Pa. Chiropractic Ass'n v. Blue Cross Blue Shield Ass'n

• Citation: 4 F.Supp.3d 929
• Decision Date: 07 November 2013
• Docket Number: Case No. 09 C 5619
• Parties: Pennsylvania Chiropractic Association, et al., Plaintiffs, v. Blue Cross Blue Shield Association, et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

4 F.Supp.3d 929

Pennsylvania Chiropractic Association, et al., Plaintiffs,

v.Blue Cross Blue Shield Association, et al., Defendants.

Case No. 09 C 5619

United States District Court, N.D. Illinois, Eastern Division.

November 7, 2013

Anthony F. Maul, D. Brian Hufford, Robert J. Axelrod, Pomerantz Grossman Hufford Dahlstrom & Gross LLP, New York, NY, Christopher M. Burke, Joseph P. Guglielmo, Scottscott LLP, San Diego, CA, David W. Stanley, Cuneo, Waldman & Gilbert, LLP, Washington, DC, John William Leardi, Paul Donald Werner, Buttaci & Leardi, LLC, Vincent N. Buttaci, Taylor, Colicchio & Silverman, LLP, Princeton, NJ, Kimberly A. Driggers, Brooks, Leboeuf, Bennett, Foster & Gwartney, P.A., Tallahassee, FL, Leigh Handelman Smollar, Louis Carey Ludwig, Patrick Vincent Dahlstrom, Pomerantz Haudek Grossman & Gross LLP, Chicago, IL, Patrick J. Sheehan, Whatley Drake & Kallas, LLC, Boston, MA, for Plaintiffs.

Amy J. Carletti, Amy Graham Doehring, Brian Alexander Fogerty, Bryan Matthew Webster, Christopher Mac Neil Murphy, Elizabeth Brooke Herrington, John Andrew Litwinski, Michael A. Pope, McDermott, Will & Emery LLP, Michael M. Conway, Foley & Lardner, Charles Clark Jackson, Morgan Lewis & Bockius, LLP, Chicago, IL, Mark E. Schmidtke, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Valparaiso, IN, for Defendants.

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, District Judge:

The plaintiffs in this case have sued a number of Blue Cross and Blue Shield entities for violations of the Employee Retirement Income Security Act (ERISA). Defendants Anthem Health Plans of Virginia, Inc. and WellPoint, Inc. moved for summary judgment against plaintiff Andrew Reno in May 2012. The Court denied defendants' motion in October 2012. Defendant Independence Blue Cross also moved for summary judgment against plaintiffs Mark Barnard and Barry Wahner in May 2012, and the Court likewise denied that motion. Reno has now moved for summary judgment against Anthem and WellPoint, and Barnard and Wahner have moved for summary judgment against Independence. For the reasons stated below, the Court grants both motions in part and denies both in part.

Background

A. General background

The plaintiffs in this case are chiropractors and several associations that represent chiropractors. The defendants are Blue Cross and Blue Shield of America (BCBSA) and individual Blue Cross and Blue Shield entities (BCBS entities), including WellPoint, Anthem Virginia, and Independence Blue Cross. BCBSA is a national umbrella organization that facilitates the activities of individual BCBS entities. Individual BCBS entities insure and administer health care plans for Blue Cross and Blue Shield customers (BCBS insureds) in various regions.

Plaintiffs allege that defendants improperly took money belonging to plaintiffs. They allege that they provided medical services to BCBS insureds. Defendants would initially reimburse plaintiffs for these services. Sometime afterward, plaintiffs allege, defendants would make a false or fraudulent determination that the payments had been made in error. Defendants then would demand that plaintiffs repay the supposedly overpaid amounts immediately. If plaintiffs refused to do so, defendants would forcibly recoup the amounts they sought by withholding payment on other, unrelated claims for services plaintiffs provided to other BCBS insureds.

Plaintiffs allege further that when defendants made these repayment demands, they typically did not provide adequate information regarding the reason for the demands or procedures for challenging the demands. Plaintiffs allege that defendants sometimes failed to offer any appeal process at all. When an appeal process was available, plaintiffs allege, defendants refused to provide details about which patients, claims, and plans were claimed to be the subject of overpayment or “effectively ignored” plaintiffs' appeals. Fourth Am. Compl. ¶ 18. Plaintiffs contend that this conduct deprived them of their right to a “full and fair review” under ERISA. 29 U.S.C. § 1133.

Plaintiffs assert their ERISA claims in three counts in the fourth amended complaint. In count one, plaintiffs seek to recover the unpaid benefits they allege defendants improperly recouped. See Fourth Am. Compl. ¶¶ 507–17. Plaintiffs bring this claim under section 502(a)(1)(B) of ERISA, which permits a plan participant or beneficiary to bring a civil action “to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B).

In counts two and four, plaintiffs request injunctive and other equitable relief under section 502(a)(3) of ERISA. Id. ¶¶ 518–25, 531–35. That provision authorizes a plan participant, beneficiary, or fiduciary to bring a civil action “(A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan.” 29 U.S.C. § 1132(a)(3).

Reno, Barnard, and Wahner each make nearly identical demands for relief. They request (1) return of the money the defendants recouped from them, with interest; (2) an injunction barring the defendants “from seeking to recover any further funds arising from [the] retroactive benefit denial”; and (3) equitable relief under ERISA, requiring each defendant to reform its policies “to ensure that [the plaintiffs'] rights are not again violated.” Reno Mem. at 2; Barnard & Wahner Mem. at 2.

B. Facts relating to Reno's claims

Reno is a chiropractor in Virginia who has a contract with Anthem VA, a Virginia-based subsidiary of WellPoint, to provide medical services to participants in Anthem's health plans. During the period relevant to this litigation from 2004 to 2006, Reno provided to patients, among other services, spinal decompression treatment on a machine called the DRX–9000. Such machines fall under the category of “Vax–D” treatment, an acronym for “vertebral axial decompression.” Pls.' Joint LR 56.1 Stat. ¶ 39.

In 2006, Anthem informed Reno that it was conducting a review of payments it had made to him for services he provided to twenty-four patients. In 2007, Anthem wrote to Reno stating that it had found numerous errors after examining the bills for his services. In particular, it told Reno that there were 170 claims that had no documentation, fifty-four claims for services that were not covered, four claims for services that were billed at a higher level than was supported by documentation, and 133 claims for services that had not been correctly coded. Anthem calculated from this that of the original $18,000 it had paid to Reno for these services, it had paid more than $10,000 wrongfully. Anthem extrapolated from this survey of twenty-four patients and concluded that during the period of time covered by the audit, it had overpaid Reno about $110,000 for all of his Anthem patients. Anthem demanded that Reno repay the $110,000.

Instead of paying, Reno retained legal counsel to dispute the repayment demand. He also made use of a chiropractic claims coding expert, though the parties dispute whether Anthem considered the expert's report. After Reno's counsel exchanged several letters with Anthem, Anthem reduced the amount it was demanding to $46,000. It calculated this reduced amount by waiving any claim for repayment on the coding and documentation errors and demanding repayment only for the claims that it contended were for services not covered by Anthem's policies because they were “not medically necessary.” See Anthem & WellPoint Resp. to Pls.' LR 56.1 Stat. ¶ 47. The non-covered services involved Vax–D treatments.

Early in 2008, Reno offered to resolve the dispute by paying about $9,000. Anthem rejected that offer. Reno then offered to pay about $25,000, and Anthem accepted. Anthem characterizes this as a settlement, but Reno contends that it was calculated as the amount he had actually received for non-covered spinal decompression procedures. Reno signed a promissory note for the payment and agreed to pay the $25,000 in twenty-four monthly installments. Reno's attorney mailed the note to Anthem, including with it a letter stating that “[a] properly executed promissory note from Dr. Reno is enclosed. I'll assume this ends all matters concerning Anthem's audit of Dr. Reno's claims.” Anthem & WellPoint Ex. N.

Reno made all of the payments due on the promissory note. At his deposition, Reno testified that he did not seek additional payment from any of the patients from whose services Anthem had recouped money. Thus those patients did not pay any additional amounts out of pocket because of Anthem's recoupment.

Reno's office had at least some patients fill out a chiropractic registration and history form, which included a section under an insurance heading entitled “Assignment and Release.” See, e.g., Anthem & WellPoint Ex. U. Patients would sign under a statement in which they agreed to “assign directly” to Reno “all insurance benefits, if any, otherwise payable to me for services rendered.” Id. The agreement also contained this statement: “I understand that I am financially responsible for all charges whether or not paid by insurance.” Id. Reno contends that he obtains such agreements from patients “[a]s a matter of course.” Reno LR 56.1 Stat. ¶ 36. Anthem disputes this characterization, citing testimony from one Reno employee who could not remember if Reno had patients execute such agreements and from another, Bernice Castro, who testified that such agreements “were mostly used for Medicare patients.” Anthem & WellPoint Ex. I at 28.¹

At some point during Reno's interactions with Anthem, an Anthem provider agreement was stamped with Reno's name, office address, and phone numbers. This particular copy of the agreement, which Anthem and...