Gilmour v. Blue Cross & Blue Shield
| Decision Date | 29 May 2020 |
| Docket Number | CIVIL ACTION NO. 4:19-CV-160 |
| Parties | NEIL GILMOUR, Bankruptcy Trustee, ET AL. v. BLUE CROSS AND BLUE SHIELD OF ALABAMA, ET AL. |
| Court | U.S. District Court — Eastern District of Texas |
This case involves a dispute between a healthcare provider, Victory Medical Centers, and an insurer, Blue Cross and Blue Shield.1 Victory Medical asserts that BCBS underpaid or failed to pay insurance claims for healthcare services, resulting in millions of dollars in losses, and that BCBS committed other unlawful acts in violation of duties and obligations owed to Victory Medical and its former patients.
Before the Court are several motions to dismiss Victory Medical's First Amended Complaint, (Dkt. #216-18, #220-22), and a motion to amend the complaint should the Court grant the motions to dismiss, (Dkt. #240). The Court, havingreviewed the parties' submissions, the record, and the applicable law, GRANTS in part the motions to dismiss and DENIES the motion to amend.
Victory Medical is a group of acute-care hospitals that provide a broad range of healthcare services.2 Victory Medical provided healthcare services to thousands of patients, including many who were insured under plans issued or administered by BCBS. Prior to providing healthcare services, Victory Medical required all of its patients to sign various forms. One such form purported to require assignment of any insurance benefits and causes of action available to the insured patient, including those against the patient's insurer, in this case BCBS. Additionally, because Victory Medical does not have access to its patients' insurance plans, Victory Medical alleges that it contacted a BCBS representative to ascertain information about a patient's plan, including confirmation of coverage and determination of the deductible and available out-of-network benefits for any healthcare services provided. Upon assignment and confirmation of coverage, Victory Medical treated its patients. After treatment, Victory Medical alleges that it properly filed insurance-benefits claims with BCBS as an assignee of its patients' benefits under their insurance plans.
At issue in this case are 1,896 insurance-benefits claims on BCBS for healthcare services provided by Victory Medical to approximately 1,500 of its BCBS-insured former patients. Victory Medical alleges that BCBS administered theunderlying insurance plans at issue and that BCBS Texas provided coverage-verification and claim-determination services for the plans. In that capacity, Victory Medical alleges that BCBS acted as a claim administrator, a plan administrator, and a fiduciary. Victory Medical asserts numerous causes of action against BCBS under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001, et seq., and Texas law3 for alleged underpayment or nonpayment of the insurance claims. Specifically, Victory Medical alleges that, for $116,376,352.79 in billed healthcare services, BCBS reimbursed only $12,481,839.08, and now seeks $43,162,553.66 in unpaid balances. Victory Medical also asserts claims for related wrongdoing throughout the claim-administration process, including oral misrepresentation of the terms of insurance plans, failure to adhere to procedural requirements during insurance-claim administration, and self-dealing as a result of those actions.
Victory Medical asserts the following ERISA claims: recovery of insurance benefits, 29 U.S.C § 1132(a)(1)(B), denial of full and fair review of insurance claims, id. § 1133, breach of fiduciary duty, id. § 1104(a)(1), and failure to provide plan information, id. § 1132(c)(1). And it asserts the following state-law claims: breach of contract, breach of the duty of good faith and fair dealing, promissory estoppel, negligent misrepresentation, violation of the Texas Insurance Code, unjust enrichment, and money had and received. Victory Medical also seeks attorneys' fees under ERISA and Texas law. In support of its claims, Victory Medical relies on several Summary Plan Descriptions ("SPDs"), which provide a summary of key termsof an insurance plan, and exhibits providing information regarding each insurance-benefit claim at issue.
BCBS has moved to dismiss all of Victory Medical's claims. Before detailing the current set of dismissal motions, a brief summary of the case's history prior to arriving at this Court is necessary. The case was filed in the Western District of Texas on June 11, 2017. BCBS responded with a set of motions for dismissal, transfer, or more definite statement,4 prompting extensive briefing.5 The district court accepted the magistrate judge's report and recommendation on two of BCBS's motions, denying Rule 12(b)(2) motions to dismiss for lack of personal jurisdiction, and dismissing without prejudice Rule 12(b)(3) motions to dismiss for improper venue and Rule 12(b)(6) motions to dismiss for failure to state a claim.6 The district court allowed Victory Medical to file an amended complaint to address BCBS's improper-venue arguments and to cure any other potential deficiencies.
Victory Medical filed its first amended complaint, specifying its alleged basis for venue in the Western District of Texas and including additional factual allegations.7 BCBS filed another set of motions to dismiss or transfer,8 and bothparties filed responsive briefing.9 The district court prioritized the threshold issue of venue, setting aside challenges to the legal sufficiency of the claims and other related challenges. The court, having found that the actions ultimately giving rise to the suit were taken by Defendant BCBS Texas in Collin County, determined that venue was proper in the Eastern District of Texas and transferred the case to this Court.10
Upon transfer, BCBS reurged its dismissal arguments, filing another set of motions to dismiss, which are now before the Court.11 Victory Medical filed a response and a motion for leave to amend should the Court grant dismissal.12 The parties provided additional briefing in support of their respective positions.13 BCBS moves for dismissal of Victory Medical's claims due to lack of standing, ERISA preemption, and failure to state a claim. The Court addresses each argument in turn.
BCBS challenges Victory Medical's standing to bring certain claims under Federal Rule of Civil Procedure 12(b)(1), asserting the following arguments. First,Victory Medical cannot bring claims made on Victory Medical Center Beaumont, LP and Victory Surgical Hospital East Houston, LP's accounts receivable because they were not preserved in Victory Medical's prior bankruptcy proceeding. Second, anti-assignment provisions within many of the insurance policies at issue preclude Victory Medical's standing to assert claims as an assignee of its former patients. Third, anti-assignment provisions aside, Texas law prohibits assignment of a claim under the Texas Insurance Code. Fourth, Victory Medical cannot bring its claim for insurance benefits under ERISA because it failed to exhaust administrative remedies. And fifth, Victory Medical's claims are barred by applicable statutes of limitations.
Victory Medical disputes that any of these arguments challenge its standing. Instead, it contends that the arguments are all affirmative defenses that the Court need not address at the dismissal stage. Victory Medical is correct, in part. The ERISA exhaustion requirement and the statutes of limitations invoked by BCBS are affirmative defenses properly addressed under Rule 12(b)(6), not Rule 12(b)(1), if at all at the dismissal stage. See United States v. Lewis, 774 F.3d 837, 845 (5th Cir. 2014) (per curiam) (statute of limitations); Crowell v. Shell Oil Co., 541 F.3d 295, 308-09 (5th Cir. 2008) (ERISA exhaustion). The remaining arguments, however, implicate standing. See In re United Operating, LLC, 540 F.3d 351, 354 (5th Cir. 2008) (); LeTourneau Lifelike Orthotics & Prosthetics, Inc. v. Wal-Mart Stores, Inc., 298 F.3d 348, 351 (5th Cir. 2002) (assignment of ERISA claims);14 Montoya v. State Farm Mut. Auto. Ins. Co., No. 5:16-CV-5, 2016 WL 5942327, at *6 (W.D. Tex. Oct. 12, 2016) () (nonassignable claims). The Court will address the standing issues before turning to the merits. See Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001) ().
"'Federal courts are courts of limited jurisdiction,' possessing 'only that power authorized by Constitution and statute.'" Gunn v. Minton, 568 U.S. 251, 256, 133 S.Ct. 1059, 185 L.Ed.2d 72 (2013) (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994)). A federal court has original jurisdiction to hear a suit when it is asked to adjudicate a case or controversy that arises under federal question or diversity jurisdiction. U.S. CONST., art. III, § 2, cl.1; 28 U.S.C. §§ 1331-32. Courts have "an independent obligation to determine whether subject-matter jurisdiction exists . . . ." Arbaugh v. Y&H Corp., 546 U.S. 500, 514, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006). However, a defendant may also challenge the court's subject-matter jurisdiction by filing a motion to dismiss under Federal Rule of Civil Procedure 12(b)(1).
A Rule 12(b)(1) challenge to the court's subject-matter jurisdiction to hear a claim may be either "facial" or "factual." A facial challenge attacks the sufficiency of the facts pleaded in the complaint. Menchaca v. Chrysler Credit Corp., 613 F.2d 507, 511 (5th Cir. 1980). When a defendant contests the facial sufficiency of the facts pleaded in the complaint to confer jurisdiction, those facts are entitled to a presumption of truth. See Williamson v. Tucker, 645 F.2d 404, 412 (5th Cir. 1981) (...
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