Doe v. Oxford Health Plans, Inc.

Background

John Doe was a participant and subscriber in an employee health-benefits plan issued by Oxford Health Insurance, Inc. to his employer. Jane Doe was a beneficiary under the plan. Jane Doe received medically necessary rhinoplasty performed by an out-of-network surgeon, Dr. Samieh Rizk, with anesthesia provided by Dr. Robert Scolnick at Park Avenue Facial Surgery. The complaint alleged that the providers’ fees and the facility fee were paid in full, but Oxford ultimately reimbursed only $147.06 of Dr. Scolnick’s $1,500 fee and paid nothing for Dr. Rizk’s services or the facility fee.

The complaint described multiple explanations for the denials, including improper coding, lack of medical necessity, the setting in which the surgery was performed, and references to unspecified standards under the plan’s certificate of coverage. The Does alleged that Oxford did not provide the standards or other materials needed to understand or challenge the denials.

The Does brought one claim under Section 502(a)(1)(B) of the Employee Retirement Income Security Act, a federal law governing employee benefit plans. They sought reimbursement under the plan and alleged that the defendants failed to provide the specific reasons for the benefit denials, as required by 29 U.S.C. § 1133(1). The defendants moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint adequately states a legally plausible claim.

Standing

The defendants argued that John Doe lacked constitutional and statutory standing because the alleged underpayment concerned services provided to Jane Doe. The court rejected that argument. It held that John Doe had standing because, as a plan participant, he had a contractual interest in receiving the benefits promised under the plan, including benefits provided to a covered beneficiary. The court stated that whether reimbursement should be paid to John Doe or Jane Doe was a merits question, not a standing barrier. The complaint did not specify who should receive payment, but it sought reimbursement according to the plan’s terms.

Proper Defendants

The court held that only Oxford Health Insurance, Inc. was alleged to be the plan’s insurer and administrator and to handle claims and benefits determinations. The complaint did not allege that Oxford Health Plans, LLC, UnitedHealthcare Insurance Company, UnitedHealthGroup Incorporated, or Oxford Health Plans (NY), Inc. was a plan administrator, trustee, or claims administrator with total control over benefits. The court therefore concluded that those four entities were not proper defendants for the benefit-enforcement claim.

Reimbursement Claims

The court held that the complaint did not adequately state a claim for reimbursement of Jane Doe’s medical expenses. An ERISA benefits claim requires the plaintiff to identify the plan provision that entitles the plaintiff to the requested benefit and explain how the defendant violated that provision. The complaint described the services, the submitted invoices, and the denials, but it did not identify a plan provision requiring payment for the care provided by Dr. Rizk or Dr. Scolnick. The court found that the complaint’s general allegations that Oxford failed to follow the plan were insufficient.

The court dismissed the substantive reimbursement claims but allowed plaintiffs to replead them if they chose to identify the relevant plan provisions. The opinion explains that this type of dismissal was without prejudice.

Procedural-Notice Claim

The court separately held that the Does adequately alleged that Oxford Health Insurance, Inc. failed to provide the specific denial reasons required by 29 U.S.C. § 1133(1). The court found that statements such as the claim was not reimbursable in the relevant setting, combined with references to standards that were not provided, could be too unclear for a participant to understand what was wrong with the claim or how to challenge the decision. The explanation for Dr. Scolnick’s claim also allegedly failed to reconcile the $147.06 payment with the reference to a facility payment calculation.

The court emphasized that proving this procedural violation would not automatically entitle plaintiffs to reimbursement. A possible remedy could be sending the matter back to the plan administrator for further explanation or review.

Disposition

The court’s order states that the motion to dismiss was granted in part and denied in part. The complaint was dismissed with prejudice as to Oxford Health Plans, LLC, UnitedHealthcare Insurance Company, UnitedHealthGroup Incorporated, and Oxford Health Plans (NY), Inc. The motion was denied as to the allegation that Oxford Health Insurance, Inc. failed to provide information required by 29 U.S.C. § 1133(1). The motion was otherwise granted without prejudice, and plaintiffs had until May 5, 2025, to file an amended complaint.