Case Studies

Epstein Becker Green Obtains Dismissal of ERISA Action Against Health Care Benefits Companies

On March 13, 2012, Epstein Becker Green obtained the dismissal of an action brought by a chiropractic practice group against Aetna Inc. and certain subsidiaries alleging that the defendants breached fiduciary duties imposed by ERISA and tortiously interfered with the practice's patients by not paying for chiropractic treatment they claimed was covered by their patients' employee health benefit plans. Chief Judge Carol Amon of the U.S. District Court in Brooklyn held that although pleaded as such, the breach of fiduciary duty claims were in actuality claims for benefits, and that such claims could be brought only against the benefit plans themselves or the named plan administrator. Since none of the defendants was a plan administrator, but merely rendered "third-party administrator" or claims processing services, they could not be sued under ERISA.

The court also held that if any of the defendants owed any fiduciary duties arising under ERISA, such duties ran to the plans themselves, and plan participants, such as plaintiffs' patients, could not assert such fiduciary breach claims in order to recover any money to cover their own medical expenses.

Lastly, the court held that the plaintiffs' state law claim for interference with the practice's business necessarily included analyzing the patients' claims for benefits, which in turn would involve interpretation of the terms of the benefit plans, and as a result would require examination of rights and obligations created by ERISA. Accordingly, the court held that ERISA preempted the state law claim and the claim was dismissed.

The EBG team representing the defendants was New York Litigation attorneys Kenneth J. Kelly and Diana C. Gomprecht. Staten Island Chiropractic Assoc., PLLC v. Aetna, Inc., 09-CV-2776(CBA) (E.D.N.Y. 3/12/12).

New Jersey Appellate Court Dismisses Suit Against Medical Claims Administrators

Epstein Becker Green recently achieved a significant appellate victory for Horizon Healthcare Services Inc. ("Horizon") and Magellan Health Services Inc. ("Magellan"). On June 11, 2013, the Superior Court of New Jersey, Appellate Division, reversed a decision by the Chancery Division, Essex County, and dismissed a lawsuit brought by the New Jersey Psychological Association ("NJPA") and two patients. The complaint alleged that Horizon and Magellan had breached their agreement under the State Health Benefit Program ("SHBP"), which insures New Jersey workers, and violated the New Jersey Practicing Psychology Licensing Act ("PPLA") by requiring psychologists to disclose confidential patient treatment information before paying for the patients' mental health services.

The NJPA previously sued Horizon and Magellan in the Chancery Division, Mercer County, for violating the SHBP agreement and the PPLA. In January 2011, the Mercer judge dismissed the suit, claiming that the NJPA lacked standing to bring its claims against Horizon and Magellan because it couldn't prove that the association had suffered any harm. The NJPA filed an appeal, but then withdrew it. In July 2011, the NJPA and two patients, who were covered under SHBP plans and claimed that they were denied treatment by Horizon and Magellan because they refused to disclose confidential information, filed a second lawsuit, but, this time, in the Chancery Division, Essex County. The Essex judge declined to dismiss the suit, and Horizon and Magellan appealed.

In its decision, the Appellate Division pointed out that the plaintiffs in the Essex County suit "raise no new issues and present no new material facts that should change the decision made by the Mercer judge." Accordingly, the Appellate Division dismissed the suit, adding that the Essex judge should not have not considered the case and that the two patient-plaintiffs were required to exhaust their administrative remedies under the SHBP before seeking judicial action.

The Epstein Becker Green team included attorneys James P. Flynn and Amy E. Hatcher.

EBG Litigators Defeat Preliminary Injunction Application, Substantially Narrow Discovery, and Ultimately Prevail

Longtime client Magellan Health Services Inc. (“Magellan”) has, once again, looked to Epstein Becker Green litigators for assistance—this time, in an attempt to deflect a significant challenge to a subsidiary’s credentialing program for the reimbursement of diagnostic imaging services.

In an action filed in New Jersey state court against Magellan and its subsidiary, National Imaging Associates, the New Jersey Podiatric Society asserted claims for violations of New Jersey’s unfair insurance claims practices act and unlawful discrimination against the podiatrists in violation of New Jersey’s scope of practice statute. The society also sought preliminary injunctive relief, posing a direct threat to our client’s business operations. If granted, the injunction would have restricted Magellan’s ability during the pendency of the litigation to dictate the necessary qualifications for network providers seeking reimbursement for diagnostic imaging services.

The court denied plaintiff’s application for a preliminary injunction and adopted Epstein Becker Green’s position that plaintiff’s discovery demands should be scaled back substantially. The court ordered discovery to be completed within 60 days and directed that discovery be limited solely to confirming facts that had been already presented by affidavit. After such discovery, on September 19, 2014, the court granted summary judgment in Magellan’s favor.

The litigation team consisted of James P. Flynn and Amy E. Hatcher of the Newark office.