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DB Healthcare, LLC v. Blue Cross Blue Shield of Arizona, Inc.

United States Court of Appeals, Ninth Circuit

March 22, 2017

DB Healthcare, LLC, DBA Metro Center Health Care; AVD Healthcare, LLC, DBA Mountain Vista Health Center; MH Healthcare, LLC, DBA North Health Center; SV Healthcare, LLC, DBA White Rock Health Center; Quinn Chiropractic, LLC, DBA White Rock Health Center; CK Healthcare, LLC, DBA Avondale Health Center; TM Healthcare, LLC, DBA Avondale Health Center; KM Healthcare, LLC, DBA Avondale Health Center; KD Chiropractic, LLC, DBA White Rock Health Center; EW Healthcare, LLC, DBA Greenway Health Center; PW Healthcare, LLC, DBA Greenway Health Center; Mary Melissa Hands; Victoria Tweedy; Robert Alexander; Simran Sethi; Sarah Quinn; Teresa Meloche; Allison Woodworth; Joe Melby; Crysty Frick; Patricia Paradis, Plaintiffs-Appellants,
v.
Blue Cross Blue Shield of Arizona, Inc., Defendant-Appellee. Advanced Women's HealthCenter, Inc., Plaintiff-Appellant,
v.
Anthem Blue Cross Life and Health Insurance Company, Defendant-Appellee.

          Argued and Submitted July 7, 2016 San Francisco, California

         Appeal from the United States District Court for the Eastern District of California Anthony W. Ishii, Senior District Judge, Presiding D.C. No. 2:13-cv-01558-NVW, 1:13-cv-01145-AWI-JLT

          Richard J. Quadrino (argued), Harold J. Levy, and Eugene R. Pagano, Quadrino Law Group P.C., Melville, New York; Tod F. Schleier and Bradley H. Schleier, Schleier Law Offices, Phoenix, Arizona; for Plaintiffs-Appellants.

          Anthony F. Shelley (argued), Michael N. Khalil, and Adam P. Feinberg, Miller & Chevalier Chartered, Washington, D.C., for Defendant-Appellee Blue Cross Blue Shield of Arizona, Inc.

          Eileen R. Ridley (argued), Alan R. Ouellette, and Michael A. Naranjo, Foley & Lardner LLP, San Francisco, California, for Defendant-Appellee Anthem Blue Cross Life and Health Insurance Company.

          Before: Marsha S. Berzon, and N. Randy Smith, Circuit Judges, and Dana L. Christensen, [*] Chief District Judge.

         SUMMARY [**]

         Employee Retirement Income Security Act

         The panel affirmed two district court judgments dismissing ERISA actions brought by health care providers designated to receive direct payments from employee health plan administrators for medical services.

         The panel held that neither direct statutory authority nor derivative authority through assignment authorized the health care providers to bring suit in federal court under ERISA's civil enforcement provisions. Agreeing with other circuits, the panel reaffirmed that health care providers are not health plan beneficiaries who may sue for declaratory relief and money damages under ERISA § 502(a)(1)(B) or injunctive relief under ERISA § 502(a)(3). Rather, a health care provider must bring claims derivatively, relying on its patients' assignments of their benefit claims. The panel held that the health care providers here, however, lacked derivative authority to sue, given the nature of the governing agreements and of the purported assignments. In one case, the governing employee benefit plans contained non-assignment clauses that overrode any purported assignments. In the other case, although the provider agreement permitted assignment, and payment authorization forms could be construed as assigning the provider limited rights, the provider's claims fell outside the scope of the assigned rights.

          OPINION

          BERZON, Circuit Judge

         These two cases involve reimbursement disputes between health care providers and employee health benefit plan administrators. We decide the cases together because they raise a common central issue: whether a health care provider designated to receive direct payment from a health plan administrator for medical services is authorized to bring suit in federal court under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. We consider two separate potential bases for such authority under ERISA's civil enforcement provisions: direct statutory authority and derivative authority through assignment. Although the contractual relationships between the health care providers and the plan administrators, and between the providers and the patients, in these two cases differ in relevant ways, we conclude in both cases that the providers cannot enforce ERISA's protections in federal court on either basis.

         I. Background

         The Plaintiffs-Appellants in these cases are health care providers ("Providers") who furnish medical services to subscribers[1] of employee health benefit plans. The benefit plans are governed by either ERISA (the private employer plans) or the Patient Protection and Affordable Care Act ("ACA") (the government employer plans). The Plaintiffs in DB Healthcare are twelve medical facilities located in and around Phoenix, Arizona, and ten nurse practitioner employees of those facilities (collectively, "DB Healthcare Providers"). The Plaintiff in Advanced Women's Health Center is a medical facility in Bakersfield, California ("the Center"). Defendants-Appellees Blue Cross Blue Shield of Arizona, Inc. ("Blue Cross") and Anthem Blue Cross Life and Health Insurance Company ("Anthem") are health insurers, plan administrators, and/or claims administrators for the relevant employee benefit plans.

         The reimbursement disputes in these cases share a number of common facts. In 2010 and 2011, Providers performed certain blood tests and related services for plan subscribers and submitted reimbursement claims to either Blue Cross or Anthem. Blue Cross and Anthem processed the claims and reimbursed Providers. On completion of post-payment reviews, however, the plan administrators determined that Providers were not entitled to reimbursement for the blood tests, albeit for different reasons. In DB Healthcare, Blue Cross determined that the tests were investigational and thus excluded from coverage. In Advanced Women's Health Center, Anthem determined that the Center used faulty practices to bill for the tests and so was not entitled to reimbursement.

         At that point, Blue Cross and Anthem informed Providers that the prior reimbursements for the blood tests were in error and requested repayments totaling $237, 000 and $295, 912.87, respectively. Providers disputed Blue Cross and Anthem's authority retroactively to recoup the reimbursements and refused to pay. Blue Cross responded by restating its payment demand to DB Healthcare Providers, threatening to withhold recredentialing for the in-network nurse practitioners, refusing to credential newly hired nurses, and threatening to terminate the relevant provider agreements. Anthem went one step further, withholding reimbursements from Advanced Women's Health Center in 2013 for unrelated claims as a means of recouping the disputed past payments.

         Several types of contracts govern the relationships between the subscribers, the plan administrators, and the providers in each case: (1) Employee benefit plans provide the terms of the insurance provided to the subscribers. (2) Payment authorizations or assignment of benefits forms executed by subscribers assign some rights to the providers. (3) Provider agreements govern the relationships between the providers and the plan administrators. Each of these contracts is relevant to our analysis.

         In DB Healthcare, the governing employee benefit plans prohibit patients from assigning any of their rights under the plans to third parties.[2] Despite this prohibition, DB

         Healthcare Providers' patients executed "assignment of benefits" forms purporting to assign certain plan rights to DB Healthcare Providers. Unlike in DB Healthcare, the benefits plans in Advanced Women's Health Center do not prohibit assignment of benefits. The Center's patients signed forms authorizing Anthem to pay the Center directly for health care services rendered to plan subscribers. Those forms read: "I Hereby Authorize My Insurance Benefits To Be Paid Directly to the Physician And Acknowledge That I Am Financially Responsible for Any Unpaid Balance."

         The provider agreements grant some health care providers in-network status for the benefit plans administered by Anthem or Blue Cross. Five of the ten nurse practitioner Providers are credentialed by Blue Cross as in-network providers and the five others seek such credentialing. Advanced Women's Health Center is an in-network provider for health plans administered by Anthem. In-network providers agree to a fixed schedule of fees for services and can bill the insurers directly for health care services rendered to plan subscribers. In fact, the provider agreements require Providers to seek payment for medical services rendered only from the relevant plan administrator, not from patients (subject to limited exceptions).[3]

         In response to recoupment strategies by Blue Cross and Anthem, DB Healthcare Providers and the Center, respectively, filed complaints in federal district court. The specific claims in DB Healthcare and Advanced Women's Health Center differ slightly, although both sets of providers generally allege that the claims administrators violated ERISA when they unilaterally determined that the blood ...


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