United States District Court, D. New Jersey
IJKG OPCO LLC, d/b/a CAREPOINT HEALTH-BAYONNE MEDICAL CENTER, Plaintiff,
GENERAL TRADING COMPANY, CONSOLIDATED HEALTH PLANS INC., CIGNA CORPORATION, INC., ZELIS HEALTHCARE, INC. a/k/a PREMIER HEALTH EXCHANGE, INC., FIRST CHOICE INSURANCE SERVICES, L.L.C., and STANDARD SECURITY LIFE INSURANCE COMPANY OF NEW YORK, Defendants.
plaintiff, IJKG Opco LLC, doing business as CarePoint
Health-Bayonne Medical Center ("BMC"), brings suit
to recover the costs of medical care it provided to a patient
who experienced severe renal complications and was
hospitalized for about three weeks. Defendants are General
Trading Company ("General Trading"), which provided
the patient's employee welfare benefits plan; Cigna
Corporation Inc. ("Cigna"), which was the claims
administrator for the plan; Consolidated Health Plans, Inc.
("CHP"), which, along with Cigna, jointly
administered the plan and was the third-party administrator
for the plan; Zelis Healthcare, Inc. ("Zelis"),
also known as Premier Health Exchange, Inc. or PHX, which was
the claims contract negotiator; and Standard Security Life
Insurance Company of New York ("SS Life"), which
provided General Trading with a stop-loss policy that insured
losses in excess of a deductible arising from specific plan
beneficiaries. Several defendants have brought motions to
dismiss and for judgment on the pleadings. For the reasons
outlined below, I will grant SS Life's motion to dismiss,
deny General Trading's motion to dismiss, and deny
Zelis's motion for judgment on the pleadings.
Summary of Facts
operates a fully-accredited, 278-bed hospital in Bayonne, New
Jersey, which provides health care services to more than 70,
000 patients annually. (AC ¶¶ 1, 22.) On November
2, 2013, "Patient l",  who is insured by General
Trading, entered BMC's emergency department and, after
testing, showed abnormally elevated levels of creatine and
potassium. (Id. ¶ 21.) She was diagnosed with
acute renal failure and received medical treatment from BMC
from her admission to the hospital until November 24, 2013.
(Id.) This inpatient care, which lasted for 22 days,
included testing to determine the progress of Patient l's
kidney disease, treatment to stabilize the abnormal levels of
blood urea nitrogen and creatine, treatment for Goodpasture
Syndrome, which was a result of the kidney failure,
plasmapheresis, hemodialysis, as well as other care.
1 incurred a charge of $771, 191.58 for the treatment of her
kidney disease and her nearly stay at BMC. (Id.)
General Trading, whose employee welfare benefits plan
provides coverage for "in-network benefits" for
"preferred providers" and for "out-of-network
benefits" for "nonpreferred providers, " has
reimbursed BMC, an "out-of-network" provider, for
only $175, 358.05. (Id. ¶ 27.) CHP, General
Trading's claim processor, issued an explanation of
benefits on January 29, 2014, which provided reasons for
disallowed charges. (Id. ¶ 28.) The majority of
disallowances were labelled as "discount . . .
negotiated through Premier Healthcare Exchange" or
"[e]xceeds reasonable and customary charge."
November 26, 2014, BMC received a letter from PHX stating
that "[t]he Payor has forwarded your letter for
additional payment dated November 7, 2014 for our review and
consideration" and that the bill would be reimbursed in
the amount of $175, 358.05. (Id. ¶ 29.) On
November 28, 2014, BMC filed an appeal with CHP.
(Id. ¶ 30.) CHP denied the appeal in its
entirety and directed BMC to balance-bill the patient for the
outstanding amount. (Id.)
January 13, 2015, BMC filed a second-level appeal within CHP.
(Id. ¶ 31.) On February 9, 2015, BMC and CHP
discussed the status of the appeal in a telephone call, in
which a CHP representative advised BMC that appeals had to be
filed directly with PHX. (Id.) The representative
also explained that the claim was paid by CHP based on the
out-of-network coverage provided by Cigna and that no further
payment would be made. (Id.) On February 23, 2015,
BMC received a letter from CHP that stated "[b]ased on
the Plan benefits and policy language it has been determined
that the above listed claim was paid appropriately and no
additional payment shall be made." (Id. ¶
32.) According to BMC, this letter effectively signaled die
exhaustion of its appeals process. (Id. ¶ 37.)
sues to recover the unreimbursed balance of its bill, in the
amount of $595, 833.53. It claims that defendants General
Trading and Cigna have violated § 502(a)(1)(B) of die
Employee Retirement Income Security Act of 1974
("ERISA"), 29 U.S.C. § 1001, et seq.,
(AC ¶¶ 47-61); that all defendants (except SS Life)
have acted as fiduciaries to die employee welfare benefits
plan that cover die patient and breached their fiduciary
duties under § 502, (AC ¶¶ 62-73), that all
defendants (except SS Life) denied BMC a full and fair review
of their claim as mandated by § 503 of ERISA (AC
¶¶ 74-79); and that SS Life breached its
contractual obligations to BMC, as a purported third-party
beneficiary to the stop-loss policy. (AC ¶¶ 80-86.)
Several motions are now before the court. SS Life has moved
to dismiss the breach-of-contract claims against it (ECF no.
63.), while General Trading has also moved to dismiss the
claims under ERISA against it. (ECF no. 69.) In addition,
Zelis has moved for judgment on the pleadings. (ECF no. 91.)
Standard of Review
12(b)(6) provides for the dismissal of a complaint, in whole
or in part, if it fails to state a claim upon which relief
can be granted. The defendants, as the moving parties, bear
the burden of showing that no claim has been stated.
Animal Science Prods., Inc. v. China Minmetals
Corp., 654 F.3d 462, 469 n.9 (3d Cir. 2011). For the
purposes of a motion to dismiss, the facts alleged in the
complaint are accepted as true and all reasonable inferences
are drawn in favor of the plaintiff. N.J. Carpenters
& the Trustees Thereof v. Tishman Const. Corp. of
N.J., 760 F.3d 297, 302 (3d Cir. 2014).
Civ. P. 8(a) does not require that a complaint contain
detailed factual allegations. Nevertheless, "a
plaintiffs obligation to provide the 'grounds' of his
'entitlement to relief requires more than labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do." Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007). Thus, the
complaint's factual allegations must be sufficient to
raise a plaintiffs right to relief above a speculative level,
so that a claim is "plausible on its face."
Id. at 570; see also W. Run Student Housing
Assocs., LLC v. Huntington Nat. Bank, 712 F.3d 165, 16
(3d Cir. 2013). That facial-plausibility standard is met
"when the plaintiff pleads factual content Fiat allows
the court to draw the reasonable inference that the defendant
is liable for the misconduct alleged." Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (citing
Twombly, 550 U.S. at 556). While "[t]he
plausibility standard is not akin to a 'probability
requirement'... it asks for more than a sheer
possibility." Iqbal, 556 U.S. at 678.
12(c) motion for judgment on the pleadings is often
indistinguishable from a motion to dismiss, except that it is
made after the filing of a responsive pleading. Fed.R.Civ.P.
12(h)(2) "provides that a defense of failure to state a
claim upon which relief can be granted may also be made by a
motion for judgment on the pleadings." Turbe v.
Gov't of Virgin Islands, 938 F.2d 426, 428 (3d Cir.
1991)). Accordingly, when a Rule 12(c) motion asserts that
the complaint fails to state a claim, the familiar Rule
12(b)(6) standard applies. Id. (making due
allowance, of course, for any factual allegations that are
admitted in the responsive pleading). Thus, the moving party
bears the burden of showing that no claim has been stated.
Hedges v. United States, 404 F.3d 744, 750 (3d Cir.
permitted to consider "extraneous documents that are
referred to in the complaint or documents on which the claims
in the complaint are based" without converting this
motion into one for summary judgment. Morano v. BMW of N.
Am., LLC, 928 F.Supp.2d 826, 830 (D.N.J. 2013) (citing
In re Burlington Coat Factory Sec. Litig., 114 F.3d
1410, 1426 (3d Cir. 1997); Pension Benefit Guar. Corp. v.
White Consol Indus., 998 F.2d 1192, 1996 (3d Cir.
Motion to Dismiss by SS Life
moves to dismiss the claims by BMC against it on two grounds.
First, SS Life argues that BMC is not a third-party
beneficiary of the stop-loss policy between SS Life and
General Trading. (ECF no. 63, at 1.) Second, even if BMC is a
third-party beneficiary, BMC's claim is time barred by
the terms of that policy. (Id. at 1-2.)
New Jersey law, contract liability to a third party depends
on "whether the contracting parties intended that a
third party should receive a benefit which might be enforced
in the courts." Fackelman v. Lac d'Amiante du
Quebec, 398 N.J.Super. 474, 488 (App. Div. 2008)
(quoting Wermann v. Aratusa, Ltd., 266 N.J.Super.
471, 476 (App. Div. 1993)). For contract liability to a third
party to exist, a court must find that the parties to the
contract intended and contemplated that the contract would
benefit a third party. Id. (citing Gold Mills,
Inc. v. Orbit Processing Corp., 121 N.J.Super. 370, 373
(Law Div. 1972)). Conversely, parties to a contract may
expressly negate any legally enforceable right in a third
party. Broadway Maint Corp. v. Rutgers, State Univ.,
90 N.J. 253, 260 (1982).
states that its policy with General Trading explicitly
disclaims any enforceable rights on behalf of third parties.
It has attached SS Life's policy with General Trading as
an exhibit to a certification by Jonathan R. Pepin, an
attorney for SS Life. (ECF no. 63, Certification of Jonathan R.
Pepin, ex. A). The relevant portions of the policy state:
This Policy does not create any right or legal relationship
whatsoever between Us and a Covered Person or beneficiaries
under the Plan. We shall not have any responsibility or
obligation under this Policy to directly reimburse any
Covered Person, or provider of professional or medical
services for any benefits which are provided under the terms
of the Plan. Our only liability under this Policy is You.
Only one of Our officers may change this Policy. No change
shall be valid unless the change is agreed to by Our
President, Vice President or Secretary in writing. . . .
[Id. at 7, § 8 (Entire Contract).)
Except as specifically provided in any rider or endorsement,
attached to and forming part of the Policy, We have no
obligation to any third party. Our liability under this
Policy is limited to reimbursing You, pursuant to the terms
of this Policy, for payments You make on behalf of Covered
Person for expenses covered under the Plan. You hold Us
harmless for damages, of any kind, which are not cause by Our
own acts or omissions. We are not responsible for any
liability You assume under any contract of agreement other
than the Plan. [Id. at 8, § 8 (Liability and
on the explicit and unambiguous language of this provision,
it was General Trading and SS Life's intent that no party
except General Trading would benefit from the stop-loss
coverage of the policy. Likewise, the "surrounding facts
and circumstance" do not support BMC's argument that
it is a third-party beneficiary. [See ECF no. 75, at
12.) As to any person covered by the policy, SS Life promised
to reimburse losses that exceeded the deductible. (ECF no.
63, at 4, § 3 (Specific Excess Loss Insurance).) This
provision, similar to most stop-loss policies, merely
provides General Trading with a means to recover excessive
losses arising from specific plan beneficiaries and does not
function as a guarantee to any particular plan beneficiary.
BMC was explicitly not intended to be a third-party
beneficiary of the stop-loss policy issued by SS Life, BMC
cannot pursue a claim of breach of contract against SS Life.
Because BMC cannot pursue a claim as a third-party
beneficiary, I need not decide whether BMC's claims
against SS Life are ...