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Kearney v. Blue Cross and Blue Shield of North Carolina

United States District Court, M.D. North Carolina

March 26, 2019

BOBBY P. KEARNEY, MD, PLLC, Plaintiff,
v.
BLUE CROSS AND BLUE SHIELD OF NORTH CAROLINA, an Independent Licensee of the Blue Cross Blue Shield Association, Defendant.

          MEMORANDUM OPINION AND ORDER

          LORETTA C. BIGGS UNITED STATES DISTRICT JUDGE

         Plaintiff, Bobby P. Kearney, MD, PLLC, brings this action against Blue Cross and Blue Shield of North Carolina (“Blue Cross NC” or “BCBSNC”) seeking payment for services under Section 502(a) of the Employment Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1132(a), including pre- and post-judgment interest and attorney's fees. (ECF No. 50.) Before the Court is Blue Cross NC's Motion to Dismiss Plaintiff's Second Amended Complaint, (ECF No. 51). For the reasons set forth below, the motion will be granted.

         I. BACKGROUND

         Plaintiff is a medical practice located in Iredell County, North Carolina, “devoted solely and exclusively” to treating patients with substance abuse and drug addiction issues. (ECF No. 50 ¶¶ 1, 13.) BCBSNC “is an administrator of health benefit plans for its insureds or members.” (ECF No. 52 at 3; see ECF No. 50 ¶¶ 2, 14.) Plaintiff and BCBSNC entered into a Network Participation Agreement (“Provider Agreement”), effective May 8, 2011, under which Plaintiff “agree[d] to render Medically Necessary Covered Services” to BCBSNC Members[1] in exchange for “payment in full for Covered Services delivered to Members during the term of th[e] Agreement.” (ECF No. 50 at 17, 20 § 2.1.1; id. at 26 § 4.1; id. at 38.) Until July 2015, BCBSNC “made all payments directly to Plaintiff for the medical services provided to BCBS[NC] insureds, ” and Plaintiff “experienced no problem with the payment of its claims submitted to Defendant for those services.” (ECF No. 50 ¶¶ 17d, 17e, 21.)

         On July 22, 2015, BCBSNC notified Plaintiff by letter that, “effective immediately, ” BCBSNC would institute a pre-payment review of certain claims for urine tests administered by Plaintiff to BCBSNC Members. (Id. ¶¶ 23, 24.) BCBSNC further informed Plaintiff that, “[g]oing forward, ” Plaintiff would be required to “submit all medical record documentation” to support the billing of claims for urine tests, including “the test results along with the specific rationale for performing these tests.” (Id. ¶ 26.) Upon receiving BCBSNC's July 22, 2015 letter, Plaintiff complied with the new billing submission requirements while attempting, to no avail, to discuss the matter with BCBSNC in order to understand “the reason or reasons that [BCBSNC] was investigating [Plaintiff, and] why the protocol for presenting claims had changed.” (Id. ¶¶ 29, 31-33.) BCBSNC subsequently terminated Plaintiff as a provider for BCBSNC on June 2, 2016. (Id. ¶ 38.)

         In February 2016, Plaintiff filed this action in state court, alleging that BCBSNC failed to pay Plaintiff for certain “medically necessary” services provided to BCBSNC insureds. (ECF No. 6.) On March 10, 2016, BCBSNC removed the action to this Court, contending that federal question jurisdiction was present because “one or more of Plaintiff's claims are completely preempted by [ERISA].” (ECF No. 1 ¶ 8.) On April 11, 2016, BCBSNC moved to dismiss all claims in Plaintiff's Complaint under Rule 12(b)(6) (“First Motion to Dismiss”). (ECF No. 15.) On February 9, 2017, this Court entered a Memorandum Opinion and Order which, in pertinent part, granted in part and denied in part BCBSNC's First Motion to Dismiss, and further, granted leave for Plaintiff to amend its Complaint “so that Plaintiff can properly file its claims consistent with this opinion and clarify any claim brought under § 502.” Bobby P. Kearney, MD, PLLC v. Blue Shield of N.C. , 233 F.Supp.3d 496, 508-09 (M.D. N.C. 2017). In its Memorandum Opinion and Order, this Court concluded that “Plaintiff's first cause of action for breach of contract is completely preempted by ERISA to the extent it involves ERISA governed health care plans and must be treated as a federal claim arising under § 502(a).” Id. at 508.

         On February 22, 2017, Plaintiff filed an Amended Complaint, (ECF No. 27), which BCBSNC moved to dismiss, (ECF No. 29). Plaintiff then simultaneously filed a motion seeking leave to file a Second Amended Complaint as well as a motion to remand this action to state court. (ECF Nos. 34, 36.) On March 23, 2018, this Court entered an Order denying Plaintiff's motion to remand; granting leave for Plaintiff to file a Second Amended Complaint; and denying as moot, without prejudice, BCBSNC's motion to dismiss. (ECF No. 43 at 9- 10.) BCBSNC now moves to dismiss Plaintiff's Second Amended Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. (ECF No. 51.)

         II. STANDARD OF REVIEW

         A motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure “challenges the legal sufficiency of a complaint, ” including whether the complaint meets the pleading standard of Rule 8(a)(2). Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009). Rule 8(a)(2) requires a complaint to contain “a short and plain statement of the claim showing that the pleader is entitled to relief, ” Fed.R.Civ.P. 8(a)(2), thereby “giv[ing] the defendant fair notice of what the . . . claim is and the grounds upon which it rests, ” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citation omitted). While a complaint need not contain detailed factual allegations, “a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action.” Id. at 555 (alteration in original). Rather, the “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Id. In other words, to survive a Rule 12(b)(6) 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.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). A claim is plausible when the complaint alleges facts that suffice to allow “the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Johnson v. Am. Towers, LLC, 781 F.3d 693, 709 (4th Cir. 2015) (quoting Iqbal, 556 U.S. at 678). A complaint may fail to state a claim upon which relief can be granted in two ways: first, by failing to state a valid legal cause of action, i.e., a cognizable claim, see Holloway v. Pagan River Dockside Seafood, Inc., 669 F.3d 448, 452 (4th Cir. 2012); or second, by failing to allege sufficient facts to support a legal cause of action, see Painter's Mill Grille, LLC v. Brown, 716 F.3d 342, 350 (4th Cir. 2013).

         Generally, on a Rule 12(b)(6) motion to dismiss, a court cannot consider documents beyond the complaint without converting the motion into a motion for summary judgment. See Occupy Columbia v. Haley, 738 F.3d 107, 116 (4th Cir. 2013) (citing Fed.R.Civ.P. 12(d)). The court can, however, properly consider “documents attached to the complaint, as well as those attached to the motion to dismiss, so long as they are integral to the complaint and authentic.” Philips v. Pitt Cty. Mem'l Hosp., 572 F.3d 176, 180 (4th Cir. 2009) (citation omitted). The Court will therefore consider the Provider Agreement attached to the Second Amended Complaint. (See ECF No. 50 at 17-51.) In addition, the Complaint alleges that the Provider Agreement authorized Plaintiff “to provide certain medical services to persons . . . eligible for health insurance coverage under one or more benefit plans provided by [BCBSNC] to its ‘member[s].'” (ECF No. 50 ¶ 17 (emphasis added).) Accordingly, the Court will also consider the health benefit plan documents attached to Defendant's memorandum of law in support of its motion to dismiss, [2] the authenticity of which has not been challenged by any party.

         III. DISCUSSION

         Defendant moves for Rule 12(b)(6) dismissal of Plaintiff's Complaint on the following four grounds: (i) “Plaintiff lacks statutory standing to bring a claim under ERISA”[3]; (ii) “Plaintiff fails to state an ERISA claim for wrongful denial of plan benefits”; (iii) “Plaintiff has not shown that each alleged ERISA beneficiary exhausted all administrative remedies for each claim for which Plaintiff seeks benefits before filing suit”; and (iv) because Plaintiff's claims for interest and attorney's fees “depend entirely on the ERISA claim which must be dismissed, ” Plaintiff's claim for interest and attorney's fees must likewise be dismissed. (ECF No. 52 at 2-3.)

         As an initial matter, Plaintiff argues that its claims “hinge[ ] solely upon the Provider Agreement” and that “[t]his case has nothing to do with efforts by Plaintiff to recover payment for medically necessary services from any of the health insurance plans alluded to in Defendant's Motion to Dismiss.” (ECF No. 54 at 3, 5.) According to Plaintiff, BCBSNC's assertions that “Plaintiff has filed [this] civil action to recover under ERISA” is erroneous, and “[n]othing could be further from the truth, as appears on the face of the pleadings.” (Id. at 2- 3.)

         However, Plaintiff specifically alleges the following on the face of ...


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