UNIVERSITY SPINE CENTER v. AETNA, INC.

Filing 13

OPINION. Signed by Chief Judge Jose L. Linares on 4/11/18. (DD, )

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

Civil Action No.: 17-13654 (JLL)
UNIVERSITY SPINE CENTER,
on assignment of Thomas P.,

OPINION

Plaintiff,
V.

AETNA, Inc.,
Defendant.

LINARES, Chief District Judge.

This matter comes before the Court by way of Defendant Aetna, Inc.’s Motion to Dismiss
Plaintiff University Spine Center’s Complaint pursuant to 12(b)(6) of the Federal Rules of Civil
Procedure. (ECF No. 6). Plaintiff has submitted opposition and Defendant filed its reply thereto.
(ECF Nos. 10, 11). For the reasons stated herein, the Court grants Defendant’s Motion to Dismiss
Plaintiffs Complaint.
BACKGROUND’

On September 12, 2016, Plaintiff performed “a spinal ftision surgical procedure” on
Thomas P. (“Patient”), who is insured by Defendant. (ECF No. 1 (“Cornpl.”)

¶f 3—4).

Plaintiff

obtained an assignment of benefits from Patient in order to bring this claim under the Employee
Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C.

§

1002, et seq. (Compl.

¶

5).

This background is derived from Plaintiffs Complaint, which the Court must accept as true at this stage of the
proceedings. See Aiston v. Countiywide fin. Corp., 585 F.3d 753, 758 (3d Cir. 2009).

Plaintiff prepared Health Insurance Claim forms requesting reimbursement from Defendant in the
amount of $301,939.00 for the medical sen’ices provided by Plaintiff to Patient. (Compl.
However, Defendant only remitted payment in the amount of $7,005.55. (Compl.

¶ 6).

¶ 7). Thereafter,

Plaintiff engaged in the applicable administrative appeals process maintained by Defendant, but
Defendant did not remit any additional payments. (Compi.

¶ 9—10).

Accordingly, Plaintiff brought this action, alleging the following claims: (1) failure to
Make All Payments Pursuant to Member’s Plan Under 29 U.S.C.
of Fiduciary Duty and Co-Fiduciary Duty Under 29 U.S.C.
and 29 U.S.C.

§ I 132(a)(l)(B); and (2) Breach

§ I 132(a)(3), 29 U.S.C. § 1 104(a)(l),

§ 1105(a). (Compl. ¶JJ 14—31). Plaintiff seeks to recover $174,289.26, which

Plaintiff claims is the outstanding balance after “[t]aking into account any known deductions,
copayments and coinsurance.” (Compl.

¶J 12—13). Defendant now moves to dismiss Plaintiffs

Complaint. (ECF No. 6).
LEGAL STANDARD

Pursuant to Federal Rule of Civil Procedure l2(b)(1). the Court must dismiss a complaint
if it lacks subject matter jurisdiction. “Ordinarily, Rule 12(b)(1) governs motions to dismiss for
lack of standing, as standing is a jurisdictional matter.” N.J Brain & Spine Ctr. v. Aetna, Inc., 801
F.3d 369, 371 n.3 (3d Cir. 2015).

However, when statutory limitations to sue are non-

jurisdictional, as is the case where a party claims derivative standing to sue under ERISA

§ 502(a).

a motion to dismiss challenging such standing is “properly filed under Rule 12(b)(6).” Id.
Regardless, “a motion for lack of statutory standing is effectively the same whether it comes under
Rule 1 2(b)( 1) or 1 2(b)(6).” Id. (citation oinitted).
On a motion to dismiss for lack of standing, the plaintiff “bears the burden of establishing’
the elements of standing, and ‘each element must be supported in the same way as any other matter

on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence
required at the successive stages of the litigation.” FOCUS v. Allegheny Cty. Court of Common
Pleas, 75 F.3d $34, $38 (3d Cit. 1996) (quoting Lujan v. Defs. of Wildlife, 504 U.S. 555, 561
(1992)). “For the purpose of detennining standing, [the Court] must accept as true all material
allegations set forth in the complaint, and must construe those facts in favor of the complaining
party.” Storino v. Borottgh of Point Pleasant Beach, 322 F.3d 293, 296 (3d Cir. 2003) (citing
Wart/i v. Se/din, 422 U.S. 490, 501 (1975)).
DISCUSSION

Under

§ 502 (a) of ERISA, “a participant or beneficiary” may bring a civil action to,

inter

a/ia. “recover benefits due to him under the terms of his plan, to enforce his rights under the tenns
of the plan, or to clarify his rights to future benefits under the terms of the plan.” 29 U.S.C.

§

1132(a). Accordingly, standing to sue under ERISA is “limited to participants and beneficiaries.”
Pascack Valley Hosp., Inc.

i’.

Local 464A UFCW Welfare Reimbursement Plan, 38$ F.3d 393,

400—0 1 (3d Cir. 2004) (holding that if plaintiff lacks standing to sue under ERISA, then the Court
also lacks federal subject matter jurisdiction to hear the claim). As ERISA is silent on the issue of
standing, Third Circuit precedent sets forth that a healthcare provider may bring a cause of action
by acquiring derivative standing through an assignment of rights from the plan participant or
beneficiary to the healthcare provider. N.J. Brain & Spine Ctr., $01 F.3d at 372. “Healthcare
providers that are neither participants nor beneficiaries in their own right may obtain derivative
standing by assignment from a plan participant or beneficiary.” Id. (citing CardioNet, Inc. v. Cigna
Health Corp., 751 F.3d 165, 176 n.10 (3d Cit. 2014)).
As a consequence, the issue presently before this Court hinges upon whether Patient
successfully assigned his rights to Plaintiff under the terms of Defendant’s insurance plan.

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Defendant argues that any purported assignment of rights from Patient, the plan participant, is void
since the applicable health benefits plan contains an anti-assignment clause that expressly prohibits
Patient from assigning his rights and/or benefits. (ECF No. 6-1 at 2). Both parties agree that the
anti-assignment clause in Defendant’s insurance plan states as followed: “Coverage and [Patient’s]
rights under this plan may not be assigned. A direction to pay a provider is not an assignment of
any right under this plan or of any legal or equitable right to institute any court proceeding.” (ECF
No. 6-I at 6; ECF No. 10 at 10). Defendant claims that this clause prevents Patient from assigning
his rights or benefits to Plaintiff and, therefore, Plaintiff cannot acquire the right to bring this
action. (ECF No. 6-1 at 8).
In opposition, Plaintiff argues that it is not barred froin bringing this action, because the
anti-assignment clause only limits Patient’s right to assign his rights or benefits to Plaintiff and
not Patient’s power to do so. (ECF No. 10 at 5—6). According to Plaintiff, the anti-assignment
clause’s limit on Patient’s right to assign his rights or benefits to Plaintiff is essentially “a covenant
not to assign” and any violations by Patient can be remedied by money damages, but does not void
the purported assignment. (Id. at 5). Plaintiff argues that the only way that Patient could be
prevented from assigning his rights or benefits to Plaintiff is if the anti-assignment clause expressly
limits Patient’s power to do so, which the anti-assignment clause here does not. (Id. at 6). In
making this argument, Plaintiff relies on a Third Circuit case that does

not pertain to

ERISA and

that applies New Jersey law. See Be/-Ray Co. v. CViernrite (PTY) Ltd., 181 F.3d 435, 442 (3d Cir.
1999).
Plaintiff further argues that the anti-assignment clause is unenforceable against it as a
health care provider, relying on a decision from the Court of Appeals for the Fifth Circuit. (ECF
No. 10 at 11—13). That Fifth Circuit decision interpreted anti-assignment clauses, such as the one

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at issue here, to apply only to third-party assignees who may obtain assignments to cover unrelated
debts. Hermanii Hosp. v. MEBA Med. & Benefits Plan, 959 f.2d 569, 575 (5th Cir. 1992) (“We
interpret the anti-assignment clause as applying only to unrelated, thitd-party assignees—other
than the health care provider of assigned benefits—such as creditors who might attempt to obtain
voluntary assignments to cover debts having no nexus with the Plan or its benefits, or even
involuntary alienations such as attempting to garnish payments for plan benefits.”), overrttled on

other grottnds by Access Mediqttip, L.L.C. v. United Health Care Ins. Co., 698 F.3d 229 (5th Cir.
2012).
The Court rejects both of Plaintiff s arguments because they are contrary to the recognized
law in this district. Though the Third Circuit has not specifically spoken on the enforceability of
anti-assignment clauses in ERISA-govemed plans, a majority of circuits, as well as courts in the
Third Circuit, have given effect to anti-assignment provisions such as the one in this case and
denied standing. See, e.g., Physicians Mztltispecialt’ Gip.

i’.

Health Care Plan ofHorton Homes,

Inc., 371 F.3d 1291, 1296 (11th Cir. 2004) (“[A]n unambiguous anti-assignment provision in an
ERISA-governed welfare benefit plan is valid and enforceable.”); LeToztrneau Lifelike Orthotics
& Prosthetics, Inc.

1’.

Wal-Mart Stores, Inc., 298 F.3d 348, 353 (5th Cir. 2002) (reversing the

district court and holding that anti-assignment clause in ERISA plan was enforceable and
distinguishing Hermann Hosp., 959 F.2d at 575); City ofHope Nat ‘1 Med. Ctr. v. HealthPlits Inc.,
156 f.3d 223, 229 (1st Cir. 1998) (“[W]e hold that ERISA leaves the assignability or

non-

assignability of health care benefits under ERISA-regulated welfare plans to the negotiations of
the contracting parties.”); St. Francis Reg ‘1 Med. Ctr. v. Blue Cross & Bltte Shield ofKan., Inc.,
49 F.3d 1460, 1465 (10th Cir. 1995) (“ERISA’s silence on the issue of assignability of insurance
benefits leaves the matter to the agreement of the contracting parties.”); Davidowitz v. Delta Dental

P/al?, Inc., 946 F.2d 1476, 1481 (9th Cir. 1991) (“The

court

concludes that ERISA welfare plan

payments are not assignable in the face of an express non-assignment clause in the plan.”);
Ath’anced Orthopedics & Sports Med. v. Blue Cross Blue Shield of Mass.. No. 14-7280 (FLW),
2015 U.S. Dist. LEXIS 93855, at *9 (D.N.J. July 20, 2015) (“[C]ourts routinely enforce antiassignment clauses contained in ERISA-govemed welfare plans.”); Prof’l Orthopedic Assocs., PA
v. Carefirst BhteCross BhieShield, No. 14-4486 (MAS), 2015 U.S. Dist. LEXIS 84996, at *10
(D.N.J. June 30, 2015) (“[T]he majority of circuits addressing the [anti-assignment enforceability]
question as well as other courts in this district have considered the issue and held such provisions
to be enforceable.”); Specialty Sttrgeiy of Middletown v. Aetna, No. 12-4429 (JLL), 2014 U.S.
Dist. LEXIS 85371, at * 10 (D.N.J. June 24, 2014) (“Courts in the District of New Jersey have thus
far held that unambiguous anti-assignment provisions in group healthcare plans are valid and
enforceable.”). Therefore, a clear and unambiguous anti-assignment clause is enforceable against
Plaintiff and will void any purported assignment of Patient’s rights or benefits.
Plaintiff asserts that the anti-assignment clause is ambiguous.

(ECF No. 10 at 10).

Specifically, Plaintiff attempts to parse the first and second sentences of the anti-assignment
clause. (Id.). According to Plaintiff, when the sentences are read separately, the anti-assignment
clause does not clearly state that the “coverage” or “rights” under the plan may not be assigned to
a provider. (Id.). However, the Court disagrees, afier carefully reviewing the anti-assignment
clause, and finds it to be clear and unambiguous. As noted above, under the anti-assignment
clause: “Coverage and [Patient’s] rights under this plan may not be assigned. A direction to pay a
provider is not an assignment of any right under this plan or of any legal or equitable right to
institute any court proceeding.” (ECF No. 6-1 at 6).

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As the Third Circuit has explained, contracts must be read as a whole, rather than in
isolation. See Ill. Nat ‘1 Ins. Co. v. iVvndhani Worltht’ide Operations, Inc., 653 F.3d 225, 231 (3d
Cir. 2011) (citing Hardy cx rd. Dowdell

i’.

Abdttl-Matin, 198 N.J. 95, 100—102 (2009)). When

reading the anti-assignment clause as a whole, it is obvious that the first sentence of the antiassignment clause prohibits any assignment of benefits under the plan. The second sentence,
which according to Plaintiff, renders the entire anti-assignment clause ambiguous, merely provides
further explanation that direction to pay a provider directly does not constitute an assignment of
benefits. As such, the Court concludes that the anti-assignment clause is not ambiguous and
therefore is enforceable. See Progressive Spine & Orthopedics, LLC v. Anthem Blue Cross Bhte
Shield, No. 17-536 (KM)(MAH), 2017 U.S. LEXIS 147466, at *16_17 (D.N.J. Sept. 11,2017)
(upholding similar anti-assignment clause language). As the Court acknowledged above, and has
acknowledged in several previous opinions, see, e.g., Univ. Spine Ctr. v. Aetna Inc., Civil Action
No. 17-7825 (JLL), 2017 U.S. Dist. LEXIS 209101, at *7 (D.N.J. Dec. 19, 2017), a valid and
enforceable anti-assignment clause, like the one in this case, prevents Patient from assigning his
rights or benefits to Plaintiff. In the absence of an assignment from Patient, Plaintiff does not have
standing to bring this action. Accordingly, Plaintiffs Complaint must be dismissed.
CONCLUSION
For the aforementioned reasons, Defendant’s Motion to Dismiss Plaintiffs Complaint is
hereby granted. An appropriate Order accompanies this Opinion.
Date: April

ij

,

2018

-

JOS <LINARES
C
Judge, United States District Court

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