ATLANTIC NEUROSURGICAL SPECIALISTS P.A. v. UNITED HEALTHCARE GROUP INC.
2:20-cv-13834
D.N.J.
Dec 12, 2022

Background

  • Plaintiffs: two medical practices (Atlantic Neurosurgical Specialists, P.A.; American Surgical Arts, P.C.) and three treating physicians sued UnitedHealthcare entities on behalf of three insured patients (F.L., P.T., J.C.) under ERISA, alleging United improperly denied/underpaid emergency/out‑of‑network claims and refused to process appeals submitted by providers using patients’ DAR forms.
  • Core allegation: United uses a uniform procedure (the alleged “DAR Denial Policy”) that rejects provider-submitted designation-of-authorized-representative (DAR) forms (or requires United’s specific form and a one‑year expiration), thereby denying a full and fair review as required by the DOL Claims Procedure Regulation, 29 C.F.R. § 2560.503‑1(b)(4).
  • Procedural history: Court previously dismissed the initial complaint for lacking Article III standing and denied an earlier amendment on Article III grounds, but had held physicians plausibly had statutory standing as attorneys‑in‑fact under valid POAs. Plaintiffs moved for leave to file a second amended complaint (PSAC).
  • New allegations in PSAC: specific plan provisions for each patient (describing “Allowed Amount” formulas, network/Complementary Provider Network participation via MultiPlan, and use of FAIR Health benchmarks) to support entitlement to additional benefits if claims were properly reviewed.
  • Claims and disposition below: Court granted leave to amend, concluding the PSAC cures prior Article III defects for the physician plaintiffs and patients; ruled that ERISA procedural/regulatory claims against United are not futile at the pleading stage; dismissed claims asserted by the medical‑practice plaintiffs insofar as they attempt to act as attorneys‑in‑fact.
  • Other rulings: Court declined to dismiss on exhaustion grounds (finding exhaustion is typically developed in discovery or summary judgment) and refused to dismiss ERISA § 502(a)(3) claims as duplicative at the pleading stage.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Article III standing PSAC now pleads plan terms showing patients were entitled to more benefits and that a full ERISA review would have yielded additional payment United: PSAC still fails to show DAR policy caused the benefit outcome or that a different procedure would change the benefits determination Court: PSAC sufficiently alleges entitlement under plans; low Article III threshold met for purposes of amendment
Applicability/reasonableness of DAR procedure under DOL Claims Procedure Reg. United’s DAR policy and template denial letters improperly deny full and fair review and may unreasonably require United’s form/one‑year expiration United: requiring completion of a specific DAR form and a one‑year authorization is a reasonable plan procedure (citing DOL FAQ) Court: Plaintiffs plausibly plead claims that United’s procedures may violate 29 C.F.R. § 2560.503‑1(b)(4); reasonableness disputed but not resolved on pleadings
Failure to exhaust administrative remedies Plaintiffs: exhaustion excused because United failed to follow ERISA‑compliant procedures or exhaustion would be futile United: patients had to comply with United’s DAR requirements before appealing Court: Declined to dismiss for failure to exhaust at pleading stage; exhaustion ordinarily addressed with discovery/summary judgment
ERISA remedies and provider standing/assignability Physicians (as attorneys‑in‑fact) and providers seek benefits under § 502(a)(1)(B) and equitable relief under § 502(a)(3) United: providers cannot bring fiduciary‑breach or equitable claims absent an assignment; (a)(3) is duplicative if (a)(1)(B) supplies complete relief Court: Physicians may proceed as attorneys‑in‑fact; medical‑practice plaintiffs cannot; § 502(a)(3) claims not dismissed as duplicative at pleading stage (may be revisited later)

Key Cases Cited

  • Heyl & Patterson Int’l, Inc. v. F.D. Rich Hous., 663 F.2d 419 (3d Cir. 1981) (courts liberally grant leave to amend under Rule 15)
  • Foman v. Davis, 371 U.S. 178 (1962) (factors guiding leave to amend)
  • Great W. Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159 (3d Cir. 2010) (consideration of Foman factors on amendment)
  • Massarsky v. Gen. Motors Corp., 706 F.2d 111 (3d Cir. 1983) (futility equals inability to survive Rule 12(b)(6))
  • Brown v. Philip Morris Inc., 250 F.3d 789 (3d Cir. 2001) (futility standard and pleading sufficiency)
  • Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility pleading standard)
  • Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (Twombly plausibility formulation)
  • Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) (injury‑in‑fact requirement under Article III)
  • Lujan v. Defs. of Wildlife, 504 U.S. 555 (1992) (standing elements)
  • Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (1998) (constitutional standing requirement)
  • Uzuegbunam v. Preczewski, 141 S. Ct. 792 (2021) (standing and redressability principles)
  • Lincoln Ben. Life Co. v. AEI Life, LLC, 800 F.3d 99 (3d Cir. 2015) (jurisdictional aspects of futility/standing)
  • Omega Hosp., LLC v. United Healthcare Servs., Inc., 345 F. Supp. 3d 712 (M.D. La. 2018) (discussed in context of DAR one‑year authorization)
  • Pa. Chiropractic Ass’n v. Blue Cross Blue Shield Ass’n, 286 F.R.D. 355 (N.D. Ill. 2012) (discussed in context of plan form requirements)
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