379 F. Supp. 3d 960
N.D. Cal.2019Background
- DaVita (dialysis provider) sued Amy's Kitchen and its employee health plan under the MSPA and ERISA after Amy's amended its plan on Jan. 1, 2017 to carve out dialysis into a Dialysis Benefit Preservation Program and reduce reimbursement for dialysis.
- DaVita alleges the Plan change incentivized ESRD patients to shift to Medicare (violating MSPA), and asserts ERISA claims (equitable relief, benefits recovery, fiduciary breach/disclosure failures) both on its own behalf and as assignee of Patient 1.
- The patient signed a DaVita authorization/assignment form that assigned "rights to payments from [his or her] insurer" and (in a provision titled "Assignment of Benefits") "all of my right, title and interest in any cause of action and/or any payment due to me ... under any employee benefit plan."
- Amy's moved to dismiss under Rules 12(b)(1) and 12(b)(6) arguing (inter alia) DaVita lacks statutory standing to sue on its own under ERISA, lacks Article III standing as assignee for ERISA/MSPA claims because the assignment is limited to payment claims, and that DaVita failed to state MSPA and ERISA claims on the merits.
- The district court treated provider-only ERISA suits as improper (provider must sue derivatively), examined the assignment language in context, and assessed Article III injury and MSPA/ERISA pleading sufficiency.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether DaVita may bring ERISA claims in its own right | DaVita asserted some ERISA counts on its own behalf | ERISA authorizes only participants, beneficiaries, fiduciaries, Sec. of Labor to sue; providers may not sue on their own | Dismissed with prejudice — providers lack statutory standing to sue on their own under ERISA |
| Whether DaVita has Article III standing as assignee to assert Patient 1's ERISA equitable claims (illegal plan terms, fiduciary breach) | Assignment language ("any cause of action") conveys broader rights including equitable ERISA claims | Form context focused on payment; assignment limited to payment/recovery of benefits | Assignment limited to payment claims; Counts 2 and 4 dismissed with prejudice |
| Whether DaVita has Article III standing as assignee to assert Patient 1's ERISA benefits claim under §1132(a)(1)(B) | Patient 1 was entitled to better coverage and higher reimbursement; reduced payment is an adverse benefit determination | Plan expressly defined dialysis benefit as reimbursement at a "Usual and Reasonable" rate and plan paid per those terms — no denial of a claimed benefit | No injury-in-fact; Count 3 dismissed with prejudice |
| Whether DaVita stated an MSPA claim on its own behalf (and as assignee) | Plan change impermissibly "took into account" Medicare-eligibility of ESRD patients and differentiated benefits for dialysis | Plan treats dialysis based on service (dialysis) not on ESRD or Medicare eligibility; same rules apply to similarly situated non-Medicare patients | MSPA claim dismissed with prejudice for failure to plead a violation; assignee MSPA claim also dismissed for lack of assignment |
Key Cases Cited
- Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (jurisdictional burden on party asserting jurisdiction)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for pleadings)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standards and inference drawing)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (Article III standing elements)
- Misic v. Bldg. Serv. Emps. Health & Welfare Tr., 789 F.2d 1374 (assignee may sue derivatively under ERISA)
- Spinedex Physical Therapy USA, Inc. v. United Healthcare of Ariz., 770 F.3d 1282 (assignment construed in context; providers limited to assigned payment rights absent clear transfer of enforcement rights)
- DB Healthcare, LLC v. Blue Cross Blue Shield of Ariz., Inc., 852 F.3d 868 (assignment limited to right to payment and suit for nonpayment)
- Bio-Medical Applications of Tenn., Inc. v. Central States Se. & Sw. Areas Health & Welfare Fund, 656 F.3d 277 (MSPA violation where plan terminated coverage upon Medicare entitlement)
- National Renal Alliance, LLC v. Blue Cross and Blue Shield of Ga., 598 F. Supp. 2d 1344 (insurer’s lowered dialysis reimbursement did not violate MSPA where reimbursement was uniform regardless of Medicare status)
- Wade v. Reg'l Credit Ass'n, 87 F.3d 1098 (district court should decline supplemental jurisdiction after dismissal of federal claims)