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Borden v. Blue Cross and Blue Shield of Western New York

February 21, 2006

RICHARD P. BORDEN, PLAINTIFF,
v.
BLUE CROSS AND BLUE SHIELD OF WESTERN NEW YORK, ALSO KNOWN AS, HEALTHNOW N.Y., INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: William M. Skretny United States District Judge

DECISION AND ORDER

I. INTRODUCTION

In this case, Plaintiff Richard P. Borden alleges that his health insurance provider, Defendant Blue Cross and Blue Shield of Western New York, also known as HealthNow, N.Y., Inc. ("HealthNow"), wrongfully refuses to waive its right of subrogation with respect to payments it made for his medical care after he was injured in a motorcycle accident. As a result, Plaintiff contends that he has been unable to execute a settlement with the parties responsible for his injuries. Plaintiff asserts that HealthNow's refusal to waive its right of subrogation constitutes a violation its contractual and fiduciary duties. He demands judgment compelling HealthNow to forego its subrogation claim, or in the alternative, to pay him the full amount offered to settle his claim. Currently before this Court is Defendants' Motion to Dismiss the Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the following reasons, Defendants' Motion is granted.

II. BACKGROUND

A. Factual History

In adjudicating Defendants' Motions to Dismiss, this Court assumes the truth of the following factual allegations contained in Plaintiff's Complaint. See Hosp. Bldg. Co. v. Trs. of Rex Hosp., 425 U.S. 738, 740, 96 S.Ct. 1848, 1850, 48 L.Ed. 2d 338 (1976); see also Hamilton Chapter of Alpha Delta Phi, Inc. v. Hamilton Coll., 128 F.3d 59, 63 (2d Cir. 1997). On September 6, 2004, while driving his motorcycle, Plaintiff collided with a vehicle owned by Defendant Oliver Kirkendall and operated by Defendant James Joy. (Compl., ¶ 8).*fn1 Having suffered serious physical injuries, Plaintiff was airlifted to Erie County Medical Center where he remained continuously hospitalized for several months. (Compl., ¶ 9). Defendant HealthNow paid more than $55,000.00 in medical expenses incurred as a result of the accident. (Compl., ¶ 15).

The employee benefit plan ("Plan") pursuant to which HealthNow rendered Plaintiff's medical payments contains a Rider that provides:

In the event that you suffer an injury or illness for which another party may be responsible, such as someone injuring you in an accident, and we have paid benefits as a result of that injury or illness, we will be subrogated and succeed to the right of recovery against the party responsible for your illness or injury to the extent of the benefits we have paid. This means that we have the right independently of you to proceed against the party responsible for your injury or illness to recover the benefits we have paid. (Compl., ¶¶ 13 & 15; Balon Dec., Exh. C, p. 53). By letter dated February 3, 2005, HealthNow notified Plaintiff that it was not willing to waive its subrogation claim, but rather, intended to pursue recovery from any and all responsible persons directly. (Compl., ¶ 16).

Shortly thereafter, by letter dated February 24, 2005, Defendant State Farm Mutual Automobile Insurance Company ("State Farm"), on behalf of its insureds Kirkendall and Joy, offered to pay Plaintiff $100,000 -- the entire policy limit -- to settle Plaintiff's claims. (Compl., ¶¶ 10 & 11). State Farm provided verification of the limits of coverage and a release, and demanded documentation of lien satisfaction as a condition of settlement.

(Compl., ¶ 11). Plaintiff thereafter requested orally and in writing that HealthNow consent to the proposed settlement and waive its subrogation rights, or in the alternative, pay the amount of the proposed settlement to him directly. (Compl., ¶¶ 17-20). HealthNow declined to do either. On or about March 11, 2005, HealthNow provided Plaintiff with a courtesy copy of a Summons and Complaint substantiating that it had commenced a formal adversarial proceeding against Kirkendall and Joy. (Compl., ¶ 21 & Exh. F).

According to Plaintiff, Defendant Progressive Northwestern Insurance Company ("Progressive"), his secondary medical insurance carrier, paid approximately $5,000.00 in medical expenses incurred as a result of the accident. (Compl., ¶¶ 25-26). Progressive also failed or refused to waive its right of subrogation, which is provided for by its policy of insurance. (Compl., ¶¶ 27, 30).

B. Procedural History

Plaintiff commenced this case on March 16, 2005, by filing a Summons and Complaint in New York State Supreme Court, Erie County. Defendant HealthNow removed this case to the United States District Court for the Western District of New York on April 11, 2005. On April 14, 2005, HealthNow filed a Motion to Dismiss the Complaint pursuant to Rule 12(b)(6) of the Federal Rules of ...


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