ADVANCED PHYSICAL MEDICINE OF YORKVILLE LTD v. UNITED STATES OFFICE OF PERSONNEL MANAGEMENT HEALTHCARE AND INSURANCE (2022)

ORDER

Plaintiff Advanced Physical Medicine of Yorkville, LTD., brings suit against the United States Office of Personnel Management Healthcare and Insurance (“OPM”), seeking administrative review of the denial of benefits under the Blue Cross Blue Shield Service Benefit Plan (“the Plan”). Defendant moves to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons stated herein, Defendant's Motion to Dismiss [23] is granted.

I. Background

A. Allegations in the Complaint

The following factual allegations are taken from the operative complaint. Dkt. 1. Plaintiff Advanced Physical Medicine is an Illinois medical corporation in Yorkville, Illinois. Dkt. 1 at ¶ 1. Plaintiff treated patient Kevin Kreinbrink (the “Patient”) from September 2017 through January 2018 for non-surgical spinal compression (the “Services”). Id. at ¶ 4. The patient was insured through Blue Cross Blue Shield Illinois (BCBSIL) under the Plan, and BCBSIL contracted with OPM as part of the Federal Employee Program. Id. at ¶¶ 2, 3.

On August 23, 2017, before providing the Services, Plaintiff spoke with two BCBSIL representatives concerning the Plan coverage for Plaintiff's treatment. Id. at ¶ 9; Dkt. 1-2, 1-3. Both representatives informed Plaintiff that the relevant procedure was a covered service billable under rehabilitative therapy and would be paid. Id. Plaintiff provided the Services, which were completed on January 11, 2018. Id. at ¶ 12. Subsequently, BCBSIL denied the Services as “not medically necessary”. Id. at ¶ 13.

On January 29, 2018, Patient signed an authorization form designating Plaintiff as Patient's authorized representative relative to the Plan. Id. at ¶ 8. On August 29, 2018, Plaintiff appealed BCBSIL's decision to OPM and on October 19, 2018, OPM upheld BCBSIL's denial as “not medically necessary” for services under code S9090. Id. at ¶¶ 14, 15. Plaintiff alleges that the Services were covered under the Plan and were deemed medically necessary by the patient's chiropractor. Id. at ¶ 16. Plaintiff also alleges it exhausted all administrative remedies. Id. at ¶ 17. As for relief, Plaintiff claims that it “sustained damages of unpaid bills submitted to BCBSIL and OPM under the Plan of $26,595.” Id. at ¶ 18. Plaintiff filed a one-count complaint; count one is entitled “Administrative Review of Denial of Benefits Violation of Plan Documents.”

OPM has moved to dismiss, seeking dismissal of the complaint with prejudice.

B. Federal Employees Health Benefits Act

This case involves the Federal Employees Health Benefits Act (FEHBA), 5 U.S.C. §§ 8901 et seq., which “establishes a comprehensive program of health insurance for federal employees.” Empire Healthchoice Assur., Inc. v. McVeigh, 547 U.S. 677, 682, 126 S.Ct. 2121, 165 L.Ed.2d 131 (2006). The Act authorizes OPM to contract with private carriers to offer federal employees an array of healthcare plans. Such plans include Blue Cross Blue Shield's Service Benefit Plan, administered by local Blue Cross Blue Shield companies. FEHBA's administrative dispute mechanism applies to disputes between “covered individuals” and carriers over “claims filed under the plan.” 5 C.F.R. § 890.105(a)(1). A “covered individual” is defined as “an enrollee or a covered family member.” Id. § 890.101(a). A “claim” is a request for “payment of a health-related bill” or “provision of a health-related service or supply.” Id. All claims must be submitted first to the carrier. Id. § 890.105(a)(1). If the carrier denies the claim in whole or in part, the covered individual may ask the carrier for reconsideration. See Id. §§ 890.105(a)(1), 890.105(b). If the carrier affirms its denial of the claim, the covered individual may ask OPM to review the claim. See Id. §§ 890.105(a)(1), 890.105(e).

The exhaustion requirement the FEHBA states that the covered individual “must exhaust both the carrier and OPM review processes ․ before seeking judicial review of the denied claim.” Id. §§ 890.105(a)(1), 890.107(d)(1). Then the covered individual may bring a judicial action against OPM. Id. § 890.107(d). In an action against the OPM challenging a denial of benefits, “[t]he recovery ․ shall be limited to a court order directing OPM to require the carrier to pay the amount of benefits in dispute.” Id.

II. Standard

“To survive a motion to dismiss under Rule 12(b)(6), the complaint must provide enough factual information to state a claim to relief that is plausible on its face and raise a right to relief above the speculative level.” Haywood v. Massage Envy Franchising, LLC, 887 F.3d 329, 333 (7th Cir. 2018) (quoting Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732, 736 (7th Cir. 2014)); see also Fed. R. Civ. P. 8(a)(2) (requiring a complaint to contain a “short and plain statement of the claim showing that the pleader is entitled to relief”). A court deciding a Rule 12(b)(6) motion “construe[s] the complaint in the light most favorable to the plaintiff, accept[s] all well-pleaded facts as true, and draw[s] all reasonable inferences in the plaintiff's favor.” Lax v. Mayorkas, 20 F.4th 1178, 1181 (7th Cir. 2021). However, the court need not accept as true “statements of law or unsupported conclusory factual allegations.” Id. (quoting Bilek v. Fed. Ins. Co., 8 F.4th 581, 586 (7th Cir. 2021)). Dismissal for failure to state a claim is proper “when the allegations in a complaint, however true, could not raise a claim of entitlement to relief.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 558, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).

III. Analysis

In moving to dismiss, OPM argues that sovereign immunity bars providers from seeking judicial review of OPM coverage decisions for individuals insured under the Federal Employees Health Benefits Program (FEHB) and bars Plaintiff's damage claims against the OPM. In addition, OPM contends that the complaint is time-barred.¹

Plaintiff does not dispute that it is not a “covered individual” under the FEHBA. The parties dispute whether Plaintiff was authorized by the Patient to bring this lawsuit.

Defendant argues that the terms of the written consent agreement between Plaintiff and the Patient limit the representation to the “disputed claims process” and not judicial review. Dkt. 24 at 12. The consent agreement between Plaintiff and Patient specifies in relevant part: “This authorization is for the sole purpose of allowing me, as the member, or my named personal representative to dispute the items noted below and expires upon completion of the disputed claims process[.]” Dkt. 27-1 at 1. This agreement is a form provided by the Plan. Section 8 of the Plan governs the “disputed claims process.” Further, under Step 4 of Section 8 of the Plan, it states, “You may not file a lawsuit until you have completed the disputed claims process.” Dkt. 27-2 at 5. Plaintiff does not cite any authority that the Patient's authorization during the claims process extended to filing a lawsuit in this court.

Plaintiff responds, nevertheless, that (1) this Court already considered “[t]he issue of jurisdiction” and (2) letters from OPM and Blue Cross “support the filing of the lawsuit by Plaintiff.” First, shortly after the complaint was filed in this case, the Court requested a supplemental filing by Plaintiff to explain why this Court as opposed to the Federal Circuit had jurisdiction over its complaint.² Plaintiff clarified that this case involved payment of medical benefits, so under the relevant federal regulations, suit could be brought against OPM in this court. The Court's confirmed subject matter jurisdiction on that basis for pleading purposes. Dkt. 5. But that was not a finding that Plaintiff was the proper party to bring this suit.

Second, it is not disputed that a covered individual may bring an action for judicial review against OPM. 5 C.F.R. § 890.105(a), 890.107(d). But again, Plaintiff is a provider, not the covered individual. Plaintiff fails to cite any authority, and the Court can think of none, that letters between OPM and Blue Cross employees establish Plaintiff as a provider may sue OPM for money damages under the FEHBA regulations. Plaintiff does not dispute that it is seeking damages from OPM.

OPM correctly frames this argument as one of sovereign immunity. “As a general rule, the United States Government, as ‘sovereign,’ is liable to third parties only when the government expressly waives its sovereign immunity.” Dawson v. Merit Sys. Prot. Bd., 712 F.2d 264, 267 (7th Cir. 1983) (citing United States v. King, 395 U.S. 1, 89 S.Ct. 1501, 23 L.Ed.2d 52 (1969)); see also F.D.I.C. v. Meyer, 510 U.S. 471, 475, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994) (“Absent a waiver, sovereign immunity shields the Federal Government and its agencies from suit.”). In other words, sovereign immunity bars Plaintiff, as the provider, from seeking judicial review of OPM's coverage decision related to the Patient, and it bars Plaintiff's claim for damages from the OPM. See Bryan v. Off. of Pers. Mgmt., 165 F.3d 1315, 1319 (10th Cir. 1999) (request for monetary judgment against [OPM] was “a remedy not contemplated by the government's waiver of sovereign immunity”). Tellingly, Plaintiff fails to respond to OPM's sovereign immunity argument. See G & S Holdings LLC v. Cont'l Cas. Co., 697 F.3d 534, 538 (7th Cir. 2012) (“a party waives an argument by failing to make it before the district court [including] an argument establishing that dismissal is inappropriate.”).³

IV. Conclusion

For the stated reasons, Defendant's Motion to Dismiss [23] is granted. Because any amendment would be futile, Plaintiff's complaint is dismissed. Civil case terminated.

FOOTNOTES

1.   The Court need not address Defendant's arguments concerning statute of limitations.

2.   The Court relied on Sattlefield v. United States Off. of Pers. Mgmt., No. 18-1552, 2018 WL 4348068 (7th Cir. Aug. 14, 2018), a case involving the denial of retirement benefits, where the Court determined an appeal of the OPM's decision should have been brought in the Federal Circuit.

3.   In its reply, OPM interprets Plaintiff's reliance on the letters from OPM administrative employees or Blue Cross attorneys to be an argument that OPM waived its sovereign immunity. The Court agrees with OPM that this argument is unconvincing. Plaintiff cites no authority that employee letters would give rise to waiving sovereign immunity in this context. See Ardestani v. I.N.S., 502 U.S. 129, 137, 112 S.Ct. 515, 116 L.Ed.2d 496 (1991) (government's waiver of sovereign immunity is construed narrowly).

MARY M. ROWLAND, United States District Judge