Federal judge says health care providers lack standing for claims against insurer

By Tomas Kassahun | Nov 7, 2018

The US District Court for the Eastern District of Pennsylvania has dismissed an amended complaint filed by healthcare providers, citing lack of standing.   pexels.com

PHILADELPHIA - The U.S. District Court for the Eastern District of Pennsylvania has dismissed an amended complaint filed by health care providers, citing lack of standing.

U.S. District Judge Gerald Austin McHugh made the ruling on Oct. 24.  

According to the opinion, Howard Bloom, D.C. and Weather Vane Chiropractic, P.C., brought 10 claims against health insurer Independence Blue Cross. The district court said four of the claims are under the federal Employee Retirement Income Security Act and six are under supplementary state laws.

The defendants first moved to dismiss the entirety of plaintiffs’ First Amended Complaint, challenging plaintiffs’ standing under ERISA, the opinion stated.

“I denied defendants’ motion at that early stage of the litigation because I was persuaded that plaintiffs alleged a plausible ERISA claim,” McHugh wrote. “Extensive discovery followed and defendants now seek summary judgment, once again asserting that plaintiffs lack standing to sue under ERISA.”

Plaintiffs have had ample opportunity to develop their case in the last three years, but have failed to unearth additional facts necessary to shore up their counterargument on ERISA standing, the opinion stated.

“Plaintiffs have neither direct nor derivative standing under ERISA with the result that I must grant defendants’ Motion for Summary Judgment on all four ERISA claims,” McHugh wrote. “And because I decline to exercise discretionary supplemental jurisdiction over the remaining state law claims, I dismiss the entirety of plaintiffs’ amended complaint for lack of standing.”

According to the opinion, Bloom was a participating provider in defendants’ network of health care providers from May 2005 to October 2013 and provided medical services to some of defendants’ members under the terms of their ERISA-governed health care plan.

“Defendants insure and administer health benefits for their members under a variety of ERISA-governed health care plans,” the opinion stated. “Defendants also contract with health care providers to provide medical services to their members at negotiated rates.”

The court said Bloom began consistently telephoning defendants’ representatives in 2006, seeking confirmation that disputed services were indeed covered by member plans — before administering and billing for treatment. 

In 2007, defendants demanded reimbursement for alleged “overpayments” made to Bloom for certain procedures, the opinion stated.

“Defendants also initiated an audit of Dr. Bloom’s billing history by sending a financial investigator to plaintiffs’ offices,” the opinion stated. “And, by letter dated Sept. 16, 2013, defendants unilaterally terminated their agreement with Dr. Bloom. But if that weren’t enough, defendants took an aggressive stand and referred allegations of insurance fraud against Dr. Bloom to the state attorney general.” 

According to the opinion, this led to Bloom’s arrest for charges including insurance fraud, theft by deception, and receiving stolen property. 

“Bloom was acquitted of all charges,” the opinion stated. “He then filed this lawsuit, with his medical practice as co-plaintiff.”  

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