On appeal from the Superior Court of New Jersey, Chancery Division, Middlesex County, Docket No. C-52-11.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Sabatino, Ashrafi and Fasciale.
Plaintiffs, the New Jersey Dental Association (NJDA) and three individual dentists*fn1 (plaintiffs), appeal from two orders dated July 21, 2011 dismissing their complaint with prejudice against Horizon Blue Cross Blue Shield (Horizon) and United Healthcare Insurance Company (United)(collectively defendants). The judge determined that the NJDA lacked standing to file the complaint and the individual dentists failed to state a claim upon which relief can be granted. We reverse in part and remand for further proceedings.
We conclude that the NJDA had standing to file its complaint. We also remand the matter to address plaintiffs' argument, raised for the first time on appeal, that N.J.S.A. 17B:27-44.2d(10) and (11) of the Health Claims Authorization, Processing and Payment Act (the Act), and N.J.S.A. 17:48E-10.1d (10) and (11) of the Prompt Payment Statute, apply to health benefit plans, rather than to insurance plans providing dental-only coverage. Because the NJDA seeks to modify all Explanation of Dental Plan Reimbursement (EOB) forms to remove any mention that patients are not obligated to satisfy insurer overpayments inadvertently made on their behalf, we direct the judge to address whether the Department of Banking and Insurance (DOBI) has primary jurisdiction to address that contention, potentially through administrative regulations.*fn2
The parties essentially dispute whether defendants are entitled to recoup overpayments that defendants mistakenly paid to the out-of-network individual dentists. The individual dentists performed dental work, properly charged the patients, and issued bills to defendants for services rendered. It is undisputed that defendants erred by overpaying the individual dentists because defendants mistakenly believed that the patients in question were eligible to receive benefits. Defendants contend that they are entitled to seek recoupment of those overpayments statutorily by withholding payment on subsequent claims made by the individual dentists, who argue that they are innocent third-parties allowing them to retain the overpayments. The NJDA seeks to enjoin defendants from informing future ineligible patients for whom overpayments are made that those patients have no responsibility to pay the dentists the amount recouped by defendants.
The relevant facts concerning the individual dentists are as follows. Dr. Jackson provided dental services to four patients insured by United, but was not a United provider when he performed those services. He then submitted claims to United seeking payment of any insurance benefits to which the patients were entitled. United paid Dr. Jackson for his services within days of receiving the claims, but thereafter determined that the four patients were ineligible to receive benefits. United requested that Dr. Jackson reimburse it, he refused, and United then recovered the overpayment by withholding it from payments for subsequent claims made by Dr. Jackson for dental services he rendered on different patients.
Similarly, Dr. Barrios and Dr. Manolakakis provided dental services to patients insured by Horizon. Neither Dr. Barrios nor Dr. Manolakakis participated in Horizon's network of providers when they performed their dental work on those patients. Horizon paid Dr. Barrios and Dr. Manolakakis for dental services rendered, and then Horizon realized that it had overpaid the dentists. Horizon requested that Dr. Barrios and Dr. Manolakakis refund the difference. When they refused, Horizon recovered the overpayment amount, just as United did, by withholding it from payments for future claims made by Dr. Barrios and Dr. Manolakakis for dental services rendered on different patients.
Plaintiffs then filed their complaint, which sought money damages and declaratory relief. The individual dentists sought damages for the overpayments recouped by defendants. In its "representational capacity" on behalf of its members, the NJDA sought to enjoin defendants from "seek[ing in the future] reimbursement from dentists who are innocent third party creditors."
Defendants then filed motions to dismiss, relying upon Rule 4:6-2(e). Defendants contended that (1) the NJDA lacked standing to pursue its claim for future injunctive relief, and (2) they complied with the Act and the Prompt Pay Statute, which defendants argue authorizes an insurer's recoupment of overpayments from future payments owed to other patients. The NJDA maintained that it had standing because it sought to enjoin defendants from using their existing recoupment procedures in the future. The individual dentists contended that they were innocent third-party creditors which allowed them to retain the overpayment.
The judge conducted oral argument, issued a twelve-page written decision, and granted the motions dismissing the complaint with prejudice. First, in determining that the NJDA lacked standing, the judge stated:
This [c]court is convinced that the NJDA lacks associational standing because it cannot satisfy the third prong of the associational standing test as described in Hunt [v. Washington State Apple Adver. Comm'n, 432 U.S. 333, 343, 97 S. Ct. 2434, 2441, 53 L. Ed. 2d 383, 394 (1977)]. Specifically, the NJDA has failed to show that the relief it seeks does not require the individual participation of its members for relief to be granted. This [c]court finds that the relief requested with regard to the EOB forms is a highly individualized and fact-sensitive inquiry that must be conducted on a case-by-case basis because it requires an examination of each individual insured's policy and the corresponding EOB form that was sent to the insured as a result of the claim filed. Therefore, the NJDA's [c]omplaint is dismissed for lack of standing.
Second, in finding that the individual dentists failed to state a claim upon which relief can be ...