OSF Healthcare System v. Insperity Group Health Plan
82 F. Supp. 3d 860
C.D. Ill.2015Background
- Michael Gray, an Insperity health-plan participant, received inpatient care at OSF Saint Francis Medical Center from Nov–Dec 2011; charges totaled $506,209.30.
- Gray assigned his plan benefits to OSF; OSF sought payment from the plan/insurer for services rendered.
- Insperity had contracted with United (Claims Administrator/insurer) to administer and decide benefit claims under the plan.
- United paid only $97,588.04 and denied the remainder because OSF was an out-of-network provider; OSF exhausted appeals with United and sued for the unpaid balance.
- OSF sued under ERISA § 502(a)(1)(B) (29 U.S.C. § 1132(a)(1)(B)), naming Insperity (the plan) and United; Insperity moved to dismiss under Rule 12(b)(6) arguing it is not a proper defendant.
- The district court denied Insperity’s motion, holding the complaint plausibly alleges plan liability despite United’s role as claims administrator/obligor.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Insperity (the plan) is a proper defendant under § 1132(a)(1)(B) | OSF: Insperity obligated itself to provide/pay benefits and thus can be sued for unpaid benefits assigned by Gray | Insperity: It merely contracted with United to administer/pay claims and had no role in benefit decisions, so it is not the proper defendant | Court: Denied dismissal — pleadings plausibly allege Insperity remains liable to beneficiaries and may be sued under § 1132(a)(1)(B) |
| Whether Larson v. United Healthcare eliminates plan liability when a plan is fully insured | OSF: Larson does not abrogate plan liability; it merely allows suits against insurers who are obligors | Insperity: Larson (and some out-of-circuit decisions) narrows liability to the insurer when the insurer decides benefits | Court: Larson does not bar suits against plans; it explains insurer liability but does not abrogate the plan’s contractual obligations or the beneficiary’s right to sue the plan |
| Sufficiency of the complaint to survive Rule 12(b)(6) | OSF: Complaint alleges facts showing Insperity obligated to Gray and thus to OSF after assignment | Insperity: Plan documents show United was responsible for payment and benefit determinations, undermining claim against Insperity | Court: Complaint contains well-pleaded factual allegations that, taken as true, plausibly state an ERISA benefits claim against Insperity; dismissal denied |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard: plausibility)
- Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (ERISA remedial scheme for benefits)
- Larson v. United Healthcare Ins. Co., 723 F.3d 905 (insurers may be sued as obligors under § 1132(a)(1)(B))
- Cyr v. Reliance Standard Life Ins. Co., 642 F.3d 1202 (potential defendants under § 1132(a)(1)(B) not limited to plans)
- Ponsetti v. GE Pension Plan, 614 F.3d 684 (§ 1132(a)(1)(B) as contract-like remedy)
- Feinberg v. RM Acquisition, LLC, 629 F.3d 671 (proper defendant normally is the plan)