Brown v. BlueCross BlueShield of Tennessee, Inc.
827 F.3d 543
6th Cir.2016Background
- Harrogate Family Practice (provider) treated Blue Cross members and obtained patients’ signed "Assignment of Benefits" forms allowing direct billing to Blue Cross.
- Harrogate had a Provider Agreement with Blue Cross that (1) incorporated Blue Cross’s Provider Manual excluding coverage for investigational services (including ALCAT tests) and (2) authorized Blue Cross to audit and recoup alleged overpayments; the Agreement also contained an arbitration clause.
- Blue Cross audited Harrogate’s ALCAT billings, concluded the tests were investigational and not covered, and initiated post-payment recoupments.
- Harrogate sued under ERISA § 502(a)(1)(B) and § 502(a)(3) seeking to enjoin recoupments and recover funds; district court dismissed for lack of ERISA standing and compelled arbitration was not resolved on appeal.
- On appeal Harrogate argued (1) it had direct standing as an ERISA beneficiary, or (2) it had derivative standing via patients’ assignments; Harrogate further asserted recoupments were effectively adverse benefit determinations subject to ERISA review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether provider is a statutory ERISA "beneficiary" with direct standing | Harrogate: provider is "designated" by plans to receive benefits and thus is a beneficiary | Blue Cross: providers are not beneficiaries under ERISA's definition | Court: Providers are not beneficiaries; Harrogate lacks direct ERISA standing |
| Whether assignment of benefits confers derivative standing to sue under ERISA | Harrogate: patients’ signed Assignment of Benefits grants Harrogate the right to bring ERISA claims for payment | Blue Cross: assignment forms only authorize direct payment and do not transfer enforceable ERISA rights | Court: patient assignments of the right to payment suffice to confer derivative standing |
| Whether the claim to enjoin post-payment recoupments falls within the scope of assignees’ derivative standing | Harrogate: recoupments are an end-run around ERISA adverse-benefit protections and thus fall within assigned rights to payment | Blue Cross: recoupment procedures arise from the Provider Agreement (a contract between provider and insurer), not from patients’ ERISA plans, so patients could not have sued over recoupments | Court: Recoupment claim is governed by the Provider Agreement and could not have been brought by patients; therefore it is outside the scope of the assignment and Harrogate lacks standing for the recoupment claim |
Key Cases Cited
- Ward v. Alternative Health Delivery Sys., Inc., 261 F.3d 624 (6th Cir.) (providers are not ERISA beneficiaries)
- Rojas v. Cigna Health & Life Ins. Co., 793 F.3d 253 (2d Cir.) (assignment of payment does not by itself make providers beneficiaries; benefits belong to patients)
- North Jersey Brain & Spine Ctr. v. Aetna, Inc., 801 F.3d 369 (3d Cir.) (assignment of payment confers derivative standing to sue under ERISA)
- Spinedex Physical Therapy USA, Inc. v. United Healthcare of Ariz., Inc., 770 F.3d 1282 (9th Cir.) (providers cannot bring benefits claims on their own behalf absent assignment)
- Blue Cross of Cal. v. Anesthesia Care Assoc. Med. Grp., Inc., 187 F.3d 1045 (9th Cir.) (distinguishes rights to payment from provider-contract payment terms; providers cannot assert contractual claims patients could not)
- Cromwell v. Equicor-Equitable HCA Corp., 944 F.2d 1272 (6th Cir.) (provider obtains derivative standing only from a valid assignment of benefits)