Spinedex Physical Therapy USA Inc. v. United Healthcare of Arizona, Inc.
770 F.3d 1282
| 9th Cir. | 2014Background
- Spinedex Physical Therapy treated patients covered by up to 44 ERISA-governed health plans for which United Healthcare acted as claims administrator (and insurer for many plans).
- Patients signed forms including an Assignment (assigning “rights and benefits” to Spinedex) and an Authorization to let Spinedex pursue payment/appeals.
- Spinedex sought payment from United for denied claims; some payments were made, many were denied. Spinedex did not bill patients for unpaid balances.
- Spinedex (as assignee), Arizona Chiropractic Society (ACS), and two individual beneficiaries (Adams, Aragon) sued under 29 U.S.C. § 1132 alleging denial of benefits and breaches of fiduciary duty. The district court granted summary judgment to defendants.
- On appeal the Ninth Circuit reversed in part, affirmed in part, vacated in part, and remanded: key holdings include that Spinedex has Article III standing as an assignee to sue for benefits, Spinedex was not assigned fiduciary‑duty claims, ACS lacks associational standing, certain individual and plan‑specific limitations/exhaustion and anti‑assignment issues required further analysis.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Article III standing of Spinedex as assignee to sue for benefits | Assignee Spinedex stands in assignors’ shoes and therefore has Article III standing to sue for benefits | No standing because patients were not injured (Spinedex never billed them), so assignee has no injury in fact | Spinedex has Article III standing as assignee to pursue benefits claims (assignee inherits assignor’s injury at time of assignment) |
| Whether assignments conveyed breach‑of‑fiduciary‑duty claims to Spinedex | Assignment’s language (“rights and benefits”) includes broad “rights,” so fiduciary claims transferred | Assignment focused on payment of benefits; no clear intent to transfer fiduciary claims | Assignment did not convey fiduciary‑duty causes of action to Spinedex; those claims remain with beneficiaries |
| Associational standing of Arizona Chiropractic Society (ACS) to seek injunctive/declaratory relief | ACS represents members injured by systemic underpayment/denial and may pursue prospective relief | Relief would require individualized member participation because injuries and treatments vary | ACS lacks associational standing because resolution would require individualized member participation |
| Enforceability of plan limitation periods; exhaustion and anti‑assignment defenses | Many SPDs either do not clearly state limitations/exhaustion or misplace limits; some plans permit assignment; some claims should be deemed exhausted due to administrators’ procedural failures | Defendants assert enforceable SPD limitations, exhaustion failures, and valid anti‑assignment clauses (e.g., Discount Tire Plan) | Two‑year limitations in Martz Agency and Acoustic Tech SPDs unenforceable (not properly disclosed). Adams’ fiduciary claim time‑barred; Aragon’s fiduciary claim not subject to exhaustion rule and was wrongly dismissed; Discount Tire anti‑assignment clause enforced; exhaustion and proper‑defendant issues remanded for claim‑by‑claim analysis |
Key Cases Cited
- Sprint Communications Co. v. APCC Servs., Inc., 554 U.S. 269 (2008) (assignees, including those for collection, can have Article III standing)
- Vermont Agency of Nat. Res. v. United States ex rel. Stevens, 529 U.S. 765 (2000) (assignee has standing to assert injury in fact suffered by assignor)
- Misic v. Building Serv. Emps. Health & Welfare Trust, 789 F.2d 1374 (9th Cir. 1986) (assignor/assignee principles in ERISA context)
- HCA Health Servs. of Ga. v. Employers Health Ins. Co., 240 F.3d 982 (11th Cir. 2001) (provider‑assignee has standing to recover benefits)
- Scharff v. Raytheon Co. Short Term Disability Plan, 581 F.3d 899 (9th Cir. 2009) (SPD placement and disclosure requirements for restrictive provisions)
- Cyr v. Reliance Standard Life Ins. Co., 642 F.3d 1202 (9th Cir. 2011) (proper defendants under § 1132(a)(1)(B) can include insurers/actors whose individual liability is established)
- Harlick v. Blue Shield of California, 686 F.3d 699 (9th Cir. 2012) (plan administrators may not assert new reasons for denial in court that were not given during administrative process)