Beye v. Horizon Blue Cross Blue Shield of N.J.

Decision Date01 August 2008
Docket NumberCivil Case No. 06-5337.,Civil Case No. 06-6219.
Citation568 F.Supp.2d 556
PartiesDawn BEYE, et al., Plaintiffs, v. HORIZON BLUE CROSS BLUE SHIELD OF NEW JERSEY, et al., Defendants. Suzanne Foley, et al., Plaintiffs, v. Horizon Blue Cross Blue Shield of New Jersey, et al., Defendants.
CourtU.S. District Court — District of New Jersey

Beth G. Baldinger, David A. Mazie, Eric D. Katz, Mazie Slater Katz & Freeman LLC, Roseland, NJ, for Dawn Beye.

Bruce H. Nagel, Randee M. Matloff, Elliott L. Pell, Nagel Rice, LLP, Roseland, NJ, for Suzanne Foley.

David Jay, Philip R. Sellinger, Laurie Ann Poulos, Greenberg Taurig, LLP, Florham Park, NJ, Thomas F. Quinn, Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, Newark, NJ, Doreen J. Piligian, Sterns & Weinroth, Erica Susan Helms, Sterns & Weinroth, PC, Trenton, NJ, for Defendants.

ORDER and OPINION

HOCHBERG, District Judge.

This matter is before the Court upon Defendant Horizon Blue Cross Blue Shield of New Jersey's ("Horizon") motion to dismiss both the Beye complaint (Beye DKT# 119) and the Foley complaint (Foley DKT# 91), and the Magellan Defendants'1 motion to dismiss the Beye Complaint (Beye DKT# 120, 121) and the Foley Complaint (Foley DKT# 92, 93).2 The Court has jurisdiction over Plaintiffs Drazin and Byram's claims pursuant to ERISA § 502, 29 U.S.C. § 1132, and 28 U.S.C. § 1331.3 The Plaintiffs assert jurisdiction in this Court over non-ERISA Plaintiffs Sedlak and Beye pursuant to the Class Action Fairness Act ("CAFA"), 28 U.S.C. § 1332(d). The Court heard oral argument in this matter on October 10, 2007, after which the Court terminated Horizon's first motion to dismiss in order to permit Plaintiffs to amend their complaints to add the Magellan Defendants. The Magellan Defendants and Horizon filed the instant motions to dismiss on January 29, 2008.

I. FACTS

These cases are class actions brought on behalf of class members who are covered by ERISA and non-ERISA health insurance policies issued by Defendant Horizon.4 All four named Plaintiffs have daughters who suffer from eating disorders and all four Plaintiffs have sought coverage for treatment of those disorders under the terms of their plans. All four Plaintiffs have been denied coverage by Horizon. The Magellan Defendants are parties to these cases in their role as administrators of the mental health benefits provided by the Horizon plans pursuant to the Magellan Defendants' Managed Care Service Agreement ("MCS Agreement") with Horizon. Plaintiffs allege that the Magellan Defendants are "authorized by Horizon to administer its managed mental health program," Beye Compl. ¶¶ 13-16, or that the Magellan Defendants "either individually or collectively promulgated and/or implemented claims processing criteria at the various relevant times." Foley Compl. ¶ 11.

As in the related case DeVito v. Aetna, "the gravamen of Plaintiffs' claims is that [Horizon] improperly denied coverage for treatment sought for their daughters' eating disorders by improperly classifying eating disorders as `non-Biologically Based Mental Illnesses.'" 536 F.Supp.2d 523, 525 (D.N.J.2008). Plaintiffs' claims are based upon the language of their respective insurance policies, three of which contain language substantially similar to that contained in the New Jersey Mental Health Parity Law.5 Plaintiffs Beye, Byram, and Drazin's policies each contain a substantially similar definition for "Biologically-Based Mental Illness" that tracks the Parity Law6 Biologically-based Mental Illness means a mental or nervous condition that is caused by biological disorder of the brain and results in a clinically significant or psychological syndrome or pattern that substantially limits the functioning of the person with the illness, including but not limited to schizophrenia; schizoaffective disorder; major depressive disorder; bipolar disorder; paranoia and other psychotic disorders; obsessive-compulsive disorder; panic disorder and pervasive developmental disorder or autism.

Morella Cert. Ex. C (Byram Policy) at 13; see also Ex. A (Beye Policy) at 6; Ex E (Drazin Policy) at 10. Plaintiffs Beye, Byram, and Drazin's policies also contain a substantially similar definition for "non-Biological-based Mental Illness"7

Non-Biologically Based Mental Illness means an Illness which manifests symptoms which are primarily mental or nervous for which the primary treatment is psychotherapy or psychotropic medication where the Illness is not biologically-based.

In determining whether or not a particular condition is a Non-Biologically-based Mental Illness, Horizon BCBSNJ may refer to the current edition of the Diagnostic and Statistical Manual of Mental Conditions of the American Psychiatric Association.

Morella Cert. Ex. C (Byram Policy) at 22; see also Ex. A (Beye Policy) at 14; Ex. E (Drazin Policy) at 23.

Three of the four Plaintiffs' policies cover treatment for BBMIs "at parity" with other illnesses as required by the New Jersey Mental Health Parity Law.8 In other words, treatment for BBMIs under those policies is subject only to the policy deductible and coinsurance payment, if any, and, in some cases, to preauthorization. See Morella Cert. Ex. C (Byram Policy) at 51 ("Horizon BCBSNJ pays benefits for the ... treatment of [BBMIs] the same way Horizon ... would for any other Illness, if such treatment is prescribed by a Practitioner."); see also Ex. A (Beye Policy) at 20; Ex. E (Drazin Policy) at 31. Three of the Plaintiffs' policies also contain coverage limitations for non-BBMIs, limiting inpatient and outpatient treatment for non-BBMIs to a certain number of days or visits per year and, in some cases, per lifetime. See Morella Cert. Ex. C. (Byram Policy) at 61; Ex. A (Beye Policy) at 24; Ex. E (Drazin Policy).

Plaintiffs Beye and Drazin received coverage for their daughters' eating disorders treatments as non-BBMIs. Both Plaintiffs exhausted the limited benefits available for non-BBMIs under the terms of their plans. Beye and Drazin allege that Horizon's treatment of eating disorders as non-BBMIs improperly limited the amount of coverage to which they are entitled under their respective policies. Plaintiffs Byram and Sedlak's daughters were denied coverage as "not medically necessary," and their daughters therefore did not receive even the limited coverage available for treating non-BBMIs. Byram and Sedlak allege that Horizon's "not medically necessary" determination is intertwined with Horizon's BBMI/non-BBMI determination such that Horizon's treatment of eating disorders as non-BBMI influences Horizon's "medical necessity" determination.

Defendant Horizon filed its first motion to dismiss on April 25, 2007. Following oral argument on October 10, 2007,9 the Beye Plaintiffs filed a third amended complaint (Beye DKT# 80) and the Foley Plaintiffs filed a second amended complaint (DKT#59), adding the Magellan Defendants. The Court terminated Horizon's motion to dismiss on January 17, 2008 pursuant to Magistrate Judge Shwartz's order that the parties submit new omnibus motions responding to the amended complaints in their entirety. The parties thereafter filed the instant motions to dismiss.

II. STANDARD

Motions to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim result in a determination on the merits at an early stage of a plaintiff's case. See Mortensen v. First Fed. Sav. and Loan Ass'n, 549 F.2d 884, 891 (3d Cir.1977). As a result, "plaintiff is afforded the safeguard of having all its allegations taken as true and all inferences favorable to plaintiff will be drawn." Id. In order to survive a 12(b)(6) motion to dismiss, "[t]he plaintiff must allege facts sufficiently detailed to `raise a right to relief above the speculative level,' and must `state a claim to relief that is plausible on its face.'" ProNational Ins. Co. v. Shah, No. 07-1774, 2007 WL 2713243, *1 (E.D.Pa. Sept.17, 2007) (quoting Bell Atlantic Corp. v. Twombly, ___ U.S. ___, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). As the Third Circuit has recently stated:

The Supreme Court's Twombly formulation of the pleading standard can be summed up thus "stating . . . a claim requires a complaint with enough factual matter (taken as true) to suggest" the required element. This "does not impose a probability requirement at the pleading stage," but instead "simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of" the necessary element.

Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir.2008) (internal citation omitted, alteration in original) (quoting Twombly, 127 S.Ct. at 1965).

III. ANALYSIS
A. Horizon's Motion to Dismiss

1. Burford Abstention

Horizon first argues that this Court should abstain from considering Plaintiffs' claims pursuant to the doctrine espoused in Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943). The Court considered and rejected a similar argument in DeVito v. Aetna, a related case that was decided on February 25, 2008, after Horizon filed the instant motions to dismiss. See 536 F.Supp.2d 523 (D.N.J.2008). Because Horizon's argument is indistinguishable from Aetna's argument in DeVito v. Aetna, the Court will quote at length from its opinion in DeVito where relevant.

The Court set forth the appropriate test for determining when a court should defer under Burford. The Court explained

Under Burford, the Court undertakes a two-step analysis. "The first question [when considering Burford abstention] is whether `timely and adequate state-court review' is available." Riley v. Simmons, 45 F.3d 764, 771 (3d Cir.1995) (citing New Orldans Public Service, Inc. v. Council of City of New Orleans, 491 U.S. 350, 361, 109 S.Ct. 2506, 105 L.Ed.2d 298 (1989) ("NOPSI")). The second prong of the Burford doctrine, as refined in NOPSI, requires a court to examine three issues: "(1) whether the particular regulatory scheme involves a matter of...

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