Hermann Hosp. v. MEBA Medical & Benefits Plan

• Decision Date: 26 May 1988
• Docket Number: No. 87-2672,87-2672
• Citation: 845 F.2d 1286
• Parties: , 9 Employee Benefits Ca 2473 HERMANN HOSPITAL, Plaintiff-Appellant, v. MEBA MEDICAL & BENEFITS PLAN, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1286

845 F.2d 1286

57 USLW 2068, 9 Employee Benefits Ca 2473

HERMANN HOSPITAL, Plaintiff-Appellant, v. MEBA MEDICAL & BENEFITS PLAN, Defendant-Appellee.

No. 87-2672.

United States Court of Appeals,

Fifth Circuit.

May 26, 1988.

Gail Magers, Houston, Tex., for plaintiff-appellant.

Andrew R. Harvin, Houston, Tex., Bettina B. Plevan, Elizabeth A. Alcron, Proskauer, Rose, Goetz & Mendelsohn, New York City, for defendant-appellee.

Appeal from the United States District Court for the Southern District of Texas.

Before GARWOOD and JONES, Circuit Judges, and FISHER ^*, District Judge.

EDITH H. JONES, Circuit Judge:

This action was brought by Hermann Hospital of Houston, Texas against MEBA pursuant to the Employee Retirement Income Security Act of 1974, Sec. 401 et seq., 29 U.S.C. Sec. 1001 et seq., to recover benefits owed to Patricia Nicholas under the terms of an ERISA-governed welfare benefit plan. Hermann's amended complaint also asserts state common law claims for breach of fiduciary duty, negligence, equitable estoppel, breach of contract and fraud. The district court dismissed the complaint pursuant to Fed.R.Civ.Proc. 12(b)(1) and 12(b)(3) for lack of subject matter jurisdiction after concluding that the hospital did not have standing to sue under ERISA either in its own right or derivatively as an assignee of Patricia Nicholas. The district court further found that Plaintiff's common law claims were preempted by ERISA, and that therefore diversity jurisdiction could not be maintained. We agree that the state claims are preempted by

ERISA, but we also hold that if Hermann was an assignee of Mrs. Nicholas's benefits, it had standing under ERISA to sue for them. We affirm in part, reverse in part, and remand.

FACTS

Hermann Hospital rendered $341,920.96 in medical services to Patricia Nicholas, the spouse of a participant in MEBA's health plan. Mrs. Nicholas was admitted to Hermann Hospital on May 13, 1982, and remained there until her death six months later. Upon entering the hospital, Nicholas signed an assignment of benefits to Hermann Hospital. At that time, a MEBA agent verified Nicholas's coverage to the hospital. During Nicholas's hospitalization and after her death, the hospital made unsuccessful efforts to obtain payment from MEBA, which asserted that the claim had neither been approved nor denied, but was being "investigated." After two years, the hospital brought this suit, premising federal jurisdiction on ERISA and diversity grounds. ¹

ANALYSIS

Hermann asserts standing to sue either as a "non-enumerated party" under 29 U.S.C. Sec. 1132(a) or as an assignee of the rights of Mrs. Nicholas, who is an enumerated party according to the same provision. We address these contentions in turn.

I. Independent Standing

Section 502 of ERISA, 29 U.S.C. Sec. 1132(a) (1976), provides that a civil action may be brought under ERISA by a plan "participant," "beneficiary," or "fiduciary," or by the Secretary of Labor. ² That provision, 29 U.S.C. Sec. 1132(e)(1), also confers exclusive jurisdiction on federal courts to hear these actions. Hermann does not contend that it falls among the parties statutorily authorized by Sec. 1132(a). Whether standing to sue under ERISA is exclusive to these three types of parties has been the subject of much debate, ³ and the federal appeals courts, as well as the parties to this case, differ on the issue.

The Ninth Circuit has held that certain "non-enumerated" parties have standing to sue ⁴ based on a three-part test for determining "implied" statutory authority to sue. ⁵ Fentron Industries v. National Shopmen Pension Fund, 674 F.2d 1300 1304 (9th Cir.1982). In that case, an employer whose employees were covered by an ERISA plan was held a non-enumerated party with standing to sue for a union pension fund's cancellation of certain benefits to the company's employees. Courts agreeing with Fentron reason that the correct inquiry in defining standing under a federal statute "is not whether the national legislature affirmatively intended to bar suits by ... [parties] not specifically identified in Sec. 1132[a]'s laundry list, but whether Congress affirmatively intended that unnamed others should be permitted access to the federal forum." Intern. Union of Bricklayers v. Menard & Co., 619 F.Supp. 1457, 1460 (D.R.I.1985). See also Airco Industrial Gases v. Teamsters Health and Welfare Pension Fund, 618 F.Supp. 943 (D.Del.1985).

The Second Circuit has rejected the "non-enumerated party" standing concept. Pressroom Unions Printers League Income Security Fund v. Continental Assurance Co., 700 F.2d 889 (2d Cir.1983), cert. denied, 464 U.S. 845, 104 S.Ct. 148, 78 L.Ed.2d 138 (1983). ⁶ The court criticized Fentron's analysis:

In our view, the Fentron court applied an inappropriate standard in resolving this issue. We focus not on whether the legislative history reveals that Congress intended to prevent actions by employers or other parties, but instead on whether there is any indication that the legislature intended to grant subject matter jurisdiction over suits by employers, funds, or other parties not listed in Sec. 1132(e)(1). 700 F.2d at 892.

The court's decision was founded on the jurisdictional principle stated by the Supreme Court in Rice v. Railroad Co., 66 U.S. (1 Black) 358, 374, 17 L.Ed. 147 (1861), and affirmed in later decisions ⁷, that "only Congress is empowered to grant and extend subject matter jurisdiction of the federal judiciary, and ... courts are not to infer a grant of jurisdiction absent clear legislative mandate." Pressroom, 700 F.2d at 888. Applying this rule, the silence of ERISA's legislative history ⁸ concerning the scope of Secs. 1132(a) and (e)(1) indicates that it should be considered an exclusive jurisdictional grant. ⁹

We may prefer the reasoning of the Second Circuit without endorsing the particular result it reached. ¹⁰ Where Congress has defined the parties who may bring a civil action founded on ERISA, we are loathe to ignore the legislature's specificity. Moreover, our previous decisions have hewed to a literal construction of Sec. 1132(a). In Yancy v. American Petrofina, Inc., 768 F.2d 707, 708 (5th Cir.1985), this court refused to allow the plaintiff to bring an ERISA action after determining that he was not a plan "participant" within the meaning accorded that term by the statute. See also Joseph v. New Orleans Elec. Pension, 754 F.2d 628 (5th Cir.1985) (retirees who had chosen to receive lump-sum retirement benefits in lieu of a continuing monthly benefit found not "participants" within meaning of ERISA and thus lacked standing to sue); Jackson v. Sears Roebuck & Co., 648 F.2d 225 (5th Cir.1981); Nugent v. Jesuit High School of New Orleans, 625 F.2d 1285 (5th Cir.1980) (former employee lacked standing because his benefits were not vested at the time of his termination, and he therefore could not be characterized as a "participant"). ¹¹ Although our evaluation of the ERISA standing issues in these cases was limited to determining whether the plaintiffs fit into an enumerated class of litigants under Sec. 1132(a), the analysis is consistent with rejection of Fentron's implied statutory standing concept. We therefore conclude that Hermann Hospital has no standing as a "non-enumerated party" to pursue an action described in Sec. 1132(a).

II. Derivative Standing

The hospital alternatively asserts that it has derivative standing to sue because it is the assignee of Nicholas's health benefits. This contention assumes that ERISA allows the assignment of health care benefits and that a valid assignment has been made. We agree with the first assumption but are unable to decide the second one, as it raises issues on which the district court did not rule.

Lacking authority from our circuit, we find persuasive the Ninth Circuit's decision, in Misic v. Building Service Employee's Health, 789 F.2d 1374, 1377 (9th Cir.1986), that ERISA health care benefits are assignable. ERISA contains no anti-assignment provision with regard to health care benefits of ERISA-governed medical plans, nor is there any language in the statute which even remotely suggests that such assignments are proscribed or ought in any way to be limited. As Misic notes, the existence of an elaborate and complex statutory anti-assignment clause for ERISA pension benefits makes significant the complete absence of an anti-assignment clause applicable to ERISA health benefits, see Misic, 789 F.2d at 1376, especially in light of the Supreme Court's recognition of ERISA as "comprehensive and reticulated." Nachman Corp. v. Pension Benefits Guaranty Corp., 446 U.S. 359, 361, 100 S.Ct. 1723, 1726, 64 L. Ed. 2d 354, 358 (1980). Moreover, the purpose of ERISA's proscription on assignment of pension benefits, "[t]o further insure that the employees' accrued benefits are actually available for retirement purposes," ¹² would not be served by applying it to health care benefits. An assignment to a health care provider facilitates rather than hampers the employee's receipt of health benefits. ¹³ 789 F.2d at 1376-77. These factors comprise sufficient evidence of Congress' intention to allow the assignment of health benefits. ¹⁴

Although we conclude that Hermann would have standing to sue in federal court as an assignee of a plan beneficiary under 29 U.S.C. Sec. 1132(a), we cannot determine on the appellate record whether Hermann was an assignee. Mrs. Nicholas apparently executed a form assignment of benefits when she entered the hospital, but MEBA contends such assignments were not permitted by its plan at that time. Hermann responds that even if the executed assignment is invalid, MEBA is estopped, by its deceptive assurances of coverage, from denying Hermann's assignment. Hermann alternatively implies that, regardless of its specific plan provision, MEBA had in practice accepted assignments to health care providers. The district court did not address any of these issues, and we leave...