Cell Science Systems Corporation v. Louisiana Health Service and Indemnity Company

Filing 46

RULING granting 14 Motion to Dismiss Plaintiff's Complaint. CSS has not met its Rule 12(b)(1) burden of demonstrating that it has derivative standing to bring this lawsuit on behalf of the plan participants/beneficiaries identified. Therefore, this matter is dismissed without prejudice for lack of subject matter jurisdiction. Judgment shall be entered accordingly. Signed by Chief Judge Shelly D. Dick on 8/20/2018. (LLH)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA

CELL SCIENCE SYSTEMS
CORPORATION

CIVIL NO.
17-1658-SDD-RLB

VERSUS
LOUISIANA HEALTH SERVICE AND
INDEMNITY COMPANY d/b/a
BLUE CROSS AND BLUE SHIELD OF
LOUISIANA

RULING
This matter is before the Court on the Motion to Dismiss Plaintiff’s Complaint1 filed
by Defendant Louisiana Health Service & Indemnity Company, d/b/a Blue Cross and Blue
Shield of Louisiana (“BCBSLA”) pursuant to Federal Rules of Civil Procedure 8, 12(b)(1),
and 12(b)(6). Plaintiff Cell Science Systems Corporation (“CSS”) has filed an Opposition2
to this motion, to which BCBSLA filed a Reply,3 and CSS filed a Sur-Reply.4
Subsequently, CSS filed an Amended and Supplemental Complaint5 which prompted the
Court to order the Parties to file supplemental briefs, if necessary.6 The Parties complied
with this Order and submitted supplemental briefing for the Court’s consideration.7 For
the reasons which follow, the Court finds that BCBSLA’s motion should be granted
pursuant to Rule 12(b)(1) for lack of jurisdiction because CSS lacks standing to bring this
1

Rec. Doc. No. 14.
Rec. Doc. No. 21.
3
Rec. Doc. No. 26.
4
Rec. Doc. No. 27.
5
Rec. Doc. No. 32.
6
Rec. Doc. No. 33.
7
Rec. Doc. Nos. 35, 37, 42, & 45.
2

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suit.
I.

BACKGROUND
CSS is the developer of the ALCAT test, a proprietary blood test that has been in

use for over thirty years, which identifies trigger foods and other substances in a patient
that manifest in several inflammatory conditions and pathologies.8

CSS claims the

ALCAT test was utilized by the healthcare providers for the plan participants and
beneficiaries in this case to identify food and chemical sensitivities in order to assess
treatment options.9

CSS filed suit against BCBSLA as plan administrator and plan

fiduciary seeking payment for the tests conducted on patients who are members of the
health benefit plans administered by BCBSLA.10 CSS alleges that payment for the
ALCAT tests was refused by BCBSLA on the basis that it was considered
“investigational.”11 CSS further alleges that the plan participants/beneficiaries identified
in this lawsuit assigned their contractual rights and benefits in and to the payment for the
ALCAT tests to CSS.12
The plan at issue is governed by the Employee Retirement Income Security Act
(“ERISA”).13 CSS asserts claims under ERISA § 502(a)(1)(B), § 502(c), and § 502(a)(3).
BCBSLA moves to dismiss CSS’s Complaint pursuant to Rule 12(b)(1) for lack of
jurisdiction on the ground that CSS lacks standing to bring these claims and Rule 12(b)(6)
for failure to state a claim upon which relief may be granted as to the substantive ERISA

8

Rec. Doc. No. 1, ¶ 4.
Id.
10
Id. at ¶¶ 7-8.
11
Id. at ¶ 9.
12
Id. at ¶ 12.
13
29 U.S.C. § 1001, et seq.
9

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claims. BCBSLA contends CSS lacks standing because it has not demonstrated a valid
assignment of rights from the participants or beneficiaries herein and, further, CSS cannot
demonstrate a valid assignment because any alleged assignment of rights is null and void
pursuant to the anti-assignment provision in the plan at issue. Because the Court finds
that CSS has failed to demonstrate standing, the Court will not address the Rule 12(b)(6)
claims in this ruling.14
II.

LAW & ANALYSIS
A. Rule 12(b)(1) Motion to Dismiss
“When a motion to dismiss for lack of jurisdiction ‘is filed in conjunction with other

Rule 12 motions, the court should consider the Rule 12(b)(1) jurisdictional attack before
addressing any attack on the merits.’”15 If a complaint could be dismissed for both lack
of jurisdiction and for failure to state a claim, “‘the court should dismiss only on the
jurisdictional ground under [Rule] 12(b)(1), without reaching the question of failure to state
a claim under [Rule] 12(b)(6).’”16 The reason for this rule is to preclude courts from issuing
advisory opinions and barring courts without jurisdiction “‘from prematurely dismissing a
case with prejudice.’”17
“Article III standing is a jurisdictional prerequisite.”18 If a plaintiff lacks standing to

14

Accordingly, CSS’s July 9, 2018 submission of the Fifth Circuit’s decision in Innova Hospital v. Blue Cross
Blue Shield of Georgia, et al, No. 14-11300 as supplemental authority (Rec. Doc. No. 45) is inapposite as
that case addressed a Rule 12(b)(6) motion to dismiss for failure to state a claim.
15
Crenshaw–Logal v. City of Abilene, Texas, 436 Fed.Appx. 306, 308 (5th Cir.2011)(quoting Ramming v.
United States, 281 F.3d 158, 161 (5th Cir.2001); see also Randall D. Wolcott, MD, PA v. Sebelius, 635 F.3d
757, 762 (5th Cir.2011); Fed.R.Civ.P. 12(h)(3)).
16
Crenshaw–Logal, 436 Fed.Appx. at 308 (quoting Hitt v. City of Pasadena, 561 F.2d 606, 608 (5th
Cir.1977)).
17
Id. (citing Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 101, 118 S.Ct. 1003, 140 L.Ed.2d 210
(1998), and Ramming, 281 F.3d at 161)
18
Crenshaw–Logal, 436 Fed.Appx. at 308 (citing Steel Co., 523 U.S. at 101, 118 S.Ct. 1003, and Xerox
Corp. v. Genmoora Corp., 888 F.2d 345, 350 (5th Cir.1989)).

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bring a claim, the Court lacks subject matter jurisdiction over the claim, and dismissal
under Rule 12(b)(1) is appropriate.19 The party seeking to invoke federal jurisdiction
bears the burden of showing that standing existed at the time the lawsuit was filed.20 In
reviewing a motion under 12(b)(1) for lack of subject matter jurisdiction, a court may
consider (1) the complaint alone; (2) the complaint supplemented by undisputed facts
evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the
court's resolution of disputed facts.21
A motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1) is
characterized as either a “facial” attack, i.e., the allegations in the complaint are
insufficient to invoke federal jurisdiction, or as a “factual” attack, i.e., the facts in the
complaint supporting subject matter jurisdiction are questioned.22 A facial attack happens
when a defendant files a Rule 12(b)(1) motion without accompanying evidence.23 In a
facial attack, allegations in the complaint are taken as true.24
If the defendant brings a factual attack, a court may consider any evidence
(affidavits, testimony, documents, etc.) submitted by the parties that is relevant to the
issue of jurisdiction.25 A defendant making a factual attack on a complaint may provide
supporting affidavits, testimony, or other admissible evidence.26 The plaintiff, to satisfy
19

Whitmore v. Arkansas, 495 U.S. 149, 154–55, 110 S.Ct. 1717, 109 L.Ed.2d 135 (1990); Chair King, Inc.
v. Houston Cellular Corp., 131 F.3d 507, 509 (5th Cir.1997).
20
M.D. Anderson Cancer Ctr. v. Novak, 52 S.W.3d 704, 708 (Tex. 2001); Howery v. Allstate Ins. Co., 243
F.3d 912, 916 (5th Cir. 2001); Ramming, 281 F.3d at 161.
21
Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir.1981).
22
In re Blue Water Endeavors, LLC, Bankr. No. 08–10466, Adv. No. 10–1015, 2011 WL 52525, *3 (E.D.Tex.
Jan. 6, 2011)(citing Rodriguez v. Texas Comm'n of Arts, 992 F.Supp. 876, 878–79 (N.D.Tex.1998), aff'd,
199 F.3d 279 (5th Cir. 2000)).
23
Paterson v. Weinberger, 644 F.2d 521, 523 (5th Cir. 1981).
24
Blue Water, 2011 WL 52525 at *3 (citing Saraw Partnership v. United States, 67 F.3d 567, 569 (5th
Cir.1995)).
25
Id. (citing Irwin v. Veterans Admin., 874 F.2d 1092, 1096 (5th Cir. 1989)).
26
Paterson, 644 F.2d at 523.

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its burden of proof, may also submit evidence to show by a preponderance of the
evidence that subject matter jurisdiction exists.27

The court's consideration of such

matters outside the pleadings does not convert the motion to one for summary judgment
under Rule 56(c)28 because, “[u]nlike in a facial attack where jurisdiction is determined
upon the basis of allegations of the complaint, accepted as true[,] when a factual attack
is made upon federal jurisdiction, no presumption of truthfulness attaches to the plaintiffs'
jurisdictional allegations, and the court is free to weigh the evidence and satisfy itself as
to the existence of its power to hear the case. In a factual attack, the plaintiffs have the
burden of proving that federal jurisdiction does in fact exist.”29 In resolving a factual attack
on subject matter jurisdiction under Rule 12(b)(1), the district court, which does not
address the merits of the suit, has significant authority “‘to weigh the evidence and satisfy
itself as to the existence of its power to hear the case.’”30 Because the arguments made
by BCBSLA relating to standing rely on the documentary evidence attached to its briefing
on the motions to dismiss, and because BCBSLA has challenged the facts asserted in
the Complaint, it has presented a factual attack on CSS’s standing.
B. Factual Attack to the Allegation of Assignments of Rights
CSS alleges that the plan participants/beneficiaries identified in the Complaint
have each “assigned his or her rights and benefits in and to the payment for the ALCAT
test to CSS.”31

CSS further alleges that, “[b]y virtue of the assignment of benefits it

27

Id.
Robinson, 2008 WL 4692392 at *10 (citing Garcia, 104 F.3d at 1261).
29
Evans v. Tubbe, 657 F.2d 661, 663 (5th Cir. 1981).
30
Robinson v. Paulson, No. H–06–4083, 2008 WL 4692392, *10 (S.D.Tex. Oct. 22, 2008)(quoting Garcia
v. Copenhaver, Bell & Assocs., 104 F.3d 1256, 1261 (11th Cir. 1997), and citing Clark v. Tarrant County,
798 F.2d 736, 741 (5th Cir. 1986)).
31
Rec. Doc. No. 1, ¶ 5. Later allegations state: “These participants and/or beneficiaries assigned their
contractual rights and benefits in and to the payment for the ALCAT test to CSS.” Id. at ¶¶ 11, 12, 13, 14,
28

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obtained

from

each

plan

participant

and

plan

beneficiary,

[CSS]

obtains

participant/beneficiary status pursuant to 29 U.S.C. § 1132(a)(1)(B).”32 CSS did not
attach any of the purported assignments to its Complaint, Amended and Supplemental
Complaint, or any of the four briefs submitted in response to the pending motion to
dismiss. Further, CSS has not provided the Court an excerpt of the assignment language
contained in the alleged assignments that would expressly set forth the rights purportedly
assigned.
BCBSLA argues that CSS has not alleged that it has been assigned the right to
file suit to obtain benefits or to assert specific claims under ERISA. BCBSLA cites
controlling jurisprudence holding that an assignment of ERISA claims must be express
and knowing and is narrowly construed.33 BCBSLA also relies on this Court’s recent
holding that an assignment of the right to receive payment does not constitute a right to
pursue benefits or other claims under ERISA.34 Because CSS has only alleged that it
was assigned the right to receive payment, not any other rights to pursue other claims, it
lacks standing to pursue all non-payment related claims brought under ERISA. Moreover,
BCBSLA contends CSS disclosed the purported assignments in its Rule 26(a)
Disclosures, but failed to disclose an assignment form for four of the claimed patients,
and in one instance, the assignment form provided is unsigned. Thus, BCBSLA has

& 15.
32
Id. at ¶ 22.
33
Texas Life, Acc. Health & Hosp. Service Ins. Guar. Ass’n v. Gaylord Entertainment Co., 105 F.3d 210,
218 (5th Cir. 1997).
34
See Cardiovascular Specialty Care Center of Baton Rouge, LLC v. United Healthcare of Louisiana, Inc.,
2017 WL 2408125 at *5 (M.D. La. June 2, 2017)(quoting Touro Infirmary v. American Maritime Officer, No.
2:07-cv-01441-EEF-KWR, 2007 WL 4181506 (E.D. La. Nov. 21, 2007)(“The court in Touro Infirmary, relying
on the decisions of other district courts, found that this language was ‘not a full assignment of benefits’; the
language ‘simply authorizes direct payment to [the healthcare provider] and makes the patient [r]esponsible
for any charges not paid by the patient's health plan.’”)).

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challenged the factual allegation that CSS has obtained valid assignments on behalf of
all of the claimed plan participants and the fact that CSS has been assigned all benefits
relating to the ERISA plan at issue herein.
Notwithstanding the claim that the purported assignments are invalid, do not exist
in some instances, and do not contain express assignment of all of the rights CSS asserts
in this action, BCBSLA maintains than any assignment of rights is nevertheless
unenforceable and invalid under the plain, unambiguous language in the plan that
precludes any form of assignment with the exception of Hospitals:
A Plan Participant’s rights and Benefits under this Plan are personal to him
and may not be assigned in whole or in part by the Plan Participant. The
Claims Administrator will recognize assignments of Benefits to Hospitals if
both this Plan and the Provider are subject to La. R.S. 40:2010. If both this
Plan and the Provider are not subject to La. R.S. 40:2010, the Claims
Administrator will not recognize assignments or attempted assignments of
Benefits.35
Based on the above provision in the plan at issue, BCBSLA contends the plan
participants/beneficiaries could not have validly assigned their rights to CSS; thus, CSS
lacks standing to bring any claims asserted in this lawsuit.
CSS claims that, on a motion to dismiss, “a plaintiff is simply not required to put on
such evidence at the pleading stage.”36 While this is generally true, as set forth above,
once a factual attack has been made on a complaint challenging subject matter
jurisdiction, a plaintiff has the burden of proving, by a preponderance of the evidence, that
federal jurisdiction does in fact exist.37 CSS alleged the plan participants/beneficiaries at
issue had assigned their rights to payment; however, once this fact was challenged, CSS

35

Rec. Doc. No. 14-3 at 13, 70 (pp. 9, 66 of the Plan).
Rec. Doc. No. 37 at 5.
37
See supra n. 26 & n. 28 (emphasis added).
36

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has the burden to submit evidence of the alleged assignments of rights to establish its
standing and this Court’s jurisdiction. Indeed, although CSS was granted leave to amend
its Complaint, and file supplemental briefs, with full knowledge of the factual attack
asserted in BCBSLA’s motion, CSS failed to present any evidentiary support for its
assertion of standing. This repeated failure undermines the allegation that CSS has
obtained a valid assignment of the rights it asserts herein. Further, CSS’s repeated
protestations that it does not have to “prove its case” at this procedural posture is simply
contrary to controlling law because its standing has been factually attacked.38 BCBSLA
is entitled to dismissal on this basis alone.
Enforceability of the Anti-Assignment Provision
CSS contends the Fifth Circuit has held that anti-assignment clauses apply only to
unrelated third party creditors. In support of this assertion, CSS presents the same
argument and relies on the same case as the plaintiff in Memorial Herman Health System
v. Pennwell Corporation Medical and Vision Plan.39 This argument was rejected by the
Memorial Herman court:
Citing Tango Transport v. Healthcare Financial Services L.L.C., 322 F.3d
888, 891–94 (5th Cir. 2003), plaintiff argues that “[t]o deny Plaintiff standing
in this case is wholly inequitable and would send a chilling effect to other
health care providers from accepting patients covered under self funded
plans.” Plaintiff also cites Hermann Hospital v. MEBA Medical & Benefits
Plan (“Hermann II”), 959 F.2d 569, 574 (5th Cir. 1992), overruled in part on
other grounds by Access Mediquip, 698 F.3d at 229, for its holdings that an
38
The Court is likewise unpersuaded by CSS’s alternative request for jurisdictional discovery based on the
complaint that it was “ambushed” by BCBSLA with thousands of pages of purported plan documents only
two days prior to the filing of the pending motion, which was January 3, 2018. See Rec. Doc. No. 27 at 2;
Rec. Doc. No. 37 at 9. CSS was granted leave to amend its complaint, which it did on April 24, 2018, over
three months after having received these plan documents. The Court allowed supplemental briefing on this
motion as late as July 2018. Despite having these documents for over six months at the time of its latest
filing relevant to this motion, CSS has never submitted any documentation to support its allegations nor has
it submitted any authority or evidence in support of its objection to the authenticity of the plan documents.
39
No. H-17-2364, 2017 WL 6561165 (S.D. Tex. Dec. 22, 2017).

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“[a]nti-[a]ssignment clause did not apply to medical service providers,” and
that “the anti-assignment clause applied only to unrelated third party
assignees such as a creditor who may attempt to obtain a voluntary
assignment to cover a debt that had no relationship, or 'nexus', with the Plan
or its benefits.” Neither the holding in Tango nor in Hermann II support
plaintiff's argument that anti-assignment provisions are unenforceable
against health care providers.40
The court analyzed both cases and held that “[c]ontrary to plaintiff’s argument, Tango did
not hold that a medical provider could have derivative standing to sue an ERISA plan
without a valid assignment.”41 The court also explained that the anti-assignment clause
in Herman II was easily distinguished from the clause before the court, and the Fifth
Circuit did not hold that an anti-assignment provision only applies to unrelated third party
creditors:
This anti-assignment provision does not in any way resemble either the
third-party creditor anti-assignment clause at issue in Hermann II or a typical
spendthrift trust provision. Moreover, reasoning that Congress intended
employers and employees to retain contractual freedom over ERISA–
governed employee-benefit plans, the Fifth Circuit subsequently recognized
that anti-assignment provisions are generally effective and will operate to
render a purported assignment invalid. See LeTourneau, 298 F.3d at 352
(“Neither Hermann I nor Hermann II stands for the proposition that all antiassignment clauses are per se invalid vis-à -vis providers of health care
services.”). See also Louisiana Health Services & Indemnity Co. v. Rapides
Healthcare System, 461 F.3d 529, 537 (5th Cir. 2006), cert. denied, 549
U.S. 1279, 127 S.Ct. 1831, 167 L.Ed.2d 319 (2007) (“We have held that an
assignee has derivative standing to enforce claims under ERISA § 502, thus
permitting assignments when not precluded by the plan terms. We have
also held that, absent a statute to the contrary, an anti-assignment provision
in a plan is permissible under ERISA.”). Plaintiff's argument that the antiassignment provision included in the Plan is unenforceable against a health
care provider therefore has no merit.42
Accordingly, CSS’s blanket assertion that “the Fifth Circuit has held that anti-

40

Id. at *6.
Id.
42
Id. at *7.
41

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assignment clauses apply only to unrelated third party creditors,”43 is simply incorrect,
and CSS has offered no argument or evidence to demonstrate that the anti-assignment
provision herein is similar to those in Tango or Herman II. The Court finds this argument
without merit.
ERISA Estoppel
CSS also argues that BCBSLA should be estopped from asserting any antiassignment provision because CSS relied to its detriment on material misrepresentations
made by BCBSLA. CSS’s Amended and Supplemental Complaint alleges:
27.
On several dozen, if not hundreds, of previous occasions, [BCBSLA] paid
for the ALCAT testing claims of the participants and beneficiaries. In
correspondence, … Blue Cross admitted that it had previously paid for
ALCAT testing.
28.
The only reason Blue Cross gave to CSS for the denial of payment for the
ALCAT testing for the participants and beneficiaries who are named in this
lawsuit was that the ALCAT testing was deemed by Blue Cross to be
“investigational.”
29.
Prior to the denial of the subject claims in the administrative process, CSS
reasonably believed that Blue Cross would pay the subject claims and
relied, to its detriment, on this belief in providing the ALCAT testing services
for these patients and by taking assignments from them.44
The Amended Complaint also refers to several dated items of correspondence in which
BCBSLA is alleged to have denied coverage for this testing as investigational.45 CSS

43

Rec. Doc. No. 37 at 1.
Rec. Doc. No. 32.
45
Id. at ¶ 30.
44

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further alleges that BCBSLA denied coverage although it had “expressly preauthorized
service/treatment for each insured patient.”46
CSS again relies on Herman II, arguing that BCBSLA should be estopped from
asserting and anti-assignment clause defense because it was not the reason given for
the denial of benefits; rather, the only reason given for the denial was because the test
was deemed “investigational.” CSS cites cases wherein the Fifth Circuit and district
courts hold that “courts reviewing an administrator's denial of benefits consider only the
actual basis on which the administrator denied the claim, ‘not its post-hoc
rationalization[s].’”47 But CSS confuses the issue presently before the Court. On the
current 12(b)(1) motion, the Court is not reviewing the reason for the denial of the
coverage by the plan administrator. The Court is reviewing whether CSS has standing to
assert a challenge to the denial at all. These are not the same issues and do not require
the same reasoning.
CSS’s reliance on Herman II is also, again, misplaced. In Hermann II, the Fifth
Circuit held that a plan was estopped from raising an anti-assignment provision in its plan
agreement.48 The plaintiff, a hospital to whom a patient had assigned her rights under
ERISA, had called the plan when the patient was first admitted and had been told by plan
representatives that the patient was covered.49 For six months while the patient was in
the hospital, the hospital repeatedly attempted to obtain payment for the services it was
providing, but the plan continuously postponed payment, asserting only that it was

46

Id.
Koehler v. Aetna Health Inc., 683 F.3d 182, 190 n.18 (5th Cir. 2012)(quoting Robinson v. Aetna Life Ins.
Co., 443 F.3d 389, 395–96 n.4 (5th Cir. 2006)).
48
959 F.2d 569.
49
Id. at 574.
47

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“investigating” the claim.50 These are not the same allegations before the Court. While
there is an allegation that the ALCAT testing was pre-authorized by BCBSLA,51 there is
no allegation or evidence that BCBSLA continuously postponed payment asserting that it
was investigating CSS’s claim for payment. Rather, CSS alleges that BCBSLA denied
the coverage, with no claim of any delay, on the grounds that the testing was
investigational, not because BCBSLA was investigating the claims.
BCBSLA maintains that CSS has made no allegations that would satisfy the Fifth
Circuit’s test for ERISA estoppel. In Mello v. Sara Lee Corp., the Fifth Circuit explicitly
adopted ERISA estoppel as a cognizable theory of recovery that requires a plaintiff to
establish: “(1) a material misrepresentation; (2) reasonable and detrimental reliance upon
the representation; and (3) extraordinary circumstances.” 52
BCBSLA contends CSS has not alleged any material misrepresentations on the
part of BCBSLA; rather, it only alleges that, based on prior payment, CSS believed that
BCBSLA would continue to pay for the testing. Further, BCBSLA contends CSS has not
alleged that BCBSLA ever represented that it would not enforce the anti-assignment
provisions in its plan. BCBSLA also argues CSS has not demonstrated reasonable
reliance.53 Although it has attached no documentation for either allegations, CSS has

50

Id.
In many ERISA cases, preauthorization letters will often indicate that the claim is still subject to review or
have a disclaimer that there is no guarantee of payment. Because CSS did not submit these
preauthorization letters for the Court’s review, the Court cannot evaluate if it was reasonable for CSS to
rely on a preauthorization, particularly since any reliance on such a preauthorization letter to modify the
terms of the plan would be unreasonable. See Ponstein v. HMO Louisiana, Inc., No. 08-663, 2009 WL
1309737 at* 7 (E.D. La. May 11, 2009).
52
431 F.3d 440, 444 (5th Cir. 2005).
53
The Court notes that, as set forth above, because CSS’s ERISA estoppel claim is in response to
BCBSLA’s factual attack on its standing, CSS must prove by a preponderance of the evidence that BCBSLA
is estopped from applying its anti-assignment provision in this case. It insufficient on this factual attack to
merely rely on the allegations in the pleadings.
51

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alleged that it reasonably believed BCBSLA would pay for the testing based both on past
payments and the preauthorization letters for the testing at issue herein. BCBSLA claims
that, as a matter of law, estoppel may only be invoked when the relevant plan provision
is ambiguous because a party’s reliance cannot be reasonable if it is inconsistent with the
terms of the plan documents.54

Finally, BCBSLA maintains that CSS has not

demonstrated that “extraordinary circumstances” exist in this case.
CSS curiously argues that BCBSLA “misstates the elements required to establish
estoppel in an ERISA case” by relying on the standard set forth by the Fifth Circuit in
Mello because Mello was an appeal from the Northern District of Mississippi relying on
Mississippi state estoppel law. 55 CSS contends this Court should apply the Louisiana
state law standard for detrimental reliance, as the counterpart to the common law concept
of estoppel, to this case. However, CSS has not asserted a state law claim for detrimental
reliance, and CSS did not cite a single case to support its flawed proposition that
Louisiana state law on detrimental reliance is the proper standard for an ERISA estoppel
claim. Moreover, the Court did not locate a single case wherein a federal district court in
Louisiana applied the Louisiana state law standard for detrimental reliance to an ERISAestoppel claim rather than the standard set forth by the Fifth Circuit. Indeed, several
Louisiana district courts have applied the Mello test to claims of ERISA estoppel, and this
court will not depart from the test set forth by the Fifth Circuit.56

54

See Mello, 431 F.3d at 447.
Rec. Doc. No. 37 at 6.
56
See Malbrough v. Kanawha Ins. Co., 943 F.Supp.2d 684, 695 (W.D. La. 2013); O’Brien v. Hartford Life
and Acc. Ins. Co., 932 F.Supp.2d 703, 715 (E.D. La. 2012); French v. Dad Behring Life Ins. Plan, 906
F.Supp.2d 571, 578-79 (M.D. La. 2012); Briscoe v. Energy Transfer Partners, LP, No. 14-00433-BAJ-EWD,
2016 WL 1126494 at *8 (M.D. La. Mar. 18, 2016).
55

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Perhaps based on the misconception that the Mello test for ERISA estoppel did
not apply to this case, CSS fails to address the three factors that must be satisfied. Even
if CSS could establish a material misrepresentation and reasonable reliance, it has not
alleged nor argued that the third requirement of extraordinary circumstances exists in this
case.
In High v. E-Systems, Inc., the Fifth Circuit acknowledged that it did not explain in
Mello or other case law what constitutes extraordinary circumstances in an ERISAestoppel analysis.57 In French v. Dade Behring Life Ins. Plan, an ERISA case brought in
this district, the court recognized that the Fifth Circuit cited with approval the Third Circuit’s
treatment of the issue.58 The court noted that:
Under the Third Circuit's approach, extraordinary circumstances “generally
... involve acts of bad faith on the part of the employer, attempts to actively
conceal a significant change in the plan, or commission of fraud.”59
The Third Circuit has also suggested that extraordinary circumstances may
exist where a plaintiff repeatedly and diligently inquired about benefits and
was repeatedly misled.60 It has also suggested that extraordinary
circumstances could exist where misrepresentations were made to an
especially vulnerable plaintiff.61
There is no allegation, argument, or evidence offered by CSS that would support a finding
of extraordinary circmstances in this case. Accordingly, for the reasons set forth above,
CSS’s estoppel claim fails, and BCBSLA is not estopped from asserting the antiassignment provisions in the plan to defeat CSS’s standing in this case.

57

459 F.3d 573 n.3 (5th Cir. 2006).
French, 906 F. Supp.2d at 579 (citing High, 459 F.3d at 573, n.3).
59
Id. (quoting Burstein v. Retirement Account Plan for Emps. of Allegheny Health Educ. & Research Found.,
334 F.3d 365, 383 (3d Cir. 2003)).
60
Id. (citing Kurz v. Philadelphia Elec. Co., 96 F.3d 1544, 1553 (3d Cir. 1996) (citing Smith v. Hartford Ins.
Grp., 6 F.3d 131, 142 (3d Cir. 1993))).
61
Id. (citing Kurz, 96 F.3d at 1553 and Smith, 6 F.3d at 142).
58

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III.

CONCLUSION
For the written reasons assigned, BCBSLA’s Motion to Dismiss Plaintiff’s

Complaint62 is GRANTED. CSS has not met its Rule 12(b)(1) burden of demonstrating
that it has derivative standing to bring this lawsuit on behalf of the plan
participants/beneficiaries identified. Therefore, this matter is dismissed without prejudice
for lack of subject matter jurisdiction.
Judgment shall be entered accordingly.
IT IS SO ORDERED.
Baton Rouge, Louisiana, this 20th day of August, 2018.

S

________________________________
SHELLY D. DICK
CHIEF DISTRICT JUDGE
MIDDLE DISTRICT OF LOUISIANA

62

Rec. Doc. No. 14.

Document Number: 47191 
Page 15 of 15