14 F. Supp. 3d 619
E.D. Pa.2014Background
- Plaintiffs: ACA (association), Dr. Steven G. Clarke (chiropractor), and Carol Lietz (CIGNA plan participant) sued ASHN and CIGNA under ERISA § 502(a) alleging improper calculation of insureds’ out-of-pocket obligations and related practices.
- Lietz alleges CIGNA/ASHN-calculated “amount billed” on EOBs used insured HSA/HRA funds based on a higher negotiated rate with ASHN rather than the lower amount actually paid to the provider.
- Dr. Clarke (an out-of-network provider) alleges ASHN applied undisclosed internal limits and policies reducing benefits; he relied on patient-signed Assignment of Benefits forms.
- ACA sues associationally on behalf of chiropractors, asserting federal ERISA claims and state-law claims for its members.
- Procedural posture: defendants moved to dismiss under Fed. R. Civ. P. 12(b)(1) and 12(b)(6) for lack of standing, failure to exhaust administrative remedies, and failure to state a claim; the court considered standing and exhaustion and dismissed the complaint.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Lietz may proceed without exhausting plan administrative remedies | Lietz: exhaustion should be excused as futile because Defendants apply a broad undisclosed fee policy | Defendants: Lietz failed to use plan remedies and made only informal contacts; no clear fixed policy shown | Dismissed Lietz’s federal claims for failure to exhaust; no showing of futility |
| Whether Dr. Clarke has standing under ERISA (as participant/beneficiary or assignee) | Clarke: has assignments/authorizations from patients that permit him to sue | Defendants: assignments are limited to payment collection and do not assign the right to sue under ERISA | Clarke lacks standing; assignments insufficient to confer ERISA § 502(a) standing |
| Whether ACA has associational standing to bring ERISA claims for members | ACA: represents members injured by Defendants’ practices; interests are germane | Defendants: ACA fails Hunt prongs because members lack standing and individual participation is required | ACA lacks associational standing; federal claims dismissed |
| Whether court should retain supplemental jurisdiction over ACA’s state-law claims | Plaintiffs: invoke supplemental jurisdiction | Defendants: federal claims fail so supplemental jurisdiction is improper | Court declines to exercise supplemental jurisdiction and dismisses state-law claims |
Key Cases Cited
- Fowler v. UPMC Shadyside, 578 F.3d 203 (3d Cir. 2009) (Rule 12(b)(6) pleading standard and plausibility review)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (conclusory allegations insufficient)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard)
- Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989) (ERISA § 502(a) scope and participant definition)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (standing burden on party invoking federal jurisdiction)
- Hunt v. Washington State Apple Advertising Comm’n, 432 U.S. 333 (1977) (associational standing test)
- Pension Benefit Guaranty Corp. v. White Consol. Indus., Inc., 998 F.2d 1192 (3d Cir. 1993) (materials proper on motion to dismiss)
- D'Amico v. CBS Corp., 297 F.3d 287 (3d Cir. 2002) (exhaustion requirement in ERISA claims)
- Harrow v. Prudential Ins. Co. of America, 279 F.3d 244 (3d Cir. 2002) (factors for futility to excuse exhaustion)