Am. Psychiatric Assoc. v. Anthem Health Plans

• Decision Date: 25 September 2014
• Docket Number: Civil No. 3:13cv494 JBA.
• Court: U.S. District Court — District of Connecticut
• Parties: AMERICAN PSYCHIATRIC ASSOC., et al., Plaintiffs, v. ANTHEM HEALTH PLANS, et al., Defendants.

50 F.Supp.3d 157

AMERICAN PSYCHIATRIC ASSOC., et al., Plaintiffs

v.ANTHEM HEALTH PLANS, et al., Defendants.

Civil No. 3:13cv494 JBA.

United States District Court, D. Connecticut.

Signed Sept. 25, 2014.

Aaron M. Panner, Matthew A. Seligman, Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C., Washington, DC, Melissa A. Federico, Murtha Cullina LLP, Hartford, CT, Elizabeth J. Stewart, Murtha Cullina, New Haven, CT, for Plaintiffs.

Erica Knievel, Peter R. Bisio, Hogan Lovells U.S. LLP, Washington, DC, Matthew H. Geelan, Michael G. Durham, Donahue, Durham & Noonan, P.C., Guilford, CT, for Defendants.

RULING ON DEFENDANTS' MOTION TO DISMISS

JANET BOND ARTERTON, District Judge.

Plaintiffs, a collection of individuals, doctors, and professional associations, allege in their Second Amended Complaint [Doc. # 32] that Defendants Anthem Health Plans, Inc. (“Anthem”) and WellPoint, Inc. (“WellPoint”) utilize methodologies to determine insurance reimbursement rates for mental health services that are not comparable to those Defendants utilize in determining reimbursement rates for medical and surgical services in breach of their fiduciary obligations to their plan holders under the Mental Health Parity and Addiction Equity Act of 2008 (“MHPAEA” or the “Parity Act”), Pub.L. No. 110–343, Div. C §§ 511–12, 122 Stat. 3861, 3881 (Oct. 3, 2008) and the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq. Plaintiffs also allege that, in doing so, Defendants have breached contracts between Anthem and the doctors, which prohibit Anthem from discriminating against patients on the basis of their health status, and that Anthem has tortiously interfered with the business relationships between these doctors and their patients. Defendants move [Doc. # 37] move to dismiss the Second Amended Complaint, contending (1) that the doctors and professional organizations lack third-party and associational standing to assert these claims and (2) that Plaintiffs have failed to state a claim for breach of fiduciary duty under ERISA.

For the reasons that follow, Defendants' Motion to Dismiss is granted as to Counts One through Three on the basis that Plaintiffs lack standing and have failed to state a claim and the Court declines to exercise supplemental jurisdiction over the remaining state law claims.

I. Facts

The Parity Act was “designed to end discrimination in the provision of coverage for mental health and substance use disorders as compared to medical and surgical conditions in employer-sponsored group health plans and health insurance coverage offered in connection with group health plans.” Coal. for Parity, Inc. v. Sebelius, 709 F.Supp.2d 10, 13 (D.D.C.2010). It “requires parity in aggregate lifetime and annual dollar limits for mental health benefits and medical and surgical benefits” and “requires employer-sponsored group health plans to cover mental illness and substance abuse on the same basis as physical conditions.”Id. Specifically, the MHPAEA requires group health plans (or insurers) to ensure that the “financial requirements” and “treatment limitations” that are applicable to mental health or substance use disorder benefits are “no more restrictive” than the predominant financial requirements or treatment limitations applied to substantially all medical and surgical benefits covered by the plan (or coverage). See 29 U.S.C. § 1185a(a)(3) ; 42 U.S.C. § 300gg–5(a)(3) ; 26 U.S.C. § 9812(a)(3). The MHPAEA defines “financial requirements” as including “deductibles, copayments, coinsurance, and out-of-pocket expenses” and defines “treatment limitations” as including “limits on the frequency of treatment, number of visits, days of coverage, or other similar limits on the scope or duration of treatment.” Id.

Plaintiffs allege that Defendants have violated this law, because they “generally reimburse psychiatrists less than they reimburse non-psychiatric physicians who provide comparable medical services” and “impose onerous administrative requirements on psychiatrists which can interfere with the doctor's ability to provide quality care.” (2d Am. Compl. ¶ 36.) For example, Defendants do not allow psychiatrists to bill for psychotherapy on the same day in which they provided medical services, which “required doctors to either provide a time consuming service, such as psychotherapy, without charge or code, or to ask the patient to come back for psychotherapy on another day thereby making access to needed psychiatric services more restrictive than allowable by law because patients would be required to visit twice for a service that should be provided in one visit and incur more costs associated with another visit.” (Id. ¶ 44.)

Defendants' unlawful conduct “prevent[s] participants and beneficiaries like B.G. and S.M. from receiving the mental health services they need, limits their access to in network providers and treatment, and often times forces them to change mental health providers.” (Id. ¶ 85.)

1. The Parties

Anthem is a Connecticut insurance company that does business as Anthem Blue Cross and Blue Shield and issues and administers insurance policies. (Id. ¶ 8.) WellPoint, directly or indirectly owns 100% of the stock of Anthem. (Id. ¶ 9).

The American Psychiatric Association, the Connecticut Psychiatric Association, the Connecticut Council of Child and Adolescent Psychiatry (the “Associations” or the “Association Plaintiffs”) are national and local membership organizations of psychiatrists. They do not bring any claims on their own behalf, but instead bring claims on behalf of member psychiatrists who interact with Defendants on an in-network or out-of-network basis and members' patients who are covered by Defendants' health plans. (Id. ¶¶ 1–3.)

Dr. Susan Savulak is a psychiatrist and a “participating” or “in-network” provider pursuant to a contract with Defendant Anthem. (Id. ¶ 4; see also Dr. Savulak's Provider Agreement, Ex. 2 to Izzo Decl. [Doc. # 38].) Two of Dr. Savulak's patients, B.G. and S.M., have purported to assign claims to Dr. Savulak but are not themselves parties to this suit. B.G. is “a participant of a self-insured health plan, Lumenos Health Savings Account (“LHSA”) provided by her employer.” (Id. ¶ 18.) S.M. is “a beneficiary under an Anthem insured Lumenos Health Savings Plan provided by SM's spouse's employer.” (Id. ¶ 19.) Dr. Theodore Zanker is a psychiatrist, who used to be an in-network provider with Anthem, but no longer participates in Anthem's networks, and brings this lawsuit as a “non-participating” or “out-of-network” provider.¹ (Id. ¶ 7.)

II. Discussion

Although there is no private right of action under the Parity Act, portions of the law are incorporated into ERISA and may be enforced using the civil enforcement provisions in ERISA § 502, to the extent they apply. New York State Psychiatric Ass'n, Inc. v. UnitedHealth Grp., 980 F.Supp.2d 527, 544 (S.D.N.Y.2013). Defendants contend that Plaintiffs' claims fail because they lack standing under both ERISA and the Constitution and they fail to state a claim under ERISA.

A. Standing²

Defendants contend that Plaintiffs lack standing to assert claims under ERISA § 502(a)(3) and that the Association Plaintiffs also lack Article III standing. “A plan participant suing under ERISA must establish both statutory standing and constitutional standing, meaning the plan participant must identify a statutory endorsement of the action and assert a constitutionally sufficient injury arising from the breach of a statutorily imposed duty.” Kendall v. Employees Ret. Plan of Avon Products, 561 F.3d 112, 118 (2d Cir.2009).

“The prudential limitations on jurisdiction require that a plaintiff establish that he or she is the proper proponent of the rights asserted; a litigant may not raise the rights of a third-party, or assert speculative, conjectural or generalized grievances more appropriately resolved by a governmental body, other than the courts.” New York State Nat. Org. for Women v. Terry, 886 F.2d 1339, 1346–47 (2d Cir.1989) (internal citations omitted).

As discussed below, the Court concludes that (1) even if the relevant insurance plans did not preclude the assignment of ERISA claims to Dr. Savulak, she lacks statutory standing under ERISA to pursue such claims on behalf of her patients; (2) Dr. Zanker and Dr. Savulak lack third party statutory standing under ERISA to pursue claims on behalf of their patients; and (3) the Association Plaintiffs lack associational standing under Article III to pursue claims on behalf of their members' patients.

1. Statutory Standing for Dr. Savulak Based on B.S. and S.M.'s Assignment of Claims (Count Two)

a) Contractual Assignability

Only “a participant, beneficiary, or fiduciary” of an ERISA plan can bring a claim under § 502(a)(3). 29 U.S.C. § 1132(a)(3). However, the Second Circuit has “carv[ed] out a narrow exception to the ERISA standing requirements,” granting “standing only to healthcare providers to whom a beneficiary has assigned his claim in exchange for health care.” Simon v. Gen. Elec. Co., 263 F.3d 176, 178 (2d Cir.2001). Dr. Savulak brings her claims based on an assignment from her patients, B.G. and S.M.³

Although Defendants do not dispute that “the assignees of beneficiaries to an ERISA-governed insurance plan have standing to sue under ERISA,” I.V. Servs. of Am., Inc. v. Trustees of Am. Consulting Engineers Council Ins. Trust Fund, 136 F.3d 114, 117 n. 2 (2d Cir.1998), they contend that the purported assignment of claims from B.G. and S.M. to Dr. Savulak is invalid, because both of their plans contain anti-assignment provisions that prohibit assignment; as to B.G. of the right “to receive benefits under the Benefit Program” (B.G. Plan, Ex. 3 to Defs.' Mem. Supp. [Doc. # 39] at 72), and as to S.M. of “rights, benefits or obligations” (S.M. Plan, Ex. 4 to Defs.' Mem. Supp. at 94).

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