{ "id": 9496891, "name": "BRADSHAW B. LUPTON, individually and on behalf of all persons similarly situated, Plaintiff v. BLUE CROSS AND BLUE SHIELD OF NORTH CAROLINA, a non-profit Corporation, Defendant and MICHAEL F. EASLEY, ATTORNEY GENERAL, on behalf of the rights and Interests of the public, Defendant-Intervenor; ROLAND GIDUZ, individually and on behalf of all persons similarly situated, Plaintiff v. BLUE CROSS AND BLUE SHIELD OF NORTH CAROLINA, a non-profit Corporation, Defendant and MICHAEL F. EASLEY, ATTORNEY GENERAL, on behalf of the rights and Interests of the public, Defendant-Intervenor", "name_abbreviation": "Lupton v. Blue Cross & Blue Shield of North Carolina", "decision_date": "2000-08-01", "docket_number": "No. COA99-1138", "first_page": "421", "last_page": "426", "citations": [ { "type": "official", "cite": "139 N.C. App. 421" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "N.C. Gen. Stat. \u00a7 58-65-160", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "opinion_index": 0 }, { "cite": "N.C. Gen. Stat. \u00a7 75-1", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "pin_cites": [ { "page": "et seq." } ], "opinion_index": 0 }, { "cite": "472 S.E.2d 578", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1996, "pin_cites": [ { "page": "585" }, { "page": "585" } ], "opinion_index": 0 }, { "cite": "123 N.C. App. 163", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11912398 ], "weight": 2, "year": 1996, "pin_cites": [ { "page": "176" }, { "page": "175" } ], "opinion_index": 0, "case_paths": [ "/nc-app/123/0163-01" ] }, { "cite": "496 S.E.2d 369", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 12, "year": 1998, "pin_cites": [ { "page": "372" }, { "page": "372" }, { "page": "371" }, { "page": "372" }, { "page": "374" }, { "page": "374-75" }, { "page": "374" } ], "opinion_index": 0 }, { "cite": "347 N.C. 627", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 551182 ], "weight": 5, "year": 1998, "pin_cites": [ { "page": "632" }, { "page": "632" }, { "page": "630" }, { "page": "636" } ], "opinion_index": 0, "case_paths": [ "/nc/347/0627-01" ] }, { "cite": "176 S.E.2d 161", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1970, "pin_cites": [ { "page": "163" } ], "opinion_index": 0 }, { "cite": "277 N.C. 94", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8561932 ], "year": 1970, "pin_cites": [ { "page": "98" } ], "opinion_index": 0, "case_paths": [ "/nc/277/0094-01" ] }, { "cite": "251 S.E.2d 843", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1979, "pin_cites": [ { "page": "851", "parenthetical": "quoting Sutton v. Duke, 277 N.C. 94, 98, 176 S.E.2d 161, 163 (1970)" } ], "opinion_index": 0 }, { "cite": "296 N.C. 416", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8567570 ], "year": 1979, "pin_cites": [ { "page": "427", "parenthetical": "quoting Sutton v. Duke, 277 N.C. 94, 98, 176 S.E.2d 161, 163 (1970)" } ], "opinion_index": 0, "case_paths": [ "/nc/296/0416-01" ] }, { "cite": "418 S.E.2d 700", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1992, "pin_cites": [ { "page": "702" } ], "opinion_index": 0 }, { "cite": "107 N.C. App. 63", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8527132 ], "year": 1992, "pin_cites": [ { "page": "67" } ], "opinion_index": 0, "case_paths": [ "/nc-app/107/0063-01" ] }, { "cite": "347 S.E.2d 743", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1986, "opinion_index": 0 }, { "cite": "318 N.C. 172", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4732963 ], "year": 1986, "opinion_index": 0, "case_paths": [ "/nc/318/0172-01" ] }, { "cite": "526 S.E.2d 214", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2000, "pin_cites": [ { "page": "215" } ], "opinion_index": 0 }, { "cite": "136 N.C. App. 834", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11242419 ], "year": 2000, "pin_cites": [ { "page": "834-35" } ], "opinion_index": 0, "case_paths": [ "/nc-app/136/0834-01" ] }, { "cite": "N.C. Gen. Stat. \u00a7 58-2-75", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "weight": 2, "year": 1999, "pin_cites": [ { "page": "(a)" } ], "opinion_index": 0 }, { "cite": "N.C. Gen. Stat. \u00a7 58-65-40", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "weight": 3, "opinion_index": 0 }, { "cite": "N.C. Gen. Stat. \u00a7 58-65-95", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "weight": 5, "pin_cites": [ { "page": "(b)" }, { "page": "(c)" } ], "opinion_index": 0 } ], "analysis": { "cardinality": 656, "char_count": 12950, "ocr_confidence": 0.773, "pagerank": { "raw": 2.4578278784551445e-07, "percentile": 0.8052085276014161 }, "sha256": "9edec9ae8a7d282ffef72a74ae6a2a77ee100908bbda77c508ff6b33f467caad", "simhash": "1:2fd53940d4b3a6d3", "word_count": 2067 }, "last_updated": "2023-07-14T19:40:43.899160+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges JOHN and TIMMONS-GOODSON concur." ], "parties": [ "BRADSHAW B. LUPTON, individually and on behalf of all persons similarly situated, Plaintiff v. BLUE CROSS AND BLUE SHIELD OF NORTH CAROLINA, a non-profit Corporation, Defendant and MICHAEL F. EASLEY, ATTORNEY GENERAL, on behalf of the rights and Interests of the public, Defendant-Intervenor ROLAND GIDUZ, individually and on behalf of all persons similarly situated, Plaintiff v. BLUE CROSS AND BLUE SHIELD OF NORTH CAROLINA, a non-profit Corporation, Defendant and MICHAEL F. EASLEY, ATTORNEY GENERAL, on behalf of the rights and Interests of the public, Defendant-Intervenor" ], "opinions": [ { "text": "WALKER, Judge.\nOn 30 June 1997, plaintiff Roland Giduz filed a class action against defendant Blue Cross and Blue Shield of North Carolina (Blue Cross) alleging, inter alia, violations of N.C. Gen. Stat. \u00a7 58-65-95. On 8 May 1998, plaintiff Bradshaw B. Lupton filed a class action against Blue Cross and filed an amended complaint on 28 October 1998, making allegations identical to those of Giduz. Pursuant to Rule 2.1 of the General Rules of Practice for the Superior and District Courts, the Chief Justice of our Supreme Court designated both actions as exceptional and assigned them to the Special Superior Court for Complex Business Cases. The trial court consolidated the two actions and substituted Lupton as the named plaintiff.\nBlue Cross is a non-profit medical service corporation governed by Articles 65 and 66 of Chapter 58 of the North Carolina General Statutes. Chapter 58 requires that health insurers and medical service corporations maintain monetary \u201creserves\u201d such that the solvency of the insurer will not likely be threatened if claims or other expenses are higher than forecast in any given year. Under N.C. Gen. Stat. \u00a7 58-65-95, Blue Cross is required to maintain a minimum monetary \u201creserve\u201d to provide for contingent expenditures. Specifically:\nEvery such corporation [subject to this Article] shall accumulate and maintain, . . ., a special contingent surplus or reserve at the following rates annually of its gross annual collections from membership dues, exclusive of receipts from cost plus plans, until the reserve equals an amount that is three times its average monthly expenditures for claims and administrative and selling expenses:\n(1) First $200,000 .4%\n(2) Next $200,000 .2%\n(3) All above $400,000 .1%\nN.C. Gen. Stat. \u00a7 58-65-95(b) (1999). Additionally, the reserve may not \u201cexceed an amount equal to six times the average monthly expenditures for claims and administrative and selling expenses.\u201d N.C. Gen. Stat. \u00a7 58-65-95(c) (1999).\nUnder our State\u2019s statutory rate making scheme, the Commissioner of Insurance (Commissioner) determines whether the rates filed by an insurer are reasonable. N.C. Gen. Stat. \u00a7 58-65-40 provides in part:\nNo corporation subject to the provisions of this Article and Article 66 of this Chapter shall enter into any contract with a subscriber after the enactment hereof unless and until it shall have filed with the Commissioner of Insurance a full schedule of rates to be paid by the subscribers to such contracts and shall have obtained the Commissioner\u2019s approval thereof. The Commissioner may refuse approval if he finds that such rates are excessive, inadequate or unfairly discriminatory; or do not exhibit a reasonable relationship to the benefits provided by such contracts. At all times such rates and form of subscribers\u2019 contracts shall be subject to modification and approval of the Commissioner of Insurance under rules and regulations adopted by the Commissioner, in conformity to this Article and Article 66 of this Chapter.\nN.C. Gen. Stat. \u00a7 58-65-40 (1999). Under N.C. Gen. Stat. \u00a7 58-2-75(a) (1999), judicial review of the Commissioner\u2019s rate determination may be obtained by petition within 30 days of the Commissioner\u2019s decision. If no petition is filed, \u201cthe parties aggrieved shall be deemed to have waived the right to have the merits of the order or decision reviewed and there shall be no trial of the merits thereof by any court to enforce or restrain enforcement of the same.\u201d Id.\nPlaintiffs\u2019 amended complaint alleged that Blue Cross violated N.C. Gen. Stat. \u00a7 58-65-95 by accumulating and maintaining a reserve that exceeds \u201cthe statutorily authorized level of reserves legislatively determined to be sufficient and reasonably necessary\u201d for the payment of Blue Cross\u2019s claims and expenses. Further, plaintiffs claimed Blue Cross misrepresented to the Commissioner that its reserves were within the statutory limits. Plaintiffs argue they have \u201cproperty and contractual rights\u201d in the statutorily excessive reserves and seek to have it placed into a common fund and distributed to them.\nPlaintiffs sought a declaratory judgment and stated four causes of action: (1) unfair and deceptive trade practices; (2) breach of fiduciary duties; (3) unjust enrichment; and (4) conversion and fraud.\nOn 13 July 1998, Blue Cross moved to dismiss plaintiffs\u2019 claims pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure. On 10 June 1999, the trial court entered an order, which was amended on 14 June 1999, granting Blue Cross\u2019s motion to dismiss for failure to state a claim upon which relief may be granted, on the grounds that the \u201cfiled rate doctrine\u201d precludes plaintiffs\u2019 actions as a matter of law.\nPlaintiffs argue the trial court erred in granting Blue Cross\u2019s motion to dismiss. Specifically, dismissing their claims based upon the \u201cfiled rate doctrine\u201d was error.\nA motion to dismiss for failure to state a claim tests the legal sufficiency of the complaint. See N.C.R. Civ. P. 12(b)(6) (1999); Shaut v. Gannon, 136 N.C. App. 834, 834-35, 526 S.E.2d 214, 215 (2000). A dismissal of a complaint for failure to state a claim upon which relief can be granted is proper when the complaint on its face reveals that no law supports a plaintiff\u2019s claim or that facts sufficient to make a good claim are absent or when some fact disclosed in the complaint necessarily defeats a plaintiff\u2019s claim. See Jackson v. Bumgardner, 318 N.C. 172, 347 S.E.2d 743 (1986). A motion to dismiss is properly granted where a valid legal defense stands as an insurmountable bar to a plaintiff\u2019s recovery. See Johnson v. N. C. Dept. of Transportation, 107 N.C. App. 63, 67, 418 S.E.2d 700, 702 (1992). For the purpose of the Rule 12(b)(6) motion, the well-pleaded material allegations of the complaint are taken as admitted; but conclusions of law or unwarranted deductions of facts are not admitted. See Lloyd v. Babb, 296 N.C. 416, 427, 251 S.E.2d 843, 851 (1979) (quoting Sutton v. Duke, 277 N.C. 94, 98, 176 S.E.2d 161, 163 (1970)).\nOur Supreme Court has recently adopted the \u201cfiled rate doctrine,\u201d where it held that a \u201cplaintiff may not claim damages on the ground that a rate approved by a regulator as reasonable is nonetheless excessive because it is the product of unlawful conduct.\u201d N. C. Steel, Inc. v. National Council on Compensation Ins., 347 N.C. 627, 632, 496 S.E.2d 369, 372 (1998). Further, after rates have been set by a regulator, those rates may not be collaterally attacked. Id. The proper venue for questions involving rates is through the Insurance Commissioner and not a court or a jury. Id. The filed rate doctrine precludes a plaintiff from requesting a recalculation of the rates the Commissioner would have set absent the alleged illegal conduct of a defendant. See N.C. Steel, Inc. v. National Council on Compensation Ins., 123 N.C. App. 163, 176, 472 S.E.2d 578, 585 (1996), affirmed in part and reversed on separate grounds, 347 N.C. 627, 496 S.E.2d 369 (1998). The \u201cGeneral Assembly has given the Insurance Commissioner the duty of setting rates. The Commissioner, aided by his staff, has the expertise to determine proper rates.\u201d N.C. Steel, 347 N.C. at 632, 496 S.E.2d at 372. The filed rate doctrine applies in the context of a suit under N.C. Gen. Stat. \u00a7 75-1 et seq. See N. C. Steel, 123 N.C. App. at 175, 472 S.E.2d at 585.\nIn N. C. Steel, the plaintiffs, companies paying workers\u2019 compensation insurance premiums, alleged that the defendant insurance companies withheld certain evidence from the Insurance Commissioner about servicing carrier fees for residual market workers\u2019 compensation insurance in order to secure approval of excessive rates. See N.C. Steel, 347 N.C. at 630, 496 S.E.2d at 371. The plaintiffs first argued that since defendants had wrongfully obtained the excessive rate, they were entitled to a refund of the excess premiums paid. Id. at 631, 496 S.E.2d at 372. Plaintiffs\u2019 second theory alleged that defendants conspired to pay excessive servicing carrier fees, which prevented the premiums from covering losses in the residual market. Id. at 636, 496 S.E.2d at 374. Plaintiffs argued this created a shortfall which required the defendants to use part of the premiums from the voluntary market to cover the loss. Id. Plaintiffs claimed that a recalculation of the rates in order to prove damages was not necessary. Id.\nOur Supreme Court disagreed and held:\nWe believe that the plaintiffs cannot prove their claim without the rates set by the Commissioner being questioned. The plaintiffs\u2019 damages must come from being shifted from the voluntary market to the residual market. If the plaintiffs offer evidence that a certain number of policyholders who were in the residual market should have been in the voluntary market, the defendants could show that the influx of these policyholders would have caused the Commissioner to set different rates for the two markets. This is a questioning of rates set by the Commissioner, which the filed rate doctrine is designed to prevent.\nId. at 636, 496 S.E.2d at 374-75.\nIn the case at bar, plaintiffs contend that they are not seeking a redetermination of their insurance rates but rather a declaration that Blue Cross\u2019s reserve is statutorily excessive. Plaintiffs argue that \u201cthe manner and method in which [Blue Cross] accumulated the reserves is irrelevant to the issue of whether the filed rate doctrine is applicable.\u201d We disagree.\nIn approving the rates, the Commissioner considers Blue Cross\u2019s reserve amount. Thereafter, Blue Cross\u2019s collection of premiums, based on these rates, determines the accumulation of the \u00a7 58-65-95 reserve. Thus, if Blue Cross accumulates a reserve in excess of the statutory limits, the Commissioner is authorized under N.C. Gen. Stat. \u00a7 58-65-40 to modify the rates, thereby affecting the amount of the reserve. Any allegation that Blue Cross accumulated an excessive reserve requires the recalculation of approved rates, notwithstanding plaintiffs\u2019 argument to the contrary. Accordingly, \u201cthe plaintiffs cannot prove their claim without the rates set by the Commissioner being questioned.\u201d N.C. Steel, 347 N.C. at 636, 496 S.E.2d at 374. Thus, the trial court properly dismissed plaintiffs\u2019 actions pursuant to Rule 12(b)(6).\nAffirmed.\nJudges JOHN and TIMMONS-GOODSON concur.\n. Plaintiffs cite N.C. Gen. Stat. \u00a7 58-65-160 in support of their contention that they have contractual rights in the reserves. Section 58-65-160 protects the rights of Chapter 58 corporations to merge or consolidate, provided that \u201cthe rights of the subscribers ... in the reserves\u201d must be \u201cadequately protected\u201d by rules and regulations adopted by the Commissioner. The section was repealed by Session Laws 1998-3, s. 3, effective 22 May 1998.\n. Plaintiffs\u2019 original complaint alleged that Blue Cross charged and collected excessive rates and misrepresented the amount of its statutory reserves to the Commissioner in order to secure the approval of higher rates. Plaintiffs\u2019 amended complaint removed all references to these allegations.", "type": "majority", "author": "WALKER, Judge." } ], "attorneys": [ "Marvin Schiller and David G. Schiller for plaintiffs-appellants.", "Maupin Taylor & Ellis, P.A., by M. Keith Kapp and Kevin W. Benedict; and Robinson, Bradshaw & Hinson, P.A., by Robin L. Hinson and Frank E. Emory, Jr., for defendant-appellee Blue Cross and Blue Shield of North Carolina." ], "corrections": "", "head_matter": "BRADSHAW B. LUPTON, individually and on behalf of all persons similarly situated, Plaintiff v. BLUE CROSS AND BLUE SHIELD OF NORTH CAROLINA, a non-profit Corporation, Defendant and MICHAEL F. EASLEY, ATTORNEY GENERAL, on behalf of the rights and Interests of the public, Defendant-Intervenor ROLAND GIDUZ, individually and on behalf of all persons similarly situated, Plaintiff v. BLUE CROSS AND BLUE SHIELD OF NORTH CAROLINA, a non-profit Corporation, Defendant and MICHAEL F. EASLEY, ATTORNEY GENERAL, on behalf of the rights and Interests of the public, Defendant-Intervenor\nNo. COA99-1138\n(Filed 1 August 2000)\nInsurance\u2014 reserves \u2014 filed rate doctrine\nThe trial court did not err by granting a Rule 12(b)(6) dismissal of plaintiffs\u2019 class actions alleging that defendant medical service corporation maintained excessive reserves on the ground that the filed rate doctrine precluded the actions. The filed rate doctrine holds that a plaintiff may not claim damages on the ground that a rate approved by a regulator as reasonable is excessive and that rates set by a regulator may not be collaterally attacked; although plaintiffs contended that they were seeking a declaration that defendant\u2019s reserve is excessive rather than a redetermination of their rates, the Commissioner of Insurance considers the reserve amount in approving rates and any allegation that defendant accumulated an excessive reserve requires the recalculation of approved rates.\nAppeal by plaintiffs from order entered 14 June 1999 by Judge Ben F. Tennille in Durham County Superior Court. Heard in the Court of Appeals 8 June 2000.\nMarvin Schiller and David G. Schiller for plaintiffs-appellants.\nMaupin Taylor & Ellis, P.A., by M. Keith Kapp and Kevin W. Benedict; and Robinson, Bradshaw & Hinson, P.A., by Robin L. Hinson and Frank E. Emory, Jr., for defendant-appellee Blue Cross and Blue Shield of North Carolina." }, "file_name": "0421-01", "first_page_order": 453, "last_page_order": 458 }