Opinion
Index No. 717081/21 Seq. Nos. 2 3
01-31-2023
ROWE PLASTIC SURGERY OF LONG ISLAND, PC, ET AL., Plaintiff, v. OXFORD HEALTH INSURANCE COMPANY, ET AL., Defendants.
Unpublished Opinion
Motion Date: April 18, 2022, June 13, 2022
Present: HONORABLE CARMEN R. VELASQUEZ, JUSTICE
CARMEN R. VELASQUEZ, JUDGE
The following numbered papers read E25-E32, E33-E38 and E41-E42 on Motion Seq. No. 2, by defendants Oxford Health Insurance Co., Inc., Oxford Health Insurance Inc., Oxford Health Plans- (NJ), Inc., Oxford Health Plans (NY), Inc. and Oxford Health Plans, LLC (Oxford) for an order dismissing plaintiffs' amended complaint pursuant to CPLR 3211 (a)(1) and (a)(7); and papers read E43-E44, E45 and E46 on motion Mot. Seq. No. 3 by defendants for an order striking portions of the affidavit of Kathleen Damiano and the affirmation of Brendan Kearns, Esq., submitted by plaintiffs in opposition to Motion Seq. No. 2.
Mot Seq. No 2
Papers Numbered
Notice of Motion-Affirmation-Exhibits.........
E25-E32
Opposing Affidavits-Exhibits....................
E33-E38
Reply Affirmation.................................
E41-42
Mot Seq. No 3
Papers Numbered
Notice of Motion-Affirmation-Exhibits........
E43-E44
Opposing Affidavits -Exhibits...................
E45
Affirmation-Reply Affirmation....................
E46
Upon the foregoing papers it is ordered that the Motion Sequence Nos. 2 and 3 are considered simultaneously herewith for one decision and order and are determined as follows:
Plaintiffs Rowe Plastic Surgery of Long Island. P.C. and Norman Maurice Rowe, M.D., M.H.A.., L.L.C. (Rowe plaintiffs), are entities that provide health services in the State of New York. Plaintiffs allege that surgical services were provided to patient "C.R.M." (the patient) on December 14, 2020. Plaintiffs were considered "out-of-network" providers of such services. Thereafter plaintiffs submitted bills to Oxford for payment. It is undisputed that the patient was insured through her employer's Oxford-administered health benefit plan, New York State Nurses Association Benefit Fund, which as an employer-provided welfare benefit plan, is governed by the Employee Retirement Income Security Act of 1974 (ERISA) (29 USC 1003 [a]). Plaintiffs allege that they requested Oxford to issue a "GAP exception". Plaintiffs allege that "a GAP exception is when the insurer agrees to reimburse a medical service rendered by an out-of-network provider at a level of reimbursement the patient is otherwise not entitled to receive." Plaintiffs further claim that defendants issued a GAP exception on November 8, 2020, and plaintiffs, allegedly relying thereon, performed the surgery on C.R.M.
In their amended complaint, plaintiffs interpose causes of action for breach of contract, unjust enrichment, promissory estoppel, and violation of the Prompt Pay Law. Plaintiffs claim that the GAP exception constituted an agreement to pay them at the in-network rate.
To the extent that plaintiffs filed a second amended complaint in NYSCEF (Doc. # E48), the same was filed without leave of court and not upon a motion, as such it is disregarded (CPLR 3025[b]).
Motion Sequence No. 2
Oxford brings a pre-answer motion to dismiss the amended complaint on the grounds that each of plaintiffs' causes of action, being state-law claims, are expressly preempted by ERISA or otherwise fail to state a claim upon which relief can be granted.
With regard to the preemption claim, ERISA's federal preemption provision explicitly provides, in pertinent part, that "the provisions of this subchapter...shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan..." (ERISA §514; 29 USC 1144 [a]). Moreover, "ERISA pre-emption is not limited to state laws that specifically affect employee benefit plans, it extends to state common-law contract and tort actions that relate to employee benefits as well" (Chau v Hartford Life Ins. Co., 167 F.Supp.3d 5 64, 571 [SDNY 2016]). Oxford maintains that the claims at issue in this action "relate to" its administration of an ERISA-governed plan within the meaning of 29 USC § 1144 (a), and as such are preempted.
In opposition to the motion, plaintiffs maintain that their claims are not preempted inasmuch as the said GAP exception is a contract or agreement. A claim is not preempted by ERISA if some other "independent duty" forms another basis for legal action (see McCullogh Orthopaedic Surgical Services, PLLC v Aetna, Inc., 857 F.3d 141, 146 [2nd Cir 2017]). Plaintiffs maintain that they are not making an ERISA claim, but rather seeking to enforce Oxford's independent contractual "promise" to pay the in-network rate.
This matter is one of dozens of cases filed by the plaintiffs against Oxford in Queens Supreme Court. It appears that a separate action was commenced with regard to each individual patient. In a related Queens County matter, Norman Maurice Rowe, M.D., M.H.A., L.L.C, and East Coast Plastic Surgery PC v Oxford Health Insurance Co., Inc., Oxford Health Insurance Inc., Oxford Health Plans (NJ), Inc., Oxford Health Plans (NY), Inc. and Oxford Health Plans, LLC, (Index No. 715808/2021 [McDonald, J.]), Oxford sought removal of the action to the Federal court. In the Memorandum and Order of the Honorable Eric Komitee, United States District Judge, the court found that plaintiff's state-law claims were not preempted, and the matter was remanded to Queens Supreme Court (see, Norman Maurice Rowe, M.D., M.H.A., L.L.C, and East Coast Plastic Surgery PC v Oxford Health Insurance Co., Inc., Oxford Health Insurance Inc., Oxford Health Plans (NJ), Inc., Oxford Health Plans (NY), Inc. and Oxford Health Plans, LLC, 22-CV-0117 [EK][CLP]).
Notwithstanding the issue of preemption, central to all of plaintiffs' claims, state and federal, is the allegation that the GAP exception was an enforceable contract or agreement existing between plaintiffs and Oxford.
A complaint shall be given a liberal construction on a motion to dismiss (see, Reznick v Bluegreen Resorts Mgt., 154 A.D.3d 891 [2nd Dept 2017]). With regard to a claim of breach of contract, a party alleging the same must demonstrate the existence of a contract reflecting the terms and conditions of the purported agreement. (Canzona v Atanasio, 118 A.D.3d 837 [2nd Dept 2014]). Moreover, "the plaintiff's allegations must identify the provisions of the contract that were breached" (id., at 839). Here, plaintiffs' amended complaint contains no allegations of the terms or conditions, or the breached provision, of the alleged GAP exception agreement (see, Theaprin Pharm. v Conway, 137 A.D.3d 1256 [2d Dept 2016]). While the amended complaint alleges that the GAP exception was given on November 8, 2020, there is no indicia as to whether this was a written or oral agreement.
There is one reference in plaintiffs' Memorandum of Law to a GAP exception "letter." However, if it exists, it was not provided with either of these motions.
Indeed, the court may freely consider affidavits submitted to remedy deficiencies in a complaint (Leon v Martinez, 84 N.Y.2d 83 [1994]). Here, in support of their claims, plaintiffs assert that "we submit the Multiplan agreement." However, annexed to the affidavit of one Kathleen Damiano (Damiano) are only two unsigned, undated pages. One page appears to be a checklist that is an appendix to another document and is apparently initialed "N.R." This is allegedly a reference to non-party Norman Rowe, M.D. The second document appears to be heavily redacted "page 2" of an apparent 19-page document, and Damiano avers that it relates to another patient. A single line of the second document sets forth: "[T]his physician or health care provider is out-of-network. Based on a fee negotiated agreement with Multiplan, the provider has accepted a discount for this service." From this one line, it is unclear as to who the parties to this document are, what the terms and conditions of the agreement were, and whether this is in fact the claimed GAP exception or part of the "Multiplan agreement." Similarly, the medical billing documentation annexed to the affirmation of Brendan Kearns, Esq. sheds no light on the alleged contract or agreement at issue. Plainly, the court cannot be called upon to "speculate" as to the terms and conditions to be gleaned from these documents (see, Mandarin Trading v Wildenstein, 16 N.Y.3d 173, 182 [2011]; Town of Oyster Bay v Doremus, 94 A.D.3d 867 [2nd Dept 2012]).
Certain documents are annexed to the affidavit of Kathleen Damiano and the affirmation of Brendan Kearns, Esq., which are the subject of Motion Sequence No. 3, to be discussed infra.
Even assuming arguendo, the said GAP exception constituted an agreement, the second document annexed to the Damiano affidavit is apparently from Oxford Health Plans NY, Inc., and it identifies "Norman Rowe" as the provider. There is no indication that either of the plaintiffs were parties to the alleged agreement. If plaintiffs were not actual parties to the agreement, they lack standing unless they can establish that they were intended beneficiaries thereof (see, Nanomedicon, LLC v Research Foundation of the State Univ, of N.Y., 112 A.D.3d 594 [2013]). "A party asserting rights as a third-party beneficiary must establish '(1) the existence of a valid and binding contract between other parties, (2) that the contract was intended for [their] benefit and (3) that the benefit to [them] is sufficiently immediate, rather than incidental, to indicate the assumption by the contracting parties of a duty to compensate [them] if the benefit is lost (id., at 596). Here, there are no allegations in the amended complaint sufficient to meet these elements.
Similarly, the amended complaint does not even allege that the plaintiffs were intended beneficiaries of the said contract. It is well-established that such an allegation is required for a non-party to maintain a claim of breach of contract (id.; Reznick, 154 A.D.3d at 894; Town of Oyster Bay v Doremus, 94 A.D.3d 867; and see, Norman Maurice Rowe, M.D., L.L.C, and East Coast Plastic Surgery PC v Oxford Health Insurance Co., Inc., et al, Sup. Ct., Queens County, July 21, 2022, McDonald, J., index 713753/2021; Norman Maurice Rowe, M.D., M.H.A., L.L.C, and East Coast Plastic Surgery PC v Oxford Health Insurance Co., Inc., et al., Sup. Ct., Queens County, Aug. 31, 2022, Caloras, J., index 716139/2021). "Vague allegations suggesting that there may have been an agreement do not suffice" (Reznick, 154 A.D.3d at 893; Canzona v Atanasio, 118 A.D.3d at 839). Essentially, without an agreement, "there can be no contract and without a contract, there can be no breach of the agreement" (Reznick, 154 A.D.3d at 893).
Plaintiffs allege, in their opposition to the motion, that they are entitled to recover based upon the doctrine of part performance, an exception to the statute of frauds (see, Town of Oyster Bay v Doremus, 94 A.D.3d 867, citing General Obligations Law § 5-703 [4][conveyances and contracts concerning real property must be in writing]). However, there is no allegation of an oral agreement, and moreover, "part performance will render [a] contract enforceable only where such performance is 'unequivocally referable' to the alleged agreement" (id. at 869.). The amended complaint is silent as to any such performance by Oxford. While in their opposition, plaintiffs allege that Oxford's part payment of the claim constituted performance, this is one of many claims made for the first time in their memorandum of law. As Oxford correctly argues, plaintiffs cannot now amend their amended complaint in this manner. (Cambridge Investments, LLC v Prophecy Asset Mgt., LP, 188 A.D.3d 521 [1st Dept 2020]; and see, Innovative Concepts and Design v Al Infinity, LLC, 202 A.D.3d 594 [1st Dept 2022]). Accordingly, the breach of contract claim is dismissed.
It is noted that the amended complaint sets for that "On or about October 28, 2020, ROWE contacted OXFORD and spoke to an individual in OXFORD'S surgical pre-approval department or unit. ROWE identified itself as an out-of-network provider and requested that OXFORD issue a GAP exception for a breast reduction to be rendered to C.R.M." However, there is no allegation that approval was in fact given in this communication.
Insofar as plaintiffs interposed no opposition to those branches of the motion that sought to dismiss the claims of unjust enrichment and promissory estoppel, the claims are dismissed as abandoned (Blackman v Metropolitan Transit Auth, 206 A.D.3d 602 [2nd Dept 2022]).
Finally, the Prompt Pay Law (Insurance Law §3224-a), by its very terms, applies to the processing of health care claims "submitted under contracts or agreements." It follows that plaintiffs' claims cannot stand where this court has already found that there was no contract or agreement between the parties. Moreover, the Prompt Pay Law "is designed to facilitate the 'prompt, fair and equitable' payment of claims for health-care services. Specifically, the Prompt Pay Law requires insurers to pay undisputed claims within thirty days following receipt of an electronic claim submission or within forty-five days after receipt by other means, as long as the claims were themselves timely submitted to the health insurer within 120 days of the date of service" (Surgicore of Jersey City v Empire Healthchoice Assurance, 2021 WL 1092029 [EDNY 2021] [emphasis added]). Here, plaintiffs allege only that "Rowe submitted its claim to Oxford." There is no allegation that plaintiffs timely made their claim, and as such, the allegations in the amended complaint are insufficient (id., at 7).
In light of all of the foregoing, the amended complaint is dismissed pursuant to CPLR 3211 (a)(7).
Motion Sequence No. 3
With regard to Motion Sequence No. 3, this motion seeks to strike the affidavit of Katheen Damiano and the affirmation of Brendan Kearns, Esq., and the exhibits thereto, submitted by plaintiffs in opposition to Motion Sequence No. 2. This court has considered these documents and the attachments thereto, and as such, the motion to strike is denied. However, nothing in the said affidavit or affirmation is Sufficient to change the court's determination in Motion Sequence No. 2.
Accordingly, Motion Sequence No. 2 seeking dismissal of the amended complaint is granted in its entirety.
Motion sequence No. 3 seeking to strike portions of an affidavit is denied.