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Pennsylvania Chiropractic Association v. Blue Cross Blue Shield Association

United States District Court, N.D. Illinois, Eastern Division

August 19, 2014

PENNSYLVANIA CHIROPRACTIC ASSOCIATION, et al., Plaintiffs,
v.
BLUE CROSS BLUE SHIELD ASSOCIATION, et al., Defendants.

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, District Judge.

In November 2013, the Court granted summary judgment in part to two Pennsylvania chiropractors, Barry Wahner and Mark Barnard, as to liability on their claims against Independence Blue Cross (IBC). See Pa. Chiropractic Ass'n v. Blue Cross Blue Shield Ass'n, No. 09 C 5619, 2013 WL 5951765 (N.D. Ill. Nov. 7, 2013). Barnard and Wahner, among several other plaintiffs including the Pennsylvania Chiropractic Association (PCA), sued IBC and others for violations of the Employee Retirement Income Security Act (ERISA). After the Court's decision on summary judgment, the Court held a bench trial on the claims of PCA, including testimony from Barnard and Wahner. In March 2014, the Court ruled in favor of PCA on its claims against IBC, and subsequently granted PCA a permanent injunction against IBC, requiring it to reform its notice and comment procedures when issuing repayment demands to PCA members. See Pa. Chiropractic Ass'n v. Blue Cross Blue Shield Ass'n, No. 09 C 5619, 2014 WL 2069343 (N.D. Ill. May 19, 2014). Barnard and Wahner have now moved for a similar injunction, as well as an injunction requiring IBC to suspend one of its claims payment policies, payment of funds IBC recouped from them plus interest, and $25, 000 each for Barnard and Wahner as an equitable surcharge. In this decision, the Court addresses the appropriate relief to be awarded to Barnard and Wahner.

Background

The Court assumes familiarity with the facts from its multiple prior opinions in this case. Wahner and Barnard are chiropractors in Pennsylvania, each with separate practices. Both became participating health care providers with IBC in 1997, and IBC paid both chiropractors for services they rendered to plan participants. In December 2008, IBC sent letters to both Barnard and Wahner informing them that IBC had erroneously paid them for certain services included in IBC's short term rehabilitation therapy capitation program, and that IBC would recoup the money. Wahner appealed this determination, but IBC upheld its decision to recoup the money.

Wahner and Barnard were among the plaintiffs, including PCA, who sued the Blue Cross and Blue Shield Association and a number of Blue Cross entities including IBC. In November 2013, the Court granted Barnard and Wahner summary judgment in part on their claims against IBC. The Court left for trial the issues of whether Barnard and Wahner had standing as ERISA beneficiaries or whether they had experienced adverse benefit determinations, which would entitle them to ERISA-compliant notice and appeal. The Court proceeded to find that the notice and appeal procedures IBC did offer Barnard and Wahner did not substantially comply with ERISA, and that IBC's recoupments from them were arbitrary and capricious.

The Court held a bench trial on PCA's claims against IBC in December 2013. Both Barnard and Wahner testified about their interactions with IBC as well as their own practices. Based in part on Wahner and Barnard's testimony, the Court found that PCA members were ERISA beneficiaries, that IBC's recoupments constituted adverse benefit determinations, and that the notice and appeal procedures IBC offered to PCA members did not substantially comply with ERISA. The Court therefore determined that IBC had violated ERISA with respect to PCA members and concluded that PCA members were entitled to a permanent injunction that would require IBC to reform its notice and appeal procedures with respect to PCA members. The Court ultimately ordered IBC to offer "ERISA-compliant notice and appeal when demanding that a health care provider repay previously issued health insurance benefits" and issued a detailed injunction outlining the procedures IBC is to follow. Pa. Chiropractic Ass'n, 2014 WL 2069343, at *1. The Court declined to extend this injunction to all medical providers who contract with IBC, limiting the injunction to PCA members only. The Court also declined to apply the injunction retroactively.

Discussion

Barnard and Wahner have asked the Court for, among other things, a permanent injunction to address IBC's inadequate notice and appeal procedures and practices regarding recoupments of paid benefits from them. Section 502(a)(3) of ERISA enables a plan participant, beneficiary, or fiduciary to bring a civil action to "enjoin any act or practice which violates any provision of this subchapter or the terms of the plan... to obtain other appropriate equitable relief to redress such violations or... to enforce any provisions of this subchapter or the terms of the plan." 29 U.S.C. ยง 1132(a)(3). This provision allows a beneficiary to seek an injunction against practices that violate the statute.

The right to injunctive relief under ERISA is determined based on the traditional standards for such relief, as "[t]here are no specific procedures under ERISA... which cover the issuance of injunctions." Gould v. Lambert Excavating, Inc., 870 F.2d 1214, 1217 (7th Cir. 1989). Under traditional standards, a plaintiff seeking a permanent injunction must show that: 1) it suffered an irreparable injury; 2) remedies available at law, such as damages, cannot compensate for that injury; 3) the balance of hardships between the plaintiff and defendant warrants injunctive relief; and 4) an injunction would not disserve the public interest. Monsanto Co. v. Geertson Seed Farms, 561 U.S. 139, 156-57 (2010).

Federal Rule of Civil Procedure 65(d) requires an order granting an injunction to include the reasons why the injunction is issued; the specific terms of the injunction; and "reasonable detail" about "the act or acts restrained or required." In fashioning an injunction, the court must "tailor injunctive relief to the scope of the violation found." e360 Insight v. Spamhaus Project, 500 F.3d 594, 604 (7th Cir. 2007) (internal quotation marks omitted). The Seventh Circuit has upheld injunctions that are "targeted at the wrongdoing, but broad enough to be effective." Russian Media Group, LLC v. Cable Am., Inc., 598 F.3d 302, 306 (7th Cir. 2010). However, "a court abuses its discretion where the scope of injunctive relief exceeds the extent of the plaintiff's protectible rights." PepsiCo, Inc. v. Redmond, 54 F.3d 1262, 1272 (7th Cir. 1995) (internal quotation marks and alterations omitted).

Barnard and Wahner propose the following:

(1) Payment by IBC to Barnard and Wahner of amounts IBC recouped from both chiropractors under ERISA plans, plus daily compounded prejudgment interest;
(2) An additional $25, 000 each for Barnard and Wahner "reflecting disgorgement of profits and a surcharge, " B&W Proposed Order at 2;
(3) An injunction preventing IBC from applying its Claims Payment Policy no. 00.03.03c, which deals with payment for capitated services, unless IBC reforms the policy to ...

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