Theunissen v. United States Office of Pers. Mgmt.

1

TAYLOR B. THEUNISSEN, MD, LLC, Individually and as Assignee and Authorized Representative of J.C. Plaintiff, v. UNITED STATES OFFICE OF PERSONNEL MANAGEMENT Defendant.

Civil Action No. 24-531

United States District Court, E.D. Louisiana

November 27, 2024

ORDER AND REASONS

JAY C ZAINEY UNITED STATES DISTRICT JUDGE

The following motions are before the Court Defendant's Motion to Dismiss (Rec. Doc 6) and Defendant's Motion to Dismiss State Law and Administrative Procedures Act Claims (Rec. Doc. 11). Pursuant to Federal Rule of Civil Procedure 12(d), the motions have been converted to motions for summary judgment.^[1] The converted motions, submitted for consideration on November 13, 2024, are before the Court on the briefs without oral argument.

I. Background

i. Factual background

This matter arises out of an alleged underpayment by Government Employees Health Association, Inc. (“GEHA”) for medical services rendered to Patient J.C. (“J.C.”) by Dr. Taylor B. Theunissen, MD, LLC (“TBT” or “Plaintiff”).^[2] At all relevant times, J.C. was a beneficiary of a health benefit plan (“Plan”) sponsored and administered by GEHA.^[3] The Plan was available to J.C., who is an employee of the federal government,^[4] via a GEHA contract with Defendant, Office of Personnel Management (“OPM”), as authorized by the Federal Employees Health Benefits Act (“FEHBA”).^[5]

In 2019, J.C. was diagnosed with breast cancer.^[6] She underwent bilateral mastectomies (“mastectomy”) on February 13, 2019.^[7] Prior to her mastectomy, J.C. assigned her provider the right to receive payment of benefits from the Plan and, if necessary, take legal action to recover benefits on her behalf.^[8] Immediately following her mastectomy, Dr. Theunissen and Dr. Alireza Sadeghi, working as co-surgeons, performed bilateral breast reconstructions with deep inferior epigastric perforator flaps (“Reconstructive Procedure”).^[9]

According to TBT, he requested a pre-authorization for the Reconstructive Procedure before conducting J.C.'s mastectomy.^[10] But as his complaint makes clear, “[t]he Reconstructive Procedure is directly covered by the Plan” and “the Plan specifically exempts from the preauthorization requirement breast reconstruction [if it is] ‘immediate reconstruction for diagnosis of cancer.'”^[11] Accordingly, preauthorization (or, as the Plan refers to it, “precertification”) was unnecessary for the Reconstructive Procedure.^[12]

But precertification was necessary under the Plan for J.C.'s in-hospital stay.^[13] And, as evidenced by the February 6, 2019 letter from Conifer Health Solutions, she received the requisite precertification.^[14] According to TBT, however, the February 6 letter is the basis for an alleged “binding contractual agreement” between TBT and OPM for performance of the Reconstructive Procedure.^[15] The instant dispute began when TBT submitted a claim for the Reconstructive Procedure to GEHA under the Plan and the claim was not reimbursed at the “reasonable and customary” amount the parties allegedly agreed to in the February 6 letter from Conifer Health Solutions.^[16] In response to the adverse determination, TBT (acting on behalf of J.C.) submitted first and second level appeals to OPM via the FEHBA claim review process outlined in the Code of Federal Regulations, thereby exhausting his administrative remedies.^[17] OPM ultimately issued a final ruling denying TBT's appeal on September 10, 2021, noting “Should [J.C.] wish to pursue this matter, she must now file suit against [OPM] in Federal court.”^[18]

ii. Procedural background

On March 1, 2024, TBT filed suit on behalf of J.C. and in his individual capacity.^[19] On behalf of J.C., TBT sought judicial review of the final agency action and alleged violations of the Administrative Procedure Act (“APA”). In his individual capacity, TBT asserted state law causes of action against OPM for breach of contract and detrimental reliance.^[20] In turn, OPM filed two motions to dismiss.^[21]

OPM's first motion attacked the timeliness of Plaintiff's claim for judicial review, arguing the claim prescribed on January 1, 2023-over a year before this lawsuit was filed.^[22] In response, Plaintiff argued the three-year prescription period does not commence until all administrative remedies are exhausted.^[23] Relying on OPM's September 10, 2021 letter giving notice that a final administrative review had been rendered, Plaintiff posited that the prescription period runs until December 31, 2024, making the judicial review claim timely.^[24]

Defendant's second motion argued (1) TBT's state law claims for breach of contract and detrimental reliance are preempted by FEHBA; and (2) because FEHBA provides an adequate remedy for judicial review, Plaintiff's claims under the APA are precluded.^[25] Plaintiff subsequently withdrew its claims under the APA, leaving only the preemption issue to be decided by the Court.^[26]

The Court reviewed the motions and exercised its discretion to convert the motions to motions for summary judgment for two reasons.^[27] First, the complaint and responses in opposition to the motions relied on certain extraneous documents that were not attached to the complaint or the motions but were central to Plaintiff's argument.^[28] This triggered the Court's obligation under Rule 12(d) to convert the motions if it opted to consider them. See Boateng v. BP, P.L.C., 779 Fed.Appx. 217, 219 (5th Cir. 2019) (“A district court converts a Rule 12(b)(6) motion to dismiss into a motion for summary judgment when matters outside of the pleadings are presented to and not excluded by the court. Such matters include evidence introduced in opposition to a 12(b)(6) motion that provides some substantiation for and does not merely reiterate what is said in the pleadings.”) (internal citations and quotations omitted)). Second, only two issues remained before the Court: (i) whether Plaintiff's claim for judicial review should be dismissed as untimely; and (ii) whether Plaintiff's state law claims are preempted by FEHBA.^[29]

In exercising its discretion to convert the motions, the Court granted the parties twenty-six days to file supplemental briefing and submit any additional evidence in support of their positions, and an additional seven days to reply to the opposing party's supplemental brief.^[30] See Hodge v. Engleman, 90 F.4th 840, 844 (5th Cir. 2024) (“Parties must have at least ten days' notice before the court's ruling that ‘the court could convert the Rule 12(b)(6) motion into a summary judgment.'”) (quoting Holguin v. U.S. Dep't of Army, 98 F.3d 1337, 1996 WL 556767, at *2 (5th Cir. 1996) (per curiam) (table) (unpublished) (“The only requirement is that the non-moving party have at least ten days in which to submit its own evidence.”)). Each party filed supplemental memoranda and the following evidence was submitted to the Court: (i) the Preauthorization Letter; (ii) correspondence between GEHA and J.C.; (iii) the Assignment and Designation document executed by J.C.; and (iv) the declaration of Kathryn Peterson, OPM Program Manager (Disputed Claims).^[31]

For the following reasons, Defendant's converted motions for summary judgment are GRANTED and Plaintiff's claims are DISMISSED WITH PREJUDICE.

II. Legal Standard

Summary judgment is proper where there is “no genuine dispute of material fact” and “the movant is entitled to judgment as a matter of law.” FED. R. CIV. P. 56(a). That is, it is appropriate where “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,” when viewed in the light most favorable to the non-movant, “show that there is no genuine issue as to any material fact.” TIG Ins. Co. v. Sedgwick James, 276 F.3d 754, 759 (5th Cir. 2002) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986)). A dispute about a material fact is “genuine” if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Id. (citing Anderson, 477 U.S. at 248). The court must draw all justifiable inferences in favor of the non-moving party. Id. (citing Anderson, 477 U.S. at 255). Once the moving party has initially shown “that there is an absence of evidence to support the non- moving party's cause,” Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986), the non-movant must come forward with “specific facts” showing a genuine factual issue for trial. Id. (citing FED. R. CIV. P. 56(e); Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986)).

III. The Federal Employees Health Benefits Act

Congress enacted FEHBA to create “a comprehensive program of health insurance for federal employees.” Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 682 (2006); see also 5 U.S.C. §§ 8901-14. FEHBA authorizes OPM to promulgate regulations and contract with insurance “carriers” for the purpose of “negotiating and regulating health-benefits plans for federal employees.” Empire, 547 U.S. at 682, 684; 5 U.S.C. §§ 8901(7), 8902-03, 8913. OPM then carries out that duty by entering contracts with private insurers, like GEHA, who act as carriers and provide health benefits to federal employees. Gonzalez v. Blue Cross Blue Shield Ass'n, 62 F.4th 891, 895 (5th Cir. 2023) (quoting St. Charles Surgical Hosp., LLC v. La. Health Serv. & Indem. Co., 935 F.3d 352, 356 (5th Cir. 2019) (citations omitted)).

Notably carriers “never take[] on the risks of an insurer in [their] relationship with OPM”-in other words, they operate more like a claims processor than an insurer. Id. at 896. So it is OPM, not GEHA, who has the final say on the health benefits that an employee may receive under the Plan. Id. Accordingly, if a dispute arises between an employee and GEHA under the plan, OPM...