Norvell v. Blue Cross and Blue Shield Association

         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 (9^th 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 (9^th 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 (9^th 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 ...