978 F.3d 326
6th Cir.2020Background
- DaVita (dialysis provider) sued Marietta Memorial Hospital Plan and its administrator MedBen after Patient A (an ESRD patient) assigned benefits to DaVita and then left the Plan to enroll in Medicare. DaVita alleges the Plan reimbursed dialysis at a uniquely low out-of-network Tier 3 rate (effectively ~87.5% of Medicare), had no in‑network dialysis options, and subjected dialysis claims to heightened scrutiny.
- DaVita asserted: Count I (MSPA private cause of action); Counts II and VII (ERISA claims for unpaid benefits and equitable relief under §§ 1132/1182); Counts III–VI (ERISA fiduciary‑duty claims). Patient A signed an Assignment of Benefits in favor of DaVita.
- The district court dismissed all counts with prejudice. DaVita appealed.
- Sixth Circuit majority: reversed dismissal as to Counts I, II, and VII (remanding for discovery), holding DaVita plausibly alleged (i) Medicare made conditional payments sufficient to invoke the MSPA private cause of action and (ii) the Plan plausibly discriminated against ESRD patients by targeting dialysis. The court held DaVita lacked assigned rights to prosecute fiduciary‑breach Counts III–VI.
- Judge Murphy concurred in part and dissented in part, arguing (inter alia) the MSPA bars express, individual‑based discrimination but does not reach neutral plan terms that have disparate impact on ESRD patients, and that ERISA § 1132(a)(1)(B) does not authorize invalidating plan terms.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Availability of MSPA private cause of action: is a Medicare "conditional payment" a precondition, and did Medicare make one? | MSPA private suit should be available without prior Medicare payment or, alternatively, Medicare made conditional payments here because the Plan-induced underpayment forced Patient A onto Medicare. | A conditional Medicare payment is a precondition and none occurred here. | Court: A conditional Medicare payment is a prerequisite, but DaVita plausibly alleged Medicare made conditional payments after Plan-induced underpayment; Count I survives dismissal. |
| Assignment/real‑party/standing: may DaVita, as assignee, bring ERISA claims (unpaid benefits, fiduciary breach, equitable relief)? | Assignment of Benefits granted DaVita all rights/causes of action; therefore DaVita can sue on ERISA claims. | Assignment (and Article III) does not authorize all asserted ERISA claims; at minimum fiduciary‑breach claims are not assigned. | Court: DaVita has Article III standing and may pursue Count II (unpaid benefits) and Count VII (equitable relief under §1182/§1132(a)(3)) as assignee; it lacks assigned rights to Counts III–VI (fiduciary‑breach). |
| Scope of MSPA antidiscrimination provisions: do they reach neutral plan terms or only express individual‑based differentiation? | MSPA’s nondifferentiation and take‑into‑account clauses prohibit both express and indirect/disparate‑impact discrimination (including targeting services predominantly used by ESRD patients). | The clauses prohibit only explicit, individual‑based differentiation; uniform service‑based limits (even if disparately impactful) are permissible; disparate‑impact theory is unworkable here. | Court: MSPA forbids more than express discrimination; plaintiffs may allege discrimination based on "need for renal dialysis" or other indirect means (disparate‑impact or effect‑based theories are plausible); remanded for discovery on Counts II and VII. (Concurrence dissented on this point.) |
| Weight of agency regulations (e.g., 42 C.F.R. §§ 411.161, 411.165): do they preclude conditional Medicare payments or disparate‑impact claims? | Regulations cannot be read to insulate plans from MSPA or to foreclose conditional payments where a plan’s underpayment forces Medicare to pay; where regs conflict with statute the court should not defer. | Defendants rely on regulations that limit conditional payment or allow uniform service limits. | Court: Declined to defer to agency interpretations that conflict with the MSPA’s text and purpose; regulations do not categorically bar conditional payments or preclude discrimination claims here. |
Key Cases Cited
- Bio‑Med. Applications of Tenn., Inc. v. Cent. States Se. & Sw. Areas Health & Welfare Fund, 656 F.3d 277 (6th Cir. 2011) (interpreting MSPA private cause of action and linking discrimination to Medicare conditional payments)
- Texas Dep’t of Hous. & Cmty. Affairs v. Inclusive Cmtys. Project, Inc., 576 U.S. 519 (2015) (catchall statutory language can support disparate‑impact claims where text looks to consequences)
- Cigna Corp. v. Amara, 563 U.S. 421 (2011) (limits on § 1132(a)(1)(B) relief and role of equitable remedies to reform plans)
- Chevron U.S.A. Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984) (framework for judicial deference to reasonable agency interpretations)
- Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) (Article III standing requires concrete injury)