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

• Decision Date: 17 May 2010
• Docket Number: Case No. 09 C 5619.
• Citation: 713 F.Supp.2d 734
• Parties: PENNSYLVANIA CHIROPRACTIC ASSOCIATION, New York Chiropractic Council, Association of New Jersey Chiropractors, Florida Chiropractic Association and California Chiropractic Association, on their own behalf and in a representational capacity on behalf of their members, and Gregory T. Kuhlman, D.C., Jay Korsen, D.C., Ian Barlow, Kendall Gearhart, D.C., Jeffrey P. Leri, D.C., Michelle M. Askar, D.C., Mark Barnard, D.C., Barry A. Wahner, D.C., Anthony Fava, D.C., David R. Barber, D.C., Ryan S. Ford, D.C., Larry Miggins, D.C., Casey Paulsen, D.C., Dean Renneke, D.C., Andrew Reno, D.C., Peri L. Dwyer, D.C., Ronald L. Young, D.C., and Eric Thompson, D.C., on their own behalf and on behalf of all others similarly situated, Plaintiffs,v.BLUE CROSS BLUE SHIELD ASSOCIATION, Blue Cross and Blue Shield of Rhode Island, Blue Cross and Blue Shield of Alabama, Arkansas Blue Cross and Blue Shield, Blue Shield of California, Blue Cross and Blue Shield of Florida, Blue Cross and Blue Shield of Georgia, Health Care Services Corporation, Independence Blue Cross, Blue Cross and Blue Shield of Kansas, Carefirst, Inc., Blue Cross and Blue Shield of Massachusetts, Blue Cross and Blue Shield of Michigan, Blue Cross and Blue Shield of Minnesota, Blue Cross and Blue Shield of Kansas City, Horizon Blue Cross and Blue Shield of New Jersey, Excellus Blue Cross and Blue Shield, Blue Cross and Blue Shield of North Carolina, Highmark, Inc., Blue Cross and Blue Shield of South Carolina, Blue Cross and Blue Shield of Tennessee, Premera Blue Cross, the Regence Group, Wellmark, Inc., and WellPoint, Inc., Defendants.
• Court: U.S. District Court — Northern District of Illinois

713 F.Supp.2d 734

PENNSYLVANIA CHIROPRACTIC ASSOCIATION, New York Chiropractic Council, Association of New Jersey Chiropractors, Florida Chiropractic Association and California Chiropractic Association, on their own behalf and in a representational capacity on behalf of their members, and Gregory T. Kuhlman, D.C., Jay Korsen, D.C., Ian Barlow, Kendall Gearhart, D.C., Jeffrey P. Leri, D.C., Michelle M. Askar, D.C., Mark Barnard, D.C., Barry A. Wahner, D.C., Anthony Fava, D.C., David R. Barber, D.C., Ryan S. Ford, D.C., Larry Miggins, D.C., Casey Paulsen, D.C., Dean Renneke, D.C., Andrew Reno, D.C., Peri L. Dwyer, D.C., Ronald L. Young, D.C., and Eric Thompson, D.C., on their own behalf and on behalf of all others similarly situated, Plaintiffs,v.BLUE CROSS BLUE SHIELD ASSOCIATION, Blue Cross and Blue Shield of Rhode Island, Blue Cross and Blue Shield of Alabama, Arkansas Blue Cross and Blue Shield, Blue Shield of California, Blue Cross and Blue Shield of Florida, Blue Cross and Blue Shield of Georgia, Health Care Services Corporation, Independence Blue Cross, Blue Cross and Blue Shield of Kansas, Carefirst, Inc., Blue Cross and Blue Shield of Massachusetts, Blue Cross and Blue Shield of Michigan, Blue Cross and Blue Shield of Minnesota, Blue Cross and Blue Shield of Kansas City, Horizon Blue Cross and Blue Shield of New Jersey, Excellus Blue Cross and Blue Shield, Blue Cross and Blue Shield of North Carolina, Highmark, Inc., Blue Cross and Blue Shield of South Carolina, Blue Cross and Blue Shield of Tennessee, Premera Blue Cross, the Regence Group, Wellmark, Inc., and WellPoint, Inc., Defendants.

Case No. 09 C 5619.

United States District Court,

N.D. Illinois,

Eastern Division.

May 17, 2010.

COPYRIGHT MATERIAL OMITTED

Christopher M. Burke, Scott+Scott, San Diego, CA, D. Brian Hufford, Robert J. Axelrod, Susan Jessica Weiswasser, Pomerantz Haudek Grossman & Gross LLP, Joseph P. Guglielmo, Scott+Scott LLP, New York, NY, 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 Robbin Handelman, Patrick Vincent Dahlstrom, Pomerantz Haudek Block Grossman & Gross LLP, Chicago, IL, Patrick J. Sheehan, Whatley Drake & Kallas, LLC, Boston, MA, for Plaintiffs.

John J. Hamill, Jr., Kevin Case, Casey T. Grabenstein, Jenner & Block LLP, Bryan Matthew Webster, Christopher MacNeil Murphy, Elizabeth Brooke Herrington, Michael A. Pope, McDermott, Will & Emery LLP, Michael M. Conway, Martin J. Bishop, Rebecca R. Hanson, Foley & Lardner, Mark E. Schmidtke, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Charles S. Bergen, Laura K. McNally, Grippo & Elden, Helen E. Witt, Eric Tomas Gortner, Stacey Garbis Pagonis, Kirkland & Ellis LLP, Joel Reid Skinner, Health Care Service Corporation, David J. Stetler, Jonathan M. Cyrluk, Mariah E. Moran, Jonathan M. Cyrluk, Stetler & Duffy, Ltd. Charles Clark Jackson, Charis A. Runnels, Kirsten Ann Milton, Morgan Lewis & Bockius, LLP, Michael P. Padden, Howrey, LLP, Michael Lee McCluggage, Wildman, Harrold, Allen & Dixon, LLP, Chicago, IL, Eric P. Mathisen, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Valparaiso, IN, Jacqueline M. Saue, Foley & Lardner, LLP, Washington, DC, Carol Hu, Gregory N. Pimstone, Joanna Sobol McCallum, John T. Fogarty, Manatt, Phelps & Phillips LLP, Los Angeles, CA, Charles Len Sweeris, Law Department, Blue Shield Of California, San Francisco, CA, Michael J. Tuteur, Foley & Lardner LLP, Boston, MA, Steven E. Siff, McDermott, Will & Emery LLP, Miami, FL, John E. Thies, Webber & Thies, Urbana, IL, Emily M. Yinger, Nathaniel Thomas Connally, Michael Matthew Smith, Hogan Lovells US LLP, McLean, VA, Jay H. Calvert, Jr., Morgan, Lewis & Bockius LLP, Philadelphia, PA, Gwendolyn C. Payton, Lane Powell PC, Seattle, WA, Joseph A. Fink, Dickinson Wright PLLC, Lansing, MI, Patrick B. Green, Dickinson Wright PLLC, Detroit, MI, for Defendants.

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, District Judge:

The plaintiffs in this case are chiropractic physicians who have provided services to members of health care plans insured or administered by the defendants, and professional associations whose members are chiropractic physicians. The defendants are Blue Cross and Blue Shield of America (BCBSA) and individual Blue Cross and Blue Shield entities (BCBS entities). BCBSA is a national umbrella organization that facilitates the activities of individual BCBS entities. Individual BCBS entities insure and administer health care plans to Blue Cross and Blue Shield customers (BCBS insureds) in various regions.

Plaintiffs' claims all concern actions they allege the defendants took to improperly take money belonging to plaintiffs. They allege that defendants would initially reimburse plaintiffs for services they provided to BCBS insureds and then sometime afterward would make a false or fraudulent determination that the payments had been in error and would demand repayment from plaintiffs. If the plaintiffs refused to return the payment as demanded, defendants would force recoupment by withholding payment on other, unrelated claims for services plaintiffs provided to other BCBS insureds. Plaintiffs contend defendants' actions violated the Racketeer Influenced and Corrupt Organizations Act (RICO), the Employee Retirement Income Security Act (ERISA), and Florida state law (with respect to plaintiffs and defendants located in Florida). On behalf of themselves, their members, and a putative class of similarly-situated health care providers, plaintiffs seek to recover the money that they allege defendants improperly recouped from them and to enjoin defendants from engaging in similar behavior in the future.

Defendants argue that several plaintiffs have contracts with individual defendants that include agreements to submit disputes to arbitration. They have moved to compel arbitration of those plaintiffs' claims with regard to all defendants and to stay any claims by those plaintiffs until arbitration is completed. They have also moved to stay proceedings regarding all other plaintiffs pending the results of arbitration proceedings.¹ For the reasons stated below, the Court grants the motion in part and denies it in part.

Background

BCBSA is a federation of BCBS entities that licenses the use of the BCBS name. The remaining defendants are regional BCBS entities, health care companies that have licenses from BCBSA to use the BCBS name. BCBS entities work together, with the oversight and assistance of BCBSA, to administer health care plans to people insured by BCBS entities.

A number of the plaintiffs, Drs. Kuhlman, Korsen, Gearhart, Leri, Askar, Barnard, Wahner, Fava, Barber, Ford, Miggins, Paulsen, Renneke, Reno, Dwyer, Young, and Thompson, are licensed chiropractors. Plaintiff Barlow is a licensed occupational therapist. For purposes of this decision, the Court refers to these plaintiffs collectively as the “individual plaintiffs”.

During the period when the acts giving rise to plaintiffs' claims took place, each of the individual plaintiffs had a signed contract (a “provider agreement”) with at least one BCBS entity in the region where the plaintiff practiced. For purposes of this decision, the Court refers to the BCBS entity with which a plaintiff entered into a provider agreement as that plaintiff's “local BCBS entity.” Pursuant to these contracts, plaintiffs agreed to provide covered services to BCBS insureds at agreed-upon discounted rates, in exchange for obtaining access to BCBS insureds of all BCBS entities. Under the terms of the provider agreements, a plaintiff could provide medical services to any BCBS insured and then submit a reimbursement form to the insured's local BCBS entity, which would administer payment to that plaintiff for the services rendered to the BCBS insured.

The provider agreements limit reimbursement to “covered services,” as defined in the agreements. If an individual plaintiff provided services to a BCBS insured that did not fall under the “covered services” definition, the plaintiff would not be reimbursed for those services. Typically, plaintiffs have patients sign agreements in advance of treatment stating that it is the responsibility of the patient to pay for any services that are not reimbursed by the insurer.

Plaintiffs' claims stem from what they allege was a practice of defendants to improperly recoup money that had previously been paid to plaintiffs for medical services they had provided to BCBS insureds. Plaintiffs allege that defendants would pay for services and then later would make a false or fraudulent determination that individual plaintiffs had been overpaid for those services. Defendants would demand that individual plaintiffs immediately repay the supposedly overpaid amounts but would not provide information about which claims, services, or patients were allegedly the subject of overpayment.

Plaintiffs allege that when defendants made these repayment demands, they often offered no appeal process at all. When an appeal process was available, plaintiffs allege defendants refused to provide specific details about which patients, claims, and plans were affected. This, plaintiffs allege, made it difficult or impossible for them to challenge the reimbursement demands effectively. Plaintiffs further allege that defendants threatened to, and in some cases actually did, force individual plaintiffs to repay the amounts they allegedly owed. Defendants did this by withholding payments to which plaintiffs were otherwise entitled for unrelated claims they had submitted on behalf of other BCBS insureds.

Defendants contend that several individual plaintiffs-Drs. Paulsen, Renneke, Miggins, Gearhart, Ford, Barber, Thompson and Young-signed provider agreements that contained mandatory arbitration or mediation provisions...