Health Reform WK-EDGE Private discrimination claims by providers not allowed under ACA
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Thursday, June 22, 2017

Private discrimination claims by providers not allowed under ACA

By Lindsey Firnbach, J.D.

An association of chiropractors and one of its members were barred from bringing a private action alleging discrimination by health plans under Section 2706 of the Patient Protection and Affordable Care Act (ACA) (P.L.111-148) when a federal district court in New Jersey held that the section does not provide a private remedy either by express language or by implication. The court held that the section, which prohibits discrimination by group health plans and health insurance issuers against health care providers, did not expressly create a private right of action nor did it create a remedy for non-compliance, and it differed from another section of the ACA which contained an implied private right of action through the incorporation of federal civil rights statutes (Association of New Jersey Chiropractors v. Horizon Healthcare Services, Inc., June 13, 2017, Wolfson F.).

Health plan design. Horizon Healthcare Services, Inc. (Horizon) was approved in 2015 to sell a health insurance policy that contained two tiers of health care providers. This plan provided lower costs for members when they sought treatment from a provider under the first tier. In 2016, the Association of New Jersey Chiropractors, Inc. (the Association) and one of its members brought a suit against Horizon, arguing that the two tier plan violated the ACA. The association claimed that only 6.1 percent of in-network chiropractors were part of the first tier of the plan, and that this was much lower than other integrative medicine groups, which had as low as 66.46 percent and as high as 79.85 percent of their in-network providers as part of the first tier. They claimed that the decision making process used by Horizon lacked transparency, and brought the federal claim with other state claims in a New Jersey district court. Horizon subsequently filed a motion to dismiss, claiming that section 2706 of the ACA does not contain a private right of action.

Private Right of Action. A private right of action can be found either in express language in the statute or by implication. In order to determine if Congress intended the section to contain a private right of action, the court must look to see if the statute displays intent to create an action for a class of beneficiaries that includes the Association and a private remedy. After doing so, the court declared neither a private right for a class nor a private remedy existed. The court noted that the Association did not provide any case law or legislative history that would suggest that Congress intended a right or remedy by implication, and declared that although its circuit had not contemplated this issue, another district court in Virginia had stated that a private right of action does not exist in this section of the ACA. Although section 1557 of the ACA had been found to contain a private right of action, the court noted that this section differed because it had incorporated four civil rights statutes and had stated that those mechanisms apply to the section.

Supplemental Jurisdiction. Although a federal court can decide state law claims with federal law claims when the claims are of the same case and controversy, the court declined to extend supplemental jurisdiction over the state law claims brought by the Association. Noting that other courts generally decline to exercise supplemental jurisdiction when a federal claim is dismissed early in the case, the court held that the case brought by the Association was in its infancy and so it would decline to hear the state law claims, and it remanded the case to state court.

The case is Civil Action No. 16-08400(FLW).

Attorneys: Jeffrey B. Randolph (Jeffrey Randolph Law Office) for The Association of New Jersey Chiropractors, Inc. Andrew I. Hamelsky (White and Williams LLP) and Edward S. Wardell (Connell Foley LLP) for Horizon Healthcare Services, Inc. d/b/a Horizon Blue Cross Blue Shield of New Jersey, Inc.

Companies: The Association of New Jersey Chiropractors, Inc.; Horizon Healthcare Services, Inc. d/b/a Horizon Blue Cross Blue Shield of New Jersey, Inc.

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