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Templin v. Independence Blue Cross

July 27, 2010

CHRISTOPHER TEMPLIN, ET. AL., PLAINTIFFS,
v.
INDEPENDENCE BLUE CROSS, ET. AL., DEFENDANTS.



The opinion of the court was delivered by: Slomsky, J.

OPINION AND ORDER

I. Introduction

Before the Court are Motions to Dismiss filed by Defendant Carefirst (Doc. No. 18) and by Defendants Independence Blue Cross and QCC Insurance Company (Doc. No. 20). Plaintiffs filed a Complaint on September 9, 2009, (Doc. No. 1), and filed an Amended Complaint on December 2, 2009 (Doc. No. 16, hereinafter "Am. Compl."). Plaintiffs allege claims arising under the Employee Retirement and Security Income Act of 1974 (hereinafter "ERISA") for wrongful denial of benefits and also seek declaratory relief pursuant to 29 U.S.C. 1132(a)(1)(B). (Doc. No. 16, at 11-12).

On December 21, 2009, Defendant Carefirst filed a Motion to Dismiss and Brief in Support of its Motion. (Doc. No. 18). On December 22, 2009, Defendants Independence Blue Cross and QCC Insurance Company (hereinafter "IBC Defendants") filed a seperate Motion to Dismiss and Memorandum of Law. (Doc. No. 20). On January 4, 2010, Plaintiff filed a Response in Opposition to Defendant Carefirst's Motion to Dismiss (Doc. No. 21), and on January 5, 2010 filed a Memorandum in Opposition to IBC Defendants' Motion to Dismiss (Doc. No. 22). Replies were filed on January 14, 2010 by Defendant Carefirst (Doc. No. 23) and IBC Defendants (Doc. No. 24). On March 19, 2010, a hearing was held on the Motions.

The Court will deny Defendants' Motions to Dismiss without prejudice. Plaintiffs, however, have failed to exhaust their administrative remedies as required by ERISA. Accordingly, for the reasons stated below, the Court will stay this case and place it in suspense pending completion of an administrative review of Plaintiffs' claims.

II. Exhaustion of Administrative Remedies

Plaintiffs are individuals and pharmacies who are beneficiaries of or alleged assignees of beneficiaries of a group health insurance policy known as the Personal Choice Health Benefits Plan ("the Plan")*fn1 , issued and administered by IBC Defendants.*fn2 Defendant Carefirst is a Blue Cross and Blue Shield Association affiliate responsible for processing a portion of the benefit claims filed by Plaintiffs.

IBC Defendants and Defendant Carefirst assert Plaintiffs have failed to exhaust their administrative remedies as required by ERISA under 29 U.S.C. § 1132(a)(1)(B). Before a plaintiff may bring a claim under § 1132(a)(1)(B), except in limited circumstances, he or she must "exhaust the remedies available under the plan." Harrow v. Prudential Ins. Co. Of Am., 279 F.3d 244, 249 (3d Cir. 2002). A plaintiff is excused from exhausting administrative remedies under the plan if the plaintiff makes a "clear and positive showing" that it would be futile to do so. Id. In determining whether a plaintiff has demonstrated futility, a court considers the following factors:

(1) whether plaintiff diligently pursued administrative relief;

(2) whether plaintiff acted reasonably in seeking immediate judicial review under the circumstances; (3) existence of a fixed policy denying benefits; (4) failure of the insurance company to comply with its own internal administrative procedures; and (5) testimony of plan administrators that any administrative appeal was futile.

Harrow, 279 F.3d at 250.

Here, Plaintiffs have alleged facts suggesting a fixed policy denying benefits for some claims, in the form of a letter from IBC Defendants' counsel to Plaintiffs' counsel stating that Defendants will not pay any claims submitted by Plaintiff Feldman Pharmacies that involve a shipment of drugs outside the state of Maryland. (Am. Compl., Ex. "D"). Plaintiffs have also alleged facts showing Defendants failed to comply with their own internal administrative procedures for other claims by failing to render a decision on a number of claims. (Am. Compl., Ex. "A"). However, these deficiencies do not apply to all of the disputed claims: of the fifty-one disputed claims identified by Plaintiffs in their Amended Complaint, only thirty-two were submitted by Plaintiff Feldman Pharmacies and over half of the claims received a decision from Defendants in the form of a partial payment. (Id.)

Furthermore, Plaintiffs do not allege any facts showing an attempt on the part of Plaintiffs to avail themselves of the remedies under the Plan. Although Defendants failed to render a decision on certain claims, they did render a decision on a large portion of disputed claims in the form of partial payment of the claim. (Am. Compl., Ex. "A"). These partial payments constitute adverse benefit determinations that Plaintiffs should have challenged through the Plan's appeal process.

Finally, it was not reasonable for Plaintiffs to seek immediate judicial review under the circumstances. Exhibit "A" to Plaintiffs' Amended Complaint lists fifty-one disputed claims. These claims presumably request compensation for a wide variety of products and services and implicate a wide variety of issues requiring interpretation and application of Plan terms. For this Court to perform the first level of review of these claims -- to examine the individual claim forms, identify any individual defects, and interpret and apply Plan terms to each claim -- would contravene the purpose of ERISA and would waste judicial resources. See Zipf v. Amer. Tel. and Tel. Co., 799 F.2d 889, 892 (3d Cir. 1986) ("When a plan participant claims that he or she has unjustly been denied benefits, it ...


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