Advanced Orthopedics & Sports Med. Inst. ex rel. SZ v. Blue Cross Blue Shield of Ala.

ADVANCED ORTHOPEDICS AND SPORTS MEDICINE INSTITUTE, on behalf of PATIENT SZ, Plaintiff, v. BLUE CROSS BLUE SHIELD OF ALABAMA, VF CORPORATION,and VF CORPORATION MEDICAL EXPENSE REIMBURSEMENT PLAN, Defendants.

Case No. 3:20-cv-03545 (BRM) (TJB)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY

May 28, 2021

NOT FOR PUBLICATION

OPINION

MARTINOTTI, DISTRICT JUDGE

Before this Court is a Motion to Dismiss filed by Defendant Blue Cross Blue Shield of Alabama ("BCBSAL") seeking to dismiss Plaintiff Advanced Orthopedics and Sports Medicine Institute's ("Advanced Orthopedics") Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). (ECF No. 12.) Advanced Orthopedics opposed the motion. (ECF No. 18.) BCBSAL filed a reply. (ECF No. 20.) Having reviewed the submissions filed in connection with the motion and having declined to hold oral argument pursuant to Federal Rule of Civil Procedure 78(b), for the reasons set forth below and for good cause appearing, BCBSAL's Motion to Dismiss is GRANTED in part and DENIED in part.

I. BACKGROUND

For the purposes of this Motion to Dismiss, the Court "accept[s] as true all factual allegations in the complaint and draw all inferences from the facts alleged in the light most favorable to" Advanced Orthopedics, the Plaintiff. Phillips v. Cty. of Allegheny, 515 F.3d 224, 228 (3d Cir. 2008) (citing Worldcom, Inc. v. Graphnet, Inc., 343 F.3d 651, 653 (3d Cir. 2003)). Furthermore, the Court also considers any "document integral to or explicitly relied upon in the complaint." In re Burlington Coat Factory Secs. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) (citing Shaw v. Dig. Equip. Corp., 82 F.3d 1194, 1220 (1st Cir. 1996)).

Advanced Orthopedics is a professional practice orthopedics group. (ECF No. 5 ¶ 11.) Advanced Orthopedics brings this lawsuit on behalf of its patient, SZ, for whom Advanced Orthopedics' surgeon performed a spinal surgery on July 12, 2016, against BCBSAL, VF Corporation, and VF Corporation Medical Expense Reimbursement Plan (the "Plan") (collectively, "Defendants"). (ECF No. 12-1 at 7.) BCBSAL is the claims administrator of the Plan, of which SZ is a participant. (ECF No. 5 ¶ 2.) The Plan is self-funded by SZ's employer, VF Corporation, and governed by the Employee Retirement Income Security Act of 1974 ("ERISA"). (Id.; ECF No. 12-1 at 7.) Advanced Orthopedics is an out-of-network provider that does not participate in a preferred provider network with BCBSAL. (ECF No. 12-1 at 7.) Advanced Orthopedics alleges Defendants under-reimbursed its spinal surgery services for SZ. (ECF No. 5 ¶ 1.)

Advanced Orthopedics allegedly received a Designation of Authorized Representative ("DAR") from SZ, which provides:

I hereby convey . . . to the Designated Authorized Representative [Advanced Orthopedics] to the fullest extent permissible under the law and under any applicable employee group health plan(s) . . . any claim, cause of action or other right I may have to such group health plans . . . with respect to medical expenses incurred as a result of the medical services I received from the providers(s) and to the full extent per permissible under the law to claim or lien such medical benefits, settlement, insurance reimbursement and any applicable remedies, including but not limited to . . . any administrative and judicial actions. . . . by the Designated Authorized Representative topursue such claim, chose in action or right against any liable party or employee group health plan(s), including, if necessary, to bring suit by the Designated Authorized Representative against such liable party or employee health plan in my name with derivative standing but at such Designated Authorized Representative's expenses.

(Id. ¶ 47.) With this Designation, Advanced Orthopedics insists it may bring ERISA claims derivatively, as an assignee of SZ. (ECF No. 18 at 8.)

However, under the sub-heading "No Assignment," the Plan provides, in relevant part:

[R]egardless of who files a claim for benefits under the plan, we will not honor an assignment by you of payment of your claim to anyone. What this means is that we will pay covered benefits to you or your in-network provider (as required by our contract with your in-network provider)—even if you have assigned payment of your claim to someone else. When we pay you or your in-network provider, this completes our obligation to you under the plan.

(Id.; ECF No. 12-3 at 3-4.) The parties dispute whether this provision (the "Disputed Provision") contains an anti-assignment clause that prevents Advanced Orthopedics from establishing derivative ERISA standing here. (ECF No. 18 at 8.)

On April 2, 2020, Advanced Orthopedics filed a Complaint, asserting the following claims on behalf of SZ: (1) a claim for unpaid benefits under ERISA § 502(a)(1)(B) against BCBSAL, and (2) a claim for violation of fiduciary duties of loyalty and care under ERISA § 404(a)(1)(B) against the Plan. (ECF No. 1 at 9-10.) On August 17, 2020, Advanced Orthopedics filed an Amended Complaint, adding VF Corporation as a defendant and asserting the following claims on behalf of SZ: (1) a claim for unpaid benefits under ERISA § 502(a)(1)(B) against BCBSAL (Count I); (2) a claim for violation of fiduciary duties of loyalty and care under ERISA § 404(a)(1)(B) against BCBSAL (Count II); (3) a claim for violation of fiduciary duties of loyalty and care under ERISA § 404(a)(1)(B) against VF Corporation (Count III); and (4) a claim for unpaid benefits under ERISA § 502(a)(1)(B) against the Plan (Count IV). (ECF No. 5 at 10-13.) AdvancedOrthopedics seeks (1) unpaid benefits, statutory interest, attorneys' fees, costs, prejudgment interest, and other appropriate relief for Count I and Count IV, and (2) declaratory relief, surcharge, profits, and removal of a fiduciary that breached its duties for Count II and Count III under ERISA § 502(a)(3). (Id. ¶¶ 59, 64, 71, 78.)

On October 29, 2020, BCBSAL filed a Motion to Dismiss the Amended Complaint pursuant to Fed. R. Civ. P. 12(b)(6). (ECF No. 12.) BCBSAL maintains Count I and Count II of the Amended Complaint, which are the only Counts asserted against BCBSAL, should be dismissed. (ECF No. 12-1 at 8.) On November 23, 2020, Advanced Orthopedics opposed BCBSAL's motion. (ECF No. 18.) On January 12, 2021, BCBSAL filed a reply. (ECF No. 20.)

II. LEGAL STANDARD

"[A] complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted). However, the plaintiff's "obligation to provide the 'grounds' of his 'entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action." Id. (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). A court is "not bound to accept as true a legal conclusion couched as a factual allegation." Papasan, 478 U.S. at 286. Instead, assuming the factual allegations in the complaint are true, those "[f]actual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555.

"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim for relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 570). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for misconduct alleged." Id. This "plausibility standard" requires the complaintallege "more than a sheer possibility that a defendant has acted unlawfully," but it "is not akin to a 'probability requirement.'" Id. (quoting Twombly, 550 U.S. at 556). "Detailed factual allegations" are not required, but "more than an unadorned, the defendant-harmed-me accusation" must be pled; it must include "factual enhancements" and not just conclusory statements or a recitation of the elements of a cause of action. Id. (citing Twombly, 550 U.S. at 555, 557).

"Determining whether a complaint states a plausible claim for relief [is] . . . a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679. "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not 'show[n]'—'that the pleader is entitled to relief.'" Id. at 679 (quoting Fed. R. Civ. P. 8(a)(2)). However, courts are "not compelled to accept 'unsupported conclusions and unwarranted inferences,'" Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir. 2007) (citing Schuylkill Energy Res., Inc. v. Pa. Power & Light Co., 113 F.3d 405, 417 (3d Cir. 1997)), nor "a legal conclusion couched as a factual allegation." Papasan, 478 U.S. at 286.

While, as a general rule, the court may not consider anything beyond the four corners of the complaint on a motion to dismiss pursuant to Rule 12(b)(6), the Third Circuit has held that "a court may consider certain narrowly defined types of material without converting the motion to dismiss [to one for summary judgment pursuant to Rule 56]." In re Rockefeller Ctr. Props. Sec. Litig., 184 F.3d 280, 287 (3d Cir. 1999). Specifically, courts may consider any "document integral to or explicitly relied upon in the complaint." In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) (quoting Shaw, 82 F.3d 1194, 1220 (1st Cir. 1996)).

III. DECISION

A. The Court Denies BCBSAL's Motion to Dismiss for Lack of ERISA Standing

BCBSAL contends Advanced Orthopedics lacks the requisite standing to pursue its ERISA claims, because the DAR form cannot supersede the Plan's anti-assignment clause in the Disputed Provision that prohibits any and all types of assignments of claims for benefits. (ECF 12-1 at 12.) BCBSAL maintains nothing in the Amended Complaint suggests a course of conduct between the parties that would...