DB Healthcare, LLC v. Blue Cross Blue Shield of Ariz., Inc., __ F.3d __, No. 14-16612, 2017 WL 1075050 (9th Cir. Mar. 22, 2017).
In two consolidated cases, plaintiff health care providers (medical facilities in California and Arizona, and some of their nurse practitioners) sued ERISA plan administrators seeking to compel reimbursements for certain blood tests and related services provided to plan subscribers. The providers sought damages, injunctive relief, and declaratory relief under the ERISA statute, 29 U.S.C. § 1132(a), that authorizes actions by “beneficiar[ies].” The district courts dismissed the actions, ruling that the providers lacked authority to bring claims under ERISA. The providers appealed.
The Ninth Circuit affirmed. The Court first held that the providers could not sue directly under ERISA because they are not “beneficiaries.” ERISA employs the term “benefit” to refer to specific advantages provided to covered employees; a payment by a plan administrator to a medical provider for services rendered is not such a “benefit.” The Court next addressed the providers’ argument that they may bring ERISA claims derivatively by obtaining assignments of their patients’ claims for benefits. The Court held that derivative claims by providers are generally cognizable, but that in these cases the particular governing agreements and purported assignments foreclosed relief. In one case, the ERISA plans contained non-assignment clauses that trumped the purported assignments by individual subscribers. And in the other case, the providers’ claims were not included in the rights they were assigned by subscribers (e.g., patients didn’t assign claims for recoupment of erroneous payments). Although the Court affirmed the dismissals on these grounds, the Court observed that, in future cases, providers could likely sue ERISA plan administrators under state law for breaching the provider agreements (and, by implication, the opinion allows providers to sue plan administrators derivatively if they obtain proper assignments from patients).
Peder K. Batalden
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