OSF Healthcare Sys. v. Bd. of Trs. of the SEIU Healthcare Ill. Home Care & Child Care Fund, Case No. 19-1341-MMM

• Decision Date: 27 April 2020
• Docket Number: Case No. 19-1341-MMM
• Citation: 456 F.Supp.3d 1018
• Parties: OSF HEALTHCARE SYSTEM, Plaintiff, v. BOARD OF TRUSTEES OF the SEIU HEALTHCARE ILLINOIS HOME CARE & CHILD CARE FUND, et al., Defendants.
• Court: U.S. District Court — Central District of Illinois

456 F.Supp.3d 1018

OSF HEALTHCARE SYSTEM, Plaintiff,

v.BOARD OF TRUSTEES OF the SEIU HEALTHCARE ILLINOIS HOME CARE & CHILD CARE FUND, et al., Defendants.

Case No. 19-1341-MMM

United States District Court, C.D. Illinois, Peoria Division.

Signed April 27, 2020

Douglas N. Koth, Dustin N. Koth, William L. Gregory, Kristin Lindsey Nieminski, Koth, Gregory & Nieminski, P.C., Bloomington, IL, for Plaintiff.

Elizabeth L. Rowe, Jeremy M. Barr, Dowd Bloch Bennett Cervone Auerbach & Yokich, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

Michael M. Mihm, United States District Judge Before the Court are Defendants' Amended Motion to Dismiss (D. 27¹ ) and Motion for Leave to File Reply (D. 31). For the reasons that follow, Defendants' Motion for Leave to File Reply is GRANTED IN PART AND DENIED IN PART, and Defendants' Motion to Dismiss is GRANTED. The Clerk of Court is directed to close this case.

JURISDICTION

The Court has federal question jurisdiction over this matter under 28 U.S.C. § 1331, as Plaintiff's claims arise under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132 et seq. Venue in this Court is appropriate under 28 U.S.C. § 1391(b)(2), as a substantial part of the events giving rise to the claims occurred in Peoria, Illinois.

BACKGROUND

Plaintiff OSF Healthcare System is a healthcare provider authorized and licensed to provide medical services in Illinois. (D. 1 at 1-2.) Between January and March of 2017, Plaintiff provided medical care to an individual who was insured by the Personal Assistant Health Fund for the SEIU Healthcare IL Home Care Health Plan ("Plan"). Id. at 2. The total cost of that care was over $500,000. Id. The Plan is administered by Defendants Board of Trustees of the SEIU Healthcare Illinois Home Care & Child Care Fund ("Fund"). (D. 27 at 1.) The Plan contains a comprehensive anti-assignment provision² , which states:

You cannot assign your rights as a Plan Participant to a provider or other third party or in any way alienate your claim for benefits. Any attempt to assign those rights or in any way alienate a claim for benefits will be void and will not be recognized by the Fund for that purpose. The Fund will treat any document you are asked by a provider to sign to assign your rights as a Plan Participant or to alienate a claim for benefits to a provider, to be only an authorization for direct payment by the Fund to the provider. For example, the Fund will NOT allow you to assign your provider any rights as a Participant in the Plan, including, but not limited to, the right to appeal a claim denial or the right to receive documentation concerning claims. In the event that the Fund does receive a document claiming to be an assignment of benefits, the Fund will send payments for the claims to the provider, but will send all claim documentation, such as an Explanation of Benefits, and appeal procedures directly to you as the Claimant. In no event shall receipt by a provider of payment or documentation concerning claims be accepted by the Plan as a waiver of the prohibition on assignments of benefits. You may file an appeal of a claim submitted by a provider that was denied in whole or in part and may authorize a representative to file such an appeal on your behalf and you or your representative may use information provided by a provider to support your appeal.

(D. 31-2 at 45.)

In January, February, and March of 2017, Plaintiff submitted claims for medical services it rendered to its patient to Defendants. (D. 1 at 4.) To date, Defendants have made direct payments to Plaintiff in the amount of $44,642. Id. In October 2017, Plaintiff submitted a claims appeal and request for plan documentation to Defendants concerning the outstanding balance on its claims. (D. 1-10 at 1-2.) Shortly thereafter, Defendants denied both of its requests. (D. 1-11 at 1.) Plaintiff now contends that despite its reasonable, good faith attempts to acquire plan documentation, Defendants have refused to comply. (D. 1 at 15.) Plaintiff seeks a complete copy of the patient's healthcare plan, all documentation related to the processing of the patient's health claims (including a copy of Defendants' benefit determinations), and statutory damages, costs, and attorney's fees related to Defendants' refusal to send the requested documentation. Id.

PROCEDURAL HISTORY

On October 23, 2019, Plaintiff filed its complaint outlining the aforementioned claims. (D. 1.) On February 21, 2020, Defendants filed an amended Motion to Dismiss the Complaint and a corresponding memorandum of law. (D. 27, 28.) On February 27, 2020, Plaintiff filed its response and corresponding memorandum of law. (D. 29, 30.) On March 12, 2020, Defendants filed a Motion for Leave to File Reply and attached their Reply. (D. 31.) On March 20, 2020, Plaintiff filed its objection to Defendants' Motion for Leave to File a Reply. (D. 32.) This Order follows.

LEGAL STANDARD

Motion to Dismiss Under Rule 12(b)(1)

A motion to dismiss filed under Federal Rule of Civil Procedure 12(b)(1) challenges the district court's subject matter jurisdiction. Fed. R. Civ. P. 12(b)(1). The Plaintiff bears the burden of proof in establishing federal jurisdiction. Silha v. ACT, Inc. , 807 F.3d 169, 173 (7th Cir. 2015). "Where evidence pertinent to subject matter jurisdiction has been submitted, the district court may properly look beyond the jurisdictional allegations of the complaint ... to determine whether in fact subject matter jurisdiction exists." Sapperstein v. Hager , 188 F.3d 852, 855 (7th Cir. 1999) (internal quotation marks and citation omitted). "The presumption of correctness that [the court] accord[s] to a complaint's allegations falls away on the jurisdictional issue once a defendant proffers evidence that calls the court's jurisdiction into question." Id. at 856 (citation omitted).

Motion to Dismiss Under Rule 12(b)(6)

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) challenges the sufficiency of the complaint, not its merits. Gibson v. City of Chi. , 910 F.2d 1510, 1520 (7th Cir. 1990). In reviewing a motion to dismiss, the court accepts as true all well-pleaded facts in the complaint and draws all reasonable inferences from those facts in plaintiff's favor. AnchorBank, FSB v. Hofer , 649 F.3d 610, 614 (7th Cir. 2011). A motion to dismiss "can be based only on the complaint itself, documents attached to the complaint, documents that are critical to the complaint and referred to in it, and information that is subject to proper judicial notice." Geinosky v. City of Chi. , 675 F.3d 743, 745 n.1 (7th Cir. 2012). "Documents referred to in, but not attached to, a plaintiff's complaint that are central to its claim may be considered in ruling on a Rule 12(b)(6) motion if they are attached to the defendant's motion to dismiss." Duferco Steel Inc. v. M/V Kalisti , 121 F.3d 321, 324 n.3 (7th Cir. 1997). To survive a Rule 12(b)(6) motion, the complaint must not only provide the defendant with fair notice of a claim's basis but must also be facially plausible. Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Plausibility is context specific and requires the court to draw on its judicial experience and common sense. McCauley v. City of Chicago , 671 F.3d 611 (7th Cir. 2011). While the court accepts all well-pleaded factual allegations in the complaint as true and draws all reasonable inferences in plaintiff's favor, it is not obligated to ignore facts in the complaint that undermine plaintiff's claim or to assign weight to unsupported conclusions of law. R.J.R. Servs., Inc., v. Aetna Cas. and Sur. Co. , 895 F.2d 279, 281 (7th Cir. 1989).

DISCUSSION

The issues at hand—in various permutations—have been raised before district courts within our circuit, and before the Circuit Court of Appeals, on numerous occasions. See, e.g., Griffin v. TeamCare , 909 F.3d 842 (7th Cir. 2018) ; Penn. Chiropractic Ass'n v. Indep. Hosp. Indem. Plan, Inc. , 802 F.3d 926, 928 (7th Cir. 2015) ; Morlan v. Universal Guar. Life Ins. Co. , 298 F.3d 609 (7th Cir. 2002) ; Kennedy v. Conn. Gen. Life Ins. Co. , 924 F.2d 698 (7th Cir. 1991) ; Cent. States, Se. and Sw. Areas Pension Fund v. Gerber Truck Serv., Inc. , 870 F.2d 1148 (7th Cir. 1989) ; OSF Healthcare Sys. v. Matcor Metal Fabrication , No. 16-1052, 2017 WL 1740022 (C.D. Ill. May 3, 2017) ; OSF Healthcare Sys. v. Nestle USA, Inc. , No. 15-1316, 2015 WL 11023789 (C.D. Ill. Dec. 2, 2015) ; OSF Healthcare Sys. v. Boyd Benefits , No. 12-1413, 2014 WL 12736152 (C.D. Ill. Jan. 22, 2014). As such, the issues at hand are not ones of first impression even though the fact scenario upon which they rely has yet to be comprehensively addressed by the Seventh Circuit.

Defendants move to dismiss Plaintiff's ERISA claims arguing Plaintiff lacks standing to sue as a beneficiary because an unambiguous anti-assignment provision in the patient's Plan bars suit. (D. 27 at 2.) They also argue that district courts within this circuit have rejected the theory that direct payments to healthcare providers from the plan itself create an enforceable assignment of benefits or confer ERISA beneficiary status on the provider. (D. 28 at 8-9.) Defendants conclude by asserting that even if Plaintiff had standing, its claims should be dismissed because Plaintiff is not entitled to the information it seeks. Id. at 12-14.

In response, Plaintiff argues that the Court should deny Defendants' dismissal request because Defendants failed to append the Plan's anti-assignment provision to their Motion to Dismiss.³ (D. 29 at 1-2.) Plaintiff also argues that it is a beneficiary to the Plan under ERISA because the Plan made direct payments to it. (D. 30 at 5.) It asserts that once a Plan "makes a determination" that a provider may be paid for its claims via direct payment, the Plan has made a concession that the provider is a beneficiary under ERISA, notwithstanding any anti-assignment provision in the Plan itself. Id. at 6-7....