throbber
Case: 1:19-cv-07162 Document #: 97 Filed: 03/15/21 Page 1 of 15 PageID #:482
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
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`PAMELA SMITH, on behalf of
`her daughter, JANE SMITH
`(a pseudonym), and all others
`similarly situated,
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`Plaintiff,
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`v.
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`HEALTH CARE SERVICE
`CORPORATION,
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`Defendant.
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`No. 19 C 7162
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`Judge John Z. Lee
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`MEMORANDUM OPINION AND ORDER
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`Pamela Smith is a beneficiary of an employer-sponsored health insurance plan
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`administered by Health Care Service Corp. (“HCSC”). Her daughter, Jane (a
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`pseudonym), was denied coverage by HCSC for residential treatment of her
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`behavioral health conditions in 2018. On behalf of Jane and a putative class of all
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`others similarly situated, Smith alleges that HCSC’s denial of coverage for Jane’s
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`treatment was the result of improperly narrow residential treatment guidelines that
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`HCSC continues to employ in making benefits determinations, in violation of the
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`Employment Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et
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`seq. Now before the Court is HCSC’s motion to dismiss Smith’s second amended
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`class action complaint. For the following reasons, the motion is granted, except to
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`the extent that it seeks a dismissal with prejudice.
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`

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`Case: 1:19-cv-07162 Document #: 97 Filed: 03/15/21 Page 2 of 15 PageID #:483
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`Background1
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`Smith and Jane are beneficiaries of a health and well-being plan (“the Plan”)
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`I.
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`sponsored by Smith’s employer, Telephone and Data Systems, Inc.; administered by
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`HCSC; and governed by ERISA. 2d Am. Compl. ¶¶ 2, 6, ECF No. 59. The Plan
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`covers treatment for sickness, injury, and “behavioral health” conditions like mental
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`illness and substance use disorders, including residential treatment not limited to
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`acute or emergency services. Id. ¶ 8; see id. ¶ 17. But the Plan provides benefits
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`only, among other “essential condition[s],” if the services for which coverage is sought
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`are “medically necessary,” which the Plan defines as “appropriate and consistent with
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`the diagnosis and which, in accordance with accepted medical standards in the state
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`in which the service is rendered, could not have been omitted without adversely
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`affecting the patient’s condition or the quality of medical care rendered.” Id. ¶ 11.
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`As the Plan’s benefit claims administrator, HCSC (the fourth largest health
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`insurance administrator in the nation, id. ¶ 3(a)) is responsible for making “all final
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`and binding” determinations of whether services for which coverage is sought are
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`covered under the Plan and for causing any resulting benefit payments to be made
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`by the Plan. Id. ¶¶ 9–10. In making such determinations, HCSC has discretion to
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`interpret the Plan’s terms, including any limitations and exclusions, such as whether
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`the services at issue are “medically necessary.” Id. ¶¶ 3(b), 9.
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`As to the term “medical necessity,” HCSC applies a uniform and internal
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`definition in making all benefit determinations. Id. ¶ 12. This definition adopts
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`1
`The Court “accept[s] as true all well-pleaded factual allegations” in reviewing a motion
`to dismiss. See Heredia v. Capital Mgmt. Servs., L.P., 942 F.3d 811, 814 (7th Cir. 2019).
`
`2
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`

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`Case: 1:19-cv-07162 Document #: 97 Filed: 03/15/21 Page 3 of 15 PageID #:484
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`certain behavioral health care guidelines devised by a company called MCG Health,
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`LLC (“MCG”), including a subset of guidelines for residential treatment services (“the
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`RTC Guidelines”). Id. ¶¶ 3(c), 16, 27. MCG assists claims administrators like
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`HCSC to make “medical necessity” decisions by developing clinical coverage
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`guidelines to serve as criteria for determining whether services are consistent with
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`accepted medical practices.2 Id. ¶¶ 15, 23.
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`HCSC licenses the RTC Guidelines from MCG and “systematically applies
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`them to determine whether services for which coverage is sought are medically
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`necessary,” id. ¶ 22, including with respect to “the medical necessity determinations
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`at issue in this case,” id. ¶ 3(c). Yet, the complaint alleges, while the RTC Guidelines
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`“purport[] to summarize accepted standards of medical practice,” they use criteria
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`that are “much more restrictive than those generally accepted.” Id. ¶ 1; see also id.
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`¶¶ 17, 25, 28–30. At bottom, the RTC Guidelines view residential treatment as
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`medically necessary only in the case of “acute” (or worse) behavioral health
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`conditions, while minimizing the relevance of chronic, yet non-acute, conditions. Id.
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`¶¶ 26, 38–41.
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`Jane suffers from a variety of behavioral health conditions, including major
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`depression, substance use disorder, and borderline personality disorder. Id. ¶ 49.
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`On April 4, 2018, Jane was admitted for residential treatment of these conditions at
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`Rogers Memorial Hospital (“Rogers”), an in-network facility in Wisconsin. Id.
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`2
`Smith’s previous complaints named MCG as a second defendant, but Smith agreed to
`dismiss MCG before filing the operative complaint. See 3/3/20 Minute Entry, ECF No. 58
`(granting Smith’s unopposed motion to dismiss).
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`3
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`

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`Case: 1:19-cv-07162 Document #: 97 Filed: 03/15/21 Page 4 of 15 PageID #:485
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`
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`Smith requested insurance coverage for Jane’s treatment at Rogers, but in a
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`letter dated April 6, HCSC denied Smith’s request on the ground that the treatment
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`was not medically necessary, a determination HCSC made based on the RTC
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`Guidelines. Id. ¶ 50. Rogers appealed the denial, which HCSC rejected by letter
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`dated April 8. Id. ¶ 51.
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`Rogers discharged Jane on May 16, 2018, and on August 1, 2018, Smith
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`submitted a post-service appeal of HCSC’s denial. Eventually, HCSC ultimately
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`approved coverage for the first six days of Jane’s residential treatment, but denied
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`coverage for the remainder—from April 10 through May 16—again citing the RTC
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`Guidelines. Id. ¶ 52. External review upheld that decision. See id. ¶¶ 53–57. As
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`a result, Plaintiff incurred significant out-of-pocket expenses for the remainder of
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`Jane’s treatment at Rogers. Id. ¶ 58.
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`
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`Smith filed this suit on behalf of Jane and a putative class of all similarly
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`situated beneficiaries.3 Her class action complaint asserts two substantive claims
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`under 29 U.S.C. § 1132(a)(1)(B) in connection with HCSC’s use of the RTC Guidelines
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`See id. ¶¶ 70, 77. Count I alleges that HCSC breached its fiduciary duties by
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`adopting the RTC Guidelines to make coverage determinations regarding residential
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`treatment of behavioral health conditions. Id. ¶¶ 69–75. Count II alleges that
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`HCSC violated the terms of the Plan by denying Smith’s coverage request for Jane’s
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`residential treatment based on the RTC Guidelines. Id. ¶¶ 76–80.
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`3
`The putative class includes “[a]ny member of a health plan governed by ERISA whose
`request for coverage of residential treatment services for a behavioral health disorder was
`denied by HCSC, in whole or in part, . . . based on the [RTC Guidelines] or other [] Behavioral
`Health Guidelines that contain the same coverage criteria.” 2d Am. Compl. ¶ 61.
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`4
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`

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`Case: 1:19-cv-07162 Document #: 97 Filed: 03/15/21 Page 5 of 15 PageID #:486
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`
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`The remaining two counts in the complaint request certain remedies for these
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`alleged violations of § 1132(a)(1)(B). Count III seeks to enjoin HCSC’s ongoing use
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`of the RTC Guidelines, id. ¶¶ 81–84, while Count IV seeks “other appropriate
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`equitable relief,” including an order compelling HCSC to reprocess Smith’s coverage
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`request and a declaration that the RTC Guidelines are (and were) inconsistent with
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`generally accepted standards of medical practice, id. ¶¶ 85–88.
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`
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`HCSC has moved to dismiss all counts under Federal Rule of Civil Procedure
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`12(b)(6). See Def.’s Mot. Dismiss (“Mot.”), ECF No. 60.
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`Legal Standard
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`To survive a motion to dismiss under Rule 12(b)(6), a complaint must “state a
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`II.
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`
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`claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,
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`570 (2007). “A claim has facial plausibility when the plaintiff pleads factual content
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`that allows the court to draw the reasonable inference that the defendant is liable for
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`the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). This standard
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`“is not akin to a probability requirement, but it asks for more than a sheer possibility
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`that a defendant has acted unlawfully.” Id. (cleaned up). Determining whether a
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`claim for relief has facial plausibility is a “context-specific task that requires the
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`reviewing court to draw on its judicial experience and common sense.” Id. at 679.
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`In reviewing a motion to dismiss, the reviewing court “must take all of the
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`factual allegations in the complaint as true.” Papasan v. Allain, 478 U.S. 265, 286
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`(1986). At the same time, the court is “not bound to accept as true a legal conclusion
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`couched as a factual allegation.” Id. Otherwise stated, “[t]hreadbare recitals of the
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`5
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`

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`Case: 1:19-cv-07162 Document #: 97 Filed: 03/15/21 Page 6 of 15 PageID #:487
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`elements of a cause of action, supported by mere conclusory statements, do not
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`suffice” to state a claim on which relief can be granted. Iqbal, 556 U.S. at 678.
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`III. Analysis
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`
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`HCSC’s opening brief raises three primary arguments. See Def.’s Mem. Supp.
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`Mot. Dismiss (“Mem.”) at 4–15, ECF No. 61. First, HCSC contends that Smith’s
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`substantive ERISA claims (Counts I and II) fail because, as the Plan administrator
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`(as opposed to the Plan sponsor), it is not a proper defendant under § 1132(a)(1)(B).
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`Second, and alternatively, HCSC asserts that Smith fails to adequately allege her
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`§ 1132(a)(1)(B) claims. And third, HCSC assails Smith’s remedial claims under
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`§ 1132(a)(3) (Counts III and IV) as duplicative of her § 1132(a)(1)(B) claims.
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`Additionally, HCSC argues for the first time in its reply brief that Smith has
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`failed to allege the elements of Article III standing. See Def.’s Reply Supp. Mot.
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`Dismiss (“Reply”) at 1–3, ECF No. 78. Given the dispositive nature of this issue, the
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`Court permitted Smith to file a surreply brief to address this argument.
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`As a preliminary matter, Smith contends that HCSC has waived this argument
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`by failing to raise it in its opening brief. See Pl.’s Surreply Opp’n Mot. Dismiss
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`(“Surreply”) at 2, ECF No. 81. But, of course, whether a plaintiff has Article III
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`standing is a jurisdictional issue that cannot be waived. Chi. Joe’s Tea Room, LLC
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`v. Vill. of Broadview, 894 F.3d 807, 814–15 (7th Cir. 2018). And as a “threshold
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`requirement” of federal litigation, the Court is dutybound to address this issue first.4
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`See Bazile v. Fin. Sys. of Green Bay, Inc., 983 F.3d 274, 278 (7th Cir. 2020).
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`4
`Although a dismissal for lack of standing falls under Rule 12(b)(1), the legal standard
`is the same as under Rule 12(b)(6). See Silha v. ACT, Inc., 807 F.3d 169, 173 (7th Cir. 2015).
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`6
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`

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`Case: 1:19-cv-07162 Document #: 97 Filed: 03/15/21 Page 7 of 15 PageID #:488
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`The elements of Article III standing are well-established. “First, the plaintiff
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`must have suffered an injury in fact—an invasion of a legally protected interest which
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`is (a) concrete and particularized and (b) actual or imminent, not conjectural or
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`hypothetical.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992) (cleaned up).
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`“Second, there must be a causal connection between the injury and the conduct
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`complained of . . . .” Id. “Third, it must be likely, as opposed to merely speculative,
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`that the injury will be redressed by a favorable decision.” Id. at 561 (cleaned up).
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`“The party invoking federal jurisdiction bears the burden of establishing these
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`elements.” Id. And, as the Supreme Court recently made clear, there “is no ERISA
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`exception to Article III.” Thole v. U.S. Bank N.A., 140 S. Ct. 1615, 1622 (2020).
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`Here, Smith asserts that she has alleged “two distinct” injuries-in-fact: “a
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`denial of benefits” and “a reduction in available coverage.” Surreply at 2; see 2d Am.
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`Compl. ¶¶ 44, 47–58, 74, 78–79. The Court addresses each in turn.
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`A.
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`Denial of Benefits
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`An improper denial of vested ERISA benefits is the quintessential injury-in-
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`fact supporting a violation of § 1132(a)(1)(B). See Thole, 140 S. Ct. at 1619. Indeed,
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`that provision expressly empowers a plan participant or beneficiary to bring a civil
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`action “to recover benefits due to him under the terms of his plan” (among other,
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`similar relief). 29 U.S.C. § 1132(a)(1)(B). Here, however, the complaint suffers
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`from numerous deficiencies.
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`“The first and critical allegation” of a violation of § 1132(a)(1)(B) is that the
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`plaintiff was “entitled to benefits under the terms of an employee-benefits plan.”
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`7
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`Case: 1:19-cv-07162 Document #: 97 Filed: 03/15/21 Page 8 of 15 PageID #:489
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`Brooks v. Pactiv Corp., 729 F.3d 758, 764 (7th Cir. 2013). The complaint “must also
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`provide the court with enough factual information to determine whether the services
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`were indeed covered services under the plan.” LB Surgery Ctr., LLC v. United Parcel
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`Serv. of Am., Inc., No. 17 C 3073, 2017 WL 5462180, at *2 (N.D. Ill. Nov. 14, 2017)
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`(cleaned up). To that end, plaintiffs sometimes “attach the relevant plan documents
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`to the complaint as insurance against the risk that the complaint’s description of the
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`plan’s terms is ambiguous or otherwise deficient.” Brooks, 729 F.3d at 764.
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`Here, Smith’s complaint does not allege that she was entitled to the benefits
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`under the Plan that she did not receive. And it “is notable for what it does not
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`contain.” See id. For instance, the complaint neither attaches any of the relevant
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`Plan documents, including the RTC Guidelines, nor quotes their relevant portions in
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`full. Nor does the complaint describe any of the “essential condition[s]” of coverage
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`other than medical necessity, see 2d Am. Compl. ¶ 11, or allege that Jane’s residential
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`treatment satisfied them. In fact, Smith herself concedes that her claims “are not
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`premised on the allegation that Jane was entitled to benefits under the [] Plan that
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`she did not receive.” Resp. at 8.
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`Even if Smith had alleged that HCSC’s denial of benefits was improper, she
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`would nonetheless lack standing to pursue the “combination of injunctions and other
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`equitable relief” that she seeks in the complaint. See Pl.’s Resp. Opp’n Mot. Dismiss
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`(“Resp.”) at 1, ECF No. 75. Specifically, instead of monetary damages, Smith
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`requests injunctive relief both to prevent HCSC from applying the RTC Guidelines to
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`future coverage requests and to compel HCSC to reprocess her previously denied
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`8
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`Case: 1:19-cv-07162 Document #: 97 Filed: 03/15/21 Page 9 of 15 PageID #:490
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`coverage request using appropriate guidelines. See 2d Am. Compl. ¶¶ 84, 88(E)–(F).
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`She also prays for a declaration that the RTC Guidelines are (and were) inconsistent
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`with generally accepted standards of medical practice. See id. ¶ 88(D). And Smith
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`premises these requests for relief, at least in part, on HCSC’s denial of coverage for
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`Jane’s treatment at Rogers. See id. ¶¶ 82, 86.
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`Even assuming arguendo that HCSC improperly denied Smith’s coverage
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`request, such “[p]ast exposure to illegal conduct” would not confer standing upon
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`Smith to seek prospective forms of relief absent “a real and immediate threat of
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`repeated injury.” See O’Shea v. Littleton, 414 U.S. 488, 495–96 (1974); see also City
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`of Los Angeles v. Lyons, 461 U.S. 95, 102 (1983) (reiterating that a “likelihood of
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`substantial and immediate irreparable injury” is a “basic” prerequisite to seeking
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`prospective equitable relief (quoting O’Shea, 414 U.S. at 502)); Vickers v. Henry Cty.
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`Sav. & Loan Ass’n, 827 F.2d 228, 231 (7th Cir. 1987) (noting the same of prospective
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`declaratory relief). Thus, in order to pursue injunctive or declaratory relief from
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`HCSC’s future use of the RTC Guidelines, Smith must allege that Jane “is likely to
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`be injured again in the near future, that [s]he would then submit a claim to
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`Defendant, who would then deny this claim in violation of ERISA, and that this denial
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`of medical coverage would result in an injury not subject to a remedy at law.” See
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`Bellanger v. Health Plan of Nev., Inc., 814 F. Supp. 914, 917 (D. Nev. 1992).
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`
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`Smith fails to allege “a real and immediate threat of repeated injury” here.
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`See O’Shea, 414 U.S. at 496. Notably, while the complaint alleges that HCSC
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`continues to use the RTC Guidelines to process coverage requests for residential
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`9
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`Case: 1:19-cv-07162 Document #: 97 Filed: 03/15/21 Page 10 of 15 PageID #:491
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`treatment, it fails to allege that there is any likelihood that Jane will ever seek
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`residential treatment again in the future, let alone “in the near future.” See
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`Bellanger, 814 F. Supp. at 917. As if to demonstrate this point, Smith relies only on
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`the complaint’s assertions that “Plaintiff and the class are likely to be harmed in the
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`future.” See 2d. Am. Compl. ¶¶ 83, 87. These “[t]hreadbare recitals” of the required
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`injury-in-fact to pursue prospective equitable relief, “supported by mere conclusory
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`statements, do not suffice” to carry Smith’s burden. See Iqbal, 556 U.S. at 678.
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`
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`As for the somewhat retrospective forms of equitable relief that Smith seeks—
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`i.e., a declaration that the RTC Guidelines were unlawful as applied to her coverage
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`request and an injunction compelling HCSC to reprocess that request using
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`appropriate guidelines—they fall for another reason. Such relief is typically not
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`available under ERISA where Congress “has ‘elsewhere provided adequate relief’ for
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`the plaintiff’s injury”—namely, an award of benefits due under the plan. See
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`Mohammed v. Prudential Ins. Co. of Am., No. 19 C 3258, 2020 WL 4569696, at *4
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`(N.D. Ill. Aug. 7, 2020) (quoting Varsity Corp. v. Howe, 516 U.S. 489, 515 (1996); see
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`also O’Shea, 414 U.S. at 502 (reiterating the bedrock rule that equitable relief is
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`unavailable where remedies at law are adequate). And here, it stands to reason that
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`any injury inflicted by HCSC’s past denial of benefits for Jane’s residential treatment
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`would be adequately remedied by an award of those benefits—a remedy that Smith
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`has expressly disclaimed. See Resp. at 5 (“Plaintiff does not seek a Court award of
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`benefits.”). The upshot is that Smith may not forgo an award of damages only to
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`seek less adequate forms of equitable relief for HCSC’s denial of benefits.
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`10
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`Case: 1:19-cv-07162 Document #: 97 Filed: 03/15/21 Page 11 of 15 PageID #:492
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`B.
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`Reduction in Available Coverage
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`That leaves Smith’s second asserted injury-in-fact: “a reduction in available
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`coverage” due to HCSC’s ongoing use of the RTC Guidelines to process coverage
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`requests. Surreply at 2; see 2d Am. Compl. ¶¶ 74, 78. The Court agrees with HCSC
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`that such an injury does not pass muster under Article III.
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`
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`A key premise in the Supreme Court’s standing jurisprudence is that a plaintiff
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`“does not . . . automatically satisf[y] the injury-in-fact requirement whenever a
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`statute grants a person a statutory right and purports to authorize that person to sue
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`to vindicate that right.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1549 (2016), as
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`revised (May 24, 2016). Instead, “Article III standing requires a concrete injury even
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`in the context of a statutory violation.” Id. (holding that “a bare violation” of the Fair
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`Credit Reporting Act, premised on inaccurate reporting yet “divorced from any
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`concrete harm,” did not satisfy the injury-in-fact requirement). “Put different, the
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`deprivation of a right created by a statute must be accompanied by ‘some concrete
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`interest that is affected by the deprivation.’” Lee v. Verizon Commc’ns, Inc., 837 F.3d
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`523, 529 (5th Cir. 2016) (quoting Spokeo, 136 S. Ct. at 1549); cf. Lujan, 504 U.S. at
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`573 (rejecting the view that the injury-in-fact element may be “satisfied by
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`congressional conferral upon all persons of an abstract, self-contained,
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`noninstrumental ‘right’”); Lyons, 461 U.S. at 101 (“Abstract injury is not enough.”).
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`
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`Lee is instructive on this point. In Lee, the plaintiff-beneficiary argued that a
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`“bare allegation of incursion on the purported statutory right to ‘proper plan
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`management’ under ERISA” sufficed to meet the injury-in-fact prong of Article III
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`11
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`

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`Case: 1:19-cv-07162 Document #: 97 Filed: 03/15/21 Page 12 of 15 PageID #:493
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`standing. 837 F.3d at 529. The Fifth Circuit disagreed, finding that such an
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`incursion must be accompanied by a “material risk” of concrete harm. Id. at 529–30
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`(quoting Spokeo, 136 S. Ct. at 1549); see also Groshek v. Time Warner Cable, Inc., 865
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`F.3d 884, 887 (7th Cir. 2017) (“[T]he plaintiff must show that the statutory violation
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`presented an appreciable risk of harm to the underlying concrete interest that
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`Congress sought to protect by enacting the statute.” (cleaned up)). Thus, because
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`“there was no allegation of a real risk” that the plaintiff’s “concrete interest in the
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`plan”—i.e., “his right to payment”—would be affected by the purported statutory
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`deprivation, the court concluded that he failed to show an injury-in-fact. Lee, 837
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`F.3d at 530; cf. Thole, 140 S. Ct. at 1618–19 (holding that a bare violation of ERISA’s
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`fiduciary duties, untethered to any “monetary injury” or other concrete harm, is not
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`an injury-in-fact); Meyers v. Nicolet Rest. of De Pere, LLC, 843 F.3d 724, 728–29 (7th
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`Cir. 2016) (citing Lee favorably in holding that, “without a showing of injury apart
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`from the statutory violation [under 15 U.S.C. § 1681c(g)(1)], the failure to truncate a
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`credit card’s expiration date is insufficient to confer Article III standing”).
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`The same result follows here, where a bare incursion on the purported
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`statutory right to more generous “medical necessity” guidelines with regard to
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`residential treatment services is all that Smith has alleged. Indeed, Smith fails to
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`tether this abstract injury—one shared equally by each of the “more than 16 million”
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`individuals with a health plan administered by HCSC, see 2d Am. Compl. ¶ 3(a)—to
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`any concrete harm to her underlying interest in the Plan, i.e., her right to receive
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`benefit payments. That is so because, as discussed above, Smith shows neither that
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`12
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`Case: 1:19-cv-07162 Document #: 97 Filed: 03/15/21 Page 13 of 15 PageID #:494
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`Jane was improperly denied benefits in the past, nor that Jane likely will be
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`improperly denied benefits in the future, on account of the RTC Guidelines. This
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`conclusion is unchanged by Smith’s assertions that HCSC’s adoption of the RTC
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`Guidelines “shifted some of the risk from itself . . . to the participants and
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`beneficiaries of the plans.” Id. ¶ 44; see also id. ¶¶ 48, 74. After all, these assertions
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`merely recharacterize the alleged reduction in coverage under the Plan, while still
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`failing to link that abstract injury to any “risk of real harm.” See Lee, 837 F.3d at
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`529 (quoting Spokeo, 136 S. Ct. at 1549 (emphasis added)).
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`
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`Johnson v. Allsteel, Inc., on which Smith relies, is not to the contrary. 259
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`F.3d 885 (7th Cir. 2001). In Johnson, the plaintiff-beneficiary alleged that the
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`defendant-employer violated ERISA by unilaterally amending one of the plan’s
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`provisions, in violation of the plan’s plain language, so as “to grant itself discretion to
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`resolve all questions arising under the Plan,” including with regard to eligibility for
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`benefits. Id. at 887. In finding that these allegations satisfied the injury-in-fact
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`requirement, the Seventh Circuit emphasized that the amendment had granted the
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`defendant “unchanneled discretion to deny claims,” id. at 890, including the ability
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`to evade judicial scrutiny of its denials, given that, under ERISA, “[t]he scope of
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`judicial review varies in accordance with the extent of discretion afforded the
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`administrator, id. at 889 (citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101,
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`115 (1989)); see id. at 888–90. In light of this drastic “increase in discretion,” the
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`court found a “likelihood” that the plaintiff would, “at some point” in the future, suffer
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`an improper denial of benefits as a result. See id. at 890. The same cannot be said
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`13
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`

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`Case: 1:19-cv-07162 Document #: 97 Filed: 03/15/21 Page 14 of 15 PageID #:495
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`here given that the complaint provides no factual content supporting a likelihood that
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`Jane will need residential treatment again at any point in the future, as discussed
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`above.5
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`Accordingly, neither of Smith’s asserted injuries-in-fact satisfy Article III,
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`requiring dismissal of her complaint.6 But, while HCSC asks the Court to dismiss
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`the complaint with prejudice, the Court finds that a dismissal without prejudice is
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`more appropriate. This is the first complaint the Court has ruled on in this case,
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`and HCSC does not show that it would be impossible for Smith to fix the defects
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`identified above. Cf. Bogie v. Rosenberg, 705 F.3d 603, 608 (7th Cir. 2013) (“When a
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`complaint fails to state a claim for relief, the plaintiff should ordinarily be given an
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`opportunity . . . to amend the complaint to correct the problem if possible.”). Thus,
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`the Court will afford Smith one more opportunity to amend her complaint.
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`5
`To the extent Johnson suggests that a mere “shifting [of] risk” to the beneficiary as a
`result of the defendant’s conduct constitutes an injury-in-fact, see 259 F.3d at 888, as Smith
`insists, the Court finds that this language is dictum whose persuasive value has been eroded
`by the Supreme Court’s more recent Article III standing jurisprudence. Indeed, just last
`term, a majority of the Court implicitly rejected the sort of “loss or depreciation in value”
`theory that at times appears to undergird Johnson’s discussion of injury-in-fact. See Thole,
`140 S. Ct. at 1626 (Sotomayor, J., dissenting) (cleaned up); cf. Johnson, 259 F.3d at 888
`(“[W]hen Allsteel increased its discretion as plan administrator, it simultaneously decreased
`the value of [the plaintiff’s] bargained-for-entitlements, causing him injury-in-fact.”).
`Moreover, the Seventh Circuit has since observed that Article III requires a plaintiff to “show
`that the statutory violation presented an appreciable risk of harm to the underlying concrete
`interest that Congress sought to protect by enacting the statute.” Groshek, 865 F.3d at 887
`(citing Spokeo, 136 S. Ct. at 1549–50 (emphasis added)); see also Susan B. Anthony List v.
`Driehaus, 573 U.S. 149, 158 (2014) (recognizing that a “substantial risk” of imminent future
`injury suffices to satisfy Article III (quoting Clapper v. Amnesty Int’l USA, 568 U.S. 398, 414
`n.5 (2013) (emphasis added))).
`
` 6
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`Because Smith fails to allege Article III standing, the Court has no occasion, and no
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`jurisdiction, to consider HCSC’s remaining arguments. See Bazile, 983 F.3d at 277–78.
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`14
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`

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`Case: 1:19-cv-07162 Document #: 97 Filed: 03/15/21 Page 15 of 15 PageID #:496
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`IV. Conclusion
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`For the foregoing reasons, HCSC’s motion to dismiss is granted in part and
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`denied in part. Smith’s second amended class action complaint is dismissed without
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`prejudice. To the extent Smith can correct the defects identified herein, she may
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`submit a third and final amended complaint no later than March 29, 2021.
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`IT IS SO ORDERED.
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`ENTERED 3/15/21
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`__________________________________
`John Z. Lee
`United States District Judge
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`15
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`

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