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Norvell v. Blue Cross and Blue Shield Association

United States District Court, D. Idaho

September 10, 2018

BRUCE NORVELL, Plaintiff,
v.
BLUE CROSS AND BLUE SHIELD ASSOCIATION, et al., Defendants.

         MEMORANDUM DECISION AND ORDER RE: PLAINTIFF'S MOTION FOR ORDER COMPELLING FEDERAL DEFENDANTS' DISCOVERY RESPONSE (DOCKET NO. 70) FEDERAL DEFENDANTS' MOTION FOR PROTECTIVE ORDER (DOCKET NO. 76) FEDERAL DEFENDANTS' MOTION TO DISMISS PLAINTIFF'S FIFTH CLAIM FOR RELIEF (DOCKET NO. 85) FEDERAL DEFENDANTS' MOTION TO STAY SUMMARY JUDGMENT BRIEFING ON THE FIFTH CLAIM AND ANY PROCEEDINGS ON THE OTHER CLAIMS (DOCKET NO. 87) PLAINTIFF'S MOTION FOR LEAVE TO AMEND COMPLAINT (DOCKET NO. 100)

          Ronald E. Bush Chief U.S. Magistrate Judge.

         Now pending before the Court are the following motions: (1) Plaintiff's Motion for Order Compelling Federal Defendants' Discovery Response (Docket No. 70); (2) Federal Defendants' Motion for Protective Order (Docket No. 76); (3) Federal Defendants' Motion to Dismiss Plaintiff's Fifth Claim for Relief (Docket No. 85); (4) Federal Defendants' Motion to Stay Summary Judgment Briefing on the Fifth Claim and Any Proceedings on the Other Claims (Docket No. 87); and (5) Plaintiff's Motion for Leave to Amend Complaint (Docket No. 100). Having carefully considered the record and otherwise being fully advised, the Court enters the following Memorandum Decision and Order:

         FACTUAL AND PROCEDURAL BACKGROUND[1]

         Plaintiff Bruce Norvell was enrolled in the Service Benefit Plan (the “Plan') - a nationwide health benefits plan created pursuant to Federal Employee Health Benefit Act (“FEHBA”), which authorizes Defendant U.S. Office of Personnel Management (“OPM”) to enter into contracts with private entities (“carriers”) to offer insurance plans to federal employees, retirees, and their dependents. See 5 U.S.C. § 8902(a); see also Compl., ¶¶ 6-8 (Docket No. 1). The Plan is one such plan and is created by a contract between OPM and Defendant Blue Cross and Blue Shield Association (“BCBSA”), the latter of which is the Plan's carrier and acts on behalf of local Blue Cross and Blue Shield companies such as Defendant Blue Cross of Idaho Health Service (“BCI”) that, in turn, administer the Plan with respect to health care services rendered in their individual localities. See Compl., ¶¶ 7-8; see also Norvell v. Office of Personnel Mgmt., et al., No. 1:14-cv-00421-BLW (D. Idaho) 9/23/15 Decision (“Norvell I” decision”), pp. 2-3 (Docket No. 126).

         Relevant here, Plaintiff's claims stem from heart ablation surgery (a procedure covered by the Plan) and the resulting cost share that he was initially charged. Specifically, Plaintiff disagreed with the approximately $3, 800 cost share the Plan first told him he would owe in connection with that surgery. See Compl., ¶ 40-43; see also Norvell I Decision, p. 3; Norvell Decl., ¶ j, attached as Ex. 7 to Compl. (Docket No. 1, Att. 8). According to Plaintiff, the Plan's original determination was based, in part, on the treatment being incorrectly or ambiguously categorized as an “outpatient” procedure, instead of “inpatient” (with related expense allocations). See generally Id. Plaintiff then challenged the amount of the cost share through the mandatory administrative appeal process, culminating with an administrative review by OPM. See id.; see also 5 C.F.R. § 890.105(a), (e). Ultimately, Plaintiff had his cost share reduced to $100. See Compl., ¶ 44; see also Novell I Decision, p. 3; Norvell Decl., ¶ j. But that did not end the matter; instead, Plaintiff brought an action in this Court - Norvell I.

         In Norvell I, Plaintiff argued that a lack of definitions in the FEHBA plans for the terms “inpatient” and “outpatient” violates two separate laws: (1) an FEHBA provision that requires FEHBA contracts to contain “a detailed statement of benefits” that includes “definitions of benefits as [OPM] considers necessary or desirable” (see 5 U.S.C. § 8902(d)); and (2) Public Health Service Act (“PHSA”) § 2715, which requires the use of certain uniform definitions in summary documents describing health plans (see 42 U.S.C. § 300gg-15). See Norvell I Decision, p. 4. Relatedly, Plaintiff alleged that he was injured by the insufficient definitions in five distinct ways, including purportedly being “unable to compare various [FEHBA] policies because their statements of benefits contain ambiguous definitions.” See Id. at p. 6.

         On September 23, 2015, Chief U.S. District Judge B. Lynn Winmill dismissed Norvell I for lack of subject matter jurisdiction (specifically, for lack of standing), holding, among other things, that “the inability to compare various plans does not constitute an injury in fact” in part because that “so-called injury is neither concrete nor particularized.” Id. at p. 7;[2] see also Id. at p. 11 (“Having found that [Plaintiff] has failed to establish that he has suffered an injury in fact fairly traceable to the Defendants' conduct, which could be redressed by judicial intervention, the Court concludes that [Plaintiff] lacks standing. As such, this Court lacks jurisdiction to entertain [Plaintiff's] Complaint.”). Plaintiff appealed the dismissal. The Ninth Circuit summarily affirmed Judge Winmill's decision to dismiss the case. See Norvell v. Office of Personnel Mgmt., et al., No. 15-35783, Order (9th Cir. Feb. 25, 2016).

         Plaintiff then filed this case - Norvell II - claiming, again, that Defendants' failure to include and/or require definitions of the terms “inpatient” and “outpatient” in any of the 2016 FEHBA plans makes it impossible for him and other consumers to make informed decisions, to understand and compare health care coverages, and to determine benefits and co-payment responsibilities. Compare generally Norvell I Compl. (Docket No. 1), with Norvell II Compl. (Docket No. 1) (both discussing PHSA and FEHBA claims, failure to define terms “inpatient” and “outpatient, ” and alleged injuries). According to Plaintiff, “Judge Winmill did not understand the nature of injury that [Plaintiff] alleged in Norvell I” and, as a result, “[a] fresh look by another judge would best serve the just determination of this action.” Pl.'s Mot. to Deny Defs.' Request for Reassign., p. 2 (Docket No. 23, Att. 1).

         In July/September 2016, all current Defendants moved to dismiss this action (Norvell II), arguing that, under the well-settled doctrines of standing, ripeness, sovereign immunity, res judicata, and/or collateral estoppel, this action should be dismissed. See generally Fed. Defs.' Mot. to Dismiss (Docket No. 10); Non-Gov't Defs.' Mot. for J. on the Pleadings and Joinder (Docket No. 27). Alternatively, these Defendants submitted that this case must be dismissed for lack of standing for the same reasons articulated by Judge Winmill in Norvell I. See Id. On February 2, 2017, the Court dismissed Norvell II, finding that it was procedurally barred by Norvell I. See 2/2/17 Rpt. & Recomm./MDO, pp. 7-8 (Docket Nos. 51-52) (“Norvell II is nearly identical to Norvell I - the allegations are the same and, importantly, the alleged injuries are the same. And, the decision in Norvell I has already determined that these allegations fail to establish an injury in fact sufficient to incur standing. In short, Plaintiff has not cured the jurisdictional defect; simply put, he includes no new facts that would prevent application of Novell I's holding that Plaintiff failed to establish an injury in fact for this latest claim. Thus, Norvell I now bars Plaintiff's claims in this action.”); see also 3/2/17 Order on Rpt. & Recomm. (Docket No. 56) (adopting February 2, 2017 Report and Recommendation in its entirety); 3/2/17 J. (Docket No. 57).

         Plaintiff appealed that decision, and the Ninth Circuit vacated the Court's judgment and remanded the action for further proceedings, concluding in relevant part:

The district court dismissed Norvell's action on the alternate grounds of lack of Article III standing and issue preclusion. However, Norvell alleged that he is unable to predict the medical care that would be covered and to project his copayments, and is therefore unable to understand and compare health benefits plans. See 5 U.S.C. § 8907(a)-(b) (setting forth information that the Office of Personnel Management shall make available to “enable the individual to exercise an informed choice among the types of [health benefits] plans.”). In a case decided after the district court's ruling in this case, Robins v. Spokeo, Inc., 867 F.3d 1108, 1113 (9th Cir. 2017), this court explained that in evaluating plaintiff's claim of harm, the district court must analyze “whether the statutory provisions at issue were established to protect [plaintiff's] concrete interests (as opposed to purely procedural rights), and if so, . . . whether the specific procedural violations alleged . . . actually harm, or present a material risk of harm to, such interests.”
In light of this intervening authority, we vacate the judgment and remand for further proceedings. See Segal v. Am. Tel. & Tel. Co.,606 F.2d 842, 845 (9th Cir. 1979) (noting exception to issue preclusion where “[t]he issue is one of law and . . . a new determination is warranted in order to take account of an intervening change in the applicable legal context” and noting that ...

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