United States District Court, E.D. Pennsylvania
HOWARD BLOOM, D.C. and WEATHER VANE CHIROPRACTIC, P.C., Plaintiffs,
INDEPENDENCE BLUE CROSS et al., Defendants
HOWARD BLOOM, D.C., WEATHER VANE CHIROPRACTIC, P.C.,
Plaintiffs: THOMAS S. MCNAMARA, LEAD ATTORNEY, INDIK &
MCNAMARA, PHILADELPHIA, PA.
INDEPENDENCE BLUE CROSS, INC., QCC INSURANCE COMPANY,
KEYSTONE HEALTH PLAN EAST, INC., AMERIHEALTH HMO, INC.,
Defendants: OLIVIA CLEAVER, CONNELL FOLEY LLP, CHERRY HILL,
Austin McHugh, United States District Judge.
case involves the broad but sometimes hard to define scope of
jurisdiction under the Employee Retirement Income Security
Act of 1974, 29 U.S.C. § 1001, et seq. ("
ERISA" ). The central question: is this case a simple
payment dispute, unworthy of federal jurisdiction, or are
Plaintiffs, even though they are providers, properly raising
an issue as to the scope of patients' coverage, giving
rise to interests protected by ERISA?
are Dr. Howard Bloom, a chiropractor, and his practice,
Weather Vane Chiropractic, P.C. Defendants are insurance
providers, Independence Blue Cross, Inc. (" IBC" ),
QCC Insurance Company, Keystone Health Plan East, Inc., and
AmeriHealth HMO, Inc. From May 2005 until October 2013, Dr.
Bloom was a participating provider in Defendants' network
of health care providers. Together, Defendants and Dr. Bloom,
as an in-network provider, offered medical services to plan
beneficiaries under the terms of their health care plans
(" IBC Plans" ). During the course of his business
relationship with Defendants, Dr. Bloom's individual
rights and duties as an in-network provider were separately
governed by a Professional Provider Agreement ("
Provider Agreement" ).
assert that IBC rescinded coverage for certain medical
procedures, after allegedly covering those same services for
years, and have brought suit to enforce what they contend are
their individual and derivative rights under the relevant IBC
plans governed by ERISA. Specifically, Plaintiffs allege that
Defendants' retroactive denial of covered benefits
amounted to an " Adverse Benefits Determination"
under ERISA, triggering the notice and appeal process
afforded to plan beneficiaries by the statute. In addition,
Plaintiffs directly bring supplemental state law claims,
including breach of the Provider Agreement, fraud, negligent
misrepresentation, and malicious prosecution. Defendants have
moved to dismiss the entirety of Plaintiffs' First
Amended Complaint, arguing Plaintiffs fail to state plausible
ERISA claims, depriving this Court of subject matter
jurisdiction. Because I am persuaded that Plaintiffs allege
an ERISA coverage dispute under the IBC Plans via a valid
assignment of rights from the plan participants, as opposed
to a simple payment dispute under the Provider Agreement,
Defendants' Motion to Dismiss will be denied.
Relevant Facts Alleged in Plaintiffs' First Amended
First Amended Complaint includes various details of the
dispute that are not essential to resolving the instant
Motion to Dismiss. In the description of the facts below, I
focus only on those allegations that are particularly
relevant to the current Motion.
Howard Bloom is a licensed chiropractor in Pennsylvania who
conducts his professional practice through Plaintiff Weather
Vane Chiropractic, P.C. (" Weather Vane" ). First
Amended Complaint ¶ 15. Including its subsidiaries,
Plaintiff identifies Defendant IBC as the leading health
insurer in southeastern Pennsylvania, administering health
insurance benefits of more than 2.2 million Pennsylvanians.
Id. at ¶ 21.
Pursuant to the terms of the applicable IBC Plans, IBC is
required to provide IBC Plan Beneficiaries with payment or
reimbursement for specified covered health care services
('Covered Services')." Id. at ¶
22. " IBC Plan Beneficiaries" include direct plan
participants, as well as their eligible spouses and children.
Id. at ¶ 5. In order to receive the full extent
of benefits under the IBC Plans, beneficiaries are often
required to obtain Covered Services by utilizing "
in-network" or " participating providers,"
since those providers have contractually agreed to
participate in the applicable IBC plan and to render care on
a fixed fee basis, as separately regulated by individual
" provider agreements." Id. at ¶ 22.
Stated differently, the IBC Plans control what services are
considered " Covered Services" for beneficiaries,
while provider agreements dictate the rights and
responsibilities of the provider in performing those
services. Of greatest significance here, the Provider
Agreement at issue, which sets fees, does not in any way
purport to control what medical services are eligible for
coverage under the relevant IBC plans.
2005, Dr. Bloom signed a Professional Provider Agreement with
Defendants QCC, Keystone, and AmeriHealth (together, "
Independence" ). Id. at ¶ 37. The purpose
of the Agreement is readily apparent on the first page:
" Independence and [Dr. Bloom] mutually desire to enter
into this Agreement whereby [Dr. Bloom] shall render Covered
Services to Beneficiaries of the various Benefit Programs and
shall be compensated by Independence therefor, as more
explicitly described hereafter." Memorandum of Law In
Support of Defendants' Motion to Dismiss, Exhibit A at 1.
" Covered Services" are defined in the Provider
Agreement as " Medically Necessary health care services
and supplies that are to be provided by [Dr. Bloom] to
Beneficiaries for which a Beneficiary has coverage pursuant
to the applicable Benefit Program or Benefit Program
Agreement." Id. at ¶ 1.10.
at Dr. Bloom's practice, Weather Vane, ordinarily signed
a standard " Financial Policy" form, which included
the following assignment clause: " THIS IS A DIRECT
ASSIGNMENT OF MY RIGHTS AND BENEFITS UNDER THIS POLICY."
First Amended Complaint at ¶ 122. Weather Vane's
services included massage therapy provided by licensed
massage therapists, known as " Delegated Adjunctive
Therapeutic Massage Procedures" (" DATMP" ).
Id. Weather Vane provided DATMP to patients "
for more than five years prior to 2006." Id. at
¶ 47. During the pre-2006 time period, Defendants
considered DATMP to qualify as a Covered Service under the
relevant IBC plans and paid Dr. Bloom directly for those
2006, IBC issued a billing guide supplement that informed
participating providers that IBC would cover massage, but
would not cover any services performed by a massage
therapist. Id. at ¶ ¶ 49-51. The guide
provided: " Note: IBC does not provide reimbursement for
services that are performed by a massage therapist. This
applies to independently practicing massage therapists as
well as those who are employed and supervised by an eligible
health care professional." Id. at ¶ 51.
Bloom alleges the note " was not incorporated or
referenced in the Provider Agreement or, on information and
belief, in the plan documents of IBC Plan
Beneficiaries." Id. at ¶ 53. Accordingly,
Dr. Bloom submits that the billing note did not, and could
not, preclude reimbursement for DATMP. Id. at ¶
54. Moreover, Dr. Bloom alleges that despite the billing
note, IBC continued to pay for DATMP services provided to
beneficiaries who were covered for such procedures under
their applicable IBC plans. Id. at ¶ 55.
IBC reversed course in 2007 and demanded reimbursement for
" overpayments" made to Dr. Bloom and other
Pennsylvania chiropractors by Keystone for massage services
provided to their insureds from 2006 to 2007, claiming those
massage procedures were not Covered Services under the
applicable Keystone plans. Id. at ¶ 56. After
receiving pushback regarding the legality of the overpayment
notices from the Pennsylvania Chiropractic Association and
numerous individual chiropractors--specifically whether the
procedures were Covered Services under the plans and whether
IBC had the legal right to recover payments
retroactively--IBC suspended its recollection efforts.
Id. at ¶ 57. IBC resumed its recollection
efforts in December 2008. Id. at ¶ 58. Dr.
Bloom initially entered an agreement to repay IBC in
installments, subject to a reservation of his rights to
recover those repayments, but he ceased payments when he
learned of a lawsuit challenging IBC's right to recover
under the circumstances. Id. at ¶ ¶ 59-60.
alleged attempt to discourage other chiropractors from
delegating activities to unlicensed support personnel, IBC
decided to refer accusations of insurance fraud against Dr.
Bloom to the state Attorney General in or around 2009.
Id. at ¶ ¶ 62-65. Nonetheless, IBC
continued to pay for massage services reported by Weather
Vane from 2008 until Dr. Bloom's arrest in 2011.
Id. at ¶ 66.
issued a Medical Policy Bulletin effective June 18, 2008,
which included a provision that specified IBC " does not
provide reimbursement for services that are performed by
someone other than an eligible health care provider .... This
includes massage therapists." Id. at ¶ 68.
Subsequent 2009 and 2011 Bulletins contain the same or
similar provisions. Id. at ¶ ¶ 70-71.
However, despite these bulletins, Dr. Bloom contends that IBC
has in fact continued to reimburse providers for services
that the provider delegates to subordinates, such as physical
therapists who delegate to assistants. Id. at ¶
January 4, 2013, Dr. Bloom was acquitted of all criminal
charges. Id. at ¶ 91. Three days later, on
January 7, 2013, IBC informed Dr. Bloom that IBC would
require pre-payment review of all of his claims, requiring
Plaintiffs to attach supporting medical records for every
patient's claim(s). Id. at ¶ 93. By letter
dated April 4, 2013, IBC advised Dr. Bloom of its intent to
terminate his Provider Agreement unless he " cured"
various alleged breaches within 30 days. Id. at
¶ 97. The April 4, 2013 letter further advised Dr. Bloom
that in order to " cure" the alleged breaches, he
would be required to repay $352,948 in overpayments,
primarily for services rendered by massage therapists.
Id. at ¶ 98. IBC subsequently began to
unilaterally offset claims due to Dr. Bloom against the
$352,948 in alleged overpayments. Id. at ¶
IBC's request, Dr. Bloom submitted a Certificate of
Compliance to IBC in May 2013. Id. at ¶ 101.
Dr. Bloom alleges that up to 2013, IBC repeatedly confirmed
that patients could receive coverage for DATMP performed by a
massage therapist when Weather Vane employees would call IBC
for pre-certification and confirmation of coverage.
Id. at ¶ 102-106. By letter dated September 26,
2013, IBC informed Dr. Bloom that he had not cured the
various material breaches of his Provider Agreement, and, as
a result, his Provider Agreement would be terminated
effective October 23, 2013. Id. at ¶ 107.
their First Amended Complaint, Plaintiffs bring ten claims
against Defendants challenging their conduct. The first four
counts arise under the federal Employee Retirement Income
Security Act (" ERISA" ). The remaining counts
allege violations of state law.
first count alleges Defendants violated ERISA based on the
terms of the IBC ERISA Plans, claiming that Defendants'
denial of benefits and efforts to retroactively rescind
coverage through the recoup of payments constituted Adverse
Benefits Determinations. Accordingly, Plaintiffs contend that
Defendants failed to comply with ERISA's statutory notice
and appeal requirements in violation of federal law.
second count alleges that ERISA entitled them to a review of
claims denials, and further that Defendants did not provide
Plaintiffs with the review. Plaintiffs claim that
Defendants' failure to provide the required process
entitles them to injunctive and declaratory relief as well as
Three of Plaintiffs' First Amended Complaint seeks
clarification of " Plaintiffs' rights to future
benefits under the terms of IBC ERISA Plans."
Id. at ¶ 178. Specifically, Plaintiffs request
a declaratory judgment establishing they are entitled to
direct payments from IBC for DATMP.
Four asks the Court for an injunction to prevent Defendants
from denying claims for DATMP in the future.
fifth count alleges a state law breach of contract claim.
Specifically, Plaintiffs assert IBC violated the Provider
Agreement between Dr. Bloom and IBC.
Six asserts a claim of promissory estoppel against
Defendants. According to Plaintiffs, Defendants repeatedly
confirmed to Plaintiffs' employees that patients could
receive " therapeutic massage when performed by a
licensed massage therapist." Id. at ¶ 194.
Plaintiffs acted on those confirmations and provided the
service, and ...