Opinion
Civil Action No.: 08-6160 (JLL)
06-04-2012
BARBARA EDWARDS, in her capacity as Trustee in Bankruptcy of Roxbury Surgical Center, LLC, f/d/b/a Roxbury Open MRI and Surgery Center, and NORTH JERSEY AMBULATORY SURGERY CENTER, LLC, individually and on behalf of all others similarly situated, Plaintiffs, v. HORIZON BLUE CROSS BLUE SHIELD OF NEW JERSEY, Defendant.
NOT FOR PUBLICATION
OPINION
LINARES, District Judge.
This matter comes before the Court by way of a motion to dismiss for lack of standing (CM/ECF No. 86) by Defendant Horizon Blue Cross Blue Shield of New Jersey ("Defendant" or "Horizon"). This Court has considered the submissions in support of and in opposition to the motion and decides this matter without oral argument pursuant to Rule 78 of the Federal Rules of Civil Procedure. For the reasons set forth below, Defendant's motion to dismiss is DENIED.
Defendant does not specify pursuant to which subpart of Federal Rule of Civil Procedure 12(b) it moves. Defendant references Plaintiff's failure to state a claim but bases its motion on the issue of standing. Accordingly, the Court construes the instant motion as one pursuant to 12(b)(1).
I. BACKGROUND
This suit arises out of an alleged scheme by Defendant to illegally reduce reimbursements for services by certain healthcare providers. Plaintiffs specifically allege that "[i]n or about June 2003, Horizon launched an illegal scheme to reduce dramatically the amounts that it pays in reimbursement for services provided at out of network ambulatory surgical centers in New Jersey . . . ." (Compl. ¶ 24). As a result of the alleged scheme, "in or about October 2004, the amounts of the payments that Horizon makes to class members abruptly decreased." (Id. at ¶ 45). Accordingly, Plaintiffs North Jersey Ambulatory Surgery Center, LLC ("North Jersey") (collectively "Plaintiffs") and Barbara Edwards, in her capacity as Trustee in the Bankruptcy of Roxbury Surgical Center, LLC, f/d/b/a Roxbury Open MRI and Surgery Center ("Roxbury") bring this putative class action as beneficiaries of small and large employer health benefits plans and self insured health benefits plans, administered by Defendant Horizon to recover funds that Horizon allegedly failed to pay in violation of § 502(a)(1)(B) of the Employee Retirement and Income Security Act (ERISA), 29 U.S.C. § 1132(a)(1)(B). (Id. at ¶¶ 1-3).
Defendant Horizon is a non-profit corporation "engaged in the business of providing health insurance coverage, administration of health benefits plans and related services." (Id. at ¶ 6). Plaintiffs are out of network providers, meaning that they provide services to patients whose Horizon policies allow them to receive services from providers who do not participate in Horizon's provider network. (Id. at ¶ 7). Accordingly, neither Plaintiff has ever had a contract with Horizon setting forth the terms of payment for services provided by Plaintiffs to patients covered under plans administered by Horizon. (Id.). Generally, policies that permit a patient to receive services from out of network providers require a higher premium than those which limit patients to obtaining services from providers who participate in Horizon's network. (Id. at ¶ 8). Patients that receive out of network services are entitled to a portion of the cost of those services. (Id.).
As per the Amended Complaint, both North Jersey and Roxbury require that every patient assign benefits to the provider. (Id. at 10). Specifically, the Amended Complaint provides as follows: "[u]nder the terms of both North Jersey's and Roxbury's standard assignment of benefits contractual language, every patient who is covered under a Horizon policy assigns to the provider benefits to which the patient is entitled under the applicable health benefits plan that Horizon administers and/or insures, including (but not limited to) the right for the provider to receive directly from Horizon payments to which the patient is entitled under the terms of the applicable health benefits plan." (Id.). The relevant language of the form completed by Roxbury patients provides as follows:
I request that payment of authorized insurance benefits be made on my behalf to Roxbury Surgical Center and Anesthesiologists for services furnished me by the Roxbury Surgical Center. I authorize any holder of medical information about me to release to the health care financing administration and its agents, or any insurance company any information needed to determine these benefits or the benefits payable for the related services. I understand that I may be responsible for any balances as dictated by my insurance carrier.(Pls.' Opp'n., 3; Nagel Decl. Ex. A). Similarly, the North Jersey patient forms contain the following relevant provision:
I authorize and direct my insurer or payor to pay directly to the above Center any or all benefits, up to the amount of my bill, accruing to me in connection with my treatment. I agree that, in consideration of the services that were provided to me. I individually obligate myself to pay the account promptly in accordance with the regular rates and terms of the facility. I understand, therefore, that to the extent permitted under applicable laws and contractual arrangements, I am financially responsible to the Center for any amount not covered by insurance. Furthermore, I understand that my insurer or payor may require certain healthcare services to be
authorized before they are furnished to me. I individually obligate myself to pay the account of the Center with respect to services that I choose to receive notwithstanding that my health insurer or payor has refused to give preauthorization for all or any portion of my services.(Pls.' Opp'n., 3-4; Nagel Decl. Ex. B). The North Jersey form also contains the following:
Out of Network: I understand I am using my out-of-network benefits. This facility is not contracted with my insurance company to provide services. I understand that the reimbursement may be sent to me instead of the Center. Upon receipt of the insurance payment, I will forward the check and the explanation of benefits to the Center. In addition, I understand that my insurance plan may still hold me responsible for any deductibles and/or coinsurance.(Pls.' Opp'n., 4; Nagel Decl. Ex. B) (emphasis in original).
Upon completion of the assignment of benefits form, Plaintiffs assumed responsibility for the patient's claim, including submitting the claim to Horizon and receiving payment. (Compl. ¶ 11). Notably, Horizon allegedly accepts such forms as a matter of course and routinely sends checks payable to North Jersey or Roxbury in connection therewith. (Id. at ¶¶ 13-14). Plaintiffs further allege that they have never received any notice that Horizon declined to consent to the assignment. (Id. at ¶¶ 13).
The Court will not recite the procedural history herein, as Magistrate Judge Arleo did so in a report and recommendation dated September 16, 2011 (CM/ECF No. 64), which this Court adopted, and the Court writes only for the parties.
II. LEGAL STANDARD
Pursuant to Rule 12(b)(1), a court must dismiss a complaint if it lacks subject matter jurisdiction to hear a claim. Fed. R. Civ. P. 12(b)(1). Standing is a jurisdictional matter and thus "a motion to dismiss for want of standing is also properly brought pursuant to Rule 12(b)(1)." Ballentine v. United States, 486 F.3d 806, 810 (3d Cir. 2007). "'The party invoking federal jurisdiction bears the burden of establishing' the elements of standing, and 'each element must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation.'" FOCUS v. Allegheny Cnty. Court of Common Pleas, 75 F.3d 834, 838 (3d Cir. 1996) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)).
"When standing is challenged on the basis of the pleadings, we accept as true all material allegations in the complaint, and construe the complaint in favor of the complaining party." Id. (quoting Pennell v. City of San Jose, 485 U.S. 1, 7 (1988)); Ballentine v. United States, 486 F.3d at 810 (citing Warth v. Seldin, 422 U.S. 490, 501 (1975); Storino v. Borough of Point Pleasant Beach, 322 F.3d 293, 296 (3d Cir. 2003)) ("Pursuant to Rule 12(b)(1), the Court must accept as true all material allegations set forth in the complaint, and must construe those facts in favor of the nonmoving party.").
Motions to dismiss under Rule 12(b)(1) may be treated as either a "facial or factual challenge to the court's subject matter jurisdiction." Gould Elec. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000). Under a facial attack, the movant challenges the legal sufficiency of the claim and the Court considers only "the allegations of the complaint and documents referenced therein and attached thereto in the light most favorable to the plaintiff." Id. In reviewing a factual attack, however, the challenge is to the actual alleged jurisdictional facts. In that instance, a court is free to consider evidence outside of the pleadings. Id.
III. DISCUSSION
"In essence the question of standing is whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues." Storino v. Borough of Point Pleasant Beach, 322 F.3d at 296 (quoting Warth v. Seldin, 422 U.S. at 498). "It is axiomatic that, in addition to those requirements imposed by statute, plaintiffs must also satisfy Article III of the Constitution." Horvath v. Keystone Health Plan E., Inc., 333 F.3d 450, 455 (3d Cir. 2003). As summarized by the Third Circuit, the requirements of Article III constitutional standing are as follows:
(1) the plaintiff must have suffered an injury in fact - an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) there must be a causal connection between the injury and the conduct complained of - the injury has to be fairly traceable to the challenged action of the defendant and not the result of the independent action of some third party not before the court; and (3) it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.Society Hill Towers Owners' Ass'n v. Rendell, 210 F.3d 168, 175-76 (3d Cir. 2000) (citing Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478, 484-85 (3d Cir. 1998) and Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130 (1992)).
Defendant implicitly argues that Plaintiffs lack both statutory and constitutional standing. Specifically, Defendant argues that Plaintiffs lack standing by virtue of the fact that they are assignees of beneficiaries of plans governed by ERISA because of the following: (1) Plaintiffs lack standing because they fail to allege that they hold a complete assignment of benefits; and (2) Plaintiffs do not allege that they nor any plan beneficiary suffered injury. Defendant additionally argues that Plaintiffs lack standing to pursue injunctive relief under section 502(a)(3) of ERISA. The Court will address each in turn.
A. Assignment of Benefits and Derivative Standing under ERISA
Generally, standing under the civil enforcement provision of ERISA, § 502(a), is "limited to participants and beneficiaries." Pascack Valley Hosp. Inc. v. Local 464A UFCW Welfare Reimbursement Plan, 388 F.3d 393, 400 (3d Cir. 2004); 29 U.S.C. § 1132(a)(1)(B). While the Third Circuit has not expressly decided the issue of whether a health care provider may obtain standing to sue under § 502 by assignment from a participant or beneficiary, it has acknowledged that almost every circuit has ruled that a provider may do so. Id. at 401; Franco v. Conn. Gen. Life Ins. Co., 818 F. Supp. 2d 792, 808 (D.N.J. 2011); Premier Health Ctr., P.C. et al. v. UnitedHealth Gp., et al., Civ. No. 11-425, 2012 WL 1135608, at *5 (D.N.J. April 4, 2012). As Judge Salas recently discussed in Premier Health, "since Pascack Valley, courts in this District have interpreted the Third Circuit's statements as an indirect affirmation of derivative standing for health care providers." 2012 WL 1135608, at *5 (citing Zahl v. Cigna Corp., Civ No. 09-1527, 2010 WL 1372318, at *2 (D.N.J. Mar. 31, 2010) ("It is settled in this District that Zahl, as an assignee of these rights, stands in the shoes of his patients and may sue on their behalf to collect unpaid benefits."); Glen Ridge Surgicenter, LLC v. Horizon Blue Cross Blue Shield of N.J., Inc., Civ. No. 08-6160, 2009 WL 3233427, at *4 (D.N.J. Sept. 30, 2009); N. J. Ctr. for Surgery, P.A. v. Horizon Blue Cross Blue Shield of N.J., Inc., Civ. No. 07-4812, 2008 WL 4371754, at *3 (D.N.J. Sept. 18, 2008); Gregory Surgical Serv., LLC v. Horizon Blue Cross Blue Shield of N.J., Civ. No. 06-0462, 2007 WL 4570323, at *3 (D.N.J. Dec. 26, 2007); Wayne Surgical Ctr., LLC v. Concentra Preferred Sys., Inc., Civ. No. 06-928, 2007 WL 24128, at *4 (D.N.J. Aug. 20, 2007) (finding that a healthcare provider has standing to sue under ERISA as a valid assignee)).
Next, the Court addresses Defendant's argument that Plaintiffs fail to allege a complete assignment of benefits. As noted above, the Court may properly consider the language of the patient forms in deciding this motion, as it is referenced in the Amended Complaint.
Although the Court construes this motion as one pursuant to Federal Rule of Civil Procedure 12(b)(1), to the extent that Defendant intended to move under Federal Rule of Civil Procedure 12(b)(6) such would be proper as well. Generally, if a court considers material submitted outside the pleadings on a Rule 12(b)(6) motion to dismiss, the court must treat the motion as one for summary judgment. Fed. R. Civ. P. 12(d). A court may exclude such outside matters and treat the Rule 12 motions as labeled. Pryor v. NCAA, 288 F.3d 548, 559 (3d Cir. 2002). However, "a court may consider an undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss if the plaintiff's claims are based on that document." Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993); In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) (a court may consider a document that is integral to or explicitly relied on in the complaint without converting a motion to dismiss into one for summary judgment).
The form completed by Roxbury patients provides, in relevant part, as follows:
I request that payment of authorized insurance benefits be made on my behalf to Roxbury Surgical Center and Anesthesiologists for services furnished me by the Roxbury Surgical Center.(Pls.' Opp'n., 3; Nagel Decl. Ex. A). Similarly, the North Jersey patient form contains the following provision:
I authorize and direct my insurer or payor to pay directly to the above Center any or all benefits, up to the amount of my bill, accruing to me in connection with my treatment. I agree that, in consideration of the services that were provided to me.(Pls.' Opp'n., 3-4; Nagel Decl. Ex. B). The North Jersey form also contains the following:
Out of Network: I understand I am using my out-of-network benefits. This facility is not contracted with my insurance company to provide services. I understand the reimbursement may be sent to me instead of the Center. Upon receipt of the insurance payment, I will forward the check and the explanation of benefits to the Center. In addition, I understand that my insurance plan may still hold me responsible for any deductibles and/or coinsurance.(Pls.' Opp'n., 4; Nagel Decl. Ex. B) (emphasis in original).
At the outset, the Court notes that neither party points to controlling authority directly on point. Plaintiffs rely in part on Premier Health Ctr. v. UnitedHealth Group to urge this Court to find the above quoted language sufficient to confer an assignment of legal rights in conjunction with the right to reimbursement. 2012 WL 1135608, at *6-7.
Plaintiffs submitted a letter to the Court after Defendant filed its Reply, pointing to the recent Premier Health decision by Judge Salas, which was issued days after Plaintiff's Opposition was due. Defendant did not address the letter or otherwise attempt to distinguish that case from the matter at bar.
Defendant relies on Franco v. Conn. Gen. Life Ins. Co., 818 F. Supp. 2d at 808 (D.N.J. 2011) to argue that in order to demonstrate derivative standing by assignment, the proponent of an ERISA § 502(a) claim must establish that the ERISA plan beneficiary or participant granted an assignment of the patient's right to assert a claim to benefits and pursue litigation, as opposed to merely authorizing payment directly from the plan in lieu of the patient. (Def.'s Reply, 2). In that case, however, the court dismissed the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) because the conclusory allegations therein did not meet the pleading standard dictated by Federal Rule of Procedure 8(a) and noted the above referenced distinction in a discussion of cases which involved motions to remand.
The Court finds Premier Health directly on point and persuasive. 2012 WL 1135608, at *7. On the issue of whether the "assignment" was merely a direction of payment, Judge Salas concluded that at the very least the language of the assignment under consideration there was an assignment of the right to reimbursement. Id. Upon consideration of the language on the patient forms quoted above and the facts alleged in this case, the Court finds the same. In addition, Defendant continuously accepted the assignments as valid through its course of conduct by allowing the provider to take responsibility for the claim and paying the provider directly. See id. ("Defendants cannot act as though valid assignments exist through course of conduct and then challenge the assignment's very existence in litigation.") (citing Gregory Surgical, 2007 WL 4570323, at *4, n. 3). There, as here, "while it is unclear whether the subscribers intended to assign all of their rights under ERISA, the Court does not have to make such a determination because the Court is concerned here only with the right to reimbursement, attempted recoupments of overpayments, and [Defendant's] interference with the payment or reimbursement process. It is enough that the assignor assigned his or her right to reimbursement to the provider." Id.
Further, in a case against the same Defendant involving similar facts, while still sitting on the District Court, Judge Greenaway noted as follows: "Horizon incorrectly states that the right to assign benefits does not implicitly incorporate the right to sue. To the contrary, an assignment of benefits under a plan includes the assignment of the right to sue for such benefits, for without the latter, the former would be unenforceable." Gregory Surgical Services, LLC v. Horizon Blue Cross Blue Shield of New Jersey, Inc., Civ. No. 06-0462, 2007 WL 4570323, at *3, n. 1 (D.N.J. Dec. 26, 2007) (citing Renfrew Ctr. v. Blue Cross & Blue Shield of Cent. N.Y. Inc., Civ. No. 94-1527, 1997 WL 204309, at *4 (N.D.N.Y. Apr. 10, 1997)). Taken to its logical conclusion, the argument advanced by Defendant that the type of assignment at issue here precludes derivative standing at the pleading stage would render such assignments meaningless because, despite the allegations in the Complaint that Plaintiffs assume full responsibility for the claim, there would be no accompanying mechanism for enforcement. Indeed, "[a]s this District has previously held, [a right to reimbursement] must logically include the ability to seek judicial enforcement of that right." Premier Health, 2012 WL 1135608, at *7 (citing Wayne Surgical, 2007 WL 2416428, at *4). Accordingly, the assignment of the right to reimbursement here confers derivative standing under ERISA.
B. Injury in Fact
Defendant argues that "Plaintiffs do not allege that: (1) any patient entered into any agreement to pay any amount beyond the reimbursement paid by Horizon; (2) any patient is responsible for the payment of any amount due to the center; or (3) any patient made any payment to the center for any amount not covered by Horizon." (Def. Mot., 5). In support of that proposition, Defendant relies on a series of cases in which the motions before the court were for summary judgment. However, as per the Supreme Court, "[a]t the pleading stage, general factual allegations of injury resulting from the defendant's conduct may suffice, for on a motion to dismiss we 'presum[e] that general allegations embrace those specific facts that are necessary to support the claim.'" Lujan v. Defenders of Wildlife, 504 U.S. at 562 (quoting Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 889 (1990)) (alteration in original).
In any event, as described by Plaintiffs, "the reality of this case is that the patients (who assigned their benefits to the Plaintiffs) indeed suffered an injury sufficient to give rise to standing. When Horizon made payment to the Plaintiffs in amounts less than required by applicable law and health benefits plans, the patient remain[s] liable to the Plaintiffs for the difference between the proper reimbursement amount and the reduced amount that Horizon paid." (Pls.' Opp'n, 1).
Further, the relevant provisions of the assignments at issue here plainly state that patients are liable for amounts not reimbursed by Horizon. The required form completed by North Jersey patients unambiguously states: "I am financially responsible to the Center for any amount not covered by insurance." (Pls.' Opp'n, 9; Nagel Decl. Ex. B). Similarly, the form that Roxbury requires patients to complete provides: "I understand that I may be responsible for any balances as dictated by my insurance carrier." (Pls.' Opp'n, 9; Nagel Decl. Ex. A).
As discussed above, at this stage of the litigation, the Amended Complaint in conjunction with the forms allegedly signed by patient beneficiaries are sufficient to allege a valid assignment of benefits. As such, Plaintiffs step into the shoes of the patient beneficiaries to ensure that Defendant performs its obligations. Biomed Pharm., Inc. v. Oxford Health Plans, Inc., Civ. No. 10-7427, 2010 U.S. Dist. LEXIS 141812, at *10 (S.D.N.Y. Feb 17, 2010) ("[A]s in any assignment relationship, the [p]atient's assignment of his rights under the contract does not extinguish [defendant's] obligation to perform under the contract, and [plaintiff out of network provider] stands in the [p]atient's shoes to ensure that [defendant] performs those obligations."). Accordingly, the Amended Complaint sufficiently alleges injury to Plaintiffs as assignees of benefits. In addition, Defendant does not address the allegations that Plaintiffs themselves suffered injury when payments allegedly decreased.
C. Injunctive Relief
As discussed above, a motion to dismiss pursuant to 12(b)(1) may be either a facial or factual attack. Gould Elec. Inc. v. United States, 220 F.3d at 176. To the extent that Defendant attacks the jurisdictional facts relating to whether Plaintiffs have standing to assert a claim for injunctive relief, the Court is free to consider evidence outside of the pleadings. Id.
In this regard, Defendant argues that Plaintiffs lack standing to pursue injunctive relief under section 502(a)(3) of ERISA because they cannot demonstrate future injury. Defendant submits that "[n]either Roxbury nor North Jersey ASC is 'engaged in the business of providing ambulatory surgical services to patients.'" (Def. Mot., 2). Specifically, "Roxbury no longer operates any business and filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Laws on May 27, 2010" and "[f]ollowing the appointment of a Trustee, the Bankruptcy Court entered an Order on November 16, 2010, approving the Trustee's sale of Roxbury's assets to Roxville Associates," including its license to operate and all of its unsecured assets. (Def. Mot., 2). Similarly, Defendant submits that "North Jersey ASC, like Roxbury, no longer operates and sold all its assets, including its license to operate, in January 2010" to Prestige Surgical Center, LLC. (Def. Mot., 2).
As to the assertions regarding North Jersey, in a certification by counsel, Plaintiffs respond that both North Jersey and Roxbury will continue to treat patients. Specifically, he asserts that "North Jersey is open for business. Earlier this year, North Jersey closed temporarily due to a closure imposed by state authorities in order to address certain alleged infractions. North Jersey addressed those alleged infractions to the satisfaction of the state authorities, and is now open for business, with cases being performed at North Jersey." (Pls.' Opp'n, 20; Nagel Certif. ¶ 5).
Counsel also certifies that despite the fact that the owner of North Jersey entered into a contract to sell the center, but whether the sale will be consummated is in dispute. In any event, North Jersey will continue to operate regardless of a potential change in ownership. (Pls.' Opp'n, Nagel Certif. ¶ 6). --------
In any event, Judge Salas recently rejected a similar argument in Premier Health and the Court finds the same warranted here. 2012 WL 1135608, at *14. In that case, defendant argued that certain plaintiffs could not seek injunctive relief under section 502(a)(3) because they could not show a non-speculative threat that they would experience wrongdoing since they were no longer part of defendant's network. Judge Salas reasoned that defendant's argument ignored the fact that plaintiffs brought their claims as assignees of patients still associated with defendant insurer and therefore found that "[p]laintiffs' patients may again experience injury as a result of [defendant's] . . . violations of ERISA and are thus entitled to request injunctive relief to prevent [defendant] from continuing its alleged wrongdoing." Id. at 14 (citing Horvath v. Keystone Health Plan E., Inc., 333 F.3d at 456 ("With regard to injunctive relief, it is well-established that '[t]he actual or threatened injury required by Art. III may exist solely by virtue of statutes creating legal rights, the invasion of which creates standing.'")).
IV. CONCLUSION
Therefore, for the reasons state above, the Court DENIES Defendant Horizon's motion to dismiss Plaintiffs' Amended Complaint.
An appropriate Order accompanies this Opinion.
Dated: June 4, 2012
/s/_________
Jose L. Linares
United States District Judge