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Jason Cohen, M.D., F.A.C.S., As Assignee of James Powers-Hill and James Powers-Hill v. Independence Blue Cross

October 24, 2011


The opinion of the court was delivered by: Wolfson, United States District Judge:



Plaintiff James-Powers Hill (the "Subscriber" or "Mr. Powers-Hill"), an insured under the health insurance plan policy between defendants ComCast Corp., the Plan sponsor, QCC Insurance Co. ("QCC"), the Plan administrator, and Independence Blue Cross ("IBC"), the insurer (collectively, "Defendants"), retained the medical services of an out-of-network provider, plaintiff Jason Cohen. M.D. ("Dr. Cohen"). In the status of a purported assignee, Dr. Cohen submitted an insurance claim to Defendants for services rendered. While a portion of the claim was paid directly to Mr. Powers-Hill, the remainder was denied. As a result, both Plaintiffs brought this suit pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA") 29 U.S.C. 1101, et seq., to challenge the denial of benefits. In the instant matter, all Defendants move to dismiss Counts II-V, and IBC additionally moves to dismiss Count I. Based on the reasons that follow, the Court concludes that Dr. Cohen does not have standing to bring the claims in this case and as such, all of the claims against Defendants brought by Dr. Cohen are dismissed; with respect to the claims brought by Mr. Powers-Hill, Counts II, III and V are likewise dismissed as to all defendants; and finally, IBC is dismissed as a defendant.


On a Rule 12(B)(6) motion, the Court recounts relevant facts from the Amended Complaint and these facts are taken as true. Mr. Powers-Hill, the Subscriber, is a beneficiary under the Personal Choice Benefit Program Plan 10 (the "Plan"). Am. Compl., ¶ 2. He underwent spinal surgery in November 2008, which was performed by Dr. Cohen, an out-of-network, or "Non-Preferred, Non-Participating," health care provider under the Plan. Id. at ¶¶ 2, 4. After the surgery, Dr. Cohen received an assignment of benefits from Mr. Powers-Hill in order to collect benefits under the Plan, see Id. at ¶ 9, and indeed, Dr. Cohen submitted an insurance claim in the amount of $143,626.00 to Defendants for reimbursement in connection with the surgery he had performed on Plaintiff, as well as for other procedures.*fn1

On April 2, 2009, in response to the claim made by Dr. Cohen, Defendants made a single payment to the Subscriber in the amount of $5,123.90. This payment was later forwarded to Dr. Cohen from the Subscriber. Id. at ¶ 13. Notwithstanding the payment to the Subscriber, Dr. Cohen avers that throughout the pre-certification and the claims processes, Defendants dealt directly with him as the assignee of the Subscriber. Id. at ¶ 15. In that regard, Dr. Cohen maintains that Defendants were "aware of the assignment of benefits and approved the surgery and [have] never advised [Dr.] Cohen that [they] declined to recognize or accept the assignment . . . ." Id. at ¶ 16.

After the initial denial, Dr. Cohen filed an appeal with Defendants on April 20, 2009. While it is not alleged in the Complaint, according to Defendants, they denied the Subscriber's "Verbal, Post-Service, Second-Level Medical Necessity/Grievance." In that denial letter, which was sent directly to the Subscriber, Defendants reasoned:

In your member handbook or certificates, the section entitled - "payment of providers" the Personal Choice/PPO Program allows a Covered Person to obtain Covered Services from Non-Preferred, Non-Participating Providers. If a Covered Person uses a Non-Preferred, Non-Participating Provider, the Covered Person will be reimbursed for Covered Services but will incur significantly higher out-of-expenses [sic] including Deductibles, Coinsurance and the balance of the provider's bill. This is true whether a Non-Preferred, Non-Participating Provider is used by choice, for level of expertise, for convenience, for location, because of the nature of the services or based on the recommendation of a provider.

Id. at ¶ 21; see Subscriber Appeal Letter dated, August 13, 2009. Defendants never responded to Dr. Cohen's provider appeal. Id. at ¶ 44. Defendants maintain that because Dr. Cohen is an out-of-network provider, he had no appeal rights. See Id. at ¶ 23.

After the denial of the Subscriber's appeal, in September 2010, Dr. Cohen brought this suit solely on behalf of himself and named only IBC as a defendant. In November 2010, IBC moved to dismiss the Complaint on standing grounds; in response, Dr. Cohen filed an Amended Complaint, which included the Subscriber as an additional plaintiff and QCC and ComCast as additional defendants. The Amended Complaint asserts five counts: Count I - violation of ERISA section 502(a) brought by the Subscriber; Count II - failure to provide information required by law brought by the Subscriber pursuant to ERISA;

Count III - breach of fiduciary duty brought by Subscriber;*fn2 Count IV - ERISA violation by Dr. Cohen; and Count V - state law claims of unjust enrichment/quantum meruit/promissory estoppel brought by the Subscriber and Dr. Cohen.

In the instant matter, IBC moves to dismiss all counts, and defendants QCC and ComCast move to dismiss all the counts except Count I. In connection with the motion, with respect to Count V, Plaintiffs concede that ERISA preempts their state law claims. See Plaintiff's Opp. Brief, p. 20. Accordingly, that count is dismissed.


I. Standard of Review

When reviewing a motion to dismiss on the pleadings, courts "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." Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (citation and quotations omitted). In Bell Atlantic Corporation v. Twombly, 550 U.S. 544 (2007), the Supreme Court clarified the 12(b)(6) standard. Specifically, the Court "retired" the language contained in Conley v. Gibson, 355 U.S. 41, 45-46 (1957), that "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Twombly, 550 U.S. at 561 (quoting Conley, 355 U.S. at 45-46). Instead, the factual allegations set forth in a complaint "must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. As the Third Circuit has stated, "[t]he 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, 515 F.3d at 234 (quoting Twombly, 555 U.S. at 555).

In affirming that Twombly standards apply to all motions to dismiss, the Supreme Court recently explained the principles. First, "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1948-49 (2009). Second, "only a complaint that states a plausible claim for relief survives a motion to dismiss." Id. Therefore, "a court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." Id. at 1949. Ultimately, "a complaint must do more than allege the plaintiff's entitlement to relief. A complaint has to 'show' such an entitlement with its facts." Fowler v. UPMC Shadyside, 578 F.3d 203, 211 (3d Cir. 2009). Moreover, in deciding a motion to dismiss, the court may consider the allegations in the complaint, exhibits attached to the complaint, matters of public record, and documents that form the basis of plaintiff's claim. Lum v. Bank of Am., 361 F.3d 217, 222 n. 3 (3d Cir. 2004).

The Third Circuit recently reiterated that "judging the sufficiency of a pleading is a context-dependent exercise" and "[s]ome claims require more factual explication than others to state a plausible claim for relief." West Penn Allegheny Health System, Inc. v. UPMC, No. 09-4468, 2010 WL 4840093, at *8 (3d Cir. Nov. 29, 2010). This means that, "[f]or example, it generally takes fewer factual allegations to state a claim for simple battery than to state a claim for antitrust conspiracy." Id. That said, the Rule 8 pleading standard is to be applied "with the same level of rigor in all civil actions." Id. at *7 (quoting Ashcroft, 129 S.Ct. at 1953).


Defendant IBC maintains that it is not a proper defendant because IBC is neither the Plan nor a plan fiduciary. Arguing otherwise, Plaintiffs claim that because IBC exercised its discretion in connection with certain of its administrative duties, IBC should be considered a fiduciary subject to liability under ERISA. The threshold question, then, is whether IBC acted as a fiduciary in conducting its activities during the insurance claim process.

ERISA imposes statutory duties on fiduciaries that "'relate to the proper management, administration, and investment of fund assets,' with an eye toward ensuring that 'the benefits authorized by the plan' are ultimately paid to participants and beneficiaries." LaRue v. DeWolff, Boberg & Assoc's., 552 U.S. 248, 253 (2008) (quoting Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 142 (1985)). Accordingly, an ERISA fiduciary is required to: discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and-

(A) for the exclusive purpose of:

(i) providing benefits to participants and their ...

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