Brooks v. Blue Cross/Blue ShieldBrooks v. Blue Cross/Blue Shield
Appeal from the United States District Court for the Southern District of Florida. (No. 95-405-CIV-SM), Stanley Marcus, Judge.
PER CURIAM:
The district court‘s grant of summary judgment to the Defendants is AFFIRMED based upon the holding and rationale contained in Part III.A of the district court‘s September 22, 1995 order, a copy of which is attached as Appendix A hereto. We have no occasion to reach the remaining issues addressed in other parts of that order and imply no view concerning any of them.
AFFIRMED.
ATTACHMENT
APPENDIX A
UNITED STATES DISTRICT COURT, SOUTHERN DISTRICT OF FLORIDA.
No. 95-405-CIV-MARCUS.
Nadine Brooks, Mildred McIver, Duane Norman, Leonard Struthers, Madie Wilkerson, J.D. Wilkerson, Winter Garden Citrus Growers Association and Winterhaven Citrus Growers Association, Plaintiffs, v. Blue Cross/Blue Shield of Florida, Inc., New York Life Insurance Company, United American Insurance Company, and First National Life Insurance Company, Defendants.
ORDER OF SUMMARY JUDGMENT
THIS CAUSE comes before the Court upon (1) Defendant Blue Cross/Blue Shield of Florida, Inc.‘s (“Blue Cross‘s“) motion to dismiss the amended complaint (DE # 31), filed May 15, 1995; (2) Defendant New York Life Insurance Company‘s (“New York Life‘s“) (a) motion for instructions and an Order directed to Plaintiff‘s counsel (DE # 46), filed June 5, 1995; (b) combined motion to dismiss and/or for summary judgment (DE # 47), filed June 5, 1995; and (c) corrected motion for more definite statement and for RICO case statement (DE # 56), filed June 7, 1995; (3) Defendant First National Life Insurance Company‘s (“First National‘s“) (a) motion to dismiss the amended complaint (DE # 53), filed June 7, 1995; and (b) motion for summary judgment (DE # 93), filed August 4, 1995; and (4) Defendant United American Insurance Company‘s (“United American‘s“) corrected motion to dismiss or in the alternative for more definite statement (DE # 67).1 On August 28, 1995, the Plaintiffs filed a single response to all of these motions with the exception of New York Life‘s motion for instructions and an Order directed to Plaintiffs’ counsel, to which the Plaintiffs responded on September 14, 1995.2 The Court also heard oral argument
ORDERED and ADJUDGED as follows:
- Defendant Blue Cross‘s motion to dismiss the amended complaint (DE # 31) is GRANTED;
- Defendant New York Life‘s motion for instructions and an Order directed to Plaintiff‘s counsel (DE # 46) is DENIED AS MOOT;
- Defendant New York Life‘s combined motion to dismiss and/or for summary judgment (DE # 47) is GRANTED;
- Defendant New York Life‘s corrected motion for more definite statement and for RICO case statement (DE # 56) is DENIED AS MOOT;
- Defendant First National‘s motion for summary judgment (DE # 93) is GRANTED;
- Defendant First National‘s motion to dismiss (DE # 53) is DENIED AS MOOT; and
- Defendant United American‘s corrected motion to dismiss (DE # 67) is GRANTED.
- Any other motions pending in this action at this time are DENIED AS MOOT.
- Defendants shall file a proposed Order of final summary judgment within ten (10) days of this Order.
I.
The Plaintiffs bring this purported Class Action pursuant to the Medicare Secondary Payer statute (the “MSP statute” or the “MSP laws“),
A group health plan—
(I) may not take into account that an individual (or the individual‘s spouse) who is covered under the plan by virtue of the individual‘s current employment status with an employer is entitled to benefits under this subchapter under section 426(a) of this title, and
(II) shall provide that any individual aged 65 or older (and the spouse age 65 or older of any individual) who has current employment status with an employer shall be entitled to the same benefits under the plan under the same conditions as any such individual (or spouse) under age 65.
to the extent that—
(i) payment has been made, or can reasonably be expected to be made, with respect to the item or service as required under paragraph (1)....
In the third paragraph, the MSP statute includes a private right of action for double damages against the “primary plan which fails to provide for primary payment (or appropriate reimbursement)....”
Under this statutory scheme, therefore, if an aged employee accepts the employer‘s plan, then that plan will provide primary coverage, even if by its own terms the policy states that its coverage is secondary to Medicare payment. Thus, where a group health plan attempts to offer coverage that is only secondary to Medicare‘s primary coverage, then that coverage becomes primary to Medicare‘s coverage by operation of the statute. See Health Ins. Ass‘n of Am. Inc. v. Shalala, 23 F.3d 412, 415 (D.C.Cir.1994) (“The effect of [
The Plaintiffs in this action are divided into two groups. The first set of Plaintiffs, the “Individual Plaintiffs,” are working individuals over the age of sixty-five whose employers provided some form of group health insurance for their employees. Each of the Individual Plaintiffs, however, opted out of the employer plan coverage in favor of Medicare payment for health care. In addition, each of the Individual Plaintiffs acquired Medigap supplemental health insurance at some time between January 1, 1983, and the present from one or more of Defendants New York Life, United American, and First National (collectively, the “Insurer Defendants“). Defendant Blue Cross acts as the fiscal intermediary or administrator for the Medicare program by processing claims for benefits under Medicare. The second group of Plaintiffs, the “Employer Plaintiffs,” are the present or former employers of the Individual Plaintiffs. The Employer Plaintiffs are alleged to have participated in the Individual Plaintiffs’ purchase of supplemental health coverage in addition to Medicare. In particular, both of the named Employer Plaintiffs provided payroll deduction services through which the Individual Plaintiffs’ insurance premiums were deducted from their paychecks, and payment was remitted directly to the insurer in a single check. In addition, Defendant Winter Haven Citrus Growers Association (“Winter Haven“) paid half the insurance premium for its employees who purchased insurance to supplement their Medicare coverage.
Beginning in 1993, the Employer Plaintiffs received demands from Medicare for reimbursement of health care costs paid by Medicare to providers rendering services for the Individual Plaintiffs. The Employer Plaintiffs claim that they have been damaged in that they “did not receive the health insurance coverage they were required to provide by law, and further may be damaged because
The Plaintiffs thus contend that the Insurer Defendants improperly sold Medigap insurance when they were required by law to provide primary insurance coverage under the MSP laws. Plaintiffs further assert that the Insurer Defendants’ use of the mail and wires to transmit false information about health insurance, solicit customers, and pay coverage secondary to that of Medicare constituted mail and wire fraud in violation of
The Insurer Defendants have separately moved to dismiss the Amended Complaint and/or for summary judgment, primarily on the grounds that the insurance they sold to the Plaintiffs did not constitute a “group health plan” subject to regulation under the MSP statute. In the alternative, the Insurer Defendants have also asserted that (1) the Plaintiffs lack standing to maintain their claims; (2) the Plaintiffs have failed to exhaust administrative remedies, depriving this Court of subject-matter jurisdiction; (3) the Plaintiffs’ claims are time-barred; (4) Plaintiffs’ RICO claims fail to plead fraud with particularity under
II.
The following standards of review are applicable to the motions before the Court:
A. Motions to Dismiss
The purpose of a
The Eleventh Circuit has recently written:
[T]he Supreme Court has stated that the “accepted rule” for appraising the sufficiency of a complaint is “that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Tiftarea Shopper, Inc. v. Georgia Shopper, Inc., 786 F.2d 1115, 1117-18 (11th Cir.1986) (quoting Conley).
Id. A complaint may not be dismissed because the plaintiff‘s claims do not support the legal theory he relies upon since the court must determine if the allegations provide for relief on any possible theory. Robertson v. Johnston, 376 F.2d 43 (5th Cir.1967).4 We hasten to add that this motion is viewed with disfavor and rarely granted. See e.g., Madison v. Purdy, 410 F.2d 99, 100 (5th Cir.1969); International Erectors, Inc. v. Wilhoit Steel Erectors & Rental Service, 400 F.2d 465, 471 (5th Cir.1968) (“Dismissal of a claim on the basis of barebone pleadings is a precarious disposition with a high mortality rate.“). The pleadings must show, in short, that the Plaintiffs have no claim before the
B. Motions for Summary Judgment
The standard to be applied in reviewing summary judgment motions is stated unambiguously in
The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
It may be entered only where there is no genuine issue of material fact. Moreover, the moving party has the burden of meeting this exacting standard. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970).
In applying this standard, the Eleventh Circuit has explained:
In assessing whether the movant has met this burden, the courts should view the evidence and all factual inferences therefrom in the light most favorable to the party opposing the motion. Adickes, 398 U.S. at 157; Marsh, 651 F.2d at 991. All reasonable doubts about the facts should be resolved in favor of the non-movant. Casey Enterprises v. Am. Hardware Mutual Ins. Co., 655 F.2d 598, 602 (5th Cir.1981). If the record presents factual issues, the court must not decide them; it must deny the motion and proceed to trial. Marsh, 651 F.2d at 991; Lighting Fixture & Elec. Supply Co. v. Continental Ins. Co., 420 F.2d 1211, 1213 (5th Cir.1969). Summary judgment may be inappropriate even where the parties agree on the basic facts, but disagree about the inferences that should be drawn from these facts. Lighting Fixture & Elec. Supply Co., 420 F.2d at 1213. If reasonable minds might differ on the inferences arising from undisputed facts, then the court should deny summary judgment. Impossible Electronic, 669 F.2d at 1031; Croley v. Matson Navigation Co., 434 F.2d 73, 75 (5th Cir.1970).
Moreover, the party opposing a motion for summary judgment need not respond to it with any affidavits or other evidence unless and until the movant has properly supported the motion with sufficient evidence. Adickes, 398 U.S. at 160; Marsh, 651 F.2d at 991. The moving party must demonstrate that the facts underlying all the relevant legal questions raised by the pleadings or otherwise are not in dispute, or else summary judgment will be denied notwithstanding that the non-moving party has introduced no evidence whatsoever. Brunswick Corp. v. Vineberg, 370 F.2d 605, 611-12 (5th Cir.1967). See Dalke v. Upjohn Co., 555 F.2d 245, 248-49 (9th Cir.1977).
Clemons v. Dougherty County, 684 F.2d 1365, 1368-69 (11th Cir.1982); see also Amey, Inc. v. Gulf Abstract & Title, Inc., 758 F.2d 1486, 1502 (11th Cir.1985), cert. denied, 475 U.S. 1107, 106 S.Ct. 1513, 89 L.Ed.2d 912 (1986).
The United States Supreme Court has recently provided significant additional guidance as to the evidentiary standard which trial courts should apply in ruling on a motion for summary judgment:
[The summary judgment] standard mirrors the standard for a directed verdict under
Federal Rule of Civil Procedure 50(a) , which is that the trial judge must direct a verdict if, under the governing law, there can be but one reasonable conclusion as to the verdict. Brady v. Southern R. Co., 320 U.S. 476, 479-80 (1943).
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). The Court in Anderson further stated that “[t]he mere existence of a scintilla of evidence in support of the position will be insufficient; there must be evidence on which the jury could reasonably find for the [non-movant].” Id. at 252. In determining whether this evidentiary threshold has been met, the trial court “must view the evidence presented through the prism of the substantive evidentiary burden” applicable to the particular cause of action before it. Id. at 254. If the non-movant in a summary judgment action fails to adduce evidence which would be sufficient, when viewed in a light most favorable to the non-movant, to support a jury finding for the non-movant, summary judgment may be granted. Id. at 254-55.
In another recent case, the Supreme Court has declared that a non-moving party‘s failure to prove an essential element of a claim renders all factual disputes as to that claim immaterial and requires the granting of summary judgment:
In our view, the plain language of
Rule 56(c) mandates the entry of summary judgment ... against a party who fails to make a showing sufficient to establish the existence of an element essential to that party‘s case, and on which that party will bear the burden of proof at trial. In such a situation, there can be “no genuine issue as to any material fact,” since a complete failure of proof concerning an essential element of the nonmoving party‘s case necessarily renders all other facts immaterial. The moving party is “entitled to a judgment as a matter of law” because the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof.
Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986) (emphasis added).
C. Rule 9(b) of the Fed.R.Civ.P.
[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity.
- precisely what statements were made in what documents or oral representations or what omissions were made, and
- the time and place of each such statement and the person responsible for making (or, in the case of omissions, not making) same, and
- the content of such statements and the manner in which they misled the plaintiff, and
- what the defendants “obtained as a consequence of the fraud.”
Fitch v. Radnor Industries, Ltd., No. 90-2084, 1990 WL 150110, at *2 (E.D.Pa. Sept.27, 1990) (quoting O‘Brien, 719 F.Supp. at 225). See also Leonard v. Stuart-James Co., 742 F.Supp. 653, 659 (N.D.Ga.1990) (Motion to dismiss granted where complaint failed to allege “specifically when, where, by whom, or specifically what the representation was.“). However, “alternative means are also available to satisfy the rule.” Durham, 847 F.2d at 1512 (citing Seville Indus., 742 F.2d at 791 (list containing allegations of fraud describing nature and subject of statements found to be sufficient, even where precise words used were not alleged)). We review the Defendants’ motions against these standards.
III.
Because the Defendants’ motions present a number of the same issues for the Court‘s consideration, we address each issue presented by the Defendants’ motions rather than analyzing each motion separately.
A. Scope of the MSP Statute‘s Coverage
As an initial matter, although some of the Insurer Defendants have moved to dismiss and some for summary judgment, because we consider matters beyond the pleadings, each of the Insurer Defendants’ motions is treated as a motion for summary judgment under Federal Rules of Civil Procedure
The primary contention presented by the Insurer Defendants’ motions is whether the policies they sold constitute “group health plans” within the meaning of the MSP statute. As noted above, the MSP statute‘s directive is addressed only to any “group health plan.”
“group health plan” has the meaning given such term in section 5000(b)(1) of Title 26, without regard to section 5000(d) of Title 26.
The term “group health plan” means a plan (including a self-insured plan) of, or contributed to by, an employer (including a self-employed person) or employee organization to provide health care (directly or otherwise) to the employees, former employees, the employer, others associated or formerly associated with the employer in a business relationship, or their families.
The regulations promulgated by the Health Care Financing Administration (“HCFA“) on behalf of the Secretary of Health and Human Services further define the phrase “group health plan” as follows:
Group health plan (GHP) means any arrangement made by one or more employers or employee organizations to provide health care directly or through other methods such as insurance or reimbursement, to current or former employees, the employer, others associated or formerly associated with the employer in a business relationship, or their families, that—
(1) Is of, or contributed to by, one or more employers or employee organizations.
(2) If it involves more than one employer or employee organization, provides for common administration.
(3) Provides substantially the same benefits or the same benefit options to all those enrolled under the arrangement.
The term includes self-insured plans, plans of governmental entities (Federal, State and local), and employee organization plans; that is, union plans, employee health and welfare funds or other employee organization plans. The term also includes employee-pay-all plans, which are plans under the auspices of one or more employers or employee organizations but which receive no financial contributions from them. The term does not include a plan that is unavailable to employees; for example, a plan only for self-employed persons.
The parties have expended considerable efforts in arguing whether or not the inclusion of “employee-pay-all” plans in the definition of “group health plan” in the regulations goes beyond the meaning of the statute. However, we need not address this question because we find that the basis upon which the Insurer Defendants’ policies fall outside the statutory definition of “group health plan” is more fundamental. The Insurer Defendants were simply not providing group insurance or a “plan” of insurance to the Plaintiffs. The pleadings and the record in this case plainly demonstrate that the Insurer Defendants issued individual policies of insurance to the Individual Plaintiffs to supplement their Medicare coverage. See Individual Health Insurance Application of John D. Wilkerson, attached as Exh. to Affid. Francis J. Mullin; Insurance applications and policies issued to Duane G. Norman, Nadine Brooks, Mildred McIver, John D. Wilkerson, and Leonard Struthers, First National‘s Mot. Summ. J., Exhs. 1-2; Insurance policies issued to Nadine Brooks, Mildred McIver, Duane Norman, Madie Wilkerson, and John D. Wilkerson, Deft. United American‘s Corrected Mot. Dismiss, Exhs. F-J; Affid. Linda Massey ¶ 9 (listing individual insureds, policy numbers, dates of application and issuance).
The Individual Plaintiffs applied separately for insurance with the Insurer Defendants and were issued independent Medigap insurance policies by the Insurer Defendants. For example, Duane Norman submitted an application with Defendant First National on February 6, 1991, Nadine Brooks applied with First National on November 1, 1991, and Leonard Struthers applied on November 15, 1991. Affid. Linda J. Massey ¶ 9; First National‘s Mot. Summ. J., Composite Exhs. 1-2. Separate policies of insurance were issued to these three Individual Plaintiffs on March 1st, November 1st, and December 1st,
Furthermore, the record is devoid of any indication that a group insurance policy, comprehensive policy, blanket policy, or other master plan of insurance ever issued to any of the Employer Plaintiffs by the Insurer Defendants. See 1 John A. Appleman & Jean Appleman, Insurance Law & Practice, § 41 (1981) (“Group insurance may [ ] be considered the coverage of a number of individual persons by one comprehensive policy, with certificates as evidences of such coverage, usually for the primary purpose of protecting and providing for employees.“). A group policy or plan of insurance makes no sense without a group insurance document to establish the levels and types of coverage provided by the plan. The Insurer Defendants aptly pointed out at oral argument that where they provided only supplemental Medigap health insurance to individuals, if this coverage is deemed a “group health plan” and the primary payer under the MSP statute, there would be no means of determining what coverages would be provided by that “group health plan.” By contrast, a true “plan” of insurance entails a detailed description of the specific coverages and exclusions provided in the insurance plan. Compare FCHAT Summary Plan Description, attached as Exh. to Supp. Affid. Francis Mullin. Where a true group plan attempts to carve out coverage for insureds eligible for Medicare, the MSP statute‘s elimination of the illegal carve-out results in that pre-defined level of coverage being applied to employees eligible for Medicare on the same terms as if they were not eligible for Medicare. There is no similar means of determining coverage under the separate insurance policies in this case if they are deemed a “group health plan.” As counsel observed, we would be required to formulate an entire scheme of coverages, deductibles, and co-pays to make these individual, supplemental policies into primary insurance. We do not believe the MSP statute intended such a result, and that intention is reflected in the statute‘s limitation, by its own terms, to regulation of “group health plans.”
The record further establishes that during the entire relevant period, the Employer Plaintiffs had in place employer group health plans, first through the Florida Citrus Health and Accident Trust (“FCHAT“), a self-insured trust, and later through The Travelers Insurance Company (“Travelers“). See, e.g., Affidavit of Richard Ruis ¶¶ 3-6; First National Life‘s Mot. Summ. J., Exh. 3, ¶¶ 2-3.6 Finally, it is clear from the record that each of the Individual Plaintiffs in this action opted out of the FCHAT and Travelers plans. See First National Life‘s Mot. Summ. J., Exh. 4, at ¶ 3; Affid. Richard Ruis ¶ 6. Having rejected their employers’ group
individual from purchasing or otherwise securing[ ] protection against the cost of any health services.“);
Plainly if the Individual Plaintiffs remained free under the law to purchase Medigap policies once they had opted out of their employers’ plans, then the statute contemplates that some entity would be permitted by law to sell such individual Medigap insurance. Without this corollary, there would be no way for individuals covered by Medicare to buy supplemental coverage. It is beyond peradventure that the statutory scheme expects and permits such policies to be sold. See
Our conclusion that these individual Medigap policies do not constitute a “group health plan” as contemplated by the MSP statute is buttressed by the regulations promulgated by the Secretary of HHS to interpret the MSP statute. The regulations provide that once an employee or spouse has rejected the employer‘s health plan, “Medicare is the primary payer for that individual....”
The Plaintiffs have made much of the fact that the Employer Plaintiffs provided payroll deduction for their employees’ supplemental insurance, and, particularly, that Plaintiff Winter Haven may have violated the MSP laws,
B. The Plaintiffs’ Standing to Maintain Their Claims
The Defendants have also challenged the Plaintiffs’ standing to maintain the claims presented by their Amended Complaint. Were the Amended Complaint not subject to summary judgment on the aforementioned basis, see supra, Part III.A., the Individual Plaintiffs claims for breach of contract (Count II) and for violation of the RICO statute (Counts IV-VII) would be subject to dismissal nonetheless for lack of standing. Similarly, if the Employer Plaintiffs could otherwise proceed in this action, their claims for double damages under the MSP statute (Count I) and breach of contract (Count II) would fail for lack of standing. The Omnibus Budget Reconciliation Act of 1989 (“OBRA 89“) established a private right of action under the MSP statute. See H.R.Conf.Rep. No. 386, 101st Cong., 1st Sess. 1989, reprinted in, 1989 U.S.C.C.A.N. 3018.
The Supreme Court has given the following explanation of the requirements of standing to bring suit in the federal courts:
In essence the question of standing is whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues. This inquiry involves both constitutional limitations on federal-court jurisdiction and prudential limitations on its exercise. E.g., Barrows v. Jackson, 346 U.S. 249, 255-256 (1953). In both dimensions it is founded in concern about the proper—and properly limited-role of the courts in a democratic society. See Schlesinger v. Reservists to Stop the War, 418 U.S. 208, 221-227 (1974); United States v. Richardson, 418 U.S. 166, 188-197 (1974) (Powell, J., concurring).
Warth v. Seldin, 422 U.S. 490, 498 (1975).
The Constitutional standing requirements give substance to Article III‘s grant of jurisdiction over “cases” and “controversies.” Association of Data Processing Svc. Org., Inc. v. Camp, 397 U.S. 150, 151 (1970). Federal courts have no power to entertain claims not rising to this level. Stated in terms of standing, a plaintiff must ” “allege[ ] such a personal stake in the outcome of the controversy’ as to warrant his invocation of federal-court jurisdiction and to justify exercise of the court‘s remedial powers on his behalf.” Warth v. Seldin, 422 U.S. at 498 (quoting Baker v. Carr, 369 U.S. 186, 204 (1962)). The federal judiciary may not reach out to decide disputes which, although they may redress social wrongs, do not address an “injury in fact” to the plaintiff who has brought the
In addition to the Constitutional mandate, the “prudential” limitations placed upon the exercise of federal jurisdiction include:
[ (1) ] the principle that federal courts should avoid deciding generalized grievances that present abstract questions of wide public significance, [ (2) ] the requirement that the plaintiff‘s complaint be within the zone of interests protected by the statute or constitutional guarantee at issue, and [ (3) ] the requirement that a plaintiff ... assert his own legal rights and interest, not the rights of third parties.
Church v. City of Huntsville, 30 F.3d 1332 (11th Cir.1994) (alterations in original) (quoting Cone Corp. v. Florida Dep‘t of Transp., 921 F.2d 1190, 1203 n. 43 (11th Cir.), cert. denied, 500 U.S. 942, 111 S.Ct. 2238, 114 L.Ed.2d 479 (1991)); see also Clarke v. Securities Indus. Ass‘n, 479 U.S. 388, 396 (1987).
As noted above, the Plaintiffs in this action fall into two distinct categories: (1) the individuals who sought coverage under the insurance at issue in this case; and (2) the employers of these individuals. The question of standing is different for the two groups. The Individual Plaintiffs claim to have suffered injury in three ways. First, the Amended Complaint asserts that “in many circumstances working aged employees are being refused, both Medicare and group health insurance coverage....” Am.Compl. ¶ 27. However, the pleading does not allege that each of the Individual Plaintiffs has been denied coverage for medical care. The Individual Plaintiffs also allege that they have been damaged in that they have paid premiums for insurance which has not been provided. Am.Compl. ¶ 5. However, unless the Plaintiffs are also able to allege that they have been denied coverage for any claim, they have not been damaged by their payment of premiums. Finally, the Individual Plaintiffs assert that they have been injured because they “may be legally obligated to repay all or a portion of coverage provided by Medicare....” Id. The MSP laws, however, provide no basis upon which an individual beneficiary would be called upon to repay the United States for payments not reimbursed by the “primary plan.” Thus, the Individual Plaintiffs’ sole injury for purposes of standing is the claimed denial of insurance benefits.
While this issue has not been directly addressed by any federal court, a closely analogous case was presented in Wheeler v. Travelers Ins. Co., 22 F.3d 534 (3d Cir.1994). In Wheeler, the plaintiff was injured when she was struck by a car crossing the street. She sustained injuries requiring medical care at a cost of $25,000. At the time of the accident, the plaintiff was enrolled in Medicare and also was covered by a no-fault automobile insurance policy issued to her by Travelers Insurance Company (“Travelers“). Medicare paid $21,947.15 directly to the health care providers for the plaintiff‘s care, and Travelers paid $3600.46 to the plaintiff to cover the difference. The plaintiff and six others then initiated individual and class actions against six automobile insurers, including Travelers, alleging injury in an automobile accident and having incurred medical expenses for which the defendants were liable under the Pennsylvania No-Fault Act. The claim was premised on the fact that the MSP statute made the insurer-defendants primarily liable for the plaintiffs’ medical expenses. For reasons undisclosed in the published opinions, the District Court remanded the entire action to state court with the single exception of plaintiff Wheeler‘s individual claim which was maintained pursuant to the Court‘s diversity jurisdiction. On appeal, the Third Circuit found that the plaintiff did not have standing to maintain the action because any recovery she might gain would have to be remitted to Medicare under the MSP laws. The Court there stated:
We conclude that Wheeler does not have constitutional standing. She has not alleged or established that she suffered any actual or threatened injury from Travelers’ denial of her claim for no-fault benefits for she acknowledges that Medicare paid the medical expenses for which she seeks a
recovery. In essence, she therefore pleads that Travelers wronged, but did not injure her. Moreover, she concedes that she “will be obliged to remit any payment she now receives from Travelers to Medicare pursuant to 42 U.S.C. § 1395y(b)(1) [ (1982) ].” Thus, Wheeler never has had anything to gain from this lawsuit. Therefore, she does not have standing for, as the Supreme Court stated in Simon, [v. Eastern Ky. Welfare Rights Org., 426 U.S. 26, 39 (1976)], “[t]he necessity that the plaintiff who seeks to invoke judicial power stand to profit in some personal interest remains an Art. III requirement. A federal court cannot ignore this requirement without overstepping its assigned role in our system of adjudicating only actual cases and controversies.” [Simon, 426 U.S. at 39].
Id. at 538. The Court then went on to find that even had the plaintiff met the Constitutional standing requirements, she would not have satisfied the prudential requirements because she was essentially seeking to vindicate the rights of a third party—the United States. Id. at 538-39 (“Inasmuch as Medicare is entitled to receive any no-fault benefits that Travelers owes Wheeler, and Congress intended [the MSP statute] to benefit the government by reducing Medicare expenditures, the government is the party “best suited to assert” this claim. The United States has not assigned its claim to Wheeler. Thus, Wheeler fails to satisfy the prudential requirements for standing because she improperly is seeking to vindicate the rights of a third-party, the United States.“)
Wheeler is distinguishable from the present case in that the plaintiff in that case was proceeding under a state insurance statute rather than directly under the
With respect to the Employer Plaintiffs, the Amended Complaint states that Medicare is now seeking reimbursement against them for payments it made on the condition that
The Employer Plaintiffs similarly lack standing to maintain a cause of action for breach of contract. The insurance policies in this case were issued to individuals and establish health insurance coverage for those individuals only. The Employer Plaintiffs are not parties to these agreements. Thus, the Employer Plaintiffs are similarly barred from bringing a claim for breach of contract. However, to the extent that the Employer Plaintiffs seek a declaration that it is the Insurer Defendants rather than themselves, FCHAT or Travelers who constitute the “primary plan” within the meaning of the
C. Exhaustion of Administrative Remedies
As stated above, we need not reach this issue because of our conclusion that the insurance policies at issue in this case fall outside the scope of the
In this case, however, the claim is plainly not brought against the United States or the Secretary of Health and Human Services (“HHS“).8 Thus,
D. Statute of Limitations Defenses
Once again, we need not reach this issue to conclude that the Plaintiffs’ claims are subject to summary judgment in favor of the Defendants in this case. Nonetheless, were the Amended Complaint to survive summary judgment, Plaintiffs’ claims under the
Defendant New York Life argues for the application of either the five-year period provided under
A four-year statute of limitations is also applicable to the Plaintiffs’ RICO claims. Agency Holding Corp. v. Malley-Duff & Assoc., 483 U.S. 143, 107 S.Ct. 2759, 97 L.Ed.2d 121 (1987). In Bivens Gardens Office Bldg., Inc. v. Barnett Bank, 906 F.2d 1546 (11th Cir.1990), cert. denied, 500 U.S. 910, 111 S.Ct. 1695, 114 L.Ed.2d 89 (1991), the Eleventh Circuit Court of Appeals established that a RICO claim accrues “as soon as the plaintiff discovers, or reasonably should have discovered, both the existence and source of his injury and that the injury is part of a pattern.” Id. at 1554-55. The Amended Complaint in this case alleges predicate acts dating back to 1983. Although the Plaintiffs assert that they did not know of their injury or that it was part of a pattern until 1993, this argument addresses only the first prong of the Bivens Gardens analysis. We find that the Plaintiffs should have known both of their injuries and that they were part of an alleged pattern of racketeering activity before February 28, 1991. The Employer Plaintiffs11 are directly regulated by the
E. Failure to Plead Fraud With Particularity
As we have noted, given the rulings on other issues in this case, see supra Parts III.A. & III.D, we need not reach the issue presented by the Defendants as to the sufficiency of the Plaintiffs’ RICO claims. Nonetheless, were the Plaintiffs’ causes of action to survive the aforementioned bars, the Plaintiffs would be required to replead their RICO claims with the specificity required in
Because fair notice is “[p]erhaps the most basic consideration” underlying
Rule 9(b) , Wright & Miller, supra, § 1298, at 648, the plaintiff who pleads fraud must “reasonably notify the defendants of their purported role in the scheme.” Midwest Grinding Co. v. Spitz, 976 F.2d 1016, 1020 (7th Cir.1992). Therefore, in a case involving multiple defendants ... “the complaint should inform each defendant of the nature of his alleged participation in the fraud.” DiVittorio v. Equidyne Extractive Indus., Inc., 822 F.2d 1242, 1247 (2d Cir.1987); see also Mills v. Polar Molecular Corp., 12 F.3d 1170, 1175 (2d Cir.1993) (”Rule 9(b) is not satisfied where the complaint vaguely attributes the alleged fraudulent statements to ‘defendants.‘“); Balabanos v. North Am. Inv. Group, Ltd., 708 F.Supp. 1488, 1493 (N.D.Ill.1988) (stating that in cases involving multiple defendants “the complaint should inform each defendant of the specific fraudulent acts that constitute the basis of the action against the particular defendant.“).
20 F.3d at 777-78. The Amended Complaint is devoid of specific allegations with respect to the separate Defendants. Thus, the Amended Complaint is also subject to dismissal without prejudice for failure to plead fraud with the requisite specificity as to each of the Defendants under
The Group Health Insurance Defendants each, directly or indirectly, in combination or conspiracy with each other and with Blue Cross of Florida, engaged in a pattern of racketeering activities within the meaning of
18 U.S.C. § 1961(a)(1)(B) or (D) and (5), involving the following predicate acts which have occurred during the last twelve years, since 1983:a. Mail fraud in violation of
18 U.S.C. § 1341 in that the Group Health Insurance Defendants together with and/or assisted by Blue Cross of Florida intentionally used the U.S. mails in furtherance of the scheme and transmitted group health plan information, claim forms, Medicare claims, claim reimbursements and Medicare payments, and otherwise conducted their business through the mails, including regular transmissions of communications containing or based upon the Group Health Insurance Defendants’ false assertions with regard to theMSP statute , each mailing constituting a separate mail fraud violation; andb. Wire fraud in violation of
18 U.S.C. § 1343 in that the Group Health Insurance Defendants together with and/or assisted by Blue Cross of Florida intentionally engaged in telephone conversations or used wire transmissions in furtherance of the scheme, including transmittal of group health plan information, solicitation of coverage, payment of premiums or payment of secondary, rather than primary insurance coverage, and including regular communications concerning or based upon the Group Health Insurance Defendants’ false assertions with regard to theMSP statute , each of which communications constitute [sic] a separate wire fraud violation.
Am.Compl. ¶ 47. These allegations provide no basis in fact upon which the Court could conclude that any specific act of any specific Defendants is indictable for mail or wire fraud. See In re Cascade Int‘l Secs. Litigation, 840 F.Supp. 1558, 1582 (S.D.Fla.1993) (“To maintain a RICO action, at a minimum, the plaintiffs must allege sufficient facts with enough specificity to show probable cause that the predicate acts were committed.“) (citing Banco de Desarrollo Agropecuario, S.A. v. Gibbs, 640 F.Supp. 1168, 1175 (S.D.Fla.1986)). Therefore, if the Plaintiffs’ RICO claims were to survive summary judgment as to the scope of the
F. Sovereign Immunity
Finally, had the Amended Complaint survived the numerous bases for granting summary judgment or dismissal in favor of the Defendants, supra Parts III.A., III.B., III.D, and III.E., we would not conclude that Defendant Blue Cross would be entitled to dismissal from this action on the basis of sovereign immunity. However, we would find that the Plaintiffs have failed to state a claim against Blue Cross in their claim for declaratory relief (Count III). As we have previously stated, Defendant Blue Cross stands in a different position in this case from that of the other Defendants. Blue Cross‘s liability in this action arises solely from its role as the claims administrator for the Medicare system, rather than as an insurer of any of the Plaintiffs. In addition, only Counts III-VII, seeking declaratory relief and damages for RICO violations, are asserted against Blue Cross. The Amended Complaint asserts the following with respect to Blue Cross:
7. Defendant Blue Cross and Blue Shield of Florida, Inc. (“Blue Cross of Florida“) is, by contract, an administrator of Medicare Part A and Part B claims. Specifically, Blue Cross of Florida has entered into contractual relations with the United States Department of Health and Human Services, Health Care Finance Administration (“HCFA“), whereby Blue Cross of Florida is responsible for the processing and payment of both Part A and Part B Medicare claims. In its capacity as administrator for the HCFA, Blue Cross of Florida is responsible for the enforcement and protection of the HCFA‘s rights under
42 U.S.C. § 1395y(b)(2) .
Am.Compl. ¶ 7. Beyond this statement, the Amended Complaint asserts in the RICO claims (Counts IV-VII) generally that activities were undertaken by the Group Health Insurance Defendants “with Blue Cross of Florida,” Id. ¶ 47, “together with and/or assisted by Blue Cross of Florida,” Id., or similarly alleges Blue Cross‘s cooperation with the Insurer Defendants in these general terms. Blue Cross has moved to dismiss each of the Plaintiffs’ claims against it on the basis of sovereign immunity.
The
The Plaintiffs argue that Blue Cross is not entitled to sovereign immunity because the claims against it are based on actions exceeding Blue Cross‘s authority to act on the government‘s behalf. To the extent that the Plaintiffs have pled injury as a result of Blue Cross‘s fraudulent conduct under the RICO laws, we agree. In Livingston v. Blue Cross & Blue Shield, 788 F.Supp. 545 (S.D.Ala.1992), aff‘d without op., 996 F.2d 314, reh‘g en banc denied, 7 F.3d 242 (11th Cir.1993), the plaintiff brought an action against Blue Cross and Blue Shield of Alabama, which acted solely as the carrier or fiscal intermediary on behalf of HHS. The plaintiff, a medical services provider, had been investigated by the defendant for Medicare fraud. This investigation ultimately led to the plaintiff being charged with eight counts of Medicare fraud. However, the plaintiff was found not guilty as to all of the charges. The plaintiff then brought suit against Blue Cross and Blue Shield of Alabama alleging malicious prosecution. The District Court held, based on binding Former Fifth Circuit precedent, that Medicare fiscal intermediaries are entitled to sovereign immunity. Id. at 548 (citing Matranga v. Travelers Ins. Co., 563 F.2d 677 (5th Cir.1977); Peterson v. Weinberger, 508 F.2d 45 (5th Cir.), cert. denied, 423 U.S. 830, 96 S.Ct. 50, 46 L.Ed.2d 47 (1975); Peterson v. Blue Cross/Blue Shield of Texas, 508 F.2d 55, 57-58 (5th Cir.), cert. denied, 422 U.S. 1043, 95 S.Ct. 2657, 45 L.Ed.2d 694 (1975)). However, the Court then explained the reason for this rule as follows:
This Court does not read [the above-cited cases] to extend blanket immunity to Medicare fiscal intermediaries. Rather, a more logical interpretation is that the fiscal intermediary is entitled to sovereign immunity to the extent that the government is exposed to financial risk. Support for this interpretation can be found in Anderson v. Occidental Life Ins. Co., 727 F.2d 855 (9th Cir.1984) in which the Ninth Circuit, relying on the Peterson cases and Matranga, held that a Medicare fiscal intermediary was immune from suit “because recovery would come from the federal treasury.” Id. at 856. The court noted that the complaint did not allege “criminal, fraudulent or grossly negligent acts” which would exempt the government from its duty to indemnify the fiscal intermediary. Id. at 587.
Id. at 548. In the present case, however, the Plaintiffs’ claims against Blue Cross seek damages against Blue Cross only in the RICO counts. These claims are plainly premised upon both criminal and fraudulent conduct. Thus, the government would not be required to indemnify Blue Cross for any recovery against it, eliminating the basis for sovereign immunity. Therefore, had the Plaintiffs’ claims survived dismissal and summary judgment, supra Parts III.A., III.B., III.D., and III.E., Defendant Blue Cross would not be entitled to dismissal on the basis of sovereign immunity.
With respect to the Plaintiffs’ claim for declaratory relief, however, the Plaintiffs have pled no grounds for inclusion of Blue Cross in that claim. In fact, Blue Cross is mentioned only in the title of Count III, with no allegations whatsoever to tie Blue Cross to the claim. Thus, if the Plaintiffs’ claims had otherwise survived dismissal and summary judgment, Count III of the Amended Complaint, seeking declaratory relief, would be dismissed for failure to state a claim against Defendant Blue Cross.
IV.
In sum, we find that all four Defendants—including both the Insurer Defendants and Blue Cross—are entitled to summary judgment as to every claim asserted in the Plaintiffs’ Amended Complaint because the Insurer Defendants in this case sold no group insurance or plan of insurance within the meaning of the
ORDERED and ADJUDGED as follows:
1. Defendant Blue Cross‘s motion to dismiss the amended complaint (DE # 31) is GRANTED;
2. Defendant New York Life‘s motion for instructions and an Order directed to Plaintiff‘s counsel (DE # 46) is DENIED AS MOOT;
3. Defendant New York Life‘s combined motion to dismiss and/or for summary judgment (DE # 47) is GRANTED;
5. Defendant First National‘s motion for summary judgment (DE # 93) is GRANTED;
6. Defendant First National‘s motion to dismiss (DE # 53) is DENIED AS MOOT;
7. Defendant United American‘s corrected motion to dismiss (DE # 67) is GRANTED; and
8. Any other motions pending in this action at this time are DENIED AS MOOT.
9. The Defendants shall file a proposed Order of final summary judgment within ten (10) days of this Order.
DONE AND ORDERED in Miami, this 22nd day of September, 1995.
/s/ Stanley Marcus