BrainBuilders, LLC v . EmblemHealth, Inc.
| Decision Date | 08 August 2022 |
| Docket Number | 21 Civ. 4627 (KPF) |
| Parties | BRAINBUILDERS LLC and H and D, by their Attorney-in-Fact, Rochel Sorotzkin, Plaintiffs, v. EMBLEMHEALTH, INC., GROUP HEALTH INCORPORATED, THE CITY OF NEW YORK, NEW YORK CITY OFFICE OF LABOR RELATIONS, and NEW YORK CITY DEPARTMENT OF EDUCATION, Defendants. |
| Court | U.S. District Court — Southern District of New York |
BRAINBUILDERS LLC and H and D, by their Attorney-in-Fact, Rochel Sorotzkin, Plaintiffs,
v.
EMBLEMHEALTH, INC., GROUP HEALTH INCORPORATED, THE CITY OF NEW YORK, NEW YORK CITY OFFICE OF LABOR RELATIONS, and NEW YORK CITY DEPARTMENT OF EDUCATION, Defendants.
No. 21 Civ. 4627 (KPF)
United States District Court, S.D. New York
August 8, 2022
OPINION AND ORDER
KATHERINE POLK FAILLA UNITED STATES DISTRICT JUDGE
Plaintiffs Brainbuilders LLC (“Brainbuilders”) and H, on behalf of herself and her minor child, D (with H, the “Members”), by the Members' attorney-in-fact Rochel Sorotzkin (together, “Plaintiffs”) bring this action against EmblemHealth, Inc. (“EmblemHealth”), Group Health Incorporated (“GHI,” and together with EmblemHealth, the “GHI Defendants”), the City of New York (the “City”), the New York City Office of Labor Relations (“OLR”), and the New York City Department of Education (“DOE,” and together with the City and OLR, the “City Defendants”), alleging claims against all Defendants for breach of contract, breach of the implied covenant of good faith and fair dealing, promissory estoppel, fraud, civil conspiracy, and civil aiding and abetting; and against the GHI Defendants for violations of various federal and state laws. The GHI Defendants now move for dismissal of Plaintiffs' Second Amended Complaint (the “SAC”) for lack of standing and for failure to state a claim. The
City Defendants also move for dismissal on the grounds that (i) OLR is a non-suable entity; (ii) Plaintiffs failed to comply with various statutory prerequisites to suing DOE; (iii) Plaintiffs' tort claims against the City Defendants are untimely; and (iv) Plaintiffs' remaining claims fail to state claims upon which relief can be granted. For the reasons set forth in the remainder of this Opinion, the Court grants both motions to dismiss.
BACKGROUND[1]
A. Factual Background
Brainbuilders, a New Jersey limited liability company, describes itself as a therapeutic intervention agency that provides services to children with
autism-spectrum-related disorders, including applied behavioral analysis (“ABA”), physical therapy, occupational therapy, and speech therapy. (SAC ¶ 1). GHI and its parent company, EmblemHealth, are each New York corporations with their principal place of business in New York City. (Id. at ¶¶ 3-4). D is a fourteen-year-old adolescent who has been diagnosed with autism spectrum disorder. (Id. at ¶ 9). He has been treated by Brainbuilders from May 2017 to the present. (Id.). H, D's mother, is employed by DOE. (Id. at ¶ 10).
Pursuant to an agreement between DOE and the United Federation of Teachers (“UFT”), of which H is a member, DOE committed “to arrange for, and make available to each day school teacher, a choice of health and hospital insurance coverage from among designated plans[.]” (SAC ¶ 11). In line with this commitment, DOE employees, like all City employees, are offered a choice of healthcare plans. (Id. at ¶ 13). H selected the GHI Comprehensive Benefits Plan (the “Plan”), a policy created by GHI and the City Defendants for City employees, and under which D is covered as a qualified dependent. (Id. at ¶ 14).
OLR is a subdivision of the City that, among other things, administers the New York City Health Benefits Program, of which the Plan is a part. (SAC ¶ 6). The Plan provides coverage for out-of-network services. (Id. at ¶ 16). Premiums for policies that cover out-of-network services are typically substantially higher than premiums for policies that only cover in-network services. (Id. at ¶ 15).
In New York State, all health insurance companies are required to provide coverage for the screening, diagnosis, and treatment of autism spectrum disorder. (SAC ¶ 18 (citing N.Y. Ins. Law § 3221(1)(17)(A))). Indeed, according to Plaintiffs, a rider to the Plan's Certificate of Insurance confirms that the Plan includes coverage for ABA. (Id. at ¶ 19). Per the Plan documents, the amounts that GHI will reimburse for the Plan's covered services “are based upon data collected by GHI and agreed to by the City of New York.” (Id. at ¶ 23). Pursuant to a 2014 agreement with the Attorney General of the State of New York, GHI committed to “create a website available to NYC employees and retirees that provides information on how much GHI will reimburse GHI Plan members for particular services obtained from out-of-network providers.” (Id. at ¶ 24 (quoting In the Matter of Group Health Incorporated, Att'y Gen. of the State of N.Y., Assurance No.: 14-181 (available at https://ag.ny.gov/pdfs/AG-GHIAssuranceNo14-181FullyExecuted.pdf))). In partial compliance with that agreement, GHI created a website for its members to seek information on its reimbursement amounts. (Id. at ¶ 25). However, there is no reimbursement information available on the website for the Current Procedural Terminology (“CPT”) or Healthcare Common Procedure Coding System (“HCPCS”) codes related to ABA. (Id.).
D was diagnosed with autism spectrum disorder in 2009, and since 2017, he has been receiving ABA from Brainbuilders. (SAC ¶ 21). According to Plaintiffs, GHI has consistently paid Brainbuilders approximately six percent of the amount Brainbuilders bills for D's ABA, with the exception of a “short
period” in the beginning of 2019, during which time GHI paid approximately 60% of the billed amounts. (Id. at ¶ 22; Bridge Decl., Ex. B). As a result, Brainbuilders is forced to bill D's caregivers for the remaining balance. (SAC ¶ 22). Plaintiffs have repeatedly appealed GHI's reimbursement determinations in compliance with the Plan's internal appeal procedures, but GHI has ignored many of their appeals. (Id. at ¶ 29).
The SAC states that H, on behalf of herself and on behalf of D, executed an assignment of benefits and an assignment of the right to pursue legal and administrative remedies under the Plan for the benefit of Brainbuilders. (SAC ¶ 1). The SAC also states that H appointed Rochel Sorotzkin as attorney-in-fact for H and D, with authority to pursue all legal and administrative remedies under the Plan. (Id. at ¶ 2).
B. Procedural Background
On August 18, 2020, Plaintiffs filed an action against Defendants in the Superior Court of the State of New Jersey, Law Division, Monmouth County, captioned Brainbuilders LLC, and H and D, by their Attorney-in-Fact, Brainbuilders LLC v. Emblem Health, Inc., Group Health Incorporated, The City of New York, New York City Office of Labor Relations and New York City Department of Education, Docket No. MON-L-002594-20. (Dkt. #1, Ex. 1). On September 15, 2020, Defendants filed a Notice of Removal pursuant to 28 U.S.C. §§ 1332(a), 1441, and 1446, and the matter was removed to the United States District Court for the District of New Jersey, where it was assigned to Chief Judge Freda L. Wolfson and Magistrate Judge Tonianne J. Bongiovanni.
(Dkt. #1, Ex. 2; Minute Entry for September 15, 2020). Magistrate Judge Bongiovanni scheduled an initial pretrial conference for October 20, 2020, and granted Defendants an extension to October 21, 2020, to respond to Plaintiffs' Complaint. (Dkt. #5, 7).
In October of 2020, the GHI Defendants and the City Defendants filed separate motions to dismiss the Complaint pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6), or, in the alternative, to transfer the case to the United States District Court for the Southern District of New York. (Dkt. #11 (GHI Defendants' motion to dismiss, filed October 19, 2020), 13 (City Defendants' motion to dismiss, filed October 21, 2020)). On November 9, 2020, Plaintiffs filed an amended complaint. (Dkt. #16). On November 18, 2020, Alvin C. Lin, counsel for the GHI Defendants, filed a letter on behalf of all Defendants, asking the court to deem the pending motions to dismiss to be directed against Plaintiffs' Amended Complaint and to maintain the existing briefing schedule. (Dkt. #17). The court granted Defendants' request the following day. (Dkt. #18). Plaintiffs filed their opposition brief on December 10, 2020, and Defendants filed their reply brief on January 12, 2021. (Dkt. #22, 24). The GHI Defendants filed a notice of supplemental authority on February 25, 2021. (Dkt. #25). On May 21, 2021, the court issued an Opinion and Order (i) granting the City Defendants' motion to dismiss for lack of personal jurisdiction, (ii) denying the GHI Defendants' motion to dismiss without prejudice, and (iii) transferring the matter to the Southern District of New York. (Dkt. #27).
The matter was transferred to this District on May 24, 2021, and thereafter was assigned to the undersigned. On June 4, 2021, the GHI Defendants filed a pre-motion letter seeking a conference to discuss the anticipated renewal of their motion to dismiss. (Dkt. #32). On July 13, 2021, Plaintiffs filed the SAC. (Dkt. #34).
The eleven-page SAC sets forth eleven separate causes of action. First, Plaintiffs allege that by covering only a small fraction of the costs of D's treatments, Defendants have breached their respective agreements. (SAC ¶ 34). Second, and for the same reason, Plaintiffs allege that Defendants have breached the covenant of good faith and fair dealing inherent in their respective agreements. (Id. at ¶ 39). Third, Plaintiffs allege that Defendants, through their respective agreements, promised to cover the costs of the services covered by the Plan; that Plaintiffs relied on Defendants' promises and did not accept or seek alternative employment or insurance coverage; and that Defendants did not honor their promise to cover the costs of D's treatment in a meaningful way. (Id. at ¶¶ 39-41). Fourth, Plaintiffs allege that Defendants engaged in fraud by misrepresenting that they would cover the costs of healthcare when they did not intend to cover the costs of D's treatments. (Id. at ¶¶ 43-44). Fifth, Plaintiffs allege that Defendants have conspired and agreed between and among themselves to deny...
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