Staten Island Chiropractic Assocs., PLLC v. Aetna, Inc., 09-CV-2276 (CBA) (VP)

• Decision Date: 12 March 2012
• Docket Number: 09-CV-2276 (CBA) (VP)
• Parties: STATEN ISLAND CHIROPRACTIC ASSOCIATES, PLLC, DAVID C. ABRAMS, D.C., and JOHN P. PIAZZA, D.C., and STATEN ISLAND CHIROPRACTIC ASSOCIATES as Assignee of JOHN "DOE" and MARY "DOE", Nos. 1-63, Plaintiffs, v. AETNA, INC.; AETNA LIFE INSURANCE CO., AETNA HEALTH INSURANCE COMPANY OF NEW YORK, AETNA HEALTH INC., CORPORATE HEALTH INSURANCE COMPANY, and AETNA HEALTH INC., Defendants.
• Court: U.S. District Court — Eastern District of New York

STATEN ISLAND CHIROPRACTIC ASSOCIATES,PLLC, DAVID C. ABRAMS, D.C., and JOHN P. PIAZZA,D.C., and STATEN ISLAND CHIROPRACTICASSOCIATES as Assignee of JOHN "DOE" and MARY"DOE", Nos. 1-63, Plaintiffs,

v. AETNA, INC.; AETNA LIFE INSURANCE CO.,AETNA HEALTH INSURANCE COMPANY OF NEWYORK, AETNA HEALTH INC., CORPORATE HEALTHINSURANCE COMPANY, and AETNA HEALTH INC., Defendants.

09-CV-2276 (CBA) (VP)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

Date: March 12, 2012

NOT FOR PUBLICATION

MEMORANDUM & ORDER

AMON, United States District Judge:

The plaintiffs in this action are two chiropractors and their professional corporation, who have received claims assignments from 63 of their patients under the patients' non-party, employer-sponsored health plans. The plaintiffs have brought suit against Aetna, Inc. and several wholly owned subsidiaries (collectively "the defendants"), alleging various violations of the Employee Retirement Income Security Act of 1974 ("ERISA") and tortious interference with business relations, arising primarily out of the defendants' alleged refusal to pay the benefits claims that the plaintiffs have submitted to them. The defendants now move to dismiss the complaint in full. For the reasons stated below, the motion to dismiss is granted, although the ERISA claims for benefits and for "full and fair review" are dismissed without prejudice.

I. BACKGROUND

The following facts are alleged in the Second Amended Complaint ("Compl.").

Certain health care providers enter into contracts with health insurance companies or managed care organizations to become in-network or "participating" providers ("PARS"). As a member of the insurer's network, these PARS agree to provide services to the insurer's enrolleesat a reduced rate in exchange for, inter alia, access to the insurer's patient base. Enrollees who visit PARS are required to pay only the applicable co-payment or co-insurance under their benefits plan, plus any fees for non-covered services. By contrast, out-of-network or "non-participating" providers ("Non-PARS") do not have a contract with the particular insurer. Non-PARS may require their patients to pay the full service charge up front, after which the patients can submit for reimbursement from their benefits plan, subject to the terms of coverage for Non-PAR services. Alternatively, Non-PARS may agree to accept an assignment of benefits from the patient, which allows the Non-PAR provider to submit requests for payment directly from the plan or its insurer on the patient's behalf. The Non-PAR provider may then be entitled to bill the patient for any amount exceeding what the benefits plan will cover.

The plaintiff chiropractors in this case are Non-PARS for the health plans at issue, and have this latter benefits-assignment arrangement with their patients. Thus, they have received claims assignments from 63 of their patients who are members of employer-sponsored health plans insured or serviced by the defendants, and have submitted these claims directly to the defendants for payment for the chiropractic services rendered. Although the parties dispute the exact role that the defendants played in these health plans, the defendants appear to concede at this stage that the patient-assignors are members of plans governed by ERISA, and that one of the defendants insures or services these plans in some manner. The defendants also do not appear to contest the validity of the assignments, or that the plaintiffs have standing to bring suit under ERISA to collect benefits that they were assigned.

The plaintiffs allege that under the terms of the plans at issue, the defendants agree to pay for services performed by Non-PARS at the lesser of the billed charge or the so-called "usual, customary and reasonable" ("UCR") rate, which is essentially the market rate for comparable services in a particular area. (Compl. ¶ 19.) The plaintiffs claim that chiropractic services arecovered when they are "medically necessary," which means that three criteria are met, "subject to some plan limitations or exclusions": the member has a neuromusculoskeletal disorder, the medical necessity for the treatment has been clearly documented, and improvement is shown within a certain amount of time after starting treatment. (Compl. ¶ 35.)

The complaint does not specify the precise role that any of the defendants play in the health plans at issue, which are never identified by name, and it does not cite to or incorporate the specific terms of any plan documents. Rather, the plaintiffs allege generally that "[i]n offering and administering its health care plans, AETNA assumes the role of 'Plan Administrator,' as that term is defined under ERISA, in that it interprets and applies the plan terms, makes all coverage decisions, and provides for payment to members and/or their providers." (Compl. ¶ 30.)

The plaintiffs claim that the defendants have "engaged in a pattern and practice of denying benefits for Non-PAR services as part of [their] effort to increase the costs to [their] members of going out-of-network, thereby pressuring them to use in-network providers, subject to discounted rates and reduced services." (Compl. ¶ 20.) The plaintiffs attribute most of the defendants' actions to their alleged "policy of 'pre-action review,' in which virtually every claim submitted by plaintiffs to defendants for chiropractic services to defendants' members [is] initially denied, additional records are requested, and either no decision is made on the claim, the denial is affirmed, or months later only a small portion of the claim is paid." (Compl. ¶ 36.) The plaintiffs claim that as part of this "pre-action review" procedure, the defendants sent questionnaires to the patients "requiring them to complete answers to lengthy interrogatories" about the treatment they received. (Compl. ¶ 37.) The plaintiffs also allege that these questionnaires were "designed to impute the good reputation of the plaintiffs and insinuate disparaging remarks about them. (Id.)

The upshot, the plaintiffs contend, is that the defendants have improperly denied valid claims for benefits, have breached the terms of the relevant health plans, and have thereby also violated various provisions of ERISA. The plaintiffs also allege that in processing the claims for benefits, the defendants followed improper procedures and provided inadequate disclosures, such as by failing to explain the reason for adverse determinations and failing to include information about how to appeal benefits denials. (Compl. ¶¶ 38, 39.) The plaintiffs submit that "appeals of the defendant's denials are futile, since the internal appeal process does not result in a fair or reasonable review of the services and charges, and the defendants do not provide adequate information concerning the external appeal process." (Compl. ¶ 40.)

As a result of the defendants' actions, the plaintiffs claim that they have been steadily losing patients who participate in the defendants' health plans and have expended many additional resources on disputing the benefits denials, causing "significant loss of revenue and income." (Compl. ¶ 42.) The plaintiffs also allege that the defendants' actions have interfered with their ability to "establish business relations with . . . patients and other sources of referrals." (Compl. ¶ 93.)

Although the plaintiffs' precise causes of action are at times difficult to discern, they are asserting various claims for unpaid benefits and equitable relief under ERISA, plus a claim for tortious interference with business relations under New York state law.

II. STANDARD OF REVIEW

To withstand a motion to dismiss for failure to state a claim, "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A complaint that contains only "labels and conclusions" or "a formulaicrecitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555. Neither will a complaint that contains only "naked assertion[s]" without "further factual enhancement." Id. at 557.

Iqbal identifies a "two-pronged" approach to determining the sufficiency of a complaint. 129 S. Ct. at 1950. First, courts can "begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." Id.; see Harris v. Mills, 572 F.3d 66, 72 (2d Cir. 2009) ("[A]lthough a court must accept as true all of the allegations contained in a complaint, that tenet is inapplicable to legal conclusions, and [t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." (internal quotation marks omitted)). Second, they can then identify whether the complaint, stripped of its conclusory pleadings, "plausibly give[s] rise to an entitlement to relief." Id. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. A court's consideration on a motion to dismiss is "limited to facts stated on the face of the complaint, in documents appended to the complaint or incorporated in the complaint by reference, and to matters of which judicial notice may be taken." Allen v. WestPoint-Pepperell, Inc., 945 F.2d 40, 44 (2d Cir. 1991).

III. DISCUSSION

A. ERISA Claims

i. Claims for Benefits under 29 U.S.C. § 1132(a)(1)(B)

All five of the plaintiffs' ERISA claims appear to be pursuing "unpaid benefits" as the primary form of relief, although nowhere in the complaint do the plaintiffs cite to the relevant ERISA provision for the recovery of benefits, 29 U.S.C. § 1132(a)(1)(B). (See Compl. ¶¶...