cmonfils | February 2, 2011
www.healthplanlaw.com
January 31, 2011 •
Under ordinary circumstances, the Court likely would not require a party making a breach of contract claim to identify the contractual terms on which it relies; alleging the nature of the breach would be enough. In this case, however, Regence’s claim is premised not on one or a small number of contracts. Rather, it relies in significant part on a large number of underlying contracts — the subscriber agreements. And, as the Court has indicated, the claim may be preempted in whole or in part, depending on the nature of the alleged breaches of the provider agreement and what underlying subscriber agreements are involved. These factors together require further detail before the Court can conclude whether, and to what extent, Regence has stated a non-preempted claim.
Pa. Chiropractic Ass’n v. BCBS Ass’n, 2011 U.S. Dist. LEXIS 6446 (N.D. Ill. Jan. 21, 2011)
In this litigation between BCBS and a group of health care providers, the defendant BCBS filed a counterclaims seeking alleged overpayments. The alleged overpayments were claimed due under the terms of collateral subscriber agreements.
Defendant The Regence Group has filed a counterclaim against plaintiff Larry Miggins and third party defendant Miggins & Miggins, Inc. (collectively, Miggins) alleging breach of contract and unjust enrichment. Regence’s breach of contract claim is premised, at least on the surface, on a provider agreement that it had with Miggins under which Miggins agreed to provide health care services to patients covered by Regence’s subscriber agreements and to receive payment for those services on specified terms.
Specifically, BCBS alleged that the plaintiff breached its contract by:
■failing to charge and make reasonable attempts to collect coinsurance payments;
■submitting and obtaining claims for reimbursement using incorrect diagnosis codes and modifiers; and
■submitting and obtaining claims for reimbursement for services that were not medically necessary as defined in the provider agreement and that were otherwise not covered under the patients’ subscriber agreements.
Plaintiff Miggins moved to dismiss the counterclaim on the ground that it is preempted by ERISA and because it does not include sufficient detail.
ERISA Preemption
Argument # 1:
Miggins argues that Regence’s claim is preempted by ERISA section 514(a), which provides that ERISA supersedes state laws that “relate to any employee benefit plan.” 29 U.S.C. § 1144(a). State law relates to a benefit plan if is has connection with or reference to such a plan. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47, 107 S. Ct. 1549, 95 L. Ed. 2d 39 (1987). This occurs in [*10] various ways, only one of which is relevant here: if the state law “provides an alternative enforcement mechanism to ERISA.” Trustees of the AFTRA Health Fund v. Biondi, 303 F.3d 765, 774 (7th Cir. 2002). That happens if the benefit plan’s existence is a critical element of a state law claim, such that the state law relies on a direct and unequivocal nexus with an ERISA plan. Id. at 778.
The court agreed that “at least some parts of Regence’s claim are, in fact, preempted by ERISA”, stating that:
Regence relies in part on a contention that Miggins obtained payment on claims that were not covered under patient subscriber agreements. Regence does not disclose whether any of those agreements are ERISA benefit plans, but it is overwhelmingly likely that some or even most of them are. In addition, it is conceivable that other parts of Regence’s claim rely on the terms of one or more ERISA benefit plans.
Lack of Specificity
Argument # 2
Demonstrating that the Twombly standard can trip up plaintiff and defendant alike, the court ruled that the counterclaim failed the specificity requirement. The court observed that:
Even after Bell Atlantic v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007), and its progeny, federal courts follow a notice-pleading regime under which a plaintiff (here, Regence) need provide only enough detail to give the defendant (here, Miggins) fair notice of what the claim is and the grounds on which it rests. See, [*11] e.g., Tamayo v. Blagojevich, 526 F.3d 1074, 1083 (7th Cir. 2008). In complex case, however, a fuller set of factual allegations may be necessary. See, e.g., Limestone Dev. Corp. v. Village of Lemont, 520 F.3d 797, 803 (7th Cir. 2008).
Category: Litigation, Provider Reimbursement |
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