Omega Hosp., LLC v. United Healthcare Servs., Inc.
345 F. Supp. 3d 712
M.D. La.2018Background
- Omega Hospital sued United Healthcare alleging ERISA violations and state-law claims based on United's post-payment audits and recoupment practices (including cross-plan offsets) that reduced payments to Omega after United determined prior overpayments.
- Omega brought claims derivatively as an assignee for two ERISA-plan representative patients ("SJ" and "LL") and a non-ERISA representative ("DB"); Omega also sought class treatment for ERISA and non-ERISA provider classes.
- United moved to dismiss arguing lack of standing (assignments invalid/insufficient), failure to exhaust plan remedies, failure to plead plausible ERISA claims, and lack of supplemental jurisdiction over state-law claims.
- The court treated United's current standing attack as a factual attack (United produced assignment/plan documents), considered La. R.S. § 40:2010, and analyzed whether Omega’s assignment forms conferred derivative standing and authority to seek prospective/fiduciary relief.
- The court dismissed claims on various grounds: LL-based ERISA claims for lack of standing; SJ’s Section 502(a)(1)(B) benefits claim and Section 503 (full-and-fair-review) claim with prejudice for failure to state a claim; fiduciary (§ 502(a)(3)) claims for lack of standing; state-law claims declined for lack of supplemental jurisdiction (dismissed without prejudice).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of provider assignments (La. R.S. § 40:2010 v. plan anti-assignment clauses) | La. statute preserves hospital assignments and transfers ERISA §502 enforcement rights to providers; assignments are valid despite plan anti-assignment language. | Plan anti-assignment clauses bar transfers of contract rights; §40:2010 does not invalidate plan terms and is preempted by ERISA (per Gobeille). | Court followed Fifth Circuit precedent (Rapides) and held §40:2010 valid as applied; plan anti-assignment clauses do not defeat assignments that comply with §40:2010. |
| Sufficiency/ambiguity of Omega’s assignment form (assignee vs. authorized representative) | Assignment form valid and may confer both assignee and authorized-rep status so provider can pursue administrative appeals and lawsuits. | Form is internally contradictory and therefore unenforceable; cannot be both assignee and authorized representative. | Court found no incompatibility; allowed dual status and denied dismissal on this ground. |
| Standing as to patient LL (absence of an assignment) | Omega implied an assignment existed for LL; United previously paid Omega so assignment must have been provided. | United's file contains only a one-year authorization (authorized representative), not an assignment; no assignment produced. | Court found no evidence of an assignment for LL, concluded Omega lacks derivative standing as to LL; LL-based ERISA claims dismissed without prejudice. |
| Standing to seek prospective/fiduciary relief (§502(a)(3)) | Assignment language broadly assigns "rights and benefits" and suits; Omega contends Article III standing was already established. | Assignments do not expressly and knowingly assign non-benefits fiduciary or prospective claims; ERISA fiduciary claims require explicit assignment. | Court held Omega's assignments did not expressly assign fiduciary/prospective relief; dismissed Counts III and IV (fiduciary claims) for lack of derivative standing. |
| Exhaustion and procedural-review claim (§1133/§503) | Omega pleaded it objected in writing to overpayment notices and was denied meaningful access to plan appeals (United failed to identify plan provisions), so exhaustion is excused. | Omega failed to exhaust available ERISA administrative remedies and cannot rely on informal letters. | Court found Omega plausibly alleged denial of meaningful access to claims procedures (per 29 C.F.R. §2560.503-1) and excused exhaustion for present pleading on that basis. |
| Plausibility of benefits claim (§1132(a)(1)(B)) alleging cross-plan offsets | Omega alleges United recouped overpayments by reducing unrelated patients’ payments (cross-plan offset) and seeks recovery of withheld/recouped amounts. | Omega failed to identify plan terms that entitle SJ/LL to the benefits that were recouped via offsets executed by other plans; plaintiffs whose plans effectuated offsets must sue. | Court held Omega failed to plausibly plead that SJ (the ERISA representative) was entitled to recover amounts recouped by unrelated plans; Count I dismissed with prejudice for failure to state a claim. |
| Section 503/§1133 standalone claim and proper defendant | Omega seeks equitable relief for failure to provide full-and-fair review and regulatory disclosures. | Section 1133/§503 claims are against the plan (not plan administrator) and may not create a standalone compensatory cause of action against non-plan defendants. | Court treated the requested relief as equitable but held §503 claims must be brought against the Plan itself; Count II dismissed with prejudice for failure to state a claim. |
Key Cases Cited
- La. Health Serv. & Indem. Co. v. Rapides Healthcare Sys., 461 F.3d 529 (5th Cir. 2006) (held La. R.S. §40:2010 is not preempted by ERISA and assignment statute transfers ERISA §502 rights to hospitals)
- Gobeille v. Liberty Mut. Ins. Co., 136 S. Ct. 936 (2016) (ERISA preemption applies where state law imposes reporting/recordkeeping duties that interfere with national plan administration)
- Innova Hosp. San Antonio, L.P. v. Blue Cross & Blue Shield of Ga., Inc., 892 F.3d 719 (5th Cir. 2018) (plaintiffs pleading §1132(a)(1)(B) need not identify every plan provision at pleading stage but must plausibly allege entitlement to benefits)
- Aetna Health Inc. v. Davila, 542 U.S. 200 (2004) (ERISA preemption of state-law claims that duplicate or supplement ERISA enforcement scheme)
- Texas Life, Accident, Health & Hosp. Ins. Guar. Ass'n v. Gaylord Entertainment Co., 105 F.3d 210 (5th Cir. 1997) (assignment of fiduciary-breach claims requires an express and knowing assignment)
- Peterson v. UnitedHealth Grp. Inc., 242 F. Supp. 3d 834 (D. Minn. 2017) (example where plaintiffs challenged cross-plan offsetting—contextual authority relied on in analysis)