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Pennsylvania Chiropractic Association, New York Chiropractic Council, et al v. Blue Cross Blue Shield Association

April 28, 2011


The opinion of the court was delivered by: Matthew F. Kennelly, District Judge:


The plaintiffs in this case are chiropractic physicians, an occupational therapist, and a clinical social worker/trauma specialist who have provided services to members of health care plans insured or administered by the defendants; professional associations whose members are chiropractic physicians; a residential treatment facility; and a subscriber to a health care plan.*fn1 The defendants are Blue Cross and Blue Shield of America (BCBSA) and individual Blue Cross and Blue Shield entities (BCBS entities). BCBSA is a national umbrella organization that facilitates the activities of individual BCBS entities. Individual BCBS entities insure and administer health care plans to Blue Cross and Blue Shield customers (BCBS insureds) in various regions.

Plaintiffs allege that defendants improperly took money belonging to plaintiffs. They allege that defendants would initially reimburse plaintiffs for services they provided to BCBS insureds and then sometime afterward would make a false or fraudulent determination that the payments had been in error and would demand repayment from plaintiffs. If plaintiffs refused to return the payment as demanded, defendants would force recoupment by withholding payment on other, unrelated claims for services plaintiffs provided to other BCBS insureds. The subscriber plaintiff, Katherine Hopkins, alleges that she was held liable for portions of a bill for services she received at a hospital after her insurer demanded recoupment from the chiropractic provider who treated her.

Plaintiffs filed their first amended complaint on November 16, 2009. In the complaint, plaintiffs alleged that defendants' actions violated the Racketeer Influenced and Corrupt Organizations Act (RICO) and the Employee Retirement Income Security Act (ERISA), as well as state law. On May 17, 2010, the Court granted a motion by defendants to dismiss the RICO claims for failure to state a claim.

Plaintiffs filed a second amended complaint on June 29, 2010. The second amended complaint reasserted the RICO and ERISA claims from the first amended complaint. Plaintiffs added a claim of RICO conspiracy and an ERISA claim on behalf of Hopkins and the putative class of subscribers she represents. The Court dismissed the RICO claims as well as Hopkins' ERISA claim against WellPoint, Inc., a BCBS entity.

Plaintiffs filed a third amended complaint on January 20, 2011 and a corrected third amended complaint on January 27, 2011. The corrected third amended complaint amended Hopkins' ERISA claims and added defendants with regard to those claims. With leave from the Court, plaintiffs filed a fourth amended complaint on February 17, 2011, in which they added plaintiff Susanna Wood, added defendants that are wholly-owned subsidiaries of WellPoint, Inc., altered the proposed class definition, and added further detail regarding particular recoupments.

On July 27, 2010, defendant The Regence Group (Regence) filed counterclaims against plaintiff Larry Miggins and a third party complaint against Miggins & Miggins, Inc. (together, Miggins), alleging breach of contract and unjust enrichment. Regence's claims arose from its provider agreement with Miggins. Regence alleged that Miggins had failed to charge and make reasonable attempts to collect coinsurance payments, submitted claims and obtained reimbursement using incorrect diagnosis codes and modifiers, and submitted claims and obtained reimbursement for services not "medically necessary" as defined in the provider agreement and otherwise not covered under patients' subscriber agreements.

On January 21, 2011, the Court granted a motion by Miggins to dismiss the counterclaims and third party claims. The Court reasoned:

4. Even after Bell Atlantic v. Twombly, 550 U.S. 544 (2007), and its progeny, federal courts follow a notice-pleading regime under which a plaintiff (here, Regence) need provide only enough detail to give the defendant (here, Miggins) fair notice of what the claim is and the grounds on which it rests. See, e.g., Tamayo v. Blagojevich, 526 F.3d 1074, 1083 (7th Cir. 2008). In complex cases, however, a fuller set of factual allegations may be necessary. See, e.g., Limestone Dev. Corp. v. Village of Lemont, 520 F.3d 797, 803 (7th Cir. 2008).

5. Under ordinary circumstances, the Court likely would not require a party making a breach of contract claim to identify the contractual terms on which it relies; alleging the nature of the breach would be enough. In this case, however, Regence's claim is premised not on one or a small number of contracts. Rather, it relies in significant part on a large number of underlying contracts - the subscriber agreements. And, as the Court has indicated, the claim may be preempted in whole or in part, depending on the nature of the alleged breaches of the provider agreement and what underlying subscriber agreements are involved. These factors together require further detail before the Court can conclude whether, and to what extent, Regence has stated a non-preempted claim.

6. The same considerations apply to Regence's unjust enrichment claim, which likewise references patient subscriber agreements.

7. For these reasons, the Court grants Miggins' motion to dismiss Regence's counterclaim for failure to state a claim. . . . In any amended pleading, Regence will be required to identify the particular provisions in the provider agreement that it contends Miggins breached, as well as the underlying subscriber agreements at issue. This will enable Miggins to assess, and the Court to determine if asked, the extent to which Regence's claim is preempted by ERISA.

Pa. Chiropractic Ass'n v. BCBS Ass'n, No. 09 C 5619, 2011 WL 219828, at *1-2 (N.D. Ill. Jan. 21, 2011).

Regence subsequently filed an amended counterclaim and third party complaint in which it reasserted its claims relating to Miggins' alleged failure to collect coinsurance payments from patients and abandoned all other claims against Miggins. Miggins has ...

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