Manderson v. Fairview Health Servs.
| Decision Date | 05 July 2022 |
| Docket Number | CIVIL 21-1797 (JRT/TNL) |
| Parties | DAVID MANDERSON and DAVID FRARY, as Trustees of the I.B.E.W. 292 Health Care Plan, Plaintiffs, v. FAIRVIEW HEALTH SERVICES and BCBSM, INC. d/b/a Blue Cross and Blue Shield of Minnesota, Defendants. |
| Court | U.S. District Court — District of Minnesota |
Amanda R. Cefalu and Ruth S. Marcott, KUTAK ROCK LLP, for plaintiffs.
D Scott Erickson and Timothy J. Henkel, D.S. ERICKSON & ASSOCIATES, PLLC, for Defendant Fairview Health Services.
Gurdip Atwal, BLACKWELL BURKE PA, for Defendant BCBSM, Inc.
EMORANDUM OPINION AND ORDER DENYING MOTIONS TO DISMISS
In 2017 and 2018, Defendant Fairview Health Services (“Fairview”) provided medical treatment to a beneficiary of a medical benefits plan established by the I.B.E.W. 292 Health Care Plan (the “Plan”) that contracted with Defendant BCBSM, Inc. to gain access to a network of medical providers including Fairview that BCBSM created. Fairview filed claims seeking payment for the services provided, but those claims were denied.
Plaintiffs David Manderson and David Frary in their roles as trustees of the Plan brought this action seeking various forms of relief from the Court. Against Fairview, the Plan seeks (1) a declaratory judgment that any claims Fairview asserts against the Plan and its agents in connection with these services are preempted by the Employee Retirement Income Security Act of 1974 (“ERISA”) and thus may only be pursued as provided for by ERISA; (2) a declaratory judgment enforcing the terms of the Plan's medical benefit plan documents and (3) an order enjoining Fairview from seeking payment for these services. Against BCBSM, the Plan brings a breach of contract claim seeking (1) damages; (2) a declaratory judgment that it has no duty to defend or indemnify BCBSM in connection with the medical claims at issue; and (3) a declaratory judgment that it has no duty to defend or indemnify BCBSM in relation to any alleged breach by BCBSM of its agreements with Fairview.
Both Defendants filed motions to dismiss the claims against them. Fairview brings its Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(1) asserting the Court lacks subject matter jurisdiction because (1) any attempt to recover for the services provided are state law causes of action that are not preempted by ERISA depriving the Court of 28 U.S.C § 1331 federal question jurisdiction[1] and (2) the Plan's Complaint does not present a justiciable case or controversy. BCBSM brings its Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(1) asserting the Court lacks supplemental jurisdiction over the claims against it and under Federal Rule of Civil Procedure 12(b)(6) asserting the Plan's Complaint fails to state a claim for which relief can be granted.
The Court will deny Fairview's Motion to Dismiss because it has federal question jurisdiction through ERISA. The Court will also deny BCBSM's Motion to Dismiss because the face of the Complaint (1) sufficiently alleges that Count III derives from a common nucleus of operative fact over the other claims for which the Court has original jurisdiction and (2) adequately alleges a plausible cause of action.
The Plan is a multiemployer benefits plan established under the Taft-Hartley Act that provides medical benefits to its participants and their dependents and beneficiaries. (Compl. ¶¶ 1, 4, Aug. 5, 2021, Docket No. 1.) It is subject to ERISA, 29 U.S.C. § 1000 et seq. (Id. ¶ 1.) The Plan provides benefits in accordance with the terms and conditions contained in various governing documents including a Trust Agreement and Plan Document and Summary Plan Description (collectively, “Plan Documents”). (Id. ¶ 4.) Fairview is a nonprofit corporation that provides medical and other health-related services. (Id. ¶ 5.) BCBSM is a nonprofit health service plan corporation. (Id. ¶ 6.)
The Plan alleges that it and BCBSM entered into several agreements. First, from January 1, 2017 through December 31, 2019, the Plan and BCBSM were parties to a series of agreements called Claims Processing Services Agreements (“Servicing Agreements”). (Id. ¶ 11.) Under these Servicing Agreements, BCBSM provided the Plan's participants and beneficiaries access to a network of health care providers created by BCBSM. (Id. ¶ 12.) BCBSM also agreed to handle various claims processing and adjudication services for the Plan for claims submitted by medical providers seeking payment from the Plan. (Id. ¶¶ 11.) The Servicing Agreements allegedly required BCBSM to follow the terms of the Plan Documents and direct questions to the Plan's administrators. (Id. ¶ 13.)
On January 1, 2020, the Plan and BCBSM entered into a Transition and Termination Network and Claims Processing Servicing Agreement (“Termination Agreement”). (Id. ¶ 20.) Under Section 2.5(1) of the Termination Agreement, according to the Complaint, the Plan agreed to pay all valid claims and BCBSM agreed to determine claim eligibility in accordance with the Plan Documents or at the direction of the Plan and then adjudicate the claims. (Id. ¶ 21.) Section 4.4 of the Termination Agreement requires the Plan to:
indemnify, defend and hold [BCBSM] forever harmless, from and against any and all claims, demands, actions, litigation, judgments, liabilities, fines, penalties, awards, expenses and/or associated costs and legal fees which are made or incurred by any third party or parties and which arise or result from any dispute regarding coverage, denial of benefits, claims payments, claims administration or claims adjudication in connection with [the Plan] or its Eligible Persons use of the Network pursuant to this Agreement and in accordance with current law or otherwise, except to the extent such third party claims, demands, actions, litigation, decrees, judgments, losses, damages, liabilities, fines, penalties, awards, expenses and/or associated costs and legal fees result directly from the breach of [BCBSM] its agents or subcontractors of any obligations of [BCBSM] under this Agreement.
(.)
The Plan Documents established deadlines by which claims for medical benefits must be submitted for them to be paid by the Plan. (Compl. ¶¶ 16-17.) The Plan Documents stated that claims for expenses incurred before April 1, 2018 should be submitted within 90 days of the date the claim was incurred and that claims would never be paid if submitted more than 15 months after the claim was incurred unless the claimant was legally incapacitated. (Id. ¶ 16.) For expenses incurred after April 1, 2018, claims had to be submitted either within 120 days or by the deadline established in a provider network agreement. (Id. ¶ 17.)
The Plan Documents also established various procedures for the coordination of benefits if expenses might be covered by two different insurance plans. (Id. ¶¶ 14-15.) Effective April 1, 2018, the Plan Documents required that expenses be filed with both plans and the two plans would work together to decide which plan was the primary plan responsible for payment and to coordinate payment. (Id. ¶ 15.) If the other insurance plan had primary responsibility, claims had to be filed with the Plan within 120 days after the other, primary plan adjudicated the claim in the first instance. (Id.)
Fairview and BCBSM entered into a separate “Master Agreement” adding Fairview to BCBSM's network of providers that BCBSM provided health benefit plans access to. (Id. ¶ 22.) This Master Agreement allowed Fairview to submit claims to BCBSM for payment by benefit plans such as the Plan. (Id.) According to the Complaint, this Master Agreement also established deadlines for submission of claims including that providers could not submit claims more than 15 months after the date of service. (Id. ¶ 24.)
The Plan has not entered into any arbitration agreement with Fairview. (Id. ¶ 52.)
From August 2017 to September 2018, Fairview provided services to a beneficiary of the Plan totaling $3,638,778.23. (Id. ¶ 23.) The services generated three separate claims incurred (1) August 27 to December 31, 2017; (2) January 18 to May 8, 2018; and (3) August 12 to September 12, 2018 (collectively the “Claims”). (Id.)
Fairview submitted these Claims to another medical benefits plan- HealthPartners-soon after incurring the expenses. (Id. ¶ 25.) HealthPartners paid Fairview for the Claims but later recouped the payments from Fairview. (Id. ¶¶ 25, 29.)
The Plan alleges that, at the time Fairview submitted the claims to HealthPartners, Fairview was aware or should have been aware that the beneficiary was covered by the Plan and that benefits should have been coordinated between the Plan and HealthPartners. (Id. ¶ 28.) Despite this, according to the Complaint, Fairview first submitted the claims to BCBSM in April 2020, more than 15 months after the expenses were incurred. (Id. ¶ 30.) The Plan alleges the Claims (1) were untimely under the Plan Documents, (2) were untimely under the Master Agreement, and (3) were not properly submitted for coordination of benefits. (Id. ¶ 33.)
The Plan further alleges that BCBSM knew or should have known of these problems with the Claims when it received them from Fairview. (Id.) Despite this, when BCBSM received the Claims, it did not reject them but instead allowed Fairview to submit them and then sent them to the Plan for adjudication. (Id. ¶¶ 32, 34.) According to the Complaint, BCBSM had a contractual obligation to adjudicate the claims in accordance with the Plan Documents but instead informed Fairview that it was requesting the Plan waive the timely filing deadlines. (Id. ¶ 35.)
On September 11, 2020, Fairview sent...
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