Children's Hospital Medical C v. Youngstown Associates In Radi, et al

Filing

OPINION filed : the district court's judgment is VACATED and the case is REMANDED to decide the standing issue first for the reasons stated in this opinion, decision not for publication. Damon J. Keith, Circuit Judge; Gilbert S. Merritt, Circuit Judge and Danny J. Boggs, Circuit Judge.

Case: 14-3437

Document: 52-1

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NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 15a0587n.06
Case No. 14-3437
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

FILED
CHILDREN’S HOSPITAL MEDICAL
CENTER OF AKRON,
Plaintiff-Appellant,
v.
YOUNGSTOWN ASSOCIATES IN
RADIOLOGY, INC. WELFARE PLAN;
YOUNGSTOWNASSOCIATES IN
RADIOLOGY INC.; PROFESSIONAL RISK
MANAGEMENT,

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Aug 17, 2015
DEBORAH S. HUNT, Clerk

ON APPEAL FROM THE UNITED
STATES DISTRICT COURT FOR
THE NORTHERN DISTRICT OF
OHIO

Defendants-Appellees.
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Before: KEITH, MERRITT, and BOGGS, Circuit Judges.
MERRITT, Circuit Judge. In this action under the Employee Retirement Income
Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq., the district court decided the case on
the merits in favor of the defendants, Youngstown Associates in Radiology, Inc., the employer,
and its ERISA Plan, and Professional Risk Management, its claims administrator, and against the
plaintiff, Children’s Hospital Medical Center of Akron, a health care provider. The case can be
found at 2014 WL 1333186, No. 4:11-cv-00506 (N.D. Ohio Mar. 31, 2014). On the merits, the
court held that the plaintiff hospital, which had received an assignment of benefits from an

Case: 14-3437

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Case No. 14-3437
Children’s Hosp. Med. Ctr. v. Youngstown Assocs. in Radiology, Inc.
insured employee under the Plan, was not entitled to receive some $230,000 that had been
claimed by the employer for treatment, including a “clinical” or experimental drug program
administered to the minor child of the employee.
In this appeal we do not now decide the merits issue presented in the briefs because there
is an undecided preliminary issue that the court below and the parties refer to as a “standing”
issue — a federal jurisdiction issue that the Supreme Court in Steel Co. v. Citizens for a Better
Environment, 523 U.S. 83 (1998), has directed the lower courts to decide before the merits issues
are decided. Defendants contend that the assignment received by plaintiff is not valid due to an
anti-assignment provision in the Plan and therefore plaintiff cannot bring a claim under ERISA.
The district court in this case made an erroneous choice to decide the merits issue before the
standing issue as follows:
The parties dispute whether Plaintiff has standing to bring this action. The Court
need not resolve that issue, however, because it finds that even if Plaintiff
properly maintains its claims, the claims fail on the merits.
2014 WL 1333186, at *3.
In the Steel Co. case, five members of the Supreme Court held that “standing questions,”
as distinguished from questions on the “merits,” must be decided at the outset of the case. That
order of decision is now mandatory and must be enforced by the lower courts. The Supreme
Court’s reasoning is based on the theory that such standing questions go to the constitutional
power of a federal court under the “case or controversy” provisions of Article III. If a federal
court does not have such jurisdiction, according to the doctrine adopted in the Steel Co. case, it
may not decide the merits, and hence it must decide such standing questions first. This order-ofdecision doctrine is now well established. See, e.g., Lance v. Coffman, 549 U.S. 437, 439 (2007)
(“Federal courts must determine that they have jurisdiction before proceeding to the merits.”);

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Case No. 14-3437
Children’s Hosp. Med. Ctr. v. Youngstown Assocs. in Radiology, Inc.
Ward v. Alt. Heart Delivery Sys., Inc., 261 F.3d 624, 626 (6th Cir. 2001) (“Standing [in an
ERISA case] is thought of as a ‘jurisdictional’ matter, and a plaintiff’s lack of standing is said to
deprive the court of jurisdiction.”).
The mandatory nature of the Steel Co. majority’s order-of-decision holding is clear from
its rejection of Justice Breyer’s concurring opinion and his view that “[t]he Constitution does not
impose a rigid judicial ‘order of operations,’ when doing so would cause serious practical
problems.” 523 U.S. at 111. The fact that it seems to make “practical” sense to decide the
merits first in this case seems irrelevant in light of the more formalistic language of the majority
opinion turning a somewhat discretionary standard into a mandatory rule.
Accordingly, the judgment of the district court is vacated and the case remanded to
decide the standing issue first for the reasons stated in this opinion.

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