Opinion
Civil Action 23-337
03-22-2023
FELIX BRIZUELA, Plaintiff, v. HIGHMARK BLUE CROSS BLUE SHIELD OF PENNSYLVANIA, Defendants.
REPORT AND RECOMMENDATION
PATRICIA L. DODGE, United States Magistrate Judge.
I. Recommendation
It is respectfully recommended that the Court dismiss Plaintiff's Complaint under the screening provisions of 28 U.S.C. § 1915.
See 28 U.S.C. § 1915(e)(2)(B) (“[T]he court shall dismiss the case at any time if the court determines that . . . the action . . . (i) is frivolous or malicious; (ii) fails to state a claim on which relief may be granted; or (iii) seeks monetary relief against a defendant who is immune from such relief.”).
II. Report
A. Relevant Procedural History
Plaintiff Felix Brizuela commenced this pro se in forma pauperis (“IFP”) lawsuit alleging federal question jurisdiction under 28 U.S.C § 1331. (ECF No. 4 at 3). Brizuela bring suits against Defendant Highmark Blue Cross Blue Shield of Pennsylvania for violation of his constitutional rights. (Id.) He also appears to allege a breach of contract claim. (Id. at 7.)
Because Brizuela alleges that both he and Defendant are citizens of Pennsylvania, no diversity jurisdiction pursuant to 28 U.S.C § 1332 exists. (See ECF No. 4 at 4.)
Brizuela was granted IFP status on March 13, 2023, (ECF No. 3), and his Complaint was docketed the same day. (ECF No. 4.)
B. Relevant Factual Background
The Complaint alleges that in October 2016, Brizuela's house was raided by the FBI pursuant to an illegal search warrant that lacked probable cause. (See generally, ECF No. 4 at 6.) An agent stated that the raid was due to an ongoing investigation for insurance fraud (or “kickbacks”) that had been allegedly initiated by Defendant arising out of Brizuela's use of intravenous gamma globulin (“IVIg”). (Id.) Brizuela alleges that he followed the proper process for such prescriptions, that only patients who were approved by the insurance companies had infusions of IVIg, and that those infusions were performed by a service provider approved by the insurance provider. (Id.) Brizuela alleges that he did not receive any compensation and that Defendant “‘speculated' that [he] was getting kick backs” and had “zero proof of this.” (Id.) Thus, Brizuela alleges that Defendant violated his Fourth Amendment rights due to the “unlawful and illegal raid” that took place at his house. (Id.)
Brizuela also alleges that the FBI “unlawfully and without due process” contacted the CEO of Highland Hospital and lied to her that he was doing IVIg infusions in a hospital office. (Id.) The CEO then evicted Brizuela from his office and revoked his hospital privileges “without due process.” (Id.) Brizuela alleges that his Fifth Amendment right to due process has been violated and he has been deprived of his right to liberty, due to not being credentialed and not being able to make a living. (Id.)
Additionally, Brizuela alleges that a law firm in West Virginia illegally learned of the investigation, gathered the names of his patients receiving IVIg infusion, and started asking them if they wanted to sue Brizuela for their “misdiagnosis.” (Id.) Brizuela asserts that all patients were properly diagnosed and had documented improvements. (Id.) He then alleges that he only settled with these individuals because his own defense attorney did not have an expert witness and would not let Brizuela serve as his own expert witness. (Id.) As a result, Brizuela argues that he was “coerced” into settling with seven patients for $1.2 million (paid by his insurance carrier) and has had difficulty finding working, tending to his family, and getting credentialed. (Id.)
Brizuela alleges that the FBI, under the orders of Defendant, disclosed this information. (ECF No. 4 at 6.)
In conclusion, Brizuela argues that neither “Blue Cross Blue Shield nor the FBI ever proved that [he] was getting kick backs for infusing IVIg and [he] was never charged with insurance fraud as a result of the false accusations....” (Id. at 7.)
C. Legal Standard
Section 1915 requires courts to screen an IFP complaint and dismiss the action before the complaint is served if the complaint fails to state a claim or is frivolous or malicious. See 28 U.S.C. § 1915(e)(2)(B)(i)-(iii); Ball v. Famiglio, 726 F.3d 448, 452 (3d Cir. 2013)). In screening complaints under § 1915, courts utilize the same standard that is applied to motions to dismiss under Federal Rule of Civil Procedure 12(b)(6). D'Agostino v. CECOM RDEC, 436 Fed.Appx. 70, 72 (3d Cir. 2011) (citing Tourscher v. McCullough, 184 F.3d 236, 240 (3d Cir. 1999)).
A complaint is susceptible to dismissal if it fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). A complaint must be dismissed under Rule 12(b)(6) if it does not allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007). The court must “accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (quoting Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)).
Additionally, “[i]f the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action.” Fed.R.Civ.P. 12(h)(3). Therefore, when screening a complaint, a court must determine whether it has subject matter jurisdiction over the case. Mowery v. Wetzel, No. 1:19-cv-44, 2019 WL 2931672, at *1 (W.D. Pa. June 11, 2019), report and recommendation adopted by, 2019 WL 2929002 (W.D. Pa. July 8, 2019).
Federal courts are courts of limited jurisdiction “defined (within constitutional bounds) by federal statute.” Badgerow v. Walters, 142 S.Ct. 1310, 1315 (2022) (citing Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994)). District courts have jurisdiction over “two main kinds of cases,” diversity cases and cases involving a federal question. Id. at 131516. Diversity cases are “suits between citizens of different States as to any matter valued at more than $75,000.” Id. at 1316 (citing 28 U.S.C. § 1332(a)). Federal question cases are those that arise under federal law. Id. (citing 28 U.S.C. § 1331). “Typically, an action arises under federal law if that law ‘creates the cause of action asserted.'” Id. (quoting Gunn v. Minton, 568 U.S. 251, 257 (2013)).
As Brizuela is proceeding pro se, the Court construes his factual allegations liberally. See Higgs v. Att'y Gen., 655 F.3d 333, 339 (3d Cir. 2011) (“The obligation to liberally construe a pro se litigant's pleadings is well-established.”).
D. Discussion
1. Defendant Highmark Blue Cross Blue Shield of Pennsylvania Is Not Sufficiently Alleged to Be a State Actor
a. Brizuela's Arguments for Federal Jurisdiction
Brizuela recognizes that, in general, private companies cannot be held liable for violations of constitutional rights and argues that “sometimes private companies are doing government work” and “when a private company is under contract to the government, they can be sued.” (ECF No. 4 at 3). In support of federal jurisdiction, Brizuela continues:
Insurance companies are regulated by the states. Each state has a regulatory body that oversees insurance matters. This body is often called the Department of Insurance, but some states use other names. Examples are the office of the Insurance Commissioner (Washington) and the Division of Financial Regulation (Oregon). The insurance department is headed by a commissioner. Depending on the state, the insurance commission may be appointed or elected.(Id.).
Thus, Brizuela concludes “[i]nsurers are therefore subject to civil litigation due to constitution violations.” (Id.)
b. Section 1983's State Actor Requirement
Section 1983 does not create substantive rights but instead “provides only remedies for deprivations of rights established elsewhere in the Constitution or federal laws.” Kneipp v. Tedder, 95 F.3d 1199, 1204 (3d Cir. 1996). To state a viable § 1983 claim, a plaintiff must plead “that []he was deprived of a federal constitutional or statutory right by a state actor.” Kach v. Hose, 589 F.3d 626, 646 (3d Cir. 2009) (emphasis added).
Generally, “[a]nyone whose conduct is ‘fairly attributed to the State' can be sued as a state actor under § 1983.” Filarsky v. Delia, 566 U.S. 377, 383 (2012) (citing Lugar v. Edmondson Oil Co., 457 U.S. 922, 937 (1982)). Conversely, “private actors do not act under color of state law [and] thus are not liable under Section 1983.” Gerhart v. Energy Transfer Partners, L.P., No. 1:17-cv-017262018, WL 6589586, at *9 (M.D. Pa. Dec. 14, 2018) (quoting Luck v. Mount Airy No. 1, LLC, 901 F.Supp.2d 547, 560 (M.D. Pa. 2012)).
Whether a private defendant is acting under color of state law depends on “whether there is ‘such a close nexus between the State and the challenged action that seemingly private behavior may be fairly treated as that of the State itself.'” Kach v. Hose, 589 F.3d 626, 646 (3d Cir. 2009) (citing Leshko v. Servis, 423 F.3d 337, 339 (3d Cir. 2005) (internal quotations omitted). To answer that question, the United States Court of Appeals for the Third Circuit has “outlined three broad tests generated by Supreme Court jurisprudence to determine whether state action exists: (1) whether the private entity has exercised powers that are traditionally the exclusive prerogative of the state; (2) whether the private party has acted with the help of or in concert with state officials; and (3) whether the state has so far insinuated itself into a position of interdependence with the acting party that it must be recognized as a joint participant in the challenged activity.” Id. (internal quotations and alteration omitted).
c. Brizuela Fails to Allege Sufficient Facts to Show that Defendant Highmark Blue Cross Blue Shield of Pennsylvania Is a State Actor
Brizuela brings claims against Highmark Blue Cross Blue Shield of Pennsylvania- which, he admits, is a private health insurance company. (ECF No. 4 at 3.)
In support of jurisdiction, Brizuela argues that regulatory oversight of health insurance companies permits suits against insurance companies as “state actors” under § 1983. (Id.) These broad allegations are insufficient as the United States Supreme Court has “consistently held that ‘the mere fact that a business is subject to state regulation does not by itself convert its action into that of the State for purposes of the Fourteenth Amendment.'” Am. Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40, 53 (1999) (citing Jackson v. Metropolitan Edison Co., 419 U.S. 345, 350 (1974)).
Brizuela has offered no specific factual allegations as to why Highmark Blue Cross Blue Shield of Pennsylvania is a state actor under any of the applicable three tests. See Anand v. Indep. Blue Cross, No. 20-6246, 2021 WL 3128690 (E.D. Pa. July 23, 2021), aff'd in relevant part by, No. 21-2679, 2022 WL 2339476, at *3 (3d Cir. June 29, 2022) (finding that a private health insurance company that allegedly “‘data mined analytics in partnership with Medicare, about physicians and patients' and work[ed] with ‘USDOJ and Medicare [to induce] criminal[] proceedings” was not a state actor, because (1) “providing medical insurance is not a traditional public function reserved exclusively for the state,” defendant's “work with the government funded and regulated Medicare program is insufficient to identify it as a state actor” and there were no allegations “that the government delegated any of its prosecutorial or investigative responsibility to [defendant]”; (2) “[g]overnment contractors do not automatically become state actors by performing contractual obligations” and allegations that a defendant “willfully participated” by accessing its insurance data analytics program to share with the government “failed to allege any agreement between the private actor and a state entity to violate the plaintiff's federal constitutional or statutory rights”; and (3) plaintiff failed to allege a “conspiracy between a state actor and the defendant-insurance company” as there were no facts “from which it could be inferred that the state actors substituted [the defendant's] judgement for their own” and “[s]upplying information to the government does not automatically make a private party a state actor.”).
Brizuela sought unsuccessfully to intervene in Anand v. Indep. Blue Cross, in part, to discover information related to that defendant's use of certain data algorithms to analyze claim and provide information to law enforcement. (See Anand v. Indep. Blue Cross (E.D. Pa.) No. 20-6246, ECF Nos. 54, 59, 64).
Finally, even a liberal reading of Brizuela's complaint that Defendant was somehow involved in the FBI investigation into his alleged insurance fraud scheme is insufficient, because “[m]erely calling the police [or] furnishing information to the police . . . does not . . . transform a private entity into a state actor.” Cooper v. Muldoon, No. 05-4780, 2006 U.S. Dist. LEXIS 23388 (E.D. Pa. Apr. 26, 2006) (finding that a police tip from a bank employee is “woefully insufficient to establish the necessary joint action”).
Defendant's alleged “involvement” in the FBI raid and investigation varies within the complaint. See ECF No. 4 at 6 (alleging the investigation was “initiated by Blue Cross Blue Shield”); id. (alleging that “Blue Cross Blue Shield ‘speculated' that I was getting kick backs just because [IVIg] was an expensive therapy, which ultimately lead to the unlawful and illegal raid.They thus violated my fourth amendment rights.”); id. (alleging that the FBI was “under the orders of Blue Cross Blue Shield” to disclose the investigation to a private law firm.); id. at 7 (alleging that neither “Blue Cross Blue Shield nor the FBI ever proved that I was getting kick backs.”)
Thus, Brizuela has failed to state a claim for which relief can be granted. Thus, it is respectfully recommended that Brizuela's § 1983 claim against Defendant Highmark Blue Cross Blue Shield of Pennsylvania be dismissed.
When dismissing a civil rights case for failure to state a claim, a court must give a plaintiff the opportunity to amend a deficient complaint, regardless of whether the plaintiff requests to do so, unless doing so would be inequitable or futile. Fletcher-Harlee Corp. v. Pote Concrete Contractors, Inc., 482 F.3d 247, 251 (3d Cir. 2007). “An amendment is futile if the amended complaint would not survive a motion to dismiss for failure to state a claim upon which relief could be granted.” Alvin v. Suzuki, 227 F.3d 107, 121 (3d Cir. 2000) (citation omitted).
This Court cannot foresee any additional facts that could convert Defendant Highmark Blue Cross Blue Shield of Pennsylvania, a private health insurance company, into a state actor. See Moody v. Lawson, No. 22-CV-4073, 2022 WL 17487735, at *2 (E.D. Pa. Dec. 7, 2022) (‘Courts have routinely found that insurance companies are not state actors for purposes of § 1983.”); see also, Clissuras v. Teachers' Ret. Sys., Nos. 02-CV-8130, 02-CV-8138, 2003 WL 1701992, at *3 (S.D.N.Y. Mar. 28, 2003) (“Private companies frequently administer health benefits and insurance plans. Providing health insurance (even if funded by the government) does not transform the Fund into a state actor.”)
Thus, it is respectfully recommended that Brizuela's § 1983 claim be dismissed with prejudice because any attempt to amend the complaint would be futile.
2. No Extraordinary Circumstances Justify the Exercise of Supplemental Jurisdiction
Brizuela's Complaint also (briefly) appears to assert a breach of contract claim. (See ECF No. 8 at 3, 6.)
“A district court may decline to exercise supplemental jurisdiction over state law claims if it has dismissed all claims over which it has original jurisdiction unless considerations of judicial economy, convenience, or fairness to the parties provide an affirmative justification for exercising supplemental jurisdiction.” Patel v. Meridian Health Sys., 666 Fed.Appx. 133 (3d Cir. 2016) (internal citations and quotations omitted); see 28 U.S.C. § 1367(c)(3) (“The district courts may decline to exercise supplemental jurisdiction . . . [if] the district court has dismissed all claims over which it has original jurisdiction.”); Byrd v. Shannon, 715 F.3d 117, 128 (3d Cir. 2014) (affirming dismissal of state law claims where district court dismissed all of the plaintiff's federal claims).
Because there are no extraordinary circumstances in this case which would warrant the exercise of supplemental jurisdiction, it is recommended that Brizuela's pendent state law claim be dismissed without prejudice.
E. Conclusion
Based on the foregoing, it is respectfully recommended that the Court dismiss Brizuela's Complaint under the screening provisions of 28 U.S.C. § 1915.
F. Notice
In accordance with the Federal Magistrates Act, 28 U.S.C. § 636(b)(1), and Fed.R.Civ.P. 72(b)(2), the parties are allowed fourteen (14) days from the date of service of this Report and Recommendation to file written objections thereto. Any party opposing the objections shall have fourteen (14) days from the date of service of objections to respond thereto. Failure to file objections will waive the right to appeal. Brightwell v. Lehman, 637 F.3d 187, 193 n.7 (3d Cir. 2011).