas following a merger), a health care system that competes directly with the CarePoint Hospitals. A principal purpose of the conspiracy is to drive Plaintiffs into bankruptcy so that Horizon can directly or indirectly acquire control over Plaintiffs’ hospitals. Upon information and belief, this would advance Horizon’s long-term goal of completely dominating the health insurance market in New Jersey. 347. As part of the conspiracy, commencing in 2014, Horizon actively encouraged Barnabas to begin construction of a sSED to be operated by JCMC and constructed at Broadway and West 23rd and 24th Street in Bayonne, New Jersey - five blocks from BMC. 348. The proposed new SED will have four evaluation rooms, five observation bays, ten minor (fast track) treatment bays, and ten emergency treatment bays, inclusive of two isolation rooms, one secure room, and one resuscitation/procedure room. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 114 of 152 PageID: 1637 - 108 - 349. In materials submitted to the NJDOH in support of its proposal, Barnabas specifically noted BMC’s presence in the Bayonne market and touted the proposed SED as an “in-network option” for emergency care in the City of Bayonne - a direct reference to Barnabas’s network relationship with Horizon. 350. Given that the SED has not yet opened, Horizon’s reference to its SED as an “in-network option,” two years before BMC lost Horizon in-network status, strongly suggests that Barnabas and Horizon agreed long ago that if Barnabas opened the SED, Horizon would make it an in-network facility and that it would force BMC into OON status. 351. In fact, Jay Picerno, Chief Operating Officer and Chief Financial Officer of Barnabas, had several conversations with Horizon’s leadership who actively supported Barnabas creating the proposed SED at the Broadway and West 23rd and 24th Street location in Bayonne. Among other things, Horizon offered to provide Barnabas with “enhanced rates” to encourage Barnabas’s development of this SED. In the course of these discussions, Horizon’s leadership conveyed to Mr. Picerno and others Horizon’s animosity toward the owners of the CarePoint Hospitals. Horizon’s offer of such enhanced rates to Barnabas was a major driving factor in Barnabas’s decision to establish the SED in the Bayonne market. 352. Although the proposed SED remains under consideration by the New Jersey Department of Health, Barnabas has already commenced and, upon Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 115 of 152 PageID: 1638 - 109 - information and belief, has nearly completed construction. If approved, the SED will result in a dramatic decrease in patient volume at BMC and threaten the hospital’s financial viability. 353. Not surprisingly, following Horizon’s announcement of its OMNIA plan, all of Barnabas’s hospitals, including JCMC, were designated as “Tier 1” providers. 354. Beginning in mid-February 2016, Barnabas in conjunction with Horizon launched a campaign of sending letters (the “Barnabas Letter”) to physicians who are on the medical staffs of the CarePoint Hospitals and have, over the years, referred many patients to those hospitals for treatment (hereinafter the “CarePoint Referring Physicians”). 355. The Barnabas Letter makes the following statements, among others, regarding Barnabas’s relationship with Horizon and their joint new initiatives under the OMNIA Plan: a. Barnabas Health is collaborating with Horizon Blue Cross Blue Shield of New Jersey to change the way healthcare is delivered in New Jersey as the OMNIA Health Alliance. b. As part of the Alliance, Barnabas Health facilities have been designated as Tier 1 for all Horizon products. c. The focus of the OMNIA Plans is to keep individuals healthy through increased population health management and more integrated, coordinated care that rewards better health outcomes, an enhanced patient experience, and lower cost care. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 116 of 152 PageID: 1639 - 110 - d. If you have privileges at a Barnabas Health facility, you are eligible to join Barnabas Health Care Network (ACO). Through this network, you may receive enhanced fee-for- service fees, be eligible for patient management fees and have the ability to participate in shared savings for most Horizon patients. e. This will provide significant improvement in reimbursement for your Horizon patients as well as help to improve patient care by participating in the programs for care management which will be developed jointly by Horizon and Barnabas Health f. Barnabas Health would like to work with your practice and invite you to join the Barnabas Health Care Network (ACO). Physicians who become part of the Barnabas Health Care Network will receive support from both Barnabas Health and Horizon to actively participate in the new care model. g. Physicians who have been designated as Tier 1 by Horizon can maximize that opportunity by becoming part of our network. h. Those physicians designated as Tier 2 can become Tier 1 by joining our network and participating in our programs. i. We will work with those physicians to understand the practice patterns that caused the Tier 2 designation. We will create action steps to help their practices remain in Tier 1 so they may enjoy enhanced fee for service, be eligible for patient management fees as well as shared savings when attained. j. If you do not know into which Tier you have been placed or have other questions regarding OMNIA you can visit https://www. horizonblue.com/providers/products- programs/products/omniahealthplans to obtain that information. k. We will be visiting each of the Medical Centers to meet with physicians within the Barnabas Health community to explain the value to of participating in this program. Horizon will be the first of many companies who will follow this type payment scenario as we move forward. Learning how to function and prosper in these novel reimbursement programs will stabilize Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 117 of 152 PageID: 1640 - 111 - and reverse the recent and relentless downward trend of physician reimbursement. 356. The Barnabas Letter misleadingly suggests that “enhanced fee-for- service fees,” are available to physicians who join an ACO, when in reality many ACOs (and the OMNIA Plan in particular) are modelled around participants accepting lower “fee-for-service fees” with the difference being recouped only if and to the extent that the ACO meets its targeted reduction in paid claims and generates any “shared savings” that are divided among the participants and, often, the insurer. 357. In effect, Horizon, in conjunction with Barnabas, is seeking to lure CarePoint Referring Physicians into cooperating with Horizon’s scheme, and linchpin to the success of the OMNIA Plan, to steer paying, insured patients to Tier 1 hospitals at the expense of the CarePoint Hospitals. 358. In tandem with the Barnabas Letters, Horizon has also contacted CarePoint Referring Physicians directly. One of those physicians, a busy practitioner who typically admits a substantial number of patients to Christ Hospital each year, is being actively pressured to join the Barnabas ACO. This physician received a call from a Horizon representative who inquired about specific patients recently admitted to Christ Hospital via its emergency department. The Horizon representative stated that those patients should have gone to an in- network hospital instead. When the physician advised Horizon that it lacked Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 118 of 152 PageID: 1641 - 112 - control over which emergency department a patient may use, the Horizon representative insisted that the physician needed to make sure that the physician’s patients go to an in-network hospital. 359. Upon information and belief, Horizon has contacted other CarePoint Referring Physicians, inquired about their recent admissions of patients to Christ Hospital, and admonished them to make sure their patients go to an in-network hospital for emergency care. 360. To date, Horizon has designated only one Tier 1 hospital in all of Hudson County, JCMC. Thus, in telling physicians whose practice and patients are located in Hudson County to “make sure” that their patients seek emergency treatment at a Tier 1 hospital, Horizon is pressuring the physicians to direct their patients to seek emergency medical treatment at JCMC, a hospital that recently represented to the NJDOH that its emergency room (“ER”) was overburdened and needed to decrease ER visits by at least 30,000 because its ER “was designed for 57,000 visits (38 bays), utilization was more than 80,000 in 2012.” 361. Physicians, in choosing to admit a patient to a hospital, must exercise his/her medical judgment as to the hospital that is best suited to meet the patient’s needs. Physicians must exercise that judgment independently of the desires of any hospital or insurer and take into account a number of factors, one of which is the patient’s preference. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 119 of 152 PageID: 1642 - 113 - 362. Horizon, by insisting that CarePoint Referring Physicians need to “make sure” that all their patients are admitted to an in-network hospital, i.e., JCMC, and particularly in the case of an emergency, is wrongfully attempting to interfere with the physicians’ medical judgment. 363. Horizon’s campaign of mail and wire fraud described in Part II.E above advances all of the goals of its conspiracies with Barnabas, including, among other things, to (i) continue conducting the affairs of the RICO enterprises through Horizon’s pattern of racketeering; and (ii) drive Plaintiffs into bankruptcy to enable Horizon to directly or indirectly acquire control over the Plaintiffs. H. The Effects of Horizon’s Conduct 364. Horizon’s campaign against Plaintiffs has caused Plaintiffs to suffer significant financial harm. In addition to other pecuniary losses described above, Plaintiffs have suffered millions of dollars in lost revenues. 365. In this regard, an untold number of prospective patients have declined to seek treatment at Plaintiffs’ hospitals as a result of Horizon’s campaign of false and misleading statements about Plaintiffs. Horizon’s bad faith claims processing tactics and campaign of false and misleading statements about Plaintiffs have also damaged and disrupted Plaintiffs’ relationships with their existing patients. 366. The effects of Horizon’s misconduct are magnified by the fact that, as noted above, Plaintiffs are required by federal and state law to provide Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 120 of 152 PageID: 1643 - 114 - emergency/urgent care to all patients, regardless of a patient’s ability to pay. As a consequence, even while Horizon is discouraging its subscribers from seeking treatment at the CarePoint Hospitals and otherwise interfering with Plaintiffs’ relationships with commercially-insured patients, the CarePoint Hospitals must still incur substantial costs in continuing to provide essential health care services to the uninsured and underinsured patient populations they serve. 367. Worst of all, there is no end in sight to Horizon’s campaign against Plaintiffs. So long as Plaintiffs stand up to Horizon and refuse to become part of Horizon’s insurance networks unless they are treated fairly and receive sustainable reimbursements, Horizon’s wrongful tactics will continue unless and until the Courts compel an end to it. 368. And even if Horizon is successful in forcing the Plaintiffs into bankruptcy and acquiring direct or indirect control over the hospitals, Horizon’s conduct will not end. Inadequate payments from private insurers have contributed to a raft of bankruptcies among New Jersey hospitals. Thus, it is only a matter of time before another hospital or group of hospitals demands fair and sustainable rates as a condition of remaining in Horizon’s network. When Horizon inevitably refuses to give in to such demands, it will simply direct its tactics to that other hospital or group of hospitals. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 121 of 152 PageID: 1644 - 115 - CAUSES OF ACTION COUNT ONE (Breach of Plan Provisions for Benefits in Violation of ERISA § 502(a)(1)(B)) 369. The foregoing allegations are re-alleged and incorporated by reference as if fully set forth herein. 370. The CarePoint Hospitals have standing to pursue claims under ERISA as the assignees and authorized representatives of the Horizon Subscribers’ claims under the Plans. 371. As the assignees of the Horizon Subscribers, the CarePoint Hospitals are entitled to payment under the ERISA Plans for the hospital services provided to the Horizon Subscribers at the CarePoint Hospitals. 372. Upon information and belief, the Plans did not prohibit the Horizon Subscribers from assigning their rights to benefits under the Plans to the CarePoint Hospitals, including the right of direct payment of benefits under the Plans to the CarePoint Hospitals. 373. Moreover, to the extent that the Plans prohibited the assignment of benefits to the CarePoint Hospitals, Horizon has waived any purported anti- assignment provisions, has ratified the assignment of benefits to the CarePoint Hospitals, and/or is estopped from using any purported anti-assignment provisions against the CarePoint Hospitals due to Horizon’s course of dealing with and Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 122 of 152 PageID: 1645 - 116 - statements to the CarePoint Hospitals as out-of-network providers, discussed more fully above. 374. Moreover, to the extent that the Plans prohibited the assignment of benefits to the CarePoint Hospitals, any such purported anti-assignment prohibitions are unenforceable as, among other things, contrary to public policy, as adhesion contracts, and/or due to a lack of privity with the CarePoint Hospitals. 375. All of the Plans require payment of medical expenses incurred by Horizon Subscribers at the rate of the CarePoint Hospitals’ full billed charges (less in-network patient responsibility) for emergency/urgent care, and at the usual or customary rates for Elective care. 376. The CarePoint Hospitals’ billed charges represent the hospitals’ usual and customary rates for the treatment provided to Horizon Subscribers. 377. Horizon breached the terms of the Plans by refusing to make out-of- network payments for charges covered by the Plans, in violation of ERISA 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B). These breaches include, among other things, refusing to pay the CarePoint Hospitals’ billed charges (less in-network patient responsibility) for emergency/urgent care that the CarePoint Hospitals provided to Horizon Subscribers, as required by the Plans; refusing to pay the CarePoint Hospitals the usual and customary charges for Elective care provided to Horizon Subscribers, as required by the Plans; and otherwise refusing to pay the Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 123 of 152 PageID: 1646 - 117 - CarePoint Hospitals the amounts due under the Plans for the medically necessary procedures and services performed at the CarePoint Hospitals. 378. As a result of, among other acts, Horizon’s numerous procedural and substantive violations of ERISA, any appeals are deemed exhausted or excused, and the CarePoint Hospitals are entitled to have this Court undertake a de novo review of the issues raised herein. 379. Under 29 U.S.C. § 1132(a)(1)(B), the CarePoint Hospitals are entitled to recover unpaid/underpaid benefits from Horizon. The CarePoint Hospitals are also entitled to declaratory and injunctive relief to enforce the terms of the Plans and to clarify their right to future benefits under such Plans, as well as attorneys’ fees. COUNT TWO (Breach of Fiduciary Duties of Loyalty and Due Care in Violation of ERISA) 380. The foregoing allegations are re-alleged and incorporated by reference as if fully set forth herein. 381. Pursuant to 29 U.S.C. § 1132(a)(3), a civil action may be brought by “a participant, beneficiary, or fiduciary to (A) 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.” Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 124 of 152 PageID: 1647 - 118 - 382. The CarePoint Hospitals, as the assignees of ERISA members and beneficiaries under the Plans, are entitled to assert a claim for relief for Horizon’s breach of fiduciary duties of loyalty and care and for failure to follow Plan documents under 29 U.S.C. § 1104(a)(1)(B) and (D). 383. Horizon exercised discretion, control, authority and oversight in determining whether Plan benefits would be paid and the amounts of Plan benefits that would be paid. 384. As an ERISA fiduciary, Horizon owed the CarePoint Hospitals a duty of care, defined as an obligation to act prudently, with the care, skill, prudence and diligence that a prudent fiduciary would use in the conduct of an enterprise of like character. Further, as a fiduciary, Horizon was required to ensure that it was acting in accordance with the documents and instruments governing the Plans, and in accordance with ERISA § 404(a)(l)(B) and (D), 29 U.S.C. § 1104(a)(l)(B) and (D). In failing to act prudently, and in failing to act in accordance with the documents governing the Plans, Horizon has violated its fiduciary duty of care. 385. As a fiduciary, Horizon also owed the CarePoint Hospitals a duty of loyalty, defined as an obligation to make decisions in the interest of its beneficiaries and to avoid self-dealing or financial arrangements that benefit the fiduciary at the expense of members, in accordance with ERISA § 404(a) (l) (A), Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 125 of 152 PageID: 1648 - 119 - 29 U.S.C. § 1104(a)(l)(A) and ERISA § 406, 29 U.S.C. § 1106. Thus, Horizon could not make benefit determinations for the purpose of saving money at the expense of the Horizon Subscribers. 386. Horizon violated its fiduciary duty of loyalty to the CarePoint Hospitals by, among other things, refusing to make out-of-network payments for hospital services provided at the CarePoint Hospitals for Horizon’s own benefit and at the expense of Horizon Subscribers. In addition, Horizon violated its fiduciary duty of loyalty by failing to inform the CarePoint Hospitals, as assignees of the Horizon Subscribers, of information material to the claims and Horizon’s handling of the claims. 387. The CarePoint Hospitals have standing to pursue claims under ERISA as assignees and authorized representatives of the Horizon Subscribers. 388. The CarePoint Hospitals are entitled to relief to remedy Horizon’s violation of its fiduciary duties under ERISA § 502(a)(3), 29 U.S.C. § 1132(a) (3), including declaratory and injunctive relief. COUNT THREE (Denial of Full and Fair Review in Violation of ERISA § 503) 389. The foregoing allegations are re-alleged and incorporated by reference as if fully set forth herein. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 126 of 152 PageID: 1649 - 120 - 390. As assignees and authorized representatives of the Horizon Subscribers’ claims, the CarePoint Hospitals are entitled to receive protection under ERISA, including (a) a “full and fair review” of all claims denied by Horizon; and (b) compliance by Horizon with applicable claims procedure regulations. 391. Although Horizon is obligated to provide a “full and fair review” of denied claims pursuant to ERISA § 503, 29 U.S.C. § 1133 and applicable regulations, including 29 C.F.R. § 2560.503-1 and 29 C.F.R. § 2590.715- 2719, Horizon has failed to do so by, among other actions: a. refusing to provide the specific reason or reasons for the denial of claims; b. refusing to provide the specific Plan provisions relied upon to support its denials; c. refusing to provide the specific rule, guideline or protocol relied upon in making the decisions to deny claims; d. refusing to describe any additional material or information necessary to perfect a claim, such as the appropriate diagnosis/treatment code; e. refusing to notify the relevant parties that they are entitled to have, free of charge, all documents, records and other information relevant to the claims for benefits; and f. refusing to provide a statement describing any voluntary appeals procedure available, or a description of all required information to be given in connection with that procedure. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 127 of 152 PageID: 1650 - 121 - 392. By failing to comply with the ERISA claims procedure regulations, Horizon failed to provide a reasonable claims procedure. 393. Because Horizon has failed to comply with the substantive and procedural requirements of ERISA, any administrative remedies are deemed exhausted pursuant to 29 C.F.R. § 2560.503-1(l) and 29 C.F.R. § 2590.715- 2719(b)(2)(ii)(F)(1). Exhaustion is also excused because it would be futile to pursue administrative remedies, as Horizon does not acknowledge any basis for its denials and thus offers no meaningful administrative process for challenging its denials. 394. The CarePoint Hospitals have been harmed by Horizon’s failure to provide a full and fair review of appeals submitted under ERISA § 503, 29 U.S.C. § 1133, and by Horizon’s failures to disclose information relevant to appeals and to comply with applicable claims procedure regulations. 395. The CarePoint Hospitals are entitled to relief under ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3), including declaratory and injunctive relief, to remedy Horizon’s failures to provide a full and fair review, to disclose information relevant to appeals, and to comply with applicable claims procedure regulations. COUNT FOUR (Violation of 18 U.S.C. § 1962(c)) 396. The foregoing allegations are re-alleged and incorporated by reference as if fully set forth herein. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 128 of 152 PageID: 1651 - 122 - 397. Each of the Plaintiffs and Horizon are entities “capable of holding a legal or beneficial interest in property” and thus, each is a “person” within the meaning of 18 U.S.C. § 1961(3). 398. The Network Enterprise is an ongoing, associated-in-fact group of individual entities and thus is an “enterprise” within the meaning of 18 U.S.C. § 1961(4) and 1962(c). 399. The OMNIA Tier 1 Enterprise is an ongoing, associated-in-fact group of individual entities and thus is an “enterprise” within the meaning of 18 U.S.C. § 1961(4) and 1962(c). 400. The Horizon-Barnabas Enterprise is an ongoing, associated-in-fact pair of individual entities and thus is an “enterprise” within the meaning of 18 U.S.C. § 1961(4) and 1962(c). 401. The activities of the RICO Enterprises affect interstate commerce within the meaning of 18 U.S.C. § 1962(c). Horizon’s activities have obstructed, delayed, or otherwise affected commerce. 402. Horizon has conducted or participated, directly or indirectly, in the conduct of the RICO EnterpriseS through a pattern of racketeering activity within the meaning of 18 U.S.C. § 1962(c). 403. The pattern of racketeering activity under 18 U.S.C. § 1961(1) and (5) includes the multiple, repeated, and continuous acts of mail fraud and wire fraud, Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 129 of 152 PageID: 1652 - 123 - in violation of 18 U.S.C. §§ 1341 and 1343. As set forth more fully above, Horizon has engaged in a scheme to disseminate false, fraudulent, and misleading information about Plaintiffs, the In-Network Providers, OMNIA, OMNIA Tier 1 providers, the OMNIA Alliance Providers, and its claims handling practices to a large number of recipients. 404. Horizon has engaged in these racketeering activities with the specific intent to defraud, described more fully above. Among other things, Horizon seeks to deceive the public, patients, prospective patients, and others into believing that Plaintiffs are overpriced, pedestrian or substandard healthcare providers and that members of the RICO Enterprises, including but not limited to the Tier 1 OMNIA Alliance Providers, give “better care at lower prices.” Horizon also seeks to mislead the public, patients, prospective patients, and others into believing that Horizon pays Plaintiffs what it is legally obligated to pay healthcare providers for services rendered to its subscribers; and that any additional amounts charged by Plaintiffs must be the result of greed and overbilling. 405. As described more fully above, Horizon has committed these activities in furtherance of its schemes to defraud and for the express purpose of depriving Plaintiffs of money and other property. Horizon has used the wires and mails in furtherance of its schemes to defraud by, among other things, Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 130 of 152 PageID: 1653 - 124 - disseminating false and misleading information over the wires (for example, by facsimile, by e-mail, over the internet, and over the radio), and by mail. 406. As a direct result of Horizon’s violation of 18 U.S.C. § 1962(c), the Plaintiffs have suffered substantial injury to their business or property within the meaning of 18 U.S.C. § 1964(c), including, but not limited to: (i) lost revenue from patients ceasing their relationship with Plaintiffs; (ii) lost revenue from patients being dissuaded from seeking healthcare from Plaintiffs; and (iii) the costs in time, person-hours, and other administrative expense incurred because of Horizon’s unlawful conduct. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 131 of 152 PageID: 1654 - 125 - COUNT FIVE (Violation of 18 U.S.C. § 1962(d) by conspiring to violate 18 U.S.C. § 1962(c)) 407. The foregoing allegations are re-alleged and incorporated by reference as if fully set forth herein. 408. The Network Enterprise is an ongoing, associated-in-fact group of individual entities and thus is an “enterprise” within the meaning of 18 U.S.C. §§ 1961(4) and 1962(c). 409. The OMNIA Tier 1 Enterprise is an ongoing, associated-in-fact group of individual entities and thus is an “enterprise” within the meaning of 18 U.S.C. § 1961(4) and 1962(c). 410. The Horizon-Barnabas Enterprise is an ongoing, associated-in-fact pair of individual entities and thus is an “enterprise” within the meaning of 18 U.S.C. § 1961(4) and 1962(c). 411. The activities of the RICO Enterprises affect interstate commerce within the meaning of 18 U.S.C. § 1962(c). Horizon’s activities have obstructed, delayed, or otherwise affected commerce. 412. Horizon has conspired with one or more members of the RICO Enterprises, including Barnabas, to violate the provisions of 18 U.S.C. § 1962(c). 413. Specifically, Horizon and one or more members of the RICO Enterprises, including Barnabas, each agreed and intended, and/or adopted the goal Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 132 of 152 PageID: 1655 - 126 - of furthering or facilitating, the following endeavor: to conduct or participate, directly or indirectly, in the management and operation of the affairs of the RICO Enterprises through a pattern of racketeering activity in violation of 18 U.S.C. § 1962(c). 414. The pattern of racketeering activity under 18 U.S.C. § 1961(1) and (5) includes the multiple, repeated, and continuous acts of mail fraud and wire fraud, in violation of 18 U.S.C. §§ 1341 and 1343. As set forth more fully above, Horizon has engaged in a scheme to disseminate false, fraudulent, and misleading information about Plaintiffs, the In-Network Providers, OMNIA, OMNIA Tier 1 providers, the OMNIA Alliance Providers, and its claims handling practices to a large number of recipients. 415. Horizon has engaged in these racketeering activities with the specific intent to defraud, described more fully above. Among other things, Horizon seeks to deceive the public, patients, prospective patients, and others into believing that Plaintiffs are overpriced, pedestrian or substandard healthcare providers and that members of the RICO Enterprises, including but not limited to the Tier 1 OMNIA Alliance Providers, give “better care at lower prices.” Horizon also seeks to mislead the public, patients, prospective patients, and others into believing that Horizon pays Plaintiffs what it is legally obligated to pay healthcare providers for Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 133 of 152 PageID: 1656 - 127 - services rendered to its subscribers; and that any additional amounts charged by Plaintiffs must be the result of greed and overbilling. 416. As described more fully above, Horizon has committed these activities in furtherance of its schemes to defraud and for the express purpose of depriving Plaintiffs of money and other property. Horizon has used the wires and mails in furtherance of its schemes to defraud by, among other things, disseminating false and misleading information over the wires (for example, by facsimile, by e-mail, over the internet, and over the radio), and by mail. 417. As a direct result of Horizon’s violation of 18 U.S.C. § 1962(d) by conspiring to violate 18 U.S.C. § 1962(c) , the Plaintiffs have suffered substantial injury to their business or property within the meaning of 18 U.S.C. § 1964(c), including, but not limited to: (i) lost revenue from patients ceasing their relationship with Plaintiffs; (ii) lost revenue from patients being dissuaded from seeking healthcare from Plaintiffs; and (iii) the costs in time, person-hours, and other administrative expense incurred because of Horizon’s unlawful conduct. COUNT SIX (Violation of 18 U.S.C. § 1962(d) by conspiring to violate 18 U.S.C. § 1962(b)) 418. The foregoing allegations are re-alleged and incorporated by reference as if fully set forth herein. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 134 of 152 PageID: 1657 - 128 - 419. Each of the Plaintiffs is a privately held, limited liability company, and thus, is an “enterprise” within the meaning of 18 U.S.C. §§ 1961(4) and 1962(b). Each was engaged in activities affecting interstate commerce at all times relevant to this Complaint by, among other things, treating patients who are residents of various states. In harming the Plaintiffs, Horizon’s activities have obstructed, delayed, or otherwise affected commerce. 420. The Network Enterprise is an ongoing, associated-in-fact group of individual entities and thus is an “enterprise” within the meaning of 18 U.S.C. § 1961(4) and 1962(c). 421. The OMNIA Tier 1 Enterprise is an ongoing, associated-in-fact group of individual entities and thus is an “enterprise” within the meaning of 18 U.S.C. § 1961(4) and 1962(c). 422. The Horizon-Barnabas Enterprise is an ongoing, associated-in-fact pair of individual entities and thus is an “enterprise” within the meaning of 18 U.S.C. § 1961(4) and 1962(c). 423. The activities of the RICO Enterprises affect interstate commerce within the meaning of 18 U.S.C. § 1962(c). Horizon’s activities have obstructed, delayed, or otherwise affected commerce. 424. Horizon has conspired with one or more members of the RICO Enterprises, including Barnabas, to violate the provisions of 18 U.S.C. § 1962(b). Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 135 of 152 PageID: 1658 - 129 - 425. Specifically, Horizon and one or more members of the RICO Enterprises, including Barnabas, each agreed and intended, and/or adopted the goal of furthering or facilitating, the following endeavor: to acquire or maintain, directly or indirectly, an interest in or control of Plaintiffs and/or the RICO Enterprises through a pattern of racketeering activity under 18 U.S.C. § 1961(1) and (5). 426. The pattern of racketeering activity under 18 U.S.C. § 1961(1) and (5) includes the multiple, repeated, and continuous acts of mail fraud and wire fraud, in violation of 18 U.S.C. §§ 1341 and 1343. As set forth more fully above, Horizon has engaged in a scheme to disseminate false, fraudulent, and misleading information about Plaintiffs, the In-Network Providers, OMNIA, OMNIA Tier 1 providers, the OMNIA Alliance Providers, and its claims handling practices to a large number of recipients. 427. Horizon has engaged in these racketeering activities with the specific intent to defraud, described more fully above. Among other things, Horizon seeks to deceive the public, patients, prospective patients, and others into believing that Plaintiffs are overpriced, pedestrian or substandard healthcare providers and that members of the RICO Enterprises, including but not limited to the Tier 1 OMNIA Alliance Providers, give “better care at lower prices.” Horizon also seeks to mislead the public, patients, prospective patients, and others into believing that Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 136 of 152 PageID: 1659 - 130 - Horizon pays Plaintiffs what it is legally obligated to pay healthcare providers for services rendered to its subscribers; and that any additional amounts charged by Plaintiffs must be the result of greed and overbilling. 428. As described more fully above, Horizon has committed these activities in furtherance of its schemes to defraud and for the express purpose of depriving Plaintiffs of money and other property. Horizon has used the wires and mails in furtherance of its schemes to defraud by, among other things, disseminating false and misleading information over the wires (for example, by facsimile, by e-mail, over the internet, and over the radio), and by mail. 429. As a direct result of Horizon’s violation of 18 U.S.C. § 1962(d) by conspiring to violate 18 U.S.C. § 1962(b) , the Plaintiffs have suffered substantial injury to their business or property within the meaning of 18 U.S.C. § 1964(c), including, but not limited to: (i) lost revenue from patients ceasing their relationship with Plaintiffs; (ii) lost revenue from patients being dissuaded from seeking healthcare from Plaintiffs; and (iii) the costs in time, person-hours, and other administrative expense incurred because of Horizon’s unlawful conduct. COUNT SEVEN (Breach of Contract - non-ERISA) 430. The foregoing allegations are re-alleged and incorporated by reference as if fully set forth herein. 431. To the extent that some of the Plans are not employee welfare benefit Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 137 of 152 PageID: 1660 - 131 - plans governed by ERISA, they are nonetheless valid and enforceable insurance contracts. 432. As set forth more fully above, upon information and belief, all of the Plans require payment of medical expenses incurred by Horizon Subscribers at usual or customary rates. Further, under the terms of the Plans, Horizon Subscribers are entitled to coverage for the services that they received from the CarePoint Hospitals. 433. By virtue of the AOB Contracts executed by Horizon Subscribers, the CarePoint Hospitals were assigned the right to receive payment under the Plans for the services rendered to the Horizon Subscribers. Pursuant to said AOB Contracts, Horizon is contractually obligated to pay the CarePoint Hospitals for these services. 434. Horizon failed to make payment of benefits to the CarePoint Hospitals in the manner and amounts required under the terms of the Plans. 435. As the result of Horizon’s failures to comply with the terms of the Plans, the CarePoint Hospitals, as assignees, have suffered damages and lost benefits for which they are entitled to recover damages from Horizon, including unpaid benefits, restitution, interest, and other contractual damages sustained by the CarePoint Hospitals. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 138 of 152 PageID: 1661 - 132 - COUNT EIGHT (Breach of the Duty of Good Faith and Fair Dealing - non-ERISA) 436. The foregoing allegations are re-alleged and incorporated by reference as if fully set forth herein. 437. As set forth more fully above, if any of the Plans are not employee welfare benefit plans governed by ERISA, they are nonetheless valid and enforceable insurance contracts. As such, the Plans contain an implied duty of good faith and fair dealing. 438. Horizon, as the obligor under the Plans, owed the Horizon Subscribers a duty of good faith and fair dealing with respect to said Plans. 439. As set forth more fully above, the Horizon Subscribers received health care services at the CarePoint Hospitals and executed AOB Contracts, among other documents, in which they assigned to the CarePoint Hospitals their right to benefits under the Plans for the services that the CarePoint Hospitals provided to the Horizon Subscribers. 440. By virtue of these assignments, Horizon also owes this duty of good faith and fair dealing to the CarePoint Hospitals. 441. Horizon breached its duty of good faith and fair dealing owed to the CarePoint Hospitals, as assignees of rights and benefits under the Plans, in a number of ways, described more fully above. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 139 of 152 PageID: 1662 - 133 - 442. Moreover, N.J.S.A. 17:29B-3, et seq., defines the public interests of New Jersey and prohibits unfair methods of competition and unfair or deceptive acts or practices in the business of insurance. 443. Without limitation, Horizon’s breaches include, but are not limited to, Horizon: a. using unilaterally and arbitrarily selected percentages of Medicare or in-network rates in determining amounts it will pay to out-of-network providers for emergency/urgent care provided to Horizon Subscribers, when Horizon’s liability for the full charges was reasonably clear; b. failing to provide the CarePoint Hospitals with adequate written explanations for the failure to pay all or a portion of the CarePoint Hospitals’ claims for the services provided to Horizon Subscribers; c. failing to pay the CarePoint Hospitals’ charges for the health care services provided to Horizon Subscribers, and failing to provide adequate written explanations for the refusal to pay all or a portion of such claims, within the statutorily prescribed time frames; d. using arbitrary methodology for determining whether to pay and, if so, the amount to pay the CarePoint Hospitals for the services the CarePoint Hospitals provided to Horizon Subscribers; e. providing patently inadequate explanations for its under- payments of the CarePoint Hospitals; f. not attempting in good faith to effectuate prompt, fair and equitable settlement of claims for which liability had become reasonably clear; Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 140 of 152 PageID: 1663 - 134 - g. compelling the CarePoint Hospitals to institute litigation to recover amounts due under the Plans by refusing to pay claims properly; h. failing to promptly provide a reasonable explanation of the basis in the Plans in relation to the facts or applicable law for nonpayment and underpayment of the CarePoint Hospital’s claims; i. violating applicable statutory and regulatory provisions governing the business of insurance; j. committing unfair and deceptive acts and practices in handling the CarePoint Hospitals’ claims; k. making use of funds which should have been paid to the CarePoint Hospitals pursuant to their claims for benefits under the Plans; and l. ignoring its own ethical standards and claims-handling procedures, which require that a claims-handler discover and disclose all bases for finding - not avoiding - insurance coverage. 444. Horizon’s conduct in derogation of its duty of good faith and fair dealing under the Plans has deprived the CarePoint Hospitals of their reasonable expectations and benefits as assignees of benefits under the Plans. COUNT NINE (Declaratory Judgment - 28 U.S.C. § 2201) 445. The foregoing allegations are re-alleged and incorporated by reference as if fully set forth herein. 446. This is a count for declaratory relief pursuant to 28 U.S.C. § 2201. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 141 of 152 PageID: 1664 - 135 - 447. Horizon claims that the Plans may be interpreted as permitting Horizon to unilaterally and arbitrarily establish an allowed amount that it will pay for claims for treatment provided by out-of-network providers. 448. Upon information and belief, none of the Plans allows Horizon to unilaterally and arbitrarily establish allowed amounts payable with respect to treatment provided by out-of-network providers. 449. Likewise, on information and belief, none of the Plans contains any formula or other methodology for determining an “allowed amount” that is payable under the Plan with respect to treatment provided by out-of-network providers. 450. Under New Jersey law, insurers who provide coverage for emergency/urgent care and receive a claim for emergency/urgent care provided by an out-of-network hospital are required to pay an amount sufficient to protect the patient/insured from being balance billed. To protect its insureds against balance billing, an insurer may (a) pay the full amount of the charges, (b) negotiate a settlement of the claim with the provider or (c) negotiate an in-network agreement with the provider. Aetna Health, Inc. v. Srinivasan, 2016 N.J. Super. Unpub. LEXIS 1515 (App. Div., June 29, 2016). The insurer may not unilaterally and arbitrarily decide whether it will pay the out-of-network provider’s claim and, if so, how much of the claim it will pay. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 142 of 152 PageID: 1665 - 136 - 451. As a direct and proximate result of Horizon’s acts and omissions, including, but not limited to, its use of a non-disclosed, arbitrary methodology to calculate “allowed amounts” it will pay for treatment provided by out-of-network providers, failure to comply with the terms of the Plans and statutory requirements to pay claims timely, the CarePoint Hospitals have sustained and will continue to sustain damages and have been deprived of and will continue to be deprived of the compensation to which they are entitled for providing covered hospital services to Horizon Subscribers. 452. The existence of another potentially adequate remedy does not preclude a judgment for declaratory relief. See Federal Rules of Civil Procedure, Rule 57. 453. The CarePoint Hospitals are entitled to supplemental relief pursuant to 28 U.S.C. § 2201, including the payment of all money that was not paid by Horizon to the CarePoint Hospitals for providing the covered hospital services described in this Complaint. COUNT TEN (Breach of Fiduciary Duty - non-ERISA) 454. The foregoing allegations are re-alleged and incorporated by reference as if fully set forth herein. 455. At all relevant times, Horizon was the plan administrator, fiduciary, relevant party-in-interest, and/or the obligor for the Plans. As such, even if some Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 143 of 152 PageID: 1666 - 137 - of the Plans are not employee welfare benefit plans governed by ERISA, Horizon nonetheless owed and owes the Horizon Subscribers fiduciary duties under the Plans. 456. As set forth more fully above, Horizon Subscribers have received health care services at the CarePoint Hospitals and executed AOB Contracts, among other documents, in which they assigned to the CarePoint Hospitals all rights to benefits under the Plans for the services that the CarePoint Hospitals provided to the Horizon Subscribers. 457. By virtue of these assignments, Horizon also owed and owes this fiduciary duty to the CarePoint Hospitals, as the assignees of beneficiaries under the Plans. 458. As set forth more fully above, upon information and belief, the Plans did not prohibit Horizon Subscribers from assigning their rights to benefits under the Plans to the CarePoint Hospitals, including the right of direct payment of benefits under the Plans to the CarePoint Hospitals. 459. Moreover, as set forth more fully above, to the extent that the Plans prohibited the assignment of benefits to the CarePoint Hospitals, Horizon has waived any purported anti-assignment provisions, has ratified the assignment of benefits to the CarePoint Hospitals, and/or is estopped from using any purported anti-assignment provisions against the CarePoint Hospitals due to its course of Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 144 of 152 PageID: 1667 - 138 - dealing with and statements to the CarePoint Hospitals as out-of-network providers, discussed more fully above. 460. Moreover, as set forth more fully above, to the extent that the Plans prohibited the assignment of benefits to the CarePoint Hospitals, any such purported anti-assignment prohibitions are unenforceable as, among other things, contrary to public policy, as adhesion contracts, and/or due to a lack of privity with the CarePoint Hospitals. 461. Horizon breached the fiduciary duties owed to the CarePoint Hospitals in a number of ways, described more fully above. 462. As the result of Horizon’s violations of its fiduciary duties to the CarePoint Hospitals, the CarePoint Hospitals have suffered, and continue to suffer, substantial damages. COUNT ELEVEN (Promissory Estoppel) 463. The foregoing allegations are re-alleged and incorporated by reference as if fully set forth herein. 464. Horizon represented to the CarePoint Hospitals that the medical treatment sought by the Horizon Subscribers as patients at the CarePoint Hospitals was a covered procedure under the Plans, and that the fees associated with that treatment were covered charges under the Plans. Based on Horizon’s statements that the patients seeking medical care and treatment had active coverage and Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 145 of 152 PageID: 1668 - 139 - benefits, the CarePoint Hospitals reasonably understood that some payment would be forthcoming for the hospital services provided at the CarePoint Hospitals related to these procedures. 465. The CarePoint Hospitals provided hospital services to Horizon Subscribers in reliance on Horizon’s statements regarding coverage and benefits. 466. The CarePoint Hospitals relied upon Horizon’s representations, authorizations, and promises to their detriment. 467. This reliance was foreseeable, as Horizon’s representations were made in the context of telephone calls from the CarePoint Hospitals’ billing agents to verify, confirm, and pre-certify coverage prior to the hospital services being provided, and there was no ability for the CarePoint Hospitals to learn, separate and apart from Horizon’s representations, whether Horizon considered the fees related to these hospital services to be covered charges under the relevant Plans. 468. Horizon is now estopped from denying full and complete payment for the claims at issue in this Complaint. 469. As a result of the CarePoint Hospitals’ reliance on Horizon’s statements, the CarePoint Hospitals have suffered and continue to suffer injury, including money damages, and injustice can only be avoided by Horizon honoring its previous promises. Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 146 of 152 PageID: 1669 - 140 - COUNT TWELVE (Temporary and Permanent Injunctive Relief) 470. The foregoing allegations are re-alleged and incorporated by reference as if fully set forth herein. 471. Currently, Horizon is wrongfully denying payment in whole or in part for virtually all claims for benefits submitted for hospital services provided to Horizon Subscribers by the CarePoint Hospitals as out-of-network providers. In so doing, Horizon has failed and is failing to comply with the terms of the Plans and its other obligations, including its obligations under ERISA. 472. Unless enjoined from doing so, Horizon will continue not to comply with the terms of the Plans and its other obligations, including under ERISA, to the CarePoint Hospitals’ severe detriment. A monetary judgment in this case will only compensate the CarePoint Hospitals for past losses, and will not stop Horizon from continuing to confiscate the money earned by the CarePoint Hospitals and necessary to maintain their medical facilities. The CarePoint Hospitals have no practical or adequate remedy, either administratively or at law, to avoid these future losses. 473. The CarePoint Hospitals are entitled to a preliminary and permanent injunction requiring Horizon to process claims for hospital services provided to Horizon Subscribers at the CarePoint Hospitals in accordance with the terms of Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 147 of 152 PageID: 1670 - 141 - the Plans, and requiring Horizon to stop summarily denying claims for medically- necessary services provided by the CarePoint Hospitals to Horizon Subscribers. CONDITIONS PRECEDENT 474. All conditions precedent have been performed or have occurred. JURY DEMAND Pursuant to Rule 38 of the Federal Rules of Civil Procedure, the CarePoint Hospitals hereby request a trial by jury on all issues so triable. PRAYER FOR RELIEF WHEREFORE, the CarePoint Hospitals demand judgment in their favor against Horizon as follows: A. Declaring that Horizon has breached the terms of the Plans with regard to out-of-network benefits and awarding damages for unpaid out-of- network benefits, as well as awarding injunctive and declaratory relief to prevent Horizon’s continuing actions detailed herein that are unauthorized by the Plans; B. Declaring that Horizon failed to provide a “full and fair review” under § 503 of ERISA, 29 U.S.C. § 1133, and applicable claims procedure regulations, and that “deemed exhaustion” under such regulations is in effect as a result of Horizon’s actions, as well as awarding injunctive, declaratory and other equitable relief to ensure compliance with ERISA and its claims procedure regulations; Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 148 of 152 PageID: 1671 - 142 - C. Declaring that Horizon violated its fiduciary duties under § 404 of ERISA, 29 U.S.C. § 1104, and awarding injunctive, declaratory and other equitable relief to ensure compliance with ERISA; D. Declaring that under New Jersey law, Horizon is obligated to pay out- of-network providers for emergency/urgent care rendered to Horizon Subscribers and that Horizon may not refuse to pay or delay paying such claims, unilaterally and arbitrarily set an “allowed amount” it will pay on such claims, or otherwise unilaterally and arbitrarily reduce its obligation to pay for such claims; E. Compensatory and consequential damages resulting from injury to Plaintiffs’ business and property in the millions of dollars, as set forth above and to be further established at trial; F. Treble the damages sustained by Plaintiffs as described above under 18 U.S.C. § 1964(c); G. Awarding damages based on Horizon’s misrepresentations and nondisclosures regarding the existence of benefits for these hospital services based on promissory estoppel, including any exemplary damages permitted by law; H. Temporarily and permanently enjoining Horizon from continuing to pursue its actions detailed herein, and ordering Horizon to pay benefits in accordance with the terms of the Plans and applicable law; Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 149 of 152 PageID: 1672 - 143 - I. Awarding lost profits, contractual damages, and compensatory damages in such amounts as the proofs at trial shall show; J. Awarding exemplary damages for Horizon’s intentional and tortious conduct in such amounts as the proofs at trial will show; K. Awarding restitution for payments improperly withheld by Horizon; L. Declaring that Horizon has violated the terms of the relevant Plans and/or policies of insurance covering the Horizon Subscribers; M. Requiring Horizon to make full payment on all previously denied charges relating to the Horizon Subscribers; N. Requiring Horizon to pay the CarePoint Hospitals the benefit amounts as required under the Plans; O. Awarding reasonable attorneys’ fees, as provided by common law, federal or state statute, or equity, including 29 U.S.C. § 1132(g) and 18 U.S.C. § 1964(c); P. Awarding costs of suit; Q. Awarding pre-judgment and post-judgment interest as provided by common law, federal or state statute or rule, or equity; and R. Awarding all other relief to which Plaintiffs are entitled. Respectfully submitted, K&L GATES, LLP Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 150 of 152 PageID: 1673 - 144 - By: __/s/ Anthony P. La Rocco Anthony P. La Rocco anthony.larocco@klgates.com One Newark Center, 10th Floor Newark, New Jersey 07102 (973) 848.4104 Telephone (973) 556.1584 Facsimile Attorneys for Plaintiffs Hudson Hospital OPCO, LLC, d/b/a CarePoint Health-Christ Hospital; IJKG, LLC, IJKG PROPCO LLC and IJKG OPCO LLC, d/b/a CarePoint Health-Bayonne Medical Center; and HUMC OPCO LLC, d/b/a CarePoint Health- Hoboken University Medical Center Dated: May 1, 2017 Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 151 of 152 PageID: 1674 - 145 - CERTIFICATION OF SERVICE I hereby certify that on this date, I caused the within pleading to be electronically filed and served upon all counsel of record via the Court’s ECF filing system: Respectfully submitted, K&L GATES, LLP By: __/s/ Anthony P. La Rocco Anthony P. La Rocco anthony.larocco@klgates.com One Newark Center, 10th Floor Newark, New Jersey 07102 (973) 848.4104 Telephone (973) 556.1584 Facsimile Attorneys for Plaintiffs Hudson Hospital OPCO, LLC, d/b/a CarePoint Health-Christ Hospital; IJKG, LLC, IJKG PROPCO LLC and IJKG OPCO LLC, d/b/a CarePoint Health-Bayonne Medical Center; and HUMC OPCO LLC, d/b/a CarePoint Health- Hoboken University Medical Center Dated: May 1, 2017 Case 2:16-cv-05922-JMV-JBC Document 31-3 Filed 05/01/17 Page 152 of 152 PageID: 1675 EXHIBIT C Case 2:16-cv-05922-JMV-JBC Document 31-4 Filed 05/01/17 Page 1 of 3 PageID: 1676 UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY IJKG OPCO LLC d/b/a/ BAYONNE MEDICAL CENTER, Plaintiff, v. EMBLEMHEALTH, INC., et al., Defendants. Civil Action No. 12-2032 (DMC) ORDER THIS MATTER having come before the Court for a case management conference on October 16, 2012; and the Court having discussed the status of the case and the parties’ outstanding discovery issues; and for good cause shown; IT IS on this 19 day of October 2012,th ORDERED that, on or before October 30, 2012, Plaintiff shall provide to Defendants the member identification numbers, patient names and dates of service for the patients referred to in Plaintiff’s Complaint; and it is further ORDERED that, on or before November 13, 2012, Defendants shall provide Plaintiff copies of the applicable health and benefit plans for the patients identified in the Complaint; and it is further Case 2:12-cv-02032-DMC-JBC Document 20 Filed 10/19/12 Page 1 of 2 PageID: 85Case 2:16-cv-05922-JMV-JBC Document 31-4 Filed 05/01/17 Page 2 of 3 PageID: 1677 ORDERED that, all information exchanged pursuant to this Order shall be maintained on an attorney’s eyes only basis. In addition, the Court believes that this case involves the exchange of sensitive and confidential personal information and, therefore, that the entry of a discovery confidentiality order is appropriate under Local Civil Rule 5.3(b). Accordingly, counsel are directed to immediately confer and submit a proposed discovery confidentiality order to govern the production of discovery in this case. If the parties are unable to agree to the form of a discovery confidentiality order, the issue should be raised with the Undersigned by letter pursuant to Local Civil Rules 5.3(b)(5) and 37.1. The non-prevailing party on any dispute relating to the entry of a confidentiality order should be prepared to incur the fees and costs associated with the dispute, see Fed. R. Civ. P. 37; and it is further ORDERED that, there shall be a status conference via telephone before the Undersigned on Monday, November 19, 2012, at 10:00 a.m. Defendants’ counsel is directed to arrange and initiate the conference call. s/Mark Falk MARK FALK United States Magistrate Judge Case 2:12-cv-02032-DMC-JBC Document 20 Filed 10/19/12 Page 2 of 2 PageID: 86Case 2:16-cv-05922-JMV-JBC Document 31-4 Filed 05/01/17 Page 3 of 3 PageID: 1678 EXHIBIT D Case 2:16-cv-05922-JMV-JBC Document 31-5 Filed 05/01/17 Page 1 of 8 PageID: 1679 Case 2:16-cv-05922-JMV-JBC Document 31-5 Filed 05/01/17 Page 2 of 8 PageID: 1680 Case 2:16-cv-05922-JMV-JBC Document 31-5 Filed 05/01/17 Page 3 of 8 PageID: 1681 Case 2:16-cv-05922-JMV-JBC Document 31-5 Filed 05/01/17 Page 4 of 8 PageID: 1682 Case 2:16-cv-05922-JMV-JBC Document 31-5 Filed 05/01/17 Page 5 of 8 PageID: 1683 Case 2:16-cv-05922-JMV-JBC Document 31-5 Filed 05/01/17 Page 6 of 8 PageID: 1684 Case 2:16-cv-05922-JMV-JBC Document 31-5 Filed 05/01/17 Page 7 of 8 PageID: 1685 Case 2:16-cv-05922-JMV-JBC Document 31-5 Filed 05/01/17 Page 8 of 8 PageID: 1686 EXHIBIT E Case 2:16-cv-05922-JMV-JBC Document 31-6 Filed 05/01/17 Page 1 of 12 PageID: 1687 Case 2:16-cv-05922-JMV-JBC Document 31-6 Filed 05/01/17 Page 2 of 12 PageID: 1688 Case 2:16-cv-05922-JMV-JBC Document 31-6 Filed 05/01/17 Page 3 of 12 PageID: 1689 Case 2:16-cv-05922-JMV-JBC Document 31-6 Filed 05/01/17 Page 4 of 12 PageID: 1690 Case 2:16-cv-05922-JMV-JBC Document 31-6 Filed 05/01/17 Page 5 of 12 PageID: 1691 Case 2:16-cv-05922-JMV-JBC Document 31-6 Filed 05/01/17 Page 6 of 12 PageID: 1692 Case 2:16-cv-05922-JMV-JBC Document 31-6 Filed 05/01/17 Page 7 of 12 PageID: 1693 Case 2:16-cv-05922-JMV-JBC Document 31-6 Filed 05/01/17 Page 8 of 12 PageID: 1694 Case 2:16-cv-05922-JMV-JBC Document 31-6 Filed 05/01/17 Page 9 of 12 PageID: 1695 Case 2:16-cv-05922-JMV-JBC Document 31-6 Filed 05/01/17 Page 10 of 12 PageID: 1696 Case 2:16-cv-05922-JMV-JBC Document 31-6 Filed 05/01/17 Page 11 of 12 PageID: 1697 Case 2:16-cv-05922-JMV-JBC Document 31-6 Filed 05/01/17 Page 12 of 12 PageID: 1698 K&L GATES LLP One Newark Center, Tenth Floor Newark, New Jersey 07102 Tel: (973) 848-4000 Fax: (973) 848-4001 Attorneys for Plaintiffs Hudson Hospital OPCO, LLC--d/b/a CarePoint Health--Christ Hospital, IJKG, LLC, PROPCO LLC and IJKG OPCO LLC d/b/a CarePoint Health--Bayonne Medical Center, and HUMC OPCO LLC d/b/a CarePoint Health--Hoboken University Medical Center UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY HUDSON HOSPITAL OPCO, LLC--d/b/a CAREPOINT HEALTH--CHRIST HOSPITAL, IJKG, LLC, IJKG PROPCO LLC and IJKG OPCO LLC d/b/a CAREPOINT HEALTH--BAYONNE MEDICAL CENTER, and HUMC OPCO LLC d/b/a CAREPOINT HEALTH--HOBOKEN UNIVERSITY MEDICAL CENTER, Plaintiffs, v. HORIZON HEALTHCARE SERVICES, INC. d/b/a HORIZON BLUE CROSS BLUE SHIELD OF NEW JERSEY, Defendant. Civil Action No.: 2:16-cv-5922 Honorable John Michael Vazquez, U.S.D.J. Honorable Judge James B. Clark, U.S.M.J. Document Filed Electronically CERTIFICATION OF SERVICE I hereby certify that on this date, I caused the following documents to be electronically filed and served on all counsel of record via the Court’s ECF filing system: (1) Brief in Opposition to Defendant’s Motion to Dismiss the First Case 2:16-cv-05922-JMV-JBC Document 31-7 Filed 05/01/17 Page 1 of 2 PageID: 1699 - 2 - Amended Complaint; (2) Declaration of Anthony P. La Rocco, Esq.; and (3) this Certification of Service. Respectfully submitted, K&L GATES LLP By: s/Anthony P. La Rocco Anthony P. La Rocco One Newark Center - Tenth Floor Newark, New Jersey 07102 (973) 848-4000 anthony.larocco@klgates.com Attorneys for Plaintiffs Hudson Hospital OPCO, LLC--d/b/a CarePoint Health--Christ Hospital, IJKG, LLC, PROPCO LLC and IJKG OPCO LLC d/b/a CarePoint Health--Bayonne Medical Center, and HUMC OPCO LLC d/b/a CarePoint Health--Hoboken University Medical Center Dated: May 1, 2017 Case 2:16-cv-05922-JMV-JBC Document 31-7 Filed 05/01/17 Page 2 of 2 PageID: 1700
