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New Jersey Back Institute v. Horizon Blue Cross Blue Shield Insurance Co.

United States District Court, D. New Jersey

February 27, 2014



SUSAN D. WIGENTON, District Judge.

Before this Court is Defendant Horizon Blue Cross Blue Shield of New Jersey's[1] ("Horizon") Motion for Summary Judgment pursuant to Federal Rule of Civil Procedure 56. This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1331. Venue is proper under 28 U.S.C. § 1441 and 28 U.S.C. § 1446. This Court, having considered the parties' submissions, decides this matter without oral argument pursuant to Federal Rule of Civil Procedure 78. For the reasons stated below, the Defendant's Summary Judgment Motion is GRANTED IN PART AND DENIED IN PART.


Plaintiff New Jersey Back Institute ("NJBI") is a Fair Lawn, N.J. based physician's office specializing in the treatment of spinal injuries. (Compl., ¶ 1.) On March 26, 2009, NJBI performed a "posterolateral endoscope assisted lumbar discectomy, laser anuloplasty at L4-5 and L3-4 from the right and at L5-S1 from the left" on Juan Rodriguez ("Rodriguez"). (Certification of Catherine Benitez (hereinafter, "Benitez Cert."), Exhibit C (July 16, 2013).) Rodriguez was insured by Horizon through an employee health benefit plan issued by his employer (the "Plan"). (Def.'s Statement of Undisputed Material Facts "SUF" ¶¶ 4, 11.) Horizon is a not-for-profit New Jersey health service corporation that, inter alia, provides health benefits and administers benefits for participants and beneficiaries of employee health benefit plans governed by the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001, et seq. ( Id. ¶¶ 1-2.)

After the March 26 procedure, NJBI submitted a bill to Horizon in the amount of $49, 500 for the services rendered to Rodriguez. (Compl., ¶ 9; Def.'s SUF ¶ 5.) Horizon initially denied coverage, determining that the procedure codes submitted for the claim reflected investigational codes, which were not covered under the Plan. (Def.'s SUF ¶ 22.) Horizon later reprocessed the claim on or about January 18, 2012, concluding that $18, 308 was covered. ( Id. ¶ 25.) Horizon therefore paid NJBI $12, 669 after it subtracted the $4, 000 coinsurance and $1, 639 deductible, which Horizon advised were Rodriguez's responsibility. ( Id. ¶¶ 7, 25.) NJBI contested the amount of Horizon's payment and submitted a first level appeal on or about February 7, 2012. ( Id. ¶ 28.) Horizon responded to NJBI's appeal via letter dated February 23, 2012, in which Horizon explained that, because NJBI did not participate in Horizon's Managed Care Network, payment was made at the 70th percentile of the Health Insurance Association of America ("HIAA") allowable amount as per the Plan. ( Id. ¶¶ 30-31.) Horizon thus upheld its decision. ( Id. ¶ 31.) NJBI then submitted a second level appeal to Horizon on or about March 8, 2012, with Horizon again upholding its decision on or around March 31, 2012. ( Id. ¶ 32-34.) Notably, despite two levels of appeal, Horizon did not advise NJBI that its decision to cover the claim was erroneously made. (Pl.'s Statement of Undisputed Material Facts ("SUF") ¶¶ 31, 34.)

After exhausting Horizon's internal appeals process, on or around June 29, 2012, NJBI filed a Complaint in the New Jersey Superior Court, Law Division, Essex County, Docket No. L-4827-12 (the "State Court Action"). (Dkt. No. 1.) The five-count Complaint asserts common law claims sounding in breach of contract, promissory estoppel, negligent representation, and unjust enrichment. ( See generally, Compl.) The gravamen of NJBI's claims is that it is entitled to recover the remaining $36, 831 for services rendered to Rodriguez because Horizon allegedly failed to provide a proper response to NJBI's appeals and allegedly failed to provide any explanation for its determinations. (Compl., ¶¶ 10-13.) On August 8, 2012, Horizon removed the State Court Action to the District of New Jersey. (Dkt. No. 1.) Horizon filed a counterclaim pursuant to the Health Claims Authorization, Processing and Policy Act, N.J.S.A. § 17B:27-44.2(d), seeking to recoup the $12, 669 payment it made to NJBI, which it alleges was erroneously made. (Def.'s Counterclaim, ¶¶ 24-27.)


Summary judgment shall be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). A factual dispute is genuine if a reasonable jury could return a verdict for the nonmovant, and it is material if, under the substantive law, it would affect the outcome of the suit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The moving party must show that if the evidentiary material of record were reduced to admissible evidence in court, it would be insufficient to permit the nonmoving party to carry its burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).

Once the moving party meets the initial burden, the burden then shifts to the nonmovant who must set forth specific facts showing a genuine issue for trial and may not rest upon the mere allegations or denials of its pleadings. Shields v. Zuccarini, 254 F.3d 476, 481 (3d Cir. 2001). The court may not weigh the evidence and determine the truth of the matter but rather, must determine whether there is a genuine issue as to a material fact. Anderson, 477 U.S. at 249. In doing so, the court must construe the facts and inferences in "a light most favorable" to the nonmoving party. Masson v. New Yorker Magazine, Inc., 501 U.S. 496, 520-21 (1991). The nonmoving party "must present more than just bare assertions, conclusory allegations or suspicions' to show the existence of a genuine issue." Podobnik v. United States Postal Serv., 409 F.3d 584, 594 (3d Cir. 2005) (quoting Celotex Corp., 477 U.S. at 325). If the nonmoving party "fail[s] to make a sufficient showing on an essential element of [its] case with respect to which [it] has the burden of proof, " then the moving party is entitled to judgment as a matter of law. Celotex Corp., 477 U.S. at 323.

In actions contesting the denial of ERISA plan benefits, the Court will use either one of two different standards to review the plan administrator's decision. If the plan gives the administrator discretionary authority to determine eligibility or construe the terms of the plan, then the administrator's decision will be reviewed under a deferential "arbitrary and capricious" or "abuse of discretion" standard, but if the plan does not confer such discretion, then the administrator's decision will be reviewed de novo. McLeod v. Hartford Life & Accident Ins. Co., 372 F.3d 618, 623 (3d Cir. 2004) (citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)). Here, it is uncontested that the plan confers broad discretion on Horizon to determine eligibility for benefits. (Def.'s SUF ¶¶ 11-14.) Accordingly, Defendant's decision will be reviewed under the deferential arbitrary and capricious standard.


A. Preemption Under ERISA

As a threshold matter, Horizon argues that it is entitled to summary judgment because ERISA completely preempts NJBI's state law causes of action - the only claims that NJBI asserts. (Def.'s Br. 14-16.) NJBI does not appear to contest whether ERISA preempts its state law claims, but instead argues that the issue of whether Horizon violated ERISA is reserved for the factfinder. (Pl.'s Br. 11-14.)

ERISA contains two preemption clauses. First, § 502(a) allows a beneficiary or participant of an ERISA-regulated plan to bring a civil action "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B). Under § 502(a)'s civil enforcement scheme, a beneficiary may recover accrued benefits due, obtain a declaratory judgment with respect to the entitlement to benefits, or obtain injunctive relief requiring the administrator to pay improperly denied benefits. See Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 53 (1987). It thus follows that if NJBI's ...

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