The opinion of the court was delivered by: Hochberg, District Judge
This matter is before the Court upon Defendant Horizon Blue Cross Blue Shield of New Jersey's ("Horizon") motion to dismiss both the Beye complaint (Beye DKT#119) and the Foley complaint (Foley DKT#91), and the Magellan Defendants'*fn1 motion to dismiss the Beye Complaint (Beye DKT#120, 121) and the Foley Complaint (Foley DKT#92, 93).*fn2 The Court has jurisdiction over Plaintiffs Drazin and Byram's claims pursuant to ERISA § 502, 29 U.S.C. § 1132, and 28 U.S.C. § 1331.*fn3 The Plaintiffs assert jurisdiction in this Court over non-ERISA Plaintiffs Sedlak and Beye pursuant to the Class Action Fairness Act ("CAFA"), 28 U.S.C. § 1332(d). The Court heard oral argument in this matter on October 10, 2007, after which the Court terminated Horizon's first motion to dismiss in order to permit Plaintiffs to amend their complaints to add the Magellan Defendants. The Magellan Defendants and Horizon filed the instant motions to dismiss on January 29, 2008.
These cases are class actions brought on behalf of class members who are covered by ERISA and non-ERISA health insurance policies issued by Defendant Horizon.*fn4 All four named Plaintiffs have daughters who suffer from eating disorders and all four Plaintiffs have sought coverage for treatment of those disorders under the terms of their plans. All four Plaintiffs have been denied coverage by Horizon. The Magellan Defendants are parties to these cases in their role as administrators of the mental health benefits provided by the Horizon plans pursuant to the Magellan Defendants' Managed Care Service Agreement ("MCS Agreement") with Horizon. Plaintiffs allege that the Magellan Defendants are "authorized by Horizon to administer its managed mental health program," Beye Compl. ¶¶ 13-16, or that the Magellan Defendants "either individually or collectively promulgated and/or implemented claims processing criteria at the various relevant times." Foley Compl. ¶ 11.
As in the related case DeVito v. Aetna, "the gravamen of Plaintiffs' claims is that [Horizon] improperly denied coverage for treatment sought for their daughters' eating disorders by improperly classifying eating disorders as 'non-Biologically Based Mental Illnesses.'" 536 F. Supp. 2d 523, 525 (D.N.J. 2008). Plaintiffs' claims are based upon the language of their respective insurance policies, three of which contain language substantially similar to that contained in the New Jersey Mental Health Parity Law.*fn5 Plaintiffs Beye, Byram, and Drazin's policies each contain a substantially similar definition for "Biologically-Based Mental Illness" that tracks the Parity Law:*fn6
Biologically-based Mental Illness means a mental or nervous condition that is caused by biological disorder of the brain and results in a clinically significant or psychological syndrome or pattern that substantially limits the functioning of the person with the illness, including but not limited to: schizophrenia; schizoaffective disorder; major depressive disorder; bipolar disorder; paranoia and other psychotic disorders; obsessive-compulsive disorder; panic disorder and pervasive developmental disorder or autism.
Morella Cert. Ex. C (Byram Policy) at 13; see also Ex. A (Beye Policy) at 6; Ex E (Drazin Policy) at 10. Plaintiffs Beye, Byram, and Drazin's policies also contain a substantially similar definition for "non-Biological-based Mental Illness":*fn7
Non-Biologically Based Mental Illness means an Illness which manifests symptoms which are primarily mental or nervous for which the primary treatment is psychotherapy or psychotropic medication where the Illness is not biologically-based.
In determining whether or not a particular condition is a Non-Biologically-based Mental Illness, Horizon BCBSNJ may refer to the current edition of the Diagnostic and Statistical Manual of Mental Conditions of the American Psychiatric Association.
Morella Cert. Ex. C (Byram Policy) at 22; see also Ex. A (Beye Policy) at 14; Ex. E (Drazin Policy) at 23.
Three of the four Plaintiffs' policies cover treatment for BBMIs "at parity" with other illnesses as required by the New Jersey Mental Health Parity Law.*fn8 In other words, treatment for BBMIs under those policies is subject only to the policy deductible and coinsurance payment, if any, and, in some cases, to preauthorization. See Morella Cert. Ex. C (Byram Policy) at 51 ("Horizon BCBSNJ pays benefits for the . . . treatment of [BBMIs] the same way Horizon . . . would for any other Illness, if such treatment is prescribed by a Practitioner."); see also Ex. A (Beye Policy) at 20; Ex. E (Drazin Policy) at 31. Three of the Plaintiffs' policies also contain coverage limitations for non-BBMIs, limiting inpatient and outpatient treatment for non-BBMIs to a certain number of days or visits per year and, in some cases, per lifetime. See Morella Cert. Ex. C. (Byram Policy) at 61; Ex. A (Beye Policy) at 24; Ex. E (Drazin Policy).
Plaintiffs Beye and Drazin received coverage for their daughters' eating disorders treatments as non-BBMIs. Both Plaintiffs exhausted the limited benefits available for nonBBMIs under the terms of their plans. Beye and Drazin allege that Horizon's treatment of eating disorders as non-BBMIs improperly limited the amount of coverage to which they are entitled under their respective policies. Plaintiffs Byram and Sedlak's daughters were denied coverage as "not medically necessary," and their daughters therefore did not receive even the limited coverage available for treating non-BBMIs. Byram and Sedlak allege that Horizon's "not medically necessary" determination is intertwined with Horizon's BBMI/non-BBMI determination such that Horizon's treatment of eating disorders as non-BBMI influences Horizon's "medical necessity" determination.
Defendant Horizon filed its first motion to dismiss on April 25, 2007. Following oral argument on October 10, 2007,*fn9 the Beye Plaintiffs filed a third amended complaint (Beye DKT#80) and the Foley Plaintiffs filed a second amended complaint (DKT#59), adding the Magellan Defendants. The Court terminated Horizon's motion to dismiss on January 17, 2008 pursuant to Magistrate Judge Shwartz's order that the parties submit new omnibus motions responding to the amended complaints in their entirety. The parties thereafter filed the instant motions to dismiss.
Motions to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim result in a determination on the merits at an early stage of a plaintiff's case. SeeMortensen v. First Fed. Sav. and Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). As a result, "plaintiff is afforded the safeguard of having all its allegations taken as true and all inferences favorable to plaintiff will be drawn." Id. In order to survive a 12(b)(6) motion to dismiss, "[t]he plaintiff must allege facts sufficiently detailed to 'raise a right to relief above the speculative level,' and must 'state a claim to relief that is plausible on its face.'" Pronational Ins. Co. v. Shah, No. 07-1774, 2007 WL 2713243, *1 (E.D. Pa. Sept. 17, 2007) (quoting Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955 (2007)). As the Third Circuit has recently stated:
The Supreme Court's Twombly formulation of the pleading standard can be summed up thus: "stating . . . a claim requires a complaint with enough factual matter (taken as true) to suggest" the required element. This "does not impose a probability requirement at the pleading stage," but instead "simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of" the necessary element.
Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (internal citation omitted, alteration in original) (quoting Twombly, 127 S.Ct. at 1965).
A. Horizon's Motion to Dismiss
Horizon first argues that this Court should abstain from considering Plaintiffs' claims pursuant to the doctrine espoused in Burford v. Sun Oil Co., 319 U.S. 315 (1943). The Court considered and rejected a similar argument in Devito v. Aetna, a related case that was decided on February 25, 2008, after Horizon filed the instant motions to dismiss. See 536 F. Supp. 2d 523 (D.N.J. 2008). Because Horizon's argument is indistinguishable from Aetna's argument in Devito v. Aetna, the Court will quote at length from its opinion in Devito where relevant.
The Court set forth the appropriate test for determining when a court should defer under Burford. The Court explained
Under Burford, the Court undertakes a two-step analysis. "The first question [when considering Burford abstention] is whether 'timely and adequate state-court review' is available." Riley v. Simmons, 45 F.3d 764, 771 (3d Cir. 1995) (citing New Orleans Public Service, Inc. v. Council of City of New Orleans, 491 U.S. 350, 361 (1989) ("NOPSI")). The second prong of the Burford doctrine, as refined in NOPSI, requires a court to examine three issues: "(1) whether the particular regulatory scheme involves a matter of substantial public concern, (2) whether it is 'the sort of complex, technical regulatory scheme to which the Burford abstention doctrine usually is applied,' and (3) whether federal review of a party's claims would interfere with the state's efforts to establish and maintain a coherent regulatory policy." Chiropractic Am. v. Lavecchia, 180 F.3d 99, 105 (3d Cir. 1999) (internal citation omitted). "Federal courts more readily abstain from a case that contains no issue of federal law." Lac D'Amiante du Quebec, Ltee v. Am. Home Assur. Co., 864 F.2d 1033, 1044 (3d Cir. 1988).
Turning to the second prong first, Defendants argue that this is the kind of case "where the state has created a complex regulatory scheme central to state interests and federal jurisdiction would be disruptive of the state's efforts." Chandler v. Omnicare/HMO, Inc., 756 F. Supp. 187, 189 (D.N.J. 1990). In particular, Defendants argue that "legislation is pending that would amend the Parity Law to mandate coverage for eating disorders. In other words, the Legislature is currently addressing the very question posed by Plaintiffs' claims." Hor. Mot. at 11. As the Court explained in DeVito:
Defendants argue that this pending legislature is grounds for Burford abstention. Although a pending bill may be enacted into law and, in the future, change the Parity Law, such a change would not provide coverage to Plaintiffs for the time period relevant to this case. This case involves claims for past coverage of eating disorders and Defendants do not suggest that the proposed bill would apply retroactively. See Transcript of 10/10/2007 Oral Argument ("Tr.") at 84(1)-(8) (conceding that proposed bill is not retroactive).[*fn11 ] A potential, prospective change in the law does not provide a basis for this Court to abstain from deciding a claim based on contractual language [contained in the relevant policies]. . . .
Both the ERISA and non-ERISA Plaintiffs claim that Horizon breached the terms of their insurance contracts. As a result, "[w]hether the Parity Law is changed or modified does not affect this case. The . . . language in the insurance policies governs this case, regardless of further changes in the Parity Law." Id. In the instant cases, "the Court is asked . . . to consider the terms of Plaintiffs' insurance policies and [Horizon]'s handling of benefit claims made pursuant to those policies. Id. In other words, in addressing Plaintiffs' claims, the Court is not faced with "complex policy trade-offs between costs and coverage" or "[c]omplex policy and clinical decisions". Mot. at 10. The Court need only interpret Plaintiffs' contracts of insurance, and, in the case of the ERISA Plaintiffs, consider whether Defendants' denials of coverage were arbitrary and capricious. This is a routine task that is familiar to this and all federal district courts and is not grounds for Burford abstention.
Turning back to the first prong of Burford, Horizon argues that the state scheme provides for timely and adequate state court review, and that this Court should therefore abstain from hearing Plaintiffs' claims. Hor. Mot. at 11. Defendant argues that under New Jersey Appellate Rule 2:2-3(a)(2), Plaintiffs could have appealed an adverse IURO decision to the Superior Court of New Jersey.*fn12 The mere availability of review by an IURO and the Appellate Division neither compels nor warrants Burford abstention and nothing in Burford suggests otherwise. See DeVito, 536 F. Supp. 2d at 528-29; see also Glushakow v. Confederation Life Ins. Co., No. 94-4201, 1994 WL 803204, at *6 (D.N.J. Dec. 5, 1994) (citing Burford, 319 U.S. at 362) ("[t]he mere existence of a complex state administrative scheme, or the potential for conflict with that scheme will not support Burford abstention"). This is particularly true with regard to the ERISA Plaintiffs. It would be inconsistent with ERISA for this Court to defer to state courts on a question that Congress so explicitly intended to be heard in a federal forum. "Congress enacted ERISA to 'protect . . . the interests of participants in employee benefit plans and their beneficiaries' by setting out substantive regulatory requirements for employee benefit plans and to 'provid[e] for appropriate remedies, sanctions, and ready access to the Federal courts.'" Aetna Health Inc. v. Davila, 542 U.S. 200, 208 (2004) (quoting 29 U.S.C. § 1001(b)). The possibility of review in the Appellate Division is not grounds for Burford abstention as to either the ERISA or non-ERISA Plaintiffs.
For the reasons stated above, the Court will not abstain from Plaintiffs' claims based on the doctrine expounded in Burford v. Sun Oil Co., 319 U.S. 315 (1943). This Court has before it a case arising from an insurer's allegedly improper denial of benefits, in both the ERISA and non-ERISA contexts. Such familiar claims are not the sort to which Burford abstention ordinarily is applied. See Chiropractic Am., 180 F.3d at 105.
ii. Exhaustion of IURO Review and "Primary Jurisdiction"
Horizon argues in the alternative that, if the Court does not defer under Burford, then it should either dismiss ERISA Plaintiff Drazin's claim for failure to exhaust his right to IURO review or the Court should "exercise its discretion" and defer to the "primary jurisdiction" of DOBI.*fn13 Mot. at 14. The Court rejected these argument in DeVito. See 536 F. Supp. 2d at 527, 529. In any event, it appears that ERISA Plaintiff Drazin has since exhausted his right to IURO review, see Foley Opp. at 20, thereby mooting these arguments. Horizon does not press these arguments in its reply brief.
iii. Subject Matter Jurisdiction and Appellate Review of an IURO Decision
Horizon next argues that the Court must dismiss the claims of ERISA Plaintiff Byram and non-ERISA Plaintiffs Beye and Sedlak for failure to appeal their adverse IURO decisions to the Appellate Division. This argument was essentially abandoned as to ERISA Plaintiff Byram at oral argument. See Tr. 49(22)-(25) ("Well, if you've got an ERISA beneficiary, we do agree that they would have the right to come to federal court."). Beneficiaries and participants in ERISA plans have a right to have their claims heard in federal court without regard to diversity or amount in controversy. See 29 U.S.C. ...