United States District Court, D. Idaho
REPORT
AND RECOMMENDATION RE: DEFENDANTS BLUE CROSS OF IDAHO HEALTH
SERVICE INC., BLUE CROSS AND BLUE SHIELD ASSOCIATION, AND
SPECIAL AGENT MUTUAL BENEFIT ASSOCIATION'S MOTION TO
DISMISS PLAINTIFF'S AMENDED COMPLAINT (DOCKET NO. 116)
DEFENDANTS CLAIMS ADMINISTRATION CORPORATION AND FIRST HEALTH
LIFE AND HEALTH INSURANCE COMPANY'S MOTION TO DISMISS
PLAINTIFF'S SECOND AMENDED COMPLAINT (DOCKET NO. 117)
FEDERAL DEFENDANTS' MOTION TO DISMISS (DOCKET NO. 121)
CIGNA HEALTH AND LIFE INSURANCE COMPANY'S MOTION TO
DISMISS (DOCKET NO. 127)
Ronald
E Bush, Chief U.S. Magistrate Judge.
Pending
before the Court are (1) Defendants Blue Cross of Idaho
Health Service Inc. (“BCI”), Blue Cross and Blue
Shield Association (“BCBSA”), and Special Agent
Mutual Benefit Association's (“SAMBA”)
(collectively “Blue Cross”) Motion to Dismiss
Plaintiff's Amended Complaint (Dkt. 116); (2) Defendants
Claim Administration Corporation (“CAC”) and
First Health Life and Health Insurance Company's
(“FHLH”) Motion to Dismiss Plaintiff's Second
Amended Complaint (Dkt. 117); (3) Defendants Office of
Personnel Management (“OPM), the Director of OPM, the
Department of Health and Human Services (“HHS”),
the Secretary of HHS, and the Centers for Medicare &
Medicaid Services' (“CMS”) (collectively
“Federal Defendants”) Motion to Dismiss (Dkt.
121); and (4) Cigna Health and Life Insurance Company's
(“Cigna”) Motion to Dismiss (Dkt. 127). Having
carefully considered the record and oral argument, the Court
enters the following Report and Recommendation:
I.
BACKGROUND
This
case involves Plaintiff Bruce Norvell's enrollment in the
Blue Cross and Blue Shield Service Benefit Plan - a
nationwide health benefits plan created pursuant to the
Federal Employees Health Benefits Act (“FEHBA”).
FEHBA authorizes the United States Office of Personnel
Management (“OPM”) to enter into contracts with
private entities (“carriers”) to offer insurance
plans to federal employees, retirees, and their dependents.
The Service Benefit Plan is one such plan and is created by a
contract between OPM and BCBSA, the latter of which acts on
behalf of local Blue Cross and Blue Shield companies such as
BCI that, in turn, administer the Service Benefit Plan with
respect to health care services rendered in their individual
localities.
A.
Mr. Norvell's Heart Surgery and Cost Share
Dispute
Mr.
Norvell's complaints initially stem from his 2013 heart
ablation surgery and the resulting cost share under the
Service Benefit Plan. See 2/2/17 MDO, pp. 2-3 (Dkt.
52). He disagreed with the approximately $3, 800 cost share,
which he believed was based, in part, on the treatment being
incorrectly or ambiguously categorized as an
“outpatient” procedure instead of an
“inpatient” procedure. See id. He
challenged the cost share through the FEHBA-mandated
administrative appeal process, prevailed, and the cost share
was reduced to $100. See id. But that did not end
the matter; instead, Mr. Norvell proceeded to bring two
actions in this Court.
B.
Norvell I: Previous Lawsuit and Dismissal of
Claims
In
September 2014, Mr. Norvell filed a related lawsuit -
Norvell I - before this Court. See generally
Norvell v. Office of Pers. Mgmt., et al., Case No.
1:14-cv-00421-BLW (D. Idaho 2015); see also 2/2/17
MDO, pp. 2-4 (describing Norvell I proceedings)
(citing Norvell v. Office of Pers. Mgmt. (Norvell
I), 2015 WL 5611588 (D. Idaho)).[1] He argued that a lack of
definitions in the FEHBA plans for the terms
“inpatient” and “outpatient” violated
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) the 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, 2015 WL 5611588 at
*2 (D. Idaho 2015). Mr. Norvell also 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 or benefits
contain ambiguous definitions.” Id. at *3.
On
September 23, 2015, then-Chief U.S. District Judge B. Lynn
Winmill dismissed Norvell I for lack of subject
matter jurisdiction (lack of standing), holding that
“the inability to compare various plans does not
constitute an injury in fact” because that
“so-called injury is neither concrete nor
particularized.” Id.;[2] see also id. at *5
(“Having found that Norvell 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 Norvell lacks
standing. As such, this Court lacks jurisdiction to entertain
Norvell's Complaint.”).
Mr.
Norvell appealed Judge Winmill's dismissal. In February
2016, the Ninth Circuit summarily affirmed. See Norvell
v. Office of Pers. Mgmt., Case No. 15-35783, Order
(9th Cir. Feb. 25, 2016).
C.
Norvell II: Present Lawsuit, Dismissal, and
Remand
Mr.
Norvell then initiated this lawsuit in May 2016 -
Norvell II - claiming, again, that
Defendants'[3] failure to include and/or require
definitions of “inpatient” and
“outpatient” in FEHBA plans prevents him from (1)
making informed decisions, (2) understanding and comparing
health care coverage, and (3) determining benefits and
co-payment responsibilities. See generally Compl.
(Dkt. 1). According to Mr. Norvell, “Judge Winmill did
not understand the nature of injury . . . alleged in
Norvell I” and “[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 (Dkt. 23-1).
Blue
Cross and the Federal Defendants moved to dismiss the action
based on standing, ripeness, sovereign immunity, res
judicata, and/or collateral estoppel. See generally
Fed. Defs.' Mot. to Dismiss (Dkt. 10); Blue Cross's
Mot. for JOP and Joinder in Fed. Defs.' Mot. to Dismiss
(Dkt. 27). Alternatively, they 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 undersigned found that Mr.
Norvell's claims were precluded and recommended that the
action be dismissed:
In other words, Judge Winmill's dismissal for lack of
standing (and, thus, jurisdiction) in Norvell I
establishes issue preclusion as to the precise issue of
standing/jurisdiction. At the same time, it does not
establish claim preclusion if jurisdiction can be
shown in a second action (for example, this action -
Norvell II) on other grounds. Therefore, if
Plaintiff has not cured the basis for his previous dismissal
in Norvell I, that same basis applies here to
likewise warrant the dismissal of Plaintiff's similar
claims here, in Norvell II .....
[T]here is little difficulty in concluding that
Plaintiff's second foray in this Court is procedurally
barred. 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 Norvell
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.
2/2/17 Rpt. and Recomm., pp. 6-8 (Dkt. 52) (citing and
quoting Myles v. Bank of America, Inc., 2017 WL
24865, *4 (N.D. Cal. 2017), citing Coll. Sports Council
v. Dep't of Educ., 465 F.3d 20, 22 (D.C. Cir.
2006)). On March 2, 2017, U.S. District Judge Edward J. Lodge
agreed, adopted the Report and Recommendation, and formally
dismissed Norvell II:
The Court finds the Report correctly characterizes the facts,
circumstances, allegations, and claims made in this case as
well as those made in the prior case. Plaintiff has again
failed to show an injury in fact in this case which leaves
him without standing to bring this action. Moreover,
Plaintiff is procedurally barred from relitigating the
standing question. The Complaint in this case makes the same
allegations and raises the same claims and injuries as in the
prior case which was dismissed for lack of standing. For the
reasons stated in the Report, which this Court adopts in its
entirety, the Court finds the Defendants' Motion to
Dismiss and Motion for Judgment on the Pleadings should be
granted. In reaching this conclusion, the Court is mindful of
the fact that the Plaintiff is a pro se litigant.
3/2/17 Order, p. 4 (Dkt. 56).
Mr.
Norvell appealed Judge Lodge's dismissal and, on October
30, 2017, the Ninth Circuit vacated the Court's judgment
and remanded the action for further proceedings:
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 “[i]ssue preclusion has never been applied
to issues of law with the same rigor as issues of
fact”).
10/30/17 Mem. (Docket No. 61).
Following
remand, Mr. Norvell attempted to amend his Complaint
approximately three times (Dkts. 66, 79, 81, 97-100). Several
other motions also followed, [4] culminating in a September 10,
2018 Order which, among other things, attempted to
“settle the pond” as to Mr. Norvell's
operative Complaint, while structuring a briefing protocol to
accommodate the Defendants' anticipated challenges to the
same. See generally 9/10/18 MDO (Dkt. 104). This
process culminated on September 14, 2018, with the filing of
Mr. Norvell's 109-page Amended Complaint, adding
additional defendants[5] and raising 134 claims (though asserting
135 “Claims for Relief, ” Mr. Norvell
“[i]ntentionally” omitted the “Eleventh
Claim for Relief”). See Am. Compl. (Dkt. 105).
D.
Mr. Norvell's Amended Complaint and the Allegations
Against Defendants
Mr.
Norvell fears a repeat of the cost share scenario that
followed his 2013 heart ablation surgery. Contending that
FEHBA-plan hospital care copayments can be drastically higher
when categorized as “outpatient” as opposed to
“inpatient, ” Mr. Norvell describes that,
“[w]ithout a uniform definition for the word that
dictates copayments for all [FEHBA plans], [he is] unable to
make an ‘informed choice' of the insurance plans
available [to him] and . . . [is] unable to anticipate the
copayments of those plans.” Norvell Decl., ¶¶
5, 8 (Dkt. 105-1). Mr. Norvell's Amended Complaint seeks
to redress these alleged procedural injuries[6] via the 134
claims for relief.
Specifically,
as against the Federal Defendants (117 total claims), Mr.
Norvell (1) argues that OPM failed to require various FEHBA
plans to include certain definitions in their plan brochures,
as allegedly required by 5 U.S.C. §§ 8902(d),
8907(a), and 8907(b), respectively (Claims for Relief 3-10
and 12-15); (2) challenges HHS's promulgation of the
‘uniform glossary” as allegedly required by 45
C.F.R. § 147.200(c)(2)(ii) (Claims for Relief 1-2); (3)
argues that OPM wrongfully approved the nationwide plans to
participate in the FEHB program as allegedly required by 5
C.F.R. § 890.203(a)(3) (Claim for Relief 16); and (4)
challenges the alleged failure by CMS and HHS to levy fines
against various entities for their non-compliance with the
PHSA under 42 U.S.C. § 300gg-15(f) (Claims for Relief
34-135). See generally Am. Compl., ¶¶
77-105, 155-309 (Dkt. 105); see also Att. 8 to Am.
Compl. (Dkt. 105-8) (chart of claims against each Defendant).
As
against the Non-Federal Defendants/Insurers (17 total claims
- nine against Blue Cross; and two against Cigna, CAC, and
FHLH, respectively), Mr. Norvell similarly argues that each
violated 45 C.F.R. § 147.200(a)(1)(ii) by failing to
include compliant information in the Summary of Benefits and
Coverage (“SBC”) for their particular FEHBA plans
(Claims for Relief 17-33);[7] in turn, he asserts that the
Non-Federal Defendants/Insurers are subject to fines and/or
civil penalties under 42 U.S.C. §§ 300gg-15(f),
300gg-22, and underlying regulations. See Am.
Compl., ¶¶ 106-154 (Dkt. 105); see also
Att. 8 to Am. Compl. (Dkt. 105-8).
Mr.
Norvell believes that the Non-Federal Defendants/Insurers are
intentionally and willfully colluding to withhold definitions
of “inpatient” and “outpatient, ” so
as to increase FEHBA plan copayments and lower the expense of
OPM and the plan carriers. See Am. Compl., ¶ 42
(Dkt. 105) (“I allege that the failure of the
Nationwide FEHBA plans to substantively define the word
‘inpatient' is not a coincidence, but rather
collusion. Collusion to intentionally and willfully
deprive FEHBA enrollees of information mandated by three
federal statutes. Collusion that enables insurance carriers
to bill hospital care as ‘outpatient,' thus
increasing FEHBA Enrollee Copayments, and lowering the
expense of OPM and the plan carriers.”).[8]
Mr.
Norvell's “Prayer for Relief” contains 53
paragraphs spread across 20 pages. As a general matter, he
seeks declaratory relief (as to the existence of
statutory/regulatory violations and that such violations were
intentional/willful), with corresponding injunctive relief,
civil fines, and penalties. See generally id. at pp.
98-108.
E.
Defendants' At-Issue Motions to Dismiss
Each
Defendant moves to dismiss Mr. Novell's claims against
them, arguing variously (or at least through some combination
of arguments) that (1) he lacks standing to raise any of his
claims; (2) he has no private right of action; (3) there are
no statutory violations under the PHSA or FEHBA; (4)
enforcement decisions are committed to agency discretion; and
(5) there is no subject matter jurisdiction.
II.
STATUTORY/REGUL ...