United States District Court, E.D. Tennessee, Chattanooga
AMANDA G. BROWN et al., Plaintiffs,
BLUE CROSS BLUE SHIELD OF TENNESSEE, INC., Defendant.
CURTIS L. COLLIER, District Judge.
Before the Court is a motion to dismiss filed by Defendant Blue Cross Blue Shield Tennessee ("BCBST") (Court File No. 14). Plaintiffs Amanda Brown and Harrogate Family Practice LLC (collectively "Plaintiffs") (Court File No. 24). And BCBST replied (Court File No. 27). For the reasons set forth below, the Court will GRANT BCBST's motion (Court File No. 14) and DISMISS for lack of subject matter jurisdiction because Plaintiffs do not have standing under ERISA to pursue their claims.
Plaintiff Harrogate Family Practice is a medical provider owned by Plaintiff Amanda Brown that regularly sees patients under Defendant BCBST plans and has executed a Health Care Professional Agreement with BCBST to be an in-network provider. Pursuant to the Agreement, Plaintiffs submit bills on behalf of their patients to BCBST and receive payment directly. In November 2013, BCBST conducted audits of Plaintiffs' reimbursement claims and discovered that Plaintiffs had allegedly improperly billed and received payment for certain procedures including alleged investigational procedures called ALCAT tests. Upon learning of these irregularities, BCBST sent five letters to Plaintiffs in January, February, and March of 2014 notifying Plaintiffs of the overpayments and seeking recoupment pursuant to the parties' agreement.
Plaintiff's counsel sent a letter April 3, 2014 asserting that these recoupments violated ERISA. The parties negotiated a tolling and standstill agreement to hold the status quo while the parties attempted to resolve the billing dispute. After the negotiations broke down, BCBST began to recoup the overpayments by offsetting them against new reimbursement claims from the Plaintiff. In response, Plaintiff filed suit in this Court seeking injunctive and declaratory relief under ERISA §§ 502(a)(3) and 502(a)(1)(B). Plaintiffs also seek to recover for breach of the tolling agreement.
II. STANDARD OF REVIEW
BCBST claims that Plaintiffs' claims should be dismissed for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6) and for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1).
A Rule 12(b)(6) motion should be granted when it appears "beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Lewis v. ACB Bus. Servs., Inc., 135 F.3d 389, 405 (6th Cir. 1998). For purposes of this determination, the Court construes the complaint in the light most favorable to the plaintiff and assumes the veracity of all well-pleaded factual allegations in the complaint. Thurman v. Pfizer, Inc., 484 F.3d 855, 859 (6th Cir. 2007). The same deference does not extend to bare assertions of legal conclusions, however, and the court is "not bound to accept as true a legal conclusion couched as a factual allegation." Papasan v. Allain, 478 U.S. 265, 286 (1986). The Court next considers whether the factual allegations, if true, would support a claim entitling the plaintiff to relief. Thurman, 484 F.3d at 859. Although a complaint need only contain a "short and plain statement of the claim showing that the pleader is entitled to relief, " Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009) (quoting Fed.R.Civ.P. 8(a)(2)), this statement must nevertheless contain "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 678. "[T]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Id. (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Plausibility as explained by the Court "is not akin to a probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 556). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not show [n]'-that the pleader is entitled to relief.'" Id. at 679 (quoting Fed.R.Civ.P. 8(a)(2)).
Under Rule 12(b)(1), a defendant may challenge this Court's subject matter jurisdiction through a facial attack or a factual attack. Gentek Bldg. Prods., Inc. v. Sherwin-Williams Co., 491 F.3d 320, 330 (6th Cir. 2007) (citing Ohio Nat'l Life Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir. 1990)). A facial attack "questions merely the sufficiency of the pleading." Id. A court must take the allegations in the complaint to be true when reviewing a facial attack. Id. On the other hand, where there is a factual attack, the Court must weigh conflicting evidence provided by the plaintiff and the defendant to determine whether subject matter jurisdiction exists. Id. Such evidence can include, and is not limited to, "affidavits, documents, and even a limited evidentiary hearing to resolve jurisdictional facts." Id. The party asserting that subject matter jurisdiction exists has the burden of proof. Davis v. United States, 499 F.3d 590, 594 (6th Cir. 2007).
Defendant argues that the Court should dismiss Plaintiffs' claims because they do not have standing to pursue them. Title 29 United States Code Section 1132(a) governs the standing requirements for who may bring a civil action under ERISA. Plaintiffs claim to have direct standing as a beneficiary as a healthcare provider. Alternatively, Plaintiffs claim that they have derivative status as a beneficiary through certain "Benefits Forms" they claim constitute assignments of rights.
A. Direct Beneficiary Standing
Plaintiffs argue that they qualify as beneficiaries under the terms of ERISA and thus have direct standing to pursue their claims. For purposes of ERISA, the term "beneficiary" is defined as "a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder." 29 U.S.C.A. § 1002.
Plaintiffs argue that a payment is a benefit and because they were authorized to receive direct payment, they qualify as beneficiaries. Many of the cases cited by Plaintiffs do not support their argument but rather deal with whether nonemployee plaintiffs designated by the plan can qualify as beneficiaries. See e.g., Harper v. Am. Chambers Life Ins. Co., 898 F.2d 1432, 1434 (9th Cir. 1990) (holding that because a partner's spouse was designated by the policy as entitled to receive benefits, she had standing to pursue claims as a beneficiary); Ruttenberg v. U.S. Life Ins. Co. in City of New York, a subsidiary of Am. Gen. Corp., 413 F.3d 652, 662 (7th Cir. 2005) (holding ...