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Prospect Medical, P.C., Montvale Surgical Center, North Jersey Surgery v. Horizon Blue Cross Blue Shield of New Jersey

August 19, 2011

PROSPECT MEDICAL, P.C., MONTVALE SURGICAL CENTER, NORTH JERSEY SURGERY CENTER, AND NORTHEAST SPINE AND WELLNESS, PLAINTIFFS-APPELLANTS,
v.
HORIZON BLUE CROSS BLUE SHIELD OF NEW JERSEY, INC,, I/P/A, HORIZON HEALTHCARE OF NEW JERSEY, INC., DEFENDANT-RESPONDENT.



Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted - December 7, 2010

Before Judges Carchman, Messano and Waugh.

Plaintiffs Prospect Medical, P.C. (Prospect), Montvale Surgical Center (Montvale), North Jersey Surgery Center (North Jersey), and Northeast Spine and Wellness (Northeast) (collectively, plaintiffs), a group of out-of-network healthcare providers, appeal from two orders entered in favor of defendant Horizon Healthcare of New Jersey, Inc. (Horizon). The first order, entered March 19, 2010, denied plaintiffs' requests for injunctive relief and a protective order limiting the scope of discovery. The second, entered April 1, 2010, dismissed plaintiffs' complaint for failure to state a claim. See R. 4:6-2(e).

Plaintiffs alleged that between November 2007 and January 2009, they administered manipulation under anesthesia (MUA) to several patients insured under health insurance plans administered by Horizon. Horizon initially approved these claims and paid plaintiffs for their services.

The express terms of each benefit plan, however, did not provide coverage for MUA:

Spinal manipulation under anesthesia (MUA) is considered investigational for the treatment of pain syndromes of musculoskeletal origin including, but . . . not limited to, acute and chronic neck and back pain. [ ] INFORMATIONAL NOTE: There is [a] lack of evidence from available published literature that spinal manipulation under anesthesia has been established as a safe and effective treatment for pain syndromes of musculoskeletal origin.

Additionally, each benefit plan contained an "anti-assignment clause" that prohibited the subscriber's assignment of benefits to out-of-network providers.

Horizon began to recoup the funds initially paid to plaintiffs as offsets to outstanding claims involving other Horizon-insured patients. On October 1, 2009, Prospect, Montvale, and North Jersey filed their complaint; an amended complaint joining Northeast was subsequently filed on or around October 15. Horizon filed its answer shortly thereafter.

In their amended complaint, plaintiffs alleged that Horizon sought recoupment for these alleged "'overpayment[s]'" after the services were provided, and in some instances, "without notice and an opportunity to be heard." It was alleged in the second count of the amended complaint that with respect to one of the patients, P.R., Horizon began recouping payments from Prospect more than two years after the treatments were made, and nearly twenty-two months after it tendered payment. Plaintiffs sought "an award of medical fees and interest" based upon Horizon's "breach[] [of] its common law duty of good faith and fair dealing," "breach[] [of] its fiduciary duty," and plaintiffs' detrimental reliance on Horizon's prior payments. Plaintiff also sought injunctive relief prohibiting future recoupment. In the third count of the complaint, plaintiffs alleged a violation of the Consumer Fraud Act, N.J.S.A. 56:8-1 to -184 (the CFA), and in the fourth count, a violation of New Jersey's Racketeer Influenced and Corrupt Organizations statute, N.J.S.A. 2C:41-1 to -6.2 (Rico).

Horizon served written discovery demands. On February 3, 2010, plaintiffs filed a motion for a protective order limiting discovery and later moved ex parte for injunctive relief to halt the continuing recoupment. The judge entered an order to show cause temporarily enjoining Horizon from recouping any additional funds from plaintiffs' accounts receivable.

Following oral arguments on March 5, 2010, the judge entered an order dissolving the temporary restraints as to Prospect, North Jersey, and Northeast. The transcript from the proceedings indicates that the judge reserved decision on plaintiffs' request for a protective order and whether to dissolve the temporary restraints on Horizon's recoupment from Montvale.

Plaintiffs filed a motion to amend the complaint on March 8, and, on March 12, Horizon cross-moved to dismiss the complaint. On March 19, the judge entered two orders denying plaintiffs' request for a protective order and dismissing the order to show cause. In a short written opinion accompanying the orders, the judge explained that he was denying the request for a protective order because plaintiffs' counsel failed to certify that she previously engaged in good-faith discussions with defense counsel regarding discovery, see R. 1:6-2(c), and "[p]laintiffs [made] no assertion as to what specific discovery requests they object[ed] to, and why they object[ed] to them, only that they are 'of a broad and harassing nature.'"

The judge also found that the anti-assignment provisions in Horizon's plans were valid, and, therefore, any assignment of benefits was void and plaintiffs lacked standing to recover on their patients' behalf. Applying the standards for preliminary injunctive relief set out in Crowe v. DeGioia, 90 N.J. 126, 132-34 (1982), the ...


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