United States District Court, S.D. New York
OPINION & ORDER ADOPTING REPORT &
Abrams United States District Judge.
Montefiore Medical Center ("Montefiore") brought
this action against Defendants Local 272 Welfare Fund and
Marc Goodman, in his capacity as Fund Manager of Local 272
Welfare Fund (together the "Fund"), alleging that
the Fund violated ERISA by reimbursing Montefiore for
hospital services it provided to the Fund's members and
their dependents at substantially lower rates than what the
Summary Plan Description ("SPD" or the
"Plan") requires. The parties cross-moved for
summary judgment. The motions were referred to Magistrate
Judge Netburn, and on December 2, 2016, she issued a Report
and Recommendation (the "Report"), which recommends
that Montefiore's Motion for Summary Judgment be granted
and the Fund's Motion for Summary Judgment be denied. On
December 16, 2016, the Fund filed objections to the Report,
and on December 30, 2016, Montefiore filed its response. For
the reasons that follow, the Court adopts the thorough and
well-reasoned Report in its entirety.
Standard of Review of a Magistrate Judge's Report and
district court "may accept, reject, or modify, in whole
or in part, the findings or recommendations made by the
magistrate judge." 28 U.S.C. § 636(b)(1). Under
Federal Rule of Civil Procedure 72(b), a party may make
"specific written objections to the proposed findings
and recommendations" within fourteen days of being
served with a copy of a magistrate judge's recommended
disposition. Fed.R.Civ.P. 72(b). A district court must review
de novo "those portions of the report or
specified proposed findings or recommendations to which
objection is made." 28 U.S.C. § 636(b)(1).
"However, when the objections simply reiterate previous
arguments or make only conclusory statements, the Court
should review the report for clear error." Brown v.
Colvin, 73 F.Supp.3d 193, 197 (S.D.N.Y. 2014). "To
accept those portions of the report to which no timely
objection has been made, 'a district court need only
satisfy itself that there is no clear error on the face of
the record.'" Hunter v. Lee, No.
13-CV-5880, 2016 WL 5942311, at *1 (S.D.N.Y. Oct. 11, 2016)
(quoting King v. Greiner, No. 02-CV-5810, 2009 WL
2001439, at *4 (S.D.N.Y. July 8, 2009)).
prevail on a motion for summary judgment, the movant must
show "that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a
matter of law." Fed.R.Civ.P. 56(a). "An issue of
fact is genuine and material if the evidence is such that a
reasonable jury could return a verdict for the nonmoving
party." Cross Commerce Media, Inc. v. Collective,
Inc., 841 F.3d 155, 162(2dCir. 2016). "The movant
bears the burden of demonstrating the absence of a question
of material fact." Chaparro v. Kowalchyn, No.
15-CV-1996, 2017 WL 666113, at *3 (S.D.N.Y. Feb. 17, 2017).
"When a motion for summary judgment is properly
supported by documents or other evidentiary materials, the
party opposing summary judgment may not merely rest on the
allegations or denials of his pleading; rather his response,
by affidavits or otherwise as provided in the Rule, must set
forth 'specific facts' demonstrating that there is
'a genuine issue for trial.'" Wright v.
Goord, 554 F.3d 255, 266 (2d Cir. 2009) (quoting
Fed.R.Civ.P. 56(e)). In determining whether to grant summary
judgment, the Court must "constru[e] the evidence in the
light most favorable to the non-moving party and draw all
reasonable inferences in its favor." Mitchell v.
City of New York, 841 F.3d 72, 77 (2d Cir. 2016)
(quoting Costello v. City of Burlington, 632 F.3d
41, 45 (2d Cir. 2011)); see also Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). "Where, as here,
there are cross-motions for summary judgment, 'each
party's motion must be examined on its own merits, and in
each case all reasonable inferences must be drawn against the
party whose motion is under consideration.'"
Lumbermens Mut. Cas. Co. v. RGIS Inventory Specialists,
LLC, 628 F.3d 46, 51 (2d Cir. 2010) (quoting Morales
v. Quintel Entm't, Inc., 249 F.3d 115, 121 (2d Cir.
Court assumes familiarity with the facts outlined in the
Report. The Fund makes three objections. First, the Fund
contends that Montefiore does not have standing to challenge
the Fund's interpretation of the Plan. Second, it argues
that Judge Netburn applied the incorrect standard of review.
Third, the Fund objects to the Report's interpretation of
the Plan's provision regarding out-of-network providers.
See Defs' Obj. at 1. For the reasons that
follow, each of these objections is unpersuasive and the
Report is adopted in its entirety. The Court holds that
Montefiore does have standing, that the de novo
standard of review is the appropriate one, and that Judge
Netburn was correct in concluding that pursuant to the SPD,
in calculating payment owed to out-of-network providers,
"the Fund needs to determine what it pays its various
in-network providers for a particular service, and then
select the 'maximum, ' or highest, amount."
Report at 13.
initial matter, the Fund argues that Montefiore does not have
standing as the assignee of the Fund's participants to
"object to [the] plan's interpretation rather than
its plan provisions." Defs' Obj. at 13. The Court
Second Circuit has held that "a narrow exception to the
ERISA standing requirements .... grants standing ... to
healthcare providers to whom a beneficiary has assigned his
claim in exchange for health care." Simon v. Gen.
Elec. Co., 263 F.3d 176, 178 (2d Cir. 2001); see
also I.V. Servs. of Am., Inc. v. Trustees of Am. Consulting
Eng'rs Council Ins. Trust Fund, 136 F.3d 114, 117
n.2 (2d Cir. 1998) ("[U]nder federal common law, the
assignees of beneficiaries to an ERISA-governed insurance
plan have standing to sue under ERISA."). Nonetheless,
Defendants contend that Montefiore does not have standing in
this case because it is challenging "the Fund's
interpretation of its SPD." Defs' Obj. at 13. In so
doing, however, they cite no case law for the proposition
that a healthcare provider cannot stand in the shoes of
beneficiaries when advancing arguments regarding a plan's
interpretation. Indeed, in I. V. Services of America,
Inc., the Second Circuit held that a healthcare
provider, "standing in [the beneficiary's]
shoes" could raise arguments regarding the
interpretation of a plan. 136 F.3d at 121-22 ("Mr.
Whitehurst (or I.V. Services [the provider] standing in his
shoes) should be able to claim that any contract ambiguities
are to be interpreted against appellees who wrote the
contract.")- The Court is thus satisfied that Montefiore
has standing to raise the issues and arguments presented
Standard of Review
Fund next argues that Judge Netburn erred by applying the
de novo standard of review to the Fund's
interpretation of the SPD. Defs' Obj. at 6-11. As the
Report rightly recognized, the SPD contains an express grant
of discretionary authority to the Board of Trustees, which
would ordinarily mean that a court could reverse the
administrator's decision only if the decision is
arbitrary and capricious. Report at 8; see Firestone Tire
& Rubber Co. v. Bruch,489 U.S. 101, 115 (1989);
Zervos v. Verizon N.Y., Inc.,277 F.3d 635, 650 (2d
Cir. 2002). Nonetheless, the Report concluded that de
novo review should be applied in this case pursuant to
the Second Circuit's decision in Halo v. Yale Health