United States District Court, D. New Jersey
L. LINARES CHIEF JUDGE
a breach of contract action wherein a medical provider
alleges that it has been wrongfully denied reimbursement for
rendering medical services by the defendant, Horizon
Healthcare Services, Inc. (hereinafter, "Horizon").
(ECF No. 1.) In this instance, Horizon is acting as an
administrator of a health plan for employees of the State of
New Jersey (hereinafter, "the State Plan"). (ECF
No. 40 at 13 (stating that Horizon is "a
State-contracted claims administrator" of the State
pending before the Court is Horizon's motion pursuant to
Federal Rule of Civil Procedure (hereinafter,
"Rule") 12(h)(3) to dismiss the remaining claims
that are asserted against it (hereinafter, "the
Remaining Claims") in this action. (ECF No. 28 through
ECF No. 28-11; ECF No. 30 through ECF No. 30-7; ECF No. 40
through ECF No. 40-3.) The medical-provider plaintiff,
Kindred Hospitals East, LLC (hereinafter, "the
Hospital"), opposes the motion. (ECF No. 36 through ECF
Court resolves the motion upon a review of the papers and
without oral argument. See L. Civ. R. 78.1(b). For
the following reasons, the Court grants the motion and
dismisses the Remaining Claims.
Court is concerned about setting forth the facts underlying
this dispute in a vacuum and in the absence of the proper
context. Therefore, a description of the manner in which the
State Plan functions will be presented first.
The State Plan
State of New Jersey offers and finances health benefits to
its employees and their family members through the State
Plan. See N J.S.A. 52:14-17.25 et seq. The
State of New Jersey has entered into a contract with Horizon
to act as an administrator of the State Plan on its behalf.
(ECF No. 30 at 2.)
Jersey Legislature makes annual appropriations for the
necessary funds to finance the State Plan. See
N.J.S.A. 52:14-17.33. Those funds are then remitted to the
State Treasury in order to pay claims for medical services
that are rendered, and the State is obligated to pay claims
only within the limits of those available appropriations.
See Id. Any funds used to pay out claims under the
State Plan come from the coffers of the Treasury of the State
of New Jersey. See N.J.S.A. 52:14-17.30; see
also N.J.S.A. 52:14-17.46a.
State Plan is completely exempt from the requirements of the
Employee Retirement Income Security Act of 1974, because it
is a "governmental plan" that is maintained
"by the government of any State or political subdivision
thereof, or by any agency or instrumentality of any of the
foregoing." 29U.S.C. § 1002(32). As a result, an
entity known as the State Health Benefits Commission
(hereinafter, "the Commission") was created
pursuant to the New Jersey State Health Benefits Program Act
to oversee the State Plan. (ECF No. 30 at 2 (uncontested
assertion of the same by Horizon).) The Commission has the
authority to develop - and the Commission has indeed
developed - the rules and regulations regarding the
administration of the State Plan. See N.J.S.A.
52:14-17.27 through 17.28; see also N.J.A.C.
17:9-1.1 et seq. (the aforementioned regulations
drafted by the Commission).
the terms of the State Plan, Horizon will send out a written
notice of a determination concerning a claim for medical
benefits. In addition, under the terms of the State Plan, a
process must be followed if a benefits determination is
viewed as being adverse. Pursuant to the terms of that
process, requests to appeal from an adverse benefits
determination must be made in writing. See N.J.A.C.
are two levels of appeals that a party must complete before
bringing a lawsuit against the State Plan or Horizon.
See N.J.A.C. 17:9-1.3. As to the first level of
appellate remedies (hereinafter, "the First Appellate
Level"), relief must be sought directly from Horizon
itself. (ECF No. 28-1 at 10.) If the adverse benefit
determination is not resolved after the First Appellate Level
has been exhausted, then relief must be sought directly from
the Commission (hereinafter, "the Second Appellate
Level"). See N.J.A.C. 17:9-1.3(a). Upon
exhaustion of the Second Appellate Level, a lawsuit against
the State Plan may then be instituted in the New Jersey
Appellate Division. See N.J.A.C. 17:9-1.3(d).
Hospital was providing long-term medical treatment to a
patient (hereinafter, "the Patient") insured by the
State Plan. (ECF No. 1.) At one point during the course of
the Patient's treatment at the Hospital, Horizon
determined that it was no longer medically necessary for the
Patient to receive the higher level of care that he was
receiving at the Hospital, and that the Patient should be
transferred to a different facility that provided a lower
level of care. (ECF No. 28-1 at 5; see also ECF No.
30 at 3-4.) Despite this determination by Horizon, the
Hospital opted to let the Patient remain admitted in the
Hospital. (ECF No. 1 at 7.) As a result, the Patient remained
under the care of the Hospital at the higher level of ...