United States District Court, D. New Jersey
For MARIA CIOTTI, DOROTA JANCZAK, NEBIS DIAZ, KATIE POLITE, DANUTA MAJDOSZ, THOMAS A. SMID, LIDIA MATEO, BERNADETTE BERIDA-MILLER, TOWANDA BUDHU, LUTGARDA BIELUCH, Class Representatives and similarly situated members of the Class, Plaintiffs: R. MATTHEW PETTIGREW, JR., LEAD ATTORNEY, PETER H. DEMKOVITZ, MARKOWITZ & RICHMAN, PHILADELPHIA, PA.
For MEADOWLANDS HOSPITAL MEDICAL CENTER, MEADOWLANDS HOSPITAL MEDICAL CENTER HEALTH & WELFARE BENEFITS PROGRAM, Defendants: A. ROSS PEARLSON, MAURO GERARD TUCCI, JR., LEAD ATTORNEYS, WOLFF & SAMSON PC, WEST ORANGE, NJ.
Kevin Mcnulty, United States District Judge.
This matter comes before the court on the motion of Defendants (ECF No. 23) to dismiss the Second Amended Complaint (" Complaint") (ECF No. 21). The plaintiffs, Maria Ciotti, Dorota Janczak, Nebis Diaz, Katie Polite, Danuta Majdosz, Thomas A. Smid, Lidia Mateo, Bernadette Berida-Miller, Towanda Budhu, and Lutgarda Bieluch, sue individually and on behalf of a putative class of persons similarly situated (collectively, " Employees"). They are current and former employees of Meadowlands Hospital Medical Center (the " Hospital"), which maintains the Meadowlands Hospital Medical Center Health and Welfare Benefits Program (the " Plan"). (For simplicity, I will refer to defendants collectively as " Meadowlands.") The Employees allege that Meadowlands systematically denied or delayed the approval and authorization of payments to which they were entitled under their health and welfare benefits plans. They bring claims under the Employee Retirement Income Security Act of 1974 (" ERISA") and the Labor Management Relations Act (" LMRA").
For the reasons set forth below, the motion to dismiss is GRANTED in part and DENIED in part. Because plaintiffs have stated in their papers the manner in which they contend that this action is not barred by failure to exhaust administrative remedies, it is clear that further amendment of the Second Amended Complaint would not be futile. See Fed.R.Civ.P. 15(a)(2); Phillips v. County of Allegheny, 515 F.3d 224, 236 (3d Cir. 2008). Leave is granted to file a Third Amended Complaint within 14 days.
The Plaintiffs are all current or former employees of the Hospital and participants in the Plan. (Compl. ¶ 1, ECF No. 21). They are represented by the Health Professionals and Allied Employees, AFT, AFL-CIO (the " Union"), which is an employee organization under Section 3(4) of ERISA, 29 U.S.C. § 1002(4) and a labor organization under Section 2(5) of the National Labor Relations Act, (" NLRA"), NLRA, 29 U.S.C. § 152(5) and Section 301 of LMRA, 29 U.S.C. § 185. (Id. ¶ ¶ 4-18).
Defendant Hospital is a for-profit New Jersey corporation that owns and operates an acute care facility in Secaucus. (Id. ¶ ¶ 9). It is an employer under Section 3(5) of ERISA, 29 U.S.C. § 1002(5), Section 301 of the LMRA, and 29 U.S.C. § 185 and Section 2(2) of the NLRA, 29 U.S.C. § 152(2), a plan sponsor of the Plan under Section 3(16)(B) of ERISA, 29 U.S.C. § 1002(16)(B), the Administrator of the Plan, and a fiduciary under Section 3(21)(A) of ERISA, 29 U.S.C. § 1002(21)(A). (Id.).
Defendant Plan is an employee welfare benefit plan under Section 3(1) of ERISA, 29 U.S.C. § 1002(1). (Id. ¶ 20). The Plan is maintained by the Hospital, which is essentially self-insured.
The Hospital and the Union have three separate Collective Bargaining Agreements (" CBAs"). (Id. ¶ 21). The Employees are third party beneficiaries of the CBAs. (Id. ¶ 4). The CBAs state that employees represented by the Union must be provided health, welfare, dental, and prescription benefits under the Plan. (Id. ¶ ¶ 22-23).
Under the Plan, a third party administrator (" TPA") processes Employees' claims and determines whether and how much the Plan will pay on each claim. (Id. ¶ ¶ 25-26). Until July 1, 2011, the TPA was Qualcare, Inc.; thereafter, it was MagnaCare, LLC. (Id. ¶ ¶ 1, 25). After approving a claim for payment, the TPA must receive approval from Meadowlands before disbursing the payment to the employee or the employee's health care provider. (Id. ¶ 26). The Employees allege that Meadowlands has: 1) " refused to approve or authorize payment of claims that the TPA has deemed covered by the Plan"; and 2) " delayed authorization of payment of claims by the TPA and/or . . . setting forth the reasons why claims have not been paid or why only certain amounts of claims have been paid." (Id. ¶ ¶ 27-29). The Employees claim that, as a result, they have been obligated to pay out of pocket for medical services that should have been covered under the Plan, have been denied secondary insurance coverage, have been denied the opportunity to have in-network health care providers accept their payments as full settlements of claims, have received bad credit scores, have been denied loans, have had difficulty obtaining medical services, have been subject to threats of litigation from health care providers, have been sued by health care providers, have had judgments rendered against them, and have had wages garnished. (Id. ¶ ¶ 30-44).
The Complaint asserts the following claims: violation of ERISA by failure to pay benefits under the Plan (Count I); violation of ERISA by failure to pay benefits in a timely fashion (Count II); breach of fiduciary duty under ERISA by failure to provide benefits or to provide benefits in a timely fashion (Count III); breach of fiduciary duty under ERISA by refusing to pay benefits or delaying payment of benefits, and thus, using Plan assets for the benefit of Meadowlands (Count IV); breach of Collective Bargaining Agreements by refusing to pay benefits under the Plan (Count V). (Id. ¶ ¶ 59-75).
Meadowlands now moves to dismiss the Complaint, arguing that 1) it fails to allege exhaustion of available administrative remedies; 2) it seeks relief not available under ERISA; 3) it fails to identify the provisions of the Plan and CBAs that Meadowlands allegedly violated; and 4) it fails to disclose how Meadowlands allegedly used assets of the Plan for its own benefit. (Def. Br., ECF No. 23).