United States District Court, D. New Jersey
MICHAEL GOTTLIEB DANIEL C. NOWAK CALLAGY LAW PC On behalf of
MICHAEL E. HOLZAPFEL BECKER LLC On behalf of Defendant
L. HILLMAN, U.S.D.J.
matter concerns claims by an out-of-network physician, as
assignee of his patient’s rights, against a benefits
plan for violations of the Employee Retirement Income
Security Act of 1974 (“ERISA”), 29 U.S.C. §
1001 et seq., when the plan paid him less than $10,000 for
what he valued to be a $217,000 elective spinal surgery. The
Court granted summary judgment in Defendant’s favor,
holding that the plan did not abuse its discretion when it
paid Plaintiff for his surgical services as an out-of-network
provider. Pursuant to Fed. R. Civ. P. 54(d) and L. Civ. R.
54.2, Defendant now moves for an award of attorney’s
fees incurred in defending this action under the ERISA fee
shifting provision, ERISA § 502(g)(1), 29 U.S.C. §
1132(g)(1). For the reasons expressed below,
Defendant’s motion will be denied.
provide the context for Defendant’s motion for
attorney’s fees, the Court will summarize the facts and
holdings from the Court’s Opinion granting
Defendant’s motion for summary judgment. (See Docket
August 27, 2014, Plaintiff, Rahul Shah, M.D., performed a
non-emergency, elective, outpatient spinal surgery on his
patient, Mary A. The patient is a participant and beneficiary
of a health benefit plan sponsored by her spouse’s
employer. The plan is administered by Defendant, Horizon Blue
Cross Blue Shield of New Jersey, and it is governed by ERISA.
Defendant describes the plan it had in place for Mary
A.’s spouse’s employer as a “70/30
plan” as it relates to out-of-network providers.
time of the surgery, Plaintiff was an out-of-network provider
under the plan. The patient assigned her rights to benefits
under the plan to Plaintiff, who then filed for reimbursement
for the surgery. Plaintiff submitted a claim for $217,363.00,
and the plan paid Plaintiff $9,762.95. Plaintiff followed the
plan’s appeal process, with the plan ultimately
concluding that the reimbursement amount was properly
calculated at the rate prescribed by the plan. In his
complaint, Plaintiff claimed that Defendant violated ERISA
§ 502(a)(1)(B), and sought $207,600.05 – the
balance for his entire charge for the surgery -plus interest,
attorney’s fees, and costs.
fee was governed by the terms of the plan, which provided
that, as an out-of-network provider, Plaintiff was entitled
to 70% of 150% of the Medicare-prescribed amount for the same
services. In a change from his complaint, which asked for
reimbursement of his full charge, Plaintiff argued in his
summary judgment opposition brief that he should have been
paid 70% of his charges - as he himself calculated them -
without reference to any other provision in the plan.
Plaintiff’s argument was based simply and exclusively
on the plan’s “Schedule of Covered Services and
Supplies,” which stated: “Surgical Services
– Out-of-Network -Outpatient - Subject to Deductible
and 70% Coinsurance.” (Docket No. 11-3 at 56, SCHEDULE
OF COVERED SERVICES AND SUPPLIES, A. COVERED BASIC SERVICES
AND SUPPLIES.) Plaintiff argued that having to unpack, like
Russian nesting dolls, the provisions buried in the plan
relied upon by Defendant was deceptive and constituted a
breach its fiduciary duties.
assessing Plaintiff’s claims, the Court applied an
abuse of discretion standard, which required the
determination as to whether Defendant was arbitrary and
capricious in its interpretation of the plan and resulting
payment to Plaintiff. See Fleisher v. Standard Ins.
Co., 679 F.3d 116, 120 (3d Cir. 2012). The Court found
that Defendant did not abuse its discretion, and that
“Plaintiff’s self-serving interpretation of the
plan myopically ignore[d] the clear inter-relationship and
correlation between sequential plan provisions and [was] so
lacking in support from the terms of the plan itself as to be
borderline frivolous.” (Docket No. 16 at 10.)
First, even accepting Plaintiff’s characterization that
the provisions in the plan regarding payment for an
out-of-network out-patient surgery must be
“unpacked,” that does not mean that the plan
acted in an arbitrary and capricious manner when it paid
Plaintiff’s claim in accord with those provisions. The
plan language provides that for an out-of-network surgery,
the plan will pay 70% of allowable charges, and those
allowable charges are 150% of the Medicare rates, with the
plan participant owing 30% of 150% of the Medicare rates to
the provider as co-insurance if the provider chose to bill
the participant for the additional amount. As assignee of the
plan participant’s benefits, Plaintiff is therefore
entitled to no more than 70% of the 150% of the Medicare
rates directly from Defendant.
Although the plan language is required to be read in
reference to several defined terms of the plan, the lack of
one compound sentence linking those terms does not cause the
plan’s decision to be erroneous. Moreover,
Plaintiff’s disagreement with the fairness of the
reimbursement terms under the plan does not render the
plan’s decision, which followed those terms, to be in
error. . . .
Second, even though Plaintiff argues that the plan terms are
unfair and ambiguous, the claims before the Court do not
require the assessment of the plan participant’s
interpretation of the plan or her reliance on certain terms
in the plan. That is an entirely different case not pleaded
here . . . . Plaintiff may be disappointed with the
out-of-network reimbursement terms of his patient’s
benefits plan, which resulted in a payment that was a small
percentage of Plaintiff’s charges, but Plaintiff
accepted the terms of the plan when he agreed with his
patient to the assignment of her benefits. . . .
When Mary A. first consulted Plaintiff about his services, he
had several options. First, he could have set what he
perceived as the market rate for his services and conditioned
providing his services on the payment of that fee, leaving to
the patient reimbursement under applicable insurance. Second,
he could have agreed to accept Mary A.’s insurance and
the benefit it provided (70% of 150% of the Medicare rate for
the covered service) and billed Mary for the remaining 30% of
the allowed and clearly defined benefit.
What he could not do was accept the benefit under the plan,
take an assignment from Mary A. of any additional claims she
might have, and through this lawsuit seek to blow up –
without legal or factual support - the carefully and clearly
drafted mutually beneficial agreement between Mary A.’s
spouse’s employer and Defendant. Plaintiff’s
claim that he is entitled to 70% of the fee he has set for
his services as against this Defendant lacks any support in
the law or the plan terms. Despite his protestations to the
contrary, as the Court can best discern, Plaintiff seeks his
demanded fee of over $217,000 simply because he thinks
he’s entitled to it.
In sum, the clear, unambiguous, bargained for terms of the
plan provide for the exact payment Defendant paid Plaintiff.
It cannot be found, therefore, that Defendant’s
benefits determination was without reason, unsupported ...