North Jersey Brain & Spine Center v. Aetna, Inc.

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 14-2101
_____________
NORTH JERSEY BRAIN
& SPINE CENTER,
Appellant
v.
AETNA, INC.
Appeal from the United States District
Court for the District of New Jersey
(No. 2-13-cv-05286)
District Judge: Hon. William J. Martini
____________
Argued: November 19, 2014
____________
Before: CHAGARES, HARDIMAN, and SHWARTZ,
Circuit Judges.
(Filed: September 11, 2015)
Eric D. Katz, Esq. [ARGUED]
David M. Estes, Esq.
Mazie Slater Katz & Freeman, LLC
103 Eisenhower Parkway
Roseland, NJ 07068
Counsel for Appellant
Edward S. Wardell, Esq. [ARGUED]
Christine S. Orlando, Esq.
Thomas Vecchio, Esq.
Thomas M. Blewitt, Jr., Esq.
Connell Foley LLP
Liberty View Building
457 Haddonfield Road, Suite 230
Cherry Hill, NJ 08002
Counsel for Appellee
D. Brian Hufford, Esq. [ARGUED]
Jason S. Cowart, Esq.
Zuckerman Spaeder
1185 Avenue of the Americas, 31st Floor
New York, NY 10036
Counsel for Amici Curiae American Medical
Association, Medical Society of New Jersey
Michael P. Abate, Esq.
Dinsmore & Shohl
801 Pennsylvania Avenue, N.W.
Washington, DC 20004
Counsel for Amici Curiae Americas Health
Insurance Plans
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OPINION
____________
CHAGARES, Circuit Judge.
This is an action for unpaid insurance benefits brought
under the Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. § 1001, et seq. Plaintiff North Jersey
Brain & Spine Center (“NJBSC”) appeals an order entered by
the United States District Court for the District of New Jersey
dismissing its complaint for lack of standing under ERISA.
The question presented on appeal is whether a patient’s
explicit assignment of payment of insurance benefits to her
healthcare provider, without direct reference to the right to
2
file suit, is sufficient to give the provider standing to sue for
those benefits under ERISA § 502(a), 29 U.S.C. § 1132(a).
Because we find that such an assignment does confer
standing, we will reverse the order of the District Court and
remand this action for further proceedings.
I.
NJBSC is a neurosurgical medical practice located in
Bergen County, New Jersey. NJBSC treated three patients
who were members of ERISA-governed healthcare plans
administered by defendant-appellee Aetna, Inc. Prior to
surgery, each patient executed an assignment that read, in
relevant part: “I authorize [NJBSC] to appeal to my
insurance company on my behalf. . . . I hereby assign to
[NJBSC] all payments for medical services rendered to
myself or my dependents.” Appendix (“App.”) 21. NJBSC
reserved the right to bill the patients for any amount not
covered by their insurance. Following treatment, Aetna
allegedly underpaid or refused to pay claims for each of the
patients. NJBSC filed suit against Aetna in the New Jersey
Superior Court for non-payment of benefits pursuant to §
502(a) of ERISA, 29 U.S.C. § 1132(a). Aetna removed the
case to the United States District Court for the District of
New Jersey.
On March 6, 2014, the District Court dismissed
NJBSC’s complaint, holding that the assigned rights to
payment did not give NJBSC standing to sue under ERISA.
The District Court acknowledged, both in its March 6 opinion
and in its order permitting NJBSC to file this interlocutory
appeal, that the district was split as to whether an assignment
of payments was sufficient to confer standing under §
502(a).1
1
Compare Wayne Surgical Ctr., LLC v. Concentra Preferred
Sys., Inc., No. 06-928, 2007 WL 2416428, at *4 (D.N.J. Aug.
20, 2007) (“[I]t is illogical to recognize that . . . a valid
assignee has a right to receive the benefit of direct
reimbursement from its patients’ insurers but cannot enforce
this right.”), with MHA, LLC v. Aetna Health, Inc., No. 12-
2984, 2013 WL 705612, at *7 (D.N.J. Feb. 25, 2013) (“[T]he
Court respectfully disagrees with the view that there is no
3
II.2
This Court exercises plenary review over district court
orders dismissing a complaint for lack of standing. Baldwin
v. Univ. of Pittsburgh Med. Ctr., 636 F.3d 69, 74 (3d Cir.
2011). “[W]hen standing is challenged on the basis of the
pleadings, we accept as true all material allegations in the
complaint, and . . . construe the complaint in favor of the
complaining party.” FOCUS v. Allegheny Cnty. Court of
Common Pleas, 75 F.3d 834, 838 (3d Cir. 1996) (quoting
Pennell v. City of San Jose, 485 U.S. 1, 7 (1988) (quotation
marks omitted)).3
distinction between an assignment of a right to payment and
an assignment of plan benefits. It is only the latter that
creates derivative standing in a provider assignee to sue under
§ 502.” (internal quotation marks and citations omitted)).
2
The District Court had jurisdiction pursuant to 28 U.S.C. §
1331. Because the District Court “certifie[d] in writing that
its order involve[d] ‘a controlling question of law as to which
there is substantial ground for difference of opinion[,]’” this
Court has jurisdiction to review NJBSC’s interlocutory
appeal. Johnson v. SmithKline Beecham Corp., 724 F.3d
337, 340 n.4, 344-45 (3d Cir. 2013) (quoting 28 U.S.C. §
1292(b)).
3
The motion to dismiss before the District Court was filed
under Federal Rule of Civil Procedure 12(b)(6). Ordinarily,
Rule 12(b)(1) governs motions to dismiss for lack of
standing, as standing is a jurisdictional matter. But the
Supreme Court has warned that “when Congress does not
rank a statutory limitation on coverage as jurisdictional,
courts should treat the restriction as nonjurisdictional in
character.” Arbaugh v. Y&H Corp., 546 U.S. 500, 516
(2006). Several United States Courts of Appeals have
therefore treated challenges to a plaintiff’s status as an ERISA
plan “participant” as nonjurisdictional. See, e.g., Leeson v.
Transamerica Disability Income Plan, 671 F.3d 969, 978 (9th
Cir. 2012); Lanfear v. Home Depot, Inc., 536 F.3d 1217,
1221 (11th Cir. 2008); Harzewski v. Guidant Corp., 489 F.3d
799, 803-04 (7th Cir. 2007). This case deals with a party
claiming derivative rather than direct status as a participant,
4
III.
Section 502(a) of ERISA empowers “a participant or
beneficiary” to bring a civil action “to recover benefits due to
him under the terms of his plan.” 29 U.S.C. 1132(a). See
Pascack Valley Hosp. v. Local 464A UFCW Welfare
Reimbursement Plan, 388 F.3d 393, 400 (3d Cir. 2004)
(citing 29 U.S.C. § 1132(a)(1)(B)). A “participant” is “any
employee or former employee of an employer, or any
member or former member of an employee organization, who
is or may become eligible to receive a benefit of any type
from an employee benefit plan which covers employees of
such employer or members of such organization, or whose
beneficiaries may be eligible to receive any such benefit.” 29
U.S.C. § 1002(7). A “beneficiary” is “a person designated by
a participant, or by the terms of an employee benefit plan,
who is or may become entitled to a benefit thereunder.” Id. §
1002(8). Healthcare providers that are neither participants
nor beneficiaries in their own right may obtain derivative
standing by assignment from a plan participant or beneficiary.
CardioNet, Inc. v. Cigna Health Corp., 751 F.3d 165, 176
n.10 (3d Cir. 2014).
This case presents the question of what type of
assignment is necessary to confer derivative standing.
NJBSC argues that an assignment of the right to payment is
sufficient. Aetna, by contrast, urges us to hold that an
assignment must explicitly include not just the right to
but that does not change the analysis. Whether NJBSC has
gained derivative status involves a merits-based
determination. This is not a case where an alleged federal
claim “appears to be immaterial and made solely for the
purpose of obtaining jurisdiction.” Bell v. Hood, 327 U.S.
678, 682 (1946). Therefore, the motion to dismiss was
properly filed under Rule 12(b)(6). For purposes of our
review, however, a motion for lack of statutory standing is
effectively the same whether it comes under Rule 12(b)(1) or
12(b)(6). See Warren Gen. Hosp. v. Amgen Inc., 643 F.3d
77, 83 n.7 (3d Cir. 2011) (“Under most circumstances, ‘[a]
dismissal for lack of statutory standing is effectively the same
as a dismissal for failure to state a claim.’” (quoting Baldwin,
636 F.3d at 73).
5
payment but also the patient’s legal claim to that payment if a
provider is to file suit.4
ERISA itself is silent on the issue of derivative
standing and assignments. In such situations, “it is well
settled that Congress intended that the federal courts would
fill in the gaps by developing, in light of reason, experience,
and common sense, a federal common law of rights and
obligations imposed by the statute.” Teamsters Pension Trust
Fund of Phila. & Vicinity v. Littlejohn, 155 F.3d 206, 208 (3d
Cir. 1998); see also Firestone Tire & Rubber Co. v. Bruch,
489 U.S. 101, 110 (1989) (“[W]e have held that courts are to
develop a federal common law of rights and obligations under
ERISA-regulated plans.” (quotation marks omitted)).
We hold that as a matter of federal common law, when
a patient assigns payment of insurance benefits to a healthcare
provider, that provider gains standing to sue for that payment
under ERISA § 502(a). An assignment of the right to
payment logically entails the right to sue for non-payment.
See I.V. Servs. of Am., Inc. v. Inn Dev. & Mgmt., Inc., 7 F.
Supp. 2d 79, 84 (D. Mass. 1998) (“An assignment to receive
payment of benefits necessarily incorporates the right to seek
payment. . . . [T]he right to receive benefits would be hollow
4
Both NJBSC and Aetna argue that we resolved this issue in
prior opinions. Aetna contends that in Community Medical
Center v. Local 464A UFCW Welfare Reimbursement Plan,
143 F. App’x 433, 436 (3d Cir. 2005), this Court recognized a
distinction between an assignment of benefits and an
assignment of the legal claim to those benefits. But the
distinction was made in dicta, and in any case Community
Medical Center was a non-precedential opinion. NJBSC
claims we held in CardioNet that a provider with derivative
standing may assert “whatever rights the assignor[s]
possessed.” 751 F.3d at 178. But that statement applied to
the CardioNet plaintiffs specifically, not provider-assignees
generally. The assignment at issue in CardioNet expressly
included “all . . . rights (without limitation) under the
Employee Retirement Income Security Act of 1974 . . . along
with any other rights under federal or state law that [they]
may have as related to the reimbursement of coverage for the
uncovered treatment.” Id. (quotation marks omitted). The
assignments here do not contain such limitless language.
6
without such enforcement capabilities.”). After all, the
assignment is only as good as payment if the provider can
enforce it. See Conn. State Dental Ass’n v. Anthem Health
Plans, Inc., 591 F.3d 1337, 1352 (11th Cir. 2009) (“[A]n
assignment furthers ERISA’s purposes only if the provider
can enforce the right to payment.”). Every United States
Court of Appeals to have considered this question has found,
as we do, that an assignment of benefits is sufficient to confer
ERISA standing. See, e.g., id.; Tango Transp. v. Healthcare
Fin. Servs. LLC, 322 F.3d 888, 889 (5th Cir. 2003) (holding
that an assignment of the right to sue the insurer was valid
where the assignment read, “I hereby assign payment of
hospital benefits directly to Mississippi Baptist Medical
Center herein specified and otherwise payable to me”); I.V.
Servs. of Am. v. Inn Dev. & Mgmt., 182 F.3d 51, 54 n.3 (1st
Cir. 1999) (holding that an assignment of only the right to
payment “easily clear[ed]” the low hurdle of a colorable
claim for derivative standing, and the argument that an
assignment to receive payment did not include the right to file
suit “wrongly conflate[d] two distinct inquiries” as to
standing and scope (quotation marks omitted)); Cromwell v.
Equicor-Equitable HCA Corp., 944 F.2d 1272, 1275 (6th Cir.
1991) (suggesting the assignment of all payments due under
the terms of the contract was sufficient to give the assignee
derivative standing); Misic v. Bldg. Serv. Emps. Health &
Welfare Trust, 789 F.2d 1374, 1378-79 (9th Cir. 1986) (per
curiam) (holding that the assignment of patients’ rights to
reimbursement gave a provider ERISA standing in their
place).
In coming to the same conclusion as our sister circuits,
we are guided by Congress’s intent that ERISA “protect . . .
the interests of participants in employee benefit plans,” 29
U.S.C. § 1001(b), and our conviction that the assignment of
ERISA claims to providers “serves the interests of patients by
increasing their access to care.” CardioNet, 751 F.3d at 179.
It does not seem that the interests of patients or the intentions
of Congress would be furthered by drawing a distinction
between a patient’s assignment of her right to receive
payment and the medical provider’s ability to sue to enforce
7
that right.5 The value of such assignments lies in the fact that
providers, confident in their right to reimbursement and
ability to enforce that right against insurers, can treat patients
without demanding they prove their ability to pay up front.
Patients increase their access to healthcare and transfer
responsibility for litigating unpaid claims to the provider,
which will ordinarily be better positioned to pursue those
claims. See Hermann Hosp. v. MEBA Med. & Benefits Plan,
845 F.2d 1286, 1289 n.13 (5th Cir. 1988) (“[P]roviders are
better situated and financed to pursue an action for benefits
owed for their services.”). These advantages would be lost if
an assignment of payment of benefits did not implicitly
confer standing to sue. See Conn. State Dental, 591 F.3d at
1352. As the United States Court of Appeals for the Fifth
Circuit observed, if providers’ “status as assignees does not
entitle them to federal standing against [insurers], providers
would either have to rely on the beneficiary to maintain an
ERISA suit, or they would have to sue the beneficiary. Either
alternative . . . would discourage providers from becoming
assignees and possibly from helping beneficiaries who were
unable to pay them ‘up-front.’” Hermann Hosp., 845 F.2d at
1289 n.13; see also Cagle v. Bruner, 112 F.3d 1510, 1515
(11th Cir. 1997) (per curiam) (“If provider-assignees cannot
sue the ERISA plan for payment, they will bill the participant
or beneficiary directly for the insured medical bills, and the
participant or beneficiary will be required to bring suit against
the benefit plan when claims go unpaid. On the other hand, if
provider-assignees can sue for payment of benefits, an
assignment will transfer the burden of bringing suit from plan
5
We note that where a provider retains the right to bill the
patient for unpaid medical fees, interpreting an assignment of
the right to payment as an assignment of the patient’s § 502
claim could create a risk that, if the provider sought recourse
against the patient instead of the insurer, the patient would be
responsible for the bill for healthcare services but lack a § 502
remedy against her insurers. Such a case would require a
court to determine whether an implied term of the assignment
is that a provider must make a reasonable effort to collect
from the insurer before attempting to collect from the patient.
Of course, that factual scenario is not before us as NJBSC has
brought its claims against Aetna alone. We therefore reserve
that question for a case that requires its resolution.
8
participants and beneficiaries to providers[, who] are better
situated and financed to pursue an action for benefits owed
for their services.” (quotation marks and citations omitted)).
We note, moreover, that reading an assignment of
benefits to confer standing under § 502(a) advances the public
interest in uniform interpretation of ERISA. It is a significant
advantage for ERISA-plan participants if basic rules
governing assignments and standing to sue do not change
when they cross circuit lines. Cf. Menkes v. Prudential Ins.
Co. of Am., 762 F.3d 285, 292 (3d Cir. 2014) (joining other
United States Courts of Appeals in declining to unbundle
closely related components of an ERISA plan and noting
ERISA’s goal of “uniform regulation ‘is impossible . . . if
plans are subject to different legal obligations in different
States’”); Krishna v. Colgate Palmolive Co., 7 F.3d 11, 16 (2d
Cir. 1993) (“There is a strong interest in uniform,
uncomplicated administration of ERISA plans.”).
Based on the practical concerns described above,
Congress’s intent to protect plan participants, the interests of
increasing patients’ access to healthcare, and the interest in
uniform interpretation of ERISA, we conclude that an
assignment of the right to payment is sufficient to confer
standing to sue for payment under ERISA § 502(a)(1).
IV.
For the foregoing reasons, we will reverse the District
Court’s order dated March 6, 2014 and remand this action for
further proceedings.
9