New York Group For Plastic Surgery LLP v. Anthem Blue Cross

Background

New York Group For Plastic Surgery LLP, a physician practice group, sued Anthem Blue Cross and Anthem, Inc. for breach of contract. The complaint alleged that the practice group’s surgeons performed two procedures on a patient on November 25, 2013, and that Anthem approved payment at an in-network benefit level. The practice group later submitted invoices, but Anthem reimbursed only part of them, using an out-of-network calculation and leaving nearly $200,000 unreimbursed, according to the complaint.

The complaint relied in part on an October 31, 2014 explanation of benefits letter stating: “We have paid this claim directly to the provider at the in-network benefit level.” The complaint also alleged that Anthem confirmed in an October 2017 letter that it would not use the in-network rate.

Motion and Legal Standard

Anthem moved to dismiss under Rule 12(b)(6), which allows dismissal when a complaint does not state a legally sufficient claim. Anthem argued that the claims were time-barred, that the two Anthem entities were not proper parties, and that the complaint failed to state a breach-of-contract claim. The court addressed only the third argument.

Under New York law, a breach-of-contract claim requires an agreement, performance, breach, and damages. A complaint must include factual allegations about the contract’s formation, timing, and major terms; conclusory statements that a contract existed or was breached are insufficient.

Court’s Analysis

The court found that the complaint’s allegations did not allow it to infer that an agreement existed. It treated the explanation of benefits statement as describing a past payment rather than creating a promise to pay additional money. The court explained that a statement saying a person paid five dollars, when the person actually paid three dollars, would not itself create a contract requiring payment of the remaining two dollars.

The court also noted that the practice group clarified the date of the explanation of benefits statement only in its opposition to the motion. The statement apparently came after Anthem had already reimbursed the practice group at the rate the practice group claimed was incorrect. The court concluded that allowing a breach-of-contract case to proceed when performance and damages occurred before the alleged agreement would not make sense.

Ruling

Judge J. Paul Oetken granted Anthem’s motion to dismiss. The court also granted the practice group leave to file a Second Amended Complaint within 21 days, provided its counsel had a good-faith basis to allege facts curing the failure to state a claim. Alternatively, the practice group could notify the court that it would not amend, after which the court would enter a judgment of dismissal permitting an appeal. The opinion does not state that the dismissal itself was with or without prejudice.