Hudson Hospital Opco, Llc et al v. Horizon Healthcare Services, Inc.

BRIEF in Support

D.N.J.December 9, 2016

IN THE 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 No.: 2:16-CV-05922-JMV-JBC MOTION DATE: FEBRUARY 21, 2017 BRIEF IN SUPPORT OF MOTION TO DISMISS COMPLAINT Michael O. Kassak, Esquire Andrew I. Hamelsky, Esquire Edward M. Koch, Esquire Luke A. Repici, Esquire WHITE AND WILLIAMS LLP The Legal Center One Riverfront Plaza 1037 Raymond Blvd. Suite 230 Newark, New Jersey 07102 (201) 368-7200 Edward S. Wardell, Esquire CONNELL FOLEY LLP Liberty View Building 457 Haddonfield Rd., Suite 230 Cherry Hill, NJ 08002 Attorneys for Defendant, Horizon Healthcare Services, Inc. D/B/A Horizon Blue Cross Blue Shield Of New Jersey Dated: December 9, 2016 Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 1 of 61 PageID: 306 -i- TABLE OF CONTENTS TABLE OF AUTHORITIES ....................................................................................iv PRELIMINARY STATEMENT ...............................................................................1 FACTS .......................................................................................................................3 I. THE PARTIES ................................................................................................3 II. THE BENEFIT PLANS OFFERED BY HORIZON......................................4 III. PLAINTIFFS EXPLOIT THEIR OUT-OF-NETWORK STATUS WITH HORIZON............................................................................................6 IV. PLAINTIFFS OBTAIN AN ASSIGNMENT FROM HORIZON’S MEMBERS AS PAYMENT IN FULL FOR PLAINTIFFS’ SERVICES ......................................................................................................8 V. PLAINTIFFS NOW SUE HORIZON TO RECOVER THEIR GROSSLY INFLATED BILLED CHARGES ...............................................8 ARGUMENT .............................................................................................................9 I. PLAINTIFFS’ COMPLAINT IS NOT PLEADED PROPERLY...................9 II. PLAINTIFFS CITE TO NO OPERATIVE CONTRACTS THAT PERMIT THEM TO RECOVER ALL OF THEIR BILLED CHARGES UNDER ERISA OR STATE LAW...........................................12 A. PLAINTIFFS FAIL TO IDENTIFY ANY HORIZON PLAN LANGUAGE IN SUPPORT OF THEIR CLAIMS............................13 1. The Contractual Language Controls .........................................14 2. No Identified Plan Provides for Out-of-Network Benefits to be Paid at Plaintiffs’ Billed Charges.....................................15 3. Many Horizon Plans Prohibit Assignments..............................19 a. Anti-Assignment Provisions Are Enforceable.............20 b. Plaintiffs Fail to Adequately Plead Waiver .................22 Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 2 of 61 PageID: 307 -ii- B. PLAINTIFFS’ AOB CONTRACTS WITH HORIZON’S MEMBERS DO NOT SUPPORT THEIR CLAIMS..........................23 1. A Horizon Member’s Obligation to Plaintiffs is Fulfilled Upon Executing the AOB Contract ..........................................24 2. Plaintiffs Cannot Pursue Any Additional Amounts From Horizon’s Members...................................................................25 3. Plaintiffs Have Waived Any Right to Balance Bill ..................26 III. PLAINTIFFS’ CLAIMS ARE NOT COGNIZABLE UNDER THE REFERENCED STATE AND FEDERAL LAWS.......................................27 A. THE HEALTHCARE FACILITIES PLANNING ACT DOES NOT PERMIT PLAINTIFFS TO SET CHARGES “AS THEY SEE FIT” .............................................................................................27 B. THE LAW DOES NOT REQUIRE HORIZON TO PAY PLAINTIFFS’ EXORBITANT CHARGES FOR ALL SERVICES RENDERED THROUGH AN EMERGENCY ROOM .................................................................................................28 IV. PLAINTIFFS HAVE NO VIABLE ERISA CLAIMS BASED ON HORIZON’S ALLEGED FAILURE TO PAY CLAIMS.............................31 A. COUNT II ALLEGING AN ERISA FIDUCIARY BREACH IS REDUNDANT AND INAPPROPRIATE ..........................................32 B. COUNT III IS DEFECTIVE AS THERE IS NO PRIVATE RIGHT OF ACTION ..........................................................................34 C. COMPENSATORY, CONSEQUENTIAL, EXEMPLARY AND PUNITIVE DAMAGES ARE NOT AVAILABLE UNDER ERISA...................................................................................36 V. PLAINTIFFS’ STATE CLAIMS ARE OTHERWISE NOT COGNIZABLE UNDER THE COMMON LAW ........................................36 A. THE DUTY OF GOOD FAITH AND FAIR DEALING...................36 1. The Good Faith and Fair Dealing Claim is Indistinct from the Breach of Contract Claim ...................................................37 Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 3 of 61 PageID: 308 -iii- 2. Plaintiffs Fail to Allege the Necessary Type of Conduct .........39 B. DECLARATORY RELIEF.................................................................40 C. INJUNCTIVE RELIEF .......................................................................41 D. FIDUCIARY DUTY ...........................................................................42 1. Plaintiffs Fail to Allege a Fiduciary Relationship ....................43 2. Plaintiffs Fail to Allege That Horizon Did Not Act Loyally to Its Members .............................................................43 E. QUANTUM MERUIT ........................................................................44 F. PROMISSORY ESTOPPEL...............................................................46 G. PLAINTIFFS’ STATE CLAIMS IN COUNTS VIII, IX, AND X ARE PREEMPTED BY ERISA .....................................................47 CONCLUSION........................................................................................................50 Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 4 of 61 PageID: 309 -iv- TABLE OF AUTHORITIES CASES: PAGE Abnathya v. Hoffman-La Roche, Inc., 2 F.3d 40 (3d Cir. 1991) .....................................................................................15 Adams v. City of Indianapolis, 742 F.3d 720 (7th Cir. 2014) ..............................................................................10 Advanced Orthopedics & Sports v. Blue Cross Blue Shield of Mass., 2015 U.S. Dist. LEXIS 93855 (D.N.J. Jul. 20, 2015) ........................................21 Aetna Health Inc. v. Davila, 542 U.S. 200 (2004)......................................................................................48, 50 Aetna Health, Inc. v. Srinivasan, 2016 N.J. Super. Unpub. LEXIS 1515 (App. Div. 2016)...............................5, 30 Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504 (1981)............................................................................................48 Amoco Prod. Co. v. Village of Gambell, 480 U.S. 531 (1987)............................................................................................41 Ashcroft v. Iqbal, 556 U.S. 662 (2009)..........................................................................10, 22, 34, 47 Ashenbaugh v. Crucible Inc. 1975 Salaried Ret. Plan, 854 F.2d 1516 (3d Cir. 1988) .............................................................................35 Bauer v. Summit Bancorp, 325 F.3d 155 (3d Cir. 2003) ...............................................................................14 Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007)................................................................................10, 22, 34 Berlin Medical Assocs., P.A. v. CMI New Jersey Operating Corp., 2006 N.J. Super. Unpub. LEXIS 2966 (App. Div. 2006).............................38, 39 Booth v. Alvin Petroleum, Inc., 1986 U.S. Dist. LEXIS 27922 (E.D. Pa. 1986) ..................................................10 Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 5 of 61 PageID: 310 -v- Broad St. Surgical Ctr., LLC v. UnitedHealth Group, Inc., 2012 U.S. Dist. LEXIS 30466 (D.N.J. Mar. 6, 2012) ..................................45, 46 Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctrs. Assocs., 182 N.J. 210 (2005) ........................................................................37, 39 Cincinnati Life Ins. Co. v. Beyrer, 722 F.3d 939 (7th Cir. 2013) ..............................................................................10 Cohen v. Horizon Blue Cross Blue Shield of N.J., 2015 U.S. Dist. LEXIS 140344 (D.N.J. Oct. 15, 2015) .....................................22 Cohen v. Horizon Blue Cross Blue Shield of New Jersey, 2013 U.S. Dist. LEXIS 153438 (D.N.J. Oct. 25, 2013) .....................................35 Cohen v. Independence Blue Cross, 820 F. Supp.2d 594 (D.N.J. 2011)......................................................................33 Conkright v. Frommert, 559 U.S. 506 (2010)............................................................................................14 Drzala v. Horizon Blue Cross Blue Shield, 2016 U.S. Dist. LEXIS 66122 (D.N.J. May 18, 2016).......................................35 Dual Diagnosis Treatment Center, Inc. et al., v. Blue Cross of Ca., 2016 WL 6892140 (S.D. Cal. 2016)...................................................................23 EnviroFinance Group, LLC v. Environmental Barrier Co., LLC, 440 N.J. Super. 325 (App. Div. 2015) ................................................................15 Ferraro v. Long Branch, 314 N.J. Super. 268 (App. Div. 1998) ................................................................27 Fowler v. UPMC Shadyside, 578 F.3d 203 (3d Cir. 2009) ...............................................................................10 Frank’s GMC Truck Center v. General Motors Corp., 847 F.2d 100 (3d Cir. 1988) ...............................................................................42 Frommer v. Celanese Corp., 2008 U.S. Dist. LEXIS 32505 (D.N.J. Apr. 18, 2008).......................................49 Henglein v. Colt Indus., 260 F.3d 201 (3d Cir. 2001) ...............................................................................14 Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 6 of 61 PageID: 311 -vi- Horizon Blue Cross Blue Shield of N.J. v. East Brunswick Surgery Ctr., 623 F. Supp. 2d 568 (D.N.J. 2009)...............................................................5 In re Arthur Teacher’s Franchisee Litig., 689 F.2d 1137 (3d Cir. 1982) .............................................................................41 In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410 (3d Cir. 1997) .............................................................................16 Ingersoll-Rand Co. v. McClendon, 498 U.S. 133 (1990)............................................................................................49 Japan Gas Lighter Ass’n v. Ronson Corp., 257 F. Supp. 219 (D.N.J. 1966)..........................................................................40 Kaul v. Horizon Blue Cross Blue Shield, 2016 U.S. Dist. LEXIS 99322 (D.N.J. Jul. 29, 2016) ........................................21 Kiss Elec., LLC v. Waterworld Fiberglass Pools, N.E., Inc., 2015 U.S. Dist. LEXIS 37457 (D.N.J. Mar. 25, 2015) ......................................46 Marzan v. Bank of Am., 779 F. Supp.2d 1140 (D. Hawaii 2011)..............................................................40 Mass Mut. Life Ins. Co. v. Russell, 473 U.S. 134 (1985)......................................................................................36, 48 McKelvey v. Pierce, 173 N.J. 26 (2002) ........................................................................................43, 44 MHA, LLC v. Aetna Health, Inc., 2013 U.S. Dist. LEXIS 25743 (D.N.J. Feb. 25, 2013) .......................................49 Moser v. Milner Hotels, Inc., 6 N.J. 278 (1951) ................................................................................................46 Original Great Am. Chocolate Chip Cookie Co. v. River Valley Cookies, Ltd., 970 F.2d 273 (7th Cir. 1992) ......................................................39 Pagnani-Braga-Kimmel Urologic Assoc. v. Chappell, 407 N.J. Super. 21 (Law Div. 2008)...................................................................26 Palisades Properties, Inc. v. Brunetti, 44 N.J. 117 (1965) ..............................................................................................36 Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 7 of 61 PageID: 312 -vii- Pilot Life Insurance Co. v. Dedeaux, 481 U.S. 41 (1987)........................................................................................48, 49 Piscopo v. Pub. Serv. Elec. & Gas Co., 2015 U.S. Dist. LEXIS 82982 (D.N.J. Jun. 25, 2015), aff’d sub nom., 2016 U.S. Dist. LEXIS 9556 (3d Cir. May 25, 2016)..............................35 Pizzullo v. New Jersey Mfrs. Ins. Co., 196 N.J. 251 (2008) ............................................................................................15 Prof’l Orthopedic Assocs., PA v. CareFirst BlueCross BlueShield, 2015 U.S. Dist. LEXIS 84996 (D.N.J. Jun. 30, 2015) .......................................33 Rochow v. Life Ins. Co. of N. Am., 780 F.3d 364 (6th Cir. 2015) ..............................................................................33 Rogers v. Morrice, 2013 U.S. Dist. LEXIS 11595 (D.N.J. 2013) .....................................................10 Saltzman v. Independence Blue Cross, 634 F. Supp.2d 538 (E.D. Pa. 2009)...................................................................14 Selective Ins. Co. of Am. v. Hudson E. Pain Mgmt. Osteopathic Med. & Physical Therapy, 210 N.J. 597 (2012) ..........................................................15 Shah v. Horizon Blue Cross Blue Shield, 2016 U.S. DIST. LEXIS 113556 (D.N.J. Aug. 25, 2016)......................33, 34, 35 Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983)........................................................................................48, 49 Somerset Orthopedic Associates, P.A. v. Horizon, 345 N.J. Super. 410 (App. Div. 2001) .........................................................passim Teamsters Local 97 v. State of New Jersey, 434 N.J. Super. 393 (App. Div. 2014) ................................................................16 Tirgan v. Mega Life and Health Ins., 304 N.J. Super. 385 (Law Div. 1997)...........................................................23, 45 Toll Bros., Inc. v. Board of Chosen Freeholders of Burlington, 194 N.J. 223 (2008) ............................................................................................47 Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 8 of 61 PageID: 313 -viii- Valley Hosp. v. Kroll, 368 N.J. Super. 601 (Law. Div. 2003)................................................................26 Varity Corp. v. Howe, 516 U.S. 489 (1996)............................................................................................32 Vickers v. Nash Gen. Hosp., Inc., 78 F.3d 139 (4th Cir. 1996) ................................................................................29 Wade v. Kessler Institute, 172 N.J. 327 (2002) ................................................................................36, 37, 38 Wilson v. Amerada Hess Corp., 168 N.J. 236 (2001) ............................................................................................39 STATUTES 28 U.S.C. § 2201......................................................................................................40 29 U.S.C. § 1001. .....................................................................................................48 29 U.S.C. § 1132(a) .................................................................................................36 29 U.S.C. § 1133................................................................................................34, 35 29 U.S.C. § 1132(a)(3).............................................................................................32 29 U.S.C. § 1144(a) .................................................................................................48 29 U.S.C. § 1144 (c)(1)............................................................................................48 42 U.S.C. § 1395dd..................................................................................................29 42 U.S.C. § 1395dd(2)(B)........................................................................................27 42 U.S.C. § 1395dd(d)(2)(A)...................................................................................27 N.J.S.A. 17:48E-1 to -40............................................................................................3 N.J.S.A. 26:2H-18.51(d) ..........................................................................................28 Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 9 of 61 PageID: 314 -ix- OTHER AUTHORITIES 29 C.F.R. § 2560-503-1 ...........................................................................................35 Fed. R. Civ. P. 8(a)(2)..............................................................................................10 Fed. R. Civ. P. 10 ...............................................................................................10, 11 N.J.A.C. 11:24-5.3 ...................................................................................................29 N.J.A.C. 11:24-9.1(d)(9)....................................................................................27, 30 Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 10 of 61 PageID: 315 - 1 - PRELIMINARY STATEMENT Plaintiffs are for-profit hospitals notorious for charging grossly excessive amounts for out-of-network services. To maximize their profits on out-of-network claims, Plaintiffs have deliberately engaged in a myriad of schemes, including the mischaracterization of healthcare regulations, excessive and unjustified billing practices, impermissible shifting of costs, and material misrepresentations about covered services. Plaintiffs now seek to benefit from these schemes by demanding as “damages” from Defendant, Horizon Healthcare Services, Inc., more than $76 million in grossly excessive charges for some 7,169 out-of-network claims arising from treatment to Horizon’s members over 15 months from June 2015 and September 2016. The deficiencies with Plaintiffs’ Complaint are numerous and substantial. Procedurally, the claims are not even pleaded properly, as all 7,169 disparate claims are lumped together in violation of the federal pleading requirements. Substantively, Plaintiffs rely on two distinct agreements: (1) Horizon’s health benefit plans with its members; and (2) Plaintiffs’ assignments of benefits (“AOB”) from Horizon’s members. But, neither the benefit plans nor the AOBs support their claims for relief. To the extent a Horizon plan provides out-of- network benefits, Horizon pays for out-of-network hospital services in accordance with the “allowance” definition found in each plan. Critically, Plaintiffs fail to Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 11 of 61 PageID: 316 - 2 - identify any plan that contains a definition of allowance that requires out-of- network benefits to be paid at a provider’s billed charges. With regard to Plaintiffs’ AOB contracts, those contracts and Plaintiffs’ own website provide that Horizon’s members owe no additional financial obligations to Plaintiffs. As a result, Plaintiffs lack any basis to balance bill Horizon’s members or seek further compensation from Horizon. Moreover, many of the plans contain enforceable anti-assignment provisions. Further, nothing in the state Healthcare Facilities Planning Act or the federal Emergency Medical Treatment and Active Labor Act (“EMTALA”) imposes obligations on health insurers to pay whatever charge a hospital may decide to impose on the healthcare system for its own profit. Recognizing the utter lack of factual and legal support for their claims, Plaintiffs also attempt to cobble together ill-fitting ERISA and common law claims, all of which fail on their merits for the reasons discussed herein. In summary, neither Horizon’s plan documents, Plaintiffs’ AOB contracts, state or federal regulations, ERISA, nor the state common law allow Plaintiffs to recover the grossly excessive out-of-network charges from Horizon that they seek in this litigation. As a result, Plaintiffs’ Complaint must be dismissed in its entirety, with prejudice. Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 12 of 61 PageID: 317 - 3 - FACTS I. THE PARTIES Plaintiffs are for-profit hospitals that are recognized as some of the most expensive hospitals in New Jersey and the United States.1 This dubious distinction is well earned, as Plaintiffs have engaged in a myriad of schemes, including mischaracterizations of healthcare regulations, excessive and unjustified billing practices, impermissible shifting of costs, and material misrepresentations about covered services. Indeed, Plaintiffs admits that their charges for elective care are over 900% of their applicable Medicare rates for the same services. See Compl. at ¶ 76. Horizon is a not-for-profit health service corporation established under the New Jersey Health Service Corporation Act, N.J.S.A. 17:48E-1 to -40, and invested with a public interest to “provid[e] available and affordable health 1 Chris Glorioso and Evan Stulberger, I-Team: Hospital Charges $17,000 to Stitch a 2-Inch Cut in Emergency Room, NBC NEW YORK, Dec. 8, 2015, http://www.nbcnewyork.com/investigations/Hospital-Cost-Emergency-Finger- Injury-17000-Dollars-Bill-Bandage-United-Healthcare-Insurance-Medical- Investigation-360940291.html (last visited Nov. 18, 2016); Olga Khazan, The Hospitals that Overcharge Patients By 1,000 Percent, THE ATLANTIC, Jun. 8, 2015, http://www.theatlantic.com/health/archive/2015/06/hospitals-that-charge- 1000-more-than-they-should/395099/ (last visited Nov. 18, 2016); Katie Jennings, Medicare Charges By Two N.J. Hospital Systems Among Highest in the Nation, POLITICO, Jul. 12, 2016, http://www.politico.com/states/new-jersey/story/2016/07/ carepoint-capital-health-hospitals-charges-among-highest-in-the-nation-103674 (last visited Nov. 18, 2016); Christopher Weaver, et al., Medicare Overpays as Hospital Prices Rise, THE WALL STREET JOURNAL, Apr. 15, 2015, http://www.wsj.com/articles/medicare-overpays-as-hospital-prices-rise- 1429151451 (last visited Nov. 18, 2016). Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 13 of 61 PageID: 318 - 4 - insurance to a broad-based community.” Somerset Orthopedic Associates, P.A. v. Horizon, 345 N.J. Super. 410, 420 (App. Div. 2001). Pursuant to this statutory mandate, Horizon provides or administers health care benefits for approximately 3.8 million members pursuant to a variety of health benefit plans, including individual plans and group plans sponsored by private and public employers. See Compl. at ¶¶ 14, 15, 18. Horizon underwrites benefits for insured plans and also provides administrative services for self-insured plans in which the employer-plan sponsor pays claims from its own funds. See Affidavit of Kristen Jarosz (Ex. A). II. THE BENEFIT PLANS OFFERED BY HORIZON Horizon benefit plans provide comprehensive health care benefits for in- network medical services rendered by a network of participating medical providers who have contracted with Horizon. Somerset Orthopedic, 345 N.J. Super. at 413. Horizon also offers health benefit plans and policies of insurance that provide benefits for “out-of-network” services rendered by providers who have not entered into contracts with Horizon. See Jarosz Aff. The member ordinarily has no financial obligation to the participating provider for these “in-network” services beyond a small, fixed co-payment. Somerset Orthopedic, 345 N.J. Super. at 413- 14. Unlike in-network providers, out-of-network providers have not agreed to accept negotiated rates as payment in full for services and have no right to proceed directly against Horizon to recover reimbursement. Id. at 415. The benefit plans offered by Horizon limit the benefits available for out-of- Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 14 of 61 PageID: 319 - 5 - network services and require the member to contribute to the cost of care. Some plans, like HMO or exclusive provider organization (“EPO”) plans, do not provide benefits for services rendered by providers out-of-network except in well-defined emergent circumstances. See Jarosz Aff. at ¶ 6. Those plans that cover out-of- network services require the member to contribute to the cost of services through the payment of coinsurance, deductibles, and other portions of a non-participating provider’s charge for out-of-network services. See Compl. at ¶ 65. Under certain circumstances, the member may also be responsible for payment of the difference between the amount of the provider’s charge and the amount allowed by the plan. This difference between the provider’s charges and the insurer’s allowed amount is commonly referred to as the “balance bill.” Aetna Health, Inc. v. Srinivasan, 2016 N.J. Super. Unpub. LEXIS 1515, at **3-4 (App. Div. 2016). This system encourages Horizon’s members to use in-network services and protects the integrity of its provider network. Medical providers have less reason to participate in Horizon’s network (and to accept negotiated limits on their fees) if members could obtain out-of-network services without higher out-of-pocket expenses. Horizon Blue Cross Blue Shield of N.J. v. East Brunswick Surgery Ctr., 623 F. Supp. 2d 568, 571 (D.N.J. 2009). Horizon has three main categories of insured plans: (1) Indemnity; (2) HMO; and (3) Managed Care. See Jarosz Aff. at ¶ 3. Additionally, Horizon offers Small Group and Individual Health Insurance policies that are based upon contract Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 15 of 61 PageID: 320 - 6 - templates issued by its statutorily created governing boards. Id. at ¶ 4. While self- insured plans may adopt their own benefit designs, a number of self-insured plans adopt the Horizon-BCBSNJ Summary plan document (“SPD”). The insured plans offered by Horizon and self-insureds define the amount of the benefit available for out-of-network services as the plan “allowance.” None of the policies identified by Horizon in this motion contain a definition of “allowance” that requires payment of a provider’s billed charges for out-of- network services. The Horizon template SPD likewise does not contain a definition of allowance that requires out-of-network benefits to be paid at Plaintiffs’ billed charges. Id. at ¶ 14. Importantly, as applicable to all of Plaintiffs’ 7,169 claims, Plaintiffs have failed to identify any plan that requires payment of out-of-network benefits at their billed charges as explained more fully in Argument Section II.A.2, below. III. PLAINTIFFS EXPLOIT THEIR OUT-OF-NETWORK STATUS WITH HORIZON Plaintiffs acknowledge that “Christ Hospital, BMC and HUMC […] became out-of-network providers as to Horizon on June 1, 2015, May 1, 2015 and June 1, 2016, respectively.” See Compl. at ¶ 37. As a result, Plaintiffs render services to Horizon’s members as out-of-network providers. Id. at ¶ 63. Despite their out-of-network status, Plaintiffs continued to falsely advise patients that they would not have to pay any more for services at the CarePoint Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 16 of 61 PageID: 321 - 7 - Hospitals than they would for services at in-network hospitals: Here, you get award-winning care that’s always covered as “in-network” with any New Jersey insurance- including hospital stays.* Because you shouldn’t have to worry about insurance status when you’re experiencing an emergency. […] * New Jersey law obligates NJ insurance companies to cover emergency room services as in-network. That means you are only responsible for your in-network deductible or out-of-pocket expenses, no matter where you receive care. Learn more, including possible exceptions of certain plans covered under Federal ERISA law online at www.state.nj.us.2 Plaintiffs also improperly encouraged patients to use their emergency rooms for non-emergent care: Our new InQuicker powered online emergency room waiting service means that you get to stay in the comfort of your home. No more need to spend time in the waiting room. Click here to check-in at Christ Hospital. … CH Emergency Check-In, Wait From Home. No more need to spend time in the waiting room. Check-in at Christ Hospital and wait from home. Emergency Room, Select your check-in time.3 Contrary to Plaintiffs’ statements, New Jersey law simply does not obligate New Jersey insurance companies to cover all “emergency room services as in- network.” Moreover, Plaintiffs fail to identify any Horizon plans that require benefits be paid based on the hospital’s billed charges. Plaintiffs further fail to 2 CarePoint Health Obstetrics Emergency Department, https://www. carepointhealth.org/family-birth-centers/obstetrics-ed (last visited Nov. 18, 2016). 3 Christ Hospital, http://web.archive.org/web/20160403082217/https:/www. carepointhealth.org/christ-hospital (as of April 3, 2016). Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 17 of 61 PageID: 322 - 8 - identify any plans providing benefits at in-network rates for non-emergency care provided through the emergency room. IV. PLAINTIFFS OBTAIN AN ASSIGNMENT FROM HORIZON’S MEMBERS AS PAYMENT IN FULL FOR PLAINTIFFS’ SERVICES Plaintiffs accept an assignment of the member’s benefits and, in return, relieve the member of any responsibility for their services beyond the payment of coinsurance and deductible. See Compl. at ¶¶ 66, 67. When Plaintiffs accept this assignment, they become the only party capable of pursuing the member’s right to benefits under the plan or policy of insurance. Id. at ¶ 69. In return for the assignment, Plaintiffs accept the benefits and release the members from any further financial responsibility for the assigned claim for all services. See id. at ¶¶ 67-70; see also Argument Section II.B, below. V. PLAINTIFFS NOW SUE HORIZON TO RECOVER THEIR GROSSLY INFLATED BILLED CHARGES Plaintiffs assert that Horizon breached the terms of its plans with Horizon’s members by failing to pay Plaintiffs their full charges for out-of-network services. Plaintiffs purport to assert such causes of action by alleging they were assigned the rights to 7,169 claims of Horizon members under their respective Horizon plans. Plaintiffs allege they were underpaid more than $76 million for out-of-network claims from June 2015 through September 2016. “Many of the plans,” Plaintiffs claim, “require Horizon to reimburse the CarePoint Hospital for elective care . . . at the usual, customary and reasonable Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 18 of 61 PageID: 323 - 9 - rates for such elective care.” See Compl. at ¶ 54. Without reference to the terms of a single plan, Plaintiffs allege “[u]pon information and belief, all . . . plans require Horizon to reimburse the CarePoint Hospitals for the total billed charges, less applicable in-network patient responsibility, for emergent/urgent care that the CarePoint Hospitals provide to Horizon [members].” Id. at ¶ 53. Despite their assurances and the express terms of the AOBs, Plaintiffs claim “[t]he Horizon [members] are responsible for the balance, if any, of [their] billed charges for such elective care.” Id. Plaintiffs, however, completely ignore the express terms of the AOBs and the actual benefits provided under the various plans. Instead, regarding alleged emergency and urgent care services, Plaintiffs calculate a $72.7 million underpayment by asserting that they are entitled to reimbursement from Horizon at their full charges less patient in-network cost-share (which they calculate at 10% of charges). As to elective services, Plaintiffs calculate an approximately $3.5 million underpayment by alleging that Horizon plans generally provide benefits in an amount equivalent to 325% of each hospitals’ applicable Medicare rates. For both amounts, Plaintiffs cite to no plan terms or any applicable plan benefit language actually providing for such reimbursement calculations. ARGUMENT I. PLAINTIFFS’ COMPLAINT IS NOT PLEADED PROPERLY A complaint must contain “a short and plain statement of the claim showing Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 19 of 61 PageID: 324 - 10 - that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). To meet this requirement, the complaint must include sufficient factual allegations “to raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, a complaint must plead “sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Though a court accepts as true the facts alleged in the complaint, legal conclusions are disregarded in determining whether a plausible claim has been pled. Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009). Moreover, “[a]n inadequate complaint will not survive a motion to dismiss simply because the defendants managed to figure out the basic factual or legal grounds for the claims.” Adams v. City of Indianapolis, 742 F.3d 720, 729 (7th Cir. 2014). Federal Rule of Civil Procedure 10 imposes a related requirement: “[E]ach claim founded on a separate transaction or occurrence . . . must be stated in a separate count or defense” when doing so would promote clarity. Fed. R. Civ. P. 10(b). A court may dismiss a complaint for its failure to comply with Rule 10. Rogers v. Morrice, 2013 U.S. Dist. LEXIS 11595, at **3-4 (D.N.J. 2013) (collecting cases dismissing overly long and overly complex complaints pursuant to Rule 10(b)). Further, federal courts routinely dismiss complaints pursuant to Rule 10 when they take a “general kitchen sink approach” to pleading a case. Cincinnati Life Ins. Co. v. Beyrer, 722 F.3d 939, 946-47 (7th Cir. 2013); Booth v. Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 20 of 61 PageID: 325 - 11 - Alvin Petroleum, Inc., 1986 U.S. Dist. LEXIS 27922, at *6 (E.D. Pa. 1986) (concerning attempted joinder of 40 plaintiffs, each plaintiff was required to state a separate cause of action and to describe dates, locations, incidents, and transactions that purportedly violated federal law). Here, Plaintiffs have completely ignored federal pleading standards. First, Plaintiffs assert claims which are almost entirely based on alleged contracts between Horizon and its members, but Plaintiffs fail to cite even one specific contract provision on which their claims are based and instead rely on unnecessary “information and belief” allegations. For example, Plaintiffs allege that under the contracts “patient responsibility on average is less than ten percent.” See Compl. at ¶ 75 (emphasis added). Plaintiffs cannot show a claim (let alone 7,169 different claims) under a contract by alleging what occurs “on average.” They must allege what the contract actually provides and allege why that provision was breached as to each particular claim. More egregiously, Plaintiffs summarily lump together into each count 7,169 individual claims of individual members, each of which is purportedly based on a separate transaction arising from a separate instance of medical treatment provided by Plaintiffs. Under Rule 10, each transaction on behalf of each patient must be pleaded separately. Plaintiffs have also failed to plead sufficiently that they have suffered damage as a result of Horizon’s alleged conduct. Plaintiffs claim that Horizon has Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 21 of 61 PageID: 326 - 12 - either failed to pay, or underpaid, 7,169 claims submitted to them. Plaintiffs attach a spreadsheet purporting to show each of the unpaid or underpaid claims. See Compl. at ¶ 78; Exhibit 5 to Plaintiffs’ Compl. A review of the spreadsheet itself, however, demonstrates that more than 10% of the listed claims were paid in full by Horizon. Id. Further, Plaintiffs allege that patient responsibility for out-of-network charges averages approximately 10% of the total bill. See id. at ¶ 75. Even accepting that allegation as true, under Plaintiffs’ theory, Horizon would be obligated to pay Plaintiffs approximately 90% of the total bill for each claim. But Exhibit 5 to Plaintiffs’ Complaint shows that Horizon has paid at least 90% of the billed amount for approximately 8% of the claims listed. Therefore, according to Plaintiffs’ own pleading, for approximately 18% of the asserted claims, Horizon has paid everything Plaintiffs claimed they are owed and have no damages as a result. Put differently, Plaintiffs’ own accounting shows that nearly one of every five asserted claims is not viable. Not only does that revelation require dismissal of a vast portion of the claims, it also underscores the need for Plaintiffs to plead each claim and transaction separately. II. PLAINTIFFS CITE TO NO OPERATIVE CONTRACTS THAT PERMIT THEM TO RECOVER ALL OF THEIR BILLED CHARGES UNDER ERISA OR STATE LAW There are two categories of contracts that define the parties’ rights and responsibilities: (1) Horizon’s plans with its members; and (2) Plaintiffs’ AOB Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 22 of 61 PageID: 327 - 13 - contracts with Horizon’s members. Neither supports Plaintiffs’ contention that they are entitled to recover the full amount of their billed charges from Horizon. A. PLAINTIFFS FAIL TO IDENTIFY ANY HORIZON PLAN LANGUAGE IN SUPPORT OF THEIR CLAIMS The gravamen of Plaintiffs’ case is that Horizon has allegedly failed to pay for out-of-network services “in clear violation of the terms of the Plans” governing their multitude of claims for both emergency and elective care reimbursements. See Compl. at ¶ 9. Conspicuously, however, Plaintiffs never actually discuss those plan terms. Rather, for plans governed by ERISA, Plaintiffs generally allege that Horizon violated Section 502(a)(1)(B) of ERISA by refusing to pay their full billed charges for emergent/urgent care and the usual, customary and reasonable rates for elective care. Id. at ¶¶ 134-36. With respect to plans governed by state law, Plaintiffs merely assert that the plans “require reimbursement of medical expenses incurred by Horizon subscribers at usual, customary and reasonable rates” and do not distinguish emergent care from elective services. Id. at ¶ 157. As discussed at length above, these bare allegations lack the specificity required of a legally sufficient pleading. But it is equally clear that Plaintiffs could not plead with any specificity because their claims are unequivocally refuted by the very contractual language upon which they purport to rely. To the extent a Horizon plan provides out-of-network benefits, Horizon pays for out-of-network hospital services in accordance with the defined “allowance” found in each plan. Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 23 of 61 PageID: 328 - 14 - For out-of-network services, Horizon plans define the “allowance” as: (1) a percentage of reimbursement rates set by FAIR Health, Inc.; (2) a percentage of reimbursement rates set by the Centers for Medicare & Medicaid Services (“CMS”); or (3) the reasonable, customary and appropriate rate as determined by Horizon in its discretion. 1. The Contractual Language Controls As to Plaintiffs’ medical reimbursement claims under plans subject to ERISA, the court must focus on the terms of the plan itself and is not free to deviate from those terms. “As the Supreme Court and the Third Circuit have repeatedly recognized […] court[s] may not ‘rewrite the terms of an ERISA plan.’” Saltzman v. Independence Blue Cross, 634 F. Supp.2d 538, 561 (E.D. Pa. 2009) (quoting Henglein v. Colt Indus., 260 F.3d 201, 215 (3d Cir. 2001)). Rather, a court is “required to enforce the Plan as written.” Bauer v. Summit Bancorp, 325 F.3d 155, 160 (3d Cir. 2003). Moreover, where the terms of an ERISA plan provide discretionary authority to the administrator to determine entitlement to benefits or to construe the terms of the policy or plan, the administrator’s decision will be granted deference and will only be overturned where the decision is arbitrary and capricious. Conkright v. Frommert, 559 U.S. 506, 512 (2010). Accordingly, a court’s review of an administrator’s decision under an ERISA plan is under the discretionary and extremely deferential arbitrary and capricious standard of review. Under this standard, a court may overturn an administrator’s Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 24 of 61 PageID: 329 - 15 - decision only if it is “without reason, unsupported by substantial evidence or erroneous as a matter of law.” Abnathya v. Hoffman-La Roche, Inc., 2 F.3d 40, 45 (3d Cir. 1991). Similarly, with regard to Plaintiffs’ medical reimbursement claims under plans subject to state law, the clear and unambiguous language of the plan also controls. In New Jersey, “[t]o prevail on a breach of contract claim, a party must prove a valid contract between the parties, the opposing party’s failure to perform a defined obligation under the contract, and the breach caused the claimant to sustain damages.” EnviroFinance Group, LLC v. Environmental Barrier Co., LLC, 440 N.J. Super. 325, 345 (App. Div. 2015). The interpretation of a contract is a question of law. Selective Ins. Co. of Am. v. Hudson E. Pain Mgmt. Osteopathic Med. & Physical Therapy, 210 N.J. 597, 605 (2012). If the terms of a contract are clear and unambiguous, there is no room for construction and the court must enforce those terms as written, giving them “their plain, ordinary meaning.” Pizzullo v. New Jersey Mfrs. Ins. Co., 196 N.J. 251, 270 (2008). 2. No Identified Plan Provides for Out-of-Network Benefits to be Paid at Plaintiffs’ Billed Charges Because Plaintiffs noticeably fail to include in their Complaint the very contractual language that they claim provides their entitlement to relief, it is Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 25 of 61 PageID: 330 - 16 - necessary to recite it here.4 Horizon’s Indemnity Plans provide that Horizon will pay “100% of its allowance for inpatient or outpatient services,” less any inpatient deductible, for services rendered by out-of-network hospitals. See Jarosz Aff. at ¶ 5. The plans define the “allowance” as “a dollar amount determined by Horizon BCBSNJ as reasonable, customary and appropriate for covered services . . . .” Id. Those plans, like all Horizon plans, do not provide benefits for amounts which exceed the allowance. Id. Horizon’s HMO Plans do not provide benefits for services rendered by out- of-network providers except in defined emergent circumstances. Id. In those circumstances, the plan “allowance” is “a dollar amount determined by Horizon HMO as reasonable, customary and appropriate for covered services and supplies, unless otherwise required by law.” Id. Horizon Managed Care Plans that provide benefits for services by out-of- network providers in accordance with New Jersey Department of Banking and Insurance (“DOBI”) approved riders to define allowed benefits. Each of these 4 When evaluating a motion to dismiss, a court should consider, among other things, “documents that form the basis of a claim.” Teamsters Local 97 v. State of New Jersey, 434 N.J. Super. 393, 412 (App. Div. 2014). Because Plaintiffs’ claims are based on the applicable plan language, consideration of that language at this stage is both permissible and necessary despite Plaintiffs’ inexplicable failure to cite the plans in their Complaint. See In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) (a plaintiff “cannot prevent a court from looking at the texts of the documents on which its claim is based by failing to attach or explicitly cite them.”). Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 26 of 61 PageID: 331 - 17 - plans, with some exceptions, defines “allowance” as an amount determined by Horizon as the least of the following: (1) the actual charge made by the provider for the service or supply; (2) for in-network providers, the amount that the provider has agreed to accept for the service or supply; or (3) for out-of-network providers, a percentage of some industry-standard of reimbursement (i.e., rates of CMS or FAIR Health, Inc.). These Managed Care Plans provide an exception for services rendered during a medical emergency, which grants Horizon discretion to increase the amount of the allowance as needed to ensure the covered person has no greater liability than he/she would have if services had been rendered by an in-network provider.5 See Jarosz Aff. at ¶ 8. Horizon Small Group and Individual Health Benefit Plans use plan forms prescribed by the New Jersey Small Employer Health Coverage Program Board and the New Jersey Individual Coverage Program Board. Id. at ¶¶ 10-11. SMG plans define an “allowed charge” as the lesser of: (1) the allowance for the service as determined by Horizon based on a standard approved by the New Jersey Small Employer Coverage Program Board; or (2) an applicable negotiated fee schedule. 5 As stated above, even with Managed Care Plans, any charge that exceeds the defined allowance is excluded. See Jarosz Aff. at ¶ 9. Accordingly, this exception does not allow Plaintiffs to obtain reimbursement for the entirety of their billed charges, especially where those charges are admittedly inflated to account for nonpayment from non-Horizon members. See Compl. at ¶¶ 30, 73. Nor does this exception apply to non-emergency care that Plaintiffs funneled through their emergency rooms. Such care would fit under the general definition of “allowance” noted above. Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 27 of 61 PageID: 332 - 18 - Id. Individual Health Benefit Plans provide benefits for emergency services by out-of-network providers when the symptoms are severe and occur suddenly, if the services are not those that are normally treated on a non-emergency basis, and if Horizon is notified within 48 hours of the emergency service and provided written proof within 30 days. Id. at ¶ 13. Like SMG plans, IHC Plans define “allowed charge” as the lesser of: (1) the allowance for the service as determined by Horizon based on a standard approved by the New Jersey Individual Coverage Program Board; or (2) an applicable negotiated fee schedule. Id. at ¶ 11. Finally, some self-insured plans adopt the Horizon-BCBNJ SPD. Id. at ¶ 14. The SPD provides for out-of-network coverage and includes a definition of “allowance” which mirrors the definition in the Horizon Managed Care Plans (i.e., the least of: (1) the actual charge made by the provider for the service or supply; (2) for in-network providers, the amount that the provider has agreed to accept for the service or supply; or (3) for out-of-network providers, a percentage of some industry-standard of reimbursement (i.e., rates of CMS or FAIR Health, Inc.)). Although not required, several ASO plans contain the exception which grants Horizon discretion to increase the allowed amount as needed to ensure the covered person has no greater liability than he/she would have if services had been rendered by an in-network provider. Plaintiffs seek to supplant all of this plan language with their own terms by Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 28 of 61 PageID: 333 - 19 - alleging that their egregious charges represent Plaintiffs’ “usual, customary and reasonable rates for the particular medical services provided.” See Compl. at ¶¶ 72, 136 (emphasis added). But the plans provide for an allowance based on the percentage of some industry standard of reimbursement, like Medicare or Fair Health or a dollar amount determined by Horizon as reasonable, customary and appropriate for the services. See Jarosz Aff. at ¶¶ 5-7, 10-11, 13, 15. Plaintiffs do not, moreover, contend that Horizon abused its discretion or violated the terms of the plan in determining the reasonable, customary, and appropriate amount of the allowance for out-of-network services. Therefore, whether for emergency or elective out-of-network care, and whether under a Horizon plan governed by ERISA or state law, Plaintiffs have failed to cite to any Horizon plan language that could even arguably entitle them to reimbursement of their billed charges. 3. Many Horizon Plans Prohibit Assignments In addition to having no entitlement to their billed charges under any of the identified plan terms, Plaintiffs’ claims likewise fail on the threshold issue of the viability of their assignments. As acknowledged by Plaintiffs, their claims are entirely predicated on purported assignments of benefits from Horizon’s members. Plaintiffs allege both that “the Plans did not prohibit the Horizon Members from assigning their rights to benefits under the Plans,” and that, to the extent there are anti-assignment provisions in the Plans, they have been waived or are Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 29 of 61 PageID: 334 - 20 - unenforceable. See Compl. at ¶¶ 131-34. Predictably, Plaintiffs completely ignore that several applicable Horizon plans contain anti-assignment provisions which are enforceable and favored under New Jersey law. a. Anti-Assignment Provisions Are Enforceable New Jersey law enforces anti-assignment provisions. The Appellate Division has recognized that “anti-assignment clauses are enforceable against assignments to out-of-network medical providers” and that “such clauses ‘are valuable tools in persuading health [care] providers to keep their costs down’ and as such override the general policy favoring the free alienability of choses in action.” Somerset Orthopedic, 345 N.J. Super. at 415-18 (noting anti-assignment provisions with “specific and express language” have generally been upheld in group health care contracts, “almost uniformly in the courts of other states.”). The court explicitly recognized that public policy favors enforceability of anti- assignment provisions in the exact context at issue in this case: [T]he anti-assignment clause has been deemed to advance the overarching public interest in limiting health care costs for, if the patient could assign his or her rights to payment to outside medical providers, it would undercut the prearranged costs with in-network providers that are relied upon by non-profit health services corporations in deciding the premium amount. Accordingly, these cases have held that the purported assignment of benefits to a non-participating medical provider, in the face of an anti-assignment clause in a group health care policy, is void and unenforceable against the insurer as contrary to public policy. Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 30 of 61 PageID: 335 - 21 - Id. at 417-18 (internal citations omitted) (emphasis added); Kaul v. Horizon Blue Cross Blue Shield, 2016 U.S. Dist. LEXIS 99322, (D.N.J. Jul. 29, 2016) (noting the complaint failed to set forth facts showing anti-assignment provisions were unenforceable and thus dismissed the complaint without prejudice); Advanced Orthopedics & Sports v. Blue Cross Blue Shield of Mass., 2015 U.S. Dist. LEXIS 93855 (D.N.J. Jul. 20, 2015). In Somerset Orthopedic, the Appellate Division held the following clause in a Horizon policy was valid: “No assignment or transfer by You of any of Your interest under this Policy is valid unless We consent thereto. However, We may, in Our discretion, pay a Provider directly for services rendered to You.” Somerset Orthopedic, 345 N.J. Super. at 414, n. 3. Many Horizon plans include anti- assignment provisions which are substantially similar to, and arguably more explicit than, those held valid and enforceable under New Jersey law: PLAN ANTI-ASSIGNMENT PROVISION Horizon Indemnity plans Covered Persons may not assign any rights to coverage or benefits under this Policy without Horizon BCBSNJ's advance written consent. However, Horizon BCBSNJ may Determine to pay Covered Charges directly to Providers for their Covered Services and Supplies; and any such direct payment shall be treated as though paid directly to Covered Persons to satisfy Horizon BCBSNJ's obligations under this Policy. Horizon HMO plans A Member may not assign his right to take legal action under this Contract to any Provider. The Covered Services and Supplies provided in this Contract may not be assigned by a Member without Horizon HMO's permission. Horizon HMO may Determine to pay claims directly to a Provider if it chooses to do so. Horizon SMG plan, Form SEH Policy B-E 2015/2016 When an Employee files proof of loss, he or she may direct [Carrier], in writing, to pay health care benefits to the recognized provider of health care who provided the covered service for which benefits became payable. […] The Employee may not assign his or her right to take legal action under the Policy to such provider. Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 31 of 61 PageID: 336 - 22 - Horizon SMG plan, SEH HMO Plan Contract 2015/2016 No assignment or transfer by the Contractholder of any of the Contractholder's interest under this Contract or by a [Member] of any of his or her interest under this Contract is valid unless We consent thereto. Horizon IHC plans When You file proof of loss, he or she may direct Us, in writing, to pay health care benefits to the recognized provider of health care who provided the covered service for which benefits became payable. […] You may not assign his or her right to take legal action under this Policy to such provider. […] No assignment or transfer by the Contractholder of any of the Contractholder's interest under this Contract or by a [Member] of any of his or her interest under this Contract is valid unless We consent thereto. See Jarosz Aff. at ¶ 16. Following Somerset Orthopedic, this Court should likewise hold that the anti-assignment clauses in Horizon’s subscriber contracts are valid and enforceable to prevent assignment by subscribers of policy benefit payments to non- participating medical providers without Horizon's consent. Such member assignments are “void as contrary to public policy.” Thus, all of Plaintiffs’ claims which are based on Horizon plans that include anti-assignment provisions should be dismissed. b. Plaintiffs Fail to Adequately Plead Waiver While Horizon disputes that anti-assignment provisions are waivable under the circumstances, Plaintiffs do not allege any facts to suggest that such a waiver occurred. When a complaint “merely alleges in summary fashion” that plaintiffs/assignees submitted a claim and filed an appeal with the insurer regarding the assigned claim, it has been held that “this type of conclusory pleading is prohibited under Iqbal and Twombly,” and the complaint fails to assert waiver. Cohen v. Horizon Blue Cross Blue Shield of N.J., 2015 U.S. Dist. LEXIS Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 32 of 61 PageID: 337 - 23 - 140344, at **11-12 (D.N.J. Oct. 15, 2015). “Waiver is a fact specific allegation, and each Defendant has a right to know the factual allegations against it just as if this case had been filed individually against each Defendant.” Dual Diagnosis Treatment Center, Inc. et al., v. Blue Cross of Ca., 2016 WL 6892140, at *19 (S.D. Cal. 2016). Plaintiffs summarily allege that Horizon has somehow waived the anti-assignment provisions based upon purported “course of dealing with and statements to the Plaintiffs as out-of-network providers, discussed more fully above.” See Compl. at ¶ 132. Such vague, unsupported, conclusory “course of dealing” allegations are inadequate to sustain a waiver claim as a matter of law. As a result, the anti-assignment provisions must be enforced.6 B. PLAINTIFFS’ AOB CONTRACTS WITH HORIZON’S MEMBERS DO NOT SUPPORT THEIR CLAIMS Plaintiffs allege that Horizon is legally obligated to pay for emergency/ urgent care services “in an amount sufficient to ensure that the Horizon Subscriber 6 Assuming, arguendo, that the assignments are somehow valid, Plaintiffs’ rights would be no greater than Horizon’s members, as an assignee’s rights can be no greater than the assignor’s. See Tirgan v. Mega Life and Health Ins., 304 N.J. Super. 385 (Law Div. 1997). It is unclear from the Complaint whether Plaintiffs assert Horizon owed Plaintiffs duties of care and loyalty beyond those duties owed to Horizon insureds. Plaintiffs allege they have been assigned the rights of ERISA and non-ERISA Horizon members and beneficiaries (see Compl. at ¶¶ 66-70), but also appear to assert that Horizon owed duties of care and loyalty to Plaintiffs themselves. See, e.g., id. at ¶ 143 (“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.”). Regardless, Horizon owes no broader independent duties to Plaintiffs. Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 33 of 61 PageID: 338 - 24 - has no obligation to the CarePoint Hospitals.” See Compl. at ¶ 83. But Plaintiffs’ AOB contracts and their own public representations to patients establish that Horizon’s members have no further obligations to Plaintiffs. Thus, Plaintiffs may not balance bill Horizon’s members and Horizon owes no further reimbursement to Plaintiffs. 1. A Horizon Member’s Obligation to Plaintiffs is Fulfilled Upon Executing the AOB Contract Plaintiffs allege that every Horizon member is required to execute an AOB contract assigning all rights and benefits under their Horizon plan to Plaintiffs. See Compl. at ¶¶ 66-70. Under the unambiguous language of the AOB contracts, the Horizon member’s assignment applies to all charges for services rendered by Plaintiffs. See id. at ¶ 67 (“I hereby assign to the Hospital, all of my rights [and] benefits [under the plan] . . . for the charges for services rendered to me by the hospital.”). Stated differently, the AOB contract covers all charges for services the Horizon member received at Plaintiffs’ facilities. Under the AOB contract, a Horizon member has no further financial obligations to Plaintiffs for charges for services covered by the assignment. A Horizon member may be potentially obligated only for charges for services not covered by the assignment of benefits. See id. at ¶ 70 (“I understand that I am financially and legally responsible for charges not covered in full by the assignment of benefits.”) (emphasis added). Here, Plaintiffs only seek to recover Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 34 of 61 PageID: 339 - 25 - against Horizon for charges covered by the assignments of benefits. See, e.g., id. at ¶ 129 (“CarePoint Hospitals have standing to pursue claims under ERISA as the assignees . . . of Horizon Subscribers”); ¶ 141 (“CarePoint Hospitals, as the assignees of ERISA members,”) ¶ 149 (“As assignees … of Horizon Subscribers”), ¶ 158 (“By virtue of the AOB Contracts executed by Horizon Subscribers”), and ¶ 165 (“By virtue of these assignments”). By executing the AOB contract and transferring to Plaintiffs all rights and benefits for the charges for services rendered by Plaintiffs, Horizon’s members have extinguished their obligations to Plaintiffs for those charges. 2. Plaintiffs Cannot Pursue Any Additional Amounts From Horizon’s Members Consistent with their AOB contracts, Plaintiffs publicly advised patients that their obligations to Plaintiffs were limited. For example, on their website (see Facts Section III, above), Plaintiffs represented to potential patients that “you are only responsible for your in-network deductible or out-of-pocket expenses.” Having made such representations to induce patients to obtain treatment at their hospitals, Plaintiffs cannot now seek to obtain amounts over and above the Horizon member’s in-network deductible or out-of-pocket expenses. Thus, under Plaintiffs’ own AOB contracts and website, Horizon’s members owe no additional financial obligations to Plaintiffs and Plaintiffs lack any basis to balance bill Horizon’s members or seek further compensation from Horizon. See Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 35 of 61 PageID: 340 - 26 - Valley Hosp. v. Kroll, 368 N.J. Super, 601, 626 (Law. Div. 2003) (“[the member’s] financial obligation to [the hospital] is fully satisfied” an insurer’s payment of fair value and the provider could not pursue the patient for any further balance of the billed charges the patient never agreed to pay.); Pagnani-Braga- Kimmel Urologic Assoc. v. Chappell, 407 N.J. Super. 21, 26-27 (Law. Div. 2008) (holding that a member “is not legally obligated to pay,” and a non-participating provider may not separately bill, a patient for services rendered “without explicit disclosure of both his particular status at the hospital and that acceptance of his services would result in a separate bill that would incur additional charges.”). 3. Plaintiffs Have Waived Any Right to Balance Bill Plaintiffs have falsely represented to Horizon members that, if they seek medical treatment though Plaintiffs’ emergency rooms, they will be charged no more than if they received the same treatment at an in-network hospital. Having made this promise, irrespective of how much reimbursement Plaintiffs actually receive from Horizon (which is governed by the terms of each individual member’s plan), Plaintiffs cannot now seek to recover the “balance” of the charged services from the patient. By promising patients up-front that they will not be charged more than in-network rates for services rendered, Plaintiffs have waived the right to balance bill the patients for the difference. Because Plaintiffs have agreed not to balance bill Horizon members regardless of the reimbursement they receive from Horizon, there is no actual risk of patients being balanced billed and Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 36 of 61 PageID: 341 - 27 - the requirements of N.J.A.C. 11:24-9.1(d)(9) are met so long as Horizon pays the benefits to which patients are entitled under their individual plans. See Section III. B, below. III. PLAINTIFFS’ CLAIMS ARE NOT COGNIZABLE UNDER THE REFERENCED STATE AND FEDERAL LAWS In an effort to buttress their dubious claims against Horizon, Plaintiffs mischaracterize numerous state and federal regulations. Plaintiffs assert that, under state and federal law, they are somehow permitted to bill Horizon’s members for any amount they see fit for medical services, and that neither Horizon nor this Court has any authority to question the propriety of those unilaterally set charges, no matter how outrageous. See, e.g., Compl. at ¶ 38. This premise is false. None of the state or federal laws Plaintiffs cite justifies their unscrupulous business practices or supports their claims against Horizon.7 A. THE HEALTHCARE FACILITIES PLANNING ACT DOES NOT PERMIT PLAINTIFFS TO SET CHARGES “AS THEY SEE FIT” Plaintiffs erroneously cite the “declarations” section of the New Jersey Healthcare Facilities Planning Act, N.J.S.A. 26:2H-18.51, for the remarkable proposition that “under New Jersey law, hospitals are permitted to set charges for various services and products as they see fit.” See Compl. at ¶ 38. That Act, 7 Moreover, there is no private right of action under these statutes and regulations in this context. 42 U.S.C. § 1395dd(d)(2)(A); 42 U.S.C. § 1395dd(2)(B); Ferraro v. Long Branch, 314 N.J. Super. 268, 287 (App. Div. 1998). Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 37 of 61 PageID: 342 - 28 - however, merely establishes a state subsidy for hospitals that provide a disproportionate amount of charity care or care to Medicare patients and thereby “experience a significant shortfall of revenues due to the difference between the hospital’s actual rates for health care services and the rates paid by the Medicare programs for those services.” N.J.S.A. 26:2H-18.51(d). Absolutely nothing about this statute expressly authorizes New Jersey hospitals to charge whatever they want for medical services, nor does the statute prohibit insurance companies from simply applying the terms of the Plans to determine provider reimbursements for services rendered. B. THE LAW DOES NOT REQUIRE HORIZON TO PAY PLAINTIFFS’ EXORBITANT CHARGES FOR ALL SERVICES RENDERED THROUGH AN EMERGENCY ROOM Plaintiffs also falsely assert that federal and state laws requiring hospitals to provide emergency medical care to patients irrespective of their insurance status further require insurance companies, like Horizon, to pay whatever amounts the hospital charges for services no matter how exorbitant and regardless of whether the services provided were for an actual emergency. The federal and state emergency care laws do not support Plaintiffs’ scheme to turn emergency rooms into cash cows. Moreover, they do not apply to any and all treatment rendered in the emergency room, but rather only to specific emergency medical services. Plaintiffs’ advertising and “InQuicker” system demonstrate that they Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 38 of 61 PageID: 343 - 29 - routinely provided non-emergency care services to Horizon members in their emergency rooms. Even if state law required Horizon to reimburse Plaintiffs for their full billed charges (which it does not), this would only be applicable to true emergency medical services rendered to patients. Plaintiffs cannot invoke these regulations to demand “full payment” for non-emergency services provided in the emergency room. EMTALA, codified at 42 U.S.C. § 1395dd, was enacted by Congress to prevent “patient dumping,” the practice of refusing to provide emergency medical treatment to patients unable to pay, or transferring them before emergency conditions were stabilized. Vickers v. Nash Gen. Hosp., Inc., 78 F.3d 139, 142 (4th Cir. 1996). EMTALA applies to Medicare-participating hospitals that offer emergency services. EMTALA imposes two obligations on hospitals: (1) when an individual seeks treatment at a hospital emergency room, “the hospital must provide for an appropriate screening examination . . . to determine whether or not an emergency medical condition” exists; and (2) if the screening examination reveals the presence of an emergency medical condition, the hospital must “stabilize the medical condition” before transferring or discharging the patient. Id. Notably, this provision does not impose any obligations whatsoever on insurers like Horizon. In New Jersey, N.J.A.C. 11:24-5.3 provides that “carriers shall reimburse hospitals and physicians for all medically necessary emergency and urgent health Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 39 of 61 PageID: 344 - 30 - 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.” (emphasis added). With respect to the amount of the reimbursement required, N.J.A.C. 11:24-9.1(d)(9) states only that patients have the right “[t]o 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.” Nothing in these laws requires hospitals to be reimbursed at any particular rate just because a Horizon member was treated in one of Plaintiffs’ emergency rooms. Rather, EMTALA requires only that a hospital provide a patient with emergency medical treatment regardless of his/her ability to pay and the state regulations providing for emergency and urgent care services simply require that out-of-network hospitals be reimbursed by the patient’s insurer for emergency medical treatment in an amount sufficient to prevent the patient from being balance billed. Plaintiffs overstate these regulations, citing to an unpublished decision of the New Jersey Appellate Division, Aetna Health, Inc. v. Srinivasan, 2016 N.J. Super. Unpub. LEXIS 1515 (App. Div. June 29, 2016), for the proposition that, for all services performed in the emergency room, Horizon is required to reimburse Plaintiffs at a rate such that the Horizon subscriber has no greater obligation than if CarePoint was in-network. See Compl. at ¶ 83. Nothing in this unpublished Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 40 of 61 PageID: 345 - 31 - decision, however, suggests that a provider may recover its billed charges. To the contrary, the Court upheld a jury determination that the physician was only entitled to reimbursement for $2 million out of $8 million in billed charges. Id. at *15. In so holding, the Appellate Division not only permitted the jury to determine what amount “would fairly and reasonably compensate [the provider]” and prevent the out-of-network physician’s patients from being balanced billed but further noted that the reasonable value of emergency medical services “can be discerned from the usual customary and reasonable rate and Medicare rates.” Id. at *3 (emphasis added). According to Plaintiffs themselves, Horizon reimbursed them for emergency services with explicit reference to applicable Medicare rates. See Compl. at ¶ 85. IV. PLAINTIFFS HAVE NO VIABLE ERISA CLAIMS BASED ON HORIZON’S ALLEGED FAILURE TO PAY CLAIMS Plaintiffs’ reliance on any duty or remedy available under ERISA is misplaced for at least four reasons. First, Plaintiffs have failed to identify any specific plan term that was breached.8 Second, Plaintiffs’ claim for an ERISA breach of fiduciary duty cannot lie given Plaintiffs’ claim for benefits. Third, compensatory, consequential, and punitive damages are not available under ERISA. Fourth, there is no private right of action under ERISA for an alleged denial of full and fair review of claims. 8 See Section II, above. Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 41 of 61 PageID: 346 - 32 - A. COUNT II ALLEGING AN ERISA FIDUCIARY BREACH IS REDUNDANT AND INAPPROPRIATE Plaintiffs allege that every Horizon member is required to execute an AOB contract assigning all rights and benefits under their Horizon plan to Plaintiffs. See Compl. at ¶¶ 66-70. Because Plaintiffs’ claims are cognizable and adequately provided for under § 502(a)(1)(B) of ERISA, 29 U.S.C. § 1132(a)(1)(B), the Supreme Court has suggested that any further equitable relief under § 502(a)(3), 29 U.S.C. § 1132(a)(3), as claimed in Plaintiffs’ Count II, would be inappropriate: …where Congress elsewhere provided adequate relief for a beneficiary’s injury, there will likely be no need for further equitable relief, in which case such relief normally would not be “appropriate.” Varity Corp. v. Howe, 516 U.S. 489, 515 (1996) (emphasis added). Section 502(a)(3) of ERISA is a general “catchall” provision that acts as a safety net offering appropriate equitable relief where § 502 does not elsewhere adequately provide a remedy. Id. at 490. There is a split among the circuits and courts within this district as to the effect of Varity on a plaintiff’s ability to pursue claims for benefits under both §§ 502(a)(1)(B) and 502(a)(3) simultaneously, with the Third Circuit not yet expressly addressing the issue. Claims for breach of fiduciary duty under § 502(a)(3), which simply re-characterize or re-package a ERISA benefits claim under § 502(a)(1)(B) as one seeking equitable relief for alleged fiduciary breach in connection with the subject claims determinations, as in this case, have been dismissed as improperly or impermissibly duplicative, Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 42 of 61 PageID: 347 - 33 - particularly where, as here, benefits and reimbursements for hospital services are what are decidedly sought in each count. See Prof’l Orthopedic Assocs., PA v. CareFirst BlueCross BlueShield, 2015 U.S. Dist. LEXIS 84996, at *15 (D.N.J. Jun. 30, 2015); Cohen v. Independence Blue Cross, 820 F. Supp.2d 594, 608 (D.N.J. 2011). Significantly, in those cases, the plaintiff need not have already received relief under another section of ERISA to be precluded from seeking relief under § 502(a)(3). Instead, where relief was available elsewhere under ERISA, duplicative relief claimed under § 502(a)(3) was held not “appropriate” and thus barred. Cf. Shah v. Horizon Blue Cross Blue Shield, 2016 U.S. DIST. LEXIS 113556, at *28 (D.N.J. Aug. 25, 2016) (allowing alternative causes of action under §§ 502(a)(1)(B) and 502(a)(3) at pleading stage while recognizing that, ultimately, duplicate relief theories will not be permitted). Plaintiffs’ claim for equitable relief here does not genuinely allege an injury separate and distinct from the allegedly insufficient medical reimbursements Plaintiffs claim gives rise to their right to recover benefits under § 502(a)(1)(B). Therefore, ERISA’s “catchall” provision is not available as a source of relief and Plaintiffs’ claims thereunder should be dismissed at this time. Rochow v. Life Ins. Co. of N. Am., 780 F.3d 364, 372 (6th Cir. 2015) (holding that relief under § 502(a)(3) is not available “irrespective of the degree of success obtained on a claim for recovery of benefits under § 502(a)(1)(B)” unless the claimant has alleged “an Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 43 of 61 PageID: 348 - 34 - injury separate and distinct from the denial of benefits or where the remedy afforded by Congress under § 502(a)(1)(B) is otherwise shown to be inadequate”). Because Plaintiffs’ claims for benefits, if any, are cognizable and adequately provided for under § 502(a)(1)(B) of ERISA, any further equitable relief under § 502 (a)(3) is inappropriate and Count II should be dismissed with prejudice. B. COUNT III IS DEFECTIVE AS THERE IS NO PRIVATE RIGHT OF ACTION Plaintiffs’ assertion in Count III that Horizon failed to provide them a full and fair review under § 503 of ERISA, 29 U.S.C. § 1133, and related Department of Labor (“DOL”) claims procedure regulations (Compl. at ¶ 150), is defective and must be dismissed as a matter of law. It is well-settled that § 503 does not provide a private right of action or an independent source of recovery under ERISA. This count alleges, (again, absent any of the supporting claim detail required by Iqbal and Twombly), that members’ claims and appeals were denied full and fair review by Horizon pursuant to § 503 and DOL regulations thereby harming Plaintiffs. These statutory provisions and regulations, however, simply do not provide for private rights of action as alleged. Section 503 and related DOL regulations set forth the basic requirements governing ERISA plans’ claims procedures. However, a “plan’s failure to comply with ERISA’s procedural requirements does not entitle a claimant to a substantive remedy.” Shah, 2016 U.S. Dist. LEXIS 113556, at *32 (quoting Ashenbaugh v. Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 44 of 61 PageID: 349 - 35 - Crucible Inc. 1975 Salaried Ret. Plan, 854 F.2d 1516, 1532 (3d Cir. 1988)) (citation omitted). This Court in Shah, in dismissing, with prejudice, a count for an alleged failure to comply with ERISA claims procedures, held that “[r]ecent decisions in this District, faced with similar fact patterns and arguments, have also reached the conclusion that neither Section 503 of ERISA, 29 U.S.C. § 1133, nor its accompanying regulation, 29 C.F.R. § 2560-503-1, give rise to a private cause of action.” Id.; see also Cohen v. Horizon Blue Cross Blue Shield of New Jersey, 2013 U.S. Dist. LEXIS 153438, at **24-25 (D.N.J. Oct. 25, 2013) (dismissing a § 503 claim with prejudice for an alleged failure to provide a full and fair review, holding that “while complying with § 503 may be ‘probative of whether the decision to deny benefits was arbitrary and capricious,’ § 503 itself does not provide an independent cause of action.”); Drzala v. Horizon Blue Cross Blue Shield, 2016 U.S. Dist. LEXIS 66122, at **20-22 (D.N.J. May 18, 2016) (dismissing the plaintiff’s 29 C.F.R. § 2560-503-1 claim, with prejudice, finding that the regulation did not provide a private cause of action, and noting that “[T]here is no distinction between ERISA procedures claims brought directly under ERISA § 1133 [§ 503] and those brought pursuant to the applicable regulation.”); Piscopo v. Pub. Serv. Elec. & Gas Co., 2015 U.S. Dist. LEXIS 82982, at *12 (D.N.J. Jun. 25, 2015) (granting a motion to dismiss because “section 503 of ERISA does not confer a private right of action”), aff’d sub nom., 2016 U.S. Dist. LEXIS 9556 (3d Cir. May 25, 2016). Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 45 of 61 PageID: 350 - 36 - Thus, Count III of Plaintiffs’ Complaint should be dismissed with prejudice. C. COMPENSATORY, CONSEQUENTIAL, EXEMPLARY AND PUNITIVE DAMAGES ARE NOT AVAILABLE UNDER ERISA Plaintiffs’ ad damnum paragraphs seeking, inter alia, compensatory, consequential, and exemplary damages are invalid under § 502(a) of ERISA, 29 U.S.C. § 1132(a). Remedies under ERISA are specifically limited by the statute itself. Congress did not intend the courts to create remedies not expressly provided for under ERISA’s “comprehensive legislative scheme” and, consequently, efforts to recover compensatory, consequential or exemplary damages are precluded and not recoverable. Mass Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 144-48 (1985). V. PLAINTIFFS’ STATE CLAIMS ARE OTHERWISE NOT COGNIZABLE UNDER THE COMMON LAW A. THE DUTY OF GOOD FAITH AND FAIR DEALING Under New Jersey law, every contract contains an implied covenant of good faith and fair dealing. Wade v. Kessler Institute, 172 N.J. 327, 340 (2002). That implied covenant holds that neither party to the contract 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. Palisades Properties, Inc. v. Brunetti, 44 N.J. 117, 130 (1965). Moreover, the party claiming such a breach must provide evidence sufficient to support a conclusion that the party alleged to have acted in bad faith has engaged in some conduct that denied the benefit of the bargain originally Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 46 of 61 PageID: 351 - 37 - intended by the parties. Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctrs. Assocs., 182 N.J. 210, 225 (2005). Such evidence is vital to this claim. Id. As a corollary to their non-ERISA breach of contract claims, Plaintiffs assert a non-ERISA claim for breach of the duty of good faith and fair dealing. See Compl. at ¶¶ 161-69 (Count V). Even assuming, arguendo, that Horizon members validly assigned their right to such a claim to Plaintiffs, which they did not, Plaintiffs fail to state a claim upon which relief can be granted. Generally, Plaintiffs contend that Horizon breached this implied duty by “using unilaterally and arbitrarily selected percentages of Medicare or in-network rates in determining amounts it will pay to out-of-network providers” and “failing to reimburse [Plaintiffs] for the health care services provided to Horizon Subscribers.” See id. at ¶¶ 168(a), (c). As discussed further below, Plaintiffs’ claim for breach of the duty of good faith and fair dealing is impermissibly duplicative of Plaintiffs’ breach of contact claim. Moreover, Plaintiffs have not alleged the requisite bad- faith conduct necessary to sustain a claim for breach of the implied covenant. 1. The Good Faith and Fair Dealing Claim is Indistinct from the Breach of Contract Claim Generally, 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. Wade, 172 N.J. at 344-45. Thus, “breach of the implied covenant of good faith and fair dealing differs from a literal violation of the contract” and where there is a literal Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 47 of 61 PageID: 352 - 38 - violation, there generally cannot be a breach of the implied covenant. Id. at 340. In other words, a defendant cannot be found separately liable for breaching a contract and the implied covenant of good faith and fair dealing when the two asserted breaches basically rest on the same conduct. Id. at 344. Accordingly, where a written contract contains an express provision that governs the conduct in question, that conduct cannot form the basis of an implied covenant claim. See id. (holding that the jury should not have been permitted to consider plaintiff’s breach of the implied covenant claim where defendant was also alleged to have breached an express term of the contract in question and the two asserted breaches “basically rest[ed] on the same conduct.”);9 Berlin Medical Assocs., P.A. v. CMI New Jersey Operating Corp., 2006 N.J. Super. Unpub. LEXIS 2966, at *28 (App. Div. 2006) (dismissing, at the pleadings stage, plaintiffs’ implied covenant claim as being redundant with their breach of contract claim). Here, Plaintiffs’ Complaint includes counts for both non-ERISA breach of contract (Count IV) and non-ERISA breach of the duty of good faith and fair dealing (Count V). These claims each rely upon the same allegation - namely, that Horizon failed to comply with the literal contractual terms of the plans at issue by refusing to pay Plaintiffs’ billed charges for out-of-network services. Compare 9 While the Wade court noted that a plaintiff is not necessarily precluded from pleading alternative claims, it further held that, where the same conduct is alleged to both violate an express term governing that conduct, and also alleged to breach the implied covenant, such alternative claims are not appropriate. Wade, 172 N.J. at 346. Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 48 of 61 PageID: 353 - 39 - Compl. at ¶ 159 with Compl. at ¶ 168(c). Because Plaintiffs’ claim for breach of the duty of good faith and fair dealing is merely a restatement of their claim for breach of contract, the former should also be dismissed.10 2. Plaintiffs Fail to Allege the Necessary Type of Conduct Contract law “does not require parties to behave altruistically toward each other; it does not proceed on the philosophy that I am my brother’s keeper.” Original Great Am. Chocolate Chip Cookie Co. v. River Valley Cookies, Ltd., 970 F.2d 273, 280 (7th Cir. 1992) (quoted with approval in Wilson v. Amerada Hess Corp., 168 N.J. 236, 251 (2001)). Accordingly, New Jersey courts have repeatedly confirmed that a plaintiff must show bad motive or ill will to prevail on a breach of good faith and fair dealing claim. See, e.g., Brunswick Hills 182 N.J. at 226. Plaintiffs have not pleaded facts to support any allegation that Horizon had a bad motive or ill will towards them. Rather, Plaintiffs’ overriding theme is that Horizon allegedly had a profit motive to not pay the entirety of Plaintiffs’ billed charges for out-of-network services. See Compl. at ¶ 106. Therefore, Plaintiffs 10 Furthermore, an independent cause of action for good faith and fair dealing is recognized in New Jersey in only three situations: (1) to allow for the inclusion of additional terms and conditions not expressly set forth in the contract but consistent with the parties’ contractual expectations; (2) to allow redress for a contracting party’s bad-faith performance of an agreement when it is a pretext for the exercise of a contractual right to terminate, even where the defendant has not breached an express term; and (3) to rectify a party’s unfair exercise of discretion regarding its contract performance. Berlin Medical, 2006 N.J. Super. Unpub. LEXIS 2966, at *28. None of those situations are implicated here. Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 49 of 61 PageID: 354 - 40 - have not sufficiently alleged Horizon had the type of bad motive necessary to maintain a claim for breach of the duty of good faith and fair dealing, a fatal flaw that requires its dismissal. B. DECLARATORY RELIEF In Count VI, Plaintiffs assert a separate cause of action for a declaratory judgment under 28 U.S.C. § 2201. See Compl. at ¶¶ 170-78. Although the federal declaratory judgment statute permits a litigant to seek a declaration of rights even if an additional potentially adequate remedy is available, a declaratory judgment cannot be used solely to “redress past wrongs.” See Marzan v. Bank of Am., 779 F. Supp.2d 1140, 1146-47 (D. Hawaii 2011). Rather, a declaratory judgment, as a legal device, is intended to relieve potential defendants from the threat of future impending litigation. See Japan Gas Lighter Ass’n v. Ronson Corp., 257 F. Supp. 219 (D.N.J. 1966). In this case, Plaintiffs request a declaration that they are entitled to “payment of all money that was not paid by Horizon . . . for providing the covered hospital services described in this Complaint.” See Compl. at ¶ 178. Plaintiffs expressly request a coercive remedy with respect to Horizon’s alleged past wrongful conduct. The law is clear that they cannot do so while also requesting a declaratory judgment. Under such circumstances, this Court should dismiss Plaintiffs’ separate count for a declaratory judgment. Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 50 of 61 PageID: 355 - 41 - C. INJUNCTIVE RELIEF Plaintiffs’ entire Complaint relates to alleged underpayment of insurance benefits to which they claim entitlement as assignees of Horizon’s members’ insurance contracts. Although Plaintiffs complain solely of monetary loss, they request temporary and permanent injunctive relief requiring Horizon to pay them, in full, for any amounts they have charged (or will charge) for medical services rendered. See Compl. at ¶¶ 200-03. Even if proven, Plaintiffs’ damages would be purely economic. As a result, their request for injunctive relief must be denied as a matter of law. In order to obtain preliminary injunctive relief, Plaintiffs must prove: (1) a reasonable probability of success on the merits; (2) that they are likely to suffer irreparable injury in the absence of relief; (3) lack of undue harm to Horizon and other interested parties if relief is granted; and (4) that the public interest favors the requested relief. See In re Arthur Teacher’s Franchisee Litig., 689 F.2d 1137, 1143 (3d Cir. 1982). The standard for permanent injunctive relief is the same except that Plaintiffs must show actual success on the merits instead of probable success on the merits. See Amoco Prod. Co. v. Village of Gambell, 480 U.S. 531, 546 n. 12 (1987). Because each of Plaintiffs’ claims is fatally flawed for the reasons discussed herein, they cannot demonstrate a reasonable probability of success on the merits. Even if this Court declines to dismiss all of Plaintiffs’ claims, dismissal of their Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 51 of 61 PageID: 356 - 42 - request for injunctive relief is nevertheless appropriate because Plaintiffs will not suffer “irreparable harm” as a result of their reduced revenue allegedly caused by Horizon’s improper underpayment of insurance claims. That is because economic injury is not irreparable. Frank’s GMC Truck Center v. General Motors Corp., 847 F.2d 100, 102 (3d Cir. 1988) (“The availability of adequate monetary damages belies a claim of irreparable injury.”). There is simply no reason why payment of the money to which Plaintiffs claim they are entitled would not remedy any past (and future) harms they assert in this case. D. FIDUCIARY DUTY Plaintiffs next attempt to plead a claim for common law breach of fiduciary duty. See Compl. at ¶¶ 179-87. Plaintiffs allege that Horizon owed its members fiduciary duties “under the Plans,” that Horizon assigned those fiduciary duties to Plaintiffs,11 and that Horizon breached those duties. Id. This claim fails because Plaintiffs fail to allege both the existence of a fiduciary relationship such that a duty was owed in the first place and, in any event, that Horizon breached its duty to the extent one existed. 11 Plaintiffs seem to allege that not only have Horizon members assigned to them causes of action for an alleged breach of fiduciary duties, but also the fiduciary duties themselves. See Compl. at ¶ 182 (“Horizon also owed and owes this fiduciary duty to the Plaintiffs”). Indeed, nowhere in the Complaint do Plaintiffs allege in even conclusory fashion that Horizon breached a fiduciary duty to any members. It is unclear on what basis Plaintiffs claim that members can assign them the fiduciary duty itself as opposed to a claim for breach of a fiduciary duty. In any event, even assuming this is somehow possible, Plaintiffs’ claim fails substantively for the reasons discussed in this section. Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 52 of 61 PageID: 357 - 43 - 1. Plaintiffs Fail to Allege a Fiduciary Relationship Under New Jersey law, 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). The relationship arises when one party must act, or give advice, for the benefit of the other party. Id. Plaintiffs allege that Horizon owed its members fiduciary duties outside of ERISA which were assigned to Plaintiffs. See Compl. at ¶¶ 180, 182. However, other than this bald legal conclusion (which should be ignored in ruling on a motion to dismiss), Plaintiffs offer no facts to support the existence of a fiduciary relationship. Nowhere in the Complaint do Plaintiffs assert that members placed particular trust or confidence in Horizon. Plaintiffs certainly do not suggest that Horizon was obligated to provide advice for the benefit of members. Indeed, they allege only that Horizon and its members entered into a relationship wherein Horizon would reimburse members, in part, for the cost of certain medical treatment. Therefore, Plaintiffs’ fail to assert facts sufficient to establish that a common law fiduciary relationship existed between Horizon and its members which could have been purportedly assigned to Plaintiffs. 2. Plaintiffs Fail to Allege That Horizon Did Not Act Loyally to Its Members Even assuming, arguendo, that Plaintiffs sufficiently plead facts to establish Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 53 of 61 PageID: 358 - 44 - that a fiduciary relationship existed, which they did not, the Complaint nonetheless fails to plead a breach. When such a relationship exists, the fiduciary has a duty of loyalty to the other party and an obligation to exercise reasonable skill and care when acting for or giving advice within the scope of the relationship. McKelvey, 173 N.J. at 57. The fiduciary duty is breached when those obligations are not met. Id. Plaintiffs do not allege that Horizon in any way failed to exercise loyalty to its members. Nor do they allege that Horizon somehow failed to use reasonable skill or care in providing advice to members (or for that matter, that it gave members advice at all). Indeed, the only allegations in the Complaint concerning members generally set forth that they sought treatment from Plaintiffs and entered into contracts with Plaintiffs. See Compl. at ¶¶ 54, 55, 63-70.12 The only allegations with regard to Horizon and its members is that they entered into unspecified “plans,” the terms of which Plaintiffs completely ignore. See id. at ¶ 3. Therefore, Plaintiffs’ Complaint fails to allege facts sufficient to support the existence of a fiduciary duty owed by Horizon to its members, or that such a duty was breached. This count of the Complaint should be dismissed with prejudice. E. QUANTUM MERUIT Plaintiffs seek recovery for Horizon’s alleged breach of contract under the 12 In fact, Plaintiffs plead a stronger case that they owed Horizon members a fiduciary duty than they do that Horizon owed one itself. See Compl. at ¶ 50 (Plaintiffs’ “Insurance Help Desk is available to answer questions from patients . . . .”) (emphasis added). Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 54 of 61 PageID: 359 - 45 - quasi-contract theory of quantum meruit. See Compl. at ¶¶ 188-92. “It is well established that claims of quantum meruit . . . do not exist where a valid express contract exists concerning the same subject matter.” Broad St. Surgical Ctr., LLC v. UnitedHealth Group, Inc., 2012 U.S. Dist. LEXIS 30466, at *22 (D.N.J. Mar. 6, 2012). Here, Plaintiffs’ alleged entitlement to payment for rendering medical services to Horizon members is governed by the members’ express insurance contracts with Horizon. See, e.g., Compl. at ¶¶ 134-36, 158-59. As purported assignees of the right to receive benefits under those contracts, Plaintiffs have no greater rights than the Horizon members themselves. See Tirgan, 304 N.J. Super. at 391. Because Plaintiffs’ right to receive payment for health care services rendered to Horizon members is specifically governed by these insurance contracts, quasi-contract liability such as quantum meruit cannot be imposed as a matter of law. Moreover, Plaintiffs’ claims fail for the additional reason that they cannot show that Horizon - the defendant - received a benefit in connection with Plaintiffs’ provision of health care services to Horizon members. In Broad St. Surgical, this Court considered a substantially similar claim brought by a health care provider against a health insurer. The court dismissed the provider’s quantum meruit claim because, under the circumstances, it found that it could not plead that the health insurer received any benefit as a result of the provider’s provision of medical services to insurer’s insureds: “In this case [the provider] provided Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 55 of 61 PageID: 360 - 46 - services to Patients 1-50 and any benefit conferred was conferred on Patients 1- 50, not [the insurer]. [The insurer,] as the insurance company, derives no benefit from those services; indeed, what the insurer gets is a ripened obligation to pay money to the insured - which can hardly be called a benefit.” Broad St. Surgical, 2012 U.S. Dist. LEXIS 30466, at *23 (emphases added). F. PROMISSORY ESTOPPEL Plaintiffs next assert a claim for promissory estoppel which is impermissibly duplicative of their breach of contract claims. See Compl. at ¶¶ 193-99. Plaintiffs claim that the terms of various Horizon Plans obligated Horizon to pay for all fees charged by Plaintiffs in connection with treatment rendered to Horizon members. See id. at ¶¶ 194 and 134-136, 158-159 (making the identical allegations with respect to Horizon’s purported breach of contract). As such, Plaintiffs’ promissory estoppel claim must be dismissed for the threshold reason that the doctrine of promissory estoppel is a theory of quasi-contract that is only available “as a stop- gap where no valid contract exists to enforce a party’s promise.” See Kiss Elec., LLC v. Waterworld Fiberglass Pools, N.E., Inc., 2015 U.S. Dist. LEXIS 37457, at *15 (D.N.J. Mar. 25, 2015) (emphasis added) (citing Moser v. Milner Hotels, Inc., 6 N.J. 278, 280-281 (1951)). Even assuming, arguendo, that Plaintiffs could rely on the doctrine of promissory estoppel notwithstanding the alleged existence of numerous, unspecified, contracts regarding the same purported obligations, Plaintiffs’ claim Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 56 of 61 PageID: 361 - 47 - should nevertheless be dismissed because 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. See Toll Bros., Inc. v. Board of Chosen Freeholders of Burlington, 194 N.J. 223, 253 (2008). On the contrary, Plaintiffs only vaguely refer to “representations made in the context of telephone calls from the CarePoint Hospitals’ billing agents” and do not specifically allege what, if any, representations were made by Horizon in the context of those unspecified conversations. See Compl. at ¶ 197. Further, Plaintiffs do not explicitly state how their reliance on such “representations” inured to their detriment. Rather, they summarily state: “as a result of the CarePoint Hospitals’ reliance on Horizon’s statements, the CarePoint Hospitals have suffered and continue to suffer injury . . . .” Id. at ¶ 199. Plaintiffs’ “threadbare recital of the elements of [promissory estoppel], supported by mere conclusory statements, do not suffice” to establish a cause of action. See Iqbal, 566 U.S. at 678. The reality here is that Plaintiffs did not rely on any statements made by Horizon. Rather, they seek to rely on their own misrepresentations of what New Jersey law and Horizon plans actually provide. G. PLAINTIFFS’ STATE CLAIMS IN COUNTS VIII, IX, AND X ARE PREEMPTED BY ERISA To the extent they are asserted against plans subject to ERISA, Counts VIII, Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 57 of 61 PageID: 362 - 48 - IX, and X, alleging state law claims for quantum meruit/unjust enrichment, promissory estoppel, and temporary and permanent injunctive relief, respectively, cannot survive, as they are preempted by ERISA. ERISA is a comprehensive statute enacted “to promote the interests of employees and their beneficiaries in employee benefit plans,” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90 (1983), and “to protect contractually defined benefits.” Russell, 473 U.S. at 148; see also 29 U.S.C. §§ 1001, et seq. To effectuate the Congressional goal of a uniform national system of pension and welfare plans, § 514(a) of ERISA preempts “any and all State laws insofar as they may now or hereafter relate to any employee benefit plan.” 29 U.S.C. § 1144(a). Counts VIII, IX, and X should be dismissed because ERISA preempts such state law claims that “relate to” employee welfare benefit plans. Pilot Life Insurance Co. v. Dedeaux, 481 U.S. 41, 45 (1987). ERISA’s preemption clause is deliberately expansive and defines the term “state law” broadly to include “all laws, decisions, rules, regulations, or other State action having the effect of law, of any state.” 29 U.S.C. § 1144 (c)(1). This is “intended to ensure that employee benefit plan regulation would be ‘exclusively a federal concern.’” Aetna Health Inc. v. Davila, 542 U.S. 200, 208 (2004) (quoting Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523 (1981)). The United States Supreme Court has repeatedly made it clear that the preemption provisions of ERISA are extremely broad, Pilot Life, 481 U.S. at 45- Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 58 of 61 PageID: 363 - 49 - 46, and has employed a similarly broad definition in determining whether a law “relates to” an employee welfare benefit plan. A state law “‘relates to’ a benefit plan . . . if it has a connection with or reference to such a plan.’” Shaw, 463 U.S. at 96-97. Furthermore, because Congress used the phrase “relate to” in its broad sense, the Court has “emphasized that the pre-emption clause is not limited to ‘state laws specifically designed to affect employee benefit plans.’” Pilot Life, 481 U.S. at 47-48; accord Shaw, 463 U.S. at 98 (preemption clause should not “be interpreted to preempt only state laws dealing with the subject matters covered by ERISA - reporting, disclosure, fiduciary responsibility, and the like.”). Any state law cause of action that duplicates, supplements, or supplants the ERISA civil enforcement remedy, conflicts with the clear congressional intent to make the ERISA remedy exclusive and is therefore preempted. Pilot Life, 481 U.S. at 54- 56; see also Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 143-45 (1990). State law causes of action “based on alleged improper processing of a claim for benefits under an employee benefit plan, undoubtedly meet the criteria for preemption.” Pilot Life, 481 U.S. at 48. Under these broad guidelines, ERISA preempts a variety of state laws, including Plaintiffs’ state law claims for quantum meruit/unjust enrichment in Count VIII (see, e.g., MHA, LLC v. Aetna Health, Inc., 2013 U.S. Dist. LEXIS 25743, at *28 (D.N.J. Feb. 25, 2013)); promissory estoppel in Count IX (id.; Frommer v. Celanese Corp., 2008 U.S. Dist. LEXIS 32505, at * 9 (D.N.J. Apr. 18, 2008)); and for temporary and permanent injunctive Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 59 of 61 PageID: 364 - 50 - relief in Count X (Davila, 542 U.S. at 209 (a state-law cause of action that duplicates, supplements or supplants the ERISA civil enforcement remedy is preempted)). To the extent Plaintiffs base these state law claims on ERISA employee welfare benefit plans, they are expressly preempted by ERISA. CONCLUSION In the final analysis, neither Horizon’s plan documents, Plaintiffs’ AOB contracts, state or federal regulations, ERISA, nor the state common law allow Plaintiffs to recover the grossly excessive out-of-network charges from Horizon that they seek in this litigation. As a result, Plaintiffs’ Complaint must be dismissed in its entirety. Respectfully submitted, WHITE AND WILLIAMS LLP /s/ Edward M. Koch By: Michael O. Kassak, Esquire Andrew I. Hamelsky, Esquire Edward M. Koch, Esquire Luke A. Repici, Esquire The Legal Center - One Riverfront Plaza 1037 Raymond Blvd. Suite 230 Newark, New Jersey 07102 (201) 368-7200 Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 60 of 61 PageID: 365 - 51 - Edward S. Wardell, Esquire CONNELL FOLEY LLP Liberty View Building 457 Haddonfield Rd., Suite 230 Cherry Hill, NJ 08002 Attorneys for Defendant, Horizon Healthcare Services, Inc. D/B/A Horizon Blue Cross Blue Shield Of New Jersey Dated: December 9, 2016 18047799v.6 Case 2:16-cv-05922-JMV-JBC Document 16 Filed 12/09/16 Page 61 of 61 PageID: 366 18117611v.1 IN THE 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-05922-JMV- JBC ORDER AND NOW, on this ____ day of ____________, 2017, upon consideration of Defendant’s Motion to Dismiss Plaintiffs’ Complaint and any response thereto, it is hereby ORDERED that the motion is GRANTED. All claims asserted in the Complaint against Defendant, Horizon Healthcare Services, Inc. d/b/a Horizon Blue Cross Blue Shield of New Jersey, are hereby dismissed, as the Complaint fails to meet the requirements of Federal Rules of Civil Procedure 8 and 10. Case 2:16-cv-05922-JMV-JBC Document 16-1 Filed 12/09/16 Page 1 of 3 PageID: 367 -2- 18117611v.1 IT IS FURTHER ORDERED as follows: 1) Plaintiffs’ claims seeking reimbursement for their billed charges are dismissed with prejudice. 2) As to the claims in Exhibit 5 to Plaintiffs’ Complaint for which Plaintiffs admit Horizon has paid the requested relief - at least ninety percent (90%) of the billed amount - those claims are dismissed with prejudice. 3) Anti-assignment provisions in Horizon Plans are valid and enforceable. Plaintiffs’ claims under Horizon Plans with anti-assignment provisions are dismissed with prejudice. 4) Count Two (Breach of Fiduciary Duties of Loyalty and Due Care in Violation of ERISA) is dismissed with prejudice. 5) Count Three (Denial of Full and Fair Review in Violation of ERISA § 503) is dismissed with prejudice. 6) Count Five (Breach of the Duty of Good Faith and Fair Dealing - non-ERISA) is dismissed with prejudice. 7) Count Six (Declaratory Judgment - 28 U.S.C. § 2201) is dismissed with prejudice. 8) Count Seven (Breach of Fiduciary Duty - non-ERISA) is dismissed with prejudice. Case 2:16-cv-05922-JMV-JBC Document 16-1 Filed 12/09/16 Page 2 of 3 PageID: 368 -3- 18117611v.1 9) Count Eight (Quantum Meruit) is dismissed with prejudice. 10) Count Nine (Promissory Estoppel) is dismissed with prejudice. 11) Count Ten (Temporary and Permanent Injunctive Relief) is dismissed with prejudice. BY THE COURT: _______________________ J. Case 2:16-cv-05922-JMV-JBC Document 16-1 Filed 12/09/16 Page 3 of 3 PageID: 369 EXHIBIT “A Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 1 of 46 PageID: 370 WHITE AND WILLIAMS, LLP The Legal Center - One Riverfront Plaza 1037 Raymond Blvd. Suite 230 Newark, New Jersey 07102 Attorneys for Defendant HORIZON HEALTHCARE SERVICES, INC. d/b/a HORIZON BLUE CROSS BLUE SHIELD 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 Plaintiff, HORIZON HEALTHCARE SERVICES, INC. d/b/a HORIZON BLUE CROSS BLUE SHIELD OF NEW JERSEY Defendant. Civil Action No.: 2:16-CV-05922-JMV-JBC AFFIDAVIT OF KRISTEN JAROSZ I, Kristen Jarosz, of full age, certifies as follows: 1. I am the Director of Contract Administration for Horizon Blue Cross Blue Shield of New Jersey (Horizon). In my capacity as Director of Contract Administration, I am responsible for supervising the area that produces health benefit plan contracts for Horizon members and groups. 2. The below facts are based upon my personal knowledge, information gathered from other Horizon employees, or my review of the documents referred to herein and, if called as a witness, I could testify competently thereto. I. Insured Plans 3. Horizon currently issues health insurance policies formed from three underlying contract types that have been previously approved by the New Jersey Department of Banking and Insurance (DOBI) and these contracts are categorized as follows: Indemnity, HMO and Managed Care. 4. Horizon also currently issues Small Group (SMG) and Individual Health Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 2 of 46 PageID: 371 Insurance (IHC) policies that are based upon contract templates issued by the DOBI. A. Indemnity Plans 5. Horizon indemnity plans primarily use Form HORIZONHMA2007. That form provides as follows: Allowance means a dollar amount Determined by Horizon BCBSNJ as reasonable, customary and appropriate for Covered Services and Supplies unless otherwise required by law. [-3 Section 5 - Schedule of Benefits ELIGIBLE BENEFITS UNDER THIS POLICY ARE SUBJECT TO ALL DEDUCTIBLE(S), COPAYMENT(S), COINSURANCE(S) AND MAXIMUM(S) STATED IN THIS SCHEDULE AND ARE DETERMINED PER BENEFIT PERIOD BASED ON OUR ALLOWANCE, UNLESS OTHERWISE STATED. b. Out-of-Network Hospital Horizon BCBSNJ will pay 100% of its Allowance for Inpatient or Outpatient services. However, any Inpatient Deductible required will be subtracted from any payment otherwise eligible. [MEDICAL EMERGENCY OR] ACCIDENTAL INJURY BENEFITS: Subject to 100% Coinsurance. Medical Emergency Or Accidental Injury Benefits Coverage for Emergency and Urgent Care includes coverage of trauma at any designated level I or II trauma center as Medically Necessary and Appropriate, which shall be continued at least until, in the judgment of the attending physician, the Covered Person is medically stable, no longer requires critical care, and can be safely transferred to another facility. Horizon BCBSNJ shall provide coverage for a medical screening examination provided upon a Covered Person’s arrival in a Hospital, as required to be performed by the hospital in accordance with federal law, but only as necessary to determine whether an Emergency Medical Condition exists [...] Exclusions -2- Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 3 of 46 PageID: 372 The following are not Covered Services and Supplies under this Policy. Horizon BCBSNJ will not pay for any charges incurred for, or in connection, with: Any charge to the extent it exceeds the Allowance. B. HMO Plans 6. Horizon HMO plans primarily use Form HORIZONHMOJAN2007. That form provides as follows: Allowance means a dollar amount Determined by Horizon HMO as reasonable, customary and appropriate for Covered Services and Supplies, unless otherwise required by law. [...] This Section lists the Covered Services and Supplies Horizon HMO will provide up to its Allowance subject to all the terms of this Contract including, but not limited to, Certification, Referral or approval by the Member's PCP, Medical Necessity and Appropriateness, utilization review features, Section 5 Schedule of Covered Services and Supplies, and other Sections of the Contract describing coverage limitations and exclusions. [■••] Medical Emergency and Medical Screening Examinations This Contract provides coverage for Medical Emergencies including diagnostic X-ray and lab, and Urgent Care for medical and Biologically-based Mental Illness and Non-Biologically-based Mental Illness on a 24-hour, 7-day-a-week basis. Horizon HMO will provide coverage for Eligible Covered Services and Supplies provided by an Eligible Hospital as stated in this Section for Medical Screening Examinations, as required under Federal law and as specified in NJ.A.C. 8:43G-12, as necessary to determine whether a Medical Emergency exists, whether or not the services or supplies were arranged for or provided by an Eligible Provider. This Contract provides coverage for Covered Services and Supplies provided by an Eligible Provider as stated in this Contract for the treatment of a Medical Emergency related to a General Condition, whether or not the services or supplies were arranged for or provided by an Eligible Provider. [-] -3- Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 4 of 46 PageID: 373 Exclusions The following are not Covered Services and Supplies under this Policy. Horizon BCBSNJ will not pay for any charges incurred for, or in connection, with: Any charge to the extent it exceeds the Allowance. C. Managed Care Plans 7. Horizon Managed Care plans pay out-of-network services in accordance with DOBI approved riders. See, for example DOBI-approved riders, attached as Exhibit 1. Allowance, subject to some exceptions, is generally defined in those riders as “an amount determined by Horizon BCBSNJ as the least of, the following amounts: (a) The actual charge made by the Provider for the service or supply; (b) In the case of In-Network Providers, the amount that the Provider has agreed to accept for the service or supply; or (c) In the case of Out-of-Network Providers, [generally a percentage of either a) rates of the Centers for Medicare & Medicaid Services (CMS), b) rates specified in the databases developed by FAIR Health, Inc. (FAIR Health), or c) an amount based on Horizon BCBSNJ’s usual and prevailing payments made to providers for similar services or supplies.) 8. Many of the Managed Care plans include the following exception: “With respect to (i) a Medical Emergency; or (ii) Covered Services and Supplies provided in an In-Network Hospital, the Allowance determined in accordance with part (c), above, for any Covered Services and Supplies provided by Out-of-Network Providers 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. But this (ii) shall not apply if the Covered Person: (a) had or was given the opportunity to select In-Network Providers to provide the Covered Services or Supplies; and (b) elected the services of Out-of-Network Providers.” 9. The Managed Care Plans include the following exclusion: “The following are not Covered Services and Supplies under this Program. Horizon BCBSNJ will not pay for any charges Incurred for, or in connection with: Any part of a charge that exceeds the Allowance.” D. Small Group (SMG) 10. Horizon SMG plans use Form SEH POLICY B-E 2015/2016 and the SEH HMO Plan Contract 2015/2016, which is approved by the New Jersey Small Employer Health Coverage Program Board, and all carriers issuing such plans are required to use these forms, which provide in relevant part as follows: Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 5 of 46 PageID: 374 SEH Policy B-E 2015/2016 Allowed Charge means an amount that is not more than the [lesser of: • the] allowance for the service or supply as determined by [Carrier], based on a standard approved by the Board[; or [• the negotiated fee schedule.] The Board will decide a standard for what is an Allowed Charge under this Policy. For charges that are not determined by a negotiated fee schedule, the [Covered Person] may be billed for the difference between the Allowed Charge and the charge billed by the Provider. [.••] Exclusions Payment will not be made for any charges incurred for or in connection with: The amount of any charge which is greater than an Allowed Charge. [...] Emergency Services If a Covered Person requires services for Urgent Care or an Emergency which occurs inside the PO Service Area, he or she must notify his or her PCP within 48 hours or as soon as reasonably possible thereafter. Emergency room visits to PO Facilities are subject to a Copayment, and such visits must be retrospectively reviewed [by the PCP]. [Carrier] will waive the emergency room Copayment if the Covered Person is hospitalized within 24 hours of the visit. In the case of Urgent Care or an Emergency, a Covered Person may go to a [XYZ Health Care Network] provider or a non-[XYZ Health Care Network] provider. If a Covered Person receives Urgent Care or care and treatment for an Emergency from a non- [XYZ Health Care Network] provider, and the Covered Person calls [Carrier] within 48 hours, or as soon as reasonably possible, [Carrier] will provide benefits for the Urgent Care or Emergency care and treatment to the same extent as would have been provided if care and treatment were provided by a [XYZ Health Care Network] provider. However, follow-up care or treatment by a non-[XYZ Health Care Network] provider will be treated as Network Benefits only to the extent it is Medically Necessary and -5- Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 6 of 46 PageID: 375 Appropriate care or treatment rendered before the Covered Person can return to the [XYZ Health Care Network] service area. SEH HMO Plan Contract 2015/2016 Allowed Charge means an amount that is not more than the [lesser of: • the] allowance for the service or supply as determined by Us, based on a standard approved by the Board[; or [• the negotiated fee schedule.] The Board will decide a standard for what is an Allowed Charge under this Contract. [...] Non-Covered Services and Supplies The following are not covered services under this contract: The amount of any charge which is greater than an Allowed Charge. [...] Emergency Care Benefits - Within And Outside Our Service Area The following services are covered [without prior written Referral by a [Member's Primary Care Physician] in the event of an Emergency as Determined by Us. 1. A [Member's Primary Care Physician is required to provide or arrange for on-call coverage twenty-four (24) hours a day, seven (7) days a week. Unless a delay would be detrimental to a [Member's health, [Member] shall call a [Member’s Primary Care Physician [or Health Center] [or Us] [or the Care Manager] prior to seeking Emergency treatment. 2. We will cover the cost of Emergency medical and hospital services performed within or outside our service area[ without a prior written Referral] only if: a. Our review Determines that a [Member's symptoms were severe and delay of treatment would have been detrimental to a [Member's health, the symptoms occurred suddenly, and [Member] sought immediate medical attention. b. The service rendered is provided as a Covered Service or Supply under this Contract and is not a service or supply which is normally treated on a non-Emergency basis; and c. We and the [Member's Primary Care Physician are notified within 48 hours of the Emergency service and/or -6- Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 7 of 46 PageID: 376 admission and We are furnished with written proof of the occurrence, nature and extent of the Emergency services within 30 days. A [Member] shall be responsible for payment for services received unless We Determine that a [Member's failure to do so was reasonable under the circumstances. In no event shall reimbursement be made until We receive proper written proof. 3. In the event a [Member] is Hospitalized in a Non-Network Facility, coverage will only be provided until the [Member] is medically able to travel or to be transported to a Network Facility. If the [Member] elects to continue treatment with Non-Network Providers, We shall have no responsibility for payment beyond the date the [Member] is Determined to be medically able to be transported. In the event that transportation is Medically Necessary and Appropriate, We will cover the amount We Determine to be the Reasonable and Customary cost. Reimbursement may be subject to payment by [Members] of all Copayments which would have been required had similar benefits been provided [upon prior written Referral to a Network Provider], 4. Coverage for Emergency services includes only such treatment necessary to treat the Emergency. [Any elective procedures performed after a [Member] has been admitted to a Facility as the result of an Emergency shall require prior written Referral or the [Member] shall be responsible for payment.] The Copayment for an emergency room visit will be credited toward the Hospital inpatient Copayment if a [Member] is admitted as an Inpatient to the Hospital as a result of the Emergency. 6. Coverage for Emergency and Urgent Care include coverage of trauma services at any designated level I or II trauma center as Medically Necessary and Appropriate, which shall be continued at least until, in the judgement of the attending physician, the Member is medically stable, no longer requires critical care, and can be safely transferred to another Facility. We also provides coverage for a medical screening examination provided upon a Member’s arrival in a Hospital, as required to be performed by the Hospital in accordance with Federal law, but only as necessary to determine whether an Emergency medical condition exists. E. Individual Health Insurance (IHC) 11. Horizon IHC plans use Forms IHC Plans A/50, B, C and D 2015/2016 and -7- Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 8 of 46 PageID: 377 IHC2015/2016HM0. The IHC and IHC HMO contracts are approved by the New Jersey Individual Health Coverage Program Board, and all carriers issuing such plans are required to use these forms, which provide as follows: Allowed Charge means an amount that is not more than the [lesser of: ■ the] allowance for the service or supply as determined by Us based on a standard approved by the Board[; or [• the negotiated fee schedule.] [...] Exclusions Payment will not be made for any charges incurred for or in connection with: The amount of any charge which is greater than an Allowed Charge. 12. The IHC Plans A/50, B, C and D 2015/2016 include the following provision: Coverage for Emergency and Urgent Care includes coverage of trauma services at any designated level 1 or II trauma center as Medically Necessary and Appropriate, which shall be continued at least until, in the judegment [sic] of the attending physician, the Covered Person is medically stable, no longer requires critical care, and can be safely transferred to another Facility. We also provide coverage for a medical screening examination provided upon a Covered Person’s arrival in a Hospital, as required to be performed by the Hospital in accordance with Federal law, but only as necessary to determine whether an emergency medical condition exists. 13. The IHC2015/2016HMO Plan includes the following provision: EMERGENCY CARE BENEFITS - WITHIN AND OUTSIDE OUR SERVICE AREA. The following services are covered without prior written Referral by a [Member's Primary Care Physician in the event of an Emergency as Determined by Us. 1. A [Member’s Primary Care Physician is required to provide or arrange for on-call coverage twenty-four (24) hours a day, seven (7) days a week. Unless a delay would be detrimental to a [Member's health, [Member] shall call a [Member's Primary Care Physician [or Us] prior to seeking Emergency treatment. 2. We will cover the cost of Emergency medical and hospital services performed within or outside our service area without a prior written Referral only if: -8- Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 9 of 46 PageID: 378 a. Our review Determines that a [Member's symptoms were severe and delay of treatment would have been detrimental to a [Member's health, the symptoms occurred suddenly, and [Member] sought immediate medical attention. b. The service rendered is provided as a Covered Service or Supply under this Contract and is not a service or supply which is normally treated on a non-Emergency basis; and c. We and the [Member's Primary Care Physician are notified within 48 hours of the Emergency service and/or admission and We are furnished with written proof of the occurrence, nature and extent of the Emergency services within 30 days. A [Member] shall be responsible for payment for services received unless We Determine that a [Member's failure to do so was reasonable under the circumstances. In no event shall reimbursement be made until We receive proper written proof. 3. In the event a [Member] is Hospitalized in a Non-Network Facility, coverage will only be provided until the [Member] is medically able to travel or to be transported to a Network Facility. If the [Member] elects to continue treatment with Non-Network Providers, We shall have no responsibility for payment beyond the date the [Member] is Determined to be medically able to be transported. In the event that transportation is Medically Necessary and Appropriate, We will cover the amount We Determine to be the Allowed Charge cost. Reimbursement may be subject to payment by [Members] of all Copayments which would have been required had similar benefits been provided upon prior written Referral to a Network Provider. 4. Coverage for Emergency services includes only such treatment necessary to treat the Emergency. [Any elective procedures performed after a [Member] has been admitted to a Facility as the result of an Emergency shall require prior written Referral or the [Member] shall be responsible for payment.] 5. The Copayment for an emergency room visit will be credited toward the Hospital Inpatient Copayment If a [Member] is admitted as an Inpatient to the Hospital as a result of the Emergency. 6. Coverage for Emergency and Urgent Care include coverage of trauma services at any designated level I or II trauma center as Medically Necessary and Appropriate, which shall be continued at -9- Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 10 of 46 PageID: 379 least until, in the judgement [sic] of the attending physician, the Member is medically stable, no longer requires critical care, and can be safely transferred to another Facility. We also provides coverage for a medical screening examination provided upon a Member’s arrival in a Hospital, as required to be performed by the Hospital in accordance with Federal law, but only as necessary to determine whether an Emergency medical condition exists, II. Self-funded / ASO Plans 14. Horizon also provides administrative services for self-funded or self-insured (often referred to as “administrative services only” (ASO)) plans. Some ASO plans adopt the Horizon-BCBNJ Summary Plan Document (SPD) as the base of their SPD. The Horizon- BCBSNJ SPD template describes the way the plans elect to pay for out-of-network services. 15. Below are 3 examples of SPD language from Horizon-BCBSNJ ASO groups: City of Union Allowance: Subject to the exceptions below, an amount determined the Plan as the least of the following amounts: (a) the actual charge made by the Provider for the service or supply; (b) in the case of In-Network Providers, the amount that the Provider has agreed to accept for the service or supply; or (c) in the case of Out-of-Network Providers, the amount determined as follows: (i) With respect to the services of Practitioners, the amount determined as 70% of the reimbursement rate specified for the Covered Service or Supply in the databases developed by FAIR Health, Inc. (FAIR Health). (ii) With respect to services and supplies provided by Ambulatory Surgical Centers, the amount determined as 160% of the amount that would be reimbursed for them under Medicare. (iii) With respect to all other Covered Services and Supplies, the amount determined in accordance with: (a) profiles compiled by Horizon BCBSNJ based on usual and prevailing payments made to Providers for similar services or supplies in specific geographical areas; or (b) similar profiles compiled by outside vendors other than FAIR Health. Exceptions: [...] -10- Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 11 of 46 PageID: 380 (2) With respect to (i) a Medical Emergency; or (ii) Covered Services and Supplies provided in an In-Network Hospital, the Allowance determined in accordance with part (c), above, for any Covered Services and Supplies provided by Out-of-Network Providers 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. But this (ii) shall not apply if the Covered Person: (a) had or was given the opportunity to select In-Network Providers to provide the Covered Services or Supplies; and (b) elected the services of Out-of-Network Providers. (3) With respect to part (c)(i), above, if the databases developed by FAIR Health do not prescribe a reimbursement rate for the Covered Service or Supply, the Allowance for it will be determined as 180% of the amount that would be reimbursed for the Covered Service or Supply under Medicare. And if Medicare does not prescribe a reimbursement rate for the Covered Service or Supply, the Allowance for it will be determined in accordance with: (a) profiles compiled by Horizon BCBSNJ based on usual and prevailing payments made to Providers for similar services or supplies in specific geographical areas; or (b) similar profiles compiled by outside vendors other than FAIR Health. With respect to part (c)(ii), above, if Medicare does not prescribe a reimbursement rate for the Covered Service or Supply, the Allowance for it will be determined in accordance with: (a) profiles compiled by Horizon BCBSNJ based on usual and prevailing payments made to Providers for similar services or supplies in specific geographical areas; or (b) similar profiles compiled by outside vendors other than FAIR Health. Exclusions The following are not Covered Services and Supplies under this Plan. The Plan will not pay for any charges Incurred for, or in connection with: Any part of a charge that exceeds the Allowance. Sealy Mattress Company of New Jersey Allowance: Subject to the exceptions below, an amount determined by Horizon BCBSNJ as the least of the following amounts: (a) The actual charge made by the Provider for the service or supply; (b) In the case of In-Network Providers, the amount that the Provider has agreed to accept for the service or supply; or -11- Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 12 of 46 PageID: 381 (c) In the case of Out-of-Network Providers, the amount determined as 250% of the amount that would be reimbursed for them under Medicare. Exceptions: (1) With respect to (i) a Medical Emergency; or (ii) Covered Services and Supplies provided in an In-Network Hospital, the Allowance determined in accordance with (c), above, for any Covered Services and Supplies provided by Out-of-Network Providers 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. But this (ii) shall not apply if the Covered Person: (a) had or was given the opportunity to select In-Network Providers to provide the Covered Services and Supplies; and (b) elected the services of Out-of-Network Providers. (2) With respect to (c), above, if Medicare does not prescribe a reimbursement rate for a Covered Service or Supply, the Allowance for the Covered Service or Supply will be determined based on profiles compiled by Horizon BCBSNJ based on usual and prevailing payments made to Providers for similar services or supplies in specific geographical areas, or similar profiles compiled by outside vendors. Township of North Bergen Allowance: Subject to the exceptions below, an amount determined the Plan as the least of the following amounts: (a) the actual charge made by the Provider for the service or supply; (b) in the case of In-Network Providers, the amount that the Provider has agreed to accept for the service or supply; or (c) in the case of Out-of-Network Providers, the amount determined as follows: (i) With respect to the services of Practitioners, the amount determined as 80% of the reimbursement rate specified for the Covered Service or Supply in the databases developed by FAIR Health, Inc. (FAIR Health). (ii) With respect to services and supplies provided by Ambulatory Surgical Centers, the amount determined as 160%of the amount that would be reimbursed for them under Medicare. 12- Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 13 of 46 PageID: 382 (iii) With respect to all other Covered Services and Supplies, the amount determined in accordance with: (a) profiles compiled by Horizon BCBSNJ based on usual and prevailing payments made to Providers for similar services or supplies in specific geographical areas; or (b) similar profiles compiled by outside vendors other than FAIR Health. Exceptions: [...] (2) With respect to (i) a Medical Emergency; or (ii) Covered Services and Supplies provided in an In-Network Hospital, the Allowance determined in accordance with part (c), above, for any Covered Services and Supplies provided by Out-of-Network Providers 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. But this (ii) shall not apply if the Covered Person: (a) had or was given the opportunity to select In-Network Providers to provide the Covered Services or Supplies; and (b) elected the services of Out-of-Network Providers. (3) With respect to part (c)(i), above, if the databases developed by FAIR Health do not prescribe a reimbursement rate for the Covered Service or Supply, the Allowance for it will be determined as 180% of the amount that would be reimbursed for the Covered Service or Supply under Medicare. And if Medicare does not prescribe a reimbursement rate for the Covered Service or Supply, the Allowance for it will be determined in accordance with: (a) profiles compiled by Horizon BCBSNJ based on usual and prevailing payments made to Providers for similar services or supplies in specific geographical areas; or (b) similar profiles compiled by outside vendors other than FAIR Health. With respect to part (c)(ii), above, if Medicare does not prescribe a reimbursement rate for the Covered Service or Supply, the Allowance for it will be determined in accordance with: (a) profiles compiled by Horizon BCBSNJ based on usual and prevailing payments made to Providers for similar services or supplies in specific geographical areas; or (b) similar profiles compiled by outside vendors other than FAIR Health. Exclusions The following are not Covered Services and Supplies under this Plan. The Plan will not pay for any charges Incurred for, or in connection with: Any part of a charge that exceeds the Allowance. III. Anti-Assignment Provisions -13- Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 14 of 46 PageID: 383 16. Numerous Horizon plans contain anti-assignment provisions. This includes, by way of example, the following: Indemnity Plans, Form HORIZONHMA2007 Covered Persons may not assign any rights to coverage or benefits under this Policy without Horizon BCBSNJ's advance written consent. However, Horizon BCBSNJ may Determine to pay Covered Charges directly to Providers for their Covered Services and Supplies; and any such direct payment shall be treated as though paid directly to Covered Persons to satisfy Horizon BCBSNJ's obligations under this Policy. HMO Plans, Form HORIZONHMOJAN2007 A Member may not assign his right to take legal action under this Contract to any Provider. The Covered Services and Supplies provided in this Contract may not be assigned by a Member without Horizon HMO's permission. Horizon HMO may Determine to pay claims directly to a Provider if it chooses to do so. SMG Plan, Form SEH Policy B-E 2015/2016 When an Employee files proof of loss, he or she may direct [Carrier], in writing, to pay health care benefits to the recognized provider of health care who provided the covered service for which benefits became payable. [...] The Employee may not assign his or her right to take legal action under the Policy to such provider. SMG Plan, SEH HMO Plan Contract 2015/2016 No assignment or transfer by the Contractholder of any of the Contractholder's interest under this Contract or by a [Member] of any of his or her interest under this Contract is valid unless We consent thereto. IHC Plans, Forms A/50, B, C and D 2015/2016 and IHC2015/2016HMO When You file proof of loss, he or she may direct Us, in writing, to pay health care benefits to the recognized provider of health care who provided the covered service for which benefits became payable. -14- Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 15 of 46 PageID: 384 [...] You may not assign his or her right to take legal action under this Policy to such provider. [...] No assignment or transfer by the Contractholder of any of the Contractholder's interest under this Contract or by a [Member] of any of his or her interest under this Contract is valid unless We consent thereto. I certify that the foregoing statements made by me are true. I am aware that if any of the foregoing statements made by me are willfully false I am subject to punishment. -15- Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 16 of 46 PageID: 385 OUT-OF-NETWORK REIMBURSEMENT RIDER Policyholder Policy No. Rider No. Effective Date This Rider forms a part of the Policy as identified above. The Definition of Allowance appearing in the Definitions Section of the Policy is replaced with the following: Allowance: An amount determined by Horizon BCBSNJ as the least of the following amounts: (a) the actual charge made by the Provider for the service or supply[;] [or] (b) in the case of In- Network Providers, the amount that the provider has agreed to accept for the service or supply[;] [or] [(c) in the case of Out-of-Network Providers, the amount determined for the service or supply determined as [150%-260%]of the amount that would be reimbursed under the Federal Medicare Program] [;] [or] [(d) in the case of Out-of-Network Providers, an amount determined for the service or supply based on[: (i)] profiles compiled by Horizon BCBSNJ based on usual and prevailing payments made to providers for similar services or supplies in specific geographical areas[; (ii)] similar profiles compiled by outside vendors[, or [iii] a payment methodology designed to replicate prevailing payments made to providers for similar services and supplies], [ In a case where a Covered Person’s [Personal/Primary] Care Physician (PCP) refers him/her to an Out-of-Network Provider, the Allowance for the Out-of- Network Provider’s services will be the amount determined in accordance with (a), above.] All other benefits and terms of your Policy not changed by this Rider remain in force. Attach this Rider to your Policy; it is part of your Policy with Horizon Healthcare Services, Inc. d/b/a Horizon Blue Cross Blue Shield of New Jersey. Horizon Healthcare Services, Inc. d/b/a Horizon Blue Cross Blue Shield of New Jersey By: ____________ Vice President GRP 2002 ALLOW 100 Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 17 of 46 PageID: 386 HORIZON HEALTHCARE SERVICES, INC. RIDER FORM (DESIGN 7) [Group Group No. Rider No. Effective Date ABC Company G-XXXX 1 March 1.200X] As of the above Effective Date, [the Policy/your Booklet] is changed as follows: I. The section “Schedule of Covered Services and Supplies” is modified to provide that the following paragraph is deleted. “Note: Our benefits will be reduced for non-compliance with the utilization review and management provisions of this Program.” II. The subsection “Non-Biologically Based Mental Illness” in the section “Schedule of Covered Services and Supplies” (form GRP 2002 SCH 100) is replaced by the following subsection: NON-BIOLOGICALLY BASED MENTAL ILLNESS Inpatient (In-Network) Subject to [80-100%] Coinsurance [for (including Practitioners’ services) the first [25] days of stay, and [70- 90%] Coinsurance for the next [ten] days of stay]. The Deductible does not apply. [Benefits subject to [a Benefit Period/Calendar Year] maximum [(combined In-Network and Out-of- Network)] of [35] days of stay./;] [and] [a Per Lifetime maximum [(combined In-Network and Out-of-Network)] of [30] days of stay].] [The first [25] days of stay do not apply toward the Per Lifetime maximum].] Two Partial Hospitalization days = one day of Inpatient care. GRP 2008 (NJ-Design 7-HSC) [1] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 18 of 46 PageID: 387 Inpatient (Out-of-Network) (including Practitioners’ services) Subject to [Deductible] [and] [50-80%] Coinsurance. [Benefits subject to [a Benefit Period/Calendar Year] maximum [(combined In-Network and Out-of- Network)] of [35] days of stay./;] [and] [a Per Lifetime maximum [(combined In-Network and Out-of-Network)] of [30] days of stay].] [The first [25] days of stay do not apply toward the Per Lifetime maximum].] Two Partial Hospitalization days = one day of Inpatient care. Outpatient (In-Network) (including group therapy) Subject to [80-90%] Coinsurance. Deductible does not apply. [Benefits subject to [[a Benefit Period/Calendar Year] maximum [(combined In-Network and Out-of- Network)] of [100] Visits./;] [and] [a Per Lifetime maximum [(combined In- Network and Out-of-Network)] of [300] Visits].] Three group therapy Visits = one Outpatient Visit. Outpatient (Out-of-Network) (including group therapy) Subject to [Deductible] [and] [50-80%] Coinsurance. [Benefits subject to [[a Benefit Period/Calendar Year] maximum [(combined In-Network and Out-of- Network)] of [100] Visits./;] [and] [a Per Lifetime maximum [(combined In- Network and Out-of-Network)] of [300] Visits].] GRP 2008 (NJ-Design 7-HSC) [2] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 19 of 46 PageID: 388 Three group therapy Visits = one Outpatient Visit. III. The subsection “Skilled Nursing Facility” in the section “Schedule of Covered Services and Supplies” is replaced by the following subsection: SKILLED NURSING FACILITY Subject to [Deductible] [and] [80-100%] Coinsurance. In-Network [Treatment must follow an Inpatient Hospital stay of at least [three] days.] [Benefits subject to a [120] day limit per [Benefit Period/Calendar Year].*] Out-of-Network Subject to [Deductible] [and] [50-80%] Coinsurance. [Treatment must follow an Inpatient Hospital stay of at least [three] days.] [Benefits subject to a [60] day limit per [Benefit Period/Calendar Year].*] [*[ln-Network days accumulate toward the Out-of-Network [Benefit Period/Calendar Year] maximum and vice versa.] [In no event will benefits be payable for more than [120] days [(combined In-Network and Out-of-Network)] during any [Benefit Period/Calendar Year]].] IV. The section “Your Horizon Program” (form GRP 2002 HOR 100) is changed so that the subsection “Out-of-Pocket Maximum” is replaced by the following: Out-of-Pocket Maximum There are separate Out-of-Pocket Maximums for In-Network and Out-of- Network Covered Services and Supplies (see the Schedule of Covered Services and Supplies). GRP 2008 (NJ-Design 7-HSC) [3] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 20 of 46 PageID: 389 Once a Covered Person Incurs, during a [Benefit Period/Calendar Year], an amount of Covered Charges for which no benefits are paid or payable under the Program equal to the applicable Out-of-Pocket Maximum, Horizon BCBSNJ will waive any applicable Deductible, Copayment or Coinsurance with respect to Covered Charges Incurred by the Covered Person for In-Network or Out-of-Network Covered Services and Supplies, as the case may be, for the remainder of that [Benefit Period/Calendar Year], Once the covered members of a family collectively Incur, during a [Benefit Period/Calendar Year], an amount of Covered Charges for which no benefits are paid or payable under the Program equal to [two/two and a half/three] times the applicable Out-of-Pocket Maximum, Horizon BCBSNJ will waive any applicable Deductible, Copayment or Coinsurance with respect to Covered Charges Incurred by the covered family members for the remainder of that [Benefit Period/Calendar Year], Unpaid In-Network Covered Charges will accumulate toward both the In- Network and Out-of-Network Out-of-Pocket Maximums. Unpaid Out-of- Network Covered Charges will accumulate only toward the Out-of- Network Out-of-Pocket Maximum. An Out-of-Pocket Maximum cannot be met with Non-Covered Charges. [In addition, Covered Charges for Prescription Drugs cannot be applied toward an Out-of-Pocket Maximum.] ick-k'kirk'ick'kiddrkickicfcirkick'kif'kieidrk'kirkit'k'k'ie'k All other benefits and terms of [the Policy/your Booklet] not changed by this Rider remain in force. Attach this Rider to [the Policy/your Booklet]. HORIZON HEALTHCARE SERVICES, INC. By:_______________________________ [Vice President] [Accepted by: ABC Company By: John Doe, President Witness: Richard Roe Date: March 15. 200X 1 GRP 2008 (NJ-Design 7-HSC) [4] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 21 of 46 PageID: 390 GRP 2008 (NJ-Design 7-HSC) [5] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 22 of 46 PageID: 391 GRP 2008 (NJ-Design 7-HSC) [6] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 23 of 46 PageID: 392 HORIZON HEALTHCARE SERVICES, INC. RIDER FORM (ALLOWANCE DEFINITION) [Policyholder Policy No. Rider No. Effective Date ABC Company G-XXXX November 1,200X] As of the above Effective Date, the [Policy’s/Booklet’s] definition of “Allowance” is replaced by the following definition: Allowance: Subject to the exceptions below, an amount determined by Horizon BCBSNJ as the least of the following amounts: (a) the actual charge made by the Provider for the service or supply; (b) in the case of In-Network Providers, the amount that the Provider has agreed to accept for the service or supply; or (c) in the case of Out-of-Network Providers, the amount determined as [100%-260%] of the amount that would be reimbursed for the service or supply under Medicare: Exceptions: (1) The above methods for determining an Allowance do not apply with respect to the [Policy’s/Program’s] coverage of Orthotic and Prosthetic Devices. The Allowance for any such covered device shall be the greater of: (i) the reimbursement rate for the device in the federal Medicare reimbursement schedule; and (ii) in the case of In-Network Providers, the amount that the Provider has agreed to accept for the device. If there is no such rate for the device, the amount determined for (i) shall be the Medicare reimbursement rate for the most similar device. [(2) In the case of a Medical Emergency, or with respect to services rendered in an In-Network Hospital upon a referral from an Out-of-Network Practitioner (unless the Practitioner was selected by the Covered Person), the Allowance determined in accordance with (c), above, shall be increased as necessary to ensure that the Covered Person has no greater liability than he/she would have if treated and so referred by an In-Network Practitioner.] [3 In a case where a Covered Person's [Personal/Primary Care] Physician refers him/her to an Out-of-Network Provider, the Allowance for the Out-of-Network Provider’s services will be the amount determined in accordance with (a), above.] [(4)] With respect to (c), above, if Medicare does not prescribe a reimbursement rate for a Covered Service or Supply, the Allowance for the Covered Service or GRP 2009 (NJ-OON(2)-HSC) [1] [A] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 24 of 46 PageID: 393 Supply will be determined based on the Medicare reimbursement rate for the most similar service or supply. ***************************** All other benefits and terms of the [Policy/Booklet] not changed by this Rider remain in force. Attach this Rider to the [Policy/Booklet]. HORIZON HEALTHCARE SERVICES, INC. By:_________________________________ [Vice President] [Accepted by: ABC Company By: John Doe, President Witness: Richard Roe Date: November 15, 200X1 GRP 2009 (NJ-OON(2)-HSC) [2] [A] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 25 of 46 PageID: 394 HORIZON HEALTHCARE SERVICES, INC. RIDER FORIVI (OUT-OF-NETWORK CHANGES) [Policyholder Policy No. Rider No. Effective Date ABC Company G-XXXX 1 June 1, 20OX] As of the above Effective Date, the [Policy/Booklet-Certificate] is amended as follows: [1. The [Policy’s/Booklet-Certificate’s] definition of “Allowance” is replaced by the following: Allowance: An amount determined by Horizon BCBSNJ as the least of the following amounts: (a) the actual charge made by the Provider for the service or supply; (b) in the case of In-Network Providers, the amount that the Provider has agreed to accept for the service or supply; or (c) in the case of Out-of-Network Providers, the amount calculated as the applicable percentage, shown below, of the amount that would be reimbursed for the service or supply under Medicare: [Ambulatory Surgical Care: [Laboratory services: [Anesthesia services: [Lithotripsy: [Ambulance (non-emergent): [Mobile services: [Cardiac Monitor: [Nurse Midwives: [Chiropractic care: [Optometrist services: [Comprehensive Outpatient Rehabilitation Facilities: [Dialysis: [Physician assistants: [Podiatry: [Durable Medical Equipment: [Psychiatric/Substance Abuse Facilities (except for the treatment of Biologically- based Mental Illness): [Home Infusion Therapy (other than [100-150%]] [100-150%]] [200-300%]] [100-150%]] [100-150%]] [100-150%]] [100-150%]] [100-150%]] [100-150%]] [100-150%]] [100-150%]] [100-125%]] [100-150%]] [100-150%]] [100-150%]] [100-150%]] GRP 2009 (NJ-OON-HSC) [1] [A] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 26 of 46 PageID: 395 drugs and home nursing): [100-150%]] [Home Infusion Therapy (drugs for): [100-110%]] [Home Infusion Therapy (home nursing): [100-125%]] [Rehabilitation Hospitals (Inpatient and Outpatient): [100-150%]] [Sleep laboratory Facilities and home care: [100-150%]] [Hospice Care: [100-125%]] [Hospital stays (Inpatient and Outpatient): [100-150%]] [Skilled Nursing Facility/Sub Acute/ Transitional Care Units: [100- [Radiology: [100- [Wound care: [100- [Physicians’ [office/Hospital] Visits: [100- All other Covered Services and Supplies: 150%]] 150%]] 125%]] 200%]] [150-260%] The above methods for determining an Allowance do not apply with respect to the Program’s coverage of Orthotic and Prosthetic Devices. The Allowance for any such covered device shall be the greater of: (a) the reimbursement rate for the device in the federal Medicare reimbursement schedule; and (b) in the case of In-Network Providers, the amount that the Provider has agreed to accept for the device. If there is no such rate for the device, the amount determined for (a) shall be the Medicare reimbursement rate for the most similar device. In the case of a Medical Emergency or with respect to services rendered in an In- Network Hospital (unless the treating Provider was selected by the Covered Person), the Allowance determined in accordance with (c), above, shall be increased as necessary to ensure that the Covered Person has no greater liability than he/she would have if treated by an In-Network Provider.] [2. The section [“Schedule of Covered Services and Supplies”] is amended to provide that the Out-of-Network Benefits for the Covered Services and Supplies listed below shall be subject to the following maximums per Covered Person per Calendar Year: [(a) For Covered Charges made by an Out-of-Network Ambulatory Surgical Center: $2,000;] [(b) For Covered Charges made for Out-of-Network laboratory services: $750;]* [(c) For Covered Charges made for Out-of-Network Therapy Services (other than services for the treatment of Biologically-based Mental Illness): $750 for [each such service/all such services, collectively].] GRP 2009 (NJ-OON-HSC) [2] [A] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 27 of 46 PageID: 396 * in the case of a Medical Emergency or with respect to services rendered in an In-Network Hospital (unless the treating Provider was selected by the Covered Person), the maximum shown in (b), above, shall be increased as necessary to ensure that the Covered Person has no greater liability than he/she would have if treated by an In- Network Provider.] ***************************** All other benefits and terms of the [Policy/Booklet-Certificate] not changed by this Rider remain in force. Attach this Rider to the [Policy/Booklet-Certificate]. HORIZON HEALTHCARE SERVICES, INC. By: [Vice President] [Accepted by: ABC Company By: John Doe, President Witness: Richard Roe Date: June 15, 200XI GRP 2009 (NJ-OON-HSC) [3] [A] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 28 of 46 PageID: 397 HORIZON HEALTHCARE SERVICES, INC. RIDER FORM (ALLOWANCE) [Policyholder Group No. Rider No. Effective Date ABC Company G-XXXXX August 1,200X] As of the above Effective Date, the section “Definitions” in the [Poiicy/Booklet] is changed to provide that the definition of “Allowance” is replaced by the following definition: Allowance: An amount determined by Horizon BCBSNJ as the least of the following amounts: (a) the actual charge made by the provider for the service or supply; or (b) in the case of In-Network Providers, the amount that the provider has agreed to accept for the service or supply; or (c) in the case of Out-of- Network Providers, and except as provided in the next sentence, the amount determined for the service or supply based on the Resource Based Relative Value System (RBRVS) promulgated by the Centers for Medicare and Medicaid Services; or (d) in the case of Out-of-Network Providers, an amount determined for the service or supply based on: (i) profiles compiled by Horizon BCBSNJ based on the usual and prevailing payments made to providers for similar services or supplies in specific geographical areas; or (ii) similar profiles compiled by outside vendors. With respect to parts (c) or (d), as applicable, the amount determined as the Allowance for services and supplies provided by Out- of-Network Ambulatory Surgical Centers shall be [160%] 1 of the amount that would be reimbursed for them under the 2010 RBRVS. Exceptions: (1) The above methods for determining an Allowance do not apply with respect to the Program’s coverage of Orthotic and Prosthetic Devices. The Allowance for any such covered device shall be the greater of: (i) the reimbursement rate for the device in the federal Medicare reimbursement schedule; and (ii) in the case of In-Network Providers, the amount that the Provider has agreed to accept for the device. If there is no such rate for the device, the amount determined for (i) shall be the Medicare reimbursement rate for the most similar device. (2) With respect to (i) a Medical Emergency; or (ii) Covered Services and Supplies provided in an In-Network Hospital, the Allowance determined in accordance with (c) or (d), above, for any Covered Services and Supplies provided by Out-of-Network Providers 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. 1 This percentage can be increased. GRP 2010 (NJ-ASC-HSC) [1] [A] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 29 of 46 PageID: 398 [(3) In a case where a Covered Person’s [Personal/Primary Care] Physician refers him/her to an Out-of-Network Provider, the Allowance for the Out-of- Network Provider’s services will be the amount determined in accordance with (a), above.] 2 'k'k'fckickirk'kiricfckitirk'k-kieickick'kirkirk-k All other benefits and terms of the [Policy/Booklet] not changed by this Rider remain in force. Attach this Rider to the [Policy/Booklet]. HORIZON HEALTHCARE SERVICES, INC. By:______________________ [Vice President] [Accepted by: ABC Company By: John Doe, President Witness: Richard Roe Date: August 15, 200X1 2 This part (3) will be omitted if the case does not involve a gatekeeper. GRP 2010 (NJ-ASC-HSC) [2] [A] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 30 of 46 PageID: 399 HORIZON HEALTHCARE SERVICES, INC. RIDER FORM (ALLOWANCE DEFINITION) [Policyholder Policy No. Rider No. Effective Date ABC Company G-XXXX February 1,200X] As of the above Effective Date, the [Policy’s/Booklet’s] definition of “Allowance” is replaced by the following definition: Allowance: Subject to the exceptions below, an amount determined by Horizon BCBSNJ as the least of the following amounts: (a) the actual charge made by the Provider for the service or supply; (b) in the case of In-Network Providers, the amount that the Provider has agreed to accept for the service or supply; or (c) in the case of Out-of-Network Providers, the amount determined as [100%-260%] ^ of the amount that would be reimbursed for the service or supply under Medicare: Exceptions: (1) The above methods for determining an Allowance do not apply with respect to the [Policy’s/Program’s] coverage of Orthotic and Prosthetic Devices. The Allowance for any such covered device shall be the greater of: (i) the reimbursement rate for the device in the federal Medicare reimbursement schedule; and (ii) in the case of In-Network Providers, the amount that the Provider has agreed to accept for the device. If there is no such rate for the device, the amount determined for (i) shall be the Medicare reimbursement rate for the most similar device. [(2) With respect to (i) a Medical Emergency; or (ii) Covered Services and Supplies provided in an In-Network Hospital, the Allowance determined in accordance with (c), above, for any Covered Services and Supplies provided by Out-of- Network Providers 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. But this (ii) shall not apply if the Covered Person: (a) had or was given the opportunity to select In-Network Providers to provide the Covered Services and Supplies; and (b) elected the services of Out-of-Network Providers.] 2 1 If an item indicates a range, anything within the specified range can be used. 2 This part (2) will be omitted if the rider is used for a case providing indemnity coverage. GRP 2010 (NJ-OON(3)-HSC) m [A] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 31 of 46 PageID: 400 [(4)] With respect to (c), above, if Medicare does not prescribe a reimbursement rate for a Covered Service or Supply, the Allowance for the Covered Service or Supply will be [determined as [50%-95%] of] 3 the actual charge made by the Provider. [(3) In a case where a Covered Person’s [Personal/Primary Care] Physician refers him/her to an Out-of-Network Provider, the Allowance for the Out-of-Network Provider’s services will be the amount determined in accordance with (a), above.]2 ***************************** All other benefits and terms of the [Policy/Booklet] not changed by this Rider remain in force. Attach this Rider to the [Policy/Booklet]. HORIZON HEALTHCARE SERVICES, INC. By:_______________________________ [Vice President] [Accepted by: ABC Company By: John Doe, President Witness: Richard Roe Date: February 15, 200X] 3 This part (3) will be omitted if the rider is used for a case that does not involve a gatekeeper. 4 If the allowance in this situation is to be the provider’s actual charge for the service or supply, the bracketed part will be omitted. 2 This part (3) will be omitted if the rider is used for a case that does not involve a gatekeeper. GRP 2010 (NJ-OON(3)-HSC) [2] [A] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 32 of 46 PageID: 401 HORIZON HEALTHCARE SERVICES, INC. RIDER FORM (ALLOWANCE DEFINITION) [Policyholder Policy No. Rider No. Effective Date ABC Company G-XXXX February 1,200X] As of the above Effective Date, the [Policy’s/Booklet’s] definition of “Allowance” is replaced by the following definition: Allowance: Subject to the exceptions below, an amount determined by Horizon BCBSNJ as the least of the following amounts: (a) the actual charge made by the Provider for the service or supply; (b) in the case of In-Network Providers, the amount that the Provider has agreed to accept for the service or supply; or (c) in the case of Out-of-Network Providers, the amount determined as [100%-260%] f of the amount that would be reimbursed for the service or supply under Medicare: Exceptions: (1) The above methods for determining an Allowance do not apply with respect to the [Policy’s/Program’s] coverage of Orthotic and Prosthetic Devices. The Allowance for any such covered device shall be the greater of: (i) the reimbursement rate for the device in the federal Medicare reimbursement schedule; and (ii) in the case of In-Network Providers, the amount that the Provider has agreed to accept for the device. If there is no such rate for the device, the amount determined for (i) shall be the Medicare reimbursement rate for the most similar device. [(2) With respect to (i) a Medical Emergency; or (ii) Covered Services and Supplies provided in an In-Network Hospital, the Allowance determined in accordance with (c), above, for any Covered Services and Supplies provided by Out-of- Network Providers 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. But this (ii) shall not apply if the Covered Person: (a) had or was given the opportunity to select In-Network Providers to provide the Covered Services and Supplies; and (b) elected the services of Out-of-Network Providers.] 2 1 If an item indicates a range, anything within the specified range can be used. 2 This part (2) will be omitted if the rider is used for a case providing indemnity coverage. GRP 2011 (NJ-OON(4)-HSC) [1) [A] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 33 of 46 PageID: 402 [(4)] With respect to (c), above, if Medicare does not prescribe a reimbursement rate for a Covered Service or Supply, the Allowance for the Covered Service or Supply will be determined based on profiles compiled by Horizon BCBSNJ based on usual and prevailing payments made to Providers for similar services or supplies in specific geographical areas, or similar profiles compiled by outside vendors. [(3) In a case where a Covered Person’s [Personal/Primary Care] Physician refers him/her to an Out-of-Network Provider, the Allowance for the Out-of-Network Provider’s services will be the amount determined in accordance with (a), above.] 3 ***************************** All other benefits and terms of the [Policy/Booklet] not changed by this Rider remain in force. Attach this Rider to the [Policy/Booklet]. HORIZON HEALTHCARE SERVICES, INC. By:_______________________________ [Vice President] [Accepted by: ABC Company By: John Doe, President Witness: Richard Roe Date: February 15, 200X] 3 This part (3) will be omitted if the rider is used for a case that does not involve a gatekeeper. GRP 2011 (NJ-OON(4)-HSC) [2] [A] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 34 of 46 PageID: 403 HORIZON HEALTHCARE SERVICES, INC. RIDER FORM (ALLOWANCE DEFINITION) [Policyholder Policy No. Rider No. Effective Date ABC Company G-XXXX 1 January 1, 20XX] As of the above Effective Date, the [Policy’s/Booklet’s] definition of “Allowance” is replaced by the following definition: Allowance: Subject to the exceptions below, an amount determined by Horizon BCBSNJ as the least of the following amounts: (a) the actual charge made by the Provider for the service or supply; (b) in the case of In-Network Providers, the amount that the Provider has agreed to accept for the service or supply; or (c) in the case of Out-of-Network Providers: (i) for services provided by Ambulatory Surgical Centers, the amount determined as [100%-260%] 1 of the amount that would be reimbursed for the services under Medicare; and (ii) for all other Covered Services and Supplies, the amount determined as [180%-400%] of the amount that would be reimbursed for them under Medicare. Exceptions: (1) The above methods for determining an Allowance do not apply with respect to the [Policy's/Program’s] coverage of Orthotic and Prosthetic Devices. The Allowance for any such covered device shall be the greater of: (i) the reimbursement rate for the device in the federal Medicare reimbursement schedule; and (ii) in the case of In-Network Providers, the amount that the Provider has agreed to accept for the device. If there is no such rate for the device, the amount determined for (i) shall be the Medicare reimbursement rate for the most similar device. [(2) With respect to (i) a Medical Emergency; or (ii) Covered Services and Supplies provided in an In-Network Hospital, the Allowance determined in accordance with part (c), above, for any Covered Services and Supplies provided by Out-of- Network Providers 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. But this (ii) shall not apply if the Covered Person: (a) had or was given the opportunity to select In-Network Providers to provide the 1 If an item indicates a range, anything within the stated range can be shown. GRP 2013 (OON(15)-HSC) [1] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 35 of 46 PageID: 404 Covered Services and Supplies; and (b) elected the services of Out-of-Network Providers.]2 [(3) In a case where a Covered Person’s [Personal/Primary Care] Physician refers him/her to an Out-of-Network Provider, the Allowance for the Out-of-Network Provider’s services will be the amount determined in accordance with (a), above.]3 [(4)] The method described in part (c), above, shall not apply with respect to Covered Charges for Orally Administered Anti-Cancer Drugs obtained from Out-of-Network Providers. Instead, such Covered Charges shall be payable at 100% after any applicable Deductible is met. [(5)] With respect to part (c), above, if Medicare does not prescribe a reimbursement rate for a Covered Service or Supply, the Allowance for the Covered Service or Supply will be determined based on profiles compiled by Horizon BCBSNJ based on usual and prevailing payments made to Providers for similar services or supplies in specific geographical areas, or similar profiles compiled by outside vendors. ***************************** All other benefits and terms of the [Policy/Booklet] not changed by this Rider remain in force. Attach this Rider to the [Policy/Booklet]. HORIZON HEALTHCARE SERVICES, INC. By:_______________________________ [Vice President] [Accepted by: ABC Company By: John Doe, President Witness: Richard Roe Date: January 15, 20XX] 2 This part (2) will be deleted if the case provided indemnity coverage. 3 This part (3) will be deleted if the case does not involve a gatekeeper. GRP 2013 (OON(15)-HSC) [2] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 36 of 46 PageID: 405 HORIZON HEALTHCARE SERVICES, INC. RIDER FORM (ALLOWANCE DEFINITION) [Policyholder Policy No. Rider No. Effective Date ABC Company G-XXXX 1 December 1,20XX] As of the above Effective Date, the [Policy’s/Booklet’s] definition of “Allowance” is replaced by the following definition: Allowance: Subject to the exceptions below, an amount determined by Horizon BCBSNJ as the least of the following amounts: (a) the actual charge made by the Provider for the service or supply; (b) in the case of In-Network Providers, the amount that the Provider has agreed to accept for the service or supply; or (c) in the case of Out-of-Network Providers, the following: (i) For Practitioners’ services, [150%-400%] of the amount determined for the service based on the Resource Based Relative Value System (RBRVS) promulgated by the Centers for Medicare and Medicaid Services. (ii) For the services of Ambulatory Surgical Centers, [160%-400%] of the amount determined for the services based on the RBRVS. (iii) For all other Covered Services and Supplies, the amount determined for the Covered Service or Supply in accordance with: (a) profiles compiled by Horizon BCBSNJ based on usual and prevailing payments made to Providers for similar services or supplies in specific geographical areas; or (b) similar profiles compiled by outside vendors. Exceptions: (1) The above methods for determining an Allowance do not apply with respect to the [Policy’s/Program’s] coverage of Orthotic and Prosthetic Devices. The Allowance for any such covered device shall be the greater of: (i) the reimbursement rate for the device in the RBRVS; and (ii) in the case of In- Network Providers, the amount that the Provider has agreed to accept for the device. If there is no such rate for the device, the amount determined for (i) shall be the Medicare reimbursement rate for the most similar device. [(2) With respect to (i) a Medical Emergency; or (ii) Covered Services and Supplies provided in an In-Network Hospital, the Allowance determined in accordance with part (c), above, for any Covered Services and Supplies provided by Out-of- GRP 2013 (OON11-HSC) [1] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 37 of 46 PageID: 406 Network Providers 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. But this (ii) shall not apply if the Covered Person: (a) had or was given the opportunity to select In-Network Providers to provide the Covered Services or Supplies; and (b) elected the services of Out-of-Network Providers.] 1 [(3) In a case where a Covered Person’s [Personal/Primary Care] Physician refers him/her to an Out-of-Network Provider, the Allowance for the Out-of-Network Provider’s service or supply will be the actual charge made by the Provider for the service or supply.]1 2 [(4)] The methods described in part (c), above, shall not apply with respect to Covered Charges for Orally Administered Anti-Cancer Drugs obtained from Out-of-Network Providers. Instead, such Covered Charges shall be payable at 100% after any applicable Deductible is met. [(5)] With respect to parts (c)(i) and (c)(ii), above, if Medicare does not prescribe a reimbursement rate for the Covered Service or Supply, the Allowance for it will be determined in accordance with: (a) profiles compiled by Horizon BCBSNJ based on usual and prevailing payments made to Providers for similar services or supplies in specific geographical areas; or (b) similar profiles compiled by outside vendors. ***************************** All other benefits and terms of the [Policy/Booklet] not changed by this Rider remain in force. Attach this Rider to the [Policy/Booklet]. HORIZON HEALTHCARE SERVICES, INC. By:_______________________________ [Vice President] [Accepted by: ABC Company By: John Doe, President Witness: Richard Roe Date: December 15, 20XX1 1 This item (2) will be omitted if the contract is providing indemnity coverage. 2 This item (3) will be omitted if the case does not involve a gatekeeper. GRP 2013 (OON11-HSC) [2] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 38 of 46 PageID: 407 HORIZON HEALTHCARE SERVICES, INC. RIDER FORM (ALLOWANCE DEFINITION) [Policyholder Policy No. Rider No. Effective Date ABC Company G-XXXX 1 May 1, 20XX] As of the above Effective Date, the [Policy’s/Booklet’s] definition of “Allowance” is replaced by the following definition: Allowance: Subject to the exceptions below, an amount determined by Horizon BCBSNJ as the least of the following amounts: (a) the actual charge made by the Provider for the service or supply; (b) in the case of In-Network Providers, the amount that the Provider has agreed to accept for the service or supply; or (c) in the case of Out-of-Network Providers, the amount determined as [60%-100%] of the reimbursement rate specified for the Covered Service or Supply in the databases developed by FAIR Health, Inc. (FAIR Health). Exceptions'. (1) The above methods for determining an Allowance do not apply with respect to the [Policy’s/Program’s] coverage of Orthotic and Prosthetic Devices. The Allowance for any such covered device shall be the greater of: (i) the reimbursement rate for the device in the federal Medicare reimbursement schedule; and (ii) in the case of In-Network Providers, the amount that the Provider has agreed to accept for the device. If there is no such rate for the device, the amount determined for (i) shall be the Medicare reimbursement rate for the most similar device. [(2) With respect to (i) a Medical Emergency; or (ii) Covered Services and Supplies provided in an In-Network Hospital, the Allowance determined in accordance with part (c), above, for any Covered Services and Supplies provided by Out-of- Network Providers 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. But this (ii) shall not apply if the Covered Person: (a) had or was given the opportunity to select In-Network Providers to provide the Covered Services or Supplies; and (b) elected the services of Out-of-Network Providers.] 1 1 This part (2) will be deleted if the case provided indemnity coverage. GRP 2013 (OON-HSC) [1] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 39 of 46 PageID: 408 [(3) In a case where a Covered Person’s [Personal/Primary Care] Physician refers him/her to an Out-of-Network Provider, the Allowance for the Out-of-Network Provider’s services will be the amount determined in accordance with part (a), above.]2 [(4)] The method described in part (c), above, shall not apply with respect to Covered Charges for Orally Administered Anti-Cancer Drugs obtained from Out-of-Network Providers. Instead, such Covered Charges shall be payable at 100% [after the applicable Deductible is met]. 3 [(5)] With respect to part (c), above, if the databases developed by FAIR Health do not prescribe a reimbursement rate for a Covered Service or Supply, the Allowance for the Covered Service or Supply will be determined as [100%- 260%] of the amount that would be reimbursed for the Covered Service or Supply under Medicare. And if Medicare does not prescribe a reimbursement rate for the Covered Service or Supply, the Allowance for it will be determined based on: (a) profiles compiled by Horizon BCBSNJ based on usual and prevailing payments made to Providers for similar services or supplies in specific geographical areas; or (b) similar profiles compiled by outside vendors other than FAIR Health. ■k-kick irk-kick-irk irk irk "kit "kit •kick irk “kirk •kit All other benefits and terms of the [Policy/Booklet] not changed by this Rider remain in force. Attach this Rider to the [Policy/Booklet]. HORIZON HEALTHCARE SERVICES, INC. By:______________________________ [Vice President] [Accepted by: ABC Company By: John Doe, President Witness: Richard Roe Date: May 15, 20XXI 2 This part (3) will be deleted if the case does not involve a gatekeeper. 3 The bracketed part will only be included if the case is a high deductible plan linked to a health savings account. GRP 2013 (OON-HSC) [2] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 40 of 46 PageID: 409 HORIZON HEALTHCARE SERVICES, INC. RIDER FORM (ALLOWANCE DEFINITION) [Policyholder Policy No. Rider No. Effective Date ABC Company G-XXXX September 1,20XX] As of the above Effective Date, the [Policy’s/Booklet’s] definition of “Allowance” is replaced by the following definition: Allowance: Subject to the exceptions below, an amount determined by Horizon BCBSNJ as the least of the following amounts: (a) the actual charge made by the Provider for the service or supply; (b) in the case of In-Network Providers, the amount that the Provider has agreed to accept for the service or supply; or (c) in the case of Out-of-Network Providers, the amount determined as: (i) [60%-100%] of the reimbursement rate specified for the Covered Service or Supply in the databases developed by FAIR Health, Inc. (FAIR Health); or [(ii) the amount determined for the Covered Service or Supply based on the Resource Based Relative Value System promulgated by the Centers for Medicare and Medicaid Services;] 1 [(iii) the amount determined for the Covered Service or Supply in accordance with: (a) profiles compiled by Horizon BCBSNJ based on usual and prevailing payments made to Providers for similar services or supplies in specific geographical areas; or (b) similar profiles compiled by outside vendors other than FAIR Health.]1 2 Exceptions: (1) The above methods for determining an Allowance do not apply with respect to the [Policy’s/Program’s] coverage of Orthotic and Prosthetic Devices. The Allowance for any such covered device shall be the greater of: (i) the reimbursement rate for the device in the federal Medicare reimbursement schedule; and (ii) in the case of In-Network Providers, the amount that the Provider has agreed to accept for the device. If there is no such rate for the device, the amount determined for (i) shall be the Medicare reimbursement rate for the most similar device. 1 This item will be omitted if part (iii) is used. 2 This item will be omitted if part (ii) is used. GRP 2013 (OONNV-HSC) [1] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 41 of 46 PageID: 410 [(2) With respect to (i) a Medical Emergency; or (ii) Covered Services and Supplies provided in an In-Network Hospital, the Allowance determined in accordance with part (c), above, for any Covered Services and Supplies provided by Out-of- Network Providers 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. But this (ii) shall not apply if the Covered Person: (a) had or was given the opportunity to select In-Network Providers to provide the Covered Services or Supplies; and (b) elected the services of Out-of-Network Providers.]3 [(3) In a case where a Covered Person’s [Personal/Primary Care] Physician refers him/her to an Out-of-Network Provider, the Allowance for the Out-of-Network Provider’s service or supply will be the actual charge made by the Provider for the service or supply.] 4 [(4)] The methods described in part (c), above, shall not apply with respect to Covered Charges for Orally Administered Anti-Cancer Drugs obtained from Out-of-Network Providers. Instead, such Covered Charges shall be payable at 100% after any applicable Deductible is met. [(5)] With respect to part (c)(i), above, if the databases developed by FAIR Health do not prescribe a reimbursement rate for the Covered Service or Supply, the Allowance for it will be determined [as [100%-260%] of the amount that would be reimbursed for the Covered Service or Supply under Medicare.] 5 And if Medicare does not prescribe a reimbursement rate for the Covered Service or Supply, the Allowance for it will be determined in accordance with: (a) profiles compiled by Horizon BCBSNJ based on usual and prevailing payments made to Providers for similar services or supplies in specific geographical areas; or (b) similar profiles compiled by outside vendors other than FAIR Health. ***************************** All other benefits and terms of the [Policy/Booklet] not changed by this Rider remain in force. Attach this Rider to the [Policy/Booklet]. 3 This part (2) will be deleted if the case provided indemnity coverage. 4 This part (3) will be deleted if the case does not involve a gatekeeper. 5 This item will be used if part (c) (iii) is used. If part (c)(ii) is used, this item will be replaced by the following insert: “...in accordance with: (a) profiles compiled by Horizon BCBSNJ based on usual and prevailing payments made to Providers for similar services or supplies in specific geographical areas; or (b) similar profiles compiled by outside vendors other than FAIR Health.” GRP 2013 (OONNV-HSC) [2] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 42 of 46 PageID: 411 HORIZON HEALTHCARE SERVICES, INC. By: [Vice President] [Accepted by: ABC Company By: John Doe, President Witness: Richard Roe Date: May 15. 20XX] GRP 2013 (OONNV-HSC) [3] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 43 of 46 PageID: 412 HORIZON HEALTHCARE SERVICES, INC. RIDER FORM (ALLOWANCE DEFINITION) [Policyholder Policy No. Rider No. Effective Date ABC Company G-XXXX 1 September 1,20XX] As of the above Effective Date, the [Policy’s/Booklet’s] definition of 'Allowance” is replaced by the following definition: Allowance: Subject to the exceptions below, an amount determined by Horizon BCBSNJ as the least of the following amounts: (a) the actual charge made by the Provider for the service or supply; (b) in the case of In-Network Providers, the amount that the Provider has agreed to accept for the service or supply; or (c) in the case of Out-of-Network Providers, the amount determined as follows: (i) With respect to the services of Practitioners, the amount determined as [60%-100%] of the reimbursement rate specified for the Covered Service or Supply in the databases developed by FAIR Health, Inc. (FAIR Health). (ii) With respect to services and supplies provided by Ambulatory Surgical Centers, the amount determined as [160%] of the amount that would be reimbursed for them under Medicare. (iii) With respect to all other Covered Services and Supplies, the amount determined in accordance with: (a) profiles compiled by Horizon BCBSNJ based on usual and prevailing payments made to Providers for similar services or supplies in specific geographical areas; or (b) similar profiles compiled by outside vendors other than FAIR Health. Exceptions: (1) The above methods for determining an Allowance do not apply with respect to the [Policy’s/Program’s] coverage of Orthotic and Prosthetic Devices. The Allowance for any such covered device shall be the greater of: (i) the reimbursement rate for the device in the federal Medicare reimbursement schedule; and (ii) in the case of In-Network Providers, the amount that the Provider has agreed to accept for the device. If there is no such rate for the device, the amount determined for (i) shall be the Medicare reimbursement rate for the most similar device. GRP 2013 (OONPS-HSC) [1] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 44 of 46 PageID: 413 [(2) With respect to (i) a Medical Emergency; or (ii) Covered Services and Supplies provided in an In-Network Hospital, the Allowance determined in accordance with part (c), above, for any Covered Services and Supplies provided by Out-of- Network Providers 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. But this (ii) shall not apply if the Covered Person: (a) had or was given the opportunity to select In-Network Providers to provide the Covered Services or Supplies; and (b) elected the services of Out-of-Network Providers.] 1 [(3) In a case where a Covered Person’s [Personal/Primary Care] Physician refers him/her to an Out-of-Network Provider, the Allowance for the Out-of-Network Provider’s service or supply will be the actual charge made by the Provider for the service or supply.]1 2 [(4)] The methods described in part (c), above, shall not apply with respect to Covered Charges for Orally Administered Anti-Cancer Drugs obtained from Out-of-Network Providers. Instead, such Covered Charges shall be payable at 100% [after the applicable Deductible is met], 3 [(5)] With respect to part (c)(i), above, if the databases developed by FAIR Health do not prescribe a reimbursement rate for the Covered Service or Supply, the Allowance for it will be determined as [100%-260%] of the amount that would be reimbursed for the Covered Service or Supply under Medicare. And if Medicare does not prescribe a reimbursement rate for the Covered Service or Supply, the Allowance for it will be determined in accordance with: (a) profiles compiled by Horizon BCBSNJ based on usual and prevailing payments made to Providers for similar services or supplies in specific geographical areas; or (b) similar profiles compiled by outside vendors other than FAIR Health. With respect to part (c)(ii), above, if Medicare does not prescribe a reimbursement rate for the Covered Service or Supply, the Allowance for it will be determined in accordance with: (a) profiles compiled by Horizon BCBSNJ based on usual and prevailing payments made to Providers for similar services or supplies in specific geographical areas; or (b) similar profiles compiled by outside vendors other than FAIR Health. ***************************** 1 This part (2) will be deleted if the case provided indemnity coverage. 2 This part (3) will be deleted if the case does not involve a gatekeeper. 3 The bracketed part will only be included if the case is a high deductible plan linked to a health savings account. GRP 2013 (OONPS-HSC) [2] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 45 of 46 PageID: 414 All other benefits and terms of the [Policy/Booklet] not changed by this Rider remain in force. Attach this Rider to the [Policy/Booklet]. HORIZON HEALTHCARE SERVICES, INC. By:_______________________________ [Vice President] [Accepted by: ABC Company By: John Doe, President Witness: Richard Roe Date: May 15. 20XX1 GRP 2013 (OONPS-HSC) [3] Case 2:16-cv-05922-JMV-JBC Document 16-2 Filed 12/09/16 Page 46 of 46 PageID: 415 18122500v.1 IN THE 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 No.: 2:16-CV-05922-JMV-JBC NEWARK VICINAGE CERTIFICATE OF SERVICE I, Edward M. Koch, hereby certify that the foregoing Notice of Motion to Dismiss, Brief in Support, and Exhibits thereto were served on the following via ECF on this 9th day of December, 2016: Anthony P. LaRocco, Esquire Kathy Dutton Helmer, Esquire K&L GATES, LLP One Newark Center, 10th Floor Newark, New Jersey 07102 Attorneys for Plaintiffs Case 2:16-cv-05922-JMV-JBC Document 16-3 Filed 12/09/16 Page 1 of 2 PageID: 416 -2- 18122500v.1 WHITE AND WILLIAMS LLP /s/ Edward M. Koch By: Edward M. Koch, Esquire One Riverfront Plaza 1037 Raymond Boulevard, Suite 230 Newark, NJ 07102-5425 Telephone 201-368-7200 Attorney for Defendant, Horizon Healthcare Services, Inc. d/b/a Horizon Blue Cross Blue Shield of New Jersey Dated: December 9, 2016 Case 2:16-cv-05922-JMV-JBC Document 16-3 Filed 12/09/16 Page 2 of 2 PageID: 417