United States District Court, E.D. Pennsylvania
For AMERICAN CHIROPRACTIC ASSOCIATION, ON ITS OWN BEHALF AND IN A REPRESENTATIONAL CAPACITY ON BEHALF OF ITS MEMBERS, Plaintiff: ANTHONY F. MAUL, LEAD ATTORNEY, PRO HAC VICE, The Maul Firm, P.C., Brooklyn, NY; D. BRIAN HUFFORD, LEAD ATTORNEY, PRO HAC VICE, ZUCKERMAN SPAEDER, LLP, NEW YORK, NY; EDITH M. KALLAS, JOE R. WHATLEY, JR., LEAD ATTORNEYS, WHATLEY KALLAS LLC, NEW YORK, NY; JASON COWART, LEAD ATTORNEY, PRO HAC VICE, ZUCKERMAN SPAEDER LLP, NEW YORK, NY; JEFFREY A. LEON, LEAD ATTORNEY, COMPLEX LITIGATION GROUP LLC, HIGHLAND PARK, IL; STEVEN A. SCHWARTZ, LEAD ATTORNEY, CATHERINE PRATSINAKIS, CHIMICLES & TIKELLIS LLP, HAVERFORD, PA.
For STEVEN G. CLARKE, D.C., INDIVIDUALLY, AND ON BEHALF OF ALL OTHER SIMILARLY SITUATED DOCTORS OF CHIROPRACTIC, CAROL A. LIETZ, INDIVIDUALLY, AND ON BEHALF OF ALL OTHER SIMILARLY SITUATED HEALTH, Plaintiffs: EDITH M. KALLAS, JOE R. WHATLEY, JR., LEAD ATTORNEYS, WHATLEY KALLAS LLC, NEW YORK, NY; JASON COWART, LEAD ATTORNEY, PRO HAC VICE, ZUCKERMAN SPAEDER LLP, NEW YORK, NY; JEFFREY A. LEON, LEAD ATTORNEY, COMPLEX LITIGATION GROUP LLC, HIGHLAND PARK, IL; STEVEN A. SCHWARTZ, LEAD ATTORNEY, CATHERINE PRATSINAKIS, CHIMICLES & TIKELLIS LLP, HAVERFORD, PA; D. BRIAN HUFFORD, PRO HAC VICE, ZUCKERMAN SPAEDER, LLP, NEW YORK, NY.
For AMERICAN SPECIALTY HEALTH INCORPORATED, AMERICAN SPECIALITY HEALTH NETWORKS, INC, Defendants: ANDREW Z. EDELSTEIN, ELIZABETH MANN, LEAD ATTORNEYS, MAYER BROWN LLP, LOS ANGELES, CA; MICHAEL P. DALY, LEAD ATTORNEY, RICHARD M. HAGGERTY, JR., DRINKER BIDDLE & REATH LLP, PHILADELPHIA, PA.
For CONNECTICUT GENERAL LIFE INSURANCE COMPANY, CIGNA CORPORATION, Defendants: FRANCINE FRIEDMAN GRIESING, KATHRYN G. LEGGE, LEAD ATTORNEYS, GRIESING LAW LLC, PHILADELPHIA, PA; JOSHUA B. SIMON, KATHERINE L. MCDANIEL, RYAN D. MCENROE, WARREN HASKEL, WILLIAM H. PRATT, LEAD ATTORNEYS, PRO HAC VICE, KIRKLAND & ELLIS LLP, NEW YORK, NY.
NITZA I. QUIÑ ONES ALEJANDRO, J.
Before the Court are motions to dismiss filed by Defendants American Specialty Health Inc., American Specialty Health Networks, Inc., CIGNA Corporation and Connecticut General Life Insurance Company  (collectively, " Defendants" ), pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), which seek the dismissal of claims asserted against them under the Employee Retirement Income Security Act (" ERISA" ), 29 U.S.C.A. § 1132(a)(1)(B), based on a lack of standing, failure to administratively exhaust claims, and/or failure to state a claim upon which relief can be granted. [ECF 41 and 43]. Plaintiffs American Chiropractic Association (" ACA" ), on its own behalf and on behalf of its members, Steven G. Clarke, D.C., on his own behalf and on behalf of a proposed class of all similarly situated Doctors of Chiropractic, and Carol A. Lietz, on her own behalf and a proposed class of all similarly situated health insurance subscribers, (collectively, " Plaintiffs" ) have opposed the motions. [ECF 51]. Thus, the matter is ripe for consideration.
For the reasons stated herein, Defendants' motions to dismiss are granted.
For the purpose of ruling on Defendants' motions to dismiss, this Court accepts, as true, the factual allegations contained in Plaintiffs' complaint. However, because this Court's decision is limited to the issues of standing and exhaustion, only those facts relevant to these particular issues are summarized.
Plaintiff Carol A. Lietz's Claims
Lietz is a subscriber to an employer healthcare plan offered by her private employer and administered by CIGNA (" Plan" ). (Comp. ¶ 15). In turn, CIGNA retained ASHN to administer the chiropractic
benefits for its insureds, including Lietz. ( Id. at ¶ 7).
Under the Plan, Lietz sets aside funds in a Health Savings Account (" HSA" ) to cover out-of-pocket medical costs, including deductibles and co-payments. Any unused balance in the HSA is rolled over for the next calendar year's expenses. ( See Plan at p. 62).
Relevant to this discussion, the Plan defines " Covered Health Services" as follows:
Benefits for Covered Health Services depend on the type of expense and the option you elect. In all cases, benefits are based on reasonable and customary charges and medical necessity as determined by the option you elect. In-network expenses are based on the rate negotiated by the Claims Administrator with the medical provider.
( Id. at p. 175). The Plan also defines " Eligible Expenses for Covered Health Services" (a) for in-network (" INET" ) services as " the contracted fee(s) with that provider," and (b) for out-of-network (" ONET" ) services as " the negotiated rates agreed to by the non-Network provider and either the Claims Administrator or one of its vendors, affiliates or subcontractors." ( Id. at p. 177).
In March 2012, Lietz received chiropractic services from her CIGNA INET provider, Dr. Inchiostro. (Comp. ¶ 32). Thereafter, Dr. Inchiostro submitted a claim for reimbursement of five separate services rendered to ASHN on behalf of Lietz in the amount of $160.00. ( Id. ). On June 12, 2012, Dr. Inchiostro received a remittance from ASHN in the amount of $88.00 as the " total amount allowed" under the INET fee schedule. ( Id. ).
As required, CIGNA sent Lietz an Explanation of Benefits (" EOB" ) statement which indicated that the " amount billed" for the chiropractic services rendered by Dr. Inchiostro was $127.28. ( Id. at ¶ 34). The statement also indicated that the $127.28 amount applied against her deductible and was paid from her HSA. ( Id. ). In her complaint, Lietz disputes the payment and corresponding deduction from her HSA, and argues that each amount deducted should have been limited to the actual monetary compensation Dr. Inchiostro received for his services, i.e., $88.00.
After Lietz raised an issue with her provider regarding the charges made ( Id. at ¶ 36), on September 18, 2012, Dr. Inchiostro emailed ASHN and inquired:
I am having our patients Health Reimbursement Account money being pulled out of their accounts by Cigna, sent to ASHN and then a lessor amount being sent to us by ASHN. When I called ASHN to inquire where the extra HRA funds were, I was told that ASHN and Cigna have a different fee schedule than ASHN and us, the provider's office, do. Which would lead me to believe that ASHN pockets this extra money that is above our fee schedule arrangement with them. The customer service rep I spoke with at ASHN (ref# 8241047) told me to look at our contract with you and it should specify this in there. Well, I've looked through the whole thing and have not come across anything that explains why my patient's HRA money is being kept by ASHN instead of paying for qualified medical expenses. Could you please explain this to me in writing or link me to the place in our contact with you that is supposed to explain this, as the customer service rep stated. I
would appreciate a prompt response to this matter as I and the patient are wondering where their HRA funds are ending up!
( Id. at ¶ 37).
ASHN responded the next day by email:
Thank you for your inquiry. I do apologize if the office was advised to check in contractual agreement for information that are not pertinent to the office. The contractual agreement between the office and ASH is: the office will be reimbursed at the fee schedule amount allowed by the Payor Summary, available under attachment G, section 2.0. Any other agreement between ASH and Cigna is confidential and will not be available in any written agreement between the doctor and ASH. If the member has any questions on how the HRA account is used, please refer the member to the Cigna Member service department.
( Id. at ¶ 38).
Notably, the complaint is silent as to whether Lietz or Dr. Inchiostro ever contacted CIGNA or followed up in any way.
The gravamen of Lietz's complaint is that the EOB statements CIGNA issued reflected an " amount billed" as the negotiated fee rate established under CIGNA's agreement with the provider, ASHN. This negotiated rate differed substantially from the negotiated (lower) rate established under ASHN's agreement with the actual provider/chiropractor, which is the rate that was ultimately paid for the services rendered yet billed to the consumer at the CIGNA/ASHN rate. ( Id. at ¶ ¶ 32-44). Lietz further contends that under the CIGNA/ASHN fee agreement, CIGNA treated ASHN as a provider and issued EOBs with her out-of-pocket obligation calculated based on the CIGNA/ASHN fee schedule agreement, to ...