Am. Psychiatric Ass'n v. Anthem Health Plans, Inc.

• Decision Date: 13 May 2016
• Docket Number: No. 14–3993–cv.,14–3993–cv.
• Citation: 821 F.3d 352
• Parties: AMERICAN PSYCHIATRIC ASSOCIATION, on behalf of its members and their patients, et al., Plaintiffs–Appellants, v. ANTHEM HEALTH PLANS, INC., et al., Defendants–Appellees.
• Court: U.S. Court of Appeals — Second Circuit

821 F.3d 352

AMERICAN PSYCHIATRIC ASSOCIATION, on behalf of its members and their patients, et al., Plaintiffs–Appellants

v.ANTHEM HEALTH PLANS, INC., et al., Defendants–Appellees.

No. 14–3993–cv.

United States Court of Appeals, Second Circuit.

Argued: Sept. 21, 2015.

Decided: May 13, 2016.

Aaron M. Panner (Matthew A. Seligman, on the brief), Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C., Washington, D.C., for Plaintiffs–Appellants.

Peter R. Bisio (Jessica L. Ellsworth, Erica K. Songer, Sean Marotta, on the brief), Hogan Lovells U.S. LLP, Washington, D.C., for Defendants–Appellees.

D. Brian Hufford and Jason S. Cowart, Zuckerman Spaeder LLP, New York, N.Y., and David A. Reiser, Washington, D.C., for Amici Curiae American Medical Association and Connecticut State Medical Society in support of Plaintiffs–Appellants.

Before: WALKER and RAGGI,¹ Circuit Judges.

JOHN M. WALKER, JR.

, Circuit Judge:

Plaintiffs–Appellants are two individual psychiatrists, Susan Savulak, M.D., and Theodore Zanker, M.D. (“the psychiatrists”), and three professional associations of psychiatrists, the American Psychiatric Association, the Connecticut Psychiatric Society, Inc., and the Connecticut Council of Child and Adolescent Psychiatry (collectively, “the associations”). They brought suit in the United States District Court for the District of Connecticut against Defendants–Appellees, four health-insurance companies: Anthem Health Plans, Inc. (doing business as Anthem Blue Cross & Blue Shield of Connecticut); Anthem Insurance Companies, Inc. (doing business as Anthem Blue Cross and Blue Shield); Wellpoint, Inc.; and Wellpoint Companies, Inc. (collectively, “the health insurers”). The psychiatrists and the associations allege that the health insurers' reimbursement practices discriminate against patients with mental health and substance use disorders in violation of the Mental Health Parity and Addition Equity Act of 2008 (“MHPAEA”), Pub.L. No. 110–343, Div. C §§ 511–12, 122 Stat. 3861,

3881, codified at 29 U.S.C. § 1185(a), and the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1001 –1461. The associations brought suit on behalf of their members and their members' patients, while the psychiatrists brought suit on behalf of themselves and their patients. The district court dismissed the case after concluding that the psychiatrists lacked a cause of action under the statute and the associations lacked constitutional standing to pursue their respective claims. We AFFIRM.

BACKGROUND

The psychiatrists and the associations allege that the health insurers discriminate against patients with mental health and substance use disorders by systemically reimbursing providers of services to treat these disorders at a less favorable rate than for other healthcare services. They argue that this less favorable reimbursement policy prevents many psychiatrists from accepting health insurance. The policy limits patients' access to necessary services and frequently forces them to change providers. Plaintiffs allege that this practice discriminates against patients with mental health and substance use disorders in violation of the MHPAEA and ERISA.

Congress enacted the MHPAEA to end discrimination in the provision of insurance coverage for mental health and substance use disorders as compared to coverage for medical and surgical conditions in employer-sponsored group health plans. See Coalition for Parity, Inc. v. Sebelius, 709 F.Supp.2d 10, 13 (D.D.C.2010)

. The MHPAEA expanded the scope of prior legislation, the Mental Health Parity Act of 1996, Pub.L. No. 104–204, §§ 701–02, 110 Stat. 2874, 2944.

Under the MHPAEA, if a covered insurer's “plan or coverage” does not include aggregate lifetime limits “on substantially all medical and surgical benefits, the plan or coverage may not impose any aggregate lifetime limit on mental health or substance use disorder benefits.” 29 U.S.C. § 1185a(a)(1)(A)

. The same is true with respect to annual limits. Id. § 1185a(a)(2)(A). Additionally, if an insurer “provides both medical and surgical benefits and mental health or substance use disorder benefits,” the insurer must ensure that both “the financial requirements” and “the treatment limitations” applicable to mental health and substance use disorder benefits “are no more restrictive” than the predominant financial requirements and treatment limitations that apply to medical and surgical benefits. Id. § 1185(a)(3)(A).

Insurers are forbidden, for example, from having either “separate cost sharing requirements that are applicable only with respect to mental health or substance use disorder benefits,” § 1185(a)(3)(A)(i)

, or “separate treatment limitations that are applicable only with respect to mental health or substance use disorder benefits,” id. § 1185(a)(3)(A)(ii) ; see also 26 U.S.C. § 9812(a)(3) (parallel provisions in Internal Revenue Code); 42 U.S.C. § 300gg–5(a) (“A group health plan and a health insurance issuer offering group or individual health insurance coverage shall not discriminate with respect to participation under the plan or coverage against any health care provider who is acting within the scope of that provider's license or certification under applicable State law.”).

The psychiatrists and the associations, on behalf of their various patients and members (and in the case of Dr. Savulak, as assignee of two of her patients), allege that the health insurers' conduct violates the foregoing anti-discrimination provisions of the MHPAEA and breaches the insurers' fiduciary duties under § 502(a)(3) of ERISA. The psychiatrists and the associations also allege state-law claims for breach of contract and tortious interference with contract. The complaint seeks a declaration of the health insurers' obligations under the MHPAEA; an order enjoining the health insurers from continuing to discriminate against individuals with mental health and substance use disorders; and damages related to the state-law claims.

The district court (Janet Bond Arterton, J. ) dismissed the action. The district court concluded that the psychiatrists lack third-party “statutory standing” to bring claims on behalf of their patients. The district court also rejected Dr. Savulak's distinct assignee-based theory of a cause of action. The district court assumed without deciding that the assignments of ERISA claims made by two patients to Dr. Savulak were not precluded by the anti-assignment provisions of their plans. But the district court concluded that the assignment conveyed legal rights only, and moreover that the complaint did not plead any facts suggesting that the assignment was in exchange for medical treatment, as required for a provider to have a cause of action under ERISA. More generally, the district court held that the physician-patient relationship does not grant third-party standing in this case because the psychiatrists asserted no constitutional claims on behalf of their patients and because the statutes at issue did not broadly confer a private right of action upon providers. Finally, the district court found that the associations lacked constitutional standing because their individual members lacked standing.

Although the district court concluded that the psychiatrists and the associations lacked standing, it went on to address the health insurers' argument that the psychiatrists and the associations had failed to state a claim.

The district court first rejected the psychiatrists' and the associations' contention that the health insurers were acting as fiduciaries “with respect to a plan” under ERISA § 3(21)(A), 29 U.S.C. § 1002(21)(A)

.² The district court determined that the health insurers' setting of system-wide reimbursement rates and polices regarding the extent of coverage was a business decision that—unlike discretionary determinations about an individual claimant's eligibility for benefits—does not constitute a fiduciary act under ERISA. The court also held that even if the insurers were acting as fiduciaries, ERISA § 502(a)(1)(B) provides adequate relief, thus requiring dismissal of the ERISA § 501(a)(3) claims.

The district court accordingly dismissed plaintiffs' federal claims and declined to exercise supplemental jurisdiction over their state claims. Plaintiffs appeal. Because we agree that plaintiffs lack standing, it is unnecessary for us to address the district court's determination that the complaint failed to state a claim.

DISCUSSION

We review de novo the district court's determination on standing. W.R. Huff Asset Mgmt. Co. v. Deloitte & Touche LLP, 549 F.3d 100, 106 (2d Cir.2008)

. “Because standing is challenged on the basis of the pleadings, we accept as true all material allegations of the complaint, and must construe the complaint in favor of the complaining party.” Id. (internal quotation marks omitted).

I. The psychiatrists lack standing.

We reject the psychiatrists' argument that they have standing to assert their ERISA § 502(a)(3) claims as third parties bringing suit on behalf of their patients. As we shall explain, this argument conflates the prudential third-party standing doctrine with the requirement that the plaintiff have a cause of action under the statute—a requirement formerly known as “statutory standing.”

We begin by briefly noting the parameters of constitutional standing, prudential standing, and what was formerly known as “statutory standing,” the differences between them, and their relationships to one another.

Constitutional standing refers to the requirement that parties suing in federal court establish that a “Case” or “Controversy” exists within the meaning of Article III of the United States Constitution. Constitutional standing requires (1) that the plaintiff have suffered an “injury in fact”—that is, “an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical”; (2) that there is “a causal connection between the injury and the...