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Progressive Spine & Orthopaedics, LLC v. Anthem Blue Cross Blue Shield

United States District Court, D. New Jersey

September 11, 2017



          Kevin McNulty, United States District Judge

         This is the latest chapter in the quest of out-of-network health care providers to be reimbursed by ERISA plans at in-network rates. The providers first struggled to be heard in federal court, finally persuading the Third Circuit that they could, via assignment, assert the rights of their patients. The Plans in many cases have responded by adopting anti-assignment provisions. Increasingly, providers have preferred to pursue claims in state court. To avoid ERISA preemption and get around the anti-assignment provision, the provider here has asserted what it deems an independent state-law contract claim on behalf of itself, rather than its patient. The insurer, citing ERISA preemption, has removed the case to federal court and promptly moved to dismiss on, inter alia, standing grounds. The result, from the insurer's point of view, should be that the provider cannot sue anywhere. The provider here agrees that it lacks derivative standing, but nevertheless seeks remand to a state forum where it can assert its own rights. Whether its allegedly independent state-law claims are viable, it says, is for the state courts to decide.

         Progressive Spine & Orthopaedics, LLC ("Progressive"), an out-of-network health care provider, brings this state-law action to recover reimbursement from the claims administrator for the patient's health plan, Anthem Blue Cross Blue Shield ("Anthem"). Progressive alleges that Anthem underpaid on its claim for reimbursement for surgery performed on, and billed to, its patient, B.G. Progressive's state-law complaint asserts three claims against Anthem: (1) breach of contract; (2) quantum meruit; and (3) unjust enrichment. Anthem removed this action from state court on the premise that this Court had subject matter jurisdiction, because all state law claims were completely preempted by Section 502(a) of the Employment Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq.

         Anthem now moves under Fed.R.Civ.P. 12(b)(6) to dismiss the Complaint for failure to state a claim upon which relief may be granted. Progressive cross-moves for the case to be remanded to state court, and for reimbursement of attorney's fees. Because the motion to remand implicates this Court's subject matter jurisdiction, I will address it first.

         For the reasons stated herein, I will grant Progressive's motion to remand, but deny its motion for attorney's fees. Anthem's motion to dismiss is denied as moot.

         I. Procedural History[1]

         The Complaint was originally filed by Progressive in New Jersey Superior Court, Bergen County, on December 8, 2016. (Cplt.). It alleges that Progressive "proceed[s] on its own individual claims" against Anthem. The evident intent is to state that Progressive is asserting its own rights, not those of its patient, B.G. Anthem "was engaged in the business of providing or administering healthcare insurance benefits for [B.G.]" (Cplt. ¶ 3 and 4). The Complaint contains three state contract-related claims against Anthem: (1) breach of contract; (2) quantum meruit; and (3) unjust enrichment. (Cplt. ¶¶ 15 to 29).

         On January 26, 2017, Anthem filed a notice of removal to federal court pursuant to 28 U.S.C. § 1441(a) and (c). (Notice of Removal). The Notice states that because Progressive is seeking to recover "increased benefit payments" under a health benefits plan which is governed by ERISA, the doctrine of complete preemption confers federal question subject matter jurisdiction under 28 U.S.C. § 1331. (Notice of removal, ¶¶ 7 to 13).

         On February 16, 2017, Anthem filed a motion under Federal Rule of Civil Procedure 12(b)(6) to dismiss the Complaint with prejudice for failure to state a claim. (Def. Brf.). In particular, Anthem maintained that Progressive's claims, all sounding in state law, should be dismissed because they are preempted by ERISA. (Def. Brf. at 4 to 6). Anthem argued in the alternative that, even setting aside preemption, the claims were deficient. (Def. Brf. 6-9).

         On April 3, 2017, Progressive filed an opposition to Anthem's motion to dismiss, and a cross-motion to remand the case to state court and award attorney's fees incurred as a result of the improper removal. (PI. Remand Brf.; PI Brf.). The cross-motion to remand asserted that this court lacks federal subject matter jurisdiction because ERISA preemption does not apply. (PI. Remand Brf. at 9 to 19).

         On April 10, 2017, Anthem submitted a reply memorandum of law in further support of its motion to dismiss and in opposition to Progressive's motion to remand. (Def. Reply). On May 8, 2017, Progressive filed a reply brief in further support of its motion to remand and for attorney's fees and costs. (PI. Reply).

         On May 9, 2017, without having previously requested leave, Anthem filed a surreply letter. (ECF no. 15). On May 11, 2017, without have previously requested leave to file, Progressive filed a letter in response to the surreply. (ECF no. 16). On that same date, without having previously requested leave, Anthem filed a letter in response to Progressive's letter, and Progressive (of course) filed another letter in response to that. (ECF no. 17 and 18).[2] On August 24, 2017, Progressive filed a letter informing the court that McCulloch Orthopaedic Surgical Servs., PLLC v. Aetna U.S. Healthcare, No. 15-CV-2007 KBF, 2015 WL 2183900 (S.D.N.Y. May 11, 2015), relied upon by Anthem in its opposition brief, had been overruled. (ECF no. 21).

         II. Facts

         Progressive is a health care provider specializing in spinal orthopedics. (PI. Remand Brf. at 6). Located in Bergen County, New Jersey, it employs one orthopedic surgeon. (Cplt. ¶ 1; PL Remand Brf. at 6).

         On October 24, 2014, Progressive's surgeon, with the aid of a physician assistant, provided medical services to B.G. The services consisted of spinal surgery and "related procedures". (Cplt. ¶ 10; Sheridan Dec. ¶ 8).

         B.G. is a member of an employer-sponsored health benefits plan: specifically, the Blue Cross Blue Shield Select Plus PPO Option for Volt Information Sciences, Inc. ("Volt Plan" or "the Plan"). (Def. Brf. at 2). Anthem is the Claims Administrator for the Volt Plan. (Def. Brf. at 2; Benefit Description at 82). The parties do not dispute that the VOLT Plan is governed by ERISA.

         At B.G.'s initial visit to Progressive, B.G. provided Progressive with a copy of his Blue Cross Blue Shield card. (Sheridan Dec. ¶ 3; Ex. A to Sheridan Dec.).[3] As an out-of-network provider, Progressive does not have any written agreement with Anthem for payment of services. (Cplt. ¶ 11). According to Progressive, before providing medical services to B.G., one of its representatives contacted Anthem by telephone to gain information about payment of services. (Sheridan Dec. ¶¶ 5-7) .[4]

         A Progressive representative allegedly spoke with an Anthem representative on three occasions. (Sheridan Dec. ¶¶ 5-7). According to Progressive's practice manager, on May 7, 2014, Progressive "called to confirm the medical benefits that Patient B.G.'s insurer would pay." (Id. ¶ 5). Progressive alleges that an Anthem representative stated that Anthem "paid the 'usual, customary, and reasonable [("UCR")] rate', and the patient a 30% coinsurance (meaning that the patient was responsible for 30% of the billed amount after the deductible, and the insurer would pay the other 70%)." (Id.).

         On May 8, 2014, Progressive received an assignment of benefits from B.G. (Notice of Removal Ex. C).

         Then, on October 6, 2014, prior to B.G.'s surgery, Progressive called to "reconfirm the medical benefits that [Anthem] would pay." (Sheridan Dec. ¶ 6). Anthem reiterated the information that it had already provided on May 7, 2014. (Sheridan Dec. ¶ 6).

         On October 8, 2014, Progressive "called to confirm that [Anthem] would pay for the particular surgery Progressive sought to perform on Patient B.G." (Sheridan Dec. ¶7). According to Ms. Sheridan, "[w]e were told that we could perform the procedure, and that no other medical documentation was required in order to pre-authorize it." (Sheridan Dec. ¶7).

         Relying on Anthem's representations, on October 24, 2014, the Progressive doctor performed spinal surgery on B.G. (Cplt. ¶ 10; Sheridan Dec. ¶ 8).

         Five days after B.G.'s surgery, Progressive submitted two health insurance claim forms: one for the surgeon's services and the other for the physician assistant's services. (Sheridan Dec. Ex. C; Claim Form). The total charge claimed for the surgeon was $60, 453. (Sheridan Dec. Ex. C; Claim Form). Progressive asserts that only $2, 381.97 of the surgeon's bill has been reimbursed by Anthem. (Sheridan Dec. ¶ 14; Sheridan Dec. Ex. F; ECF no. 10 Ex. F), [5] Progressive appealed the payment decision through Anthem's administrative appeals process by sending a letter from counsel dated April 1, 2016. (Genovese Decl., Ex. 1). The outcome of the appeal is not specifically documented, but the implication is that it was denied.

         On December 8, 2016, Progressive filed this action in the Superior Court of New Jersey, Law Division, Bergen County. (Cplt.)

         III. Removal and Remand in the Context of ERISA Preemption

         Pursuant to the federal removal statute, "any civil action brought in a State court of which the district courts of the United States have original jurisdiction" may be removed by the defendants to the appropriate district court where the action is pending. 28 U.S.C. § 1441(a). Removal is not appropriate if the case does not fall within the district court's original federal question jurisdiction and the parties are not diverse. See U.S. Express Lines Ltd. v. Higgins, 281 F.3d 383, 389 (3d Cir. 2002) (citing Franchise Tax Bd. of Cat v. Constr. Laborers Vacation Trust for S. Cat, 463 U.S. 1, 8 (1983)); see generally 28 U.S.C. §§ 1331, 1332(a).

         The Third Circuit has cautioned that 28 U.S.C. § 1441 must be strictly construed against removal. Samuel-Bassett, 357 F.3d at 396, 403 (citing Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990), cert, denied, 498 U.S. 1085 (1991). Accordingly, all doubts should be resolved in favor of remand. Id. A party opposing remand must show that removal was proper. Boyer, 913 F.2d at 111.

         A party may move to remand a civil action to state court "at any time" based on the federal court's lack of subject matter jurisdiction. 28 U.S.C. § 1447(c). As in any federal court case, "the party asserting federal jurisdiction in a removal case bears the burden of showing, at all stages of the litigation, that the case is properly before the federal court." Frederico v. Home Depot, 507 F.3d 188, 193 (3d Cir. 2007) (citing Samuel-Bassett v. KIA Motors Am., Inc., 357 F.3d 392, 396 (3d Cir. 2004)).

         In general, under the well-pleaded complaint rule, a cause of action "arises under" federal law, and removal is proper, only if a federal question is presented on the face of a properly pleaded complaint. Dukes v. U.S. Healthcare, 57 F.3d 350, 353 (3d Cir. 1995) (citing Franchise Tax Bd., 463 U.S. at 9-12). The complete preemption doctrine, however, may be viewed as creating a quasi-exception to the well-pleaded complaint rule: "Congress may so completely pre-empt a particular area that any civil complaint raising this select group of claims is necessarily federal in character." Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64 (1987) (emphasis added); Dukes, 57 F.3d at 354 (citing Taylor); see generally Goepel v. Nat'l Postal Mail Handlers Union, 36 F.3d 306, 309-13 (3d Cir. 1994) (discussing the Court's complete-preemption jurisprudence). In such a case, even a facial state claim will be deemed to present a federal question.

The complete preemption doctrine applies when the pre-emptive force of [the federal statutory provision] is so powerful as to displace entirely any state cause of action [addressed by the federal statute]. Any such suit is purely a creature of federal law, notwithstanding the fact that state law would provide a cause of action in the absence of [the federal provision].

Dukes, 57 F.3d at 354 (quoting Franchise Tax Bd., 463 U.S. at 23). When the federal law completely preempts a state law cause of action, a claim within the scope of that federal law is federal in nature, even if it is pleaded in terms of state law, and it is therefore removable under 28 U.S.C. § 1441. Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 8 (2003).

         Although ERISA preemption is broad, it is not all-encompassing. The Supreme Court has "addressed claims of pre-emption with the starting presumption that Congress does not intend to supplant state law." N.Y.State Conf. of Blue Cross & Blue Shield Plans v. Travelers Inc. Co., 514 U.S. 645, 654 (1995). Thus, even though "[t]he governing text of ERISA is clearly expansive" in prescribing preemption for any state law claims that "relate to any employee benefit plan, " the Supreme Court did not extend "relate to" "to the furthest stretch of its indeterminacy." Id. at 655 (internal citations and quotations omitted).

         IV. Analysis

         Here, a federal question is not presented on the face of the complaint. Progressive is suing in its individual capacity as a third-party health care provider, not in its derivative capacity as an assignee of the patient's ERISA plan benefits. Its state-law claims are based on alleged independent promises or obligations of Anthem to Progressive itself. Such claims, in Progressive's view, lie outside the scope of the beneficiary/Plan relationship. Anthem's notice of removal is based on its argument that Progressive's claims are completely preempted ...

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