625 F. App'x 169
3rd Cir.2015Background
- CIGNA issues ERISA-governed health plans and delegated chiropractic claims administration to ASHN, a network administrator.
- Subscriber Carol Lietz received chiropractic care; her provider was paid $88 but CIGNA’s EOB reported $127.28 billed and applied to her deductible; ASHN would not explain discrepancies, citing contractual confidentiality.
- Chiropractor Steven Clarke accepted patients’ Assignment of Benefits (AOB) authorizing payment to his clinic and sued after alleging underpayment by CIGNA/ASHN.
- The American Chiropractic Association (ACA) sued on behalf of members alleging ERISA benefits violations, fiduciary breaches, and state-law claims.
- The district court dismissed the complaint under Fed. R. Civ. P. 12(b)(1) and 12(b)(6): it found Lietz failed to exhaust administrative remedies, Clarke lacked ERISA standing from the AOB, and ACA lacked associational standing; district court declined supplemental jurisdiction over state claims.
- The Third Circuit reviews de novo, vacates parts of the dismissal, and remands: it reverses dismissal of Lietz’s and Clarke’s certain claims, affirms dismissal of ACA’s claims, and instructs the district court to address participant status and exhaustion issues on remand.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Lietz must be dismissed for failure to exhaust plan remedies | Lietz alleges misleading EOBs and systemic policies making exhaustion futile | CIGNA/ASHN argued Lietz did not exhaust administrative remedies | Dismissal vacated — defendants bear burden to plead failure to exhaust; futility and pleading ambiguity require remand |
| Whether Count II (breach of fiduciary duty) is barred by exhaustion | Lietz contends fiduciary claim need not be exhausted because it alleges statutory violations distinct from benefit denial | Defendants argued fiduciary claim effectively seeks benefits and thus requires exhaustion | Vacated — district court failed to analyze whether claim is an ‘‘actual’’ fiduciary claim or an artful benefits claim; remand for that analysis |
| Whether Clarke (provider) has ERISA standing via AOB to sue for reimbursement | Clarke: AOB assigns right to payment and attendant right to sue insurer for benefits owed | Defendants: Assignment did not transfer right to litigate ERISA claims; AOB preserves patient financial responsibility | Vacated — Third Circuit holds provider-assignee has standing to sue under ERISA for reimbursement; district court must address any applicable exhaustion requirements on remand |
| Whether ACA has associational (representational) standing to sue on members’ behalf | ACA: represents chiropractors harmed by defendants’ practices and seeks relief for members | Defendants: ACA failed to identify a member with standing and seeks relief (monetary) requiring individual participation | Affirmed — ACA lacks representational standing because its members (other than Clarke) aren’t shown to have standing to seek non‑monetary relief and association seeks monetary-type relief requiring individual inquiries |
Key Cases Cited
- In re Schering-Plough Corp. Intron/Temodar Consumer Class Action, 678 F.3d 235 (3d Cir. 2012) (pleading facts accepted as true on motion to dismiss)
- Harrow v. Prudential Ins. Co. of Am., 279 F.3d 244 (3d Cir. 2002) (ERISA exhaustion requirement for benefits claims explained)
- Metro. Life Ins. Co. v. Price, 501 F.3d 271 (3d Cir. 2007) (exhaustion is prudential, defendant bears burden to show failure to exhaust)
- CardioNet, Inc. v. CIGNA Health Corp., 751 F.3d 165 (3d Cir. 2014) (recognizing provider standing via assignment)
- Conn. State Dental Ass’n v. Anthem Health Plans, Inc., 591 F.3d 1337 (11th Cir. 2009) (assignment of right to payment creates ERISA standing)
- Tango Transp. v. Healthcare Fin. Servs. LLC, 322 F.3d 888 (5th Cir. 2003) (assignment to provider does not fail because patient retains financial responsibility)
- Hunt v. Wash. State Apple Adver. Comm’n, 432 U.S. 333 (1977) (associational standing requirements)
- Summers v. Earth Island Inst., 555 U.S. 488 (2009) (associational standing requires specific member allegations)