Under ERISA's civil enforcement section, only two categories of persons may sue to recover benefits under an ERISA-governed plan, or to enforce their rights under the plan, or to clarify their rights to future benefits under the terms of the plan. They are the plan participants and the plan beneficiaries. 29 U.S.C. § 1132(a)(1). ("A civil action may be brought …by a participant or beneficiary…")
ERISA defines a participant as "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 defined as "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." 29 U.S.C. § 1002(8).
When plan participants and their beneficiaries receive healthcare services, they typically assign to their doctors or hospitals the right to receive payment for those services. A properly drafted assignment gives a doctor or hospital the right to submit a claim and receive payment, and it confers standing to bring a legal action under ERISA to obtain payment when a benefit is denied. See, e.g., City of Hope Nat. Med. Ctr. v. HealthPlus, Inc., 156 F.3d 223, 227-28 (1st Cir. 1998) ("a health care provider, as the assignee of a beneficiary, acquires derivative standing and is able to sue as a 'beneficiary' by standing in the shoes of his assignor").
But does the right to receive payment under an assignment give the healthcare provider additional rights that otherwise would belong exclusively to a plan participant or beneficiary? For example, can a doctor claim "beneficiary" status to invoke Section 510 of ERISA, the anti-retaliation provision, to bring an action to maintain his standing as an in-network provider of medical services?
Section 510 prohibits retaliation against an ERISA plan participant or beneficiary who exercises a right guaranteed by the plan. "It shall be unlawful for any person to … discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of any employee benefit plan." 29 U.S.C. § 1140. This prohibition is enforced through the exclusive remedy provisions of Section 502(a), 29 U.S.C. § 1132(a).
Typically, Section 510 is invoked when an employer acts to prevent a plan participant from attaining a plan benefit – a retirement benefit, for example – or when an employer retaliates against an employee for taking advantage of a plan benefit. See, e.g., Conkwright v. Westinghouse Elec. Corp., 933 F.2d 231 (4th Cir. 1991) (plaintiff must establish employer's specific intent to interfere with plaintiff's benefit rights).
Despite the fact that Section 510 prohibits discrimination "against a participant or beneficiary," in several cases medical care providers have sought to invoke the anti-retaliation provision to prevent the termination of their contracts as in-network providers, or to prevent the recoupment of claimed overpayments. The threshold issue in such cases is whether the medical care provider has standing as an ERISA plan beneficiary to maintain the action.
Medical Practice Seeks to Invoke Anti-Retaliation Provision
Most recently, in Rojas v. Cigna Health and Life Insurance Company, 2015 WL 4256306 (2d Cir. July 15, 2015), two in-network doctors sued under ERISA to prevent the termination of their contracts with Cigna, which insured health benefits provided by welfare benefit plans. The question, as framed by the court, was this:
[W]hether doctors, as healthcare providers, are beneficiaries of their patients' health-insurance plans such that they have standing to seek relief under Section 502 of [ERISA], 29 U.S.C. 1132(a)(1)(B).
Drs. Rojas and Rosen were the co-owners of a medical practice operated as a professional corporation. The practice had a contract with Cigna as an in-network health care provider for ERISA plan participants and beneficiaries who were insured by Cigna. When a patient received treatment, he signed a form, acknowledging that he had health insurance with Cigna, and "assign[ing] to Rojas and Rosen, MD, PC all medical benefits, if any, otherwise payable to me for services rendered."
After conducting an investigation, Cigna suspected that the medical practice was ordering blood tests to measure allergies, instead of skin tests as required under Cigna's coverage, and that it had received payments that were not authorized under the plans. According to Cigna, it had paid the practice more than $844,000 for blood tests that were inconsistent with normal testing. Cigna notified Drs. Rojas and Rosen that their medical practice would be terminated as a healthcare provider in the Cigna network.
The medical practice sued Cigna in federal court in New York. Drs. Rojas and Rosen sought an injunction "prohibiting all retaliatory acts against [the practice] including [the] termination of the provider agreements," and seeking reinstatement as an in-network provider of medical services for Cigna insureds. The district court held, however, that the medical practice was not a beneficiary of the plan and, therefore, it lacked standing to maintain the action.
"Healthcare providers, such as Plaintiffs … don't become beneficiaries solely by virtue of receiving reimbursement from a plan administrator, such as Cigna," the district court said. According to the court, the assignments obtained from its patients gave the medical practice only the right to receive payment for services; the assignments did not convey the right to assert an anti-retaliation claim.
Court of Appeals Agrees: Medical Practice Lacks Standing
Drs. Rojas and Rosen appealed, but they fared no better in the Second Circuit Court of Appeals, which held that the medical practice was not a plan beneficiary with standing to maintain the action.
The appellate court noted that Section 502(a)(1)(B) of ERISA, 29 U.S.C. § 1132(a)(1)(B), specifically identifies those persons who are empowered to bring a civil action to recover ERISA plan benefits, to enforce rights under a plan, or to clarify their rights to future benefits. "Section 502 is narrowly construed," the court said, "to authorize only two categories of persons to sue directly to enforce their rights under the plan: participants and beneficiaries." 2015 WL 4256306, at *2.
The medical practice argued that, because it was entitled to reimbursement in the form of a direct payment from Cigna, it received a plan "benefit," and thus it qualified as an ERISA plan "beneficiary" with standing to bring an action under Section 502.
"Rojas has sued under the wrong agreement," the court said, noting that the medical practice's status in the Cigna network was based on its provider contract with Cigna, not on the terms of the ERISA benefit plans in which its patients were participants and beneficiaries. Id. at *3.
"Although the term 'benefit' is not defined in ERISA, we are persuaded that Congress did not intend to include doctors in the category of 'beneficiaries,'" the court said. "A beneficiary is best understood as an individual who enjoys rights equal to the participant's to receive coverage from the healthcare plan. A participant's spouse or child is the most likely candidate for this term." Id.
As an alternative to its "beneficiary" argument, the medical practice contended that it had derivative standing – as the assignee of its patients – to sue under ERISA's anti-retaliation provision. That argument also failed.
"The assignments allegedly executed by the patients, however, confer to Rojas only the right to pursue the participants' claims for payment, not other categories of ERISA claims," the court said. "By expressly assigning only their right to payment, Rojas's patients did not also assign any other claims they may have under ERISA." Id. at *4.
The Rojas decision was consistent with those of other circuit courts of appeals which have considered whether a healthcare provider has standing to sue as a plan "beneficiary." See, e.g., Spinedex Physical Therapy USA, Inc. v. United Healthcare of Ariz., Inc., 770 F.3d 1282, 1292 (9th Cir. 2014) ("Because Spindex was assigned only the right to bring claims for payment of benefits, Spindex has no right to bring claims for breach of fiduciary duty."); Hobbs v. Blue Cross Blue Shield of Ala., 276 F.3d 1236 (11th Cir. 2001) ("Healthcare providers generally are not considered 'beneficiaries' or 'participants' under ERISA."); Ward v. Alt. Health Delivery Sys., Inc., 261 F.3d 624, 627 (6th Cir. 2001) ("The fact that plaintiff may be entitled to payment from defendants as a result of her client's participation in an employee plan does not make her a beneficiary for the purpose of ERISA standing.").
Despite these circuit court decisions, a district court in Illinois held last year that a chiropractic association had standing to seek injunctive relief under 29 U.S.C. § 1132(a)(3), and also that the association was entitled to a "full and fair review" of the insurer's decision that benefits had been overpaid and could be recouped. Pennsylvania Chiropractic Ass'n v. Blue Cross Blue Shield Ass'n, 2014 WL 1276585 (N.D. Ill. Mar. 28, 2014),
The validity of that case is doubtful. It is inconsistent with other decisions regarding standing to sue under ERISA, and it cited no case from any jurisdiction to support the conclusion that "a payment or money for medical services covered in the relevant insurance plans constitutes a 'benefit' under ERISA." Id. at *7.
In a footnote to the Rojas decision, the Sixth Circuit noted the district court's ruling in Pennsylvania Chiropractic, referring to it as one of several cases in which "courts have used the term 'beneficiary' loosely to include the payment owed." 2015 WL 4256306, *3 n.7. "While correct from the dictionary's perspective, use of 'benefit' to include payment in this context does not fit with ERISA's greater statutory scheme," the Sixth Circuit said. Id.
Pennsylvania Chiropractic also has been criticized by other district courts, which have declined to adopt its reasoning. "The court did not rely on a single case, let alone one interpreting ERISA, to reach this conclusion," the court wrote in DB Healthcare, LLC v. Blue Cross Blue Shield of Ariz., Inc., 2014 WL 3349920, at *7 (D. Ariz. July 9, 2014). Further, "it appears to be the only case ever to reach this conclusion." Id. See also Brown v. Blue Cross Blue Shield of Tenn., Inc., 2015 WL 3622338, at *2 (E.D. Tenn. June 9, 2015) ("This case, however, has also been criticized as 'incorrect and contrary to the weight of authority' and 'the only case ever to reach this conclusion.'").
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