Rai Care Ctrs. of Md. I v. U.S. Office of Pers. Mgmt.

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RAI CARE CENTERS OF MARYLAND I, LLC Plaintiff, v. U.S. OFFICE OF PERSONNEL MANAGEMENT Defendant.

Civil Action No. 18-3151 (TJK)

United States District Court, District of Columbia

August 7, 2024

MEMORANDUM OPINION

TIMOTHY J. KELLY, United States District Judge.

Plaintiff provided outpatient renal dialysis services to nine beneficiaries of a federal-government-sponsored health plan. Now, it says, that plan's carrier unlawfully slashed its reimbursements to the plan's beneficiaries. Purporting to bring claims on those beneficiaries' behalf, Plaintiff sought reconsideration from the carrier and then review from the Office of Personnel Management, or OPM, the federal agency that oversees the plan. After failing both times, it sued OPM for review of its adjudications of those claims.

Both parties move for summary judgment. After reviewing the administrative record, the Court holds that Plaintiff is wrong about which document defines the plan's terms. As a result, Plaintiff lacks authorization to bring claims on seven of nine patients' behalf. But as for the other two patients, the Court finds that the agency failed to adequately explain the reduction in benefits. Thus, it will grant in part and deny in part both parties' motions for summary judgment, vacate as arbitrary and capricious two of the agency's adjudications, and remand to the agency for further proceedings consistent with this opinion.

I. Background

A. Legal Background

The Federal Employees Health Benefits Act (“FEHBA”) empowers OPM to “contract with qualified carriers offering [health-benefits] plans.” See 5 U.S.C. § 8902(a). Such contracts must “contain a detailed statement of benefits offered and shall include such maximums, limitations, exclusions, and other definitions of benefits as [OPM] considers necessary or desirable.” Id. § 8902(d). Once OPM enters such a contract, federal employees, annuitants, and certain family members may enroll in an approved plan. See generally id. §§ 8903, 8903a, 8905. Enrollees must receive “a statement of benefits conveying information about the [p]lan's coverage and conditions.” Empire Healthchoice Assur., Inc. v. McVeigh, 547 U.S. 677, 684 (2006); 5 U.S.C. § 8907(b). Although enrollees are not parties to the contracts that define the plans, they are third-party beneficiaries and may enforce the plan's terms in that capacity. See Christiansen v. Nat'l Sav. & Tr. Co., 683 F.2d 520, 530-33 (D.C. Cir. 1982).

OPM can require a carrier to pay for or provide health care if OPM finds that the relevant contract requires it. See 5 U.S.C. § 8902(j). It may also “prescribe regulations necessary to carry out [the FEHBA].” Id. § 8913(a). By regulation, OPM directs that claims should be “submitted initially to the carrier of the covered individual's health benefits plan.” 5 C.F.R. § 890.105(a)(1). If the carrier denies any part of the claim, the claimant may ask the carrier to reconsider. Id. After exhausting that process, the claimant may appeal to OPM. Id. Once OPM takes final action on the denial, the claimant may seek judicial review in federal district court. See id. § 890.107(c); 5 U.S.C. § 8912.

B. Factual Background

Plaintiff claims that OPM unlawfully refused to direct a carrier to pay health benefits due nine patients under an FEHBA plan for services Plaintiff provided in 2015. See ECF No. 1 ¶¶ 164-74. Thus, the Court will start with the terms of the relevant plan as it existed in 2015.^[1]

1. The Plan

OPM's predecessor agency authorized the plan by contract with Blue Cross Blue Shield Association in 1960. See AR B373. The FEHBA requires contract terms “of at least 1 year,” 5 U.S.C. § 8902(a), and, in practice, OPM “negotiates benefits and rates with each plan annually,” see AR B379. Geographically defined Blue Cross Blue Shield affiliates underwrite and administer the plan “in their individual localities.” AR B379. The affiliate relevant here is CareFirst BlueCross BlueShield. See AR B1-5; AR G1-2.

The plan includes a preferred-provider organization, commonly called a PPO. AR B387. Thus, the plan divides facilities that provide health care into three categories. First are preferred providers, which are in the organization and bill CareFirst directly. See id. Second are member facilities, which are not in the organization, but separately contract with CareFirst and so also bill CareFirst directly. See id. Third are nonmember facilities, which are neither in the organization nor have contracts with CareFirst and so must bill their patients for services. See AR B388. A patient enrolled in the plan may then file a claim with CareFirst for reimbursement. Id.

Some covered services are subject to a plan allowance. AR B401. The allowance is the figure from which CareFirst calculates how much it will pay. See AR B523. For some services provided by nonmember facilities, the plan allowance is calculated by averaging the amount Blue Cross Blue Shield Association pays nationally for listed services. See AR B523-24. For other types of services, the plan allowance is simply “the billed amount.” See id. Regardless, nonmember facilities need not “accept [the plan benefit] as payment in full,” and the patient is “responsible for any difference between [CareFirst's] payment and the billed amount,” subject to limited exceptions not relevant here. See AR B524-25.

Thus, once a patient meets his annual deductible,^[2] CareFirst pays a set portion of the plan allowance for covered services provided by nonmember facilities. See, e.g., AR B402. The patient is then responsible for his coinsurance-the rest of the plan allowance-plus any difference between what the facility billed and the plan allowance. See id.

Two relatively recent amendments to the plan contract are relevant here. The first, effective as of 2001, allows carriers to implement “pilot programs” if approved by OPM. See ECF No. 44-2 at 10. It reads:

Upon approval by the Contracting Officer, the Carrier may design and implement pilot programs in one or more local Plan areas that test the feasibility and examine the impact of various managed care initiatives. The Carrier shall brief the Contracting Officer on a pilot program prior to its implementation, advise the Contracting Officer of the progress of the pilot program and provide a written evaluation at the conclusion of the pilot program. The evaluation of the pilot program shall . . . assess the cost effectiveness, effect on quality of care and/or quality of life, and customer satisfaction, and recommend whether the pilot program should be continued or expanded.

Id.^[3]The second, effective as of 2014, restricts enrollees' ability to assign their benefits. It reads:

[B]enefits provided under the contract are not assignable by the Member to any person without express written approval of the carrier, and in the absence of such approval, any such assignment shall be void. Notwithstanding such approval, no assignment of benefits may be made in any case prior to the time that a valid claim for benefits arises.

AR B373-74. Thus, both amendments were in effect in the 2015 plan year.

OPM approved a statement of plan benefits for 2015. See AR B373-534. That document describes itself as a “brochure” and says it relays the plan benefits “under [Blue Cross Blue Shield Association's] contract . . . with [OPM], as authorized by the [FEHBA].” See AR B379. But it also notes that enrollees are “entitled to the benefits” it describes and provides that “[n]o oral statement can modify . . . [its] benefits, limitations, and exclusions.” Id. Further, the brochure explains that, if an enrollee appeals a claim denial to OPM, OPM “will determine if [CareFirst] correctly applied the terms of [the] contract.” AR B509.

Three provisions of the statement of plan benefits are most relevant to this case. First, for renal dialysis at nonmember facilities, it says CareFirst should pay 65 percent of the plan allowance. See AR B454. Second, it describes the plan allowance for that service as “the billed amount (minus any amounts for noncovered services).” AR B524. Third, it tells enrollees they “may designate an authorized representative to act on [their] behalf for filing a claim or to appeal claims decisions.” AR B507. Also relevant is a provision it does not contain-the statement says nothing about pilot programs.

2. Plaintiff and Its Patients

Plaintiff is RAI Care Centers of Maryland I, LLC. It provides outpatient renal dialysis services. See AR B73. As relevant here, it claims to have provided dialysis to nine beneficiaries of the plan in 2015. ECF No. 1 ¶ 1. Those patients are anonymously identified by letter as patients A-I, although the parties know the patients' identities, which are also available in sealed portions of the administrative record. See id. at 1 n.1; Minute Order of Jan. 13, 2022. Critically, Plaintiff is a nonmember facility vis-a-vis the CareFirst plan, meaning that it has no contract with Blue Cross Blue Shield Association or CareFirst. See AR B74.

Plaintiff purports to be the assignee of each patient. For most patients, that is because the patient signed a form Plaintiff created, which is titled “Assignment of Benefits and Appointment of Personal Representative.” E.g., AR B95. Such forms were signed by the patient and, if applicable, the nonpatient policyholder-but not approved by CareFirst. See id. But for two patients, Patients B and G, Plaintiff later also got written consent for its lawyers to pursue their claims in a manner approved by CareFirst and OPM. See AR B370; AR G337.

3. The Parties' Dispute

Although this dispute is confined to services provided in 2015 Plaintiff's relationship with some patients began years earlier. For example, it treated Patient A starting in 2012. ECF No. 1 ¶ 27. For years, Plaint...