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ARTANDI v. BUZACK

April 9, 2004.

JOHN S. ARTANDI and ADVANCED PAIN CARE OF NEW YORK, INC., Plaintiffs, -against- ARNALDO BUZACK, SCOTT DENETT, TIMOTHY BROWN, MARITZA JACOBO, FIRST HEALTH GROUP CORP. and SAM ASH MUSIC CORPORATION, Defendants


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.

Background

  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.

 Discussion

  A. Summary Judgment

  1. Legal Framework

  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 ...


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