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Shah v. Horizon Blue Cross Blue Shield of New Jersey

United States District Court, D. New Jersey

December 18, 2018

RAHUL SHAH, MD ON ASSIGNMENT OF MARY A., Plaintiff,
v.
HORIZON BLUE CROSS BLUE SHIELD OF NEW JERSEY, Defendant.

          MICHAEL GOTTLIEB DANIEL C. NOWAK CALLAGY LAW PC On behalf of Plaintiff

          MICHAEL E. HOLZAPFEL BECKER LLC On behalf of Defendant

          OPINION

          NOEL L. HILLMAN, U.S.D.J.

         This 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.

         BACKGROUND & DISCUSSION

         To 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 No. 16.)

         On 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.

         At the 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.[1]

         Defendant’s 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.

         In 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.)

         The Court explained:

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 ...

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