B. v. BLUE CROSS BLUE SHIELD OF NORTH CAROLINA

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

DAVID B. and A.B., )

)

Plaintiffs,1 )

)

v. ) 1:24CV896

)

BLUE CROSS BLUE SHIELD OF NORTH )

CAROLINA, INSIGHT SOFTWARE, LLC, )

INSIGHTSOFTWARE LLC HEALTH )

BENEFITS PLAN (BLUE OPTIONS PPO )

PLAN), and GROUP ADMINISTRATOR )

DOE, )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

OF UNITED STATES MAGISTRATE JUDGE

Plaintiffs David B. and A.B. brought this action against

Defendants Blue Cross Blue Shield of North Carolina (“Blue Cross

NC”), insightsoftware, LLC (“insightsoftware”), insightsoftware LLC

Health Benefits Plan (the “Plan”), and Group Administrator Doe

(collectively “Defendants”) under the Employee Retirement Income

Security Act of 1979 (“ERISA”), 29 U.S.C. §§ 1001 et seq. (Docket

Entry 1 (“Compl.”).) Defendants moved to dismiss the Complaint

under Rule 12(b)(6) of the Federal Rules of Civil Procedure (Docket

Entry 10 (the “Motion”); see also Docket Entry 11 (Brief in

Support)), Plaintiffs responded in opposition (Docket Entry 15),

and Defendants replied (Docket Entry 18). For the reasons that

follow, the Court will grant Defendants’ Motion with respect to the

1 Consistent with Rule 5.2(a) of the Federal Rules of Civil Procedure,

which requires parties to “include only . . . the minor’s initials” in “filing[s]

with the [C]ourt that contain[] . . . the name of an individual known to be a

minor,” the Court will, throughout this document, refer to the minor Plaintiff

by his initials, “A.B.,” and to the other named Plaintiff, A.B.’s father, as

“David B.”

Second Cause of Action, and deny the Motion regarding the First and

Third Causes of Action (except for the dismissal of the First Cause

of Action as against Defendant insightsoftware, LLC).

I. Factual Allegations and Plaintiffs’ Claims

Plaintiffs’ Complaint alleges as follows:

Blue Cross NC issued the Plan, “a group health insurance

policy[,] to insightsoftware” (Compl., @ 3), which qualified as a

fully-insured employee “welfare benefits plan under [ERISA]” (id.,

q 4). During the time at issue in this action, insightsoftware

employed David B. (see id., J 2), “Blue Cross NC determine[d] and

pa[id] claims, and [wa]s a fiduciary under the [P]Jlan” (id., 7 5),

David B qualified as “a participant in the Plan” (id., @ 6), and

David B.’s son, A.B., qualified as “a beneficiary of the Plan”

(id., @ 7).

A.B. “was diagnosed with certain conditions defined by the

[Diagnostic and Statistical Manual of Mental Disorders, Fifth

Edition (‘DSM-V’)], including persistent depressive disorder” and

“was engaged in the abuse of certain substances.” (Id., 27.)

“A.B. was hospitalized at Dell Children’s medical center in Austin,

Texas” and, “[u]pon discharge, his providers there recommended

further treatment at a facility such as Outback Therapeutic

Journeys (‘Outback’).” (Id., {I 34.) “Outback was licensed by the

State of Utah to provide therapeutic outdoor youth treatment to

adolescents struggling with chronic mental health and other

behavioral health conditions.” (Id., @ 35.) “A.B. . . . received

treatment [at Outback] from October 11, 2022, through December 29,

2022,” and, “[d]uring that time, his mental health conditions and

substance abuse problems improved.” (Id., { 36).

“On April 4, 2023, Blue Cross [NC] sent an Explanation of

Benefits (EOB)” to Plaintiffs (id., {7 39) that “denied payment for

A.B.’Ss treatment at Outback for alleged lack of

preauthorization . . . on the entire sum [of $50,800.00]” (id.,

40). “On September 26, 2023, Plaintiffs submitted a

Retrospective Review Request and appeal from the denial” (id.,

41), and “argued that preauthorization was not required under the

[P]lan for A.B.’s treatment, that efforts to seek more information

from the Blue Cross NC website had returned a ‘404 no page found’

error, and other arguments against denying the claim based upon

alleged failure to obtain prior review” (id., QJ 42). Plaintiffs

also “requested that a ‘parity analysis’ be conducted under the

Mental Health Parity and Addiction Equity Act (MHPAEA), and that

they be provided with a copy [of that analysis]” (id., QI 43), in

addition to “request[ing] additional documents” (id., JI 44), to

“includ[e] all governing plan documents” (id.), “any clinical

guidelines or medical necessity criteria utilized in [the adverse

benefits] determination” (id.), “any reports or opinions about this

claim provided . . . from any physician or other professional”

(id.), and “the names, qualifications, and healthcare claim denial

rates of all individuals who reviewed this claim or with whom [Blue

Cross NC] consulted about this claim” (id.). “On October 27, 2023,

Blue Cross NC issued a ‘Notice of First Level Internal Adverse

Benefit Determination’ (‘First Level Notice’) regarding A.B.’s

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treatment at Outback . . . uph[olding] the denial on the ground

that preauthorization had not been obtained.” (Id., ¶ 45.) “Blue

Cross NC’s [First Level Notice] did not include any of the

documents requested in Plaintiffs’ September 26, 2023, letter,

including the parity analysis.” (Id., ¶ 46.)

“On December 12, 2023, Plaintiffs submitted a Level Two Member

Appeal disputing the First Level Notice.” (Id., ¶ 47.) In that

appeal, Plaintiffs again requested information and documents

relating to a parity analysis under the MHPAEA (see id., ¶¶ 48-49),

and “any reports or opinions about this claim provided . . . from

any physician or other professional, as well as the names,

qualifications, and healthcare claim denial rates of all

individuals who reviewed this claim” (id., ¶ 49 (internal quotation

marks omitted)). “On February 1, 2024, Blue Cross [NC] issued a

denial letter to Plaintiffs” (id., ¶ 50), “stat[ing] that a

Grievance Review Panel had recommended approving Plaintiffs’

request to waive the prior authorization denial, and that Blue

Cross [NC] had agreed to this recommendation” (id., ¶ 51). “Blue

Cross NC reviewed the service[s A.B. received at Outback] for

medical necessity[, but was] unable to approve benefits for

Behavioral Health Services.” (Id., ¶ 52 (internal quotation marks

omitted).) Blue Cross NC determined that A.B.’s services at

Outback qualified as “investigational.” (Id., ¶ 54 (internal

quotation marks omitted).) “The February 1, 2024, denial did not

indicate what experience, if any, the [external medical expert]

reviewer(s) had with the type of treatment or provider involved”

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(id., ¶ 61), “included snippets of what Blue Cross NC characterized

as ‘pertinent’ statements by the [external medical expert]

reviewer” (id., ¶ 63), “did not mention or address any of the

information or material that accompanied Plaintiffs’ appeal” (id.,

¶ 66), and “did not engage with the argument, facts, evidence or

analysis contained in Plaintiffs’ appeal” (id., ¶ 73).

“Plaintiffs filed an independent review organization (IRO)

request with the North Carolina Dep[artment] of Insurance

(NCDI)[,]” but the “NCDI informed Plaintiffs that they needed to

exhaust internal appeal remedies specifically regarding the new

medical necessity ground for denial raised by Blue Cross [NC]

before an IRO review could be obtained.” (Id., ¶ 74.) “On July

17, 2024, Plaintiffs submitted an appeal of Blue Cross [NC}’s

February 1, 2024, denial of payment for services” and “titled

th[at] document ‘Level One Member Appeal.’” (Id., ¶ 76.) In that

document, “Plaintiffs stated that the denial letter [they] received

on February 1, 2024, cite[d] the [Magellan Care Guidelines (‘MCG’)]

Criteria B-009-RES as the criteria utilized to review [their] case,

and argued that reference to th[at Criteria] would be inappropriate

when reviewing A.B.’s treatment” (id., ¶ 79), “provided

documentation showing that Blue Cross insurers had previously

provided coverage for services [such as A.B.’s] billed under the

[National Uniform Billing Committee (‘NUBC’)] 1006 revenue code

[for outdoor/wilderness behavioral health]” (id., ¶ 80), “provided

peer reviewed research demonstrating that outdoor behavioral health

treatment services have been established as effective alternatives

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to residential treatment programs” (id., QI 81), “requested that

Blue Cross [NC] conduct a full comparative parity analysis” under

the MHPAFA (id., @ 82), and “requested any reports or opinions

about this claim provided . . . from any physician or other

professional, as well as the names, qualifications, and healthcare

claim denial rates of all individuals who reviewed this claim”

(id., J 84). “Blue Cross NC did not respond [to Plaintiff’s July

17, 2024, Level One Member Appeal].” (Id., {I 85.)

The Complaint asserts three Causes of Action: 1) a “Claim for

Recovery of Benefits Under 29 U.S.C. § 1132(a) (1) (B)” (id. at 21;

also id., 88-95); 2) a “Violation of MHPAEA and equitable

relief under 29 U.S.C. § 1132(a) (3)” (id. at 22; see also id.,

Wi 96-106); and 3) a claim for statutory penalties for non-

disclosure of requested plan documents under 29 U.S.C.

S§ 1132(a) (1) (A) and (c) (see id., TI 107-13). In addition to

seeking “[j]udgment in the total amount that is owed for A.B.’s

treatment at Outback” (id., Prayer for Relief, J 1), “[p]re- and

post-judgment interest” (id., Prayer for Relief, {7 2), attorney’s

“fees and costs” (id., Prayer for Relief, {@ 5), and “[a] penalty

for nondisclosure of documents” (id., Prayer for Relief, J 4),

Plaintiffs seek “equitable relief” (id., Prayer for Relief, @ 3),

including “[a] declaration that the action of Defendants violate

[sic] the MHPAFA” (id., {@ 106(a)), “[a]n injunction ordering

Defendants to cease violating the MHPABA and requiring compliance

with the statute” (id., 106(b)), “[a]n Order requiring the

reformation of the terms of the Plan and the medical necessity

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criteria utilized by Defendants to interpret and apply the terms of

the Plan to ensure compliance with the MHPARA” (id., J 106(c)),

“[La]n Order requiring disgorgement of funds obtained or retained by

Defendants as a result of their violations of the MHPAEA” (id.,

106(d)), “[a]n Order requiring an accounting by Defendants of the

funds wrongly withheld by each Defendant from participants and

beneficiaries of the Plan as a result of Defendants’ violations of

the MHPAEA” (id., {@ 106(e)), “[a]n Order based on the equitable

remedy of surcharge requiring Defendants to provide payment to

Plaintiffs as make-whole relief for their loss” (id., { 106(f)),

“La]n Order equitably estopping Defendants from denying Plaintiffs’

claims in violation of the MHPAFA” (id., {@ 106(g)), and “[a]n Order

providing restitution from Defendants to Plaintiffs for their loss

arising out of Defendants’ violations of the MHPAEA and unjust

enrichment” (id., 7 106(h)).

II. Standard of Review and Defendants’ Attachments

A plaintiff fails to state a claim when the complaint does not

“contain sufficient factual matter, accepted as true, to ‘state a

claim to relief that is plausible on its face.’” Ashcroft v.

Igbal, 556 U.S. 662, 678 (2009) (emphasis added) (internal

citations omitted) (quoting Bell Atlantic Corp. v. Twombly, 550

U.S. 544, 570 (2007)). “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. (quoting Twombly, 550 U.S. at 557). This standard

“demands more than an unadorned, the-defendant-unlawfully-harmed-me

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accusation.” Id. In other words, “the tenet that a court must

accept as true all of the allegations contained in a complaint is

inapplicable to legal conclusions,” and “[t]hreadbare recitals of

the elements of a cause of action, supported by mere conclusory

statements, do not suffice.” Id. “[D]etermining whether a

complaint states a plausible claim for relief will . . . be a

context-specific task that requires the reviewing court to draw on

its judicial experience and common sense.” Id. at 679; see also

Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009).

“In deciding whether a complaint will survive a motion to

dismiss, a court evaluates the complaint in its entirety, as well

as documents attached [to] or incorporated into the complaint.”

E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435,

448 (4th Cir. 2011). The Court may also consider documents

“attached to [the] motion to dismiss,” so long as they qualify as

“clearly integral to, and w[ere] relied upon in, [the] complaint”

and the plaintiff “does not dispute [their] authenticity.”

Blankenship v. Manchin, 471 F.3d 523, 526 n.1 (4th Cir. 2006).

Typically, a “court cannot go beyond th[o]se documents” without

“convert[ing] the motion into one for summary judgment.” E.I. du

Pont, 637 F.3d at 448.

Here, Defendants attached to the instant Motion the “Benefit

Booklet for insightsoftware, LLC for Blue Options” (“Benefit

Booklet”) (Docket Entry 11-1), as well as Plaintiffs’ September 26,

2023, Retrospective Review Request (Docket Entry 11-2), Blue Cross

NC’s October 27, 2023, First Level Notice (Docket Entry 11-3),

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Plaintiffs’ December 12, 2023, Level Two Member Appeal (Docket

Entry 11-4), Blue Cross NC’s February 1, 2024, denial letter

(Docket Entry 11-5), and a “Healthy Blue Medical Policy” governing

coverage of “Wilderness Programs” (Docket Entry 11-6) (collectively

“Appeal Documents”) .* Although Plaintiffs’ Complaint deems it

“unclear whether the Benefit Booklet is (part of) the Plan or is a

summary plan description” (Compl., 9% 16), and notes that the

Benefit Booklet’s language “suggests the latter” (id. (citing

Docket Entry 11-1 at 3)), Plaintiffs rely extensively on the terms

of the Benefit Booklet in their Complaint (see id., II 12-33, 55-

60, 70), and have not disputed the authenticity of the Benefit

Booklet (See Compl.; see also Docket Entry 15). Additionally,

Plaintiffs’ Complaint relies on the Appeal Documents (see Compl.,

QI 41-75), and Plaintiffs have not challenged the authenticity of

those Appeals Documents (see Compl.; see also Docket Entry 15).

Accordingly, in ruling on Defendants’ instant Motion, the Court

will consider the Benefit Booklet and Appeal Documents as

referenced in and integral to the Complaint. See E.I. du Pont, 637

F.3d at 448.

III. Discussion

A. First Cause of Action - Recovery of Benefits under Section

1132 (a) (1) (B)

Section 1132(a) (1) (B) of ERISA authorizes “a participant or

beneficiary .. . to recover benefits due to him under the terms of

* As noted by Defendants (see Docket Entry 11 at 20 n.16), Plaintiffs

attached a copy of the last of those documents (Docket Entry 11-6) to their

December 12, 2023, Level Two Member Appeal (see Docket Entry 11-4 at 6 & n.25).

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his plan, to enforce his rights under the terms of the plan, or to

clarify his rights to future benefits under the terms of the plan.”

29 U.S.C. § 1132(a)(1)(B). Moreover, “[ERISA] permits a person

denied benefits under an employee benefit plan to challenge that

denial in federal court.” Metropolitan Life Ins. Co. v. Glenn, 554

U.S. 105, 108 (2008) (citing, inter alia, 29 U.S.C.

§ 1132(a)(1)(B)). The United States Supreme Court has further

explained that right to judicial review of a benefits denial as

follows:

ERISA imposes higher-than-marketplace quality standards

on insurers. It sets forth a special standard of care

upon a plan administrator, namely, that the administrator

‘discharge [its] duties’ in respect to discretionary

claims processing ‘solely in the interests of the

participants and beneficiaries’ of the plan; it

simultaneously underscores the particular importance of

accurate claims processing by insisting that

administrators provide a ‘full and fair review’ of claim

denials, and it supplements marketplace and regulatory

controls with judicial review of individual claim

denials.

Id. at 115 (citing 29 U.S.C. §§ 1104(a)(1), 1132(a)(1)(B), 1133(2))

(internal citations and some internal quotation marks omitted).

With regard to the applicable standard of review under Section

1132(a)(1)(B), the United States Supreme Court has held that

“[p]rinciples of trust law require courts to review a denial of

plan benefits ‘under a de novo standard’ unless the plan provides

to the contrary.” Id. at 111 (quoting Firestone Tire & Rubber Co.

v. Bruch, 489 U.S. 101, 115 (1989)). However, “[w]here the plan

provides to the contrary by granting ‘the administrator or

fiduciary discretionary authority to determine eligibility for

benefits,’” id. (quoting Firestone, 489 U.S. at 115), “‘[t]rust

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principles make a deferential standard of review appropriate,’” id.

(quoting Firestone, 489 U.S. at 111 (in turn, citing Restatement

(Second) of Trusts, § 187 (setting forth abuse of discretion

standard)); see also Champion v. Black & Decker (U.S.) Inc., 550

F.3d 353, 359 (4th Cir. 2008) (“[C]ourts are to apply [] the

abuse-of-discretion standard for reviewing discretionary

determinations by [an] administrator” and, “[u]nder that familiar

standard, a discretionary determination will be upheld if

reasonable”).

The Benefit Booklet reflects that Blue Cross NC had

“discretionary authority to construe and to interpret the terms of

the health benefit plan and to determine the amount of benefits,

and its decision on such matters is final and conclusive subject

only to the member’s appeals process” (id. at 93 (small capitals

omitted)), and Plaintiffs’ Complaint does not address the

applicable standard of review (see Compl.). In passing and without

citation to authority, Plaintiffs state in their brief opposing the

instant Motion that “[d]iscretionary authority is not at issue

here, where Defendants did not respond to Plaintiffs’ appeal of the

investigational issue and therefore did not exercise any

discretion.” (Docket Entry 15 at 12 n.3.) Defendants, in reply,

assert that “Blue Cross NC informed Plaintiffs their appeal was not

timely perfected” (Docket Entry 18 at 4 n.4), but readily

acknowledge that the Court cannot consider such outside-the-

pleadings matters when ruling on their instant Motion (see id.).

The Court need not resolve which standard of review applies at this

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stage in the litigation because, even under the deferential abuse

of discretion standard, and as the discussion to follow shows,

Plaintiffs have sufficiently pleaded a plausible claim for wrongful

denial of benefits under Section 1132(a)(1)(B).

Plaintiffs’ Complaint alleges that, “[a]s set forth [in

earlier paragraphs of the Complaint], [A.B.’s] treatment was

covered by the terms of the Plan.” (Compl., ¶ 91.) In previous

paragraphs of the Complaint, Plaintiffs made the following

allegations regarding the terms of the Plan:

23. The Benefit Booklet defines COVERED SERVICE as “A

service, drug, supply or equipment specified in this

benefit booklet for which MEMBERS are entitled to

benefits in accordance with the terms and conditions of

this health benefit plan.”

24. Under the heading “Mental Health and Substance Use

Disorder Services,” the Benefit Booklet includes in its

list of benefits “Mental Health Inpatient, Outpatient,

and Residential Treatment Facility Services” and

“Substance Use Disorder Inpatient, Outpatient, and

Residential Treatment Facility Services[.]”[]

25. Under the heading “Mental Health and Substance Use

Disorder Services,” the Benefit Booklet states: [“]This

health benefit plan provides benefits for the treatment

of MENTAL ILLNESS and substance use disorder by a

HOSPITAL, RESIDENTIAL TREATMENT FACILITY, DOCTOR or OTHER

PROVIDER without a referral, and includes, but is not

limited to: . . . Inpatient and RESIDENTIAL TREATMENT

FACILITY services (includes room and board and related

treatment).” The Benefit Booklet states that residential

treatment centers are “included” in the broader category

of inpatient services.

26. The definition of MENTAL ILLNESS in the Benefit

Booklet includes “a mental disorder defined in the

current edition of the [DSM-V].”

27. A.B. was diagnosed with certain conditions defined by

the [DSM-V], including persistent depressive disorder.

A.B. also was engaged in the abuse of certain

substances. . . .

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28. There is no definition of substance use disorder in

the Benefit Booklet. A.B. was treated for substance

abuse at Outback.

29. The definition of RESIDENTIAL TREATMENT FACILITY in

the Benefit Booklet is:

A residential treatment facility is a facility

that either: (1) offers treatment for patients

that require close monitoring of their

behavioral and clinical activities related to

their chemical dependency or addiction to

drugs or alcohol, or (2) offers treatment for

patients that require psychiatric services for

the diagnosis and treatment of MENTAL ILLNESS.

All services performed must be within the

scope of license or certification to be

eligible for reimbursement.

30. The definition of FACILITY SERVICES in the Benefit

Booklet is: “COVERED SERVICES provided and billed by a

HOSPITAL or NONHOSPITAL FACILITY. All services performed

must be within the scope of license or certification to

be eligible for reimbursement.”

31. The definition of NONHOSPITAL FACILITY in the Benefit

Booklet is: “An institution or entity other than a

HOSPITAL that is accredited and licensed or certified in

the state where located to provide COVERED SERVICES and

is acceptable to Blue Cross NC. All services performed

must be within the scope of license or certification to

be eligible for reimbursement.”

32. The definition of OTHER PROVIDER in the Benefit

Booklet is: “An institution or entity other than a

HOSPITAL, which is accredited and licensed or certified

in the state where located to provide COVERED SERVICES

and which is acceptable to Blue Cross NC. All services

performed must be within the scope of license or

certification to be eligible for reimbursement.”

(Compl., ¶¶ 23-32 (ellipsis and internal parenthetical citations

omitted).3

3 Words and phrases in all caps font denote terms specifically defined by

the Plan. (See Docket Entry 11-1 at 108-23 (“Glossary” of terms in Benefit

Booklet).)

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Defendants argue that, “[a]lthough the Complaint defines

RESIDENTIAL TREATMENT FACILITY, FACILITY SERVICES, NONHOSPITAL

FACILITY, and OTHER PROVIDER, Plaintiffs do not allege that Outback

qualifies as any of those” (Docket Entry 11 at 12-13 (citing

Compl., ITI 29-32, 35)) but, rather, “allege that Outback’s services

are an ‘alternative[] to residential treatment programs’” (id. at

13. (quoting Compl., @ 81)). Defendants thus contend that

“Plaintiffs’ conclusory allegation that the Plan covers Outback’s

service is insufficient to state a claim.” (Id. (citing Compl.,

{ 91); see also id. (citing LB Surgery Ctr., LLC v. United Parcel

Serv. of Am., Inc., No. 17-c-3073, 2017 WL 5462180, at *2 (N.D.

Ill. Nov. 14, 2017) (unpublished), and Paragon Office Servs., LLC

v. UnitedHealthcare Ins. Co., No. 3:11CV2205, 2012 WL 5868249, at

*3 (N.D. Tex. Nov. 20, 2012) (unpublished)).)*

“ Defendants additionally argue that the Court should dismiss Plaintiffs’

First Cause of Action, because Plaintiffs “failed to obtain PRIOR REVIEW, which

was required for inpatient services to be covered.” (Docket Entry 11 at 13 n.12

(citing Docket Entry 11-1 at 54).) However, as Plaintiffs point out (see Docket

Entry 15 at 6 n.1), the February 1, 2024, denial letter attached to Defendants’

instant Motion reflects that Blue Cross NC accepted as its “final decision in

th[e] matter” the Grievance Review Panel’s “recommend[ation] to approve

[Plaintiffs’] request to waive the prior authorization requirement.” (Docket

Entry 11-5 at 2 (emphasis added).) Nonetheless, the denial letter also states

that Plaintiffs’ appeal “[wa]s denied based on lack of prior authorization as

well as the [Outback] program being wilderness therapy which is not a covered

benefit as it is investigational/experimental.” (Id. at 3 (emphasis added) □□

Given this factual conflict, the Court cannot, at this stage in the proceedings,

dismiss Plaintiffs’ First Cause of Action based on an alleged failure to obtain

PRIOR REVIEW. Although Defendants cite Gagliano v. Reliance Std. Life Ins. Co.,

547 F.3d 230, 239 (4th Cir. 2008), for the proposition that “Blue Cross NC’s

agreement to conduct a retrospective review . . . cannot create coverage through

waiver” (Docket Entry 18 at 3 n.2), the Court finds that case distinguishable,

because the Fourth Circuit found that the insurer’s “mistake” in not initially

asserting a pre-existing conditions limitation as the basis to terminate the

plaintiff’s disability benefits did not constitute waiver of the insurer’s right

to ultimately deny benefits on that ground. Gagliano, 547 F.3d at 239 (emphasis

added). Here, in contrast, Blue Cross NC issued an appeal document expressly

‘“waiv[ing]” the prior authorization requirement as its “final decision.” (Docket

Entry 11-5 at 2.)

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Although the Complaint does not specifically assert that

Outback qualifies as a RESIDENTIAL TREATMENT FACILITY, NONHOSPITAL

FACILITY, and/or OTHER PROVIDER under the Plan (see Compl., ¶¶ 23-

32), the factual allegations of the Complaint, considered with the

Appeal Documents, taken as true for purposes of deciding the

instant Motion, and viewed in the light most favorable to

Plaintiffs with the benefit of all reasonable inferences, plausibly

allege that 1) A.B. suffered from MENTAL ILLNESS as defined by the

Plan and substance abuse disorder (which the Plan did not define)

(see id., ¶¶ 26-28); 2) A.B.’s treatment providers recommended he

obtain treatment at Outback after inpatient mental health treatment

did not successfully treat his MENTAL ILLNESS (see id., ¶ 34); 3)

Plaintiffs did not find outdoor behavioral health listed among the

services requiring PRIOR REVIEW and CERTIFICATION under the Plan

(see Docket Entry 11-2 at 2) and could not find additional

information on Blue Cross NC’s website and, thus, did not seek

PRIOR REVIEW and CERTIFICATION (see Compl., ¶ 42); 4) after Blue

Cross NC denied benefits for A.B.’s treatment at Outback for

failure to obtain PRIOR REVIEW and CERTIFICATION, Plaintiffs sought

retrospective review under the Plan, and Blue Cross NC ultimately

agreed to waive the preauthorization requirement (see id., ¶¶ 45-

51; see also Docket Entries 11-2 through 11-5); 5) Blue Cross NC

thereafter denied benefits on the grounds of both lack of

preauthorization and lack of medical necessity as

“INVESTIGATIONAL,” rather than failure of Outback to qualify as

RESIDENTIAL TREATMENT FACILITY, NONHOSPITAL FACILITY, and/or OTHER

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PROVIDER under the Plan (Compl., ¶¶ 52-56; see also Docket Entry

11-5), 6) Plaintiffs challenged Blue Cross NC’s characterization of

A.B.’s treatment at Outback as “INVESTIGATIONAL,” and proffered

material, including peer reviewed studies and the opinions of

A.B.’s treatment providers, showing that Outback’s treatment did

not qualify as “INVESTIGATIONAL” under the Plan (Compl., ¶¶ 76-84),

and 7) Blue Cross NC did not provide a response to Plaintiffs’

appeal of the “INVESTIGATIONAL” ground (id., ¶ 85). The Court

further notes that the pleadings before the Court do not contain

the criteria relied on by Blue Cross NC in determining that A.B.’s

treatment at Outback qualified as “INVESTIGATIONAL,” i.e., the “MCG

26th Edition Care Guidelines: Health Behavioral Health Care 26th

Edition Persistent Depressive Disorder (Dysthymia): Residential

Care ORG: B-009-RES (BHG), Blue Cross NC Corporate Medical Policy:

Medical Necessity and Investigational(Experimental) Services.”

(Id., ¶ 65 (quoting Docket Entry 11-5 at 3).)

Another Judge of this Court recently denied Blue Cross NC’s

motion to dismiss a plaintiff’s claim under Section 1132(a)(1)(A)

for wrongful denial of benefits for wilderness therapy under

similar factual circumstances:

Notably, [Blue Cross NC]’s denial based on the lack of

medical necessity involved several rounds of medical

reviews that invoked application of “Magellan Care

Guidelines” and “Blue Cross NC Corporate Medical Policy

(CMP) Medical Necessity”, but those guidelines and

policies are not contained in the Benefit Booklet relied

on by [Blue Cross NC] in the [m]otion to [d]ismiss, and

[the p]laintiff alleges that the services were in fact

medically necessary, based on the opinions of [the

adolescent beneficiary]’s doctors and therapists, and

therefore covered under the terms of the [p]lan.

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Having considered the briefing, the Court concludes that

the allegations in the [c]omplaint are sufficient to put

[Blue Cross NC] on notice of the provisions of the [p]lan

at issue. While [Blue Cross NC] may dispute [the

p]laintiff’s contentions, the analysis of whether the

denial of benefits was reasonable under the terms of the

[p]lan is a question for review on the record applying

the relevant factors, and would be premature at this

stage. Indeed, attempting to resolve these issues at

this stage would essentially create an end-run around the

structured process for judicial review in ERISA cases for

a [p]lan participant challenging a specific denial of

coverage.

N.E. v. Blue Cross Blue Shield of N. Carolina, No. 1:21CV684, 2023

WL 2696834, at *8 (M.D.N.C. Feb. 24, 2023) (unpublished) (Peake,

M.J.), recommendation adopted, 2023 WL 2692414 (M.D.N.C. Mar. 29,

2023) (unpublished) (Biggs, J.); see also William J. v. BlueCross

BlueShield of Texas, No. 3:22CV1919, 2023 WL 3635640, at *7 (N.D.

Tex. May 24, 2023) (unpublished) (“[V]iewing the plaintiffs’

complaint in the light most favorable to them, the plaintiffs

plausibly allege that they are entitled to relief under [S]ection

1132(a)(1)(B), even without citing to relevant provisions of the

plan. The plaintiffs pled enough to nudge their arguments across

the line from conceivable to plausible, and, therefore, the court

denies the defendants’ motions to dismiss on this issue.” (emphasis

added) (internal citation omitted)), reconsideration denied, 2023

WL 6149126 (N.D. Tex. Sept. 18, 2023) (unpublished).5

5 Defendants contend that all three of “Plaintiffs’ claims against

insightsoftware fail because Plaintiffs do not allege insightsoftware is an ERISA

fiduciary or participated in the complained-of conduct.” (Docket Entry 11 at 14

(bold font and block formatting omitted).) In that regard, Defendants assert

that “[t]he only allegations concerning insightsoftware specifically are that it

employed Plaintiff David B., obtained a fully insured group health insurance

policy from Blue Cross NC, and had a group contract with Blue Cross NC.” (Id.

at 15 (citing Compl., ¶¶ 2-3, 13).) In response, Plaintiffs state that, “[b]ased

on [their] understanding that [Blue Cross NC] is responsible (or has accepted

(continued...)

-17-

In sum, Plaintiffs have pleaded sufficient facts that

plausibly allege the Plan covered A.B.’s treatment at Outback to

survive Defendants’ instant Motion.6

B. Second Cause of Action - Equitable Relief under Section

1132(a)(3)

In the Second Cause of Action, Plaintiffs seek equitable

relief under 29 U.S.C. § 1132(a)(3) for Defendants’ alleged

violation of the MHPAEA. (Compl., ¶¶ 96-106.) Section 1132(a)(3)

permits a participant or beneficiary of a plan to bring a claim

“(A) to enjoin any act or practice which violates any provision of

th[e Protection of Employee Benefit Rights] subchapter [of ERISA]

or the terms of the plan, or (B) to obtain other appropriate

equitable relief (i) to redress such violations or (ii) to enforce

5(...continued)

responsibility for paying benefits, Plaintiffs do not oppose the dismissal of

insightsoftware as a defendant with respect to [the First Cause of Action].”

(Docket Entry 15 at 13-15 n.4.) Accordingly, the Court will grant Defendants’

Motion to Dismiss the First Cause of Action as to Defendant insightsoftware. As

discussed in more detail infra, the Court will grant Defendants’ Motion to

Dismiss as to all Defendants with respect to the Second Cause of Action, and deny

the Motion as to all Defendants with respect to the Third Cause of Action.

6 Defendants also maintain that “Plaintiffs conceded that Outback did not

provide COVERED SERVICES throughout the administrative process,” and that those

“admissions that Outback did not provide COVERED SERVICES foreclose Plaintiffs’

ability to plausibly allege the Plan covers the claims at issue.” (Docket Entry

11 at 14.) In response, Plaintiffs correctly note that Blue Cross NC did not

“raise[ that contention] during the administrative process” and, instead,

“recognized that Plaintiffs argued that [A.B.’s] treatment was covered,” “alleged

lack of preauthorization[,] and then, once that issue was resolved, [maintained]

that therapy provided in a wilderness setting is automatically

‘INVESTIGATIONAL[.]’” (Docket Entry 15 at 13 (all caps font added); see also

Docket Entries 11-3 at 2 & 11-5 at 2 (reflecting Blue Cross NC’s statements

recognizing that Plaintiffs “maintain[ed] that the services were medically

necessary and should be covered by the [P]lan”).) “[A] court reviewing an

administrator’s benefits decisions cannot consider reasons the administrator

included in its internal notes when the administrator never conveyed those

reasons to the claimant.” David P. v. United Healthcare Ins. Co., 77 F.4th 1293,

1313 (10th Cir. 2023). Accordingly, the Court will not dismiss the First Cause

of Action based on any purported concession by Plaintiffs during the

administrative process.

-18-

any provisions of th[e Protection of Employee Benefit Rights]

subchapter [of ERISA] or the terms of the plan.” 29 U.S.C.

§ 1132(a)(3). In turn, the MHPAEA requires that, when a group

health plan (such as the Plan here) provides both medical/surgical

benefits and mental health/substance use disorder benefits, “the

treatment limitations applicable to such mental health or substance

use disorder benefits are no more restrictive than the predominant

treatment limitations applied to substantially all medical and

surgical benefits.” 29 U.S.C. § 1185a(a)(3)(A)(ii). Treatment

limitations under the MHPAEA can qualify as quantitative or

nonquantitative. See 29 C.F.R. § 2590.712(a). “Quantitative

treatment limitations are expressed numerically (such as fifty

outpatient visits per year), while nonquantitative treatment

limitations otherwise limit the scope or duration of benefits.”

Michael M. v. Nexsen Pruet Group Med. & Dental Plan, No. 3:18CV873,

2021 WL 1026383, at *10 (D.S.C. Mar. 21, 2021) (unpublished).

“Nonquantitative [treatment] limitations include, for example,

‘medical management standards limiting or excluding benefits based

on medical necessity or medical appropriateness or based on whether

the treatment is experimental or investigative.’” Id. (quoting 29

C.F.R. § 2590.712(c)(4)(ii)(A)). “To determine whether the Plan

has imposed a more restrictive limitation on mental

health/substance use disorder benefits than comparable

medical/surgical benefits, the Court must identify what specific

benefits it is comparing,” Michael M., 2021 WL 1026383, at *11, and

“a plaintiff must show that the mental health or substance use

-19-

disorder benefit being limited is in the same classification as the

medical/surgical benefit to which it is being compared,” A.H. by &

through G.H. v. Microsoft Corp. Welfare Plan, Civ. No. C17-1889,

2018 WL 2684387, at *6 (W.D. Wash. June 5, 2018) (unpublished).

A plaintiff can allege violations of the MHPAEA by bringing

(1) a facial challenge asserting that the terms of plan

discriminate against mental health and substance abuse treatments

in comparison to medical or surgical treatment; or (2) an

as-applied challenge alleging that the defendant applied the same

nonquantitative treatment limitations more stringently to mental

health and substance use disorder benefits. See Michael M., 2021

WL 1026383, at *10. Here, Plaintiffs’ Complaint does not specify

whether Plaintiffs intend to bring a facial or as-applied challenge

under the MHPARA, but (as previously documented) does “allege[]

that Defendant[s] violated the [MHPAFA] when Defendant[s] applied

medical necessity criteria more stringently by using acute

inpatient care guidelines and criteria to evaluate claims for care

received at sub-acute residential mental health/substance abuse

treatment facilities, applied limitations based on the type of

facility, and applied the preauthorization requirement[s] in ways

that they were not applied to evaluate claims for care received at

analogous medical/surgical facilities, and as a result, denied

coverage for [A.B.]’s treatment at [Outback],” N.E., 2023 WL

2696834, at *10 (emphasis added). “Therefore, it appears that

Plaintiffs bring an as-applied challenge.” Id.

~20-

Defendants argue that the Court should dismiss Plaintiffs’

Second Cause of Action for equitable relief, because the First

Cause of Action for recovery of benefits due under the Plan under

Section 1132(a) (1) (B) would provide Plaintiffs with an adequate

legal remedy. (See Docket Entry 11 at 15-18.) According to

Defendants, Section 1123(a) (3) “is a ‘safety net provision’ that

‘does not authorize claims “where the plaintiff’s injury finds

adequate relief in another part of ERISA’s statutory scheme.”’”

(Id. at 15 (quoting Koman_v. Reliance Std. Life Ins. Co., No.

1:22CV595, 2022 WL 17607056, at *3 (M.D.N.C. Dec. 13, 2022)

(unpublished) (Biggs, J.) (in turn, quoting Korotynska_v.

Metropolitan Life Ins. Co., 474 F.3d 101, 105 (4th Cir. 2006))).)

Thus, Defendants argue, “[w]here a plaintiff asserts an equitable

relief claim seeking redress for the same injuries as a claim for

benefits, dismissal ‘at the motion to dismiss stage is

appropriate.’” (Id. (quoting Koman, 2022 WL 17607056, at *3 n.2).)

In Defendants’ view, “Plaintiffs are not entitled to any of thle

equitable] remedies [they requested in the Complaint],

. . . because their injury remains the denial of benefits[, and a]

claim for benefits could adequately redress that injury.” (Id. at

17.)!

/ Significantly, Plaintiffs did not address Defendants’ arguments under

Korotynska and Koman (see Docket Entry 15 at 17-23), and conceded “that, if

Plaintiffs are ultimately awarded relief under Count I, their MHPAEA count will

be moot” (id. at 17). Moreover, persuasive authority from other district courts

within the Fourth Circuit undermines any argument that the general rule

permitting the pleading of alternative liability theories precludes dismissal of

claims like Plaintiffs’ Second Cause of Action under such circumstances. See

Gasper v. EIDP, Inc., No. 3:23CV512, 2024 WL 1446594, at *3 (W.D.N.C. Apr. 3,

2024) (unpublished) (“[The p]laintiff [] contends the Fourth Circuit .. . could

(continued...)

-—?1-

In Varity Corp. v. Howe, 516 U.S. 489 (1996), the United

States Supreme Court held that, “where Congress elsewhere provided

adequate relief for a beneficiary’s injury [under ERISA], there

will likely be no need for further equitable relief, in which case

such relief normally would not be ‘appropriate,’” id. at 515, and

thus held that Section 1132(a)(3) operates as a “catchall”

7(...continued)

not have been more clear when it stated . . . [that] ‘Federal Rule of Civil

Procedure 8(a)(3) specifically permits pleading “in the alternative,” so nothing

would have prevented plaintiff from suing under both provisions.’ Hayes[ v.

Prudential Ins. Co. of Am., 60 F.4th [848,] 855 [(4th Cir. 2023)] (citations

omitted). However, the [Fourth Circuit] did not address whether[,] had the

plaintiff [pleaded in the alternative], either cause of action would be

susceptible to dismissal. The [Fourth Circuit] made this observation arguably,

in dicta. Id. While th[e c]ourt acknowledges, as other courts in this district

have, that a panel opinion like Hayes cannot overrule a decision of a prior

panel, there is still some support the Fourth Circuit would permit a plaintiff

to plead claims under [Section 1132](a)(1)(B) and [Section 1132](a)(3) in the

alternative. See Rose v. PSA Airlines, Inc., 80 F.4th 488, 495 n.4 (4th Cir.

2023) (stating in a footnote “[p]laintiffs are allowed to plead in the

alternative, ‘so nothing would have prevented [plaintiff] from suing under both

provisions[]’” (quoting Hayes, 60 F.4th at 855)). However, even if this

precedent allows pleading in the alternative, the key question here — as it was

in Rose — is whether the relief [the p]laintiff seeks qualifies as equitable

relief. As the [c]ourt stated in Rose, ‘compensatory damages intended to provide

“monetary relief for all losses sustained as a result of the alleged breach of

fiduciary duties” are legal, not equitable, relief.’ Rose, 80 F. 4th at 496

(quoting Mertens v. Hewitt Assocs., 508 U.S. 248, 255 (1993)).”); T.S. v. Anthem

Blue Cross Blue Shield, No. 1:23CV60, 2023 WL 5004499, at *3 (W.D.N.C. Aug. 4,

2023) (unpublished) (“Contrary to [the p]laintiffs’ assertion, the Fourth

Circuit’s decision in Hayes did not alter the rule established in Korotynska.

Rather, Hayes is an application of that rule, allowing a plaintiff to bring a

claim for equitable relief simultaneously with a claim for benefits under Section

1132(a)(1)(B) in ‘exceptional’ and ‘special circumstances.’ . . . [T]he court

noted in dicta that federal rules and Fourth Circuit precedent allow pleading in

the alternative under certain circumstances, and thus ‘nothing would have

prevented plaintiff from suing under both provisions.’ Id. at 855. But the

court did not address whether, had the plaintiff done so, either cause of action

would be susceptible to dismissal, which is the situation addressed by

Korotynska. Accordingly, Hayes does not ‘reject’ or otherwise render

inapplicable Korotynska, which controls the outcome in this case. Here, [the

p]laintiffs’ equitable claim under the [MHPAEA] is almost identical to the

plaintiff’s equitable claim in Korotynska[, and the] underlying injury is the

same — [the d]efendants’ denial of benefits under the [p]lan. [The p]laintiffs

have a cause of action against the [p]lan directly under [Section] 1132(a)(1)(B).

[T]hus, relief through the application of Section 1132(a)(3) would be

inappropriate.” (footnotes and internal quotation marks omitted)).

-22-

provision and “safety net, offering appropriate equitable relief

for injuries caused by violations that [Section 1132] does not

elsewhere adequately remedy,” id. at 512. The Fourth Circuit has

similarly held that “no question” existed, Korotynska, 474 F.3d at

105, that a plaintiff’s Section 1132(a)(3) claim for “reform of the

systemic and improper and illegal claims handling practices that

[the insurer] use[d] to deny her and other ERISA beneficiaries a

full and fair review of their claims for disability benefits,” id.

at 104, actually “pressed a claim for individual benefits” and

“that [the plaintiff’s] injury is redressable . . . [u]nder

[Section] 1132(a)(1)(B),” id. at 106; see also id. at 107 (“[The

court] join[s] our sister circuits and hold[s] that [Section]

1132(a)(1)(B) affords the plaintiff adequate relief for her

benefits claim, and a cause of action under [Section] 1132(a)(3) is

thus not appropriate.”).

Here, Plaintiffs seek “equitable relief” (Compl., Prayer for

Relief, ¶ 3), including “[a] declaration that the action of

Defendants violate [sic] the MHPAEA” (id., ¶ 106(a)), “[a]n

injunction ordering Defendants to cease violating the MHPAEA and

requiring compliance with the statute” (id., ¶ 106(b)), “[a]n Order

requiring the reformation of the terms of the Plan and the medical

necessity criteria utilized by Defendants to interpret and apply

the terms of the Plan to ensure compliance with the MHPAEA” (id.,

¶ 106(c)), “[a]n Order requiring disgorgement of funds obtained or

retained by Defendants as a result of their violations of the

MHPAEA” (id., ¶ 106(d)), “[a]n Order requiring an accounting by

-23-

Defendants of the funds wrongly withheld by each Defendant from

participants and beneficiaries of the Plan as a result of

Defendants’ violations of the MHPAEA” (id., ¶ 106(e)), “[a]n Order

based on the equitable remedy of surcharge requiring Defendants to

provide payment to Plaintiffs as make-whole relief for their loss”

(id., ¶ 106(f)), “[a]n Order equitably estopping Defendants from

denying Plaintiffs’ claims in violation of the MHPAEA” (id.,

¶ 106(g)), and “[a]n Order providing restitution from Defendants to

Plaintiffs for their loss arising out of Defendants’ violations of

the MHPAEA and unjust enrichment” (id., ¶ 106(h)).

All of those equitable remedies, however packaged, ultimately

seek to obtain payment for A.B.’s treatment at Outback under the

Plan - relief which Section 1132(a)(1)(B) adequately provides. See

Gasper v. EIDP, Inc., No. 3:23CV512, 2024 WL 1446594, at *4

(W.D.N.C. Apr. 3, 2024) (unpublished) (“[The p]laintiff’s second

claim for relief simply repackages the same argument for a single

injury. [The p]aintiff alleges no additional facts or injury other

than the wrongful denial of benefits, and [the p]laintiff’s

requested relief under [Section 1132](a)(3) would all serve the

ultimate purpose of allowing [the p]laintiff to recover wrongfully

denied benefits. [The p]aintiff’s claims are impermissibly

duplicative because no relief sought by the [p]laintiff is

unavailable under [Section 1132](a)(1)(B).” (internal quotation

marks, brackets, ellipsis, and citation omitted)); R.P. & M.P. v.

BlueCross BlueShield of N. Carolina, No. 5:22CV295, 2023 WL

4242746, at *2 (E.D.N.C. June 28, 2023) (unpublished) (“[T]he only

-24-

harm that flowed from the alleged breach of fiduciary duty was the

denial of benefits. Because [Section] 1132(a)(1)(B) remedied the

denial of benefits, the alleged breach of fiduciary duty is

adequately remedied without invoking [Section] 1132(a)(3). Indeed,

if the [c]ourt followed [the] plaintiffs’ logic, any beneficiary

claiming a wrongful denial of benefits could ‘repackage’ her claim

as a breach of fiduciary duty.”); Carol P. v. Truliant Fed. Credit

Union, No. 3:22CV356, 2023 WL 2110896, at *4 (W.D.N.C. Jan. 25,

2023) (unpublished) (“[The p]laintiffs [] assert that the relief

sought under the [MHPAEA] claim is distinct. But the standard is

not whether the relief sought is distinct. It is whether ‘relief

is potentially available to [a plaintiff] under [Section]

1132(a)(1)(B)[,]’ Korotynska, 474 F.3d at 106. ‘[The

p]laintiff[s’] approach would promote [Section] 1132(a)(3) from

safety net to first line of attack, an outcome at odds with both

the plain language of [Section] 1132(a)(1)(B) and the statutory

structure of [Section] 1132.” Id. at 108. Here, [the p]laintiffs’

underlying injury is the same – [the d]efendants’ denial of

benefits under the [p]lan. [The p]laintiffs have a cause of action

against the [p]lan directly under [Section] 1132(a)(1)(B).

‘[T]hus, relief through the application of Section 1132(a)(3) would

be inappropriate.’ Id. at 107.”), recommendation adopted, 2023 WL

2088436 (W.D.N.C. Feb. 17, 2023) (unpublished); Alan R. v. Bank of

Am. Grp. Benefits Program, No. 3:20CV441, 2022 WL 413935, at *11

(W.D.N.C. Feb. 9, 2022) (unpublished) (“[The p]laintiffs’ [MHPAEA]

claim does appear to be a repackaged claim for the denial of

-25-

benefits claim. [The p]laintiffs bring a claim under the [MHPAEA]

as an-applied violation which raises the same concerns as [the

p]laintiffs’ [S]ection 1132(a)(1)(B) claim that [the insurer]’s

decision to deny benefits because [the adolescent beneficiary]’s

treatment was not medically necessary was the wrong decision.

While the issue for [the p]laintiffs’ [MHPAEA] claim is whether

[the insurer] applied the [Level of Care Assessment Tool] more

restrictively than the guidelines applied to certain medical and

surgical conditions, it does not change the ultimate injury and

intent of the claim which is the same as that raised in the

[S]ection 1132(a)(1)(B) claim.”); Greenwell v. Group Health Plan

for Employees of Sensus USA, Inc., 505 F. Supp. 3d 594, 607

(E.D.N.C. 2020) (“[The] plaintiff’s claim for himself and the

putative class under [Section] 1132(a)(3) must be dismissed under

Varity and Korotynska as their injuries are adequately remedied by

the relief available under [Section] 1132(a)(1)(B). The injunctive

relief and equitable accounting and disgorgement sought under

[Section] 1132(a)(3) seek to remedy the same injury that the

[Section] 1132(a)(1)(B) does: the wrongful denials of Plaintiff and

the putative class members’ claims for coverage.”); Exact Sciences

Corp. v. Blue Cross & Blue Shield of N. Carolina, No. 1:16CV125,

2017 WL 1155807, at *9 (M.D.N.C. Mar. 27, 2017) (unpublished)

(Tilley, S.J.) (“[The plaintiff]’s alleged injuries resulting from

the alleged breach of fiduciary duties are redressable under

[Section 1132](a)(1)(B) pursuant to which [the plaintiff] is

seeking, in Count 1, the benefits it claims that BCBS–NC has

-26-

improperly denied. BCBS–NC’s motion to dismiss Count 2 [seeking

relief under Section 1132(a)(3)] is granted.”); Wood v. General

Dynamics Corp., 157 F. Supp. 3d 428, 431-32 (M.D.N.C. 2016) (“[The

d]efendants [] move to dismiss [the p]laintiff’s breach of

fiduciary duty claims, variously styled as claims for

misrepresentation, failure to follow plan documents, omission,

equitable estoppel, and surcharge. [The p]laintiff brings each of

these claims under the equitable relief provision in [Section]

1132(a)(3). . . . [T]here is no question that [the p]laintiff’s

denial of benefits claims could provide adequate remedies for her

alleged injuries. The complaint implicitly acknowledges as much by

requesting the same relief for her equitable claims as it does for

her denial of benefits claims. Because Plaintiff’s denial of

benefits claims could provide an adequate remedy for all of her

injuries, her claims for equitable relief under Section 1132(a)(3)

will be dismissed.” (internal quotation marks and parenthetical

citations omitted)); Patterson v. Duke Univ., No. 1:14CV1062, 2015

WL 5608126, at *2-3 (M.D.N.C. Sept. 23, 2015) (unpublished)

(Tilley, S.J.) (“Here, the clear focus of [the plaintiff]’s suit is

the denial of benefits she alleges are due to her. . . . As in

Korotynska, [Section] 1132(a)(1)(B) affords [the plaintiff] an

adequate remedy for her claimed denial of benefits. Furthermore,

resolution of her claims requires a review, interpretation, and

application of . . . an ERISA-regulated plan, not simply a review,

interpretation, and application of ERISA. Therefore, [the

plaintiff]’s second claim for relief seeking equitable relief under

-27-

[Section] 1132(a)(3) is dismissed.”); Wright v. Hartford Life &

Acc. Ins. Co., No. 5:14CV126, 2015 WL 4488656, at *8 (W.D.N.C. July

23, 2015) (unpublished) (“A benefits determination under [Section]

1132(a)(1)(B) should consider the fiduciary’s decision making

process and the fiduciary’s motives and any conflict of interest it

may have. Because the fiduciary’s conduct is woven into a claim

for benefits, bringing multiple causes of action for the same

conduct asking for the same outcome is duplicative, rendering

equitable relief unnecessary. Th[e c]ourt [previously] warned

against plaintiffs attempting to repackage benefit claims as claims

for breach of fiduciary duty in this manner . . . . [The

p]laintiff seeks equitable relief in the form of an injunction

against [the d]efendant from engaging in further violations of

ERISA. But this equitable relief ‘is pursued with the ultimate aim

of securing the remedies afforded by [Section] 1132(a)(1)(B).’

Korotynska, 474 F.3d at 108. Further, as the District of South

Carolina noted[,] ‘simply because one [may be] unable to prevail on

the merits under a [Section] 1132(a)(1)(B) claim does not mean such

a claim is not an adequate remedy.’ Johnson v. Michelin North

America, 658 F. Supp. 2d 732, 744 (D.S.C. 2009). [The p]laintiff’s

claim for equitable relief arises out of [the insurer]’s handling

of [the p]laintiff’s [long term disability] benefit claim, and thus

the [c]ourt finds that monetary relief under [Section

1132](a)(1)(B) would adequately remedy [the p]laintiff’s injury and

that an additional claim under [Section 1132(a)(3) is duplicative

and unnecessary.” (some internal quotation marks and internal

-28-

citations omitted)); Roland v. Jefferson Pilot Fin. Ins. Co., No.

1:07CV982, 2008 WL 11483555, at *5 (M.D.N.C. Apr. 16, 2008)

(unpublished) (Dixon, M.J.) (“[The p]laintiff seeks the kind of

relief available under [S]ection 1132(a)(1)(B) – that is, ‘to

recover benefits due to him under the terms of his plan, to enforce

his rights under the terms of the plan, or to clarify his rights to

future benefits under the terms of the plan.’ Specifically, the

complaint alleges that [the p]laintiff is entitled to recover

benefits due to him under the [p]lan and enforce his rights under

the [p]lan pursuant to 29 U.S.C. [§] 1132(a)(1)(B). In sum, for

these reasons, Plaintiff may not pursue a breach of fiduciary duty

action under . . . [S]ection 1132(a)(3), and his breach of

fiduciary duty claim should therefore be dismissed.” (internal

quotation marks and parenthetical citation omitted)).

With regard specifically to Plaintiffs’ request for equitable

relief in the form of “reformation of the terms of the Plan and the

medical necessity criteria utilized by Defendants to interpret and

apply the terms of the Plan to ensure compliance with the MHPAEA”

(Compl, ¶ 106(c)), the Court notes that the United States Supreme

Court has held that “[it] ha[d] found nothing suggesting that

[Section 1132(a)(1)(B)] authorizes a court to alter th[e] terms [of

an ERISA plan], at least not in present circumstances, where that

change, akin to the reform of a contract, seems less like the

simple enforcement of a contract as written and more like an

equitable remedy,” CIGNA Corp. v. Amara, 563 U.S. 421, 436 (2011),

and thus found that reformation of a plan’s terms “f[e]ll within

-29-

the scope of the term ‘appropriate equitable relief’ in [Section

1132] (a) (3),” id. at 442.

Here, however, as discussed above, Plaintiffs bring an as-

applied challenge to the Plan under the MHPAEA, alleging not that

the Plan’s terms, on their face, discriminate against mental health

and substance abuse disorder treatment, but that Blue Cross applies

those terms in a manner that violates the MHPAERA. As such,

Plaintiffs do not plausibly allege that they seek “reformation of

the terms of the Plan” (Compl., @ 106(c) (emphasis added)) but,

rather, enforcement of Blue Cross NC’s application of the Plan’s

terms in a manner consistent with the MHPAFA, relief that Section

1132 (a) (1) (B) affords, see 29 U.S.C. § 1132(a) (1) (B) (authorizing

“a participant or beneficiary .. . to enforce his rights under the

terms of the plan”). see Korotynska, 474 F.4th at 107-08 (“Not

only is relief available to the plaintiff under [Section]

1132 (a) (1) (B), but the equitable relief she seeks under [Section]

(3) - the revision of claims procedures - is pursued with

the ultimate aim of securing the remedies afforded by [Section]

1132 (a) (1) (B).”); see also L.L. v. Medcost Benefit Servs., No.

1:21CV265, 2023 WL 4375663, at *4 (W.D.N.C. July 5, 2023)

(unpublished) (“[T]he [p]laintiffs allege that an MHPAEA-compliant

process would have resulted in an award of benefits. Accordingly,

to the extent the plan administrator violated the MHPAEA, such

violations can be raised and adequately addressed through the

[p]laintiffs’ [Section] 1132(a) (1) (B) claim. That is a claim based

on enforcement of the statute (i.e., a claim at law) pursuant to

~30-

[Section] 1132(a)(1)(B), not an equitable claim pursuant to

[Section] 1132(a)(3) . . . .” (internal bracketed citation

omitted)); William J., 2023 WL 3635640, at *8-9 (finding that,

where the plaintiffs sought recovery of benefits under Section

1132(a)(1)(B) as well as equitable remedies including reformation

of plan terms under Section 1132(a)(3) for alleged MHPAEA

violations, “[w]hichever way the plaintiffs frame their

allegations, whether as a breach of fiduciary duty, breach of

contract, failing to properly administer benefits, applying

exclusion criteria that the plan does not contain, or applying more

restrictive standards to [the adolescent beneficiary’s outdoor

behavior health] treatment than for other forms of treatment, all

of the plaintiffs’ allegations boil down to one issue: whether the

defendants improperly denied covering [the adolescent

beneficiary]’s treatment” and, as a result, dismissing the Section

1132(a)(3) claim as “duplicative,” because “[S]ection 1132(a)(1)(B)

provides the plaintiffs with an adequate avenue for the remedies

that they seek through [S]ection 1132(a)(3)”); N.E., 2023 WL

2696834, at *13 (noting that the plaintiff sought reformation of

the plan’s terms under Section 1132(a)(3), “conclud[ing] that it

[wa]s likely that a [Section 1132](a)(1)(B) remedy [wa]s or would

be adequate to address [the p]laintiff’s injury related to the

alleged [MHPAEA] violation, particularly where [the p]laintiff

raises ‘as applied’ [MHPAEA] claims, and therefore [holding that]

a separate claim under [Section] 1132(a)(3) [wa]s duplicative,” but

-31-

opting to “defer determination of [that issue]” to later stages of

the litigation).8

In short, the Court will dismiss the Second Cause of Action

under Section 1123(a)(3) as duplicative under Varity and

Korotynska. In light of that determination, the Court need not

address Defendants’ alternative argument that Plaintiffs failed to

plausibly allege a violation of the MHPAEA (see Docket Entry 11 at

18-21).

C. Third Cause of Action - Statutory Penalties under Section

1132(a)(1)(A) and (c)

“Section 1132(c) . . . provides for liability against ‘any

administrator . . . who fails or refuses to comply with a request

for any information which such administrator is required by this

subchapter to furnish to a participant or beneficiary.’” Craine v.

Hartford Life & Acc. Ins. Co., No. 1:08CV586, 2010 WL 1957593, at

*3 (M.D.N.C. May 17, 2010) (unpublished) (quoting 29 U.S.C.

§ 1132(c)(1)). “Specifically, 29 U.S.C. § 1024(b)(4) requires plan

administrators to ‘furnish a copy of the latest updated summary,

plan description, and the latest annual report, any terminal

report, the bargaining agreement, trust agreement, contract, or

other instruments under which the plan is established or

8 Moreover, as Defendants point out (see Docket Entry 11 at 17 n.15), to

the extent that Plaintiffs seek prospective equitable remedies such as “[a]n

injunction ordering Defendants to cease violating the [MHPAEA]” (Compl.,

¶ 106(b)) and “reformation of the terms of the Plan . . . to ensure compliance

with the [MHPAEA]” (id., ¶ 106(c)), “former plan participants like Plaintiffs ‘do

not have standing to seek [such] relief because they are not realistically

threatened by [ D]efendant[s’] future breaches of fiduciary duties.’” (Docket

Entry 11 at 17 (quoting Kendall v. Pharmaceutical Product Dev., LLC, No.

7:20CV71, 2021 WL 1231415, at *13 (E.D.N.C. Mar. 31, 2021) (unpublished))

(internal quotation marks omitted).)

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operated.’” Id. District courts have the discretion to award a

daily statutory penalty (currently $110) if a plan administrator

fails or refuses to comply with a written request within thirty

days. See id.; see also 29 C.F.R. § 2575.502c–1.

In Plaintiffs’ Complaint, they allege, “[u]pon information and

belief, [that] Blue Cross NC was the Plan Administrator, was

appointed agent by the Plan Administrator for the receipt of

response to Participant document requests, and/or was delegated the

Plan Administrator’s obligation to respond to Participants’

requests for documents.” (Compl., ¶ 113.) In Plaintiff’s view:

[f]acts supportive of th[at] belief include:

a. The Benefit Booklet contains a vague description of

the Plan Administrator (within the definition of “Group

Administrator”) as an unspecified “representative of the

Employer designated to . . . provide information to

SUBSCRIBERS and MEMBERS concerning this health benefit

plan.”

b. The Benefit Booklet does not name or provide any

additional information for the Plan Administrator.

c. The Benefit Booklet states that this Group/Plan

Administrator “has the discretionary authority and

responsibility to manage and direct the operation of the

Plan.” Elsewhere in the Benefit Booklet, Blue Cross NC

suggests that it claims discretionary authority under the

plan.

d. The Benefit Booklet, which is part of the Plan or a

summary plan description, states that “Blue Cross and

Blue Shield of North Carolina has directed that this

Benefit Booklet be issued and signed by the President and

the Secretary [of Blue Cross NC].” Under ERISA, it is the

Plan Administrator’s role to issue plans and summary plan

descriptions.

e. The Benefit Booklet uses MEMBER of the Plan and Member

of Blue Cross NC interchangeably.

f. Plaintiffs asked Blue Cross NC to forward their

document requests to the plan administrator if Blue Cross

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NC was not the plan administrator, and Blue Cross NC did

not forward the requests.

(Id., ¶ 131.)

Defendants contend that Plaintiffs’ Third Cause of Action

“fails[,] because they did not direct their requests [for Plan

documents] to the plan administrator.” (Docket Entry 11 at 21

(bold font and block formatting omitted).) In that regard,

Defendants (A) note that “Plaintiffs requested documents only from

Blue Cross NC” (id. at 22 (citing Compl., ¶¶ 41, 45, 47, 50)), and

(B) assert that “Blue Cross NC is not the plan administrator”

(id.). According to Defendants, “[u]nder the Benefit Booklet, the

GROUP ADMINISTRATOR is ‘the plan administrator for purposes of

ERISA’” (id. (quoting Docket Entry 11-1 at 114)), and “[t]he

Benefit Booklet identifies the GROUP ADMINISTRATOR as a

‘representative of the EMPLOYER designated to assist with MEMBER

enrollment and provide information to SUBSCRIBERS and MEMBERS

concerning this health benefit plan.’” (Id. (quoting Docket Entry

11-1 at 114)). Defendants further maintain that “neither the Plan

nor insightsoftware is the plan administrator” (id. at 23), because

“[t]he ‘Plan itself cannot be the plan administrator, as the terms

“plan” and “plan administrator” are entirely distinct’” (id.

(quoting Figlioli v. Liberty Life Assurance Co. of Boston, No.

1:17CV171, 2018 WL 834616, at *3 (N.D. W. Va. Feb. 12, 2018)

(unpublished))), and “insightsoftware is the employer that

established the Plan, making it the ‘plan sponsor’” (id. (quoting

29 U.S.C. § 1002(16)(B))). Defendants concede that “a plan sponsor

can be the plan administrator if the plan does not otherwise

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designate an administrator” (id. (citing 29 U.S.C.

§ 1002(16) (A) (11)), but contends that “the Plan designates a plan

administrator” (id. (citing Docket Entry 11-1 at 114)). Defendants

additionally argue that Group Administrator Doe “cannot be liable

for penalties,” as “Plaintiffs do not allege they submitted a

written request for documents to [that entity].” (Id. (citing

Compl., FTI 41, 47, 76).)

Although Defendants deny in their arguments in support of the

instant Motion that Blue Cross NC constitutes the plan

administrator (see Docket Entry 11 at 22; see also id. at 23

(further denying that the Plan or insightsoftware constitute the

plan administrator)), Defendants’ denials do not constitute factual

allegations that the Court can consider on a motion to dismiss

under Rule 12(b) (6). Further complicating matters, neither the

Benefit Booklet nor Blue Cross NC’s denial letters during the

administrative appeals process identify the plan administrator.

(See Docket Entries 11-1, 11-3, and 11-5.) In light of the absence

of this information in the pleadings before the Court and, as

quoted above, Plaintiffs’ allegations that Blue Cross NC

constituted either the plan administrator or, through agency or

delegation, obtained the plan administrator’s duty to receive

participants’ document requests under ERISA (see Compl., 113),

the Court will not dismiss the Third Cause of Action at this early

stage in the litigation. Compare N.E., 2023 WL 2696834, at *13-14

(dismissing claim for statutory penalties under Section 1132 □□□

against the defendant BlueCross, where BlueCross identified the

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defendant employer as the plan administrator and “contend[ed] that

the[] statutorily required documents were provided by [the

defendant employer], the [p]lan [a]dministrator”).

IV. Conclusion

Plaintiff have stated a claim for relief in the First Cause of

Action (except against Defendant insightsoftware, LLC), as well as

in the Third Cause of Action, but the Second Cause of Action fails

as a matter of law due to its duplicativeness.

IT IS THEREFORE ORDERED that Defendants’ Motion to Dismiss

(Docket Entry 10) is GRANTED IN PART AND DENIED IN PART, in that,

1) as to the First Cause of Action, the Motion to Dismiss is

GRANTED as to Defendant insightsoftware, but DENIED as to all other

Defendants; 2) regarding the Second Cause of Action, the Motion to

Dismiss is GRANTED as to all Defendants; and 3) with respect to the

Third Cause of Action, the Motion to Dismiss is DENIED as to all

Defendants.

/s/ L. Patrick Auld

L. Patrick Auld

United States Magistrate Judge

September 30, 2025

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