Neurological Surgery, P.C. v. Aetna Health Inc.

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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NEUROLOGICAL SURGERY, P.C.,

Plaintiff, MEMORANDUM AND ORDER

- against - 2:19-cv-4817 (DRH) (ARL)

AETNA HEALTH INC. and AETNA HEALTH

INSURANCE COMPANY OF NEW YORK,

Defendants.

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APPEARANCES

GARFUNKEL WILD, P.C.

Attorneys for Plaintiff

111 Great Neck Road

Great Neck, NY 11021

By: Roy W. Breitenbach, Esq.

Colleen M. Tarpey, Esq.

Marc A. Sittenreich, Esq.

FOX ROTHSCHILD LLP

Attorneys for Defendants

10 Sentry Parkway, Suite 200

P.O. Box 3001

Blue Bell, PA 19422

By: Jordann R. Conaboy, Esq.

ELLIOT GREENLEAF P.C.

Attorneys for Defendants

925 Harvest Drive, Suite 300

Blue Bell, PA 19422

By: Gregory R. Voshell, Esq.

HURLEY, Senior District Judge:

INTRODUCTION

Plaintiff Neurological Surgery P.C. (“Plaintiff”) brought this action against

Defendants Aetna Health Inc. and Aetna Health Insurance Company of New York

(collectively “Aetna” or “Defendants”) seeking payment, pursuant to the Employee

Retirement Income Security Act (“ERISA”) and New York state law, for 200 medical

claims for services performed on Aetna health plan members1 alleging that Aetna has

either underpaid or denied full payment on these claims. The claims2 arise from

medically necessary, complex procedures occurring over a four-year span (2012–2016)

and implicating 145 different Aetna health plans. Presently before the Court is

Aetna’s motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). [DE

21]. For the reasons set forth below, Aetna’s motion is granted in part and denied in

part.

BACKGROUND

I. Factual Background

Plaintiff is the largest private neurosurgery practice on Long Island and in the

New York tri-state area. (Compl. ¶ 1). As a healthcare provider, Plaintiff treats

patients with “complex, often emergent, neurological conditions requiring

neurosurgical procedures and treatment.” (Id. ¶ 15). These patients often have

health insurance coverage with, or are members of, group health plans sponsored or

administered by Aetna. (Id. ¶ 17).

Aetna is a health insurance company that creates “provider networks”: a group

of providers whom Aetna reimburses at pre-determined, contractual rates for services

performed for Aetna members. (Id. ¶ 5). A provider in a “provider network” is “in-

1 The term “members” refers to individuals covered by fully-insured and self-

funded Aetna health plans, including any such members, subscribers, or

beneficiaries. (See Compl. ¶¶ 1, 19, 46).

2 For the purposes of this Memorandum and Order, the term “claim” is not used

synonymously with “cause of action,” unless used in that manner in a quotation.

network”; otherwise, a provider is “out-of-network.” (Id. ¶¶ 5–6). Aetna members

may obtain treatment from out-of-network providers. (Id. ¶¶ 7, 19). When they do,

however, Aetna reimburses at “the usual, customary, and reasonable charges for the

services rendered, less any co-payment, co-insurance, member out-of-pocket, or

deductible amounts” – the “UCR Rate.” (Id. ¶¶ 8, 20). The precise reimbursement

methodology is set out in each member’s plan. (Id. ¶ 20).

Plaintiff is out-of-network with Aetna. (Id. ¶¶ 9, 23). Before Plaintiff performs

medically necessary, complex procedures for Aetna members, the members authorize

and assign Plaintiff their rights to receive payment directly from Aetna. (Id.). They

do so, for example, by executing “assignment of benefits” forms. (Id. ¶ 24). With

these authorizations and assignments, Plaintiff “engage[s Aetna] in communications

or discussions” in order to open a “claim” for reimbursement at the rates in each Aetna

member-patient’s “applicable health plan.” (Id. ¶¶ 25, 29, 31–33, 40). Aetna has

allegedly failed to pay or, after delay, underpaid on 200 claims between 2012 and

2016. (Id. ¶¶ 37–39; see, e.g., id. ¶¶ 44–2365). Plaintiff’s attempts to collect any

outstanding amounts fell “on deaf ears” and yielded “vague letters and promises of

proper payment at some uncertain point in the future.” (Id. ¶¶ 40–41).

The Complaint sets out the details of each claim in the following pattern: (i) the

Aetna member’s initials; (ii) the date of service; (iii) whether the services were

emergency or elective, (iv) the nature of the services (i.e., the diagnosis and

procedure, generally); (v) the date on which the member assigned to Plaintiff all

rights to receive reimbursement from Aetna for the services provided; (vi) the date on

which Plaintiff first billed Aetna, and the amount of the bill; (vii) the dates on which

Plaintiff “communicated” with Aetna, if any; (viii) whether or not Aetna reimbursed

Plaintiff, and the amount of reimbursement, if any; (ix) “the reimbursement

methodology that Aetna should have applied in accordance with the terms of the

applicable plan”; and (x) the dates and outcome of “additional, written appeals” to

Aetna seeking further reimbursement, if any. (Compl. ¶¶ 44–2365; see Pl. Opp. at 4

[DE 23]). The abundance of details prevents the Court from reciting the particulars

succinctly in the body of this Order, though they are important for the analysis below.

Instead, the spreadsheet at Appendix A lays out each claim’s pertinent facts.3

A few observations about the claims are worthy of note. Though Aetna

members assigned their reimbursement rights for 198 of the 200 claims, Plaintiff does

not reveal the terms of each assignment or attach the assignment contracts

themselves. (Compl. ¶¶ 401–09, 491–503 (failing to allege assignment)). Plaintiff

identifies a reimbursement methodology for most—but not all—of the claims.

(Compare id. ¶¶ 53, 65, 77 (detailed methodologies), with id. ¶¶ 390–400, 401–09 (no

methodology given)). A claim’s reimbursement methodology is the only instance

where Plaintiff relays the terms of the health plan at issue on that claim. While

Plaintiff styles its communications with Aetna as “appeals . . . for additional payment”

in which Aetna “[r]ecogniz[ed] [Plaintiff’s] status as an assigned beneficiary,”

Plaintiff never specifies the context and content of these “numerous” communications.

3 As they have minimal bearing on the Court’s analysis, Appendix A does not

devote columns to the information in (iii), (iv), and (v).

(E.g., id. ¶¶ 51, 63). Plaintiff likewise omits the context and content of its “additional,

written appeal[s].” (E.g., id. ¶¶ 102, 114).

II. Procedural Background

Plaintiff originated this action in late July 2019 in Nassau County Supreme

Court of the State of New York.4 (Notice of Removal at 1 [DE 1]). Defendants

removed this action to federal court on August 22, 2019. (Id.). Plaintiff filed its

Complaint on August 30, 2019. [DE 5]. Plaintiff brings eight causes of action:

(1) recovery of benefits due under an employee benefit plan, enforcement rights under

the plan, and clarification of rights and future benefits under the plan, pursuant to

ERISA, 29 U.S.C. § 1132; (2) an award of reasonable attorneys’ fees and costs

pursuant to ERISA, 29 U.S.C. § 1132(g)(1); (3) breach of contract; (4) breach of

implied-in-fact contract; (5) unjust enrichment; (6) tortious interference with

contract; (7) violation of the New York Prompt Pay Law, N.Y. Ins. Law § 3224-a; and

(8) breach of third-party beneficiary contract. (Compl. ¶¶ 2366–432). The first two,

as ERISA-based causes of action, are governed by federal law; the rest are governed

by New York state law.

4 Defendants allege Plaintiff’s present suit is the third time it brings an action

“over the same subject matter.” (Def. Mem. at 3). The first was Neurological Surgery,

P.C. v. Aetna Health Inc., No. 16-4524 (E.D.N.Y. 2016), voluntarily dismissed without

prejudice via notice pursuant to a Federal Rule of Civil Procedure 41(a)(1)(A)(i). That

action was commenced in state court via a summons with notice and then removed.

No complaint was filed in that matter. The second was Neurological Surgery, P.C. v.

Aetna Health Inc., No. 18-2167 (E.D.N.Y. 2018), voluntarily dismissed without

prejudice via stipulation pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(ii).

Its docket includes the complaint at Exhibit D to the Notice of Removal.

Defendants moved to dismiss on December 6, 2019 on nine grounds. First,

several claims trigger ERISA preemption, requiring dismissal of those claims’ state

law causes of action. (Def. Mem. at 9–12 [DE 21-2]). Second, Plaintiff failed to

exhaust administrative remedies for its ERISA-governed claims. (Id. at 12–17).

Third, many ERISA-governed claims involve health plans with anti-assignment

provisions and/or expired limitations periods, depriving Plaintiff of standing and

rendering the action as to those claims untimely. (Id. at 18–25). The fourth through

ninth grounds address the merits of Plaintiff’s state law causes of action. (Id. at 25–

34).

Plaintiff opposes. First, ERISA does not preempt any claims partially-paid by

Aetna. (Pl. Opp. at 6–8). Second, a valid anti-assignment provision or time limitation

bars ERISA from preempting state law causes of action. (Id. at 9–14). Third,

exhaustion of administrative remedies is an affirmative defense and not required in

Plaintiff’s pleading, and any further measures would have been futile regardless. (Id.

at 14–18). Fourth, dismissal is premature where discovery may show that Defendant

failed to notify Plaintiff and Aetna members of a time limitation to file suit. (Id. at

18–21). Fifth, Aetna waived its anti-assignment and time limitation by accepting

claims from, and paying, Plaintiff. (Id. at 21–22). Plaintiff further argues that the

Complaint adequately pleads its state law causes of action. (Id. at 23–35).

Plaintiff concludes by requesting leave to amend its Complaint should the

Court agree with Defendants. (Pl. Opp. at 35). Defendants ask this Court to deny

leave due to Plaintiff’s repeatedly-filed “substantively-identical complaints.” (Def.

Reply at 15 [DE 24]; see supra note 4).

DISCUSSION

The legal analysis will occur in the following order: In Section I, the Court

identifies the legal standards. In Section II, the Court determines whether it can

consider the health plan exhibits, and highlights certain plans that are inconclusively

labeled (see Appendix B) or mislabeled (see Appendix C) with respect to whether

ERISA applies. In Section III, the non-ERISA claims are analyzed. (See Appendix

D). In Section IV, the Court addresses the unassigned ERISA claims. (See Appendix

E). In Section V, the various anti-assignment provisions in the ERISA plans are

interpreted. (See Appendix F). In Section VI, the ERISA preemption analysis is

performed. (See Appendix G). In Section VII, the Court determines whether Plaintiff

exhausted administrative remedies before bringing suit. (See Appendix G). In

Section VIII, the Court concludes with Plaintiff’s request for leave to amend the

Complaint.

I. Legal Standards

A. Rule 12(b)(6) Motion to Dismiss Standard

In deciding a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6),

a court should “draw all reasonable inferences in Plaintiff[’s] favor, assume all well-

pleaded factual allegations to be true, and determine whether they plausibly give rise

to an entitlement to relief.” Faber v. Metro. Life Ins. Co., 648 F.3d 98, 104 (2d Cir.

2011) (internal quotation marks omitted). The plausibility standard is guided by two

principles. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v.

Twombly, 550 U.S. 544 (2007)); accord Harris v. Mills, 572 F.3d 66, 71–72 (2d Cir.

2009).

First, the principle that a court must accept all allegations as true is

inapplicable to legal conclusions. Thus, “threadbare recitals of the elements of a

cause of action supported by mere conclusory statements, do not suffice.” Iqbal, 556

U.S. at 678. Although “legal conclusions can provide the framework of a complaint,

they must be supported by factual allegations.” Id. at 679. A plaintiff must provide

facts sufficient to allow each named defendant to have a fair understanding of what

the plaintiff is complaining about and to know whether there is a legal basis for

recovery. See Twombly, 550 U.S. at 555.

Second, only complaints that state a “plausible claim for relief” can survive a

motion to dismiss. Iqbal, 556 U.S. at 679. “A claim has facial plausibility when the

plaintiff pleads factual content that allows the court to draw the reasonable inference

that the defendant is liable for the misconduct alleged. The plausibility standard is

not akin to a ‘probability requirement,’ but asks for more than a sheer possibility that

defendant acted unlawfully. Where a complaint pleads facts that are ‘merely

consistent with’ a defendant's liability, it ‘stops short of the line’ between possibility

and plausibility of ‘entitlement to relief.’” Id. at 678 (quoting Twombly, 550 U.S. at

556-57) (internal citations omitted); see In re Elevator Antitrust Litig., 502 F.3d 47,

50 (2d Cir. 2007). Determining whether a complaint plausibly states a claim for relief

is “a context specific task that requires the reviewing court to draw on its judicial

experience and common sense.” Iqbal, 556 U.S. at 679; accord Harris, 572 F.3d at 72.

B. Materials Considered on a Rule 12(b)(6) Motion to Dismiss

In considering a motion to dismiss pursuant to Rule 12(b)(6), a court is

generally limited to the complaint and documents attached thereto. See Fed. R. Civ.

P. 12(d); Nakahata v. N.Y.-Presbyterian Healthcare Sys., Inc., 723 F.3d 192, 202 (2d

Cir. 2013). A court “‘may also consider matters of which judicial notice may be

taken.’” Apotex Inc. v. Acorda Therapeutics, Inc. 823 F.3d 51, 60 (2d Cir. 2016)

(quoting Staehr v. Hartford Fin. Servs. Grp., Inc., 547 F.3d 406, 425 (2d Cir. 2008));

see Bristol v. Nassau County, 2016 WL 2760339 (E.D.N.Y. May 12, 2016) (“On a

motion to dismiss, consideration is limited to the factual allegations in plaintiff's

amended complaint, which are accepted as true, to documents attached to the

complaint as an exhibit or incorporated in it by reference, to matters of which judicial

notice may be taken, or to documents either in plaintiff's possession or of which

plaintiff had knowledge and relied on in bringing suit.” (internal quotation marks

omitted)).

II. The Health Plan Exhibits

Absent from the Complaint is any method to decipher which, and how many,

claims involve ERISA-governed employee benefit plans – beyond the allegation that

“[s]ome,” indeed, do. (Compl. ¶ 2367). Defendants attach every health plan—145 in

total—implicated by the claims in the Complaint.5 (See Exs. 1–145, Aff. of Elizabeth

Petrozelli (“Petrozelli Aff.”) [DE 21-4];6 see also Appendix A to this Order).

Defendants’ Exhibit A to their Opening brief lists whether a plan is governed by

ERISA or not. There is no explanation for Defendants’ ERISA or non-ERISA label,

but Plaintiff’s submissions thus far do not dispute their accuracy. (See Pl. Opp. at 5

n.1, 9–10).

A. Consideration of the Health Plans

At the outset, the Court must determine whether it can consider these exhibits

on the motion to dismiss. Plaintiff does not contest the Court’s consideration of the

health plans. And Defendants state they provided Plaintiff with copies in exchange

for the dismissal of Neurological Surgery, P.C. v. Aetna Health Inc., No. 18-2167

(E.D.N.Y. 2018). (See Def Mem. at 5).

Courts routinely consider the health plans on motions to dismiss in similar

cases. E.g., Neurological Surgery, P.C. v. Travelers Co. (“Travelers”), 243 F. Supp. 3d

318, 325 (E.D.N.Y. 2017) (“When deciding a motion to dismiss, a court may

consider . . . ERISA plan documents.”); Neurological Surgery, P.C. v. Northrup

Grumman Sys. (“Northrup Grumman”), 2017 WL 389098, at *5 (E.D.N.Y. Jan. 26,

2017). In Neurological Surgery, P.C. v. Siemens Corp. (“Siemens”), the Court

considered a health plan because, in part, ERISA plaintiffs “had to exhaust all

5 Every claim implicates a health plan. Two or more claims may implicate the

same plan, but no one claim implicates more than one plan.

6 Unless otherwise noted, any citation to “Ex. #” refers to the exhibits in the

Affidavit of Elizabeth Petrozelli [DE 21-4].

administrative remedies outlined in the [p]lan whether or not they were aware of

such remedies before bringing suit.” 2017 WL 6397737, at *7 (E.D.N.Y. Dec. 12,

2017). In Steger v. Delta Airlines, the plaintiff did not attach the applicable ERISA

plan to the complaint, but the defendants “annexed a copy . . . to [the] motion to

dismiss.” 382 F. Supp. 2d 382, 385 (E.D.N.Y. 2005). The Steger Court considered the

plan because it was “directly referenced in the complaint and is the basis of this

action.” Id.

The Complaint here specifies each plan’s precise reimbursement methodology

for most claims, though the methodologies are pled “upon information and belief.”

(See, e.g., Compl. ¶¶ 53, 65, 77, 100–01, 137, 698, 1361, 1428, 1566). Plaintiff’s brief

admits by way of example that certain claims are governed by the plans at Exhibits

63 and 84. (E.g., Pl. Opp. at 8; see Exs. 63, 84 [DE 22-13, 22-34]). Plaintiff also relies

on plan terms in formulating arguments in opposition. (Pl. Opp. at 24 (quoting the

language of the various anti-assignment provisions in the health plans at issue)).

For the reasons expressed in Travelers, Northrup Grumman, Siemens, and

Steger, the 145 health plans at issue are properly considered on this motion to

dismiss. See Exs. 1–145. The exhibited plans form the basis of the action: Each plan’s

reimbursement methodology enabled Plaintiff to determine whether, and to what

extent, Aetna allegedly owes payment.

In reviewing certain exhibits, however, the Court notes that some contradict

or fail to confirm Defendants’ ERISA or non-ERISA label. The Court now turns to

the inconclusive and mislabeled plans.

B. Inconclusive Plans7

There are 3 exhibits Defendants label “non-ERISA” that do not provide a basis

to determine whether or not the plan is subject to ERISA. Exhibit 33 is labeled a

non-ERISA plan, but the one-page slipsheet Defendants provided states “Aetna has

no plan document for this claim.” Ex. 33 [DE 21-37]. Defendants do not address why

they nevertheless labeled it as a non-ERISA plan.

Exhibit 54 is also labeled a non-ERISA plan. Upon inspection, Exhibit 54 is a

chart labeled “Attachment A,” and the document which it appends is not included.

Ex. 54 at 1 [DE 22-4]. The chart purports to identify the benefits available for certain

network and out-of-network services. This chart is not the health plan, and the Court

cannot say whether it is governed by ERISA. Additionally, the word “Aetna” does not

appear in the document. See id.

Exhibit 95 is also labeled a non-ERISA plan, but the one-page slipsheet

Defendants provided states “Aetna has no plan document for this claim.” Ex. 95 [DE

22-45]. Defendants do not address why they nevertheless labeled it as a non-ERISA

plan.

Without a basis to say whether or not the health plans are subject to ERISA,

the 4 claims implicating Exhibits 33, 54, and 95 are treated as inconclusive. The

Court retains jurisdiction over such claims until it is clear whether they are subject

to ERISA.

7 Appendix B lists all pertinent information for the claims mentioned in this

Inconclusive Plans section.

C. Mislabeled Plans8

There are 2 “non-ERISA” claims implicating plans which, upon review, suggest

they are governed by ERISA. Exhibit 11 is titled “Extraterritorial Riders,” which is

a set of provisions that “form[] a part of the booklet certificate issued to [a member]

by Aetna describing the benefits provided under the policy,” implying that Exhibit 11

is not, in fact, the actual health plan at issue for that claim. Ex 11 at 1 [DE 21-15].

Moreover, the first page of the Schedule of Benefits states, “This is an ERISA plan,

and you have certain rights under this plan.” Id. at 134.

In similar fashion, the Schedule of Benefits page in Exhibit 13 also states,

“This is an ERISA plan, and you have certain rights under this plan.” Ex. 13 at 102

[DE 21-17]. For the purposes of this Memorandum and Order, and without an

argument to treat them as non-ERISA, the 2 claims implicating Exhibits 11 and 13

are thus treated as subject to ERISA.

III. Non-ERISA Plans and Standing9

The non-ERISA label is correctly applied to 8 plans implicated by 12 claims.

Under such plans, Plaintiff (assigned the right to reimbursement) cannot enforce

ERISA rights, as the assigning Aetna member is not an ERISA “participant or

beneficiary.” See Montefiore Med. Ctr. v. Teamsters Local 272, 642 F.3d 321, 328–29

(2d Cir. 2011) (citing 29 U.S.C. § 1132(a)(1)(B)). With no ERISA causes of action, only

8 Appendix C lists all pertinent information for the claims mentioned in this

Mislabeled Plans section.

9 Appendix D lists all pertinent information for the claims mentioned in this

Non-ERISA Plans section.

state law causes of action remain; no federal question jurisdiction pursuant to 28

U.S.C. § 1331 exists. There is no diversity jurisdiction pursuant to 28 U.S.C. § 1332

because all parties hail from New York. (Compl. ¶¶ 13–15).

Plaintiff therefore asks the Court to exercise supplemental jurisdiction over

these claims. 28 U.S.C. § 1367(a); see Pl. Opp. at 5 n.1, 11 n.2. District courts have

“supplemental jurisdiction over all the claims that are so related to claims in the

action with such original jurisdiction that they form part of the same case or

controversy.” 28 U.S.C. § 1367(a). Thus supplemental jurisdiction exists if the Court

has subject-matter jurisdiction over other claims and if the federal and state claims

stem from a “common nucleus of operative fact.” United Mine Workers of Am. v.

Gibbs, 383 U.S. 715, 725 (1966).

Plaintiff alleges the Court’s subject-matter jurisdiction comes from its

“multiple viable ERISA claims.” (Pl. Opp. at 11 n.2). Yet the Court’s analysis below

reveals that there may not be any viable claims in federal court,10 meaning there is

no original jurisdiction to affix supplemental jurisdiction. See 28 U.S.C. § 1367(a).

Even if certain claims remained in federal court, however, it is arguable

whether the 12 non-ERISA claims stem from the same “common nucleus of operative

fact” as any of the 184 ERISA claims. A similar legal theory undergirds all claims:

Aetna allegedly underpaid or failed to pay Plaintiff for services performed for Aetna

10 The Court retains jurisdiction over the 4 claims implicating Exhibits 33, 54,

and 95 to determine whether these are, in fact, ERISA-governed claims for which

Plaintiff has statutory standing. (See Compl. ¶¶ 538–48, 549–60, 853–62, 1431–41).

If not, then such claims must be remanded to state court.

members. See Montefiore Med. Ctr., 642 F.3d at 323–333 (citing Brunswick Surgical

Ctr., LLC v. CIGNA Healthcare, 2010 WL 3283541, at *1 (D.N.J. Aug. 18, 2010)). But

practically, there are important differences. The members are different, their health

plans have different terms, their medical procedures were different, the

reimbursement methodologies are different, the dates of service and correspondence

were different, and some but not all involve “additional, written appeals.”

A court “may decline to exercise supplemental jurisdiction” if “in exceptional

circumstances, there are compelling reasons for declining jurisdiction.” 28 U.S.C.

§ 1367(c)(4). Compelling reasons to decline exist here. Plaintiff’s 400-page Complaint

details 200 total claims: 4 inconclusive, 12 non-ERISA, and 184 ERISA. There are

145 implicated health plans: 3 inconclusive, 8 non-ERISA, and 134 ERISA – and no

indication that any non-ERISA plans are “substantially identical” to any ERISA ones.

By way of contrast: the Brunswick Surgical Court exercised supplemental

jurisdiction over claims relating to 5 non-ERISA plans, where those 5 were among 12

“substantially identical” plans, in a case with 13 total plans. 2010 WL 3283541, at

*1.

Without supplemental jurisdiction, all causes of action related to the 12 non-

ERISA claims are remanded to New York state court.

IV. The Unassigned Claims11

For 2 ERISA claims, Plaintiff fails to allege that the Aetna members assigned

their rights to receive reimbursement for the health care services provided. (Compl.

¶¶ 401–09, 491–503). Plaintiff nevertheless asserts ERISA “cause[s] of action as an

assignee” of these two Aetna members. (Id. ¶¶ 401–09, 491–503, 2376; see Exs. 25,

30 [DE 21-29, DE 21-34]).

The ERISA statute is “narrowly construed” to permit only ERISA enumerated

parties—“participant[s] or beneficiar[ies]”—to enforce their right to reimbursement.

See Franchise Tax Bd. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 27

(1983); Montefiore Med. Ctr., 642 F.3d at 328–29 (citing 29 U.S.C. § 1132(a)(1)(B)).

Plaintiff, a health care provider, is not an enumerated party. (See Compl. ¶¶ 1–3, 9).

Without a valid assignment of this right to reimbursement, (see id. ¶¶ 9, 23–24, 27,

401–09, 491–503, 2376), Plaintiff has no standing to bring a claim for benefits. Simon

v. Gen. Elec. Co., 263 F.3d 176, 177–78 (2d Cir. 2001) (“Simon conceded that he is

neither a participant nor beneficiary of the plan under which his benefit claims

arise. . . . Simon is not a healthcare provider assignee. Accordingly, and for the

reasons given by the several circuit courts, we conclude that Simon does not have

standing to sue under the terms of ERISA.”).

11 Appendix E lists all pertinent information for the claims mentioned in this

Unassigned Claims section.

Plaintiff’s ERISA causes of action for these 2 claims are dismissed. To the

extent any state law causes of action survive, they are remanded to New York state

court.

V. Anti-Assignment Provisions and Statutory Standing12

Plaintiff therefore brings 184 actionable ERISA claims. At play in 111 of them

are anti-assignment provisions. (See Def. Mem. at 18; Exs. E–G, id.). If valid, these

provisions would keep Plaintiff from bringing ERISA causes of action based on these

claims’ plans.

While only an ERISA “participant or beneficiary” may bring a claim for

benefits under ERISA, a “narrow exception” exists for “healthcare providers to whom

a beneficiary has assigned his claim in exchange for health care.” Montefiore Med.

Ctr., 642 F.3d at 328–29 (internal quotation marks omitted); see 29 U.S.C.

§ 1132(a)(1)(B). Plaintiff alleges all “Aetna [m]embers at issue have assigned their

right to receive benefits under relevant health plans to” Plaintiff. (Compl. ¶ 2376).

Valid anti-assignment provisions render Plaintiff’s “acceptance of [the]

assignment . . . ineffective—a legal nullity.” McCulloch Orthopaedic Surgical Servs.,

PLLC v. Aetna Inc. (“McCulloch”), 857 F.3d 141, 147 (2d Cir. 2017); Mbody Minimally

Invasive Surgery, P.C. v. Empire Healthchoice HMO, Inc. (“Mbody”), 2014 WL

4058321, at *3 (S.D.N.Y. Aug. 15, 2015) (“If a health insurance plan ‘unambiguously

prohibits assignment, an attempted assignment will be ineffectual’” (quoting

12 Appendix F lists all pertinent information for the claims mentioned in this

Anti-Assignment Provisions section.

Neuroaxis Neurological Assocs., P.C. v. Costco Wholesale Co., 919 F. Supp. 2d 345,

351–52 (S.D.N.Y. 2013))). A plaintiff must establish that the ERISA beneficiary

“assigned his right [to reimbursement] in accordance with the terms of the ERISA

plan.” Travelers, 243 F. Supp. 3d at 326; see McCulloch, 857 F.3d at 148 (“[A]bsent a

valid assignment of a claim, . . . non-enumerated parties lack statutory standing to

bring suit under ERISA . . . .” (internal quotation marks omitted) (emphasis in

original)); Mbody, 2014 WL 4058321, at *3; Neuroaxis Neurological Assocs., P.C., 919

F. Supp. 2d at 351. Courts “construe ERISA plans according to federal common law

and interpret them in an ordinary and popular sense as would a person of average

intelligence and experience.” Pepe v. Newspaper & Mail Deliveries’-Publishers’

Pension Fund, 559 F.3d 140, 147 (2d Cir. 2009) (internal quotation marks and citation

omitted).

Plaintiff does not argue that the language in any of the anti-assignment

provisions is ambiguous. Instead, Plaintiff contends that “[r]egardless of whether o[r]

not the applicable health plans at issue contain anti-assignment clauses, Aetna

accepted and acknowledged the assignment” of benefits by paying or communicating

with Plaintiff and thus “affected a waiver.” (Compl. ¶ 25; Pl. Opp. at 21–22). To

Plaintiff, any anti-assignment language is thereby “ineffective to bar an assignment

as a matter of law.” (Id. ¶ 26).

A. The Nine Anti-Assignment Provisions

There are nine different anti-assignment provisions across the 86 ERISA plans

implicated by the 111 claims.13 Each provision is analyzed below. Minor differences

in the wording of two anti-assignment provisions of the same type—like referring to

the health plan as a “contract” or a “policy”—do not impact the analysis and are not

mentioned. As a result of the analysis below, 110 claims implicate 85 ERISA plans

with valid anti-assignment provisions, which deprives Plaintiff of standing to bring

such claims. Appendix F identifies which claims correspond to which anti-

assignment clause.

Anti-Assignment Provision #1: “Coverage may be

assigned only with the written consent of Aetna. To the

extent allowed by law, Aetna will not accept an assignment

to an out-of-network provider, including . . .”

There are 46 claims that implicate 39 ERISA plans with this anti-assignment

provision or a nearly identical one.

In a similar case, the Second Circuit analyzed an anti-assignment provision

with the same wording. See McCulloch, 857 F.3d at 144 (quoting the same anti-

assignment provision). The McCulloch Court held “[b]ased on the plain language of

this provision, [the out-of-network plaintiff’s] acceptance of an assignment was

ineffective—a legal nullity.” 857 F.3d at 147–48. Under binding Second Circuit

precedent, the unambiguous “terms of the [member’s] health care plan” prohibit any

Aetna member’s attempt to assign an out-of-network provider the right to receive

13 While their briefing is silent on the issue, Defendants’ Exhibit B names a tenth

anti-assignment provision. None of Plaintiff’s claims implicate a plan with this

provision. (See Exs. D, E, G to Def. Mem.). As such, it is not analyzed.

reimbursement without Aetna’s consent. Id. Plaintiff never alleges receipt of Aetna’s

explicit consent to any assignment. Plaintiff therefore has no standing to bring these

46 claims.

Anti-Assignment Provision #2: “Coverage and your rights

under this Aetna medical benefits plan may not be

assigned. A direction to pay a provider is not an

assignment of any right under this plan or of any legal or

equitable right to institute any court proceeding.”

There are 55 claims that implicate 38 ERISA plans with this anti-assignment

provision or a nearly identical one.

The Second Circuit has not yet analyzed this provision, but the Third and

Ninth Circuits have. The Third Circuit held “[t]here is only one reasonable

interpretation of that language, and it is that [the plan member] was prohibited from

assigning his rights to benefits payments.” Univ. Spine Ctr. v. Aetna, Inc. 774 Fed.

App’x 60, 63 (3d Cir. 2019). The Ninth Circuit upheld the anti-assignment provision

as “valid and enforceable,” after a district court held the “prohibition on assigning

‘coverage’ and ‘rights’ constitutes a ban on the assignment of both the right to receive

payments and other ancillary ERISA rights.” Eden Surgical Ctr. v. Cognizant Tech.

Sols. Corp., 720 Fed. App’x 862, 863 (9th Cir. 2018), aff’g 2016 WL 7637666, at *5

(C.D. Cal. Aug. 30, 2016) (emphasis in original). Though not binding, the analyses

are persuasive.

This anti-assignment provision unambiguously prohibits an assignment of

“the right to receive benefits under the relevant health plan[],” i.e., the basis for

Plaintiff’s suit. (Compl. ¶ 2376). Plaintiff therefore has no standing to bring these

55 claims.

Anti-Assignment Provision #3: “The Plan is designed to

provide benefits exclusively for you and your dependents

(under the medical, dental, vision, disability and FSA

plans) or your beneficiary (under the life and accident

plans). Therefore, you may not sell, transfer, assign, or

otherwise encumber your interest in the Plan except as

provided by law or by plan terms.”

Only 1 claim implicates an ERISA plan with this anti-assignment provision.

Though no federal court has explicitly analyzed this provision, its plain language is

clear, definite, and unambiguous. Because Plaintiff has not identified a “law” or a

“plan term[]” triggering an exception, the Aetna member was prohibited from

assigning his or her rights to Plaintiff. As such, the purported assignment is

“ineffective” and “a legal nullity,” depriving Plaintiff of standing on this claim. See

McCulloch, 857 F.3d at 147.

Anti-Assignment Provision #4: “The employee may not

assign his or her right to take legal action under the

contract to such provider.”

Only 1 claim implicates an ERISA plan with this anti-assignment provision.

Two federal district courts in New Jersey analyzed this provision and found it “clear

and unambiguous.” Somerset Orthopedic Assocs., P.A. v. Horizon Healthcare Servs.,

Inc., 2020 WL 1983693, at *4 n.7 (D.N.J. Apr. 27, 2020); Univ. Spine Ctr. v. Horizon

Blue Cross Blue Shield, 2017 WL 6372238, at *2–3 (D.N.J. Dec. 12, 2017). “The

language . . . prohibits [Plaintiff] from asserting the very claims that [it is] trying to

assert through this litigation.” Somerset Orthopedic Assocs., P.A., 2020 WL 1983693,

at *4 n.7.

These analyses are persuasive. This provision may not work to prevent

assignments of the right to reimbursement, but it bars Plaintiff from bringing suit

under the ERISA plan for a violation thereof. That bar suffices to deprive Plaintiff of

standing to bring the ERISA causes of action with respect to this claim. See Univ.

Spine Ctr., 2017 WL 6372238, at *2–3.

Anti-Assignment Provision #5: “You cannot assign

benefits due under this Policy to any person, corporation,

or other organization. Any assignment by You will be void.

Assignment means the transfer to another person or to an

organization of Your right to the services provided under

this Policy. However, You may request Us to make

payment for services directly to Your Provider instead of

You.”

Only 1 claim implicates an ERISA plan with this anti-assignment provision.

A similar anti-assignment provision was analyzed in Farkas v. Group Health Inc.,

2019 WL 2235959, at *1, *4 (S.D.N.Y. May 19, 2019). Farkas’s provision differs from

the one at bar by virtue of an exception and its triggering condition, both of which are

absent here. Id. The Farkas Court held that the anti-assignment provision identical

in each was unambiguous. Id. (“As this Court has observed, and the Parties do not

dispute, the Plan contains an unambiguous anti-assignment provision. But that is

not the end of the story. The anti-assignment clause has an exception . . .”); Farkas

v. Group Health Inc., 2019 WL 657006 (S.D.N.Y. Feb. 1, 2019) (“It is clear enough

that the GHI Plan contains an unambiguous anti-assignment provision.”).

The Court agrees that the plain language of the provision is clear, definite, and

unambiguous. As such, the purported assignment is “ineffective” and “a legal

nullity.” See McCulloch, 857 F.3d at 147. Plaintiff has no standing on this claim.

Anti-Assignment Provision #6: “Coverage may be assigned only with

the consent of Aetna.”

There are 2 claims that implicate 2 ERISA plans with this anti-assignment

provision or a nearly identical one. Its language unambiguously bars assignment to

Plaintiff, who lacked Aetna’s consent. “The plain meaning . . . is that assignments

are prohibited without the consent of . . . Aetna.” Neuroaxis Neurosurgical Assocs.,

PC, 919 F. Supp. 2d at 353 n.4, 354; see E. Coast Aesthetic Surgery, P.C. v.

UnitedHealthcare, 2018 WL 3201798, at *2–3 (D.N.J. June 29, 2018) (“The anti-

assignment clauses here are unambiguous and thus enforceable. Absent consent,

[p]atients lacked authority to assign Plaintiff or anyone else the right to

reimbursement.”). Plaintiff fails to allege that it received Aetna’s explicit consent to

any assignment. (Compl. ¶¶ 25–26 (alleging waiver)). As such, the assignments are

ineffective and legal nullities; Plaintiff has no standing to bring these 2 claims.

Anti-Assignment Provision #7: “If you choose to designate

someone else to act on your behalf, you must submit a

written designation, identifying the person who will

represent you with respect to the claim. An ‘assignment of

benefits’ on a claim without a separate written designation

by you does not constitute a valid designation.”

Only 1 claim implicates an ERISA plan with this provision. Whether this

provision can be construed as “anti-assignment provision” is arguable. First, the

provision at most enables a designated third party to “act on [a member’s] behalf.”

But when Plaintiff pursues reimbursement from Aetna, it is not “act[ing] on [a

member’s] behalf” – it is acting on its own (Plaintiff’s) behalf, by virtue of assigned

contractual rights. Conn. v. Physicians Health Servs. of Conn., Inc., 287 F.3d 110,

117 (2d Cir. 2002) (“Typically, the assignee . . . replaces the assignor with respect to

the claim or the portion of the claim assigned, and thus stands in the assignor’s stead

with respect to both injury and remedy.”). Second, the last sentence in the provision

mentions an “assignment of benefits” only to rule out its use as a “valid designation.”

Understood in context, a so-labeled “assignment of benefits” fails to “designate

someone else to act on [the member’s] behalf.” The Court therefore declines to say

this provision unambiguously bars an assignment of the right to reimbursement.

Plaintiff thus retains standing for the claim implicating this provision.

Anti-Assignment Provision #8: “Your rights and benefits

under the Plan cannot be sold, transferred or pledged by

you or reached by your creditors or anyone else. Coverage

may be assigned under limited circumstances and only

with the written consent of Aetna.”

There are 2 claims that implicate 2 ERISA plans with this anti-assignment

provision or a nearly identical one.

While the first sentence clearly denies the ability to assign “rights and

benefits” under the ERISA contract, which would include the right to reimbursement,

the second sentence carves out certain exceptions. Those carve-outs require Aetna’s

written consent, which Plaintiff does not have. Where no allegations support the

inference that Aetna granted consent to its members’ assignments, the federal courts

analyzing this provision call it a “valid and unambiguous anti-assignment” provision

that deprives a purported assignee of standing. E.g., Shuriz Hishmeh, M.D., PLLC

v. Aetna Health Inc., 2017 WL 4281449, at *1–2 (E.D.N.Y. Sept. 25, 2017); Univ. of

Wis. Hosps. v. Aetna Life Ins. Co., 2016 WL 305062, at *2–3 (W.D. Wis. Jan. 25, 2016).

Anti-Assignment Provision #9: “An employee cannot sell,

transfer, or pledge, or assign either voluntarily or

involuntarily the value of his or her benefit. However,

under certain circumstances, a court may award all or part

of the employee’s benefit to a present or former spouse,

child or their dependent through a Qualified Medical Child

Support Order.”

There are 2 claims that implicate 1 ERISA plan with this anti-assignment

provision. Though no federal court has explicitly analyzed this provision, its plain

language is clear, definite, and unambiguous. Here, the “value of [the] benefit” is

amount of reimbursement pursuant to the terms of the ERISA plan. As such, the

purported assignment is “ineffective” and “a legal nullity,” depriving Plaintiff of

standing on these claims. See McCulloch, 857 F.3d at 147.

B. Waiver

Plaintiff argues Defendants “waived any such [anti-assignment] provision and

accepted [Plaintiff’s] assignment of benefits from its patients,” enabling Plaintiff to

retain standing. (Pl. Opp. at 21; Compl. ¶¶ 25–27). Aetna purportedly failed to “raise

the purported non-assignment language as its reason for denying or underpaying any

claims” in support. (Pl. Opp. a 21–22; Compl. ¶¶ 25–33).

Waiver requires “a clear manifestation of an intent . . . to relinquish [a] known

right.” Beth Israel Med. Ctr. v. Horizon Blue Cross & Blue Shield of N.J., 448 F.3d

573, 585 (2d Cir. 2006). Waiver does not arise from “mere silence, oversight or

thoughtlessness.” Id. Waiver is intentional and voluntary. See id. Therefore, though

Aetna “[n]ever once” pointed to the anti-assignment language to “deny[] or underpay[]

any claim,” Aetna’s inaction does not constitute waiver.

Plaintiff also argues Aetna’s payment “directly to [Plaintiff], over the course of

several years,” waives enforcement of the anti-assignment provisions. (Pl. Opp. at

21–22; Compl. ¶¶ 25–33). Courts have interpreted McCulloch to reject this

argument. E.g., Shuriz Hishmed, M.D., PLLC, 2017 WL 4271449, at *2 (“What is

more, the Second Circuit implicitly rejected Plaintiff’s argument . . . that a partial

payment voids the anti-assignment provision.”). In McCulloch, the Second Circuit

held a plaintiff’s “acceptance of an assignment was ineffective” due to an

unambiguous anti-assignment provision. 857 F.3d at 147–48. The McCulloch

holding came in the face of its recitation of facts, which detailed the defendants’

partial payments to and communications with the plaintiff:

Before performing the patient’s surgeries, McCulloch’s office staff called

a number listed on the patient’s Aetna insurance card to obtain

information about the patient's coverage. An Aetna representative

informed McCulloch’s staff that the patient was covered by a health care

plan administered by Aetna, that the plan provided for payment to out-

of-network physicians, and that the plan covered the surgical

procedures that McCulloch would be providing for the patient. The

Aetna representative stated that McCulloch would be reimbursed at

seventy percent of the usual, customary, and reasonable (“UCR”) rate

for the knee surgeries and that this rate would be based on an industry-

standard schedule.

. . .

Relying on Aetna’s promise of reimbursement, McCulloch

performed the two surgeries and billed Aetna at the UCR rate for a total

of $66,048. McCulloch then submitted a health insurance claim form to

Aetna for each surgery . . . . Despite this provision, Aetna reimbursed

McCulloch $842.51 for the first surgery and $14,425 for the second

surgery, for a total of $15,267.51.

857 F.3d at 144. The partial payment (and the communications) did not factor into

the Second Circuit’s holding on waiver. See id. at 147–48. Accordingly, “in a number

of cases from [the Southern District of New York] and beyond,” courts have rejected

Plaintiff’s waiver argument. See Med. Soc’y of N.Y. v. UnitedHealth Grp. Inc., 2019

WL 1409806, at *10–11 (S.D.N.Y. Mar. 28, 2019) (citing cases from the Third Circuit,

District of New Jersey, and Southern District of New York); e.g., Farkas v. UFCW

Loc. 2013 Health & Welfare Fund, 2018 WL 5862741, at *2 (E.D.N.Y. Sept. 12, 2018).

Besides McCulloch, Plaintiff and Plaintiff’s counsel previously made the same

waiver allegations and nearly-verbatim waiver arguments in Travelers. Compare

Travelers, 243 F. Supp. 3d at 330–31 (quoting the complaint: “Travelers, Empire, and

Neurological . . . communicated with each other numerous times—including on

[dates]—about the status of the pending claim” and Neurological “appealed the claim

on or about October 30, 2013”), with Compl. ¶¶ 51, 63 (“Aetna and [Plaintiff]

communicated with each other numerous times—including on [dates]—at which

times [Plaintiff] appealed to Aetna for additional payment.”). Like this Court, the

Travelers Court did not agree with Plaintiff’s position. Travelers, 243 F. Supp. 3d at

330–31.

That Plaintiff “routinely submitted its claims to Aetna, and that Aetna paid

those claims directly to [Plaintiff], over the course of several years,” (Pl. Opp. at 22),

does not override the anti-assignment provisions. In the past ten years only two

courts in the Second Circuit have held that a “long-standing pattern and practice of

direct payment . . . suffic[es] to show [defendant’s] consent to [plaintiff’s]

assignments,” and both of those cases pre-date McCulloch. Neuroaxis Neurosurgical

Assocs., P.C. v. Cigna Healthcare of N.Y., Inc., 2012 WL 4840807, at *3 (S.D.N.Y. Oct.

4, 2012); Biomed Pharms., Inc. v. Oxford Health Plans (NY), Inc. (“Biomed”), 2011

WL 803097, at *5 (S.D.N.Y. Feb. 18, 2011).

Biomed provides the impetus to make this argument. Angstadt v. Empire

HealthChoice HMO, Inc., 2017 WL 10844692, at *5 & n.5 (E.D.N.Y. Mar. 16, 2017)

(discussing the expansion of Biomed’s holding). Importantly, however, Biomed did

not hold that a long-standing pattern and practice of direct payment, without more,

defeats an unambiguous anti-assignment clause. 2011 WL 803097, at *5. Instead,

Biomed’s holding relies on an ERISA plan that had both an anti-assignment provision

and a provision that “either expressly authorize[d] patients to assign their claims to

healthcare providers without [defendant’s] consent, or, at the very least, create[d] an

ambiguity within the contract that should be construed against the drafter.” Id. Only

“[g]iven this ambiguity” did Biomed make its holding. Id. Plaintiff’s other case cited

in support, Neuroaxis Neurosurgical Assocs., P.C., “omitted the phrase, ‘given this

ambiguity’ [when it quoted Biomed] thus broadening the holding of Biomed without

explanation.” Angstadt, 2017 WL 10844692, at *5 n.5 (describing that Neuroaxis

Neurosurgical Assocs., P.C. further involved an ERISA plan that “was also ambiguous

regarding assignments”). In the absence of more persuasive authority, Aetna’s

history of payment to Plaintiff does not override the unambiguous anti-assignment

provisions in the ERISA plans. See id. at *5 & n.5; Merrick v. UnitedHealth Grp. Inc.,

175 F. Supp. 3d 110, 122 (S.D.N.Y. 2016) (finding “more persuasive,” after analyzing

Biomed and Neuroaxis Neurosurgical Assocs., P.C., the other “decisions that give

effect to the plain language of anti-assignment provisions”).

Finally, the fact that Plaintiff “did not have access to the applicable plan

documents at [the] time it submitted its claims to Aetna” does not change the result.

(Pl. Opp. at 21). Even if true, Plaintiff still would not have alleged an intentional or

voluntary waiver by Defendants. Beth Israel Med. Ctr., 448 F.3d at 585. And, in the

ERISA context, the Second Circuit has enforced the terms of a health plan even

though a plaintiff lacked access. Cf. Davenport v. Harry N. Abrams, Inc., 249 F.3d

130, 134 (2d Cir. 2001) (“Davenport was required to exhaust even if she was ignorant

of the proper claims procedure.”).

C. Anti-Assignment Provisions and ERISA Preemption

Plaintiff next argues that if valid anti-assignment provisions deprive Plaintiff

of standing on its ERISA causes of action, then its “corresponding state law causes of

action are not preempted” by ERISA because, otherwise, Plaintiff would have no

remedy. (Pl. Opp. at 9–10). Defendants say the Plaintiff’s position “contradict[s]

ERISA and controlling precedent.” (Def. Reply at 7–9).

The Second Circuit opined on this issue in McCulloch. There, like here, the

insurer argued an anti-assignment provision “rendered invalid [plaintiff’s] attempt

to enforce the purported assignment.” 857 F.3d at 147. The insurer also “argue[d]—

and the district court found—that in determining whether preemption applies,

[courts] should ignore that the health care plan prohibits any assignment.” Id.,

vacating and remanding, 2015 WL 2183900 (S.D.N.Y. May 11, 2015). The Second

Circuit disagreed. The ERISA preemption analysis first requires courts to “assess

whether a party has standing to pursue an ERISA claim.” Id. at 147–48 (citing

Montefiore, 642 F.3d at 328 n.7). Without a “valid assignment,” non-enumerated

parties have no standing to sue under ERISA “even if they have a direct stake in the

outcome of the litigation.” Id. (emphasis in original) (internal quotation marks

omitted) (quoting Conn. v. Physicians Health Servs. of Conn., Inc., 287 F.3d 110, 121

(2d Cir. 2002)). To ignore a party’s lack of standing “would not further the principal

purpose of ERISA to protect plan beneficiaries and participants.” Id. Wrote the

Second Circuit:

If we were to ignore that the health care plan prohibits an assignment

to [plaintiff] in determining whether his claim is preempted, this would

lead to a result that is both unjust and anomalous: [plaintiff] would be

barred from pursuing state-law claims in state court on preemption

grounds and from pursuing an ERISA claim in federal court for lack of

standing.

Id. (emphasis added). Otherwise, such plaintiffs would be “left without a remedy.”

Id.

While it is true the McCulloch Court also analyzed that plaintiff’s promissory

estoppel cause of action, Defendants are incorrect to say that McCulloch’s “holding

was not based on the anti-assignment provision in the subject health plan.” (Def.

Reply at 8). The Second Circuit expressly qualifies everything after its standing

analysis by stating it “requires that [the Second Circuit] reverse the district court’s

ruling.” McCulloch, 857 F.3d at 149. In other words, the anti-assignment and

preemption analysis—preceding any holding on promissory estoppel—stands on its

own and does not depend on the rest of the opinion. See id.

In conclusion, Aetna did not waive the application of the valid anti-assignment

provisions, which deprives Plaintiff of standing to bring ERISA causes of action on

110 claims. In the absence of statutory standing, Plaintiff cannot remain in federal

court; the state law causes of action for these 110 claims are thus remanded to New

York state court. To be clear, this Order does not address what effect, if any, these

anti-assignment provisions have on any of Plaintiff’s state law causes of action.

VI. ERISA Preemption14

As to the 72 surviving ERISA claims, implicating 48 plans, for which Plaintiff

has alleged statutory standing, the Court now turns to ERISA preemption. Had the

ERISA causes of action for all 200 claims survived to this point, the Court

parenthetically notes that the same exact analysis and outcome would apply.15

ERISA preempts state law causes of action because ERISA “supersede[s] any

and all State laws [statutory or common law] insofar as they may now or hereafter

relate to any employee benefit plan.” 29 U.S.C. § 1144(a). “A law ‘relates to’ an

employee benefit plan, in the normal sense of the phrase, if it has connection with or

reference to such a plan.” Shaw v. Delta Air Lines, Inc., 462 U.S. 85, 96–97 (1983).

ERISA preemption is “deliberately expansive,” with “the only relevant state laws, or

portions thereof, that survive . . . [being] those relating to plans that are themselves

exempted from ERISA’s scope.” Paneccasio v. Unisource Worldwide, Inc., 532 F.3d

101, 113 (2d Cir. 2008) (quoting Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 45–46

14 Appendix G lists all pertinent information for the claims mentioned in this

Preemption Provisions section.

15 The parties disagree over the distinction between “complete preemption” and

“express preemption,” but they agree it is immaterial here. (Def. Mem. at 10 n.5; Pl.

Opp. at 10–11 (“[T]he distinction between complete preemption and express

preemption has no material impact on the analysis here.”); Def. Reply at 2 n.1 (“[T]he

same ‘related-to’ analysis applies to express and complete preemption.”)).

(1987) and Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523 & n.20 (1981))

(internal quotation marks omitted).

State common law causes of action “relate to” an employee benefit plan if they

seek “to rectify a wrongful denial of benefits under ERISA-regulated plans, and do

not attempt to remedy any violation of a legal duty independent of ERISA.” Aetna

Health Inc. v. Davila, 542 U.S. 200, 214 (2004). State statutory causes of action

“relate to” an employee benefit plan if they “provide an alternative cause of action to

employees to collect benefits protected by ERISA, refer specifically to ERISA plans

and apply solely to them, or interfere with the calculation of benefits owed to an

employee. Aetna Life Ins. Co. v. Borges, 869 F.2d 142, 146 (2d Cir. 1989). Therefore,

state laws can “relate to” a benefit plan “even if the law is not specifically designed to

affect such plans, or the effect is only indirect.” Ingersoll-Rand Co. v. McClendon,

498 U.S. 133, 139 (1990).

A. Application to Plaintiff’s State Common Law and Statutory

Causes of Action

Plaintiff’s state law causes of action, even in their most favorable light, “relate

to” an employee benefit plan and are preempted by ERISA. To start, Plaintiff’s breach

of contract allegations—breach of express contract and breach of third-party

beneficiary contract—premise themselves on Aetna’s failure to pay benefits according

to ERISA plans. No “legal duty independent of ERISA” lies where the duty comes

from an ERISA plan. See Montefiore Med. Ctr., 642 F.3d at 332.

The Complaint’s allegations are literally identical to those held already

preempted by this Court in Northrop Grumman: “Through the assignment of

benefits . . . [Plaintiff] obtained the right to enforce the” health plans, which

“obligated Aetna to provide reimbursement for the . . . services provided,” which

Defendants “breached . . . by failing to timely and properly pay [Plaintiff] for the

medically necessary, covered services.” Compare Compl. ¶¶ 2391, 2392, 2395 (breach

of express contract), and id. ¶¶ 2428–2430, with Northrop Grumman, 2017 WL

389098, at *9 (quoting identical language from the complaint), and Siemens, 2017

WL 6397737, at *5 (“[Defendant] was obligated to reimburse [plaintiff] in full . . . for

the medically necessary health care services provided.”). Because Plaintiff’s breach

of contract causes of action seek to remedy Aetna’s alleged wrongful denials of

benefits according to ERISA plans, they “relate to” an ERISA plan and are preempted.

Plaintiff’s breach of implied-in-fact contract, unjust enrichment, and tortious

interference with contract causes of action are likewise “related to” the plans and thus

preempted by ERISA. The “pre-authorization, pre-certification, or other

requirements” provided to Aetna before Plaintiff rendered “medically necessary,

covered health care services” do not create a legal duty independent of ERISA. (See

Compl. ¶¶ 2401, 2410, 2418; Pl. Opp. at 25, 28 (arguing these causes of action arise

from pre-authorizations and pre-certifications)). Indeed, the source of those “pre-

authorization[s], pre-certification[s], or other requirements” is an ERISA plan. That

same ERISA plan also determines what is, and what is not, a “covered” service.

(Compl. ¶ 29 (“[T]hese health care services were covered services under the applicable

health plan documents.”)). Plaintiff’s dispute involves obligations derived from

ERISA plans themselves; they are thus not independent of ERISA. See Pilot Life Ins.

Co., 481 U.S. at 43 (finding a tortious breach of a contract cause of action, arising

from an alleged failure to provide benefits, preempted by ERISA); Montefiore Med.

Ctr., 642 F.3d at 331–32 (“None of [the contract or unjust enrichment causes of action]

appear to be [causes of action] . . . where the basic right to payment has already been

established and the remaining dispute only involves obligations derived from a source

other than the Plan.”); Siemens, 2017 WL 6397737, at *5 (“Courts have expressly

rejected [Plaintiff’s] argument” and collecting cases where ERISA preempted, inter

alia, implied-in-fact contract and unjust enrichment causes of action); Chau v.

Hartford Life Ins. Co., 167 F. Supp. 3d 564, 572 (S.D.N.Y. 2016) (holding tortious

interference with contract cause of action preempted by ERISA).

The state statutory Prompt Payment Law cause of action is also preempted by

ERISA. Under New York Insurance Law § 3224-a, providers must make prompt

payment unless their obligation “is not reasonably clear due to a good faith dispute

regarding the eligibility of a person for coverage, . . . the amount of the claim, [or] the

benefits covered under a contract or agreement.” N.Y. Ins. Law § 3224-a(b). That is,

this cause of action grounds itself in the rights and obligations expressed in—and

therefore “refers to”—an ERISA plan. Case law is replete with examples of courts

holding that ERISA preempts such causes of action. E.g., Siemens, 2017 WL 6397737,

at *5–6 (“The [Prompt Payment Law cause of action] itself, in effect, seeks to recover

for monies owed pursuant to the [ERISA] Plan. Therefore, . . . [it] relates to their

ERISA claims and merely seeks an alternative cause of action for those claims.”);

Northrup Grumman, 2017 WL 389098, at *10 (“At least two sister courts within the

Second Circuit have ruled that a plaintiff’s attempt to circumvent ERISA by stating

a [cause of action] under New York’s Prompt Payment Law are preempted by

ERISA.”); Beth Israel Med. Ctr. v. Goodman, 2013 WL 1248622, at *4 (S.D.N.Y. Mar.

26, 2013) (holding that Prompt Payment Law cause of action “incorporates the

coverage and eligibility limitations” of the ERISA plan and is thus preempted”);

Weisenthal v. United Health Care Ins. Co., 2007 WL 4292039, at *7 (S.D.N.Y. Nov.

29, 2007) (“[A]ny resolution of what constitutes a benefit disputed in good faith

necessarily derives entirely from the particular rights and obligations established by

the benefit plans. Thus, Plaintiffs’ Prompt Payment Law [causes of action] are . . .

pre-empted with respect to the ERISA-governed plans” (internal quotation marks and

citations omitted)); Berry v. MVP Health Plan, Inc., 2006 WL 4401478, at *5

(N.D.N.Y. Sept. 30, 2006) (“[P]laintiffs are attempting to utilize N.Y. Ins. Law to

vindicate their rights under the relevant MVP ERISA-governed plans. Although

plaintiffs cite New York statutory law in the complaint, the factual allegations reveal

the true motive of this action, to wit, to recover benefits for medical services to which,

plaintiffs, as assignees, believe they are entitled under the terms of the plans.”).

In sum, ERISA preempts Plaintiff’s state law causes of action because, even in

their most favorable light, they “relate to” an employee benefit plan.

B. “Amount of Payment” or “Right to Payment”

Plaintiff first contests preemption by construing its case as involving the

“amount of payment,” which—unlike one involving the “right to payment”—is not

subject to ERISA preemption. (Pl. Opp. at 6–8). “[A]mount of payment” claims

concern “the computation of contract payments or the correct execution of such

payments . . . [and] are typically construed as independent” of ERISA. Montefiore

Med. Ctr., 642 F.3d at 331–31. In “amount of payment” claims, “the basic right to

payment has already been established and the remaining dispute only involves

obligations derived from a source other than the” ERISA plan. Id. “Right to payment”

claims “implicate coverage and benefits established by the terms of the ERISA benefit

plan” and are construed as “claims for benefits that can be brought pursuant to”

ERISA. Id.

Plaintiff contends Aetna’s partial payment of “approximately 160 of the 200

claims at issue” establishes Aetna’s recognition of Plaintiff’s right to payment and

thus means the Court need only to examine “other documents, such as out-of-network

fee schedules and provider billing data” to assess the amount due. (Pl. Opp. at 8, 11–

12). Plaintiff recites the law as: “A provider has no ERISA cause of action where, as

here, the requested relief rests on information or documents that are outside the

actual ERISA plan.” Id. (emphasis removed) (citing Long Island Thoracic Surgery,

P.C. v. Building Serv. 32BJ Health Fund, 2019 WL 7598669 (E.D.N.Y. Sept. 3, 2019),

report and recommendation adopted, 2019 WL 5060495 (E.D.N.Y. Oct. 9, 2019), and

Garber v. United Healthcare Corp., 2016 WL 1734089 (E.D.N.Y. May 2, 2016)).

Yet even construing the allegations in its favor, as required, Plaintiff simply

“seek[s] enforcement of specific provisions of the” ERISA health plans, which revolves

around a “right to payment.” See Arditi v. Lighthouse Int’l, 676 F.3d 294, 299–300

(2d Cir. 2012). The defined terms in the ERISA health plans, like “medically

necessary, covered health care services,” determine what, if any, benefit Plaintiff is

owed. See Compl. ¶¶ 28–29; Plastic Surgery Grp., P.C. v. United Healthcare Ins. Co.

of N.Y., Inc., 64 F. Supp. 3d 459, 466 (E.D.N.Y. 2014) (“[T]he complaint refers directly

to [an ERISA] Plan term in alleging that plaintiff was entitled to payment for the

services . . . because they were ‘medically necessary’—a standard imposed by the

Plan.”); Neuroaxis Neurosurgical Assocs., P.C., 2012 WL 4840807, at *4 (“‘Medical

necessity’ is defined by the plan. To resolve this claim of underpayment, the Court

must look to the plan to determine . . . what is ‘medical necessity’ . . . . This is a

classic ‘right to payment’—not ‘amount of payment’—determination.”); see also Lone

Star OB/GYN Assoc. v. Aetna Health Inc., 579 F.3d 525, 530–31 (5th Cir. 2009)

(“[A]ny determination of benefits under the terms of a plan—i.e., what is ‘medically

necessary’ or a ‘Covered Service’—does fall within ERISA.”). The ERISA plan terms

provide “more than a mere benchmarking for calculating damages” – they are “the

basis for the claimed benefits.” Arditi, 676 F.3d at 299–300.

The Enigma Management Corp. v. Multiplan, Inc. Court analyzed Plaintiff’s

argument and described it as “mischaracteriz[ing] the dispute.” 994 F. Supp. 2d 290,

300–01 (E.D.N.Y. Jan. 27, 2014). The Enigma Court explained:

In a literal sense the parties disagree on the amount that [defendant] is

required to pay on [plaintiff’s] claims, but they only disagree because

[defendant] asserts that [plaintiff] does not have the right to full

payment under the terms of the ERISA plan.

Id. (emphasis in original). The case law reflects a “narrow” interpretation of “amount

of payment,” which would not include Plaintiff’s case here. See id. Plaintiff does not

contest “the applicable rate for [Plaintiff’s] services, the timing of [Aetna’s] payment

to [Plaintiff], or the mechanism for paying the claim.” See id.

Therefore, Aetna’s partial payment does not immunize Plaintiff’s claims from

ERISA preemption. E.g., Salzberg v. Aetna Ins. Co., 2018 WL 1275776, at *1, 3

(S.D.N.Y. Mar. 12, 2018) (“Plaintiff billed $78,674.00 for the surgery, and defendants

paid $12,936.87. . . . [P]laintiff's claims implicate coverage and benefit

determinations as set forth by the terms of the ERISA benefit plan” (internal

quotation marks omitted)); Plastic Surgery Grp., P.C., 64 F. Supp. 3d at 465–68

(holding that, even though defendants paid on one claim, plaintiff’s “claims do not

relate solely to the amount of payment, but instead to the right to payment under”

an” ERISA plan). Plaintiff brings “right to payment” claims.

The cases on which Plaintiff relies, Long Island Thoracic and Garber, bore on

different, more-nuanced theories of liability. Neither involved an insurer’s “fail[ure]

to pay the percentage of the UCR specified in any of the assigned member plans, or

breach [of] any other terms of those plans.” 2019 WL 7598669, at *14; 2016 WL

1734089, at *5.16 Instead, their disputes centered on the defendants’ “reliance on the

Fair Health Organization’s rates [as] an incorrect and artificially low reference

point,” which “turns on the methodology that Fair Health, Inc. (which [p]laintiffs did

not sue) utilized to arrive at” the rate paid. 2019 WL 7598669, at *14; 2016 WL

1734089, at *5. That “determination does not depend upon the terms of any ERISA-

16 The Court notes that the quoted paragraphs in Long Island Thoracic and

Garber are nearly identical.

governed insurance agreements.” 2019 WL 7598669, at *14; 2016 WL 1734089, at

*5.

But here, Plaintiff squarely challenges Aetna’s failure to pay the

reimbursement specified in the ERISA plans as a breach of those plans. E.g., Compl.

¶¶ 33–34 (“[Plaintiff] agreed to provide covered health care services . . . in exchange

for Aetna paying [Plaintiff] . . . at the rates and levels set forth under the applicable

health plan documents.” (emphasis added)). Plaintiff does not dispute any plan-

provided “methodology” or Aetna’s reliance thereon. E.g., Compl. ¶ 101 (“Aetna

would have been obligated by its plan documents to pay . . . the 85th percentile rates

established by FairHealth”). For every single one of the 200 claims, Plaintiff pleads:

the plan documents governing the amount [Plaintiff] was to receive for

services rendered to this patient require Aetna to pay [reimbursement

methodology], which Aetna failed to do. . . . Aetna has failed . . . to

honor its obligations regarding claim reimbursement, despite, upon

information and belief, plan provisions dictating to Aetna the amounts

that should have been paid on this claim . . .

Compl. ¶¶ 44–2365 (emphasis added). Such pleadings reflect “right to payment”

claims. Arditi, 676 F.3d at 299–300 (“[The] actual claims asserted seek enforcement

of specific provisions of the [p]lan, implicate coverage and benefits established by the

terms of the ERISA benefit plan, and can be construed as colorable claim[s] for

benefits pursuant to” ERISA (ellipses and internal quotation marks removed)).

Therefore, ERISA preempts the state law causes of action for the 72 remaining

claims.

VII. ERISA Exhaustion of Administrative Remedies17

Because the remaining 72 claims present only ERISA causes of action, the next

step in the analysis is to apply “the firmly established federal policy favoring

exhaustion of administrative remedies in ERISA cases.” Alfarone v. Bernie Wolff

Constr., 788 F.2d 76, 79 (2d Cir. 1986).

“ERISA requires both that employee benefit plans have reasonable claims

procedures in place, and that plan participants avail themselves of these procedures

before turning to litigation.” Eastman Kodak Co. v. STWB, Inc., 452 F.3d 215, 222

(2d Cir. 2006). Courts require that plaintiffs exhaust only “those administrative

appeals provided for in the relevant plan or policy.” Kennedy v. Empire Blue Cross &

Blue Shield, 989 F.2d 588, 594 (2d. Cir. 1993). The failure to exhaust administrative

remedies before filing an action in federal court requires ERISA cause of action to be

dismissed. Alfarone, 788 F.2d at 79; see also Leak v. CIGNA Healthcare, 423 Fed.

App’x 53, 53–54 (2d Cir. 2011); Griefenberger v. Hartford Life Ins. Co., 131 Fed. App’x

756, 758–59 (2d Cir. 2005). The ERISA exhaustion requirement is not “an

insignificant procedural hurdle.” Northrup Grumman, 2017 WL 389098, at *6

(quoting Am. Med. Ass’n v. United HealthCare Corp., 2007 WL 1771498, at *5

(S.D.N.Y. June 18, 2007)).

Second Circuit precedent requires Plaintiff to have exhausted pursuant to the

terms in the 48 health plans implicated by the 72 remaining ERISA claims. See

17 Appendix G lists all pertinent information for the claims mentioned in this

ERISA Exhaustion section.

Kennedy, 989 F.2d at 594. Plaintiff never specifies whether or not it has done so.

Instead, Plaintiff sets forth the same general allegations for each claim.

At the outset of the Complaint, Plaintiff references its attempts “to enter into

a meaningful dialog” with Defendants that have “fallen on deaf ears.” (Compl. ¶¶ 40–

41). Plaintiff says “[a]ll that effort” sufficed to “exhaust[] all reasonable

administrative remedies and appeals – to the point were further administrative

actions and appeals would be futile.” (Compl. ¶ 42). Then, for each specific claim,

Plaintiff repeats the same allegation 200-times:

Aetna and [Plaintiff] communicated with each other numerous times –

including on [dates] – at which times [Plaintiff] appealed to Aetna for

additional payment. . . . [Plaintiff’s] repeated attempts to communicate

with Aetna about the status of this claim for health care services

provided to [patient] – including those documented above – have fallen

on deaf ears, . . . despite, upon information and belief, plan provisions

dictating to Aetna . . . the timing of the payment to [Plaintiff] and

response to any appeals, among other plan provisions.

E.g., id. ¶¶ 51, 55. Where Plaintiff made “additional, written appeals,” Plaintiff

states:

On [date], [Plaintiff] filed an additional, written appeal with Aetna,

seeking further reimbursement on this claim. That appeal was [denied

or ignored].

E.g., id. ¶¶ 66, 78. Spelling out its first ERISA cause of action, Plaintiff writes:

[Plaintiff] has exhausted all available administrative remedies or appeal

rights . . . . Specifically, all appeals and other administrative remedies

have either been denied or have been outstanding for such a long time

that the only reasonable conclusion that can be drawn is that they have

been ignored and are deemed denied.

E.g., id. ¶¶ 2381–83.

These allegations sound familiar because they are, quite literally, the exact

same allegations quoted and dismissed in Northrup Grumman. 2017 WL 389098, at

*6 (quoting complaint paragraphs 101–03). Just as they were in Northrup Grumman,

these are mere conclusory statements without any plausible factual allegations in

support. Id. at *7. Plaintiff cannot satisfy its pleading burden by simply arguing “it

administratively appealed each of the 200 claims at issue with Aetna.” (Pl. Opp. at

14). “It is well established that ERISA complaints containing bald assertions that

administrative remedies have been exhausted do not withstand a 12(b)(6) motion.”

Kesselman v. The Rawlings Co., LLC, 668 F. Supp. 2d 604, 609 (S.D.N.Y. 2009) (citing

cases).

The alleged appeals, made during the parties’ “communications,” are devoid of

context and content. Id. Plaintiff never once alleges that any initial claim was denied

– viz., the prerequisite to any appeal. (See Compl. ¶¶ 44–2365). By the same token,

there is no known date on which Aetna denied any claim, precluding any

determination that an appeal was timely taken under a plan. This is not the first

time Plaintiff and Plaintiff counsel engaged in this exact “artful pleading.” Siemens,

2017 WL 6397737, at *8 (“[I]t appears that the [same Plaintiff and Plaintiff’s counsel

as here] have engaged in artful pleading in failing to state when their claim was

denied by the Defendant . . . .”).

Even assuming Aetna denied the claims on one of the dates of

correspondence—or through non-payment or minimal reimbursement—nothing

suggests that Plaintiff appealed pursuant to the procedure set out in each ERISA

plan. The Complaint lacks a basis to reasonably infer what each ERISA plan’s

appeals procedure required, whether Plaintiff followed that procedure, when the

appeal was taken, and when the appeal was decided. (See Compl. ¶¶ 44–2365). Nor

is it Plaintiff’s explicit position that its “additional, written appeals” complied with

the ERISA plan terms. (See Pl. Opp. at 17–18). These allegations say no more about

the provisions of the ERISA plan than any others. (Compl. ¶¶ 44–2365). Plus, there

are only 89 instances of such “additional, written appeals,” i.e., not every claim had

such an additional appeal. (Compl. ¶¶ 44–2365; see Appendix A). And, to insist these

complied with the ERISA plan appeals process would contradict their “additional”

label, which presupposes earlier “appeals.” (See Pl. Opp. at 16 (“For several claims,

[Plaintiff] states that it submitted a second written appeal” (emphasis added))).

Despite the absence of the fundamental details, Plaintiff states “all appeals

and other administrative remedies have either been denied or have been outstanding

for such a long time that the only reasonable conclusion that can be drawn is that

they have been ignored and are deemed denied.” (Compl. ¶ 2382). Yet an allegation

“that all conditions precedent including the exhaustion of administrative remedies to

maintaining this action have been performed or have occurred . . . is insufficient.”

Kesselman, 668 F. Supp. 2d at 609 (emphasis added) (internal quotation marks and

citation omitted).

Plaintiff invokes a similar theory of exhaustion to the one dismissed in Antell

v. United Healthcare Ins. Co. of N.Y., 2012 WL 13042822, at *2 (S.D.N.Y. Mar. 16,

2012). Though the Antell plaintiff “did not follow the formal process for exhausting”

the claims as laid out in the ERISA plan, she pointed to her “correspondence” and

“numerous telephone conversations” with the insurer, including her submission of

“numerous additional documents,” in satisfaction thereof. Id. (internal quotation

marks omitted). The Antell Court was not persuaded: “The law, however, is clear

that correspondence such as that between [plaintiff] and [her insurer] is insufficient

to meet the clearly delineated process set forth within” the ERISA plan. Id. (emphasis

added); see Egan v. Marsh & McLennan Cos., Inc., 2008 WL 245511, at *10 (S.D.N.Y.

Jan. 29, 2008) (“Plaintiff contends that his communications with [defendants] should

be considered sufficient exhaustion of remedies. . . . This argument fails.”). It is

insufficient here too – a cursory review of plans’ appeals procedures reflects Plaintiff’s

non-compliance. E.g., Ex. 1 at 77–85 [DE 21-5]; Ex. 2 at B-71 to B-77 [DE 21-6].

Plaintiff misplaces reliance on Nichols v. Prudential Ins. Co. of Am., 406 F.3d

98 (2d Cir. 2005) and Ritzer v. Nat’l Org. of Indus. Trade Unions Ins. Tr. Fund Hosp.,

Med., Surgical Health Benefit, 807 F. Supp. 257 (E.D.N.Y. 1992). The Nichols

plaintiff clearly pleaded the key dates (her claim, the insurer’s denial, her appeal,

etc.) as well as the appeals procedure followed. 406 F.3d at 105–06. Ritzer is a

summary judgment decision that likewise relies the particular dates and details of

the plaintiff’s claim and appeal. 807 F. Supp. at 260.

Plaintiff has thus failed to plead exhaustion of the administrative remedies set

out in the 48 ERISA plans applicable to the 72 claims.

A. Exhaustion as an Affirmative Defense

Plaintiff correctly notes that exhaustion is an affirmative defense and the

Defense’s “burden to prove.” (Pl. Opp. at 14–15). But Plaintiff incorrectly asserts

that, therefore, “an ERISA plaintiff is not even required to plead that it exhausted its

administrative remedies.” (Id.) “[E]stablishing exhaustion is generally considered a

prerequisite to pursuing an ERISA action.” Star Multi Care Servs., Inc. v. Empire

Blue Cross Blue Shield, 6 F. Supp. 3d 275, 292 (E.D.N.Y. 2014). “Accordingly,

plaintiffs were required to plead exhaustion of administrative remedies under the

[ERISA] plan.” DeSilva v. North Shore-Long Island Jewish Health Sys., Inc., 770 F.

Supp. 2d 497, 538 (E.D.N.Y. 2011); Kesselman, 6 F. Supp. 2d at 608 (“[Defendants]

argue that [plaintiff] has not stated a viable claim for relief against them because she

has not sufficiently pled exhaustion of administrative remedies, a prerequisite to

bringing an ERISA action. The Court agrees.”).

Plaintiff bases its position on Paese v. Hartford Life & Accident Ins. Co., where

the Second Circuit held the failure to exhaust was “not jurisdictional but is an

affirmative defense.” 449 F.3d 435, 446 (2d Cir. 2006). Paese’s holding is not a license

to avoid pleading anything concerning the exhaustion of administrative remedies.

“[I]n cases following Paese, courts in [the Second] Circuit have explicitly noted that

‘Paese does not remove the requirement that the plaintiff exhaust his administrative

remedies.’” Kesselman, 668 F. Supp. 2d at 608 (quoting Egan, 2008 WL 245511, at

*10); Novella, 2007 WL 2417303, at*3 (same).

The Second Circuit has held that “an affirmative defense may be raised by a

pre-answer motion to dismiss under Rule 12(b)(6) . . . if the defense appears on the

face of the complaint.” Pani v. Empire Blue Cross Blue Shield, 152 F. 3d. 67, 74 (2d

Cir. 1988); Leak, 423 Fed. App’x at 53–54. The failure of exhaust appears on the face

of a complaint where, for example, plaintiff “explicitly admit[s] a conscious decision

not to exhaust,” Leak, 423 Fed. App’x at 54, or plaintiff “pleads no facts suggesting

any effort to exhaust the remedies available through his ERISA administrative plan,”

Abe v. N.Y.U., 2016 WL 1275661, at *5 (S.D.N.Y. Mar. 30, 2016) (emphasis added).

Courts within the Second Circuit “routinely dismiss ERISA claims . . . on a

12(b)(6) motion to dismiss where the plaintiff fails to plausibly allege exhaustion of

remedies.” Abe, 2016 WL 1275661, at *5. Hence a long line of post-Paese cases doing

so. E.g., Diamond v. Loc. 807 Loc. Mgmt. Pension Fund, 595 Fed. App’x 22, 25–26

(2d. Cir. 2014); McFarlane v. First Unum Life Ins. Co., 274 F. Supp. 3d 150, 154–55

(S.D.N.Y. 2017) (citing cases); Northrup Grumman, 2017 WL 389098, at *5–8; Mayer

v. Joint Indus. Bd. of Elec. Indus., 2015 WL 9581821, at *4–5 (E.D.N.Y. 2015); Star

Multi Care Servs., Inc., 6 F. Supp. 3d at 292–93; DeSilva, 770 F. Supp. 2d at 536–39;

Morillo v. 1199 SEIU Benefit & Pension Funds, 783 F. Supp. 2d 487, 489 n.3 (S.D.N.Y.

2011); Kesselman, 668 F. Supp. 2d at 608–09; Egan, 2008 WL 245511, at *10; Novella

v. Empire State Carpenters Pension Fund, 2007 WL 2417303, at*3–5. (S.D.N.Y. Aug.

28, 2007).

Plaintiff cites to Rozek v. N.Y. Blood Ctr., which says “a plaintiff is not required

to plead exhaustion of administrative remedies.” 925 F. Supp. 2d 315, 342–43

(E.D.N.Y. 2013). The quote’s face value supports Plaintiff’s position, but its context

re-harmonizes it with precedent. Rozek was not analyzing a motion to dismiss – it

concerned summary judgment and a motion in limine to preclude evidence. Id. at

318. Because the Rozek defendants’ “Answer d[id] not assert failure to exhaust

administrative remedies as an affirmative defense,” the Rozek court had to determine

whether the defendants could nevertheless raise it on summary judgment. Id. at

342–43. On the exhaustion issue, Rozek’s quote merely affirms the ordinary

requirement that defendants, not plaintiffs, plead affirmative defenses.

In sum, Plaintiff’s exhaustion-as-an-affirmative-defense argument is not

persuasive. Plaintiff’s sole remaining recourse is futility.

B. Futility

Plaintiff alternatively argues that the Complaint makes a “clear and positive

showing of the futility of . . . an appeal,” which excuses it from ERISA’s exhaustion

requirement. Kennedy, 989 F.2d at 594. The Complaint alleges far less than a “clear

and positive showing,” however. Indeed, the futility exception “is not applied lightly.”

Northrup Grumman, 2017 WL 389098, at *6 (emphasis removed) (quoting Zupa v.

Gen. Elec. Co., 2016 WL 3976544, at *2 (D. Conn. July 22, 2016)); Quigley v. Citigroup

Supplemental Plan for Shearson Transfers, 2011 WL 1213218, at *6 (S.D.N.Y. Mar.

29, 2018) (“The standard for demonstrating futility is very high, and Plaintiffs

seeking to make such a showing face a heavy burden” (internal quotation marks and

citations omitted)).

Plaintiff’s futility allegations are conclusory statements unsupported by

plausible factual allegations, just as they were in Northrup Grumman. The essence

of Plaintiff’s futility contention is that “so many unsuccessful attempts have been

made by [Plaintiff] . . . [such that] that the only conclusion that can be drawn is that

further administrative proceedings would be futile.” (Compl. ¶ 2383). As already

underscored, this allegation—verbatim—was held insufficient in Northrup

Grumman, 2017 WL 389098, at *6 (quoting that complaint’s paragraph 103).

Plaintiff’s “characterization of [its] communications falling on deaf ears does

not recast [Aetna’s] nonpayment [or underpayment] into ‘a formal or informal

administrative decision denying benefits [such that] it is clear that seeking further

administrative review of the decision would be futile.’” Northrup Grumman, 2017

WL 389098, at *7 (quoting Davenport, 249 F.3d at 133); see Compl. ¶¶ 40–41; Pl. Opp.

at 18. In Davenport, for example, informal letter correspondence “did not render

futile further pursuit of [the plaintiff’s] claims through the proper channels.”

Davenport, 249 F.3d at 133–34 (citing Bourgeois v. Pension Plan, 215 F.3d 475, 480

n.14 (5th Cir. 2000)). Holding otherwise would make “the courts and not ERISA

trustees . . . primarily responsible for deciding claims for benefits.” Barnett v. IBM

Corp., 885 F. Supp. 581, 588 (S.D.N.Y.1995); see Bourgeois, 215 F.3d at 480 n.14

(“[A]llowing informal attempts to substitute for the formal claims procedure would

frustrate the primary purposes of the exhaustion requirement.”).

Even if “a plaintiff makes a clear and positive showing of futility where . . . the

defendant ignores the plaintiff’s appeals,” the point operates without force here. (See

Pl. Opp. at 17–18 (citing Siemens, 2017 WL 6397737, at *9 and Sibley-Schreiber v.

Oxford Health Plans (N.Y.), Inc., 62 F. Supp. 2d 979 (E.D.N.Y. 1999))). Plaintiff has

not “appeal[ed]” as that term is used in ERISA precedent – i.e., pursuant to the

ERISA plan provisions. Davenport, 249 F.2d at 133–34 (holding informal

correspondence “did not render futile further pursuit of her claims through the proper

channels” (emphasis added)); Leonelli v. Pennwalt Corp., 887 F.2d 1195, 1199 (2d Cir.

1989) (“Leonelli made no attempt, as required, to exhaust the administrative

remedies provided for under the plan” (emphasis added)). Because plaintiffs must

exhaust all administrative remedies—to wit, appeals—outlined in ERISA plans,

regardless of their awareness of such remedies before bringing suit, informal

substitutes for the formal appeals process does not trigger the futility exception. Id.

Thus “attempts to enter into a meaningful dialog,” absent more, are of no import here.

Sibley-Schreiber, on which Plaintiff relies, is inapposite. (Pl. Opp. at 17). The

Sibley-Schreiber plaintiffs challenged “a company-wide promulgation of limited or no

coverage unrelated to the personal circumstances of individual claimants.” 62 F.

Supp. 2d at 986–89 (questioning whether courts should apply exhaustion

requirement to cases challenging “across the board company-wide coverage policies”).

Plaintiff here challenges no “uniform and generally applicable” policy. Each of

Plaintiff’s claims relates to the Aetna member’s health plan and its terms – not to

mention each member’s individual circumstances, like how much of his or her

deductible has been paid. (E.g., Compl. ¶¶ 257, 698, 1361, 2097).

Therefore, Plaintiff has not plausibly alleged futility and thus has not excused

its failure to exhaust the administrative remedies for the 72 ERISA claims.

VIII. Leave to Amend

Plaintiff is denied leave to amend. “Although leave to amend should be freely

given ‘when justice so requires,’ it is ‘within the sound discretion of the district court

to grant or deny leave to amend.’” Lopez v. Stop & Shop Supermkt. Co. LLC, 2020

WL 4194897, at *2 (S.D.N.Y. July 21, 2020) (quoting Fed. R. Civ. P. 15(a)(2) and

McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 200 (2d Cir. 2007)). Though

Plaintiff suggests it can “cure any pleading deficiencies,” its Opposition brief does not

suggest the withholding of any curative facts. Cuoco v. Moritsugu, 222 F.3d 99, 112

(2d Cir. 2000); see Pl. Opp. Indeed, the operative Complaint repeats identically-

worded allegations dismissed in previous cases brought by Plaintiff and Plaintiff’s

counsel. E.g., Siemens, 2017 WL 6397737, at *5 (“[T]he [same] Plaintiffs have

engaged in artful pleading” when they filed an identical complaint); Travelers, 243 F.

Supp. 3d at 330–31; Northrup Grumman, 2017 WL 389098, at *6; cf. Lopez, 2020 WL

4194897, at *2 (denying leave to replead where plaintiff was “represented by the same

counsel and filed nearly verbatim copies of the complaints” in other cases). Plaintiff’s

request is denied, therefore, as “it appears that granting leave to amend is unlikely

to be productive.” Ruffolo v. Oppenheimer & Co., 987 F.2d 129 (2d. Cir. 1993).

That said, however, the 72 dismissed ERISA claims are dismissed without

prejudice to refile upon exhaustion of administrative remedies pursuant to the terms

of the ERISA plans.

CONCLUSION

For the reasons discussed above, Defendants’ motion to dismiss is DENIED in

part and GRANTED in part and. See Appendix A for the full claim-by-claim

breakdown.

Defendants motion is DENIED with respect to the 4 inconclusive claims. See

Appendix H (listing the 4 claims). The parties are ORDERED TO SHOW CAUSE,

via a joint letter no longer than three pages, filed within 45 days from the date of this

Order, as to whether these 4 claims implicate health plans governed by ERISA. The

parties are further directed to attach the full health plans, if the plans can be

identified.

Defendants motion is GRANTED to the extent that the 12 non-ERISA claims,

the 2 unassigned claims, and the 110 claims implicating valid anti-assignment

clauses bring ERISA causes of action because Plaintiff lacks statutory standing.

Defendants motion is DENIED as to these claims’ state law causes of action, all of

which are REMANDED to state court because the Court declines to exercise

supplemental jurisdiction. See Appendix I (listing the 124 claims).

Defendants’ motion is GRANTED in full as to the remaining 72 claims, due to

the failure to exhaust administrative appeals and because their state law causes of

action are preempted by ERISA. See Appendix J (listing the 72 claims). The ERISA

causes of action for these claims are dismissed without prejudice to refile upon

exhaustion of administrative remedies pursuant to the terms of the ERISA plans; the

state law causes of action for these claims are dismissed with prejudice.

SO ORDERED.

Dated: Central Islip, New York s/ Denis R. Hurley

January 4, 2021 Denis R. Hurley

United States District Judge