Merrick v. Unitedhealth Grp. Inc.

127 F.Supp.3d 138

Timothy MERRICK, D.C. d/b/a Alive & Well Chiropractic, Joshua I. Kantor, D.C., Jason Piken, D.C. d/b/a Innate Chiropractic of Manhattan, and Craig Fishel, D.C., on behalf of themselves and all others similarly situated, Plaintiffs,

v.UNITEDHEALTH GROUP INCORPORATED, Unitedhealthcare, Inc., Unitedhealthcare Services, Inc., Optum Inc., and Optumhealth, Inc., Defendants.

No. 14 Civ. 8071(ER).

United States District Court, S.D. New York.

Signed Aug. 31, 2015.

Peter R. Kahana, Russell David Paul, Berger & Montague, P.C., Philadelphia, PA, Richard J. Quadrino, Quadrino Law Group P.C., Melville, NY, Steven Lawrence Bloch, Bailey & Glasser, LLP, West Conshohocken, PA, for Plaintiffs.

Brian David Boyle, Danielle Carim Gray, Gregory Frederick Jacob, Meaghan Vergow, O'Melveny & Myers LLP, Washington, DC, Sloane Ackerman, O'Melveny & Myers LLP, New York, NY, for Defendants.

ORDER

RAMOS, District Judge:

Four Chiropractors, Timothy Merrick, D.C., doing business as Alive & Well Chiropractic, Joshua Kantor D.C., Jason Piken, D.C., doing business as Innate Chiropractic of Manhattan, and Craig Fishel D.C. (collectively "Plaintiffs"), assert a class action on behalf of themselves and others similarly situated, against UnitedHealth Group Incorporated, UnitedHealthcare, Inc., UnitedHealthcare Services, Inc., Optum, Inc., and OptumHealth, Inc. (collectively "Defendants" or "United"), asserting violations of the Employee Retirement Income Security Act of 1974 ("ERISA"). In the instant motion, United moves to compel arbitration only of Merrick's claims, and to dismiss Merrick's claims. For the reasons set forth below, United's motion to compel arbitration of Merrick's claims is GRANTED, and United's motion to dismiss Merrick's claims is DENIED. Merrick's claims are instead STAYED.

I. Factual Background

a. The Allegations

Plaintiffs are healthcare providers licensed to provide chiropractic services in New York. Am. Compl. ¶¶ 1, 3–6. Plaintiffs provide healthcare services to patients covered under United healthcare plans governed by ERISA ("Covered Patients"). Id. ¶¶ 1, 14, 19, 53. According to Plaintiffs, patients routinely authorize them, as providers, to receive payments from United. Id. ¶ 65, 66, 97, 98, 121–124, 142–144. As a result, Plaintiffs bill directly to and receive payments directly from United for services provided to Covered Patients. Id. 19, 67, 99, 126, 146.

UnitedHealth Group Incorporated is a health company incorporated in Delaware. Id. ¶ 7. UnitedHealthcare, Inc., UnitedHealthcare Services, Inc., Optum, Inc., and OptumHealth, Inc., doing business as OptumHealth Care Solutions Inc., are wholly owned subsidiaries of UnitedHealth Group Incorporated. Id. ¶¶ 8–11. Plaintiffs allege that United is a Plan and/or Claims Administrator as defined by ERISA, and is therefore, responsible for determining whether a given claim is covered under the healthcare plans and effectuating payment for any covered services. Id. ¶¶ 7, 17.

Plaintiffs assert putative class action claims against United for United's purported violation of ERISA claims regulation, 29 C.F.R. § 2560.503–1 ("Claims Regulation"). Id. ¶ 46. According to Plaintiffs, when a Plan or Claim Administrator renders an initial decision on claims, "meaning the decision rendered before any appeal of a claim determination," the Claims Regulation requires claimant, in this case Plaintiffs, to be notified of an "adverse benefit determination"¹ made by the Plan "no[ ] later than 30 days after receipt of the claim." Id. ¶ 25. This time period "may be extended one time by the plan for up to 15 days, provided the plan administrator determines such an extension is necessary ... and notifies the claimant, prior to the expiration of the initial 30–day period[.]" Id. ¶ 25. Plaintiffs claim that United originally "voluntarily paid ... benefits within the required time limits set out in the Claims Regulation" but then reversed its initial benefit determination on numerous occasions after the thirty-day time period passed, and, without requesting an extension, requested that Plaintiffs refund the amount allegedly overpaid by United for these benefits. Id. ¶¶ 1, 60–62, 187. Specifically, United allegedly sent letters to Plaintiffs requesting patient's clinical records after the thirty-day period had passed, and then recouped the allegedly overpaid amounts when Plaintiffs declined to provide clinical records on the basis that United could no longer question the claim. Id. ¶¶ 60, 62. United allegedly recouped the overpaid amounts by offsetting these amounts from approved claim payments owed to the same providers for services provided to different patients under different healthcare plans. Id. ¶¶ 62, 187. Plaintiffs assert that United's recoupment of previously paid claims amount to an "Adverse Benefit Determination" as defined in the Claims Regulation. Id. ¶¶ 26, 169, 173.

United specifically requested patient records from Merrick starting at an unidentified point prior to May 17, 2013 through May 27, 2014:

• On May 17, 2013, United sent a letter to Merrick allegedly reiterating its previous request for documents and specifically requesting the patient records for patients numbered 201, 205, 206, 209, 210, and 213 through 217 for services provided by Merrick in 2012. Id. ¶ 127.² Merrick "did not forward the requested information and did not otherwise reply to the May 17, 2013 letter" because more than thirty days had passed since United received the claim and United did not request a fifteen day extension, therefore, Merrick alleges he was not required to comply with United's request. Id. ¶ 128.

• On September 5, 2013, United allegedly requested Merrick refund the alleged overpayments, listed in a spreadsheet titled "Refund Request Claim Detail," for services provided by Merrick to patients numbered 201, 205, 206, 209, 210, 214 and 218. Id. ¶ 129.

• On September 20, 2013, United allegedly sent another letter to Merrick requesting Merrick provide records for patients numbered 201 through 210 for services provided by him in 2013. Id. ¶ 130. Merrick "again did not forward the requested information and did not otherwise reply to the September 20, 2013 letter" for the same reasons Merrick did not respond to United's May 17, 2013 letter. Id. ¶ 131.

• On October 28, 2013, by letter titled "FOLLOW UP REQUEST—Overpayment Notification," United requested Merrick refund the alleged overpayments for services provided by him to patient number 211. Id. ¶ 132.

• On March 27, 2014, United allegedly sent Merrick another letter titled "Outstanding Overpayments" and again requested Merrick refund the alleged overpayments for services provided to patients numbered 201, 205, 206, 209, 210, 214, and 218. Id. ¶ 133.

According to Merrick, "United did not offer, in good faith, any informal dispute resolution procedures regarding the dispute related to its request for medical records" and did not "invoke the arbitration clauses in the Provider Agreements regarding these disputes." Id. ¶¶ 135, 136. After Merrick did not respond to any of United's requests for documentation and recoupment of the alleged overpayments, United purportedly offset the overpayments by reducing the amount United paid Merrick for services performed for other patients covered by other healthcare plans. Id. ¶ 137.

Plaintiffs, including Merrick, allege that they are ERISA beneficiaries asserting ERISA claims on behalf of their patients. See id. ¶¶ 54–58. Pursuant to ERISA Section 502(a)(1)(B), Plaintiffs request declaratory relief that (a) Defendants have no legal authority, after the time set forth in the Claims Regulation, to reverse benefit determinations it previously made, (b) "cannot recoup monies that have been previously paid[,]" and (c) future payments owed by United for covered services "shall not be reduced—or offset—by any amounts" past the time period allotted in the Claims Regulation. Id. ¶¶ 192–194. Plaintiffs also request monetary judgment and reimbursement under Section 502(a)(1)(B), for "all amounts ... taken from Plaintiffs ... via offsetting." Id. ¶ 195. Pursuant to Section 502(a)(3), Plaintiffs request injunctive relief enjoining United from reversing previously made benefit determinations and offsetting amounts previously paid in violation of the Claims Regulation or, alternatively, requiring United to comply with the Claims Regulation. Id. ¶¶ 197–200.

b. The Provider Agreements

Merrick is an "in-network" healthcare provider that routinely treats patients covered under United healthcare plans through his business, Alive & Well Chiropractic. Am. Compl. ¶¶ 3, 19. "An ‘in-network’ provider is a provider who has entered into a contractual agreement with United—separate and apart from the United Administered Plans —under which the provider has agreed to accept reduced benefits under the Plans for providing healthcare services to Covered Persons (‘Provider Agreements')."³ Id. ¶ 18 (emphasis original). Merrick executed two Provider Agreements, one with United's New York Non–HMO/non–IPA network (ACN Group, Inc.) (the "Non–HMO Provider Agreement" or "Ex. 1") and the other with United's New York HMO/IPA network (ACN Group IPA of New York, Inc.) (the "HMO Provider Agreement" or "Ex. 2"), in 2011. See Defs.’ Mem. at 2; Decl. of Steven Vynorius ("Vynorius Decl.") Exs. 1, 2.⁴ These Provider Agreements specify how Merrick is to submit, bill, process, and be paid for his services. Vynorius Deck Ex. 1 §§ 3.3, 4, Ex. 2 §§ 3.4, 6. Additional rights and obligations of the parties to the Provider Agreements are specified in Operations Manuals, incorporated into the Provider Agreements. Id. Ex. 1 § 4.3 ("A claim will be considered properly completed if Provider complies with the billing procedures set forth in this Agreement, the Plan Summary, the Operations Manual, or other applicable documents"); Ex. 2 § 6.1 (same); see also Ex. 3, Ex. 4.

According to United, Merrick was obligated under the Provider Agreements, and documents incorporated therein, to...