The opinion of the court was delivered by: JAMES FRANCIS, Magistrate Judge
MEMORANDUM OPINION AND ORDER
This is an action brought by a physician and the professional
corporation through which he operates to recover payment for services
rendered. The plaintiffs originally brought suit in New York State
Supreme Court, New York County, against four former patients; their
employer, Sam Ash Music Corporation ("Sam Ash"); and the entity that
administered the Sam Ash group health plan, First Health Group Corp.
("First Health"). The defendants removed the case to this Court pursuant
to 28 U.S.C. § 1441 on the basis of federal question jurisdiction,
since it involves claims arising under the Employee Retirement Income
Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et sea.
The parties then agreed that I would exercise jurisdiction over the
action for all purposes pursuant to 28 U.S.C. § 636(c). The
defendants have now moved for summary judgment, while the plaintiffs have
cross-moved to disqualify defendants' counsel from continuing its joint
representation of all defendants. For the reasons set forth below, the defendants' motion for summary judgment is granted in part and
denied in part, and decision on the plaintiffs' motion for
disqualification is deferred pending a hearing.
Plaintiff John S. Artandi is a physician licensed to practice in the
State of New York. (Affidavit of John S. Artandi dated Feb. 25, 2004
("Artandi Aff."), attached to Notice of Cross-Motion, at 4 & Exh. A).
He practices as a physiatrist specializing in the field of physical
medicine and rehabilitation, which is a medical discipline incorporating
physical therapy. (Artandi Aff. at 4). Apparently, Dr. Artandi performs
his services under the auspices of Advanced Pain Care of New York, Inc.
("Advanced Pain"). (Complaint ("compl."), ¶ 12).
From December 1995 to November 1996, Dr. Artandi treated the four
individual defendants in this action: Arnaldo Buzack, Scott Denett,
Timothy Brown, and Maritza Jacobo. (Artandi Aff. at 5). At the time he
provided the services, he obtained from each patient an assignment of
insurance payments. (Affirmation of Douglas E. Rowe dated Feb. 5, 2004
("Rowe Aff."), attached to Notice of Motion, ¶ 5 & Exh. C).
Although some of the claims submitted to First Health on behalf of these
patients were paid, the vast majority were not. According to Dr. Artandi,
he is still owed $37, 717.00 for treatment provided to Mr. Buzack, $33,
866.00 for Mr. Denett,*fn1 $9, 502.00 for Mr. Brown, and $18, 534.00 for
Ms. Jacobo. (Compl., ¶¶ 15-34).
The group health insurance plan at issue here (the "Plan") was
established by Sam Ash for its employees in 1992. (Affidavit of David
Charles Ash dated Feb. 4, 2004 ("Ash Aff."), attached to Notice of
Motion, ¶ 4). Because it is a self-insured plan, the funds to pay
most claims come directly from Sam Ash itself. (Ash Aff., ¶ 4). In
addition, Sam Ash maintains a stop-loss policy with Standard Security
Life Insurance Company of New York, which pays the amount by which any
covered claim exceeds $50,000.00 in one year. (Ash Aff., ¶ 4).
At the time the Plan was created, Sam Ash hired Comprehensive Benefit
Services Co., Inc. ("Comprehensive") as a third-party administrator to
process and adjudicate claims. (Ash Aff., ¶ 5). Thereafter,
Comprehensive changed its name to EBP HealthPlans and was subsequently
purchased by First Health. (Ash Aff., ¶ 6). First Health's role is
defined by an Administration Agreement originally entered into between
Sam Ash and Comprehensive. (Ash Aff., ¶¶ 6, 7).
When the various insurance claims at issue here were denied, Dr.
Artandi and Advanced Pain brought this action against Sam Ash, First
Health, and the four individual patients who, under the terms of their
assignments, remain liable for payment for any services not covered by
insurance. Discovery has been completed, and Sam Ash and First Health now
move for summary judgment on a variety of grounds. First Health argues
principally that as a third-party administrator, it is not a fiduciary of
the Plan and therefore cannot be held liable for unpaid benefits. Sam Ash contends that
it, too, is not liable because it was never in privity with the
plaintiffs, and the parties who did have a direct relationship with Sam
Ash the patients only assigned to the plaintiffs their
rights with respect to First Health. Further, Sam Ash maintains that the
denial of the claims was proper because: (1) the Plan allowed for the
provision of physical therapy services only by a physical therapist, not
by a physician, (2) the services rendered were unnecessary and not in
accordance with generally accepted medical standards, and (3) the charges
exceeded those that are reasonable and customary.
The plaintiffs have opposed the defendants' motion and have cross-moved
to disqualify the law firm of Certilman Balin Adler & Hyman, LLP (the
"Certilman Firm") from representing all of the defendants jointly.
According to the plaintiffs, the interests of the individual patients are
so inconsistent with those of Sam Ash and First Health that ethical
principles bar a law firm from representing both groups.
I will address each issue in turn and will discuss additional facts as
appropriate to the analysis.
Pursuant to Rule 56 of the Federal Rules of Civil Procedure, summary
judgment is appropriate where "the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to
any material fact and that the moving party is entitled to judgment as a
matter of law." Fed.R.Civ.P. 56(c); accord Marvel Characters.
Inc. v. Simon, 310 F.3d 280, 285-86 (2d Cir. 2002); Andy Warhol
Foundation for the Visual Arts, Inc. v. Federal Insurance Co.,
189 F.3d 208, 214 (2d Cir. 1999). The moving party bears the initial burden
of demonstrating "the absence of a genuine issue of material fact."
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Where the
moving party meets that burden, the opposing party must come forward with
"specific facts showing that there is a genuine issue for ...