Redstone v. Empire HealthChoice HMO, Inc.

CourtDistrict Court, S.D. New York
DecidedMarch 5, 2024
Docket1:23-cv-02077
StatusUnknown

This text of Redstone v. Empire HealthChoice HMO, Inc. (Redstone v. Empire HealthChoice HMO, Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Redstone v. Empire HealthChoice HMO, Inc., (S.D.N.Y. 2024).

Opinion

UNITED STATES DISTRICT COURT 3/5/2024 SOUTHERN DISTRICT OF NEW YORK -------------------------------------------------------------- X JEREMIAH REDSTONE, M.D., individually and : as attorney-in-fact on behalf of Empire : beneficiary L.P., and JOHN PAUL TUTELA, : M.D., individually, : : 23-CV-2077 (VEC) : Plaintiffs, : OPINION : -against- : : : EMPIRE HEALTHCHOICE HMO, INC. and : EMPIRE HEALTHCHOICE ASSURANCE, INC., : : Defendants. : -------------------------------------------------------------- X VALERIE CAPRONI, United States District Judge: Plaintiffs Jeremiah Redstone and John Paul Tutela (collectively, the “Plaintiffs”) commenced this action seeking to recover alleged underpayments for medical services provided to L.P., who was enrolled in a health insurance plan (the “Plan”) administered by Defendants Empire Healthchoice HMO, Inc. and Empire Healthchoice Assurance, Inc. (collectively, “Empire”). Plaintiffs assert claims under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, et seq., and New York State law. Comp. ¶ 1, Dkt. 1. Empire moved to dismiss the Complaint in its entirety pursuant to Federal Rule of Civil Procedure 12(b)(6). See Defs. Mot., Dkt. 12. Plaintiffs opposed the motion. See Pl. Mem. of Law, Dkt. 26. For the following reasons, Empire’s motion to dismiss is GRANTED. I. BACKGROUND1 0F L.P.2 is a 61-year-old woman who was diagnosed with breast cancer and is a beneficiary 1F of a health care plan administered by Empire. Compl. ¶¶ 16–17. Plaintiffs Redstone and Tutela are board-certified plastic surgeons with medical practices in New York and New Jersey. Id. ¶¶ 4–5. The Complaint alleges that L.P. executed an assignment of benefits to Plaintiffs and a power of attorney authorizing Redstone to file this action to recover benefits owed under the Plan. Id. ¶¶ 7, 18. A. Medical Care In March 2020, Plaintiffs, assisted by a physician’s assistant, performed breast reconstruction on L.P. following a bilateral mastectomy. Id. ¶¶ 17, 20. Prior to the procedure, Empire had authorized L.P.’s surgery. Id. ¶ 24. The Authorization clearly identified Redstone as an out-of-network provider and warned L.P. that she may pay much more than she would pay if she used an in-network provider and that those costs may be in excess of what Empire would pay. Declaration of Frances Schultz (“Schultz Decl.”) Exhibit B at 2, Dkt. 15–2. Of the $671,723 Plaintiffs billed for the surgery, Empire covered $26,099.20, leaving a balance due of $645,623.80. Id. ¶¶ 26–31.3 2F In August 2020, Redstone performed the second stage of L.P.’s breast reconstruction. Id. ¶ 32. As before, Empire authorized the procedure, again warning L.P. that her surgeon was an

1 The well-pled facts alleged in the Complaint are assumed true for purposes of evaluating Defendants’ motion to dismiss. See Nielsen v. Rabin, 746 F.3d 58, 61 (2d Cir. 2014). The facts are taken from the complaint and any documents incorporated by reference therein.

2 To maintain Patient L.P.’s privacy and to comply with the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), the parties abbreviate Patient L.P.’s name in the Complaint and briefing.

3 Using the estimate provided in the Complaint that the surgery took 8 to 12 hours, Redstone’s bill would translate to a rate of between $19,503.50 and $29,255.25 per hour. Tutela’s bill was only slightly less. Even the physician assistant’s billing rate was jaw-dropping: $17,506 to $26,260 per hour. out-of-network provider who may charge more than what Empire would cover. Schultz Decl. Exhibit C at 1, Dkt. 15–3. Of the $138,451 Redstone charged for his services, Empire paid $7,216.77, leaving a balance due of $131,234.23. Id. ¶¶ 34, 37. B. Insurance Coverage

Plaintiffs are out-of-network providers with Empire, which is a large health insurance company. Id. ¶¶ 9–12. The allegations in the Complaint are confusing and conclusory with regard to the provisions of the Plan. According to the Complaint, for reasons that are inadequately alleged,4 Empire was obligated to grant “an in-network exception” to Plaintiffs and 3F to reimburse them in full at their billed rate for the medical services they provided to L.P. Id. ¶¶ 54–55. Perhaps recognizing that those allegations were not factually supported, the Complaint also alleges that even if Plaintiffs were not entitled to an in-network exception, Empire was obligated to reimburse out-of-network providers based on “available data resources of competitive fees” in the area in which the services were provided. Id. ¶ 58. The Complaint alleges that the main source for such fees is the FAIRHealth databases, but, according to the Complaint, Empire’s reimbursement rates were far below the amounts reflected in those databases.5 Id. ¶¶ 59–60. 4F The Complaint alleges that the medical services Plaintiffs provided to L.P. were rendered outside of Empire’s service area and were provided through Empire’s BlueCard program,

4 Plaintiffs allege that Defendants had no in-network surgeons who could perform L.P.’s surgery. Compl. ¶ 51. That allegation is entirely conclusory and strikes the Court as implausible. Nevertheless, from that factually dubious premise, Plaintiffs allege “[u]pon information and belief” that the Plan was, therefore, obligated to reimburse them as out-of-network providers “under an in-network exception at the physicians’ billed charges.” Compl. ¶ 54. Plaintiffs do not cite to any provision of the Plan to support that allegation and allege no facts to support their conclusion that there was not a single in-network surgeon capable of performing L.P.’s surgery.

5 The Complaint does not allege the amounts reflected in the FAIRHealth databases for this surgical procedure. The Complaint also alleges that the “amount reimbursed by Empire for [Plaintiffs’] services are . . . far below the 85-90th percentile as represented by the terms of the Plan.” Compl. ¶ 60. The Complaint cites to no provision of the Plan and does not disclose to what the “85-90th percentile” relates. pursuant to which Empire relies upon Horizon Blue Cross and Blue Shield (“BCBS”) for claims administration and processing. Id. ¶¶ 61–62. Plaintiffs allege that Empire must rely on Horizon BCBS’s payment methodologies, and that Empire was required to pay claims at amounts paid to out-of-network providers by Horizon BCBS. Id. ¶ 63. The Complaint alleges that BCBS “has

paid substantially greater amounts for these services than was paid on these claims” and that those higher reimbursement rates “represent the reasonable and customary rates in New Jersey.” Id. The Complaint never alleges what those rates are or to whom such higher rates were paid. According to Plaintiffs, they interpret unspecified provisions of the Plan and representations purportedly made on Horizon BCBS’s website to require: (1) Empire to pay non-participating out-of-service area providers based on the local Horizon BCBS’s non- participating provider fee schedule/rate; (2) payments from Empire to be consistent with obligations imposed by local law; (3) non-participating providers to be paid using a fee schedule based on a percentage of values determined by either Medicare or FAIRHealth; (4) if reimbursement is determined using information from the Centers for Medicare and Medicaid

Services (“CMS”), then the claims administrator will update such information no less than annually. Id. ¶ 64. Plaintiffs allege that they exhausted their administrative remedies with Empire and, if they did not, they were excused from doing so because it would have been futile. Id. ¶¶ 66–68. DISCUSSION II.

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Bluebook (online)
Redstone v. Empire HealthChoice HMO, Inc., Counsel Stack Legal Research, https://law.counselstack.com/opinion/redstone-v-empire-healthchoice-hmo-inc-nysd-2024.