Loretta C. Biggs, United States District Judge.
Bobby P. Kearney, MD, PLLC ("Plaintiff") initiated this action in state court against Blue Cross and Blue Shield of North Carolina ("BCBSNC" or "Defendant"), alleging various violations of North Carolina law and seeking declaratory and injunctive relief. Defendant removed the action to this Court, on the basis of federal question jurisdiction. Before the Court is Plaintiff's Motion for Preliminary Mandatory Injunction (ECF No. 11) and Defendant's Motion to Dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure (ECF No. 15). For the reasons that follow, the Court grants in part and denies in part Defendant's motion to dismiss and denies as moot Plaintiff's motion for preliminary injunction.
Plaintiff is a medical practice located in Iredell County, North Carolina, devoted
In February 2016, Plaintiff filed this action, alleging that BCBSNC improperly denied claims submitted for payment by Plaintiff and failed to pay Plaintiff for certain "medically necessary" services Plaintiff provided to persons insured by BCBSNC. (ECF No. 6 at 2, 9-10.) The Complaint alleges five causes of action:
On March 10, 2016, Defendant 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 the Employee Retirement Income Security Act of 1974 (`ERISA')." (ECF No. 1 ¶ 8.) Following removal, on March 25, 2016, Plaintiff filed a motion for preliminary injunction, seeking a mandatory injunction to compel BCBSNC to make payment to Plaintiff for "medically necessary" services rendered by Plaintiff to Defendant's insureds.
Plaintiff, in its Complaint, asserts only state law claims, and thus this Court must assess, as a threshold matter, its subject matter jurisdiction.
"The United States Constitution gives Congress the power to preempt state law." America's Health Ins. Plans v. Hudgens, 742 F.3d 1319, 1329 (11th Cir. 2014). "Congress enacted ERISA to `protect ... the interests of participants in employee benefit plans and their beneficiaries' by setting out substantive regulatory requirements for employee benefit plans and to `provid[e] for appropriate remedies, sanctions, and ready access to the Federal courts.'" Aetna Health Inc. v. Davila, 542 U.S. 200, 208, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004) (alteration in original) (quoting 29 U.S.C. § 1001(b)). The United States Supreme Court explained that "[t]he purpose of ERISA is to provide a uniform regulatory regime over employee benefit plans." Id. For this reason, "ERISA includes expansive pre-emption provisions, which are intended to ensure that employee benefit plan regulation would be `exclusively a federal concern.'" Id. (citation and quotation omitted). Courts recognize two types of ERISA preemption: complete preemption under § 502(a), 29 U.S.C. § 1132(a), and conflict preemption under § 514, 29 U.S.C. § 1144(a). See, e.g., Sonoco, 338 F.3d at 370-71; Darcangelo, 292 F.3d at 186-87.
Complete preemption is a jurisdictional doctrine that transforms a claim into one arising under federal law "even if pleaded in terms of state law." Aetna, 542 U.S. at 208, 124 S.Ct. 2488; Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64, 65, 67, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987). The claim then can be brought originally in, or removed to, federal court. King v. Marriott Int'l, Inc., 337 F.3d 421, 425 (4th Cir. 2003). To determine whether a claim has such preemptive force, courts analyze whether the claim falls within the scope of ERISA's civil enforcement scheme, § 502(a), which provides the exclusive remedies for plans governed by ERISA. Aetna, 542 U.S. at 208-09, 124 S.Ct. 2488. "A claim falls within the scope of § 502 when a `plan participant or beneficiary' brings suit `to, among other things, recover benefits, enforce rights conferred by an ERISA plan, remedy breaches of fiduciary duty, clarify rights to benefits, and enjoin violations of ERISA.'" Rollins v. Kjellstrom & Lee, Inc., 109 F.Supp.3d 869, 878 (E.D. Va. 2015) (quoting Marks, 322 F.3d at 323). The Fourth Circuit has made clear that when a state law claim is completely preempted under § 502(a) and has been removed to federal court, dismissal of the claim is inappropriate. See Darcangelo, 292 F.3d at 195 ("[W]hen a claim under state law is completely preempted and is removed to federal court because it falls within the scope of § 502, the federal court should not dismiss the claim as preempted, but should treat it as a federal claim under § 502."). Rather, the court "may choose to grant plaintiff leave to amend her complaint in order to clarify the exact scope of relief requested under § 502(a)." Singh v. Prudential Health Care Plan, Inc., 335 F.3d 278, 292 (4th Cir. 2003).
Under conflict preemption, "state laws that conflict with federal laws are preempted, and preemption is asserted as `a federal defense to the plaintiff's suit.'" Darcangelo, 292 F.3d at 186-87 (quoting Taylor, 481 U.S. at 63, 107 S.Ct. 1542). Conflict preemption, however, does not authorize removal to federal court. Id. at 187. State laws are superseded under ERISA § 514 if they "relate to" an ERISA plan. Id. (quoting 29 U.S.C. § 1144(a)). According to the Supreme Court, a state law "`relates to' an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983). "`State law' includes all laws, decisions, rules, regulations or other State action having the effect of law, of any State." 29 U.S.C. § 1144(c); see Gresham v. Lumbermen's Mut. Cas. Co., 404 F.3d 253, 258 (4th Cir. 2005). Further, "[t]he Supreme Court has repeatedly emphasized that ERISA's preemptive scope is not limited to `state laws specifically designed to affect employee benefit plans.'" Wilmington Shipping Co. v. New England Life Ins. Co., 496 F.3d 326, 341 (4th Cir. 2007) (quoting Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47-48, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987)). "[A]ny state-law cause of action that duplicates, supplements, or supplants the ERISA civil enforcement remedy conflicts with the clear congressional intent to make the ERISA remedy exclusive and is therefore pre-empted." Aetna, 542 U.S. at 209, 124 S.Ct. 2488. Unlike complete preemption, a state law claim that is conflict preempted under § 514 must be dismissed. See Marks, 322 F.3d at 323.
A threshold question that must be resolved before a determination that ERISA preemption applies in a given case is whether the case involves an "employee benefit plan" as defined by ERISA. House v. Am. United Life Ins. Co., 499 F.3d 443, 448 (5th Cir. 2007); see also Searls v. Sandia Corp., 50 F.Supp.3d 737, 743 n.5 (E.D. Va. 2014). Plaintiff's Complaint does not identify a specific benefit plan governed by ERISA. Defendant contends, and Plaintiff does not dispute, that it is "`overwhelmingly likely' that some of BCBSNC's Members are participants in ERISA-governed plans." (ECF No. 16 at 8 n.4 (quotation omitted).) In addition, Defendant, as part of its Notice of Removal, submitted evidence that at least some of Plaintiff's patients for whom Plaintiff is seeking payment are covered by ERISA plans. (See ECF No. 2 ¶¶ 4-5 (stating that at least 115 members for which Plaintiff submitted claims were covered by 32 group health benefits plans governed by ERISA).) The Court concludes that there is sufficient evidence to satisfy this threshold prerequisite that this action involves a health care plan governed by ERISA.
As earlier stated, at least one of Plaintiff's claims must be completely preempted by ERISA for this Court to have subject matter jurisdiction. Plaintiff alleges in its first claim that BCBSNC owes it for "medically necessary" services provided to BCBSNC members. (See ECF No. 6 at 2, 12.) Defendant argues, among other things, that Plaintiff's claim should be dismissed as conflict preempted, contending that a determination of whether Plaintiff is entitled to payment involves interpretation of the ERISA plans. (See ECF No. 16 at 5 & n.3.) The Court agrees with Defendant that the claim may be conflict preempted; however, dismissal would be improper because the Court concludes that the claim is also completely
For a claim to be completely preempted by ERISA, it must fall within the ambit of § 502(a)'s civil enforcement provision. This provision provides, in relevant part:
A civil action may be brought —
29 U.S.C. § 1132(a). In interpreting § 502(a), the Fourth Circuit has outlined a three-prong test for complete preemption: "(1) the plaintiff must have standing under § 502(a) to pursue its claim"; (2) the claim must come within the scope of an ERISA provision that can be enforced via § 502(a); and "(3) the claim must not be capable of resolution `without an interpretation of the contract governed by federal law,' i.e., an ERISA-governed employee benefit plan."
Here, analysis of the factors leads the Court to conclude that Plaintiff's breach of contract claim is really one for benefits under § 502(a) and is thus completely preempted to the extent it seeks benefits under plans governed by ERISA. As to the first factor, whether Plaintiff has statutory standing, "[h]ealthcare providers... are generally not `participants' or `beneficiaries' under ERISA and thus lack independent standing to sue under ERISA." Gables Ins. Recovery, Inc. v. Blue Cross & Blue Shield of Fla., Inc., 813 F.3d 1333, 1338 (11th Cir. 2015) (quotation omitted), cert. denied, ___ U.S. ___, 137 S.Ct. 296, 196 L.Ed.2d 215 (2016). However, most courts recognize an exception to this general rule: a provider may acquire derivative standing to sue under ERISA if the provider secures a written assignment from a "participant" or "beneficiary" of that individual's right to payment of medical benefits. Id. at 1339; Nat'l Ctrs. for Facial Paralysis, Inc., v. Wal-Mart Claims Admin. Grp. Health Plan, 247 F.Supp.2d 755, 758-59 (D. Md. 2003); see also Brown v. Sikora & Assocs., Inc., 311 Fed.Appx. 568, 570 (4th Cir. 2008) (noting that, "[a]lthough we have never addressed the question of derivative standing for ERISA benefits, our sister circuits have consistently recognized such standing when based on the valid assignment of ERISA health and welfare benefits by participants and beneficiaries" and that "extending derivative standing to health care providers serves to further the explicit purpose of ERISA").
Second, the Court must determine whether Plaintiff's breach of contract claim falls within § 502(a)'s scope. A claim falls within the scope of § 502(a) if it seeks, among other things, the recovery of benefits under an ERISA plan. Marks, 322 F.3d at 323. In determining whether a claim falls within a provider's derivative standing under § 502(a), courts distinguish between a "rate of payment" claim and one of "right to payment." See Brown v. Blue Cross Blue Shield of Tenn., Inc., 827 F.3d 543, 548 (6th Cir. 2016). A claim implicates "rate of payment" if the dispute is over the amount or level of payment under a provider agreement. Id.; see also Lone Star OB/GYN Assocs. v. Aetna Health Inc., 579 F.3d 525, 530-32 (5th Cir. 2009). Such a claim does not fall within § 502(a). Lone Star, 579 F.3d at 532. On the other hand, a claim is one for "right to payment" if it "challenge[s] coverage determinations under ERISA plans," such as what is "medically necessary" or a "covered service," and this type of claim falls within § 502(a). Borrero v. United Healthcare of N.Y., Inc., 610 F.3d 1296, 1304 (11th Cir. 2010); Brown, 827 F.3d at 548.
Plaintiff's breach of contract claim falls squarely within § 502(a). Plaintiff challenges BCBSNC's denial of payment for services it rendered to participants under health care plans issued by BCBSNC. Specifically, Plaintiff argues that BCBSNC denied coverage for the claims based on an erroneous conclusion that the services were not "medically necessary." (See ECF No. 6 at 9-10.) "[Q]uestions of medical necessity," according to Plaintiff, are to be determined by the physician, Dr. Kearney in this case. (ECF No. 20 at 6-7.) Because Plaintiff's breach of contract claim implicates the "right to payment" based on coverage determinations, in that it seeks payment of benefits under ERISA plans, the claim falls within § 502(a). See Conn. State Dental Ass'n, 591 F.3d at 1350-51.
The final inquiry is whether Plaintiff's claim is capable of resolution without interpreting the ERISA plans. The Provider Agreement states that Plaintiff will "render Medically Necessary Covered Services to Members according to [BCBSNC's] Policies and Procedures and according to the terms of this Agreement." (ECF No. 16-1 § 2.1.1.) Under the Provider Agreement, in return for the provision of said services, BCBSNC "will pay and [Plaintiff] agree[s] to accept as payment in full for Covered Services delivered to [its] Members." (Id. § 4.1.) Determining Plaintiff's entitlement to payment depends on whether Plaintiff rendered a service that is "medically necessary" as defined in the Provider Agreement, and whether the service constitutes a "covered service" under the member plan.
For all of these reasons, the Court concludes that to the extent Plaintiff's breach of contract claim involves health care plans governed by ERISA, the claim is completely preempted by § 502(a) and arises under federal law. Thus, the claim must be treated as a federal claim under § 502(a). This Court, therefore, has subject matter jurisdiction based on the presence of a federal question.
Having determined that this Court has subject matter jurisdiction, the Court must examine Defendant's motion to dismiss the remaining claims. Defendant's arguments in support of its motion to dismiss these claims are essentially twofold: first, Defendant contends that the claims should be dismissed for failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(6); and second, Defendant contends that these claims should be dismissed as preempted. (See ECF No. 16 at 8, 14, 18.) Because the Court concludes that the claims must be dismissed without prejudice for failure to state claims for relief, the Court declines to address whether they are subject to dismissal on preemption grounds.
The purpose of a motion made under Rule 12(b)(6) of the Federal Rules of Civil Procedure "is to test the sufficiency of a complaint." Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). 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 Sea-food, 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). A dismissal under Rule 12(b)(6) is appropriate only when the complaint "lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory." Capital Associated Indus., Inc. v. Cooper, 129 F.Supp.3d 281, 300 (M.D.N.C. 2015) (quoting Brown v. Target, Inc., No. ELH-14-00950, 2015 WL 2452617, at *9 (D. Md. May 20, 2015)). In other words, "[t]o survive a 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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)).
In the second claim of the Complaint, Plaintiff seeks alleged interest at the rate of 18% on all amounts due from Defendant under the North Carolina Prompt Pay Act (the "NCPPA"), N.C. Gen. Stat. § 58-3-225. (ECF No. 6 at 12.) The fourth claim in the Complaint is also brought under the NCPPA and seeks an order directing Defendant to provide specific reasons for its denial of Plaintiff's claims. (Id. at 13-14.) Defendant contends, among other things, that the NCPPA does not authorize a private cause of action, and therefore Plaintiff has failed to state a
"In North Carolina, `[g]enerally, a statute allows for a private cause of action only where the legislature has expressly provided a private cause of action within the statute.'" Benjamin v. Sparks, 173 F.Supp.3d 272, 291 (E.D.N.C. 2016) (alteration in original) (quoting Willett v. Chatham Cty. Bd. of Educ., 176 N.C. App. 268, 625 S.E.2d 900, 903 (2006)). Whether a private cause of action can be implied from a statute depends on legislative intent. See Lea v. Grier, 156 N.C. App. 503, 577 S.E.2d 411, 416 (2003). The Fourth Circuit has admonished that "[w]ithout clear and specific evidence of legislative intent, the creation of a private right of action by a federal court abrogates both the prerogatives of the political branches and the obvious authority of states to sculpt the content of state law." Am. Chiropractic Ass'n v. Trigon Healthcare, Inc., 367 F.3d 212, 229 (4th Cir. 2004) (quoting A & E Supply Co. v. Nationwide Mut. Fire Ins. Co., 798 F.2d 669, 674 (4th Cir. 1986)). Thus, "federal courts should be reluctant to read private rights of action into state laws where state courts and state legislatures have not done so." Id.
The NCPPA provides that within 30 days of the submission of a claim by a claimant,
Further, neither party has cited any cases where a court considered a claim under the NCPPA. Nor has this Court found such a case. In addition, of the jurisdictions that permit a private right of action under their version of the prompt pay act, such action is either expressly or implicitly authorized by statute. See, e.g., Tex. Ins. Code Ann. §§ 1301.101, 1301.108; Ala. Code § 27-1-19(a); Miss. Code Ann. § 83-9-5(h)(4), (k); Va. Code Ann. § 38.2-3407.15(E); Nev. Rev. Stat. Ann. § 689A.410(5); see also In re Managed Care Litig., 298 F.Supp.2d 1259, 1299-1300 & n.22 (S.D. Fla. 2003) (dismissing claims brought under the prompt pay statutes of 22 states because the statutes did not provide for a private right of action).
The Court concludes that Plaintiff has failed to allege a cognizable claim under the NCPPA. Accordingly, Plaintiff's second and fourth claims must be dismissed.
Plaintiff, in its third claim, alleges that Defendant, under its contract with Plaintiff, "is obligated to inform Plaintiff of Defendant's members who are entitled to health care benefits under BCBSNC's health insurance policies, and to allow Plaintiff to provide medically necessary drug addiction services to those members." (ECF No. 6 at 13.) Plaintiff therefore contends that it is entitled to an "Order from the Court instructing Defendant to inform its members whether they are entitled to payment for drug addiction services rendered by Plaintiff." (Id.) Defendant seeks dismissal, contending, among other things, that the Provider Agreement does not impose such an obligation on Defendant. (ECF No. 16 at 16.) The Court agrees that this claim must be dismissed.
Taking the Complaint and the Provider Agreement in the most light favorable to Plaintiff, the third claim must be dismissed for failure to state a claim. As Defendant points out, the Provider Agreement states that BCBSNC "agree[s] to provide a mechanism that allows [Plaintiff] to verify Member eligibility before rendering services, based on current information held by [Defendant]. (ECF No. 16-1, § 3.2.3.) This provision does not obligate Defendant to provide any notification to its insureds, and Plaintiff has failed to point to any provision in the Provider Agreement that
Because Plaintiff has failed to allege a basis in the Provider Agreement for imposing an obligation on Defendant to provide notification to its members as to whether they are entitled to payment for drug addiction services rendered by Plaintiff, Plaintiff's third claim must be dismissed for failure to state a claim.
In its fifth claim, Plaintiff alleges that it is entitled to an "Order from the Court requiring Defendant to make such payments to Plaintiff as are within the limits of Defendant's liability for insurance to its insureds, as will permit Plaintiff to meet its financial obligations for the continued provision of treatment to Defendant's insureds for drug addiction." (ECF No. 8 at 3.) Defendant seeks dismissal, contending, among other things, that a mandatory injunction is not a proper cause of action and therefore should be dismissed. (ECF No. 16 at 18.) Again, the Court agrees with Defendant.
It is well settled that a request for injunctive relief is not a cause of action but rather a type of remedy. See Eli Research, Inc. v. United Commc'ns Grp., LLC, 312 F.Supp.2d 748, 764 (M.D.N.C. 2004); Fare Deals, Ltd. v. World Choice Travel.Com, Inc., 180 F.Supp.2d 678, 682 n.1 (D. Md. 2001) ("[A] request for injunctive relief does not constitute an independent cause of action; rather, the injunction is merely the remedy sought for the legal wrongs alleged ... "). Accordingly, the Court dismisses the fifth claim to the extent it is pled as a cause of action.
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). While the Fourth Circuit has held that a completely preempted claim should not be dismissed, the Court may grant Plaintiff leave to properly file the claim under ERISA to clarify the scope of the relief requested.
For the reasons outlined herein, the Court enters the following:
IT IS THEREFORE ORDERED that Defendant's Motion to Dismiss (ECF No. 15) is GRANTED IN PART and DENIED IN PART. To the extent that Plaintiff's first cause of action is completely preempted by ERISA, and thus transformed into a federal claim, Defendant's motion to dismiss
IT IS FURTHER ORDERED that Plaintiff is granted leave to amend the Complaint consistent with this Court's Opinion.
IT IS FURTHER ORDERED that Plaintiff's Motion for Preliminary Injunction (ECF No. 11) is DENIED AS MOOT.
