United States District Court, N.D. Illinois, Eastern Division
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Christopher M. Burke, Scott䧊 LLP, San Diego, CA, D. Brian Hufford, Robert J. Axelrod, Susan Jessica Weiswasser, Pomerantz Grossman Hufford Dahlstrom & Gross LLP, Joseph P. Guglielmo, Scott䧊 LLP, New York, NY, David W. Stanley, Cuneo, Waldman & Gilbert, LLP, Washington, DC, John William Leardi, Paul Donald Werner, Buttaci & Leardi, LLC, Vincent N. Buttaci, Taylor, Colicchio & Silverman, LLP, Princeton, NJ, Kimberly A. Driggers, Brooks, Leboeuf, Bennett, Foster & Gwartney, P.A., Tallahassee, FL, Leigh Handelman Smoller, Patrick Vincent Dahlstrom, Pomerantz Haudek Grossman & Gross LLP, Chicago, IL, Patrick J. Sheehan, Whatley Drake & Kallas, LLC, Boston, MA, for Plaintiffs.
Amy J. Carletti, Amy Graham Doehring, Brian Alexander Fogerty, Bryan Matthew Webster, Christopher Mac Neil Murphy, Elizabeth Brooke Herrington, John Andrew Litwinski, Michael A. Pope, McDermott, Will & Emery LLP, Michael M. Conway, Foley & Lardner, Chicago, IL, for Defendants.
MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, District Judge:
Plaintiffs have sued a number of Blue Cross and Blue Shield entities for violations of the Employee Retirement Income Security Act (ERISA) and Florida law. Defendants Anthem Health Plans of Virginia, Inc. and WellPoint, Inc. have moved for summary judgment against plaintiff Andrew Reno. Defendant Independence Blue Cross has moved for summary judgment against plaintiffs Mark Barnard and Barry Wahner. Defendants have also moved for judgment on the pleadings against plaintiff Brenda Tomanek. For the reasons stated below, the Court denies the motion for judgment on the pleadings in part and grants it in part and denies the motions for summary judgment.
A. General background
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; and a residential treatment facility. 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 the provider plaintiffs for medical services they provided to BCBS insureds. Sometime afterward, plaintiffs allege, defendants would make a false or fraudulent determination that the payments had been in error. Defendants then would demand that individual plaintiffs repay the supposedly overpaid amounts immediately. If plaintiffs refused to do so, defendants would forcibly recoup the amounts they sought by withholding payment on other, unrelated claims for services plaintiffs provided to other BCBS insureds.
Plaintiffs allege further that when defendants made these repayment demands, they typically did not provide adequate information regarding available review procedures. Plaintiffs allege that defendants sometimes failed to offer any appeal process at all. When an appeal process was available, plaintiffs allege, defendants refused to provide details about which patients, claims, and plans were claimed to be the subject of overpayment or " effectively ignored" plaintiffs' appeals. Fourth Am. Compl. ¶ 18. Plaintiffs contend that this conduct deprived them of their right to a " full and fair review" under ERISA. 29 U.S.C. § 1133.
Plaintiffs assert their ERISA claims in three counts in the fourth amended complaint. In count one, plaintiffs seek to recover the unpaid benefits they allege defendants improperly recouped. See Fourth Am. Compl. ¶¶ 507-17. Plaintiffs bring this claim under section 502(a)(1)(B) of ERISA, which permits a plan participant or beneficiary to bring a civil action " to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B).
In counts two and four, plaintiffs request injunctive and other equitable relief under section 502(a)(3) of ERISA. Id. ¶¶ 518-25, 531-35. That provision authorizes a plan 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." 29 U.S.C. § 1132(a)(3).
Although their complaint indicates otherwise, all four plaintiffs involved in the current motions state that they are not seeking final determination that the defendants' repayment requests and recoupments were improper, but only an order " remanding" the claims to the insurance plans so that the plans can provide ERISA-compliant notice and appeal rights. As part of that remand, however, plaintiffs argue that defendants should be required to return all the money they have received from their repayment demands and recoupments, in order to return the situation to the status quo ante, that is, the situation as it existed before the repayment requests.
B. Facts relating to Reno's claims
Reno is a chiropractor in Virginia who has a contract with Anthem, a subsidiary of WellPoint, to provide medical services to participants in Anthem's health plans. In 2006, Anthem informed Reno that it was conducting a review of payments it had made to him for services he provided to twenty-four patients. In 2007, Anthem wrote to Reno stating that it had found numerous errors after examining the bills for his services. In particular, it told Reno that there were 170 claims that had no
documentation, fifty-four claims for services that were not covered, four claims for services that were billed at a higher level than was supported by documentation, and 133 claims for services that had not been correctly coded. Anthem calculated from this that of the original $18,000 it had paid to Reno for these services, more than $10,000 had been paid wrongfully. Anthem extrapolated from this survey of twenty-four patients and concluded that during the period of time covered by the audit, Reno had been overpaid about $110,000 for all of his Anthem patients. Anthem demanded that Reno repay the $110,000.
Instead of paying, Reno retained legal counsel to dispute the repayment demand. He also made use of a chiropractic claims coding expert, though the parties dispute whether Anthem considered the expert's report. After Reno's counsel exchanged several letters with Anthem, Anthem reduced the amount it was demanding to $46,000. It calculated this reduced amount by waiving any claim for repayment on the coding and documentation mistakes and demanding repayment only for the claims that it contended were for non-covered services. The non-covered service was Vax-D, a type of spinal decompression procedure. Reno Ex. 6; Anthem Ex. I.
Early in 2008, Reno offered to resolve the audit by repaying about $9,000. Anthem rejected that offer. Reno then offered to pay about $25,000, and Anthem accepted. Anthem characterizes this as a settlement, but Reno contends that it was calculated as the amount he had actually received for non-covered spinal decompression procedures. Reno signed a promissory note for the payment and agreed to pay the $25,000 in twenty-four monthly installments. Reno's attorney mailed the note to Anthem, including with it a letter stating that " [a] properly executed promissory note from Dr. Reno is enclosed. I'll assume this ends all matters concerning Anthem's audit of Dr. Reno's claims." Anthem Ex. N.
Reno made all of the payments due on the promissory note. At his deposition, Reno testified that he did not seek additional payment from any of the patients from whose services Anthem had recouped money. Thus those patients did not pay any additional amount out of pocket because of Anthem's recoupment.
C. Facts relating to Wahner and Barnard's claims
Wahner and Barnard are chiropractors in Pennsylvania, each with separate practices, who are participating health care providers with Independence. Independence paid both of them for services they rendered to participants in Independence's plans. It subsequently determined that it should not have paid some of the claims and demanded that Wahner and Barnard repay some of the money they had received. Independence contends that it recovered no more than $4,950 from Barnard, but Barnard contends that the amount was greater. Wahner and Independence also disagree about the amount of Independence's demand and recovery from him. Independence has produced a summary of what it contends are all the claims on which it recovered and calculated that they total $4,056. Wahner, however, has presented a letter and an e-mail from Independence in which it demands repayment of $5,110, though he offers no evidence to show that Independence actually recovered this entire amount. Wahner & Barnard Exs. 8-9. It is undisputed that neither Wahner nor Barnard ever attempted to bill their patients to recover any of the amounts they had to repay to Independence, although they contend that they could have done so.
D. Facts relating to claims by Tomanek
For purposes of resolving a motion for judgment on the pleadings, the Court " view[s] the facts in the complaint in the light most favorable to the nonmoving party." Buchanan-Moore v. County of Milwaukee, 570 F.3d 824, 827 (7th Cir.2009).
Tomanek is a chiropractor in Pennsylvania who has a contract to provide services to patients in Highmark's plans. In 2004, a review specialist for Highmark wrote Tomanek and requested that she provide documentation and records for a number of claims. Highmark justified its request by stating that a review of Tomanek's billing had revealed questionable billing and coding practices. Tomanek provided the records and later learned that the records had been forwarded to a chiropractic consultant for review.
In 2006, Highmark told Tomanek that the consultant's review determined that it had overpaid her by more than $97,000 in relation to services provided to 113 patients. Highmark demanded that Tomanek repay that amount. In response, Tomanek sent Highmark letters seeking to exercise the ERISA appeal rights of her patients. Highmark denied that Tomanek or her patients were entitled to any appeal rights.
Tomanek then proceeded to appeal the repayment demands through a medical review committee (MRC) that Highmark provided for billing disputes with providers. Tomanek submitted a memorandum to the MRC containing her arguments, as well as the report of a coding expert who disputed Highmark's billing and coding determinations. Shortly before the MRC's hearing in 2007, the consultant retained by Highmark who had concluded that Tomanek made coding and billing errors submitted a supplemental letter to the MRC. The supplemental letter partially repudiated some of the consultant's prior conclusions supporting Highmark's repayment demands and justified other prior conclusions. Tomanek contends that she did not receive a copy of the letter long enough before the MRC hearing to respond to it. Tomanek also contends that the MRC process was flawed because she and her counsel only had a limited amount of time to present her challenge to Highmark's determination to the MRC and because the eleven-member MRC included only one chiropractor.
After the MRC hearing, Highmark reduced its repayment demand to about $48,000. Highmark recouped the money it claimed it was owed by withholding payment due to Tomanek for services provided to other patients.
In June 2007, Tomanek and the entity through which she operated her practice filed suit against Highmark and its consultant in Pennsylvania state court. Highmark Ex. A; see Ennenga v. Starns, 677 F.3d 766, 773-74 (7th Cir.2012) (court may take judicial notice of public court documents). Tomanek asserted five claims: a claim that Highmark violated her due process rights by providing inadequate review of its repayment demands, three claims that Highmark violated its provider agreement with her, and a claim against Highmark's consultant for tortious interference with contract. Highmark Ex. A.
In March 2008, the Pennsylvania trial court dismissed four of Tomanek's five claims. Highmark Ex. B. The court concluded that Tomanek's due process claim failed because neither the Constitution nor Pennsylvania common law required Highmark to grant Tomanek due process. Id. at 11. The court also concluded that two of Tomanek's three breach of contract claims failed because Tomanek lacked the contractual rights she asserted. Id. at 10-11, 12. Finally, it determined that Tomanek could not assert a tortious interference
claim against the consultant because he was acting as Highmark's agent. Id. at 11-13. The court also struck all of Tomanek's requests for injunctive relief and attorney's fees.
After the court's decision, only one of Tomanek's breach of contract claims remained. In February 2011, the court dismissed this claim with prejudice for lack of prosecution. See Pa. R. Civ. P. 230.2.
A. Summary judgment motion against Reno
On a motion for summary judgment, the Court " view[s] the record in the light most favorable to the non-moving party and draw[s] all reasonable inferences in that party's favor." Trinity Homes LLC v. Ohio Cas. Ins. Co., 629 F.3d 653, 656 (7th Cir.2010). Summary judgment is appropriate " if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). In other words, a court may grant summary judgment " [w]here the record taken as a whole could not lead a rational trier of ...