United States District Court, M.D. Tennessee
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For Productive MD, LLC, Plaintiff: David L. Steed, Cornelius & Collins, LLP, Nashville, TN.
For Aetna Health, Inc., Aetna Life Insurance Company, Inc., Defendants: James C. Crumlish, III, Elliott Greenleaf & Siedzikowski, P. C., Blue Bell, PA; John E. B. Gerth, Waller, Lansden, Dortch & Davis, LLP (Nashville), Nashville, TN; Waverly David Crenshaw, Jr., Waller, Lansden, Dortch & Davis, Nashville, TN.
ALETA A. TRAUGER, United States District Judge.
Pending before the court are several motions filed by defendants Aetna Health, Inc. and Aetna Life Insurance Company, Inc. (collectively, " Aetna" ) and by the plaintiff, Productive MD, LLC (" Productive MD" ).
Aetna has filed a Partial Motion to Dismiss Second Amended Complaint (Docket No. 108) (" Motion to Dismiss ERISA-Governed Claims" ) and a Partial Motion to Dismiss the Non-ERISA Claims (Docket No. 116) (" Motion to Dismiss Non-ERISA Claims" ), with respect to which Productive MD filed Responses in opposition (Docket Nos. 140 (non-ERISA) and 141 (ERISA)), Aetna filed a consolidated Reply (Docket No. 146), and Productive MD filed a Sur-Reply (Docket No. 152). Aetna has also filed a Motion to Sever the Non-ERISA Claims (Docket No. 86), to which Productive MD filed a Response in opposition (Docket No. 90), and Productive MD filed a Reply (Docket No. 93). 
Productive MD has filed a Motion for Order Specifying Contents of Administrative Record (Docket No. 95), with respect to which Aetna has filed an unopposed Motion for Leave to file an additional legal brief (Docket No. 125). Productive MD has also filed a Motion for Protective Order (Docket No. 134), with respect to which it has filed an unopposed Motion to Supplement (Docket No. 144).
For the reasons stated herein, the Motion to Dismiss ERISA-Governed Claims will be granted in part and denied in part, the Motion to Dismiss Non-ERISA Claims will be granted in part and denied in part, the Motion to Sever will be granted in part and conditionally denied in part, the Motion for Order Specifying Content of the Administrative Record will be denied without prejudice, and the Motion for Protective Order will be granted.
I. Professional and Technical Component Payment
Productive MD provides medical services by administering diagnostic tests at the request of treating physicians. The tests include EKG testing, cardiopulmonary exercise tests, pulmonary function tests, and resting metabolic tests. The tests can identify heart disease and lung
disease, among other conditions. The tests can also help rule out certain medical conditions in an effort to avoid more expensive and invasive testing. Productive MD only tests a patient after a treating physician determines that the test is medically necessary.
In connection with each test at issue in this case, Productive MD had the patient sign a consent form (" Patient Consent Form" ), which, in most relevant part, contained the following language:
I authorize payment of medical benefits to Productive MD for services rendered. I authorize the release of any medical or other information necessary to process this claim. I also request payment of government benefits either to myself or to Productive MD.
( See SAC Attachment G.) Productive MD argues that this paragraph, particularly the first sentence, constituted a valid assignment of each patient's right to recover health insurance benefits under the patient's insurance plan.
Once each test was performed, the treating physician and Productive MD, purporting to " stand in the shoes" of the insured patient under the patient assignments, filed separate claims for payment to the patient's insurer. Productive MD requested payment for the " technical" component of each test, which included providing equipment and a technician to administer the test. With respect to that same test, the prescribing physician separately and simultaneously requested payment for the " professional" component, which included interpreting and utilizing the test results for the patient's benefit.
Aetna administered (and in some cases also insured) health insurance plans for some of the patients on whom Productive MD performed a diagnostic test at a physician's request. This case concerns claims for payment by Productive MD to Aetna related to 167 of these patients.
II. Aetna's Non-Payment of Technical Component Claims by Productive MD
Certain medical providers contract with Aetna to join Aetna's " network" of medical providers. In return for joining Aetna's network, these " in-network" providers agree to lower reimbursement rates (for insurance claims administered by Aetna) than they might otherwise charge. Relative to Aetna, the physicians who ordered the tests at issue here were " in-network" providers, whereas Productive MD was not.
Before 2005, Aetna regularly paid Productive MD's " technical component" claims for each test performed. However, from that year forward, Aetna began regularly denying most claims by Productive MD. By 2008, Aetna was paying less than 2% of Productive MD's technical component claims. After Productive MD made an unspecified legal challenge to Aetna's handling of those denied claims, the parties in July 2009 reached a negotiated settlement of the outstanding claims for payment relating to claims for dates of service through May 31, 2009.
Following that 2009 settlement, Aetna has denied virtually all technical component claims filed by Productive MD.  At the same time, Aetna has generally allowed - in whole or in part - the professional
component claims filed by the physicians with respect to the same tests . Productive MD alleges that there is a simple explanation for this incongruence: Aetna is attempting to punish Productive MD for refusing to join Aetna's provider network at the lower reimbursement rates that Aetna seeks.
Productive MD's Second Amended Complaint attaches data compilations that reflect obvious discrepancies between Aetna's handling of the professional component claims on the one hand and the technical component claims on the other. ( Compare SAC Attachments A-1 and A-2 (listing, by patient, claims by Productive MD that Aetna has not paid), with SAC Attachment D (listing, by patient and CPT code, Aetna's handling of claims for payment billed by physicians).)  For example, as to diagnostic testing performed by Productive MD on " Patient 3",  Aetna allowed payment under eight of the nine professional component CPT codes submitted by the physician (Attachment D at p. 1)), but completely denied Productive MD's request for payment for performing that test ( see SAC Attachment A-1 at p.1). This is just one example among many: of the 167 tests at issue, Aetna completely denied Productive MD's claims for payment as to 162 of those tests. With respect to the remaining tests (Patients 22, 89, 129, 163, and 173), Aetna paid only a small fraction of Productive MD's bills ($1,172.96 paid out of $8,482.00 billed). Cumulatively, by the court's calculation, Aetna has not paid $382,146.14 out of $390,628.14 in disputed charges billed by Productive MD. In other words, during the relevant three-year time period, Aetna denied 98% of Productive MD's charges (collectively), including all of the charges for 97% of the tests performed by Productive MD. 
Productive MD contends that Aetna could not logically pay the professional component claims while simultaneously denying the technical component claims. According to Productive MD, when Aetna paid the professional component billed by an in-network physician, that payment necessarily reflected Aetna's determinations that (a) the test was medically necessary for purposes of the underlying insurance plan, (b) the test was otherwise reimbursable under the underlying insurance plan, and (c) the information presented by the physician was sufficient to establish that the test was medically necessary and reimbursable. Thus, when Aetna paid the physician with respect to a particular test, Aetna also should have paid Productive MD's technical component based on the same information. Productive MD argues that Aetna's consistent failure to do so demonstrates its inherent bias against Productive MD as an out-of-network provider.
Productive MD also alleges that Aetna " flagged" claims for payment by Productive MD and directed them to a " Special Investigations Unit" (" SIU" ) for special handling. The individual claims administrators within the SIU received some type of automated notification within Aetna's claims administration system, indicating that the tests had been flagged for " overutilization" (or words to similar effect). According to Productive MD, the claims administrators often followed those suggestions and accordingly denied payment for the technical component of the test as medically unnecessary. Aetna allegedly adopted special protocols for handling Productive MD's claims pursuant to an internal policy memorandum concerning Productive MD's tests.
Productive MD also alleges other facts tending to show bias by Aetna. For example, Productive MD alleges that Jayna Harley, an Aetna " network executive," told Productive MD's President that Productive MD's claims were being denied specifically because Productive MD was an out-of-network provider. Productive MD alleges that patients have reported to Productive MD that Aetna has told them that Productive MD is not being paid because it is an out-of-network provider.
III. Aetna's Alleged Conduct in the Claims Administration Process
Productive MD alleges that, in the context of discriminating against Productive MD, Aetna utilized the claims administration process to punish Productive MD for refusing to join Aetna's network. Aetna allegedly dragged its feet in processing claims, imposed procedural hurdles on Productive MD that it did not impose on the in-network physicians who ordered the same underlying tests, and made meritless excuses for denying payment to Productive MD.
For example, in some instances, Aetna allegedly paid an in-network physician the professional component as medically justified (and covered by) the underlying patient's plan, while simultaneously disallowing Productive MD's technical component claim as not medically justified. In other instances, Aetna allowed the in-network physician's claim without requesting the physician's records, but simultaneously denied Productive MD's technical component on the grounds that Aetna did not have the physician's records . With respect to many of Productive MD's claims for payment at issue, Aetna allegedly has also refused to respond (either entirely or in a timely fashion) to claims submitted by Productive MD in the first instance or on appeal, as set forth in Attachment J to the SAC. ( See, e.g., SAC Attachment J, Patient 11 (last response from Aetna on October 21, 2011: " These expenses require further
review." ); Patient 22 (second appeal sent May 20, 2010, no further action by Aetna); and Patient 46 (first appeal sent June 27, 2010, no further action by Aetna).)
As to the status of Productive MD's claims for payment, Aetna concedes that Productive MD exhausted its administrative remedies as to 41 of the claims. However, Aetna contends that Productive MD's other claims for payment are not ripe for adjudication because Productive MD has not exhausted its administrative remedies. Productive MD alleges that Aetna denied the 41 " exhausted" claims and did not reverse its determination during the administrative appeals process. Productive MD alleges that completing the appeals process with respect to the remaining claims would be an exercise in futility.
In the claims administration process, Aetna never challenged the validity of Productive MD's assignments from the underlying patients, even where the underlying plan (to which Productive MD was not privy) purported to restrict assignment.  Moreover, for each particular patient, both the physician and Productive MD necessarily billed Aetna for payment pursuant to a patient assignment. Thus, with respect to all the tests at issue here, Aetna allegedly paid the physicians without challenging assignment, regardless of the underlying insurance policy terms.
III. Three Rivers Provider Network
Productive MD alleges that Aetna breached the terms of a contract between Productive MD and Aetna arising from both parties' participation in the " Three Rivers Provider Network," which is administered by Three Rivers Providers Network, Inc. (" TRPN" ). As the court understands Productive MD's allegations, TRPN contracts with medical services providers (such as Productive MD) to join TRPN's preferred provider network. TRPN also contracts with insurance companies, third party administrators, and health plans (" payors" ) for the right to access TRPN's provider network.
Productive MD has attached to the SAC its contract with the TRPN. (See SAC Attachment H.) Under the terms of that contract, the payors are obligated to pay " contracted providers" (such as Productive MD) 80% of the contracted provider's usual charges for covered services, which are defined as " all services that are medically necessary[.]" The payors " are obligated to make payment directly to provider[s] only at the contracted rate as payment in full." The agreement obligates Productive MD not to balance bill patients upon receipt of payment in full " at the contracted rate." Productive MD alleges that Aetna is one of the payors with whom TRPN contracted during the relevant time frame. Productive MD alleges that Aetna has its own contract with TRPN, which Aetna has refused to furnish to Productive MD.
With respect to 100 of the 167 tests at issue in this case, Aetna's Explanation of Benefits (" EOB" ) forms to Productive MD contained the notation " TRPN HOSP/ANCILLARY
NAP." Productive MD alleges that this notation reflected Aetna's agreement to the TRPN provider network terms, under which Productive MD was entitled to 80% of its usual charges for medically necessary tests. Productive MD alleges that, by failing to pay Productive MD for " medically necessary" services, Aetna breached its obligations as a payor in the TRPN arrangement.
IV. Productive MD's Causes of Action
In its Second Amended Complaint, Productive MD asserts the following claims:
1. Breach of the TRPN Agreement with respect to approximately 100 claims for payment;
2. Claims arising under ERISA with respect to 160 claims for payment relating to insurance policies governed by ERISA, including (a) a claim for recovery of medical benefits due under 29 U.S.C. § 1132(a)(1)(B), and (b) a claim for failure to provide a full and fair review under 29 U.S.C. § 1133 and 29 C.F.R. § 2560-503-1; 
3. Breach of contract with respect to the underlying insurance plans;
4. Violation of the Tennessee Prompt Pay Act, Tenn. Code Ann. § 56-7-109;
5. Bad faith failure to pay first-party claims in violation of Tenn. Code Ann. § 56-7-105;
6. Unjust enrichment;
7. A right of recovery in quantum meruit ; and
8. Interference with contract and prospective business relations.
Productive MD demands a jury trial as to all non-ERISA claims. With respect to the ERISA claims, Productive MD demands actual damages, prejudgment interest, attorney's fees, and post-judgment interest. Productive MD also requests treble damages with respect to the tortious interference claims, injunctive relief prohibiting interference with Productive MD's contracts and prospective business relations, an order enjoining Aetna from continuing to engage in " wrongful rejection" of Productive MD's claims, a stay of any pending claims for payment by Productive MD that have not been administratively exhausted, and an evidentiary hearing concerning Aetna's alleged bias and conflict of interest.
V. Overview of Claims for Payment at Issue
Of the 167 claims at issue, 160 relate to insurance plans governed by ERISA (" ERISA-governed claims for payment" ), one relates to an insurance plan governed by Medicare (" Medicare-governed claim for payment" ), and six others relate to plans that are governed by Tennessee law (" Tennessee-governed claims for payment" ). 
Aetna argues that, with respect to all 167 claims, Productive MD never received
a purported assignment in the first place, thereby depriving Productive MD of standing to sue. Aetna also contends that, even if Productive MD's assignments were otherwise valid, (1) 60 of the 160 ERISA-governed claims for payment and three of the non-ERISA claims for payment (including two Tennessee-governed claims for payment and the Medicare-governed claim for payment) should be dismissed because the underlying Plans did not permit assignment in the first place, and (2) all but 45 of the claims for payment are not ripe for adjudication because Productive MD has not exhausted its administrative remedies. 
In the interest of judicial economy, the court ordered the parties to brief several threshold legal issues, none of which would require the court to conduct a plan-by-plan analysis of the numerous underlying insurance plans. As explained herein, the court finds that, at least at this stage, it is not necessary to address the additional plan-specific issues raised by Aetna.
I. Productive MD's Standing to Sue
Aetna argues that Productive MD lacks standing to sue. The issue of Productive MD's standing implicates at least three separate inquiries: (1) with respect to all of the claims for payment at issue, could the purported assignment language in the Patient Consent Forms constitute an assignment to Productive MD of the patient's right to recover benefits under the applicable insurance policy? (2) regardless of whether the underlying insurance policies purported to prohibit assignment, is Aetna estopped from challenging standing with respect to the claims for payment at issue? and (3) regardless of whether Productive MD has standing to recover benefits under the applicable insurance policy as an assignee of the plan participant or beneficiary, does Productive MD independently have standing to sue for breach of contract under the TRPN agreement?
A. Assignment Language
Aetna argues that the alleged " assignment" language in the Patient Consent Forms did not contain language sufficient to convey an assignment, regardless of the terms of the underlying insurance plan. Resolving this question actually involves three separate inquiries: was the assignment sufficient to confer standing with respect to (1) the ERISA-governed claims
for payment, (2) the Medicare-governed claim for payment, and/or (3) the Tennessee-governed claims for payment?
1. Assignments Under ERISA
Section 502 of ERISA, 29 U.S.C. § 1332(a), provides that a civil action may be brought under ERISA by a plan " participant," " beneficiary," or " fiduciary," or by the Secretary of Labor. The Sixth Circuit has found that a health care provider " may assert an ERISA claim as a 'beneficiary' of an employee benefit plan if it has a received a valid assignment of benefits." Cromwell v. Equicor Equitable HCA Corp., 944 F.2d 1272, 1277 (6th Cir. 1991) (citing Hermann Hosp. v. MEBA Med. & Benefits Plan, 845 F.2d 1286 (5th Cir. 1988)).  Here, the " Patient Consent Form" purports to convey to Productive MD the patient's right to payment of " medical benefits." The question is whether, subject to the terms of each underlying insurance policy, that language would otherwise be sufficient to support Productive MD's standing to sue.
There is no binding Sixth Circuit authority on this issue. The cases cited by Aetna and Productive MD demonstrate that federal courts have reached inconsistent conclusions about whether assigning the right to payment confers standing. Aetna has identified several unpublished district court cases holding that conveying a right to payment is not sufficient to support standing under ERISA. See, e.g., Touro Infirmary v. Am. Maritime Officer, Civil Action No. 07-1441, 2007 WL 4181506, *5-*6 (E.D. La. Nov. 21, 2007) (where release stated, " I assign and hereby authorize . . . direct payment to the Hospital . . . of all insurance and health plan benefits otherwise payable to or on behalf of me for this hospitalization or for these outpatient services," assignment " simply authorizes direct payment to [the provider] and, as an incomplete assignment of benefits, was insufficient to support standing under ERISA" ).  On the other hand, other courts, including the Eleventh Circuit, have concluded that conveying a right to payment is sufficient to confer standing for purposes of ERISA. See, e.g., Conn. State Dental Ass'n v. Anthem Health Plans, Inc., 591 F.3d 1337, 1352 (11th Cir. 2009) (concluding that " assignment of the right to payment is enough to create standing," because " [a]n assignment to receive payment of benefits necessarily incorporates the right to seek payment. [T]he right to receive benefits would be hollow without such enforcement capabilities" ); N. Jersey Brain & Spine Ctr. v. Conn. Gen. Life Ins. Co., No. 10-4260, 2011 WL 4737067, at *5 (D.N.J. June 30, 2011) (following language sufficient to confer standing: " I hereby assign to North Jersey Brain & Spine Center all payments
for medical services rendered to myself or my dependents" ; court reasoned that " an assignment of a right to reimbursement logically includes the right to judicially enforce the reimbursement rights, and thus, creates a valid assignment under ERISA" ). 
In ascertaining on which side the Sixth Circuit would fall on this divide, Cromwell suggests that the right to payment is sufficient to support standing. In Cromwell, the plaintiff health care provider filed suit in state court, alleging standing based on an assignment of benefits from the insureds. 944 F.2d at 1275. After the defendant insurer removed the case, the district court denied the provider's motion to remand, finding that the court retained jurisdiction over the case because the insurance plan at issue was governed by ERISA. Id. at 1275. Later in the case, the district court granted summary judgment to the defendant insurer, finding that the patient actually did not have insurance benefits to convey in the first place because he had already terminated his employment by the time he received care.  On appeal, the provider argued that it was inconsistent for the district court to (1) find that jurisdiction was appropriate under ERISA at the outset of the case and (2) at a later stage in the case, reach the issue of standing and find that the provider lacked standing to sue in the first place.
In determining whether the district court appropriately found that it had jurisdiction in denying the motion to remand, the Sixth Circuit analyzed whether the original complaint allegations, taken as true, established that the providers were suing the insurer pursuant to a valid patient assignment. See id. at 1277-78. The relevant provision, entitled " Assignment of Insurance Benefits," authorized " [p]ayment directly to . . . [appellants] of any and all sums of money otherwise payable to me under the terms of the home health provisions of said group policy or contract." Id. at 1275. The Sixth Circuit found that the complaint allegations had sufficiently established standing at the time of removal:
Appellants' complaint also indicated that they had standing to bring the ERISA claim. A health care provider may assert an ERISA claim as a " beneficiary" of an employee benefit plan if it has received a valid assignment of benefits. Hermann Hospital v. Hermann MEBA Med. & Benefits Plan, 845 F.2d 1286 (5th Cir. 1988). Appellants alleged that they received a valid assignment of benefits. If the assignment of benefits did actually convey rights under the plan, appellants clearly would have had standing to sue under ERISA. There was nothing in appellants' complaint indicating that the assignment of benefits was invalid or ineffective . To the contrary, appellants
repeatedly relied on the assignment of benefits and their rights " standing in the shoes" of the Reinkes vis-a-vis the health insurance contract.
. . . [N]othing in appellants' allegations at the time of the petition for removal could have alerted the district court that standing would even be at issue in the case . Appellants clearly claimed to be entitled to benefits due them from the [underlying insurance] plan as beneficiaries by virtue of the assignment of benefits clause. Thus, appellants have alleged standing sufficient to support removal.
944 F.2d at 1277-78 (emphases added). In sum, the Sixth Circuit found that, for purposes of standing, the assignment of benefits language authorizing " payment directly to" the medical providers ...