Neurological Surgery, P.C. v. Aetna Health Inc.

• Decision Date: 04 January 2021
• Docket Number: 2:19-cv-4817 (DRH) (ARL)
• Citation: 511 F.Supp.3d 267
• Parties: NEUROLOGICAL SURGERY, P.C., Plaintiff, v. AETNA HEALTH INC. and Aetna Health Insurance Company of New York, Defendants.
• Court: U.S. District Court — Eastern District of New York

511 F.Supp.3d 267

NEUROLOGICAL SURGERY, P.C., Plaintiff,

v.AETNA HEALTH INC. and Aetna Health Insurance Company of New York, Defendants.

2:19-cv-4817 (DRH) (ARL)

United States District Court, E.D. New York.

Signed January 4, 2021

GARFUNKEL WILD, P.C., Attorneys for Plaintiff, 111 Great Neck Road, Great Neck, NY 11021, By: Roy W. Breitenbach, Esq., Colleen M. Tarpey, Esq., Marc A. Sittenreich, Esq.

FOX ROTHSCHILD LLP, Attorneys for Defendants, 10 Sentry Parkway, Suite 200, P.O. Box 3001, Blue Bell, PA 19422, By: Jordann R. Conaboy, Esq.

ELLIOT GREENLEAF P.C., Attorneys for Defendants, 925 Harvest Drive, Suite 300, Blue Bell, PA 19422, By: Gregory R. Voshell, Esq.

MEMORANDUM AND ORDER

HURLEY, Senior District Judge:

INTRODUCTION

Plaintiff Neurological Surgery

P.C. ("Plaintiff") brought this action against Defendants Aetna Health Inc. and Aetna Health Insurance Company of New York (collectively "Aetna" or "Defendants") seeking payment, pursuant to the Employee Retirement Income Security Act ("ERISA") and New York state law, for 200 medical claims for services performed on Aetna health plan members¹ alleging that Aetna has either underpaid or denied full payment on these claims. The claims² arise from medically necessary, complex procedures occurring over a four-year span (2012–2016) and implicating 145 different Aetna health plans. Presently before the Court is Aetna's motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). [DE 21]. For the reasons set forth below, Aetna's motion is granted in part and denied in part.

BACKGROUND

I. Factual Background

Plaintiff is the largest private neurosurgery

practice on Long Island and in the New York tri-state area. (Compl. ¶ 1). As a healthcare provider, Plaintiff treats patients with "complex, often emergent, neurological conditions requiring neurosurgical procedures and treatment." (Id. ¶ 15). These patients often have health insurance coverage with, or are members of, group health plans sponsored or administered by Aetna. (Id. ¶ 17).

Aetna is a health insurance company that creates "provider networks": a group of providers whom Aetna reimburses at pre-determined, contractual rates for services performed for Aetna members. (Id. ¶ 5). A provider in a "provider network" is "in-network"; otherwise, a provider is "out-of-network." (Id. ¶¶ 5–6). Aetna members may obtain treatment from out-of-network providers. (Id. ¶¶ 7, 19). When they do, however, Aetna reimburses at "the usual, customary, and reasonable charges for the services rendered, less any co-payment, co-insurance, member out-of-pocket, or deductible amounts" – the "UCR Rate." (Id. ¶¶ 8, 20). The precise reimbursement methodology is set out in each member's plan. (Id. ¶ 20).

Plaintiff is out-of-network with Aetna. (Id. ¶¶ 9, 23). Before Plaintiff performs medically necessary, complex procedures for Aetna members, the members authorize and assign Plaintiff their rights to receive payment directly from Aetna. (Id. ). They do so, for example, by executing "assignment of benefits" forms. (Id. ¶ 24). With these authorizations and assignments, Plaintiff "engage[s Aetna] in communications or discussions" in order to open a "claim" for reimbursement at the rates in each Aetna member-patient's "applicable health plan." (Id. ¶¶ 25, 29, 31–33, 40). Aetna has allegedly failed to pay or, after delay, underpaid on 200 claims between 2012 and 2016. (Id. ¶¶ 37–39; see, e.g. , id. ¶¶ 44–2365). Plaintiff's attempts to collect any outstanding amounts fell "on deaf ears" and yielded "vague letters and promises of proper payment at some uncertain point in the future." (Id. ¶¶ 40–41).

The Complaint sets out the details of each claim in the following pattern: (i) the Aetna member's initials; (ii) the date of service; (iii) whether the services were emergency or elective, (iv) the nature of the services (i.e. , the diagnosis and procedure, generally); (v) the date on which the member assigned to Plaintiff all rights to receive reimbursement from Aetna for the services provided; (vi) the date on which Plaintiff first billed Aetna, and the amount of the bill; (vii) the dates on which Plaintiff "communicated" with Aetna, if any; (viii) whether or not Aetna reimbursed Plaintiff, and the amount of reimbursement, if any; (ix) "the reimbursement methodology that Aetna should have applied in accordance with the terms of the applicable plan"; and (x) the dates and outcome of "additional, written appeals" to Aetna seeking further reimbursement, if any. (Compl. ¶¶ 44–2365; see Pl. Opp. at 4 [DE 23]). The abundance of details prevents the Court from reciting the particulars succinctly in the body of this Order, though they are important for the analysis below. Instead, the spreadsheet at Appendix A lays out each claim's pertinent facts.³

A few observations about the claims are worthy of note. Though Aetna members assigned their reimbursement rights for 198 of the 200 claims, Plaintiff does not reveal the terms of each assignment or attach the assignment contracts themselves. (Compl. ¶¶ 401–09, 491–503 (failing to allege assignment)). Plaintiff identifies a reimbursement methodology for most—but not all—of the claims. (Compare id. ¶¶ 53, 65, 77 (detailed methodologies), with id. ¶¶ 390–400, 401–09 (no methodology given)). A claim's reimbursement methodology is the only instance where Plaintiff relays the terms of the health plan at issue on that claim. While Plaintiff styles its communications with Aetna as "appeals ... for additional payment" in which Aetna "[r]ecogniz[ed] [Plaintiff's] status as an assigned beneficiary," Plaintiff never specifies the context and content of these "numerous" communications. (E.g. , id. ¶¶ 51, 63). Plaintiff likewise omits the context and content of its "additional, written appeal[s]." (E.g. , id. ¶¶ 102, 114).

II. Procedural Background

Plaintiff originated this action in late July 2019 in Nassau County Supreme Court of the State of New York.⁴ (Notice of Removal at 1 [DE 1]). Defendants removed this action to federal court on August 22, 2019. (Id. ). Plaintiff filed its Complaint on August 30, 2019. [DE 5]. Plaintiff brings eight causes of action: (1) recovery of benefits due under an employee benefit plan, enforcement rights under the plan, and clarification of rights and future benefits under the plan, pursuant to ERISA, 29 U.S.C. § 1132 ; (2) an award of reasonable attorneys’ fees and costs pursuant to ERISA, 29 U.S.C. § 1132(g)(1) ; (3) breach of contract; (4) breach of implied-in-fact contract; (5) unjust enrichment; (6) tortious interference with contract; (7) violation of the New York Prompt Pay Law, N.Y. Ins. Law § 3224-a ; and (8) breach of third-party beneficiary contract. (Compl. ¶¶ 2366–432). The first two, as ERISA-based causes of action, are governed by federal law; the rest are governed by New York state law.

Defendants moved to dismiss on December 6, 2019 on nine grounds. First, several claims trigger ERISA preemption, requiring dismissal of those claims’ state law causes of action. (Def. Mem. at 9–12 [DE 21-2]). Second, Plaintiff failed to exhaust administrative remedies for its ERISA-governed claims. (Id. at 12–17). Third, many ERISA-governed claims involve health plans with anti-assignment provisions and/or expired limitations periods, depriving Plaintiff of standing and rendering the action as to those claims untimely. (Id. at 18–25). The fourth through ninth grounds address the merits of Plaintiff's state law causes of action. (Id. at 25–34).

Plaintiff opposes. First, ERISA does not preempt any claims partially-paid by Aetna. (Pl. Opp. at 6–8). Second, a valid anti-assignment provision or time limitation bars ERISA from preempting state law causes of action. (Id. at 9–14). Third, exhaustion of administrative remedies is an affirmative defense and not required in Plaintiff's pleading, and any further measures would have been futile regardless. (Id. at 14–18). Fourth, dismissal is premature where discovery may show that Defendant failed to notify Plaintiff and Aetna members of a time limitation to file suit. (Id. at 18–21). Fifth, Aetna waived its anti-assignment and time limitation by accepting claims from, and paying, Plaintiff. (Id. at 21–22). Plaintiff further argues that the Complaint adequately pleads its state law causes of action. (Id. at 23–35).

Plaintiff concludes by requesting leave to amend its Complaint should the Court agree with Defendants. (Pl. Opp. at 35). Defendants ask this Court to deny leave due to Plaintiff's repeatedly-filed "substantively-identical complaints." (Def. Reply at 15 [DE 24]; see supra note 4).

DISCUSSION

The legal analysis will occur in the following order: In Section I, the Court identifies the legal standards. In Section II, the Court determines whether it can consider the health plan exhibits, and highlights certain plans that are inconclusively labeled (see Appendix B) or mislabeled (see Appendix C) with respect to whether ERISA applies. In Section III, the non-ERISA claims are analyzed. (See Appendix D). In Section IV, the Court addresses the unassigned ERISA claims. (See Appendix E). In Section V, the various anti-assignment provisions in the ERISA plans are interpreted. (See Appendix F). In Section VI, the ERISA preemption analysis is performed. (See Appendix G). In Section VII, the Court determines whether Plaintiff exhausted administrative remedies before bringing suit. (See Appendix G). In Section VIII, the Court concludes with Plaintiff's request for leave to amend the Complaint.

I. Legal Standards

A. Rule 12(b)(6) Motion to Dismiss Standard

In deciding a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a court should "draw all reasonable inferences in Plaintiff[’s] favor, assume all well-pleaded factual allegations to be true, and determine whether they plausibly give rise to an entitlement to relief." Faber v. Metro. Life Ins. Co. , 648 F.3d 98, 104 (2d Cir. 2011) (internal quotation marks omitted). The plausibility standard is guided by...