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Shah v. Blue Cross Blue Shield of Alabama

United States District Court, D. New Jersey

September 21, 2017

RAHUL SHAH, MD on assignment of CHRISTOPHER H., Plaintiff,
v.
BLUE CROSS BLUE SHIELD OF ALABAMA and HORIZON BLUE CROSS BLUE SHIELD OF NEW JERSEY, Defendants.

          MEMORANDUM OPINION

          JEROME B. SIMANDLE U.S. DISTRICT JUDGE

         This dispute arises from Defendants Horizon Blue Cross Blue Shield of New Jersey[1] and Blue Cross Blue Shield of Alabama's (“BCBSAL”) alleged refusal to fully reimburse Plaintiff Dr. Rahul Shah (“Dr. Shah”) for medical services provided to Christopher H., a patient whose health care plan is administered by BCBSAL. Before the Court is BCBSAL's motion to dismiss the Complaint in its entirety pursuant to Fed.R.Civ.P. 12(b)(6). [Docket Item 10.] The principal issue to be determined is whether the non-assignment clause in the health care plan of Christopher H. bars Dr. Shah's claim as assignee of his patient's payments from BCBSAL, for lack of standing, pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA”). A secondary issue is whether Dr. Shah has a private right of action alleging that BCBSAL failed to have reasonable claims procedures required by Section 503 of ERISA, 29 U.S.C. § 1133 and the regulations at 29 C.F.R. 2569.503-1. For the reasons that follow, the Court will grant the motion and dismiss the Complaint.

         The Court finds as follows:

         1. Factual and Procedural Background.

         The facts of this case are straightforward.[2] On March 8, 2016, Dr. Shah performed a lumbar laminectomy and fusion procedure on Christopher H, a patient who holds a health care plan administered by BCBSAL. (Compl. at ¶¶ 5-6, 13.) After the surgery was performed, Dr. Shah purportedly obtained an assignment of benefits from Christopher H., allowing Dr. Shah to sue his patient's insurer under ERISA. (Id. at ¶ 7.) Dr. Shah then prepared a Health Insurance Claim Form, demanding reimbursement from Defendants in the amount of $238, 310.00 for those services, but BCBSAL paid only $4, 782.93 for the patient's treatment. (Id. at ¶¶ 8-9.) Dr. Shah alleges that he is entitled to the $233, 527.07 difference under the terms of his patient's plan. (Id. at ¶ 14.) The parties agree that the health benefit plan at issue is governed by ERISA. (Def. Br. at 10; Pl. Opp. Br. at 1.)

         2. After allegedly engaging in BCBSAL's administrative appeals process, Dr. Shah filed a Complaint in the Superior Court of New Jersey, Law Division, Cumberland County, which BCBSAL timely removed. [Docket Item 1.] The Complaint brings causes of action for: (1) breach of contract; (2) denial of benefits under § 1132(a)(1)(B); (3) breach of fiduciary duty in violation of § 1132(a)(3); and (4) failure to maintain reasonable claims procedures pursuant to 29 C.F.R. 2560.503-1. [See id. at Ex. 1.] In lieu of an answer, BCBSAL moves to dismiss the Complaint. [Docket Item 5.] BCBSAL's motion is now fully briefed and will be decided without oral argument pursuant to Fed.R.Civ.P. 78.

         3. Standard of Review.

         Pursuant to Fed.R.Civ.P. 8(a)(2), a complaint need only contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Specific facts are not required, and “the statement need only ‘give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'” Erickson v. Pardus, 551 U.S. 89, 93 (2007) (internal citations omitted). While a complaint is not required to contain detailed factual allegations, the plaintiff must provide the “grounds” of her “entitle[ment] to relief, ” which requires more than mere labels and conclusions. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).

         4. A motion to dismiss under Fed.R.Civ.P. 12(b)(6) may be granted only if, accepting all well-pleaded allegations in the complaint as true and viewing them in the light most favorable to the plaintiff, a court concludes that the plaintiff failed to set forth fair notice of what the claim is and the grounds upon which it rests. Id. A complaint will survive a motion to dismiss if it contains sufficient factual matter to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). Although a court must accept as true all factual allegations in a complaint, that tenet is “inapplicable to legal conclusions, ” and “[a] pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do.” Id. at 678

         5. Discussion.

         As a preliminary matter, Dr. Shah voluntarily dismissed the state law breach of contract claim in Count One, conceding that it is preempted by ERISA. (Pl. Br. at 1.) Accordingly, the Court will dismiss this claim pursuant to Fed.R.Civ.P. 41(a), and dismiss BCSBAL's motion to dismiss as moot as to Count One.

         6. The Court will also dismiss Count Four with prejudice for the reasons explained in Shah v. Aetna, 2017 WL 2918943 (D.N.J. July 6, 2017). In Aetna, Dr. Shah also filed a complaint in which he alleged, as here, that the defendant failed to maintain reasonable claims procedures pursuant to 29 C.F.R. 2569.503-1. Id. at *1. As this Court explained then, neither 29 C.F.R. 2569.503-1 nor its accompanying statute, 29 U.S.C. § 1133 (ERISA § 503), establish a private right of action for failure to comply with the regulatory disclosure requirements. Id. at *3. Accordingly, the Court must grant BCBSAL's motion to dismiss with respect to Count Four with prejudice. Id. (citing United States ex rel. Schumann v. Astrazenca Pharma. L.P., 769 F.3d 837, 849 (3d Cir. 2014)).

         7. With respect to the remaining counts, BCBSAL argues the Complaint must be dismissed because Dr. Shah lacks standing to pursue his patient's alleged ERISA claims under an assignment agreement, as such an assignment is expressly prohibited under the terms of Christopher H.'s health care agreement (“the Plan”).[3] Dr. Shah, in turn, contends that the clause in the Plan prohibiting assignment is either unenforceable as a matter of law or was waived by BCBSAL through a course of direct dealing with Christopher H. and Dr. Shah. For the reasons that follow, the Court finds that Dr. Shah does not have standing to bring the remaining claims in this case.

         8. The parties do not dispute that Christopher H. executed an agreement with Dr. Shah (“the Assignment Agreement”), whereby Christopher H. agreed to “irrevocably assign to [Dr. Shah], my medical provider, all of my rights and benefits under my insurance contract for payment for services rendered to me, including but not limited to, all of my rights under ‘ERISA' applicable to the medical services at issue.” (Compl. at Ex. B; Def. Br. at 6.) But, as BCBSAL highlights in its briefing, the Plan contained an explicit anti-assignment clause labeled “No Assignment” (“the Anti-Assignment Clause”), which included in relevant part: “We will not honor an assignment of your claim to anyone.” (Def. Br. at 7, Palmer Cert. at Ex. A, p.46). In light of Dr. Shah's attempt to collect benefits as assignee of Christopher ...


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