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Long Island Thoracic Surgery, P.C. v. Building Service 32BJ Health Fund

United States District Court, E.D. New York

September 3, 2019

LONG ISLAND THORACIC SURGERY, P.C. AND SHAHRIYOUR ANDAZ, M.D., Plaintiffs,
v.
BUILDING SERVICE 32BJ HEALTH FUND, Defendant.

          REPORT AND RECOMMENDATION

          Anne Y. Shields, United States Magistrate Judge

         Plaintiffs Long Island Thoracic Surgery, P.C. (“LI Thoracic”) and Shahriyour Andaz, M.D. (“Dr. Andaz”) (collectively “Plaintiffs”) commenced this action under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001, et seq. In the Amended Complaint, Plaintiffs allege that Defendant Building Service 32BJ Health Fund (the “Fund” or “Defendant”) violated ERISA by failing to pay Plaintiffs for medical services provided by the Plaintiffs to three beneficiaries of the Fund. Plaintiffs also bring state law claims sounding in breach of express and implied contract, unjust enrichment, violation of New York Insurance Law § 3224-a (the “Prompt Pay Law”), and defamation.

         Presently before this court, upon referral for report and recommendation by the Honorable Sandra J. Feurstein, see Docket Entry (“DE”) dated December 28, 2018, is Defendant's motion for summary judgment to dismiss Plaintiffs' complaint pursuant to Federal Rule of Civil Procedure 56. DE [37].

         For the reasons set forth below it is respectfully recommended that Defendant's motion be granted in part and denied in part.

         FACTUAL BACKGROUND

         I. Basis of Facts Recited Herein

         The facts set forth below are drawn largely from the parties' statements of material facts submitted pursuant to Rule 56.1 of the Local Rules of the United States District Courts for the Southern and Eastern Districts of New York (the “Rule 56.1 Statements”). The facts are undisputed unless otherwise noted.

         The Court turns to discuss the facts relied upon by the parties in connection with the present motion.

         II. The Parties

         Plaintiff LI Thoracic is a New York professional corporation with its principal place of business located at 444 Merrick Road, Suite 380, Lynbrook, New York. Amended Complaint (“Am. Compl.”) ¶ 3, DE [9]. LI Thoracic employs physician assistants (“PA”), to assist in examining, diagnosing, and treating patients. Id. ¶ 5.

         Dr. Andaz is a New York licensed and board-certified physician affiliated with LI Thoracic. Id. ¶ 4. Dr. Andaz specializes in complex chest cancer procedures and robotic assisted and minimally invasive thorascopic surgery. Id. ¶ 7. Dr. Andaz serves as the Director of the Thoracic Oncology program at South Nassau Communities Hospital (“SNCH”). Id. ¶ 6. During the relevant time period, Dr. Andaz maintained privileges at SNCH and Mercy Medical Center (“Mercy”) to provide medical services to patients. Id. ¶ 9.

         The Fund is a corporation duly organized under the laws of New York State. Am. Compl. ¶ 10. The Fund is a jointly administered benefit fund established pursuant to the Taft-Hartley Act, 29 U.S.C.§ 186. It is administered by an equal number of management and union trustees, The Fund is governed by a Declaration of Trust and Plan, administered by the Trustees. The Trust Agreement provides:

Article V Section 1. Administrative Powers. The Trustees shall have all the general and incidental powers necessary or appropriate to proper administration of the Plan, and the Trust Fund . . . Included within such Trustee powers, but not by way of limitation, shall be the power:
a. To adopt a Plan and amend it from time to time as the Trustee determine in their sole and absolute discretion;
b. To pay or provide for the payment of Benefits in accordance with the Plan, and to determine the manner of payments of such benefits;
c. To process and approve or deny claims for the Benefits, determining whether the conditions for the payments of Benefits as set forth in this Third Agreement and the Plan have been fulfilled and whether any exceptions or exclusions are applicable. . . .
e. To decide in the Trustee's sole discretion, all questions (both factual and legal) relating to the eligibility or rights of Participants or Beneficiaries for Benefits under the plan. And the amount and kind of all benefits to be paid under the plan;
f. To interpret, in the Trustee's sole discretion, all terms in this Trust Agreements or in the Plan, including the resolution or clarification of any ambiguities, omissions or inconsistencies;
g. To make, amend, modify or repeal rules and regulations which the Trustees, in their sole discretion, deem necessary or proper for administering the Plan or carrying out the provisions of the Trust Agreement.

         III. The Claims

         a. Patient P.S.

         Patient P.S. was a 71-year old male, and long-time smoker who was admitted to Mercy on April 16, 2015, as an inpatient. Am. Compl. ¶ 13. P.S. was found to have bilateral pulmonary embolism and right hilar mass with significant lymph adenopathy. Id. P.S. was treated by Dr. Andaz from April 16, 2015 through April 23, 2015. Id. ¶ 15.

         During the time of treatment, P.S. presented documentation indicating that Defendant was contractually required to pay for the health services provided when P.S. incurred liability. Am. Compl. ¶ 16. Also, at that time, P.S. executed documents purportedly assigning to Plaintiffs all rights to receive reimbursement for the health care services. Id. Plaintiffs agreed to provide medical care to P.S. with the understanding that they would receive payment in full for the services from Defendant on P.S.'s behalf. Am. Compl. ¶ 22. To date, Plaintiffs have not been paid in full. Id. ¶¶ 25, 30.

         b. Patient W.D.

         In or around March 14, 2015, patient W.D. was admitted through the emergency room at SNHC where he presented with serious health conditions including enlargement of the lymph nodes. Am. Compl. ¶¶ 32-33. From March 14, 2015 through March 23, 2015, W.D. was treated by Dr. Andaz and/or Frank Smith (“Smith”), a PA employed by LI Thoracic. Id. ¶ 34.

         During the time of treatment W.D. presented documentation indicating that Defendant was contractually required to pay for the health services provided when W.D. incurred liability. Am. Compl. ¶ 35. Also at that time, W.D. executed documents purportedly assigning to Plaintiffs all rights to receive reimbursement for health care services. Id. Plaintiffs agreed to provide medical care to W.D. with the understanding that they would receive payment in full for the services from Defendant on W.D.'s behalf. Am. Compl. ¶ 40. To date, Plaintiffs have not been paid in full. Id. ¶¶ 43, 50.

         c. Patient W.E.

         From June 2013 through April 2014, patient W.E. was provided medical care by Dr. Andaz and/or Smith. Am. Compl. ¶ 52. During the time of treatment, W.E. presented documentation indicating that Defendant was contractually required to pay for the health services provided when W.E. incurred liability. Id. ¶ 53. Also, at that time, W.E. executed documents purportedly assigning to Plaintiffs all rights to receive reimbursement for the health care services. Id. To date, Plaintiffs have not been paid in full. Id. ¶¶ 62, 68.

         IV. The Plan

         A Summary Plan Description (SPD) sets forth the benefits provided by the Fund. In its opening section under Important Notice the SPD states:

This booklet is the Summary Plan Description (SPD) of the plan of benefits (“the Plan”) of the Building Service 32BJ Health Fund (“the Fund”) with regard to the Metropolitan and Suburban Plans. Your rights to benefits can only be determined by this SPD, as interpreted by official action of the Trustees (“the Board”). . . .
In the event there is any conflict between the terms and conditions of the Plan benefits as set forth in this booklet and any oral advice you receive from a Building Service 32BJ Funds employee or union representative, the terms and conclusions set forth in this booklet shall control.

         With regard to the discretionary authority vested with the Fund administrators the SPD provides that:

The Plan is what the law calls a “health and welfare: benefits program. Benefits are provided from the Fund's assets. Those assets accumulated under the provisions of the Trust Agreement and ae held in a Trust Fund for the purpose of providing benefits to covered participants and dependents and defraying reasonable administrative expenses.
The Plan is administered by a Board of Trustees. The Board governs the Plan in accordance with an Agreement and Declaration of Trust. The Board and/or its duly authorized designess(s) has the exclusive right, power and authority, in its sole and absolute discretion, to administer, apply and interpret the Plan established under the Trust Agreement, and to decide all matters arising in connection with the operation or administration of the Plan established under the Trust. Without limiting the generality of the foregoing the Board and/or its duly authorized designees, including the Appeals committee with regard to benefit claim appeals, shall have the sole and absolute discretional authority to:
*take all actions and make all decisions with respect to the eligibility for, and the amount of, benefits payable under the Plan.
*formulate, interpret and apply rules, regulations and policies necessary to administer the Plan in accordance with the terms of the Plan.
*decide questions, including legal or factual questions, relating to the calculation and payment of benefits under the Plan.
*resolve and/or clarify an ambiguities, inconsistencies and omissions arising under the Plan, as described in this SPD, the Trust Agreement or other Plan documents.
*process and approve or deny benefit claims and rules on any benefit exclusions.
*determine the standard of proof required in any case.

         The SPD provides for benefits at different levels depending as to whether the treating physician is in-network or out-of-network. The SPD defines and out-of-network provider as:

Out-of-network provider/supplier means a doctor, other professional provider or durable medical equipment, home, health, care or home infusion supplier who is not in the Plan's network for medical, hospital, vision, dental or behavioral health services. Out-of-network benefits are benefits for covered services provided by out-of-network providers and suppliers.
The SPD further provides that:
Care that is provided by an out-of-network provider is considered out-of-network care and, as such, reimbursed at a lower level. If you use out-of-network providers, you must first satisfy the annual deductible before being reimbursed at 70% of the allowed amount. Amounts above the allowed amount are not eligible for reimbursement and are your responsibility to pay, in addition to any deductible and required co-insurance, if you use an out-of-network provider ask your provider if he or she will accept Empire's payments as payment in full (excluding your deductible or co-insurance requirements).
In the section titled “Frequently asked questions”, the SPD states:
10. What is the allowed amount?
The allowed amount is not what the doctor charges you. It is the amount that the Plan will pay for covered services, and it is generally a much lower amount than the doctor charges you. When you go in-network, the allowed amount is based on an agreement with the provider. When you go out-of-network, the allowed amount is based on the Fund's payment rate charge to a network provider.

         Finally, the SPD provides that only health benefits under the Plan may be assigned, and only to a health care provider. Def.'s 56.1 ¶ 9, DE [38].

         V. The Assignments

         Defendant contends that it has no record of any assignment of benefits to Plaintiffs for patient P.S., and that none has been provided by Plaintiffs. Def.'s 56.1 ¶ 10. Plaintiffs dispute that and maintain that all services provided to P.S. were rendered exclusively when he was in the hospital and that the Fund received and paid for claims related to P.S.'s inpatient hospital stay, “for which an assignment was likely executed by P.S. that was inclusive of all services received in the hospital.” Pls.' 56.1 ¶ 10, DE [42].

         There is no dispute that W.D. and W.E. executed assignment forms. The assignment forms read as follows:

ASSIGNMENT OF INSURANCE BENEFITS: Patients with insurance benefits please read and sign below.
I hereby assign all medical and/or surgical benefits, to include major medical benefits to which I am entitled, private insurance, and any other health plans, to Long Island Thoracic Surgery, PC. This assignment will remain in effect until revoked by me in writing. A photocopy of this assignment is to be considered as valid as the original. I understand I am financially responsible for charges whether or not paid by said insurance. I hereby authorize said assignee to release all information necessary to secure payment.

Def.'s Mot., Affidavit of Peggy Napier (“Napier Aff.”) ¶ 10, DE [41]. This assignment, signed by W.D. is dated August 17, 2015. Id. W.D. signed a second ...


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