Hoogenboom v. Trs. of Allied Servs. Div. Welfare Fund

CAROL HOOGENBOOM, Plaintiff, v. THE TRUSTEES OF ALLIED SERVICES DIVISION WELFARE FUND, Defendant.

Case No. 20-cv-4663

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

June 8, 2021

Judge Robert M. Dow, Jr.

MEMORANDUM OPINION AND ORDER

Carol Hoogenboom ("Plaintiff") brings this action against The Trustees of Allied Services Division Welfare Fund ("Defendant") arising out of Defendant's processing of her claims under an ERISA-covered benefit plan. Defendant moved to dismiss all claims [8]. For the reasons stated below, Defendant's motion [8] is denied in part and granted in part. However, after considering Defendant's motion, only a state-law claim remains, and the Court declines to exercise supplemental jurisdiction. Therefore, all claims in Plaintiff's complaint are dismissed without prejudice. The Court gives Plaintiff leave to file an amended complaint no later than July 9, 2021 if she can do so consistent with this opinion. This case is set for a telephonic status hearing on July 15, 2021 at 9:00 a.m.

I. Background¹

Plaintiff is a licensed psychologist practicing in Illinois. [1-1, at ¶ 1]. Defendant is a business operating in Illinois, and it contracted with BNSF Railway Company ("BNSF") and/or HealthCare Services Corporation to administer a portion of BNSF's benefits plan (the "Plan").[Id., at ¶¶ 5, 11]. From in 2014-2017, Plaintiff provided psychological services for a family that was eligible for benefits and covered by the terms of the Plan. [Id., at ¶¶ 9, 12, 14, 74]. The complaint alleges that the family assigned their rights to benefits to Plaintiff. [Id., at ¶ 48]. Defendant confirmed it was the primary carrier for the claims submitted either by the family directly or on behalf of the family by Plaintiff. [Id., at ¶ 13]. Plaintiff submitted her bills for a family member's treatment to BlueCross BlueShield of Illinois (BCBS), which then referred the claims to Defendant; she conformed her bills to industry practice and professional standards for psychological services. [Id., at ¶¶ 18-19].

During 2014, BCBS and/or Defendant issued Plaintiff payments for the services she provided the family. [Id., at ¶ 21]. However, sometime in 2015, Defendant directed BCBS to stop issuing payments to Plaintiff. [Id., at ¶ 22]. Defendant directed Plaintiff to resubmit her bills using a different procedure code for family therapy despite industry practice that such therapy be individually billed and despite the fact that Defendant previously paid the claims using individual therapy procedure codes. [Id., at ¶ 23]. Defendant "stated it would pay if the bills were resubmitted using the family codes." [Id.]. Plaintiff resubmitted her bills suing the guidelines required by Defendant. [Id., at ¶ 24].

Also in 2015, Defendant contended that it made a $781.56 overpayment to Plaintiff for services provided on March 11, 2015 and April 8, 2015. [Id., at ¶ 25]. It refused to make any more payments on Plaintiff's claims and "stated that it would process her claims when she refunded the overpayment." [Id., at ¶ 25]. However, there was no overpayment because "the matter involved a dispute over the proper" billing codes "and not whether the services were rendered or were covered, and the dispute was resolved when the bills were resubmitted with the" billing codes required by Defendant. [Id., at ¶ 26]. Defendant used the allegations about theoverpayment to withhold all benefits due to Plaintiff despite the fact that the new claims for benefits exceeded the alleged overpayment by many thousands of dollars. [Id., at ¶ 27]. In August 2019, two years after she stopped providing services to Defendant, Plaintiff sent Defendant a money order for $781.56. [Id., at ¶ 74, 84].

Defendant also made false statements about Plaintiff's bills, including alleging that she was billing for telephone calls and emails. [Id., at ¶ 33]. However, Plaintiff did not submit any claims for unbillable telephone calls or emails; instead, she "submitted claims for prolonged therapy services which included paperwork, filing, progress notes, analysis, and telephone calls." [Id., at 34]. Moreover, "billing for services including a telephone call is not a reason to deny an entire claim for service or a whole course of treatment over multiple claims." [Id.].

Defendant also engaged in a practice of delaying and obstructing the administration of claims, "including refusing to pay claims where there was no denial, refusing to supply information, and pretending not to be present when answering the telephone" when Plaintiff or the family called. [Id., at ¶ 28]. Defendant repeatedly asked for more information about the claims, including the confidential progress notes kept by Plaintiff. [Id., at ¶ 29]. Plaintiff provided these notes to Defendant, and the notes verified that she had rendered services to the family on the dates for which she submitted claims. [Id., at ¶¶ 30-31]. Throughout 2015 and 2016, Defendant continued to refuse to pay benefits, stating that it was waiting for more information. [Id., at ¶ 35]. However, Plaintiff had already submitted the information requested by Defendant. [Id., at ¶ 36]. Defendant also required Plaintiff to repeatedly resubmit her bills and progress notes, even after stating that it had received the progress notes. [Id., at ¶ 40]. Defendant refused to respond to inquiries about the status of the bills, refused to supply the list of claims for which it is withholding benefits, and refused to state what information was lacking to resolve the claims. [Id., at ¶¶ 41,44].

Defendant engaged in other tactics against Plaintiff, including refusing "to explain why checks were detached from Explanations Of Benefits forms before they were mailed to her" and refusing "to account for all the payments she received." [Id., at ¶ 42]. In 2015 and 2016, Defendant "sent partial explanation of benefit letters in envelops with falsely dated postage marks." [Id., at ¶ 43]. Defendant also told Plaintiff that she cannot appeal her claims cannot because they are not yet denied, only in a closed status waiting for more information. [Id., at ¶¶ 35, 45].

Finally, Defendant asked the family to stop seeing Plaintiff, caused the family stress by refusing to process Plaintiff's bills, and told the family false information about Plaintiff. [Id., at ¶¶ 68, 72]. The family benefitted and believed it benefitted from Plaintiff's services, and they wanted to continue their relationship with Plaintiff. [Id., at ¶ 71]. A family member "missed appointments because of stress created by" Defendant "and in 2017 [the family] stopped coming for their appointments." [Id., at ¶ 74].

From 2014 to 2017, Plaintiff submitted bills for at least fifty dates of services, and the billable amount of her claims exceeds $50,000. [Id., at ¶ 46]. Defendant told Plaintiff that her "services were covered," and Plaintiff relied upon the "statements that her services were covered and continued to treat the patients." [Id., at ¶¶ 79-80]. Defendant has yet to process Plaintiff's claims. [Id., at ¶85].

In June 2020, Plaintiff filed a complaint in the Circuit Court of Cook County. [See 1-1]. In it, she alleges (1) breach of contract, (2) vexations delay and bad faith pursuant to the Illinois Insurance Code, (3) breach of fiduciary duty, (4) that she is entitled to equitable relief, (5) interference with contract, and (6) promissory estoppel. Defendant removed the complaint to this Court, claiming that all six of Plaintiff's state-law claims are preempted by the EmployeeRetirement Income Security Act of 1974 ("ERISA"). [See 1, at 3-7]. Shortly thereafter, Defendant filed a motion to dismiss. [8].

II. Legal Standard

A. Motion to Dismiss Standard

To survive a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted, the complaint typically must comply with Rule 8(a) by providing "a short and plain statement of the claim showing that the pleader is entitled to relief," Fed. R. Civ. P. 8(a)(2), such that the defendant is given "fair notice of what the * * * claim is and the grounds upon which it rests." Bell Atl. Corp v. Twombly, 550 U.S. 544, 555 (2007) (alteration in original) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). "A pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S at 555). In determining whether the complaint meets this standard, the Court accepts as true all of Plaintiff's well-pleaded factual allegations and draws all reasonable inferences in Plaintiff's favor. Killingsworth, 507 F.3d at 618.

B. ERISA Preemption

State-law claims may be preempted under ERISA under either § 502 or § 514². An "individual's cause of action is completely pre-empted by ERISA § 502(a)(1)(B)" if the "individual, at some point in time, could have brought his claim under ERISA § 502(a)(1)(B), and where there is no other independent legal duty that is implicated by a defendant's actions." Aetna Health Inc. v. Davila, 542 U.S. 200, 210 (2004). Section 514(a) states that ERISA preempts "anyand all State laws insofar as they may now or hereafter relate to any employee benefit plan" covered under ERISA. 29 U.S.C. § 1144(a). "The structure and legislative history indicate that the words 'relate to' are intended to apply in their broadest sense." Cent. States, Se. & Sw. Areas Health & Welfare Fund v. Neurobehavioral Assocs., P.A., 53 F.3d 172, 174 (7th Cir. 1995). "Therefore, ERISA 'preempts a state law claim if the claim requires the court to interpret or apply the terms of an employee benefit plan.'" Laborers' Pension Fund v. Miscevic, 880 F.3d 927, 931 (7th Cir. 2018) (quoting Kolbe & Kolbe Health & Welfare Benefit Plan v. Med. Coll. of Wis., Inc., 657 F.3d 496, 504 (7th Cir. 2011)).

III. Analysis

A. Jurisdiction

Defendant removed this lawsuit based on ERISA preemption. Although preemption does not typically give...