DISCHINGER ORTHODONTICS, PC, a domestic professional corporation; and Tanya L. March, individually and as a parent and natural guardian of BMS#1, a minor, and BMS#2, a minor, individually and on behalf of all others similarly situated, Plaintiffs-Appellants,
REGENCE BLUECROSS BLUESHIELD OF OREGON, an Oregon non-profit public benefit corporation, Defendant-Respondent.
and submitted May 17, 2016.
County Circuit Court 14CV07130; Stephen K. Bushong, Judge.
S. Senoff, Pennsylvania, argued the cause for appellants.
With him on the opening brief were Darian A. Stanford,
Nicholas J. Slinde, Phil J. Nelson, and Slinde Nelson
Stanford; William R. Caroselli, Lauren C. Fantini, and
Caroselli, Beachler, McTiernan & Conboy, Pennsylvania;
and Jay Edelson, Rafey S. Balabanian, Ari J. Scharg, J. Aaron
Lawson, and Edelson PC, Illinois. With him on the reply brief
were Darian A. Stanford, Nicholas J. Slinde, Phil J. Nelson,
and Slinde Nelson Stanford; Anapol Weiss, Pennsylvania; and
Jay Edelson, Rafey S. Balabanian, Ari J. Scharg, J. Aaron
Lawson, and Edelson PC, Illinois.
A. Mullin argued the cause for respondent. With him on the
brief were Rachel C. Lee and Stoel Rives LLP.
Armstrong, Presiding Judge, and Egan, Judge, and Shorr,
Or.App. 298] Case Summary:
brought these putative class action breach of contract claims
against defendant claiming that defendant breached insurance
contracts with it policyholders by retaining excessive
earnings and distributing them as compensation to executives,
in violation of defendant's contracts, articles of
incorporation, and state law. Plaintiffs also sought a
declaration that defendant violated its articles of
incorporation, contracts with policyholders, and state law,
and an order requiring defendant to recover the improperly
distributed earnings. On defendant's motion to dismiss
under ORCP 21 A(6), the trial court ruled that plaintiffs
lack standing to bring their claims under ORS 65.084, which
provides that, except as otherwise provided, "the
validity of corporate action may not be challenged on the
ground that the corporation lacks or lacked power to
act." Plaintiffs appeal, contending the trial court
erred in its construction of ORS 65.084 and the Declaratory
lacked standing to bring their breach of contract claims
under ORS 65.084, because their allegations that defendant
has violated provisions of its articles of incorporation and
state law challenged the validity of corporate action. As the
narrower and more specific statute, ORS 65.084 takes
precedence over the more general standing provisions of the
Declaratory Judgment Act, and the trial court therefore did
not err in also dismissing plaintiffs' claim for
Or.App. 299] EGAN, J.
brought these putative class action claims against defendant
Regence BlueCross and BlueShield of Oregon, claiming that
defendant breached insurance contracts with its policyholders
by retaining excessive earnings and distributing them as
compensation to executives, in violation of defendant's
contracts, articles of incorporation, and state law.
Plaintiffs also sought a declaration that defendant violated
its articles of incorporation, contracts with policyholders,
and state law, and an order requiring defendant to recover
the improperly distributed earnings. On defendant's
motion to dismiss under ORCP 21 A(6) ("the party
asserting the claim is not the real party in interest"),
the trial court concluded that plaintiffs' claims are
barred. We agree with the trial court that plaintiffs lack
standing to bring their claims, and we therefore affirm.
our summary of the facts from the allegations of
plaintiffs' complaint, which we assume to be true for
purposes of reviewing the trial court's ruling.
Simonsen v. Ford Motor Co., 196 Or.App. 460, 462,
102 P.3d 710 (2004), rev den, 338 Or. 681 (2005).
Defendant is an independent licensee of the national
BlueCross and BlueShield Association and provides health
insurance coverage to approximately 500, 000 Oregonians.
Defendant is incorporated as a nonprofit public benefit
corporation that was formed pursuant to ORS 65.044 to 65.067.
See ORS 65.001(35).
Defendant's articles of incorporation state:
"This corporation is a public benefit corporation. The
purposes of this Corporation shall be:
"Without profit to itself to furnish, provide, contract
for or pay for health care services, including but not
limited to medicine, medical and surgical treatment, nursing,
hospital service, ambulance service, dental service, and any
other necessary services, whether or not contingent upon
injury, sickness or accident."
complaint alleges that defendant's website states,
"Being a nonprofit means we put people first. * * * We
maintain our status as a not-for-profit organization to
remain focused on providing value to our members."
Or.App. 300] The representative plaintiffs for the putative
class are alleged to own health insurance policies issued by
defendant. Plaintiffs' complaint alleges that, as a
nonprofit public benefit corporation, defendant's
activities are required to benefit the community as a whole
and are not to be focused on the accumulation of profits.
"In particular, " ...