Almont Ambulatory Surgery Center, LLC v. UnitedHealth Group, Inc.
2015 WL 1608991, 99 F.Supp.3d 1110, 2015 U.S. Dist. LEXIS 49954 (2015)
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Rule of Law:
An assignment of 'rights and benefits' under an ERISA-governed health plan from a patient to a healthcare provider is sufficient to confer standing to sue for payment of benefits under § 502(a)(1)(B), but is not broad enough to confer standing for ancillary claims like breach of fiduciary duty or for equitable relief unless the assignment's language manifests a clear intent to transfer those specific causes of action.
Facts:
- Plaintiffs, a group of ambulatory surgery centers and a physicians' medical group, provided Lap-Band surgeries and related services to patients.
- The patients were participants in various employer-sponsored PPO health plans governed by ERISA and administered by UnitedHealth Group, Inc. ('United').
- Prior to receiving medical services, each patient executed an 'Assignments of Rights and Benefits' form, assigning their health insurance benefits and a range of related rights to the Plaintiffs.
- Plaintiffs allege that for nearly every claim, United either authorized the Lap-Band procedures or stated that no authorization was necessary, representing that the costs would be reimbursed at the usual, customary, and reasonable (UCR) rate.
- After Plaintiffs provided the services, United allegedly began to systematically underpay, delay, or deny payment for the claims, citing pretextual reasons and making burdensome requests for additional medical records.
- The assignment form signed by patients assigned 'all rights and benefits under my contract with my INSURANCE COMPANY' and authorized the providers to 'take all action necessary to obtain the benefits I have, in good faith, been promised'.
Procedural Posture:
- Thirteen ambulatory surgery centers and a physicians' medical group ('Plaintiffs') filed a complaint against UnitedHealth Group, its subsidiaries, and numerous ERISA plans and their employer sponsors ('Defendants') in the U.S. District Court for the Central District of California, a court of first instance.
- Plaintiffs subsequently filed a First Amended Complaint ('FAC') alleging nine counts, including claims for benefits, breach of fiduciary duty under ERISA, and violations of California's Unfair Competition Law (UCL).
- The Employer and Plan Defendants filed an Omnibus Motion to Dismiss Plaintiffs' FAC for failure to state a claim and on other procedural grounds.
- The UnitedHealth Defendants filed a separate, but related, motion to dismiss the FAC.
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Issue:
Does a patient's assignment of 'all rights and benefits' under their health insurance contract to a healthcare provider confer standing on the provider to sue not only for the payment of benefits under ERISA § 502(a)(1)(B), but also for ancillary claims such as breach of fiduciary duty and equitable relief under other ERISA provisions?
Opinions:
Majority - Fitzgerald, J.
No. While such an assignment is sufficient to confer standing for a direct claim for benefits, it does not transfer the right to sue for ancillary claims like breach of fiduciary duty or equitable remedies unless the language of the assignment clearly manifests an intent to transfer those specific rights. The court found that the language of the assignment was sufficient to confer standing for the claim for benefits under § 502(a)(1)(B), as the Ninth Circuit has long recognized that assignments of benefits convey such standing. However, for ancillary claims such as breach of fiduciary duty, statutory penalties, and most equitable relief, the court must find a clear manifestation of intent to transfer those specific rights. Citing the Ninth Circuit's decision in Spinedex, the court reasoned that the 'entire focus of the Assignment is payment for medical services.' The general language assigning 'all rights and benefits under my contract' was not specific enough to demonstrate that patients intended to assign the distinct right to bring claims for breach of fiduciary duty. The assignment lacked explicit references to fiduciary duties, specific ERISA enforcement provisions, or language indicating the provider 'stands in the shoes' of the patient, which would be necessary to confer standing for such ancillary claims.
Analysis:
This decision clarifies the level of specificity required in an assignment of benefits for a healthcare provider to assert various types of ERISA claims. It reinforces the critical distinction between a simple right to payment and the broader rights of a plan participant, such as the right to sue fiduciaries for plan mismanagement. Following the precedent set in Spinedex, this ruling makes it more difficult for provider-assignees to bring systemic challenges against plan administrators unless their assignment forms contain explicit language transferring those specific causes of action. This will likely compel healthcare providers wishing to litigate beyond simple non-payment issues to revise their patient intake forms to expressly include the assignment of rights to sue for fiduciary breaches and other equitable remedies under ERISA.
