Bristol SL Holdings, Inc. v. Cigna Health & Life Ins. Co.
| Decision Date | 14 January 2022 |
| Docket Number | No. 20-56122,20-56122 |
| Citation | 22 F.4th 1086 |
| Parties | BRISTOL SL HOLDINGS, INC., a California corporation, in its capacity as the owner of the claims for Sure Haven, Inc., a California corporation, Plaintiff-Appellant, v. CIGNA HEALTH AND LIFE INSURANCE COMPANY, a Connecticut corporation; CIGNA Behavioral Health, Inc., a Connecticut corporation, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Dorothy F. Easley (argued), Easley Appellate Practice PLLC, Miami, Florida; Matthew M. Lavin and Aaron Modiano, Arnall Golden Gregory LLP, Washington, D.C.; John W. Tower, Law Office of John W. Tower, Encinitas, California; for Plaintiff-Appellant.
William P. Donovan Jr. (argued), McDermott Will & Emery LLP, Los Angeles, California, for Defendants-Appellees.
Before: Andrew J. Kleinfeld, Ryan D. Nelson, and Lawrence J. VanDyke, Circuit Judges.
At issue is a dispute between a healthcare treatment center (Sure Haven, and Bristol as its assignee) and an insurance company (Cigna) over approximately $8.6 million worth of services that Sure Haven provided to Cigna's insureds. The crux of the disagreement is whether Sure Haven entered into an enforceable agreement with Cigna to treat patients covered by Cigna through a series of "verification" and "authorization" phone calls that Sure Haven claims it relied on in providing the medical services.
Sure Haven was an accredited mental-health and substance-abuse treatment center that regularly serviced patients insured by Cigna. According to Bristol, Sure Haven went out of business and was forced into bankruptcy when Cigna abruptly stopped reimbursing for services provided, ultimately refusing to pay Sure Haven for services it rendered to 106 Cigna-insured patients. Bristol became the successor-in-interest to Sure Haven through a bankruptcy proceeding.
Sure Haven was an out-of-network provider for Cigna, which meant that the two parties did not have a standing contract governing medical rates and coverage. Sure Haven would therefore regularly call Cigna to verify coverage and get approval for various services before performing treatment. This process included at least one verification call and authorization call per covered patient. The verification call served to ensure at the outset that the patient's insurance was active and included out-of-network services. Once verified, Sure Haven would make authorization calls before providing specific services to the patients to ensure that Cigna would approve the service. During the period at issue here, Sure Haven made 106 verification calls (one for each patient) and 706 authorization calls to Cigna.
The parties heavily dispute what these calls included and established. According to Bristol, Sure Haven's verification calls with Cigna included establishing a percentage reimbursement of the "usual, customary, and reasonable rate" (UCR), which means the percentage of costs that Cigna would cover for a given patient's services. Cigna would give varying percentages of UCR for each of the 106 patients. After the UCR percentage was established, Sure Haven would make follow-up authorization calls to Cigna for pre-approval of specific services. When Cigna permitted a service, it would give a "unique ‘authorization number’ " to confirm prior approval when Sure Haven billed for that provided service. The parties continued this practice for almost a year, with Sure Haven providing reimbursable services worth over $8.6 million to Cigna insured patients, which Cigna stopped reimbursing. Bristol alleges that Cigna continued authorizing treatment during this time despite deciding internally not to pay these claims.
Cigna tells a different story. According to Cigna, the verification calls established only that the insured had out-of-network benefits and other related information (e.g., deductibles, out-of-pocket maximums, etc.). For out-of-network providers, payment could not be determined until after the claim was received, reviewed, and justified. And contrary to Bristol's claims, nowhere in this process were UCRs discussed, nor did any Cigna representative promise to pay a percentage of the UCR. Moreover, Cigna claims that nearly all the verification and authorization calls were automatically routed to hear certain disclaimers before any subsequent conversation. For the authorization calls, Cigna insists the following would play:
Please be aware, pre-approval is not a guarantee of coverage. Coverage and covered services are contingent upon the patient's eligibility on the date(s) services are rendered and the patient's covered services plans and policies. Coverage and covered services also may be dependent on your CIGNA HealthCare network participation. If you are not a participating provider in the plan's network, out-of-network covered services may apply.
A similar warning that the information given in a verification call "does not guarantee coverage or payment" also played automatically.
Regarding the stoppage of payments, Cigna maintains that it began denying all of Bristol's claims because Sure Haven was violating the benefit plan's requirement by not collecting the portion of the payment due from the members themselves in addition to collecting the portion due from Cigna. After it purchased all Sure Haven's claims against Cigna in Sure Haven's bankruptcy proceeding, Bristol sued Cigna as Sure Haven's assignee.
The litigation below progressed over a series of amended complaints by Bristol, with the district court eventually ruling for Cigna on all claims. Bristol's first complaint was filed in April of 2019, and asserted twelve causes of action, which Cigna moved to dismiss. The court ruled for Cigna, and granted Bristol leave to amend. In October of 2019, Bristol filed its first amended complaint, which added an Employee Retirement Income Security Act of 1974 (ERISA) claim and had ten state law claims. Most relevant for our purposes here was the district court's dismissal of the ERISA claim with prejudice. The district court ruled that Bristol lacked standing to bring a claim under ERISA because neither ERISA's text nor this circuit's case law granted standing to an assignee of a healthcare provider.1
After further evidentiary and merits proceedings in the litigation that are not relevant here, Cigna eventually moved for summary judgment on the remaining claims in Bristol's second amended complaint, which the district court granted. With final judgment rendered, Bristol brought this appeal.2
We have jurisdiction under 28 U.S.C. § 1291, and we review de novo the district court's dismissal for failure to state a claim. See DB Healthcare, LLC v. Blue Cross Blue Shield of Ariz., Inc. , 852 F.3d 868, 873 n.5 (9th Cir. 2017).
The text of ERISA authorizes "a participant or beneficiary" of an ERISA plan to bring a civil action.3 See 29 U.S.C. § 1132(a)(1)(B). Circuit case law has made clear that healthcare providers are not "beneficiaries" within the meaning of ERISA. See DB Healthcare, LLC , 852 F.3d at 874. Therefore, Spinedex Physical Therapy USA Inc. v. United Healthcare of Ariz., Inc. , 770 F.3d 1282, 1289 (9th Cir. 2014).
It is well-established that assignees are generally allowed to bring suit on behalf of the assignor. See Sprint Commc'ns Co., L.P. v. APCC Servs. , 554 U.S. 269, 275, 128 S.Ct. 2531, 171 L.Ed.2d 424 (2008) (). This general principle extends into the ERISA context. See Misic v. Bldg. Serv. Emps. Health & Welfare Tr. , 789 F.2d 1374, 1378 (9th Cir. 1986) ; Spinedex , 770 F.3d at 1288.
But there are certain limits to such derivative standing for assignees bringing ERISA claims. Most prominently, our circuit denied derivative standing to Stephen Simon, a lawyer who had acquired over 600 benefit claims assigned to him by numerous mental-health facilities, who in turn had been assigned those claims by hundreds of patients. See Simon v. Value Behav. Health, Inc. , 208 F.3d 1073, 1080 (9th Cir. 2000), amended by 234 F.3d 428 (9th Cir. 2000), and overruled on other grounds by Odom v. Microsoft Corp. , 486 F.3d 541 (9th Cir. 2007). The panel in Simon explained that we had previously only extended derivative standing to "health care providers to whom beneficiaries had assigned their benefit claims after receiving medical care from such providers." Id. at 1081. Granting standing to these healthcare providers furthered the congressional purposes behind ERISA because it enhanced the efficiency and ease of billing among all the interested parties. See id.
Id. Presented with the request to extend standing to Simon, the court concluded, "[w]e do not see how such a result would further ERISA's purpose." Id.
Looking beyond the nuanced rationale given in Simon for refusing to extend derivative standing in that case, the district court here read Simon to stand for the general proposition that "[t]he Ninth Circuit has declined to extend this derivative standing to assignees of health care providers"—period. Because Bristol is "an assignee of the health care provider," the district court concluded that it lacked derivative standing.
But a closer reading of the case law shows that much of...
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Health Law Standing Committee — 2022 Appellate Litigation Update
...authorize them to enter arbitration agreements]VII. FEES, COSTS, AND INSURANCE Bristol SL Holdings, Inc. v. Cigna Health & Life Ins. Co., 22 F.4th 1086 (9th Cir. 2022) [Sole successor-in-interest assignee of healthcare provider has derivative standing to sue insurer under ERISA]Saini v. Sut......