983 F.3d 435
9th Cir.2020Background
- Beverly Oaks, an out-of-network surgical center, provided services to 14 patients covered by employer-sponsored ERISA plans administered by Blue Cross.
- The relevant plan documents (Teamsters, Williams Lea, Woodward) contained express anti-assignment clauses barring assignment of benefits.
- Patients signed Beverly Oaks’ Financial Responsibility Agreement assigning their benefit rights to Beverly Oaks; Beverly Oaks made pre-surgery calls to Blue Cross, which represented out-of-network benefits would be available (typically 50–100%) and gave eligibility/deductible information.
- Beverly Oaks submitted claim forms to Blue Cross marking that it was the patient’s assignee; Blue Cross adjudicated the claims (denying or underpaying) but never invoked the anti-assignment clauses during the administrative process.
- Beverly Oaks sued under ERISA to recover unpaid benefits; the district court dismissed for lack of standing (enforceable anti-assignment clauses), and Beverly Oaks appealed.
- The Ninth Circuit reversed and remanded, holding Beverly Oaks plausibly pleaded waiver and equitable estoppel that could prevent Blue Cross from asserting the anti-assignment provision for the first time in litigation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Waiver of anti-assignment clause | Blue Cross processed claims after Beverly Oaks marked itself as assignee and never raised the clause during the admin process, so Blue Cross waived the right to assert it later | Anti-assignment clauses are enforceable; failure to raise during claims administration does not waive the defense and it can be raised in litigation | Reversed: allegations plausibly show waiver under Spinedex — Blue Cross should have known Beverly Oaks was acting as assignee and its silence/payments were inconsistent with enforcing the clause |
| Equitable estoppel | Blue Cross’ pre-surgery representations and continued acquiescence induced Beverly Oaks to provide services; Beverly Oaks relied to its detriment and alleges extraordinary circumstances and plan ambiguity | Estoppel inappropriate; anti-assignment is a plan term that cannot be nullified by provider statements | Reversed: Beverly Oaks adequately pleaded the elements of equitable estoppel (promise/misrepresentation, reliance, injury, extraordinary circumstances, ambiguity, interpretation vs. amendment) |
| Provider standing as assignee to bring ERISA claim | As an assignee of participants’ benefits, Beverly Oaks can pursue benefits derivatively if the anti-assignment clause is not enforced (due to waiver/estoppel) | Providers are not ERISA beneficiaries and anti-assignment clauses preclude assignment, so provider lacks standing | Reversed: at pleading stage, waiver/estoppel allegations could defeat the anti-assignment barrier to standing; dismissal was improper |
Key Cases Cited
- Spinedex Physical Therapy USA, Inc. v. United Healthcare of Ariz., Inc., 770 F.3d 1282 (9th Cir. 2014) (administrator cannot reserve a known reason to deny during admin process and raise it first in litigation; waiver analysis)
- Harlick v. Blue Shield of Cal., 686 F.3d 699 (9th Cir. 2012) (plan administrator must communicate reasons for denial during admin process)
- DB Healthcare, LLC v. Blue Cross Blue Shield of Ariz., Inc., 852 F.3d 868 (9th Cir. 2017) (healthcare providers are not ERISA beneficiaries; providers pursue benefits derivatively)
- Gabriel v. Alaska Elec. Pension Fund, 773 F.3d 945 (9th Cir. 2014) (equitable estoppel elements and ERISA-specific requirements including extraordinary circumstances)
- Gordon v. Deloitte & Touche LLP Group Long Term Disability Plan, 749 F.3d 746 (9th Cir. 2014) (definition of waiver as intentional relinquishment or conduct inconsistent with enforcement)
- Intel Corp. v. Hartford Accident & Indem. Co., 952 F.2d 1551 (9th Cir. 1991) (waiver may be found when acts are inconsistent with intent to enforce a right)
- Pisciotta v. Teledyne Indus., Inc., 91 F.3d 1326 (9th Cir. 1996) (Summary Plan Description is the statutorily established means of informing participants of plan terms)