City of Hope Nat. Medical Center v. Healthplus, Inc.

• Citation: 156 F.3d 223
• Decision Date: 11 September 1998
• Docket Number: No. 98-1038,98-1038
• Parties: 22 Employee Benefits Cas. 1914 CITY OF HOPE NATIONAL MEDICAL CENTER, Plaintiff, Appellant, v. HEALTHPLUS, INC., Defendant, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

Page 223

156 F.3d 223

22 Employee Benefits Cas. 1914

CITY OF HOPE NATIONAL MEDICAL CENTER, Plaintiff, Appellant, v. HEALTHPLUS, INC., Defendant, Appellee.

No. 98-1038.

United States Court of Appeals First Circuit.

Submitted July 28, 1998.

Decided Sept. 11, 1998.

Gary L. Tysch on brief for appellant.

Jorge E. Perez Diaz and Jose W. Vazquez Matos on brief for appellee.

Before SELYA, BOUDIN and LIPEZ, Circuit Judges.

LIPEZ, Circuit Judge.

Plaintiff-appellant City of Hope National Medical Center (City of Hope) filed an action asserting that defendant-appellee Health Plus, Inc. (HPI) and others were obligated to pay City of Hope for its treatment of Maria D. Diaz for leukemia. City of Hope appeals from the judgment entered in the district court granting defendants' motions for a summary judgment, primarily on the basis of the non-assignability of Diaz's rights pursuant to two health insurance policies. We affirm.

I.

Maria D. Diaz was diagnosed with myeloid leukemia in 1992. After initial treatment in Puerto Rico, she experienced a period of remission. In late 1992, however, Diaz suffered a relapse of her cancer that required additional treatment. Diaz was referred by her treating physicians to Memorial Sloane-Kettering Hospital in New York City for consultation and further treatment. In January 1993, Diaz was referred by doctors at Memorial Sloane-Kettering to City of Hope in Duarte, California with a recommendation that Diaz undergo high-dose chemotherapy with allogenic bone marrow transplantation (HDCT/ABMT). Diaz was admitted to City of Hope in January 1993. Diaz received extensive treatment for her leukemia at City of Hope (including HDCT/ABMT), ultimately receiving services costing in excess of $250,000.

After Diaz's admission and the commencement of her treatment, City of Hope sought coverage for Diaz's medical expenses from her health insurers. Diaz had two sources of health insurance: Segurio de Servicio de Salud de Puerto Rico, Inc. (Triple-S) was her primary insurance carrier (offered through her employer) and PCA Health Plan of Puerto Rico (formerly HealthPlus, Inc. or "HPI") was her secondary insurance carrier (offered through her husband's employer). Except under limited circumstances, only services provided by physicians and hospitals that were part of the HMO network were covered by Diaz's HPI policy; treatment outside the network was only covered if it was (i) pre-approved by the HMO or (ii) constituted emergency medical services. City of Hope did not have a contract with Diaz's HMO to provide medical services.

Triple-S denied coverage for Diaz's treatment at City of Hope because Diaz's policy did not cover HDCT/ABMT. HPI refused coverage because, inter alia, neither City of Hope nor Diaz had complied with the pre-authorization procedures mandated by Diaz's HMO policy.

In April 1993, Diaz signed a document that purported to assign her rights under her health insurance policies to City of Hope "[t]o the degree permitted under any insurance policy." The HPI health insurance policy at issue contained the following clause: "[a]ll entitlements of a member to receive covered rights are personal and may not be assigned."

Alleging a breach of the health insurance plans, City of Hope subsequently sued Triple-S, HPI, and American Airlines Employee Benefit Plan (the administrator of her husband's employer's benefit program) for benefits and attorney's fees pursuant to the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq. The three defendants filed answers and thereafter moved for a summary judgment. The district court granted summary judgment for the defendants, finding, with regard to HPI, that (i) the non-assignment clause was valid, and precluded City of Hope's claims, (ii) the services rendered by City of Hope were not "emergency medical services," and (iii) HPI was not equitably estopped from denying coverage.

City of Hope filed a timely notice of appeal. We subsequently dismissed this appeal with respect to Triple-S and American Airlines Employee Benefit Plan because City of Hope failed to raise any issue regarding the district court's grant of a summary judgment for those appellees. Thus, HPI is the sole remaining appellee.

II.

In considering a motion for summary judgment, the court's "role is to pierce the boilerplate of the pleadings and assay the parties' proof in order to determine whether a trial is actually required." Wynne v. Tufts Univ. Sch. of Med., 976 F.2d 791, 794 (1st Cir.1992), cert. denied, 507 U.S. 1030, 113 S.Ct. 1845, 123 L.Ed.2d 470 (1993). A motion for summary judgment should be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). Because the lower court makes a judgment of law, our review of a summary judgment ruling is de novo. See IAM v. Winship Green Nursing Ctr., 103 F.3d 196, 199 (1st Cir.1996).

1. The Rights of City of Hope Pursuant to Diaz's Assignment

City of Hope argues that it is a party to a valid assignment from Diaz. That contention requires us to address the following issues: (i) whether ERISA permits the assignment of benefits under ERISA-regulated health insurance plans; (ii) whether City of Hope has standing under ERISA to assert its claim as assignee; (iii) whether the non-assignment provision in Diaz's contract violates public policy, and; (iv) whether the non-assignment provision bars City of Hope's claim.

a. The Assignability of Health Care Benefits Under ERISA

In Mackey v. Lanier Collection Agency & Service, Inc., 486 U.S. 825, 108 S.Ct. 2182, 100 L.Ed.2d 836 (1988), the Supreme Court addressed whether ERISA allowed or prohibited the garnishment of benefits under ERISA-regulated welfare plans. ¹ The Court noted that while Congress prohibited the assignment or alienation of benefits under pension plans, 29 U.S.C. § 1056(d)(1), Congress did not include such a ban on the assignment of benefits under welfare plans, and reasoned that "Congress' decision to remain silent concerning the attachment or garnishment of ERISA welfare plan benefits 'acknowledged and accepted the practice, rather than prohibiting it.' " Id. at 837-38, 108 S.Ct. 2182 (quoting Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 516, 101 S.Ct. 1895, 68 L.Ed.2d 402 (1981)).

Congress prohibited the assignment of pension benefits "[t]o further ensure that the employee's accrued benefits are actually available for retirement purposes." H.R.Rep. No. 807, 93d Cong., 2d Sess. 68 (1974), reprinted in 1974 U.S.C.C.A.N. 4639, 4670, 4734. By contrast, the assignability of welfare plan benefits may further the goal of ERISA "to promote the interests of employees and their beneficiaries in employee benefit plans." Shaw v. Delta Air Lines, 463 U.S. 85, 90, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983). For example, "assignment to a health care provider facilitates rather than hampers the employee's receipt of health benefits." Hermann Hosp. v. MEBA Med. and Benefits Plan, 845 F.2d 1286, 1289 (5th Cir.1988). Given these considerations, we agree with other circuits that the logic of the Supreme Court's decision in Mackey allowing the garnishment of benefits under ERISA-regulated welfare plans allows the assignment generally of welfare benefits under such plans. See Davidowitz v. Delta Dental Plan of California, 946 F.2d 1476, 1478 (9th Cir.1991) (holding that "ERISA does not preclude welfare plan benefit assignments" and citing Mackey ); St. Francis Regional Med. Ctr. v. Blue Cross and Blue Shield of Kansas, Inc., 49 F.3d 1460, 1464 (10th Cir.1995) (citing Mackey for the proposition that "Congress did not intend to enact a policy precluding [welfare plan benefits] assignability").

b. City of Hope's Standing to Sue Under ERISA

Despite our conclusion that ERISA permits the assignment of welfare plan benefits, we must address the basis for City of Hope's standing to file its ERISA lawsuit pursuant to such an assignment. ERISA specifically enumerates the parties with standing to sue to enforce ERISA's provisions: participants, beneficiaries, fiduciaries and the Secretary of Labor. ² Under ERISA, a "beneficiary" is defined as "a person ³ designated by a participant ... who is or may become entitled to a benefit" under the plan. 29 U.S.C. § 1002(8). "Participant" is defined as "any employee or former employee of an employer ... who is or may become eligible to receive a benefit of any type from an employee benefit plan which covers employees of such employer ... or whose beneficiaries may be eligible to receive any such benefit." 29 U.S.C. § 1002(7). Commenting on the exclusive nature of ERISA's list of parties with standing, the Supreme Court has cautioned that "[t]he assumption of inadvertent omission is rendered especially suspect upon close consideration of ERISA's interlocking, interrelated, and interdependent remedial scheme, which is in turn part of a 'comprehensive and reticulated statute.' " Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 146, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985) (quoting Nachman Corp. v. Pension Benefit Guar. Corp., 446 U.S. 359, 361, 100 S.Ct. 1723, 64 L.Ed.2d 354 (1980)). Thus, when we previously considered ERISA's standing provision, we stated that "since Congress has carefully catalogued a selected list of persons eligible to sue under ERISA, there is no plausible rationale for us gratuitously to enlarge the roster." Kwatcher v. Massachusetts Serv. Employees Pension Fund, 879 F.2d 957, 965 (1st Cir.1989).

In light of ERISA's comprehensiveness and the Supreme Court's admonition to avoid expanding ERISA's class of plaintiffs, the Third Circuit has refused to recognize assignee standing under ERISA: "Congress simply made no provision in § 1132(a)(1)(B) for persons other than participants and beneficiaries to...