United States District Court, D. Arizona
NEIL V. WAKE, District Judge.
Before the Court are Defendant's Motion to Dismiss Pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) and Supporting Materials (Doc. 31), Plaintiffs' response (Doc. 39), Defendant's Reply (Doc. 41). Also before the Court are Plaintiffs' Notice of New Developments (Doc. 42), Defendant's response (Doc. 43), and Plaintiffs' supplemental brief (Doc. 46). The parties also presented oral argument on June 25, 2014. For the following reasons, Defendant's motion will be granted and Plaintiffs' Complaint will be dismissed.
Defendant Blue Cross Blue Shield of Arizona is the insurer and administrator of employee health benefit plans. Some of the plans at issue are governed by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461; others are governed by ERISA's claims regulations as adopted and incorporated into them by the Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, 124 Stat. 119, codified at 42 U.S.C. § 18091 and 26 U.S.C. § 5000A. Doc. 1 at 2 ¶ 1.
Plaintiffs are Phoenix-area medical services facilities and ten nurse practitioners that they employ or employed. Five of these nurse practitioners, Robert Alexander, Mary Melissa Hands, Teresa Meloche, Simran Sathi, and Victoria Tweedy, are current or former in-network providers of Blue Cross-administered healthcare. These five nurse practitioners entered into provider agreements with Blue Cross. The other five nurse practitioners, Crysty Frick, Joe Melby, Patricia Paradis, Sarah Quinn, and Allison Woodworth, are new hires at the facilities. Blue Cross has not credentialed them. "Credentialing involves reviewing qualifications and licensing and then admission into the [Blue Cross] provider network as a Provider. Thereafter, [Blue Cross] patients can be seen and treated by the Nurse Practitioners and [have their] health plan claims and their invoicing submitted, to be paid at the [Blue Cross] network fee schedules rates." Doc. 39 at 4 n.4. Consequently, they are not party to any provider agreement with Blue Cross.
The provider nurse practitioners render healthcare to enrollees in Blue Cross-administered employee health benefit plans and file claims with Blue Cross for payment. Blue Cross then authorizes payments and remits them directly to the medical facilities at the providers' request. Doc. 39 at 8; Doc. 31 at 5 n.6. Among other contractual arrangements, providers agree not to seek payment from Blue Cross for "investigational" or "experimental" services, and Blue Cross retains the right to "adjust an adjudicated claim if [it] determines that the claim was incorrectly paid or denied" within one year of the date of the payment. Doc. 31-2 at 55.
The parties dispute whether the terms of the plans themselves also authorize Blue Cross to recoup reimbursements paid to providers in error. Compare Doc. 1 at 5 ¶ 10 ("[U]pon information and belief, the applicable ERISA-governed and PPACA-governed health plans at issue have no provisions and do not otherwise indicate that covered claims can somehow be subsequently converted into non-covered claims months or years after final benefit determination decisions have been made.") with Doc 31 at 8 (averring that all the plans included a "Payments Made in Error" section providing that Blue Cross could obtain reimbursement from the provider if it made a payment in error).
Beginning in May 2011 the five provider nurse practitioners began filing claims for particular allergy tests-ALCAT cytotoxic laboratory tests-and attendant care. Although Blue Cross initially paid these claims, it subsequently reversed those claims determinations because the tests were "investigational" and thus excluded from coverage. Doc. 1 at 5 ¶¶ 8-9. Although Plaintiffs acknowledge a "purported" website identifying the subject allergy tests as "investigational, " see id. at 5 ¶ 9, they allege the web posting was "at some publicly unannounced location and time" and that Blue Cross "never declared, decided, or communicated to anyone a belief or a coverage position that the tests or services were experimental' or investigational' during the time that it repeatedly, knowingly, and voluntarily paid for the tests and services." Id. Plaintiffs allege that Blue Cross's payments, totaling in the hundreds of claims, see Doc. 39 at 3, "acknowledg[ed] that both the tests and services were medically necessary and that the accounts billed and paid were proper." Doc. 1 at 5 ¶ 8.
In April 2012, Blue Cross informed the five provider nurse practitioners in writing that the claims had been paid in error and required repayment of the billing amounts totaling $237, 000. Doc. 31 at 6. Plaintiffs allege that Blue Cross "reversed its prior benefits determination." Doc. 1 at 5 ¶ 9. Blue Cross asserts it had "discovered the improper billing." Doc. 31 at 6. Either way, Plaintiffs did not repay. Blue Cross viewed this as a breach of the provider nurse practitioners' contracts, refused to recredential them, threatened to terminate their provider agreements, and declined to credential the five nonprovider nurse practitioners "who were associated with the same practices." Id. at 2.
Plaintiffs allege that Blue Cross's "unilateral" reversal-via the repayment letters it sent the providers-violates ERISA. Doc. 1 at 6 ¶ 13. Specifically, Plaintiffs allege that the health plans at issue do not authorize Blue Cross's actions, that any provision of the health plans that purports to do so violates ERISA's claims regulations-which require that plan administrators like Blue Cross notify claimants of adverse benefit determinations within 30 days-and that any provision of the provider agreements that purports to do so is preempted by ERISA or otherwise invalid. Id. at 12-13 ¶¶ 42-49.
In their first claim, Plaintiffs allege that Blue Cross retaliated against them in violation of ERISA § 510. They seek an injunction to prevent Blue Cross from terminating existing provider agreements and to require Blue Cross to credential the five nonprovider nurse practitioners. ERISA § 510 prohibits retaliation against a participant or beneficiary who exercises rights guaranteed by a plan. See 29 U.S.C. § 1140 ("It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan...."). ERISA § 502(a) allows a civil suit to enforce § 510. 29 U.S.C. § 1132(a)(3) (allowing a participant, beneficiary, or fiduciary to bring a civil action "(A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan").
In addition to injunctive relief, ERISA § 502 allows for declaratory relief. 29 U.S.C. § 1132(a)(1)(B) (allowing a participant or beneficiary to bring a civil action "to clarify his rights to future benefits under the terms of the plan"). In their second claim, Plaintiffs seek declaratory relief that Blue Cross's recoupment attempts
(1) violate 29 U.S.C. § 1133 (requiring every employment benefit plan to "provide adequate notice in writing to any participant or beneficiary whose claim for benefits under the plan has been denied, " and to "afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review...");
(2) violate ERISA's claims regulations;
(3) are not authorized by any enforceable terms of the plans; and
(4) are forfeited, waived, or estopped.
Doc. 1 at 28 ¶ 97. Plaintiffs further assert that Blue Cross cannot recover the funds because any recovery would be preempted by ERISA, limited to equitable remedies, and thus require tracing-which cannot be done.
Finally, Plaintiffs seek declaratory relief pursuant to the federal Declaratory Judgment Act that Blue Cross's actions breached the non-ERISA, contractual PPACA plans and their attendant duties of good faith and fair dealing, violated ERISA's claims regulations and waived its rights to all payment issues, and waived its rights under Arizona law by paying the subject claims. Although Plaintiffs refer to ERISA's claim regulations in ...