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No. 14-
IN THE
Supreme Court of the United States _________
UNITEDHEALTHCARE OF ARIZONA, INC., et al.,
Petitioners, v.
SPINEDEX PHYSICAL THERAPY, U.S.A., INC., et al.,
Respondents. _________
On Petition for a Writ of Certiorari to the
United States Court of Appeals
for the Ninth Circuit _________
PETITION FOR A WRIT OF CERTIORARI _________
GREGORY SILBERT
WEIL, GOTSHAL &
MANGES LLP
767 Fifth Avenue
New York, NY 10153
(212) 310-8000
MATTHEW M. SHORS
UNITEDHEALTH GROUP
INCORPORATED
9900 Bren Road East
Minnetonka, MN 55343
(952) 936-1697
NEAL KUMAR KATYAL
Counsel of Record
CATHERINE E. STETSON
FREDERICK LIU
HOGAN LOVELLS US LLP
555 Thirteenth Street, NW
Washington, DC 20004
(202) 637-5600 [email protected]
Counsel for Petitioners
(i)
QUESTION PRESENTED
Section 502(a)(1)(B) of the Employee Retirement
Income Security Act (ERISA), 29 U.S.C.
§ 1132(a)(1)(B), authorizes an ERISA plan partici-
pant to bring suit “to recover benefits due to him
under the terms of his plan.” In this case, respond-
ents brought suit against UnitedHealth Group
Incorporated and several of its subsidiaries (collec-
tively, United), seeking to recover benefits allegedly
due under a health benefits plan. United is not the
plan, the plan administrator, or the plan insurer.
Rather, United is merely a third-party claims admin-
istrator, hired to process claims for benefits. United
undisputedly has no obligation to pay benefits under
the plan. The Ninth Circuit nevertheless held that
United could be sued for “benefits due * * * under the
terms of [the] plan” in a § 502(a)(1)(B) action, deep-
ening a conflict involving nine other circuits.
The question presented is:
Whether a claims administrator with no obligation
to pay benefits under an ERISA plan is a proper
defendant in a § 502(a)(1)(B) action for benefits due
under that plan.
ii
PARTIES TO THE PROCEEDING
1. UnitedHealth Group Incorporated, United-
Healthcare of Arizona, Inc., UnitedHealthcare, Inc.,
UnitedHealthcare Insurance Company, United
HealthCare Services, Inc., and Ingenix, Inc.
(currently known as OptumInsight, Inc.), petitioners
on review, were defendants-appellees below.
2. Spinedex Physical Therapy, U.S.A., Inc., Jack
Adams, Claude Aragon, and the Arizona Chiropractic
Society, respondents on review, were plaintiffs-
appellants below.
3. Defendants 5 & Diner Franchise Corporation
Group Health Plan; Abbott Laboratories Group
Health Plan; Acoustic Technologies, Inc. Group
Health Plan; Adobe Drywall, Inc. Group Health Plan;
ADP Totalsource, Inc. Group Health Plan; Affiliated
Cardiologists of Arizona, P.C. Group Health Plan;
Art in Metal U.S.A. Group Health Plan; Car-Graph,
Inc. Group Health Plan; Citigroup, Inc. Group
Health Plan; Discount Tire Co., Inc. Group Health
Plan; Downtown Tempe Community, Inc. Group
Health Plan; Faxwatch, Inc. Group Health Plan;
General Motors Corporation Group Health Plan;
Genuine Parts Company Group Health Plan; Home
Depot USA, Inc. Medical and Dental Plan; Insight
Enterprises, Inc. Group Health Plan; ITC Manufac-
turing and Powder Coating Group Health Plan; The
Martz Agency Group Health Plan; Metlife Securities,
Inc. Group Health Plan; Oldcastle Glass, Inc. Group
Health Plan; Pinnacle Engineering, Inc. Group
Health Plan; Pfizer, Inc. Group Health Plan; The
Procter & Gamble Company Group; Qualex Inc.
Group Health Plan; Qwest Communications Interna-
tional Inc. Group Health Plan, (United Group
iii
No. 0197313); Qwest Communications International
Inc. Group Health Plan, (United Group
No. 0229050); Revlon Consumer Products Corpora-
tion Group Health Plan; Richard A. Bietz, D.D.S.,
P.C. Group Health Plan; Shamrock Foods Company
Group Health Plan; Shasta Industries, Inc. Group
Health Plan; Sumco USA Corporation Group Health
Plan; Temcon Concrete Construction Company
Group Health Plan; URS Corporation Group Health
Plan; Watson Williams Freight Agency, Inc. Group
Health Plan; Wells Fargo & Company Group Health
Plan; America West Holdings Corporation Group
Health Plan; American Express Company Group
Health Plan; AT & T Corporation Group Health
Plan; Delta Airlines, Inc. Group Health Plan;
Hasbro, Inc. Group Health Plan; Honeywell Interna-
tional, Inc., Group Health Plan; International Busi-
ness Machine Corporation Group Health Plan;
Iridium Satellite, LLC Group Health Plan; Lucent
Technologies Inc. Group Health Plan; and Southwest
Airlines Company Group Health Plan, respondents
on review, were defendants-appellees below.
iv
RULE 29.6 DISCLOSURE STATEMENT
UnitedHealth Group Incorporated is a publicly held
corporation. It has no parent corporation, and no
publicly held corporation owns 10 percent or more of
its stock.
United HealthCare Services, Inc., is a wholly
owned subsidiary of UnitedHealth Group Incorpo-
rated.
UnitedHealthcare, Inc., is a wholly owned subsidi-
ary of United HealthCare Services, Inc., which is a
wholly owned subsidiary of UnitedHealth Group
Incorporated.
UnitedHealthcare of Arizona, Inc., is a wholly
owned subsidiary of UnitedHealthcare, Inc., which is
a wholly owned subsidiary of United HealthCare
Services, Inc., which is a wholly owned subsidiary of
UnitedHealth Group Incorporated.
UnitedHealthcare Insurance Company is a wholly
owned subsidiary of UHIC Holdings, Inc., which is a
wholly owned subsidiary of United HealthCare
Services, Inc., which is a wholly owned subsidiary of
UnitedHealth Group Incorporated.
Ingenix, Inc. (currently known as OptumInsight,
Inc.) is a wholly owned subsidiary of OptumInsight,
Holdings, LLC, which is a wholly owned subsidiary
of Optum, Inc., which is a wholly owned subsidiary of
United HealthCare Services, Inc., which is a wholly
owned subsidiary of UnitedHealth Group Incorpo-
rated.
v
TABLE OF CONTENTS
Page
QUESTION PRESENTED........................................... i
PARTIES TO THE PROCEEDING ............................ ii
RULE 29.6 DISCLOSURE STATEMENT ................ iv
TABLE OF AUTHORITIES ...................................... vii
OPINIONS BELOW .................................................... 1
JURISDICTION .......................................................... 2
STATUTE INVOLVED ............................................... 2
INTRODUCTION ........................................................ 2
STATEMENT .............................................................. 4
A. Statutory Background ................................... 4
B. Factual And Procedural Background ............ 5
REASONS FOR GRANTING THE PETITION ......... 9
I. THE COURTS OF APPEALS ARE
DEEPLY DIVIDED OVER THE
QUESTION PRESENTED ................................... 9
II. THE QUESTION PRESENTED
RAISES A FREQUENTLY
RECURRING ISSUE OF NATIONAL
IMPORTANCE ................................................... 16
III. THIS CASE IS A PROPER VEHICLE
FOR DECIDING THE QUESTION
PRESENTED ...................................................... 20
IV. THE NINTH CIRCUIT’S DECISION IS
INCORRECT ...................................................... 22
CONCLUSION .......................................................... 26
APPENDIX A—Court of Appeals’ Opinion
(Nov. 5, 2014) .......................................................... 1a
vi
TABLE OF CONTENTS—Continued
Page
APPENDIX B—District Court’s Order
(Mar. 30, 2011) ...................................................... 32a
APPENDIX C—Court of Appeals’ Order
Denying Petition for Panel Rehearing and
Rehearing En Banc (Dec. 12, 2014) ..................... 57a
vii
TABLE OF AUTHORITIES
Page
CASES:
Advanced Rehab., LLC v. Unitedhealth Grp.,
Inc., No. 10-cv-263, 2011 WL 995960
(D.N.J. Mar. 17, 2011) ....................................... 19
Almont Ambulatory Surgery Ctr., LLC v.
UnitedHealth Grp., Inc.,
No. 14-cv-2139, 2015 WL 1608991
(C.D. Cal. Apr. 10, 2015) ................................... 19
Anderson v. Blue Cross & Blue Shield,
No. 3:13-cv-402, 2013 WL 5674510
(S.D. Miss. Oct. 17, 2013) .................................. 17
Baker v. Big Star Div. of the
Grand Union Co.,
893 F.2d 288 (11th Cir. 1990) ........................... 17
Black & Decker Disability Plan v. Nord,
538 U.S. 822 (2003) ....................................... 4, 22
Braden v. Aetna Life Ins. Co.,
No. 8:13-cv-535, 2013 WL 6086460
(M.D. Fla. Nov. 19, 2013) .................................. 17
Brown v. J.B. Hunt Trans. Servs., Inc.,
586 F.3d 1079 (8th Cir. 2009) ..................... 12, 13
Chapman v. ChoiceCare Long Island Term
Disability Plan,
288 F.3d 506 (2d Cir. 2002) ............................... 11
CIGNA Corp. v. Amara,
131 S. Ct. 1866 (2011) ............................... 5, 7, 23
Conkright v. Frommert,
559 U.S. 506 (2010) ................................... 4, 5, 15
viii
TABLE OF AUTHORITIES—Continued
Page
Crocco v. Xerox Corp.,
956 F. Supp. 129 (D. Conn. 1997) ..................... 18
Crocco v. Xerox Corp.,
137 F.3d 105 (2d Cir. 1998) ..................... 9, 10, 18
Curtiss-Wright Corp. v. Schoonejongen,
514 U.S. 73 (1995) ......................................... 5, 22
Cyr v. Reliance Standard Life Ins. Co.,
642 F.3d 1202 (9th Cir. 2011) (en banc) ..... 16, 17
Daniel v. Eaton Corp.,
839 F.2d 263 (6th Cir. 1988) ............................. 17
Downey Surgical Clinic, Inc. v. Ingenix, Inc.,
No. 09-cv-5457 (C.D. Cal. Mar. 12, 2013) ......... 17
Evans v. Akers,
534 F.3d 65 (1st Cir. 2008) ................................ 16
FAA v. Cooper,
132 S. Ct. 1441 (2012) ....................................... 21
Feinberg v. RM Acquisition, LLC,
629 F.3d 671 (7th Cir. 2011) ............................. 16
Filarsky v. Delia,
132 S. Ct. 1657 (2012) ....................................... 21
FMC Corp. v. Holliday,
498 U.S. 52 (1990) ............................................... 7
Garren v. John Hancock Mut. Life Ins. Co.,
114 F.3d 186 (11th Cir. 1997) ........................... 17
Geddes v. United Staffing Alliance Emp.
Med. Plan, 469 F.3d 919 (10th Cir. 2006) ........ 11
Gelardi v. Pertec Computer Corp.,
761 F.2d 1323 (9th Cir. 1985)
(per curiam) ....................................................... 17
ix
TABLE OF AUTHORITIES—Continued
Page
Geneva Coll. v. Sec’y of U.S. Dep’t of
Health & Human Servs.,
778 F.3d 422 (3d Cir. 2015) ............................... 12
Gómez-González v. Rural Opportunities, Inc.,
626 F.3d 654 (1st Cir. 2010) ........................ 14, 15
Graden v. Conexant Sys., Inc.,
496 F.3d 291 (3d Cir. 2007) ............................... 11
Guerrero v. FJC Sec. Servs. Inc.,
423 F. App’x 14 (2d Cir. 2011) .......................... 10
Hahnemann Univ. Hosp. v. All Shore, Inc.,
514 F.3d 300 (3d Cir. 2008) ................... 10, 11, 23
Hall v. LHACO, Inc.,
140 F.3d 1190 (8th Cir. 1998) ............................. 9
Hammonds v. Aetna Life Ins. Co.,
No. 2:13-cv-310, 2015 WL 1299515
(S.D. Ohio Mar. 23, 2015) ................................. 17
Harris Trust & Sav. Bank v. Salomon Smith
Barney Inc., 530 U.S. 238 (2000) ...................... 24
Heffner v. Blue Cross & Blue Shield of Ala.,
Inc., 443 F.3d 1330 (11th Cir. 2006) ........... 14, 19
Heimeshoff v. Hartford Life &
Accident Ins. Co., 134 S. Ct. 604 (2013)............ 22
Jass v. Prudential Health Care Plan, Inc.,
88 F.3d 1482 (7th Cir. 1996) ............................. 16
Jones v. Life Ins. Co. of N. Am.,
No. 08-cv-3971, 2015 WL 1433998
(N.D. Cal. Mar. 30, 2015) .................................. 17
Larson v. United Healthcare Ins. Co.,
723 F.3d 905 (7th Cir. 2013) ............................. 12
x
TABLE OF AUTHORITIES—Continued
Page
Layes v. Mead Corp.,
132 F.3d 1246 (8th Cir. 1998) ........................... 16
Lee v. Burkhart,
991 F.2d 1004 (2d Cir. 1993) ............................. 17
Leister v. Dovetail, Inc.,
546 F.3d 875 (7th Cir. 2008) ............................... 9
Leonelli v. Pennwalt Corp.,
887 F.2d 1195 (2d Cir. 1989) ............................. 17
LifeCare Mgmt. Servs. LLC v. Ins. Mgmt.
Adm’rs Inc., 703 F.3d 835 (5th Cir. 2013) ........ 13
Lipstein v. UnitedHealth Grp.,
296 F.R.D. 279 (D.N.J. 2013) ............................ 19
Mass. Mut. Life Ins. Co. v. Russell,
473 U.S. 134 (1985) ..................................... 23, 25
Meguerditchian v. Aetna Life Ins. Co.,
999 F. Supp. 2d 1180 (C.D. Cal. 2014) ............. 17
Mein v. Carus Corp.,
241 F.3d 581 (7th Cir. 2001) ............................. 16
Moore v. Lafayette Life Ins. Co.,
458 F.3d 416 (6th Cir. 2006) ............................. 14
Mote v. Aetna Life Ins. Co.,
502 F.3d 601 (7th Cir. 2007) ............................. 16
Muscemi v. Schwegmann Giant
Super Markets, Inc.,
332 F.3d 339 (5th Cir. 2003) ............................. 16
N.Y. State Psychiatric Ass’n v.
UnitedHealth Grp.,
No. 13-cv-1599 (S.D.N.Y. Oct. 31, 2013) ........... 17
xi
TABLE OF AUTHORITIES—Continued
Page
Oliver v. Aetna Life Ins. Co.,
No. 4:13-cv-1947, 2014 WL 5460855
(N.D. Ala. Oct. 27, 2014) ................................... 17
Oliver v. Coca Cola Co.,
497 F.3d 1181 (11th Cir. 2007) ......................... 17
OSF Healthcare Sys. v. Insperity Grp.
Health Plan, No. 1:14-cv1135, 2015 WL
1117776 (C.D. Ill. Mar. 10, 2015) ..................... 17
Paneccasio v. Unisource Worldwide, Inc.,
532 F.3d 101 (2d Cir. 2008) ............................... 11
Premier Health Ctr., P.C. v. UnitedHealth
Grp., No. 11-cv-425, 2014 WL 7073439
(D.N.J. Dec. 15, 2014) ....................................... 19
Raymond B. Yates, M.D., P.C. Profit
Sharing Plan v. Hendon,
541 U.S. 1 (2004) ............................................... 16
Rosen v. TRW, Inc.,
979 F.2d 191 (11th Cir. 1992) ........................... 16
Sanctuary Surgical Ctr., Inc. v.
UnitedHealth Grp. Inc., No. 10-cv-81589,
2013 WL 149356 (S.D. Fla. Jan. 14, 2013) ....... 19
Sweet v. Consol. Aluminum Corp.,
913 F.2d 268 (6th Cir. 1990) ............................. 16
US Airways, Inc. v. McCutchen,
133 S. Ct. 1537 (2013) ....................................... 21
Van Loo v. Cajun Operating Co.,
No. 14-cv-10604, 2014 WL 6750453
(E.D. Mich. Dec. 1, 2014)................................... 17
xii
TABLE OF AUTHORITIES—Continued
Page
Yoon v. Fordham Univ. Faculty &
Admin. Ret. Plan,
263 F.3d 196 (2d Cir. 2001) ............................... 16
STATUTES:
28 U.S.C. § 1254(1) ................................................... 2
29 U.S.C. § 1002(16) ........................................... 6, 21
29 U.S.C. § 1002(16)(A) ................................ 7, 20, 21
29 U.S.C. § 1002(16)(B) ............................................ 7
29 U.S.C. § 1002(21)(A) .................................. 7, 8, 21
29 U.S.C. § 1021(a) ............................................. 7, 21
29 U.S.C. § 1022.................................................. 7, 21
29 U.S.C. § 1024.................................................. 7, 21
29 U.S.C. § 1102(a)(1) ......................................... 5, 22
29 U.S.C. § 1109(a) ................................................. 25
29 U.S.C. § 1132(a)(1) ............................................. 23
29 U.S.C. § 1132(a)(1)(B) ................................ passim
29 U.S.C. § 1132(a)(2) ............................................. 25
29 U.S.C. § 1132(a)(3) ............................................. 24
29 U.S.C. § 1132(e)(2) ............................................. 16
OTHER AUTHORITIES:
Cong. Budget Office, Key Issues in Analyzing
Major Health Insurance Proposals (2008) ........ 18
(1)
IN THE
Supreme Court of the United States _________
No. 14- _________
UNITEDHEALTHCARE OF ARIZONA, INC., et al.,
Petitioners, v.
SPINEDEX PHYSICAL THERAPY, U.S.A., INC., et al.,
Respondents. _________
On Petition for a Writ of Certiorari to the
United States Court of Appeals
for the Ninth Circuit _________
PETITION FOR A WRIT OF CERTIORARI _________
UnitedHealthcare of Arizona, Inc., UnitedHealth
Group Incorporated, UnitedHealthcare, Inc., United-
Healthcare Insurance Company, United HealthCare
Services, Inc., and Ingenix, Inc. (collectively, United)
respectfully petition for a writ of certiorari to review
the judgment of the United States Court of Appeals
for the Ninth Circuit in this case.
OPINIONS BELOW
The Ninth Circuit’s opinion is reported at 770 F.3d
1282. Pet. App. 1a-31a. The District Court’s order is
unreported. Id. at 32a-56a.1
1 The District Court filed this order under seal, with a re-
dacted version placed on the public docket. Because the
confidential material is not relevant to the question presented
2
JURISDICTION
The Ninth Circuit entered judgment on November
5, 2014. Pet. App. 3a. On December 12, 2014, the
Ninth Circuit denied a timely petition for panel
rehearing and rehearing en banc. Id. at 59a. On
February 24, 2015, Justice Kennedy extended the
time within which to file a petition for a writ of
certiorari to and including April 26, 2015. This
Court’s jurisdiction is invoked under 28 U.S.C.
§ 1254(1).
STATUTE INVOLVED
Section 502(a)(1)(B) of the Employee Retirement
Income Security Act (ERISA) provides:
A civil action may be brought—
(1) by a participant or beneficiary—
* * *
(B) to recover benefits due to him under
the terms of his plan, to enforce his
rights under the terms of the plan, or
to clarify his rights to future benefits
under the terms of the plan * * * .
29 U.S.C. § 1132(a)(1)(B).
INTRODUCTION
Health benefits plans are contracts. On one side of
the contract are the plans and plan administrators,
who owe benefits. On the other side are the plan
participants and beneficiaries, to whom benefits are
due. To reduce the costs of administration, plan
sponsors often hire third parties known as claims
in this petition, the redacted version of the order is included in
the appendix.
3
administrators to process benefits claims. A claims
administrator determines whether benefits are due
under a plan, much like an accountant determines
whether taxes are owed by a taxpayer. And just as
an accountant is not responsible for paying the taxes
owed, a mere claims administrator has no obligation
to pay the benefits due. The question presented in
this case is whether a claims administrator with no
responsibility for paying benefits can be a proper
defendant in an ERISA § 502(a)(1)(B) action to
recover “benefits due” under the plan. The Ninth
Circuit held yes, and this Court should grant certio-
rari to review that decision.
To begin, the Ninth Circuit’s decision deepens an
entrenched divide among the circuits over who may
be sued under § 502(a)(1)(B). Five circuits hold that
only parties responsible for paying benefits may be
sued. Five other circuits, including the Ninth, disa-
gree. They hold that any party exercising control
over benefits determinations may be sued, even if the
party has no obligation to pay. This split under-
mines ERISA’s goal of national uniformity, and will
not go away on its own. This Court’s intervention is
necessary to resolve it.
This Court should intervene for another reason:
The question presented raises a frequently recurring
issue with significant consequences for plans, parti-
cipants, and claims administrators alike. Claims
administrators typically process claims for multiple
plans. And because they do, they have become
regular targets of litigation. Throughout the coun-
try, plaintiffs are suing claims administrators on
behalf of broad classes of participants in dozens of
plans. These massive multi-plan actions threaten to
raise the costs of administering these plans, and to
4
make it more difficult for participants to afford them.
This Court should grant review to decide the im-
portant and recurring question in this case.
Moreover, this case is a proper vehicle for deciding
the question presented. The question was pressed
and passed upon below, and it is ripe for this Court’s
review. There is no dispute that United, the claims
administrator here, had no responsibility to pay
benefits under the plan. And the record conclusively
establishes that United was not the plan administra-
tor. Accordingly, there can be no doubt that if this
Court were to grant certiorari and side with the
circuits on the other side of the split, this suit
against United would not be able to proceed.
Finally, the Ninth Circuit’s decision is incorrect.
Section 502(a)(1)(B) authorizes a contractual remedy.
It follows that the only parties that may be sued for
benefits are those contractually obligated to pay
them. Mere claims administrators owe no benefits
under the plan, and so they cannot be sued for “bene-
fits due.” The Ninth Circuit erred in holding that
United could be a proper defendant.
For these reasons, certiorari should be granted.
STATEMENT
A. Statutory Background
“Congress enacted ERISA to ensure that employees
would receive the benefits they had earned, but
Congress did not require employers to establish
benefit plans in the first place.” Conkright v. From-
mert, 559 U.S. 506, 516 (2010). Nor did Congress
dictate to employers what benefits to include in their
plans. See Black & Decker Disability Plan v. Nord,
538 U.S. 822, 833 (2003) (“[E]mployers have large
5
leeway to design * * * welfare plans as they see fit.”).
Instead, “ERISA induces employers to offer benefits
by assuring a predictable set of liabilities, under
uniform standards of primary conduct and a uniform
regime of ultimate remedial orders and awards when
a violation has occurred.” Conkright, 559 U.S. at 517
(internal quotation marks and brackets omitted).
As part of this uniform regulatory regime, ERISA
requires that “ ‘[e]very employee benefit plan * * * be
established and maintained pursuant to a written
instrument.’ ” Curtiss-Wright Corp. v. Schoone-
jongen, 514 U.S. 73, 83 (1995) (quoting 29 U.S.C.
§ 1102(a)(1)). That written instrument is a “con-
tract” that sets forth the terms of the benefit plan.
CIGNA Corp. v. Amara, 131 S. Ct. 1866, 1877 (2011).
And ERISA provides a federal cause of action to
enforce that contract. Section 502(a)(1)(B) authoriz-
es a plan “participant or beneficiary” to bring suit “to
recover benefits due to him under the terms of his
plan, to enforce his rights under the terms of the
plan, or to clarify his rights to future benefits under
the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B).
B. Factual And Procedural Background
Respondent Spinedex Physical Therapy, U.S.A.,
Inc., provided physical therapy services in Arizona.
Pet. App. 5a. Some of Spinedex’s patients were
participants in health benefits plans sponsored by
their employers. And for some of those plans, a third
party, United, acted as a claims administrator. Id.
In that role, United processed claims for benefits and
determined whether a participant was entitled to
payment under the plans’ terms. Id.
Spinedex’s patients assigned to Spinedex their
rights to seek payment for physical therapy under
6
their plans. Id. When Spinedex submitted their
benefits claims to United, United determined that
payment was appropriate on some claims but not
appropriate on others. Id. at 6a.
In 2008, Spinedex brought suit in federal district
court for “benefits due” under ERISA § 502(a)(1)(B).
29 U.S.C. § 1132(a)(1)(B); see also Pet. App. 6a. The
defendants were United and 45 different employer-
sponsored health plans for which United served as a
claims administrator. Second Amend. Compl. ¶¶ 17-
61, No. 2:08-cv-457 (D. Ariz. July 9, 2008), ECF
No. 38 [hereinafter Second Amend. Compl.]. The
complaint alleged that United and the plans had
improperly denied benefits to over 60 of Spinedex’s
patients and a putative class of “similarly situated”
plan participants. Id. ¶¶ 2, 97, 137.2
One of the defendant plans was the American Ex-
press Plan. United has an administrative services
agreement with American Express Co. to be the
Plan’s claims administrator. See Ex. A, Aff. of Jane
Pennington, No. 2:08-cv-457 (D. Ariz. July 22, 2011),
ECF No. 424-2. As such, United processes claims for
benefits and determines whether benefits are owed
by the plan, in much the same way an accountant
determines whether taxes are owed by a taxpayer.
Although United is the claims administrator, it is
not the plan “administrator.” 29 U.S.C. § 1002(16).
2 The other named plaintiffs in the suit were Jack Adams,
Claude Aragon, and the Arizona Chiropractic Society. Adams
and Aragon were participants in plans that are not implicated
by the question presented in this petition. Pet. App. 17a-18a.
And the Ninth Circuit affirmed the District Court’s holding that
the Arizona Chiropractic Society lacks associational standing to
bring suit at all. Id. at 16a-17a.
7
As defined by statute, the plan “administrator” is “a
trustee-like fiduciary” that “manages the plan,
follows its terms in doing so, and provides partici-
pants with the summary documents that describe
the plan (and modifications) in readily understanda-
ble form.” Amara, 131 S. Ct. at 1877 (citing 29
U.S.C. §§ 1002(21)(A), 1021(a), 1022, 1024). The
American Express Plan does not “specifically * * *
designate[]” a plan “administrator,” and so by stat-
ute, the plan “administrator” is the “plan sponsor”—
in this case, American Express, through its Employ-
ee Benefits Administration Committee. 29 U.S.C.
§ 1002(16)(A), (B); see Defs.’ Rule 56.1 Statement of
Undisputed Facts ¶¶ 118-119, No. 2:08-cv-457
(D. Ariz. May 3, 2010), ECF No. 241. Accordingly,
the Plan filed an annual report with the U.S. De-
partment of Labor identifying that Committee—not
United—as the plan administrator.3
Nor is United the American Express Plan’s insurer.
The Plan is “self-funded,” which means that “it does
not purchase an insurance policy from any insurance
company in order to satisfy its obligations to its
participants.” FMC Corp. v. Holliday, 498 U.S. 52,
54 (1990); see also Pet. App. 27a. Thus, when a
participant submits a claim for benefits under the
Plan, the responsibility for payment lies with the
Plan itself, not United.
3 This annual report was attached as Exhibit D to the Decla-
ration of Nicholas J. Pappas, Esq., in Support of Defendants’
Motion for Partial Summary Judgment and Severance,
No. 2:08-cv-457 (D. Ariz. May 3, 2010), ECF No. 243. The
annual report is also publicly available at http://
freeerisa.benefitspro.com/5500/formprint.aspx?DLN=840373192
79028.
8
The District Court granted summary judgment for
United and the plans. Pet. App. 6a. It held that
United was not the “plan administrator” of the
American Express Plan and so was not a proper
defendant in a § 502(a)(1)(B) suit seeking benefits
due under the Plan. Id. at 51a (emphasis added).
The Ninth Circuit vacated in relevant part. Id. at
28a. It began by announcing the sweeping rule that
“ERISA plans, formally designated plan administra-
tors, insurers or other entities responsible for pay-
ment of benefits, * * * de facto plan administrators
that improperly deny or cause improper denial of
benefits,” and “fiduciar[ies] of the plan” are all prop-
er defendants under § 502(a)(1)(B). Id. at 26a-27a
(internal quotation marks and emphasis omitted).
The court explained that “[a] fiduciary is any entity
that ‘exercises any discretionary authority or discre-
tionary control respecting management of such plan
or exercises any authority or control respecting
management or disposition of its assets * * * [or] has
any discretionary authority or discretionary respon-
sibility in the administration of such plan.’ ” Id. at
27a (quoting 29 U.S.C. § 1002(21)(A)).
Turning to the facts of this case, the Ninth Circuit
held that because “the American Express Plan is
self-insured,” United had no “responsibility to pay
benefits,” and so could not be sued on that basis. Id.
The court nevertheless concluded that it could not
“be certain of the status of United.” Id. In particu-
lar, the Ninth Circuit was “unable to reconcile”
United’s acknowledgement that it was a claims
administrator with the District Court’s determina-
tion that it was not the plan administrator. Id. at
28a. For that reason, the Ninth Circuit remanded
the case for further proceedings. Id.
9
The Ninth Circuit denied rehearing en banc. Fur-
ther proceedings in the District Court have been put
on hold pending this Court’s disposition of this
petition. See Order, No. 2:08-cv-457 (D. Ariz.
Jan. 16, 2015), ECF No. 603; Joint Status Report
Pursuant to Court’s Jan. 16, 2015 Order, No. 2:08-cv-
457 (D. Ariz. Feb. 2, 2015), ECF No. 604.
REASONS FOR GRANTING THE PETITION
I. THE COURTS OF APPEALS ARE DEEPLY
DIVIDED OVER THE QUESTION
PRESENTED
The Ninth Circuit’s decision deepens an entrenched
split over who may be sued in an action to recover
benefits under ERISA § 502(a)(1)(B). Five courts of
appeals—the Second, Third, Seventh, Eighth, and
Tenth Circuits—have held that only parties respon-
sible for paying benefits may be sued. In those
circuits, a third-party claims administrator with no
obligation to pay is not a proper defendant. By
contrast, five other courts of appeals—the First,
Fifth, Sixth, Ninth, and Eleventh Circuits—have
held that anyone who exercises control over benefits
determinations may be sued, regardless of obligation
to pay. In those circuits, whether a third-party
claims administrator is a proper defendant depends
on the extent of its authority in deciding benefits
claims.
The circuits have acknowledged their differences,
and this split will persist without this Court’s inter-
vention. See Leister v. Dovetail, Inc., 546 F.3d 875,
879 (7th Cir. 2008) (acknowledging differences); Hall
v. LHACO, Inc., 140 F.3d 1190, 1194-1195 (8th Cir.
1998) (same); Crocco v. Xerox Corp., 137 F.3d 105,
107 (2d Cir. 1998) (same). Certiorari should be
10
granted to bring national uniformity to this im-
portant question.
1. Start with the circuits that have held that the
only parties that may be sued under § 502(a)(1)(B)
are parties responsible for paying benefits. These
circuits fall into two camps.
a. In one camp are the Second, Third, and Tenth
Circuits. In these circuits, the only proper defendant
in a suit to recover benefits is the plan itself or the
plan “administrator” as defined by ERISA. The
rationale behind this rule is straightforward: The
plans and their plan administrators are ultimately
responsible for making payments out of the plans’
assets. “Thus, if entitlement to benefits is estab-
lished, the court can direct the plan administrator to
pay them from the assets of the plan, much as a
trustee may be compelled to satisfy a trust obligation
from trust assets.” Hahnemann Univ. Hosp. v. All
Shore, Inc., 514 F.3d 300, 308 (3d Cir. 2008).
In Crocco, for example, a participant in a health
benefits plan sued her employer, challenging the
denial of benefits. 137 F.3d at 106. The Second
Circuit held that the employer could not be sued for
benefits due under the plan, even though the em-
ployer “had control, indirectly, over the administra-
tion of the plan.” Id. at 107. That was because the
employer was not the plan, the “designated Plan
administrator,” or “a Plan trustee.” Id. at 107-108.
And “in a recovery of benefits claim, only the plan
and the administrators and trustees of the plan in
their capacity as such may be held liable.” Id. at 107
(internal quotation marks and brackets omitted).
The Second Circuit has reaffirmed this rule several
times since Crocco. See Guerrero v. FJC Sec. Servs.
11
Inc., 423 F. App’x 14, 16 (2d Cir. 2011); Paneccasio v.
Unisource Worldwide, Inc., 532 F.3d 101, 108 n.2
(2d Cir. 2008); Chapman v. ChoiceCare Long Island
Term Disability Plan, 288 F.3d 506, 509-510 (2d Cir.
2002).
The Tenth Circuit has read § 502(a)(1)(B) the same
way. In Geddes v. United Staffing Alliance Employee
Medical Plan, 469 F.3d 919 (10th Cir. 2006), a plan
beneficiary sued to recover unpaid benefits from the
plan, the plan administrator, and a third-party
claims administrator. Id. at 922-923. The Tenth
Circuit held that “[t]he ERISA statute is clear:
ERISA beneficiaries may bring claims against the
plan as an entity and plan administrators.” Id. at
931. Because the third-party claims administrator
was neither, it could not be sued for benefits due. Id.
The Third Circuit has also adopted the same rule.
In Graden v. Conexant Systems, Inc., 496 F.3d 291
(3d Cir. 2007), it concluded that, in a § 502(a)(1)(B)
action, “the defendant is the plan itself (or plan
administrators in their official capacities only).” Id.
at 301. Although the Third Circuit also permits suits
against plan administrators in their individual
capacities, it does so only when “a denial of ‘benefits
due’ arises from a plan administrator’s breach of its
fiduciary obligations to the claimant.” Hahnemann,
514 F.3d at 309.
b. The Seventh and Eighth Circuits are in a differ-
ent camp. They agree that the only parties that may
be sued under § 502(a)(1)(B) are parties with an
obligation to pay. But in their view, plans and plan
administrators are not the only parties that fit that
description. When a plan is “insured”—that is, when
it “contracts with an insurance company to bear the
12
financial risk of paying its [members’] health insur-
ance claims,” Geneva Coll. v. Sec’y of U.S. Dep’t of
Health & Human Servs., 778 F.3d 422, 427 n.1
(3d Cir. 2015)—the Seventh and Eighth Circuits hold
that the insurance company is a proper defendant
under § 502(a)(1)(B). The reason, according to these
circuits, is that when an insurance company serves
as the plan’s insurer, it assumes the obligation to pay
benefits. See Larson v. United Healthcare Ins. Co.,
723 F.3d 905, 913 (7th Cir. 2013).
For instance, in Larson, plan participants sued
various insurance companies acting as the plan’s
insurers; the insurers had “both the authority to
decide all eligibility and benefits questions and the
obligation to pay claims.” Id. at 908-909, 913. The
Seventh Circuit held that the insurers could be sued
under § 502(a)(1)(B). Id. at 913. It explained that “a
cause of action for ‘benefits due’ must be brought
against the party having the obligation to pay.” Id.
And although “[t]ypically the plan owes the benefits
and is the right defendant,” the court concluded that
“[w]hen an employee-benefits plan is implemented by
insurance and the insurance company * * * pays the
claims, an action against the insurer for benefits due
is precisely the civil action authorized by
§ [502](a)(1)(B).” Id. (internal quotation marks
omitted).
The Eighth Circuit agrees. In Brown v. J.B. Hunt
Transport Services, Inc., 586 F.3d 1079 (8th Cir.
2009), a plan participant sued two parties for bene-
fits due under § 502(a)(1)(B): Hunt, the plan admin-
istrator; and Prudential Insurance Co., which “in-
sured the Plan and served as claims administrator.”
Id. at 1081, 1083. “Prudential, not Hunt, was re-
sponsible for processing claims, determining eligibil-
13
ity, and paying benefits under the Plan.” Id. at 1081.
Because “the Plan require[d] Prudential, not Hunt,
to pay * * * benefits,” the Eighth Circuit held that
Prudential was the only proper defendant. Id. at
1088.
2. The First, Fifth, Sixth, Ninth, and Eleventh
Circuits apply a different test for who may be sued
under § 502(a)(1)(B). In those circuits, whether a
party has an obligation to pay is not dispositive; even
absent such an obligation, a party may be sued if it
exercises control over benefits determinations.
In the decision below, for example, the Ninth Cir-
cuit acknowledged that, as a third-party claims
administrator, United had no “responsibility to pay
benefits” under the American Express Plan.
Pet. App. 27a. And yet, the Ninth Circuit held that
United could be sued under § 502(a)(1)(B) if United
“exercise[d] any discretionary authority or discre-
tionary control respecting management of [the]
plan.” Id. (internal quotation marks omitted).
The Fifth Circuit has taken a similar approach. In
LifeCare Management Services LLC v. Insurance
Management Administrators Inc., 703 F.3d 835
(5th Cir. 2013), a health care provider sued a third-
party claims administrator on behalf of plan partici-
pants. Id. at 840 & n.3. The Fifth Circuit held that
the claims administrator was a proper defendant
under § 502(a)(1)(B). Id. at 846. According to the
Fifth Circuit, “[w]here a [third-party claims adminis-
trator] exercises control over a plan’s benefits claims
process, and exerts that control to deny a claim by
incorrectly interpreting a plan in a way that
amounts to an abuse of discretion, liability may
attach.” Id. at 845.
14
The Sixth Circuit’s decision in Moore v. Lafayette
Life Insurance Co., 458 F.3d 416 (6th Cir. 2006), is to
the same effect. The plan participant in that case
sued his employer, the Michigan Tooling Association
(MTA), and Lafayette. The parties agreed that
“while MTA [was] the plan administrator, Lafayette
[was] the claims administrator and exercised full
authority in adjudicating Plaintiff’s claim for bene-
fits.” Id. at 438. The Sixth Circuit held that “anyone
* * * who exercises discretionary control or authority
over a plan’s management, administration, or assets”
may be sued on a “denial of benefits” claim. Id.
Because “[i]t was Lafayette who made a decision
with respect to Plaintiff’s benefits,” the Sixth Circuit
concluded that “Lafayette, and not MTA, [was] the
proper party defendant for a denial of benefits
claim.” Id.
The Eleventh Circuit reached a similar conclusion
in Heffner v. Blue Cross & Blue Shield of Alabama,
Inc., 443 F.3d 1330 (11th Cir. 2006). There, a puta-
tive class of participants and beneficiaries of various
plans sued their common claims administrator, Blue
Cross. Id. at 1333. Many of the plans were “self-
funded plans in which the employer or plan sponsor
[was] responsible for paying claims.” Id. at 1334.
The Eleventh Circuit nevertheless held that, “[a]s
the party that controls administration of the plan,
Blue Cross is the proper party defendant in an action
concerning ERISA benefits.” Id. at 1334 (internal
quotation marks and brackets omitted).
The rule is the same in the First Circuit. The First
Circuit has held that “[t]he proper party defendant in
an action concerning ERISA benefits is the party
that controls administration of the plan.” Gómez-
González v. Rural Opportunities, Inc., 626 F.3d 654,
15
665 (1st Cir. 2010) (internal quotation marks omit-
ted). “If an entity or person other than the named
plan administrator takes on the responsibilities of
the administrator, that entity may also be liable for
benefits.” Id. Thus, to the extent third-party claims
administrators “control[] administration of the plan,”
they may be sued in the First Circuit under
§ 502(a)(1)(B). Id. (internal quotation marks omit-
ted).
3. In sum, the ten circuits that have addressed the
issue are evenly divided: Five circuits hold that
whether a party is a proper defendant under
§ 502(a)(1)(B) depends on whether the party has an
obligation to pay benefits; five other circuits, by
contrast, hold that even if a party does not have an
obligation to pay, it may be sued if it exercises con-
trol over benefits determinations. Thus, in one half
of the country, third-party claims administrators
with no responsibility for paying benefits may not be
sued for benefits due; in the other half, they may be
sued depending on the extent of their authority in
deciding benefits claims.
This divide cannot be expected to resolve itself.
Almost all the circuits have spoken, and there are
simply too many on each side of the issue for the
split to go away on its own. Moreover, the differ-
ences among the circuits strike at the very purpose of
ERISA: to “assur[e] a predictable set of liabilities,
under uniform standards of primary conduct and a
uniform regime of ultimate remedial orders and
awards when a violation has occurred.” Conkright,
559 U.S. at 517 (internal quotation marks omitted).
And given ERISA’s broad venue provision—which
allows suit to be brought “in the district where the
plan is administered, where the breach took place, or
16
where a defendant resides or may be found,” 29
U.S.C. § 1132(e)(2)—this conflict will inevitably
result in forum-shopping, as plaintiffs elect to sue
claims administrators in jurisdictions where they can
be held liable without regard to their obligation to
pay.
Because the split in this case is deep, entrenched,
and untenable—particularly given ERISA’s goal of
“national uniformity,” Raymond B. Yates, M.D., P.C.
Profit Sharing Plan v. Hendon, 541 U.S. 1, 17
(2004)—this Court should grant certiorari to resolve
the question presented.
II. THE QUESTION PRESENTED RAISES A
FREQUENTLY RECURRING ISSUE OF
NATIONAL IMPORTANCE
Certiorari should also be granted because this case
raises a frequently recurring issue of national im-
portance. Indeed, courts are regularly called upon to
decide whether a party may be sued in an action to
recover benefits under § 502(a)(1)(B). See, e.g., Cyr v.
Reliance Standard Life Ins. Co., 642 F.3d 1202, 1207
(9th Cir. 2011) (en banc); Feinberg v. RM Acquisition,
LLC, 629 F.3d 671, 673 (7th Cir. 2011); Evans v.
Akers, 534 F.3d 65, 72 (1st Cir. 2008); Mote v. Aetna
Life Ins. Co., 502 F.3d 601, 610-611 (7th Cir. 2007);
Muscemi v. Schwegmann Giant Super Markets, Inc.,
332 F.3d 339, 349-350 (5th Cir. 2003); Yoon v. Ford-
ham Univ. Faculty & Admin. Ret. Plan, 263 F.3d
196, 207 (2d Cir. 2001); Mein v. Carus Corp., 241
F.3d 581, 584-585 (7th Cir. 2001); Layes v. Mead
Corp., 132 F.3d 1246, 1249 (8th Cir. 1998); Jass v.
Prudential Health Care Plan, Inc., 88 F.3d 1482,
1490 (7th Cir. 1996); Rosen v. TRW, Inc., 979 F.2d
191, 193-194 (11th Cir. 1992); Sweet v. Consol.
17
Aluminum Corp., 913 F.2d 268, 272 (6th Cir. 1990);
Leonelli v. Pennwalt Corp., 887 F.2d 1195, 1199
(2d Cir. 1989); Daniel v. Eaton Corp., 839 F.2d 263,
265-266 (6th Cir. 1988); OSF Healthcare Sys. v.
Insperity Grp. Health Plan, No. 1:14-cv1135, 2015
WL 1117776, at *2-4 (C.D. Ill. Mar. 10, 2015).
And when the issue arises, the party in question is
often a third-party claims administrator. See, e.g.,
Oliver v. Coca Cola Co., 497 F.3d 1181, 1193-1195
(11th Cir. 2007), vacated in part on other grounds,
506 F.3d 1316 (11th Cir. 2007); Garren v. John
Hancock Mut. Life Ins. Co., 114 F.3d 186, 187 (11th
Cir. 1997); Lee v. Burkhart, 991 F.2d 1004, 1009-
1011 (2d Cir. 1993); Baker v. Big Star Div. of the
Grand Union Co., 893 F.2d 288, 290 (11th Cir. 1990);
Gelardi v. Pertec Computer Corp., 761 F.2d 1323,
1324-1325 (9th Cir. 1985) (per curiam), overruled by
Cyr, 642 F.3d 1202; Jones v. Life Ins. Co. of N. Am.,
No. 08-cv-3971, 2015 WL 1433998, at *2-3 (N.D. Cal.
Mar. 30, 2015); Hammonds v. Aetna Life Ins. Co.,
No. 2:13-cv-310, 2015 WL 1299515, at *4 (S.D. Ohio
Mar. 23, 2015); Van Loo v. Cajun Operating Co.,
No. 14-cv-10604, 2014 WL 6750453, at *5-6 (E.D.
Mich. Dec. 1, 2014); Oliver v. Aetna Life Ins. Co.,
No. 4:13-cv-1947, 2014 WL 5460855, at *16 (N.D.
Ala. Oct. 27, 2014); Meguerditchian v. Aetna Life Ins.
Co., 999 F. Supp. 2d 1180, 1185-1186 (C.D. Cal.
2014); Braden v. Aetna Life Ins. Co., No. 8:13-cv-535,
2013 WL 6086460, at *3 (M.D. Fla. Nov. 19, 2013);
N.Y. State Psychiatric Ass’n v. UnitedHealth Grp.,
No. 13-cv-1599 (S.D.N.Y. Oct. 31, 2013), ECF
No. 102; Anderson v. Blue Cross & Blue Shield,
No. 3:13-cv-402, 2013 WL 5674510, at *1-2 (S.D.
Miss. Oct. 17, 2013); Downey Surgical Clinic, Inc. v.
Ingenix, Inc., No. 09-cv-5457 (C.D. Cal. Mar. 12,
18
2013), ECF No. 155; Crocco v. Xerox Corp., 956
F. Supp. 129, 136-137 (D. Conn. 1997), aff’d in part,
rev’d in part on other grounds, 137 F.3d 105 (2d Cir.
1998).
That should come as no surprise. Plan sponsors
often enter into administrative services agreements
with third parties such as United. The reason is
simple: Administering benefit claims requires signif-
icant investments of time and effort. Third parties
can alleviate these burdens by performing valuable
functions, “such as developing networks of providers,
negotiating payment rates, processing claims, and so
forth.” Cong. Budget Office, Key Issues in Analyzing
Major Health Insurance Proposals 6 (2008). And
they can often perform these functions in a more
cost-effective manner; many claims administrators
are insurance companies or their affiliates, which
already provide such services on a broader scale.
Accordingly, plan sponsors have every incentive to
hire third-party claims administrators.
Plaintiffs, for their part, have every incentive to sue
such claims administrators. That is because claims
administrators typically process claims for more than
one plan. And so by suing a single claims adminis-
trator for the denial of a particular benefit, plaintiffs
can seek to represent all the participants of all those
plans denied the same benefit. That is precisely
what respondents sought to do here. United is the
third-party claims administrator of hundreds of
plans. And so when patients at Spinedex were
denied benefits for physical therapy, Spinedex sued
United along with 45 of those plans, seeking to
represent a class of every plan participant denied
physical therapy benefits. Second Amend. Compl.
¶¶ 17-61, 97. The result is a class action of “extraor-
19
dinary scope,” involving upwards of 10,000 allega-
tions against United for mishandling benefits claims.
Pet. App. 33a & n.2. Similar actions against third-
party claims administrators, spanning dozens of
plans, are increasingly common. See, e.g., Heffner,
443 F.3d at 1333. Indeed, several such actions
beyond this case have been filed against United-
Health Group Incorporated and its subsidiaries in
various jurisdictions. See, e.g., Almont Ambulatory
Surgery Ctr., LLC v. UnitedHealth Grp., Inc., No. 14-
cv-2139, 2015 WL 1608991 (C.D. Cal. Apr. 10, 2015);
Premier Health Ctr., P.C. v. UnitedHealth Grp.,
No. 11-cv-425, 2014 WL 7073439 (D.N.J. Dec. 15,
2014); Lipstein v. UnitedHealth Grp., 296 F.R.D. 279
(D.N.J. 2013); Sanctuary Surgical Ctr., Inc. v. Unit-
edHealth Grp., Inc., No. 10-cv-81589, 2013 WL
149356 (S.D. Fla. Jan. 14, 2013); Advanced Rehab.,
LLC v. Unitedhealth Grp., Inc., No. 10-cv-263, 2011
WL 995960 (D.N.J. Mar. 17, 2011).
The question presented thus has profound conse-
quences for plans, participants, and third-party
claims administrators alike. If claims administra-
tors who are not responsible for paying benefits can
be named as defendants in massive multi-plan
actions, they will be less likely to agree to perform
administrative services in the first place—or will be
willing to do so only for a greater fee. Either way,
the result will be higher costs for plans and ultimate-
ly their participants. Because the question present-
ed has significant implications for the administration
of benefits plans across the country, certiorari should
be granted.
20
III. THIS CASE IS A PROPER VEHICLE FOR
DECIDING THE QUESTION PRESENTED
Certiorari should be granted for yet another rea-
son: This case is a proper vehicle for this Court’s
review.
To begin, the question presented was pressed and
passed upon below. See Pet. App. 25a-28a; Appel-
lees’ Joint C.A. Br. 56-58. And in addressing the
question, the Ninth Circuit squarely held that “prop-
er defendants under § [502](a)(1)(B)” include not only
plans, “formally designated plan administrators,”
and “insurers or other entities responsible for pay-
ment of benefits,” but also “de facto plan administra-
tors that improperly deny or cause improper denial
of benefits” and “fiduciar[ies]” with “discretionary
authority or discretionary control respecting man-
agement of [the] plan.” Pet. App. 26a-27a (internal
quotation marks omitted).
If United had been sued in the Second, Third, Sev-
enth, Eighth, and Tenth Circuits, it would not be a
proper defendant under § 502(a)(1)(B). Each of those
other circuits permits suit only against parties
responsible for paying benefits: plans, plan adminis-
trators, or plan insurers. See supra Part I.1. And
here, the Ninth Circuit acknowledged that United
has no “responsibility to pay benefits.” Pet. App.
27a. United is not the plan itself. It is not the plan
insurer, because the American Express Plan is self-
funded. Id. And it is not the plan administrator,
because, by statute, the Plan’s “administrator” is the
“plan sponsor”—namely, the Employee Benefits
Administration Committee of American Express. 29
U.S.C. § 1002(16)(A); see also Pet. App. 51a; supra
p. 7 & n.3.
21
On this last point, the Ninth Circuit believed a
remand was necessary in light of United’s acknowl-
edgement that it was a “claims administrator” for
the Plan. Pet. App. 27a-28a (emphasis added). The
Ninth Circuit was “unable to reconcile” that ac-
knowledgment with the District Court’s determina-
tion that United was not the plan administrator. Id.
at 28a. But a claims administrator and a plan
administrator are not the same thing. A claims
administrator is a third party, hired to determine
whether the Plan owes benefits to claimants. It is a
role defined not by ERISA, but rather by United’s
administrative services agreement with American
Express. See supra p. 6. A plan administrator, by
contrast, is a statutorily defined role with specific
duties. E.g., 29 U.S.C. §§ 1002(16), 1002(21)(A),
1021(a), 1022, 1024. And by statute, that role is
occupied by the “plan sponsor” where, as here, the
Plan does not “specifically * * * designate[]” an
“administrator.” Id. § 1002(16)(A). There is thus no
inconsistency in the fact that United was the claims
administrator but not the plan administrator. And
because United was not the plan administrator, the
plan insurer, or the Plan itself, United would not be
subject to a § 502(a)(1)(B) action in any of the five
circuits on the other side of the split.
Thus, although the Ninth Circuit remanded for
further proceedings, this case is ripe for this Court’s
review. See, e.g., US Airways, Inc. v. McCutchen,
133 S. Ct. 1537 (2013) (granting review in an ERISA
case in which the court of appeals decided a legal
question and remanded for further proceedings);
Filarsky v. Delia, 132 S. Ct. 1657 (2012); FAA v.
Cooper, 132 S. Ct. 1441 (2012). The Ninth Circuit
squarely addressed the question presented, and held
22
that United could be a proper defendant under
§ 502(a)(1)(B). By contrast, five other circuits, on the
same record, would have held that United could not
be sued. This Court should grant review to decide
whether those other circuits are right—and whether
this suit may proceed against a claims administrator
with no obligation to pay benefits under the Plan.
IV. THE NINTH CIRCUIT’S DECISION IS
INCORRECT
Finally, this Court should grant review because the
Ninth Circuit’s decision is incorrect. Under ERISA
§ 502(a)(1)(B), only parties obligated to pay benefits
may be sued for benefits due.
1. ERISA recognizes that plans are contracts. For
the most part, ERISA does not dictate what terms a
plan must include. See Black & Decker, 538 U.S. at
833. But the statute does require that “ ‘[e]very
employee benefit plan * * * be established and main-
tained pursuant to a written instrument.’ ” Curtiss-
Wright, 514 U.S. at 83 (quoting 29 U.S.C.
§ 1102(a)(1)). And it also provides a cause of action
to enforce the terms of that written instrument.
That cause of action is found in § 502(a)(1)(B).
Section 502(a)(1)(B) authorizes “a participant or
beneficiary” to bring suit “to recover benefits due him
under the terms of his plan, to enforce his rights
under the terms of the plan, or to clarify his rights to
future benefits under the terms of the plan.” 29
U.S.C. § 1132(a)(1)(B) (emphases added). As the text
of this provision makes clear, a “cause of action for
benefits is * * * bound up with the written instru-
ment.” Heimeshoff v. Hartford Life & Accident Ins.
Co., 134 S. Ct. 604, 612 (2013). The only parties that
may sue for benefits are the parties to whom contrac-
23
tual obligations are owed—the “participant[s]” and
“beneficiar[ies]” of the plan. 29 U.S.C. § 1132(a)(1).
And the only benefits they may seek to recover are
the benefits they have a contractual right to receive—
the “benefits due * * * under the terms of the plan.”
Id. § 1132(a)(1)(B).
It follows that the only parties that may be sued for
benefits are the parties who bear a contractual
obligation to pay. Those parties include the plan
itself, which is bound by the written instrument it
entered into. They also include the plan administra-
tor, who, as a “trustee-like fiduciary,” Amara, 131
S. Ct. at 1877, may be directed to pay benefits from
plan assets, “much as a trustee may be compelled to
satisfy a trust obligation from trust assets.” Hahne-
mann, 514 F.3d at 308.
But the proper defendants do not include mere
claims administrators who, as third parties, bear no
obligation to pay benefits under the written instru-
ment. Because third-party claims administrators
owe no benefits under the contract, they cannot be
sued for “benefits due” under that contract. To order
such third parties to pay benefits under
§ 502(a)(1)(B) would be to order relief outside the
plan. And this Court has made clear that that would
be impermissible: Section 502(a)(1)(B) “says nothing
about the recovery of extracontractual damages.”
Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 144
(1985). Thus, the Second, Third, Seventh, Eighth,
and Tenth Circuits are correct: Only parties respon-
24
sible for paying benefits may be sued under
§ 502(a)(1)(B).4
This Court’s decision in Harris Trust & Savings
Bank v. Salomon Smith Barney Inc., 530 U.S. 238
(2000), is not to the contrary. That case dealt with a
different ERISA provision, § 502(a)(3), authorizing “a
participant, beneficiary, or fiduciary” to bring suit “to
enjoin any act or practice which violates any provi-
sion of [ERISA Title I] or the terms of the plan.” 29
U.S.C. § 1132(a)(3). The Court held that any party
who participates in such a violation may be the
subject of such a suit, even if he is not a fiduciary.
Harris Trust, 530 U.S. at 241. That makes sense,
because the “focus” of § 502(a)(3) “is on redressing
the ‘act or practice which violates any provision of
[ERISA Title I].’ ” Id. at 246 (quoting 29 U.S.C.
§ 1132(a)(3) (emphasis added)). What matters for
purposes of § 502(a)(3), then, is whether the defend-
ant participated in that “act or practice,” not whether
he is a fiduciary; if he did, he may be enjoined,
regardless of his fiduciary status.
Section 502(a)(1)(B) is different. Its focus is on
paying the “benefits due * * * under the terms of [the]
plan.” 29 U.S.C. § 1132(a)(1)(B) (emphasis added).
What matters, then, is whether the defendant is
responsible for paying those benefits under the plan.
4 Because United is undisputedly not the American Express
Plan’s insurer, this case does not present the question whether
the Seventh and Eighth Circuits are correct to hold that a plan
insurer may be sued under § 502(a)(1)(B). See supra Part I.1.b.
The question presented here is whether a claims administrator
with no obligation to pay may be sued—a question whose
answer the Second, Third, Seventh, Eighth, and Tenth Circuits
all agree is no.
25
If he is, he may be sued. But if he is not, no liability
under § 502(a)(1)(B) may lie. Accordingly, the only
proper defendants under § 502(a)(1)(B) are parties
with an obligation to pay the benefits due.
2. The Ninth Circuit’s decision cannot be recon-
ciled with this straightforward reading of the statu-
tory text. The Ninth Circuit held that United could
be a proper defendant if it “exercise[d] any discre-
tionary authority or discretionary control respecting
management of [the] plan.” Pet. App. 27a (internal
quotation marks omitted). But whether United has
“discretionary authority” or “control” has nothing to
do with whether it has an obligation to pay benefits
under the plan. Indeed, the Ninth Circuit acknowl-
edged that United has no “responsibility to pay
benefits.” Id. Thus, if allowed to stand, the Ninth
Circuit’s decision will have the effect of exposing
United and other third-party claims administrators
to “extracontractual” liability. Russell, 473 U.S. at
144. And that liability will only deter companies
from becoming claims administrators in the first
place, harming the countless plans across the coun-
try that rely on them to reduce the costs of pro-
cessing claims.
This is not to say that mere claims administrators
could never be sued under ERISA. In certain cir-
cumstances, a claims administrator could be a proper
defendant to a claim for breach of fiduciary duty, and
thus incur liability separate from the plan’s obliga-
tion to pay benefits. See 29 U.S.C. §§ 1109(a),
1132(a)(2). But ordering a mere claims administra-
tor to pay a participant’s benefits is like ordering an
accountant to pay his client’s taxes. Even if the
accountant’s error results in underpayment, it is still
the taxpayer who must pay the balance due. Simi-
26
larly, even if a claims administrator’s error results in
a wrongful denial of benefits, it is still the plan (or
some other party responsible for paying benefits)
that must make good on the obligation. When claims
administrators owe no benefits, they cannot be sued
for “benefits due.” This Court should grant certiorari
to reverse the contrary conclusion of the Ninth
Circuit.
CONCLUSION
The petition for a writ of certiorari should be
granted.
GREGORY SILBERT
WEIL, GOTSHAL &
MANGES LLP
767 Fifth Avenue
New York, NY 10153
(212) 310-8000
MATTHEW M. SHORS
UNITEDHEALTH GROUP
INCORPORATED
9900 Bren Road East
Minnetonka, MN 55343
(952) 936-1697
Respectfully submitted,
NEAL KUMAR KATYAL
Counsel of Record
CATHERINE E. STETSON
FREDERICK LIU
HOGAN LOVELLS US LLP
555 Thirteenth Street, NW
Washington, DC 20004
(202) 637-5600 [email protected]
Counsel for Petitioners
April 2015
APPENDIX
1a
APPENDIX A _________
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
_________
No. 12-17604 _________
SPINEDEX PHYSICAL THERAPY USA INCORPORATED; CLAUDE ARAGON; JACK ADAMS;
THE ARIZONA CHIROPRACTIC SOCIETY,
Plaintiffs-Appellants,
v.
UNITED HEALTHCARE OF ARIZONA, INC.; UNITED
HEALTHCARE, INC.; UNITED HEALTHCARE INSURANCE
COMPANY; UNITED HEALTHCARE SERVICES, INC.; INGENIX, INC.; UNITED HEALTH GROUP, INC.;
DEFENDANTS 5 & DINER FRANCHISE CORPORATION
GROUP HEALTH PLAN; ABBOTT LABORATORIES GROUP
HEALTH PLAN; ACOUSTIC TECHNOLOGIES, INC. GROUP
HEALTH PLAN; ADOBE DRYWALL, INC. GROUP HEALTH
PLAN; ADP TOTALSOURCE, INC. GROUP HEALTH PLAN; AFFILIATED CARDIOLOGISTS OF ARIZONA, P.C. GROUP
HEALTH PLAN; ART IN METAL U.S.A. GROUP HEALTH
PLAN; CAR-GRAPH, INC. GROUP HEALTH PLAN; CITIGROUP, INC. GROUP HEALTH PLAN; DISCOUNT TIRE
CO., INC. GROUP HEALTH PLAN; DOWNTOWN TEMPE
COMMUNITY, INC. GROUP HEALTH PLAN; FAXWATCH, INC. GROUP HEALTH PLAN; GENERAL MOTORS
CORPORATION GROUP HEALTH PLAN; GENUINE PARTS
COMPANY GROUP HEALTH PLAN; HOME DEPOT USA, INC. MEDICAL AND DENTAL PLAN; INSIGHT
ENTERPRISES, INC. GROUP HEALTH PLAN; ITC
2a
MANUFACTURING AND POWDER COATING GROUP
HEALTH PLAN; THE MARTZ AGENCY GROUP HEALTH
PLAN; METLIFE SECURITIES, INC. GROUP HEALTH
PLAN; OLDCASTLE GLASS, INC. GROUP HEALTH PLAN; PINNACLE ENGINEERING, INC. GROUP HEALTH PLAN; PFIZER, INC. GROUP HEALTH PLAN; THE PROCTER &
GAMBLE COMPANY GROUP; QUALEX INC. GROUP
HEALTH PLAN; QWEST COMMUNICATIONS
INTERNATIONAL INC. GROUP HEALTH PLAN, (UNITED
GROUP NO. 0197313); QWEST COMMUNICATIONS
INTERNATIONAL INC. GROUP HEALTH PLAN, (UNITED
GROUP NO. 0229050); REVLON CONSUMER PRODUCTS
CORPORATION GROUP HEALTH PLAN; RICHARD A. BIETZ, D.D.S., P.C. GROUP HEALTH PLAN; SHAMROCK
FOODS COMPANY GROUP HEALTH PLAN; SHASTA
INDUSTRIES, INC. GROUP HEALTH PLAN; SUMCO USA
CORPORATION GROUP HEALTH PLAN; TEMCON
CONCRETE CONSTRUCTION COMPANY GROUP HEALTH
PLAN; URS CORPORATION GROUP HEALTH PLAN; WATSON WILLIAMS FREIGHT AGENCY, INC. GROUP
HEALTH PLAN; WELLS FARGO & COMPANY GROUP
HEALTH PLAN; AMERICA WEST HOLDINGS
CORPORATION GROUP HEALTH PLAN; AMERICAN
EXPRESS COMPANY GROUP HEALTH PLAN; AT & T
CORPORATION GROUP HEALTH PLAN; DELTA AIRLINES, INC. GROUP HEALTH PLAN; HASBRO, INC. GROUP
HEALTH PLAN; HONEYWELL INTERNATIONAL, INC., GROUP HEALTH PLAN; INTERNATIONAL BUSINESS
MACHINE CORPORATION GROUP HEALTH PLAN; IRIDIUM
SATELLITE, LLC GROUP HEALTH PLAN; LUCENT
TECHNOLOGIES INC. GROUP HEALTH PLAN; SOUTHWEST
AIRLINES COMPANY GROUP HEALTH PLAN,
Defendants-Appellees. _________
3a
Appeal from the United States District Court for the District of Arizona
Roslyn O. Silver, Senior District Judge, Presiding,
D.C. No. 2:08-cv-00457-ROS _________
Argued and Submitted April 7, 2014 Filed November 5, 2014
_________
Joseph Creitz (argued), Joseph A. Creitz Law Of-fices, San Francisco, CA; Joseph A. Garofolo, Garofolo Law Group, P.C., San Francisco, CA, for Plain-tiffs-Appellants.
Nicholas James Pappas (argued) and Jared R. Friedmann, Reed Lawrence Collins, Weil Gotshal & Manges LLP, New York, NY; John Clifton West, Brownstein Hyatt Farber Schreck, LLP, Phoenix, AZ, for Defendants-Appellees.
Marcia Elizabeth Bove (argued), United States Department of Labor, Washington, D.C., for Amicus Curiae Secretary of Labor.
_________
OPINION _________
Before: BARRY G. SILVERMAN, WILLIAM A. FLETCHER, and JAY S. BYBEE, Circuit Judges.
W. FLETCHER, Circuit Judge:
Defendant United Healthcare (“United”) is the claims administrator for as many as forty-four de-fendant health plans (the “Plans”; collectively with United, “Defendants”). For most but not all of the Plans, United insures plan benefits. All of the Plans
4a
are governed by the Employee Retirement Income Security Act of 1974 (“ERISA”).
As assignee and would-be assignee of Plan benefi-ciaries, health care provider Spinedex filed suit against United and the Plans seeking payment of denied benefit claims. The Arizona Chiropractic So-ciety (“ACS”), as well as individual Plan beneficiaries Jack Adams and Claude Aragon, joined the suit as plaintiffs in an amended complaint. The amended complaint alleged improper denials of benefits as well as breaches of fiduciary duty.
The district court granted summary judgment to all defendants, holding, inter alia, that Spinedex lacked Article III standing to bring claims as an assignee. We reverse in part, affirm in part, vacate in part, and remand. We hold that Spinedex had Article III standing as assignee of Plan beneficiaries to bring claims for payment of benefits. We hold, further, (1) that Spinedex was not assigned the right to bring claims for breach of fiduciary duty; (2) that ACS does not have associational standing to bring suit against United; (3) that Adams’ claim for breach of fiduciary duty is timebarred; (4) that Spindex’s claims as as-signee of beneficiaries under the Martz Agency Plan and the Acoustic Technologies Plan are not time-barred; and (5) that the anti-assignment provi-sion of the Discount Tire Plan precluded assignment by Plan beneficiaries to Spinedex. Finally, we vacate or reverse, and remand for further proceedings, the district court’s holdings that Aragon’s claim for breach of fiduciary duty was not exhausted, that United is not a proper defendant for benefit claims under the American Express Plan, and that some of the claims assigned to Spinedex were not adminis-tratively exhausted.
5a
I. Background
United serves as claims administrator for Plans named as defendants in this suit. United’s role in-cludes processing claims for benefits, interpreting and applying plan provisions, reviewing appeals, and issuing payments in accordance with the terms of the Plans. For most but not all of the Plans, United in-sures the benefits.
During the period relevant to this suit, Spinedex was a physical therapy clinic whose patients included Plan beneficiaries. Spinedex’s patients signed several documents in connection with their treatment: a new patient form (the “Enrollment Form”); a form con-senting to Spinedex’s billing policies (the “Financial Policy”); an assignment of benefits form (the “As-signment”); and an “Authorization of Representation” form (the “Authorization”). The Enrollment Form allowed patients to provide their contact information and medical history. It also included a statement in which patients acknowledged that they were liable for all costs of the services rendered. The Financial Pol-icy disclosed Spinedex’s fees and practices relating to insurance coverage and the submission of claims. It provided that patients would be responsible for any treatment costs not covered by their health insurance plan. The Assignment assigned to Spinedex its pa-tients’ “rights and benefits” under their respective Plans. The Authorization stated that Spinedex was authorized to represent patients in administrative or civil proceedings that might be necessary to pursue payment of benefits under their health insurance plans.
The Plans paid benefits differently depending on whether or not a health care provider was part of
6a
United’s network. For health care services rendered by network providers, the Plans made payments di-rectly to those providers. For health care services not rendered by network providers, Plan beneficiaries were required to seek payment from their respective Plans. A typical Plan provision states, “When you receive Covered Health Services from a non-Network provider, you are responsible for requesting payment from us.” Almost all of the Plans allowed written as-signment of claims for services rendered by non-network providers, without requiring the consent of the Plans for such assignment. A typical Plan provision states, “If a Subscriber [i.e., a Plan benefi-ciary] provides written authorization to allow this, all or a portion of any Eligible Expenses due to a provider may be paid directly to the provider instead of being paid to the Subscriber.”
After treating patients covered by defendant Plans, Spinedex submitted claims to United. United paid some claims, but denied others in whole or in part. Although Spinedex’s Enrollment Form and Financial Policy both stated that patients were responsible to Spinedex for unpaid balances, Spinedex did not seek payment from its patients.
In March 2008, Spinedex filed a complaint under 29 U.S.C. § 1132(a), seeking payment of the denied claims. In July 2008, plaintiffs, including Spinedex, ACS, Adams, and Aragon, filed a Second Amended Complaint. The complaint alleged, inter alia, im-proper denials of benefits by United and the Plans, and breaches of fiduciary duty by United.
The district court granted summary judgment to Defendants. This appeal followed.
7a
II. Standard of Review
We review de novo a district court’s grant of sum-mary judgment. In re Syncor ERISA Litig., 516 F.3d 1095, 1100 (9th Cir. 2008). We review de novo a dis-trict court’s Article III standing determination. L.A.
Haven Hospice, Inc. v. Sebelius, 638 F.3d 644, 654 (9th Cir. 2011). We review de novo a dismissal on statute of limitations grounds. Donoghue v. Orange
Cnty., 848 F.2d 926, 929 (9th Cir. 1987). “Because the potential applicability vel non of exhaustion princi-ples is a question of law, we consider it de novo.” Diaz
v. United Agric. Emp. Welfare Benefit Plan & Trust, 50 F.3d 1478, 1483 (9th Cir. 1995).
III. Discussion
A. Spindex’s Standing to Bring Claims for Payment of Benefits
The district court held that Spinedex, as an assignee of its patients’ claims for payment of benefits, does not have Article III standing to bring those claims. We disagree.
“ERISA provides for a federal cause of action for civil claims aimed at enforcing the provisions of an ERISA plan.” Reynolds Metals Co. v. Ellis, 202 F.3d 1246, 1247 (9th Cir. 2000) (citing 29 U.S.C. § 1132(e)(1)). To have standing to state a claim under ERISA, “a plaintiff must fall within one of ERISA’s nine specific civil enforcement provisions, each of which details who may bring suit and what remedies are available.” Id. (citing 29 U.S.C. §§ 1132(a)(1)-(9)). ERISA’s civil enforcement provision, 29 U.S.C. § 1132(a), identifies only plan participants, benefi-ciaries, fiduciaries, and the Secretary of Labor as “[p]ersons empowered to bring a civil action.” See
Misic v. Bldg. Serv. Emps. Health & Welfare Trust,
8a
789 F.2d 1374, 1378 (9th Cir. 1986). As a non-participant health care provider, Spinedex can-not bring claims for benefits on its own behalf. It must do so derivatively, relying on its patients’ as-signments of their benefits claims. See id. at 1377-79; see also Franchise Tax Bd. v. Constr. Laborers Vaca-
tion Trust for S. Cal., 463 U.S. 1, 27, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983).
Defendants do not dispute that Spinedex patients would have had standing under ERISA and Article III to bring suit on their own behalf under the Plans of which they are beneficiaries. Nor do they dispute that Plan beneficiaries have a right under ERISA to assign their claims for payment of benefits. Nor, fi-nally, do they dispute that the terms of most of the Plans explicitly allow beneficiaries to assign their claims for payment of benefits to non-network pro-viders that have rendered health care services. But Defendants seek to avoid the consequence of the foregoing by contending that Spinedex, despite its status as assignee, lacks Article III standing to bring suit for payment of benefits.
The three elements of Article III standing are fa-miliar:
[A] plaintiff must show (1) it has suffered an “injury in fact” that is (a) concrete and partic-ularized and (b) actual or imminent, not con-jectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the de-fendant; and (3) it is likely, as opposed to merely speculative, that the injury will be re-dressed by a favorable decision.
Friends of the Earth, Inc. v. Laidlaw Envtl. Servs.
(TOC), Inc., 528 U.S. 167, 180-81, 120 S.Ct. 693, 145
9a
L.Ed.2d 610 (2000). Defendants point out that Spinedex has not sought payment from its patients for claims, or portions thereof, that United and the Plans have refused to pay. Defendants argue that because Spinedex has not sought payment from its assigning patients for any shortfall, those patients do not have the “injury in fact” necessary for Article III standing. Defendants argue that since Spinedex stands in the shoes of, and can have no greater injury than, its assignors, Spinedex has not suffered injury in fact.
We are aware of no circuit court that has accepted defendants’ argument. In the one circuit case directly on point, HCA Health Services of Georgia, Inc. v.
Employers Health Insurance Co., 240 F.3d 982 (11th Cir. 2001), the Eleventh Circuit squarely rejected the argument. Employers Health Insurance (“EHI”) claimed that HCA lacked Article III standing because it had never billed its patient-assignor for the amount EHI refused to pay. EHI argued that because the patient was not harmed by its refusal to pay, he lacked Article III standing to bring this action himself and that, as a result, assignee HCA also lacked Arti-cle III standing. Id. at 991. The Eleventh Circuit rejected this argument, holding that “as a provid-er-assignee, [HCA] ha[d] standing to sue for the re-covery of benefits.” Id.; see also Pac. Shores Hosp. v.
United Behavioral Health, 764 F.3d 1030 (9th Cir. 2014); Connecticut v. Physicians Health Servs. of
Conn., Inc., 287 F.3d 110, 117 (2d Cir. 2002); I.V. Servs. of Am., Inc. v. Trs. of Am. Consulting
Eng’rs Council Ins. Trust Fund, 136 F.3d 114, 117 n. 2 (2d Cir.1998) (collecting cases).
The Supreme Court case most directly on point is Sprint Communications Co. v. APCC Services, Inc.,
10a
554 U.S. 269, 128 S.Ct. 2531, 171 L.Ed.2d 424 (2008), in which payphone operators were owed money by long-distance carriers. The amounts of money owed were small, and payphone operators found it useful to assign unpaid claims to “aggregators.” Id. at 271, 128 S.Ct. 2531. In return for a fee, the aggregators agreed to pursue the payphone operators’ claims against the carriers, by filing suit if necessary. The aggregators agreed to remit the proceeds of the suits (minus their fee) to the payphone operators. At issue in Sprint Communications were claims by a group of aggregators who had taken assignments from about 1,400 payphone operators and who had brought suit against AT & T, Sprint, and other carriers. AT & T moved to dismiss, arguing that the aggregators had no standing under Article III. The centerpiece of AT & T’s argument was that because the aggregators were assignees for the sole purpose of collection, with no interest in the proceeds of the suits beyond the collection of their fee, they had insufficient interest to support Article III standing.
Based on an extensive historical analysis of the history of assignments, the Court concluded that the aggregators had standing. It wrote:
[H]istory and precedent are clear on the ques-tion before us: Assignees of a claim, including assignees for collection, have long been per-mitted to bring suit. A clear historical answer at least demands reasons for change. We can find no such reasons here, and accordingly we conclude that the aggregators have standing.
Id. at 275, 128 S.Ct. 2531. Even apart from the his-torical pedigree of assignees, the Court concluded
11a
that the aggregators had standing under modern Ar-ticle III doctrine. It wrote:
Petitioners argue . . . that the aggregators have not themselves suffered any injury in fact and that the assignments for collection “do not suffice to transfer the payphone operators’ in-juries.” It is, of course, true that the aggrega-tors did not originally suffer any injury caused by the long-distance carriers; the payphone operators did. But the payphone operators as-signed their claims to the aggregators lock, stock, and barrel. And within the past decade we have expressly held that an assignee can sue based on his assignor’s injuries. In Ver-
mont Agency [of Natural Resources v. United
States ex rel. Stevens, 529 U.S. 765, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000)], we considered whether a qui tam relator possesses Article III standing to bring suit under the False Claims Act, which authorizes a private party to bring suit to remedy an injury (fraud) that the United States, not the private party, suf-fered. . . . [I]n Vermont Agency we stated quite unequivocally that “the assignee of a claim has standing to assert the injury in fact suffered by the assignor.”
Id. at 286, 128 S.Ct. 2531 (citations omitted). The Court pointed out that federal courts routinely en-tertain suits in which the plaintiffs do not themselves obtain benefits-for example, trustees bringing suit on behalf of their trusts; guardians ad litem bringing suit on behalf of their wards; assignees in bankruptcy bringing suit to benefit bankrupt estates; and execu-tors bringing suits to benefit testator estates. Id. at 287-88, 128 S.Ct. 2531.
12a
Chief Justice Roberts, writing for himself and three others, dissented. He contended that the aggregators had no Article III standing because they were paid a flat fee and had no stake in any recovery obtained from the carriers. He wrote:
[R]espondents are authorized to bring suit on behalf of the payphone operators, but they have no claim to the recovery. Indeed, their take is not tied to the recovery in any way. [Re-spondents’ compensation is] not based on the measure of damages ultimately awarded by a court or paid by petitioners as part of a set-tlement. Respondents received the assign-ments only as a result of their willingness to assume the obligation of remitting any recov-ery to the assignors, the payphone operators.
Id. at 300-01, 128 S.Ct. 2531 (Roberts, C.J., dissent-ing).
Sprint Communications was a difficult case (to the degree that a five-four split is an indication of diffi-culty) because the aggregators had no stake in the outcome of the suits beyond their fee. That is, the aggregators were not assigned an interest in the claims; rather, they were assigned the claims for the sole purpose of collection, and were obligated to remit the entire proceeds (minus a fee) to the assignors. The difficulty presented by Sprint Communications does not exist in the case before us. Precisely the in-terest that the dissenters found lacking in Sprint
Communications is present here. Spinedex’s patients assigned the entirety of their claims against the Plans, and Spinedex, as assignee, is permitted to keep all amounts recovered in suits brought on those claims. The fact that Spinedex has chosen not to seek
13a
payment from its assignors, despite its contractual right to do so, does not mean that Spinedex had no right to recover benefits under the Plans from De-fendants. It means only that Spinedex has decided not to pursue its legal rights against its assignors.
The flaw in Defendants’ argument is that they would treat as determinative Spinedex’s patients’ injury in fact as it existed after they assigned their rights to Spinedex. We agree with Defendants that Spinedex has not sought to recover from its patients any shortfall in Spinedex’s recovery from the Plans, and that the patients have not suffered injury in fact after assigning their claims. But the patients’ injury in fact after the assignment is irrelevant. As assign-ee, Spinedex took from its assignors what they had at
the time of the assignment. At the time of the as-signment, Plan beneficiaries had the legal right to seek payment directly from the Plans for charges by non-network health care providers. If the benefi-ciaries had sought payment directly from their Plans for treatment provided by Spinedex, and if payment had been refused, they would have had an unques-tioned right to bring suit for benefits. No one, in-cluding Defendants in this suit, would contend that the beneficiaries would have lacked Article III standing in that circumstance. However, instead of bringing suit on their own behalf, plaintiffs assigned their claims to Spinedex.
Under Vermont Agency, it is black-letter law that an assignee has the same injury as its assignor for pur-poses of Article III. As the Court wrote in Sprint
Communications, “[I]n Vermont Agency we stated quite unequivocally that ‘the assignee of a claim has standing to assert the injury in fact suffered by the assignor.’” 554 U.S. at 286, 128 S.Ct. 2531; see also
14a
Misic, 789 F.2d at 1378 n. 4 (“[A]n assignment cannot create rights in the assignee not held by the assign-or. . . . [Rather,] the assignee stands in the shoes of the assignor, and, if the assignment is valid, has standing to assert whatever rights the assignor pos-sessed.”). Defendants themselves concede that as-signee Spinedex stands in the shoes of its assignors. At the time of the assignment, the Plan beneficiaries had Article III standing. Therefore, as assignee, Spinedex also has Article III standing.
In addition to holding that Spinedex lacked Arti-cle III standing, the district court issued alternative holdings on a number of issues relevant to Spinedex’s ability to bring suit. We address those holdings as necessary in the following sections.
B. Spinedex’s Claims for Breach of Fiduciary Duty
The district court held that Spinedex’s patients did not assign their rights to Spinedex to bring claims for breach of fiduciary duty. We agree.
The Assignments signed by Plan beneficiaries as-signed to Spinedex the right to seek payment of claims directly from their Plans. In relevant part, the Assignments provided that the Plans would make payments directly to Spinedex for services rendered. Any such payments would be considered
payment toward the total charges for the pro-fessional services rendered. THIS IS A DI-RECT ASSIGNMENT OF MY RIGHTS AND BENEFITS UNDER THIS POLICY. This payment, will not exceed my indebtedness to the above mentioned assignee, and I have agreed to pay, in a current manner, any bal-ance of said professional service charges over and above this insurance payment.
15a
(Capitalization in the original.)
Spinedex’s argument that the patients assigned their right to sue for breach of fiduciary duty depends on the meaning of the word “rights” in the capitalized sentence. Spinedex argues that the word “benefits” refers to payments to non-network providers for ser-vices rendered. It argues, further, that “rights” and “benefits” have different meanings, and that the word “rights” cannot refer to benefits. “Rights” must in-stead refer to rights to bring claims for breach of fi-duciary duty.
Spinedex’s argument is divorced from context. The entire focus of the Assignment is payment for medical services provided by Spinedex. The Assignment no-where indicates that, by executing the assignment, patients were assigning to Spinedex rights to bring claims for breach of fiduciary duty. See Britton v.
Co-op Banking Grp., 4 F.3d 742, 746 (9th Cir. 1993) (“[I]t is essential to an assignment of a right that the [assignor] manifest an intention to transfer the right to another person . . . .” (quoting Restatement (Sec-
ond) of Contracts § 324 (1981))). To the contrary, the entirety of the Assignment indicates that patients intended to assign to Spinedex only their rights to bring suit for payment of benefits. See id. (noting that the purported assignment document did not contain language that could be considered an effective as-signment of the rights at issue and stating that in-stead, “the plain language of the contract indicate[d] that the parties had just the opposite intent”). Be-cause Spinedex was assigned only the right to bring claims for payment of benefits, Spinedex has no right to bring claims for breach of fiduciary duty.
16a
C. Standing of Arizona Chiropractic Society
The district court held that the Arizona Chiropractic Society (“ACS”) does not have associational standing to bring suit. We agree.
ACS is a non-profit association of chiropractors. It contends that Defendants have improperly refused to pay for “decompression therapy” and other specified therapies, or have paid for such therapies at an im-properly low rate. It seeks declaratory and injunctive relief on behalf of its members against such allegedly improper practices.
Associational standing has three requirements.
[A]n association has standing to bring suit on behalf of its members when: (a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization’s purpose; and (c) neither the claim asserted nor the relief requested requires the participation of indi-vidual members in the lawsuit.
Hunt v. Wash. State Apple Adver. Comm’n, 432 U.S. 333, 343, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977). Be-cause ACS cannot satisfy the third requirement, it does not have standing to seek prospective relief on behalf of its members.
Under the third requirement, an association has standing only to seek relief that would not require the participation of its individual members. See Alaska
Fish & Wildlife Fed’n & Outdoor Council, Inc. v.
Dunkle, 829 F.2d 933, 938 (9th Cir. 1987); see also Pa.
Psychiatric Soc’y v. Green Spring Health Servs., Inc., 280 F.3d 278, 286 (3d Cir. 2002) (holding that an in-dustry group has associational standing where it is
17a
pursuing only injunctive and declaratory relief and “the heart of its complaint involves systemic policy violations that will make extensive individual par-ticipation unnecessary”). The relief ACS seeks in the Second Amended Complaint would require the par-ticipation of its individual members. The complaint alleges that in some cases payment was wrongfully withheld altogether, and other cases wrongfully withheld only in part. Further, the complaint refers to a number of different therapies, not limited to “decompression therapy,” for which payment has been allegedly wrongfully withheld or limited. Fi-nally, the complaint alleges that “ACS’s members and their patients have suffered actual injury as a result of the violations of ERISA herein alleged.” The com-plaint thus alleges variations in payments wrongfully withheld, in the treatments for which payment has been withheld, and in the individual situations of ACS members. Because of these multiple variations, specific to individual members of ACS, we conclude that the violations of which ACS complains are not susceptible to judicial treatment as “systematic policy violations that . . . make extensive individual partic-ipation unnecessary.” Pa. Psychiatric Soc’y, 280 F.3d at 286.
D. Claims of Adams and Aragon
The district court dismissed the claims of plaintiffs Jack Adams and Claude Aragon as barred by the statute of limitations and by their failure to exhaust. We agree with respect to Adams, and affirm. But we vacate the district court’s dismissal of Aragon’s claim and remand for further proceedings.
Adams and Aragon are beneficiaries, respectively, of the International Business Machines Plan and the
18a
Qwest Communications International Plan. Adams and Aragon allege that they were “improperly denied benefits in violation of ERISA and the terms of [their] Plan[s].” Adams was treated by Spinedex between December 2001 and February 2002. Aragon was treated by Spinedex between May and August 2005. Spinedex submitted claims for payment, which were denied.
Adams and Aragon, like other Spinedex patients, assigned to Spinedex the right to seek payment of benefits directly from their Plans. Because Adams and Aragon assigned their right to seek payment from their Plans, they may not themselves seek payment of those claims. See Hahnemann Univ. Hosp. v. All
Shore, Inc., 514 F.3d 300, 307 n. 5 (3d Cir. 2008) (“[I]f there is a valid assignment, the hospital becomes the only claimant because the original claimant gives up her claim by the assignment.” (citing Principal Mut.
Life Ins. Co. v. Charter Barclay Hosp., Inc., 81 F.3d 53, 55-56 (7th Cir. 1996))).
However, neither Adams nor Aragon assigned their claims for breach of fiduciary duty. The district court denied both of their claims, on the grounds that Adams’ claim was time-barred and that Aragon had not exhausted his administrative appeals. We agree with respect to Adams. Adams’ claim is time-barred because he was on notice in December 2004, at the latest, of the facts giving rise to his claim. The statute of limitations is three years, and Adams did not file suit until 2008.
The district court denied Aragon’s claim on the ground that he had not exhausted his administrative appeals. However, as a general rule, exhaustion is not required for statutory claims like Aragon’s. See
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Horan v. Kaiser Steel Ret. Plan, 947 F.2d 1412, 1416 n.1 (9th Cir. 1991). Defendants argue that exhaus-tion is required because Aragon’s statutory claim is no more than a “disguised” benefit claim. See Diaz, 50 F.3d at 1484 (rejecting the argument that an ERISA claimant can “attach a ‘statutory violation’ sticker to his or her [denial of benefits] claim and then . . . use that label as an asserted justification” for failure to exhaust). But that is not so. As the district court found, United’s alleged statutory violations were “willful and systematic, as contemplated in Massachusetts Mutual [Insurance Co. v. Russell, 473 U.S. 134, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985)],” and Aragon’s complaint sought injunctive relief that “clearly will benefit the Plans.” Aragon’s statutory claim thus is not a “disguised” claim for benefits, and he need not have exhausted. We therefore reverse the district court’s dismissal of Aragon’s claim for breach of fiduciary duty.
The district court did not consider whether, in the case’s current procedural posture, Aragon has Arti-cle III standing. That is, it did not consider whether Aragon would have standing to bring a claim for breach of fiduciary duty if he cannot pursue his claim for denial of benefits because he has assigned it to Spinedex. Cf. Glanton ex rel. ALCOA Prescription
Drug Plan v. AdvancePCS Inc., 465 F.3d 1123, 1125 (9th Cir. 2006) (“There is no redressability, and thus no standing, where (as is the case here) any prospec-tive benefits depend on an independent actor who retains ‘broad and legitimate discretion the courts cannot presume either to control or to predict.’” (quoting ASARCO, Inc. v. Kadish, 490 U.S. 605, 615, 109 S.Ct. 2037, 104 L.Ed.2d 696 (1989))). We there-
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fore remand Aragon’s case to the district court to consider that question in the first instance.
E. Spinedex’s Claims Against the Martz Agency Plan and the Acoustic Technologies Plan
The district court held that claims assigned to Spinedex by beneficiaries of the Martz Agency Plan and the Acoustic Technologies Plan are time-barred by limitations periods contained in the Plans. We disagree.
The summary plan descriptions (“SPDs”) for both Plans contain two-year limitations periods for claims of benefits. There is no question that Spinedex’s ac-tion was filed after the expiration of the two-year pe-riod. However, we hold that because the limitation periods were not properly disclosed in the SPDs, these provisions are unenforceable.
Because SPDs serve as “the employee’s primary source of information regarding employment bene-fits,” Bergt v. Ret. Plan for Pilots Employed by
MarkAir, Inc., 293 F.3d 1139, 1143 (9th Cir. 2002), they are subject to a number of statutory and regu-latory requirements. In particular, “circumstances which may result in disqualification, ineligibility, or denial or loss of benefits” must be clearly disclosed in the SPD. Scharff v. Raytheon Co. Short Term Disa-
bility Plan, 581 F.3d 899, 904 (9th Cir. 2009) (internal quotation marks omitted) (quoting 29 U.S.C. § 1022(b)). A limitation of the time for bringing suit qualifies as a circumstance “which may result in disqualification, ineligibility, or denial or loss of ben-efits.” Id. at 906 (internal quotation marks omitted) (quoting 29 U.S.C. § 1022(b)).
A Department of Labor regulation imposes specific requirements for the placement and format in an SPD
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of a provision falling under § 1022(b). The language of the regulation is clear, though a little convoluted: “The description or summary of restrictive plan pro-visions need not be disclosed in the summary plan description in close conjunction with the description or summary of benefits, provided that adjacent to the benefit description the page on which the restrictions are described is noted.” 29 C.F.R. § 2520.102-2(b). That is, either (1) the description or summary of the restrictive provision must be placed “in close con-junction with the description or summary of benefits,” or (2) the page on which the restrictive provision is described must be “noted” “adjacent to the benefit description.” The SPDs for the Martz Agency and Acoustic Technologies Plans comply with neither re-quirement.
The two SPDs are almost identical. The Martz Agency Plan has 76 numbered pages; the Acoustic Technologies Plan has 77. Both have ten sections. Section 1 is entitled “What’s Covered-Benefits.” Sec-tion 2 is entitled “What’s Not Covered-Exclusions.” Sections 1 and 2 of the Martz Agency Plan are on pages 3 through 36; they are on pages 3 through 38 of the Acoustic Technologies Plan. Section 9 of the Plans is entitled “General Legal Provisions.” The SPDs for each Plan contain a provision, contained in Section 9, specifying a two-year limitations period for bringing legal action. The limitations provision is labeled “Limitation of Action,” and it is the sixteenth of nineteen provisions. The fifteen earlier provisions in Section 9 are labeled “Your Relationship with Us,” “Our Relationship with Providers and Participating Employers,” “Your Relationship with Providers and Participating Employers,” “Notice,” “Statements by Participating Employer or Subscriber,” “Incentives to
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Providers,” “Incentives to You,” “Interpretation of Benefits,” “Administrative Services,” “Amendments,” “Clerical Error,” “Information and Records,” “Exam-ination of Covered Persons,” “Workers’ Compensation not Affected,” and “Refund of Overpayments.” The provision is on page 66 of the Martz Agency Plan and page 69 of the Acoustic Technologies Plan.
In Scharff, we employed a “reasonable plan partic-ipant” standard in analyzing 29 C.F.R. § 2520.102-2(b). Scharff, 581 F.3d at 907. Because “[t]he one-year deadline for filing suit regarding dis-ability claims was, logically, placed at the end of the disability chapter,” we held in Scharff that the placement satisfied § 2520.102-2(b). Id. We noted that a “reasonable plan participant applying for dis-
ability benefits would be expected to read, in its en-tirety, the Disability chapter of the SPD, as it ex-plains the rules relating to the benefits for which she is applying.” Id. (emphasis in original).
This case is a far cry from Scharff. The “Limitation of Action” provision, buried deep in Section 9, is not in “close conjunction” to benefits provisions, Sections 1 and 2. Nor is there any reference, adjacent to the benefits description, to the page number on which the “Limitation of Action” provision appears. Defendants contend that Section 8, entitled “When Coverage Ends,” is a benefits provision within the meaning of the regulation. We disagree. But even if Section 8 were a benefits provision, the limitation provision contained in Section 9, coming after fifteen unrelated provisions in that section, is hardly “in close conjunc-tion” with Section 8.
If we were to hold that the placement of the limita-tion provision in Section 9 satisfies Scharff’s “rea-
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sonable plan participant” standard under § 2520.102-2(b), we would, in effect, require a plan beneficiary to read every provision of an SPD in order to ensure that he or she did not miss a limitation provision. Such a requirement is what the regulation is specifically designed to avoid. We therefore con-clude that limitations periods in the SPDs for the Martz Agency and Acoustic Technologies Plans were not disclosed in compliance with 29 C.F.R. § 2520.102-2(b). Because they were not so disclosed, they are unenforceable.
F. Anti-Assignment Provision in the Discount Tire Plan
The district court held that an anti-assignment provision in the Discount Tire Plan prevented Spinedex’s patients from assigning claims under that Plan. We agree.
Anti-assignment clauses in ERISA plans are valid and enforceable. Davidowitz v. Delta Dental Plan of
Cal., Inc., 946 F.2d 1476, 1481 (9th Cir. 1991). It is uncontested that the Discount Tire Plan contains an anti-assignment provision. However, Plaintiffs argue that United (1) consented to the assignments by sending Explanation of Benefits (“EOB”) letters in-dicating that certain payments had been assigned to Spinedex, and (2) waived any right to enforce the an-ti-assignment provision by failing to raise it during the first-level administrative appeals process. We disagree with both arguments. We address them in turn.
First, the SPD for the Discount Tire Plan provides, “You may not assign your Benefits under the Plan to a non-Network provider without our consent. The
Claims Administrator may, however, in their discre-
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tion, pay a non-Network provider directly for services rendered to you.” (Emphasis added.) The word “our,” as used in the Plan, is defined in the Introduction to the SPD: “When we use the words ‘we,’ ‘us,’ and ‘our’ in this document, we are referring to the Plan Spon-sor.” The employer, Discount Tire Company, is the Plan Sponsor.
Acting as claims administrator, United sent EOB letters to Discount Tire Plan beneficiaries stating “PAYMENT ASSIGNED TO PROVIDER.” We con-strue United’s statement as an exercise of its discre-tionary authority. Under the explicit terms of the Plan, United had the discretionary authority only to send payments directly to non-network providers. United did not have authority to consent to assign-ment of benefits; only the Plan Sponsor had that au-thority. There is no evidence in the record that the Discount Tire Company consented to any assignment.
Second, we wrote in Harlick v. Blue Shield of Cali-
fornia:
A plan administrator may not fail to give a reason for a benefits denial during the admin-istrative process and then raise that reason for the first time when the denial is challenged in federal court . . . . The general rule, . . . in this circuit and in others, is that a court will not allow an ERISA plan administrator to assert a reason for denial of benefits that it had not given during the administrative process.
686 F.3d 699, 719-20 (9th Cir. 2012). That is, an administrator may not hold in reserve a known or reasonably knowable reason for denying a claim, and give that reason for the first time when the claimant challenges a benefits denial in court. But in the case
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before us, Defendants did not improperly assert a new reason in the district court. In Hermann Hospital v.
MEBA Medical & Benefits Plan, the Fifth Circuit re-jected a plan’s argument that “there was never a reason to assert the non-assignment clause until [the provider] formally claimed an assignment in its lawsuit.” 959 F.2d 569, 574 (5th Cir. 1992), overruled
on other grounds by Access Mediquip, LLC v. Unit-
edHealthcare Ins. Co., 698 F.3d 229 (5th Cir. 2012) (en banc). The court held that the plan was “estopped to assert the anti-assignment clause . . . because of its protracted failure to assert the clause when [the pro-vider] requested payment pursuant to a clear and unambiguous assignment.” Id. at 575; see also
Harlick, 686 F.3d at 720 (“ERISA and its imple-menting regulations are undermined where plan administrators have available sufficient information to assert a basis for denial of benefits, but choose to hold that basis in reserve rather than communicate it to the beneficiary.” (internal quotation marks and citations omitted)).
Unlike in Hermann, there is no evidence that United was aware, or should have been aware, during the administrative process that Spinedex was acting as its patients’ assignee. So far as United knew, Spinedex was acting merely as an authorized repre-sentative charged with filing, collecting, or appealing a claim on behalf of the patient. Defendants therefore did not waive their objection to the assignment in the district court when it became clear, for the first time, that Spinedex was claiming as an assignee.
G. United as a Proper Defendant
The district court held that United was not a proper defendant for claims brought under the American
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Express and Discount Tire Plans. (The prop-er-defendant issue is relevant only to claims brought under the American Express Plan because, as we held above, the anti-assignment provision of the Discount Tire Plan prevented assignment to Spinedex.) We are unable to determine with certainty a proper basis to affirm or reverse the district court’s holding.
Spinedex contends, under our analysis in Cyr v.
Reliance Standard Life Insurance Co., 642 F.3d 1202 (9th Cir. 2011) (en banc), that United is a proper de-fendant. Cyr had sued Reliance Standard Life, which was the plan insurer, but was neither the plan nor an administrator of the plan. We overruled previous decisions in which we had held “that only a benefit plan itself or the plan administrator of a benefit plan covered under ERISA is a proper defendant” in a suit for benefits under 29 U.S.C. § 1132(a)(1)(B). Id. at 1203-04. We noted that the text of § 1132(a)(1)(B) does not limit the classes of defendants that may be sued, and we held that suit may successfully be brought against a defendant under this section “as long as that party’s individual liability is estab-lished.” Id. at 1207. We concluded that because Re-liance was a plan insurer, responsible for paying le-gitimate benefits claims, it was “a logical defendant for an action by Cyr to recover benefits due to her under the terms of the plan and to enforce her rights under the terms of the plan.” Id.
As the district court noted, the reach of Cyr was left unclear in our opinion. But we read it to hold that proper defendants under § 1132(a)(1)(B) for improper denial of benefits at least include ERISA plans, for-mally designated plan administrators, insurers or other entities responsible for payment of benefits, and de facto plan administrators that improperly deny or
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cause improper denial of benefits. Suits under § 1132(a)(1)(B) to recover benefits may be brought “against the plan as an entity and against the fidu-
ciary of the plan.” Hall v. Lhaco, Inc., 140 F.3d 1190, 1194 (8th Cir. 1998) (emphasis added) (collecting cases). A fiduciary is any entity that “exercises any discretionary authority or discretionary control re-specting management of such plan or exercises any authority or control respecting management or dis-position of its assets . . . [or] has any discretionary authority or discretionary responsibility in the ad-ministration of such plan.” 29 U.S.C. § 1002(21)(A); see LifeCare Mgmt. Servs. LLC v. Ins. Mgmt. Adm’rs
Inc., 703 F.3d 835, 844-45 (5th Cir. 2013) (holding that a third-party administrator that neither was designated as the plan administrator nor was re-sponsible for paying claims was nonetheless a proper defendant based on the control it exercised over ben-efits claims processing).
With the appeal in its current posture, we cannot be certain of the status of United. Unlike most of the defendant Plans, the American Express Plan is self-insured. It is thus clear that United is not, based on a responsibility to pay benefits, a proper defendant under Cyr. But it is not clear whether United is a formally designated or de facto administrator. The district court held that United is not an administrator of the American Express Plan. It wrote that “the American Express Plan does not designate a plan administrator, meaning the plan administrator is the ‘sponsor’ identified as the Employee Benefits Admin-istrator Committee of American Express.” But in their brief to us, Defendants state without qualifica-tion, “United was a claims administrator for each of the 44 Plans named as defendants.”
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We are unable to reconcile the district court’s holding with Defendants’ apparent concession. We therefore vacate the district court’s holding that United is not a proper defendant for claims brought under the American Express Plan and remand for further proceedings on this issue.
H. Exhaustion of Administrative Remedies
Defendants argued in the district court that some claims were barred due to a failure to exhaust ad-ministrative remedies. The district court ultimately dismissed on other grounds, the most important of which was its holding that Spinedex had no Article III standing to bring claims as the patients’ assignee. However, the district court concluded that “[e]ven if standing existed, many individuals did not exhaust their administrative remedies for their benefit denial claims.” We vacate and remand on this issue.
“As a general rule, an ERISA claimant must ex-haust available administrative remedies before bringing a claim in federal court.” Barboza v. Cal.
Ass’n of Prof’l Firefighters, 651 F.3d 1073, 1076 (9th Cir. 2011). However, Plaintiffs argue that, because a number of patients’ plans did not expressly require exhaustion, those claims should not now be barred for failure to exhaust. Plaintiffs further argue that even where the plans require exhaustion of administrative remedies, the claims should be “deemed” exhausted as a result of United’s failure to follow appropriate claims procedures.
“ERISA seeks to avoid saddling plaintiffs . . . with the burdens and procedural delays imposed by in-artfully drafted plan terms.” Kirkendall v. Hallibur-
ton, Inc., 707 F.3d 173, 181 (2d Cir. 2013). Where plan documents could be fairly read as suggesting
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that exhaustion is not a mandatory prerequisite to bringing suit, claimants may be affirmatively misled by language that appears to make the exhaustion requirement permissive when in fact it is mandatory as a matter of law.
[E]xempting from the general exhaustion re-quirement those plan participants who “rea-sonably interpret” their ERISA plan not to impose an exhaustion requirement will have the salutary effect of encouraging employers and plan administrators to clarify their plan terms and, thereby, of leading more employees to pursue their benefits claims through their plan’s claims procedure in the first instance.
Id. at 180 (quoting Watts v. BellSouth Telecomms.,
Inc., 316 F.3d 1203, 1209 (11th Cir. 2003)).
Several of the Plans contain language which could reasonably be read as making optional the adminis-trative appeals process. For example, the Temcon Concrete Plan says that “[i]n the interest of saving time and money, you are encouraged to complete all steps in the complaint process . . . before bringing any legal action against us.” (Emphasis in original.) A number of our sister circuits have held that a claim-ant need not exhaust when the plan does not require it. See, e.g., Watts, 316 F.3d at 1209-10 (“If a plan claimant reasonably interprets the relevant state-ments in the summary plan description as permitting her to file a lawsuit without exhausting her admin-istrative remedies, and as a result she fails to exhaust those remedies, she is not barred by the court-made exhaustion requirement from pursuing her claim in court.”); Kirkendall, 707 F.3d at 180. We arguably adopted the same rule in Nelson v. EG & G Energy
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Measurements Group, Inc., 37 F.3d 1384 (9th Cir. 1994), and we do so explicitly today. In Nelson, we rejected a defendant’s contention “that the plaintiffs were required to bring their valuation claims before the Administrative Committee prior to seeking relief from the courts,” observing that “[n]othing in the Plan requires such action prior to instituting suit.” Id. at 1388.
Even where a plan expressly requires exhaustion of administrative remedies, 29 C.F.R. § 2560.503-1(l) provides that where a plan fails “to establish or follow claims procedures consistent with the requirements of this section,” claimants are “deemed to have ex-hausted [their] administrative remedies.” See Bar-
boza, 651 F.3d at 1076. The Secretary of Labor, ap-pearing as amicus in this case, interprets 29 C.F.R. § 2560.503-1(l) as allowing exceptions for de minimis deviations in certain circumstances, but requiring “deemed exhaustion” for violations more serious than de minimis violations. An agency’s interpretation of its own ambiguous regulation is entitled to deference. See Auer v. Robbins, 519 U.S. 452, 461, 117 S.Ct. 905, 137 L.Ed.2d 79 (1997). Because the Secretary’s in-terpretation is not “plainly erroneous or inconsistent with the regulation,” id., we adopt it here. Where United’s failure to comply with claims procedures went beyond mere de minimis violations, patients’ claims must be deemed exhausted under 29 C.F.R. § 2560.503-1(l).
Because the district court held that Spinedex lacked Article III standing to bring claims as an assignee, it did not perform a claim-by-claim analysis of exhaus-tion. We therefore remand to the district court to make this determination in the first instance. On remand, for each claim for which failure to exhaust is
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at issue, the district court should determine whether: (1) the plan required exhaustion of administrative remedies; (2) the claim must be deemed exhausted due to United’s noncompliance with the claims pro-cedures; and (3) the claim was in fact exhausted.
Conclusion
We hold that Spinedex had Article III standing to bring benefit claims against Defendants as assignee of its patients. Its injury in fact is the same injury its assignees had at the time of the assignment. Our other holdings are recited in the body of our opinion and need not be repeated here.
REVERSED in part, AFFIRMED in part, VA-
CATED in part, and REMANDED. Each party shall bear its own costs on appeal.
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APPENDIX B _________
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA
_________
No. CV-08-00457-PHX-ROS _________
Spinedex Physical Therapy, U.S.A, Inc., et al.,
Plaintiffs, v.
United Healthcare of Arizona, Inc., et al.,
Defendants. _________
REDACTED ORDER _________
Defendants seek summary judgment on a variety of claims. For the following reasons, the motion will be granted in part.
BACKGROUND
Plaintiff Spinedex Physical Therapy (“Spinedex”) is a medical practice which provided health care ser-vices to Plaintiffs Claude Aragon, Jack Adams, and many other individuals. Spinedex, on behalf of nu-merous individuals, Aragon, and Adams now assert various legal claims against forty employee welfare benefit plans (“Plans”) based on the unpaid medical claims. Plaintiffs also sued various corporations which allegedly function as fiduciaries and adminis-trators of the Plans (the “United Defendants”). 1
1 The Plans and the United Defendants will be referred to as “Defendants.”
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Plaintiffs seek to recover the benefits allegedly due as well as recover for various statutory violations of ERISA.
Given the extraordinary scope of Plaintiffs’ claims,2 the Court directed the Defendants to present certain legal issues using exemplars.3 The Defendants have done so by way of a motion for summary judgment.
ANALYSIS
I. Standard for Summary Judgment
Summary judgment is appropriate when “the dis-covery and disclosure materials on file, and any affi-davits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c)(2). When resolving motions for summary judgment, a court is not required to “scour the record in search of a genuine issue of triable fact.” Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996). Thus, when op-posing a motion for summary judgment, a party must “identify with reasonable particularity the evidence that precludes summary judgment.” Id. (emphasis added).
II. Plaintiffs Spinedex, Adams, and Aragon
Lack Standing
Defendants’ first argument for summary judgment
is that Plaintiffs Spinedex (as the assignee of Par-
ticipant 1), Adams, and Aragon lack standing to
2 This case involves approximately 10,000 claims by 58 indi-
viduals against 44 health plans. 3 A similar procedure was used by the Southern District of
New York in an attempt to narrow a large litigation. See Am.
Med. Ass’n v. United HealthCare Corp., 2007 WL 1771498 at 18 (S.D.N.Y).
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pursue their claim for benefits because they have not
suffered an injury in fact. Participant 1 obtained physical therapy services from January to March 2005,4 Jack Adams received physical therapy services from December 2001 to February 2002, and Claude Aragon received physical therapy services from May to August 2005.5 Spinedex submitted claims to these individuals’ health plans. The claims were not paid by the health plans, but Spinedex did not pursue payment from the individuals. In fact, Spinedex “wrote off’ the outstanding amounts owed by each individual as “bad debt.” This write off occurred in June 2006, long before the initiation of this suit. Plaintiffs have not presented any evidence showing Spinedex pursued payment from the individuals after that date. Given that Spinedex has not pursued payment, and has not presented evidence showing it plans to do so, the issue is whether Spinedex (as as-
signee of Participant 1’s rights), Adams, and Ara-gon have standing to pursue their claims against Defendants. They do not.
The “irreducible constitutional minimum of stand-ing contains three elements: (1) injury in fact; (2) causation; and (3) likelihood that a favorable de-cision will redress the injury.” Schneider v. Chertoff, 450 F.3d 944, 959 (9th Cir. 2006). The focus here is on whether Spinedex, Adams, and Aragon have suffered an injury in fact. An “injury in fact” is “an invasion of
4 At that time, Participant 1 was a member of the MetLife
Options Plan. Participant 1 is the only participant of that plan currently involved in this case.
5 At that time, Mr. Aragon was a member of the IBM Medical and Dental Benefits Plan. Mr. Aragon is the only participant of that plan currently involved in this case.
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a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not con-jectural or hypothetical.” Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560 (1992). In the context of a motion for summary judgment, “mere allegations of injury are insufficient.” Dept. of Commerce v. U.S.
House of Representatives, 525 U.S. 316, 329 (1999). Instead, Plaintiffs “must set forth by affidavit or other evidence specific facts supporting each element [of standing].”6 S.D. Myers, Inc. v. City and County of
San Francisco, 253 F.3d 461, 474 (9th Cir. 2001).
There is no published Ninth Circuit case addressing this type of situation. There is, however, an un-published case addressing a very similar situation. In Bryant v. Amercian Seafoods Co., 348 Fed. Appx. 256 (9th Cir. 2009), various employees of fishing compa-nies obtained medical treatment. The medical pro-viders billed the employers but the employers paid only a portion of the bills, leaving unpaid balances for which the employees were ostensibly responsible. Charles Bryant v. American Seafoods Co., LLC, C07-740RSM (W.D. Wash. Sept. 19, 2007). At the time the employees filed their complaint, the medical providers had not billed the employees directly. (The practice of billing a patient for the difference between the cost billed by the medical provider and the amount paid by a third party, usually an insurance
6 At this stage, Plaintiffs need not “establish that they in fact
have standing, but only that there is a genuine question of ma-terial fact as to the standing elements.” Central Delta Water
Agency v. United States, 306 F.3d 938, 947 (9th Cir. 2002). In other words, Plaintiffs need not definitively establish standing but they must, at the very least, submit evidence which, when taken as true, establishes standing. Lujan, 504 U.S. at 561.
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company, is known as “balance billing.”7) The medical providers billed the employees after the initial com-plaint was filed, but the Ninth Circuit found the em-ployees had not suffered an injury at the time of the original complaint. “Because the [employees] did not receive balance bills from their medical providers until after they filed their third amended complaint, the [employees] had suffered no injury-in-fact at the time the third amended complaint was filed and therefore lacked standing to bring their complaint.” Bryant, 348 Fed. Appx. at 257. The Ninth Circuit further observed that the employees who had never received a balance bill also failed to establish an in-jury at the time the lawsuit was filed. Id. at n.1.
Having failed to establish an injury at the time the suit was filed, the Ninth Circuit then addressed whether the threat of injury, i.e. the possibility the medical providers would eventually seek payment, was sufficient to confer standing. According to the court, the employees’ claim that they might “some day” be held responsible for the amounts allegedly owed to the medical providers was not sufficient. Id.
Because the plaintiffs had not presented “specific facts” showing they would be held responsible for the unpaid amounts, the threat of future injury was in-sufficient for standing purposes.
This Ninth Circuit holding appears to conflict with a holding by the Eleventh Circuit that balance billing is not required for plaintiffs to have standing to sue. In a case addressing whether the assignment of benefits is permitted under ERISA, the Eleventh Circuit ob-
7 See http://www.mibcn.com/glossary/glossaryB.shtml (defin-
ing balance billing”).
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served that allowing the assignment of benefits fur-thers the purposes of ERISA:
If provider-assignees cannot sue the ERISA plan for payment, they will bill the participant or beneficiary directly for the insured medical bills, and the participant or beneficiary will be required to bring suit against the benefit plan when claims go unpaid. On the other hand, if provider-assignees can sue for payment of benefits, an assignment will transfer the bur-den of bringing suit from plan participants and beneficiaries to providers[, who] are better situated and financed to pursue an action for benefits owed for their services. For these reasons, the interests of ERISA plan partici-pants and beneficiaries are better served by allowing provider-assignees to sue ERISA plans.
Cagle v. Bruner, 112 F.3d 1510, 1515 (11th Cir. 1997). Relying on this reasoning, the Eleventh Circuit later held that a provider need not balance bill a patient to have standing to sue. HCA Health Services of Geor-
gia, Inc. v. Employers Health Ins. Co., 240 F.3d 982, 991 (11th Cir. 2001). According to the Eleventh Cir-cuit, one of the reasons “for allowing provid-er-assignees derivative standing is so that providers will not balance bill participants, thereby requiring participants to bring suit against their insurance company for unpaid benefits.”8 Id. at 991 n.19.
8 This reasoning only makes sense if the Eleventh Circuit
concluded a balance bill to an individual meant the provider would be prohibited from bringing suit against the insurance company to recover the outstanding amount. Unfortunately, the Eleventh Circuit does not explain why this would be true. There
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In light of the opinions from the Ninth and Eleventh Circuit, the abstract legal question of whether bal-ance billing is necessary to confer standing is a close one. But the standing issue in this case can be re-solved without resolving the abstract question.
Participant 1, Adams, and Aragon received medical treatments between 2001 and 2005. Between August 2005 and March 2008 (the date this case was filed), Spinedex did not send any balance bills. The indi-vidual accounts were formally “written off’ in 2006 and Spinedex has not provided any evidence of an intent to reinstate the accounts. See Ross v. Albany
Medical Center, 916 F. Supp. 196, 200 (N.D.N.Y. 1996) (finding plaintiff lacked standing when hospital had forgiven portion of bill but Plaintiff wanted de-claratory judgment that hospital could not reinstate the bill). While bare allegations of an outstanding liability might have been sufficient to survive a mo-tion to dismiss, they are not sufficient to survive summary judgment. Plaintiffs were required to es-tablish standing “by affidavit or other evidence.” Lujan, 504 U.S. at 561. It was not sufficient for Plaintiffs merely to claim they remained contingently liable and Spinedex might “some day” attempt to collect. Id. at 564. Standing demands evidence Spinedex had “concrete plans” to collect the amounts from the individuals.9 Id.
is no obvious bar to a provider balance billing the pa-tient-thereby showing an intent to collect on the outstanding amounts-while at the same time suing the insurance company as the assignee of the patient’s rights under the plan.
9 Plaintiffs point to two declarations establishing that Spinedex’ s decision to “write off’ the accounts did not constitute a formal forgiveness of the liability. (Doc. 301 at 2; Doc. 310 at 3). But Spinedex’s internal accounting mechanisms are not the
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The situation in this case is very similar to the sit-uation in Owen v. Regence Bluecross Blueshield of
Utah, 388 F. Supp. 2d 1318 (D. Utah 2005). There, the plaintiff had purchased various medical equip-ment. The medical equipment supplier submitted a claim to the plaintiff’s health insurance for $2,461.80. The medical insurance agreed to pay only $842.64 of that amount. The plaintiff remained ostensibly liable for the difference. On summary judgment, the plain-tiff submitted an affidavit stating she believed the medical equipment supplier was still expecting pay-ment. There was not, however, any evidence the medical equipment supplier had billed the plaintiff for the difference. Moreover, the medical equipment supplier’s internal accounting reflected the plaintiff did not owe anything. The court concluded the “[t]he threat that [a medical provider] may attempt to col-lect, more than four years after the debt was incurred and in the face of evidence to the contrary, is not so imminent as to confer standing.” Id. at 1326.
Similarly here, the fact that the amounts had re-mained outstanding for as long as seven years prior to this suit belies Spinedex’s present claim that collec-tion efforts were imminent. Absent some indication
linchpin of the standing analysis. Instead, Plaintiffs should have pointed to “concrete plans” for Spinedex to assert claims against the individuals for the outstanding balances. See Lujan, 504 U.S. at 579 (Kennedy, J., concurring) (noting purchase of airline tickets for site visit or a statement containing a “date certain” for visit would be enough to confer standing). For ex-ample, Plaintiffs might have submitted a declaration stating Spinedex will assert claims against its patients for the out-standing amounts. Plaintiffs did not do so and the Court is left to conclude Spinedex’s collections attempts are not “certainly impending.” Whitmore v. Arkansas, 495 U.S. 149, 158 (1990).
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from Spinedex that it planned to seek recovery on the outstanding amounts, the Plaintiffs’ injury is too speculative to support standing. The Supreme Court has “said many times” that “[a] “[a]llegations of pos-sible future injury do not satisfy the requirements of [Article III]. A threatened injury must be certainly impending to constitute injury in fact.” Whitmore v.
Arkansas, 495 U.S. 149, 158 (1990). The evidence in the record shows there was no “certainly impending” intention to collect the outstanding amounts from Participant 1, Adams, and Aragon. Therefore, Spinedex (as assignee Participant 1), Adams, and Aragon lack standing.10
III. Plaintiffs Participant 2 and Participant 3
Cannot Assign Their Claims
Defendants seek summary judgment on the claims asserted by Spinedex on behalf of Participant 2 and Participant 3. These individuals were participants in the Discount Tire Plan. Defendants argue that the Discount Tire Plan prohibits assignments, meaning the alleged assignment by Participant 2 and Par-
ticipant 3 to Spinedex is ineffective. Plaintiffs re-spond that Discount Tire authorized the assignment,
10 Plaintiffs Aragon and Participant 1 are the only indi-
viduals asserting claims against the IBM Plan and the MetLife Plan. Granting summary judgment against these Plaintiffs means the IBM Plan and the MetLife Plan must be dismissed. Plaintiffs have repeatedly relied on a Sixth Circuit case to claim “ERISA class action plaintiffs are permitted to sue across plans, including plans of which they themselves are not participants.” (Doc. 295 at 18). The Ninth Circuit has in-structed otherwise. Acosta v. Pacific Enterprises, 950 F.2d 611, 617 (plaintiff “lacks standing to sue regarding the ad-ministration of the remaining plans, in which he does not participate”).
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that Discount Tire is estopped from enforcing the an-ti-assignment clause, and that Discount Tire waived the anti-assignment clause. None of these arguments have merit.
The Discount Tire Plan states a participant “may not assign [his or her] benefits under the Plan to a non-Network provider without [Discount Tire’s] con-sent. The Claims Administrators may, however, in their discretion, pay a non-Network provider directly for services rendered to [the participant].” (Doc. 250 at 12). It is well-established that anti-assignment clauses are valid and enforceable. Davidowitz v.
Delta Dental Plan of Cal., Inc., 946 F.2d 1476, 1480-81 (9th Cir. 1991). The dispute, therefore, is whether the anti-assignment clause is enforceable in this case.
A. The Discount Tire Plan Did Not
Authorize the Assignment
Plaintiffs’ first argument against enforcement of the anti-assignment clause is that Discount Tire effec-tively authorized the assignment” by the “explana-tions of benefits sent on behalf of the Discount Tire Plan indicating Payment Assigned to Provider.’” (Doc. 295 at 19). This statement, according to Plain-tiffs, meant Discount Tire consented to the assign-ment. But the summary plan description explained that direct payments might be made to a medical provider. The assignment of a right to direct payment does not constitute a complete assignment of rights. LeTourneau Lifelike Orthotics & Prosthetics, Inc. v.
Wal-Mart Stores, Inc., 298 F.3d 348, 351-52 (5th Cir. 2002). In other words, assigning payment to a pro-vider did not constitute a wholesale assignment of all
other rights. The fact that payment was made di-
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rectly to Spinedex did not assign to Spinedex other rights retained by Participant 2 and Participant 3. The Discount Tire Plan’s direct payment did not con-stitute a consent to any assignment.
B. Discount Tire Is Not Estopped
Plaintiffs’ second argument against enforcement of the anti-assignment clause is that Discount Tire should be estopped from enforcing the clause. Plain-tiffs claim estoppel exists because the claims admin-istrator “dealt directly with Spinedex throughout the claims process” and the explanations of benefits stated payment was assigned to Spinedex. (Doc. 295 at 20). Estoppel requires the existence of three con-ditions: “1) the party to be estopped must be apprised of the facts; 2) the other party must be ignorant of the true state of facts, and the party to be estopped must have acted so that the other party had a right to be-lieve that the party intended its conduct to be acted upon; and 3) the other party relied on the conduct to its prejudice.” Golden v. Faust, 766 F.2d 1339, 1341 (9th Cir. 1985). Plaintiffs have not established the second condition, i.e. Plaintiffs have not explained what actions Discount Tire took which gave rise to Plaintiff’s “right to believe” that Discount Tire in-tended to consent to the assignment. The facts that the claims administrator dealt directly with Spinedex, and indicated that payment was assigned to Spinedex, does not provide any indication that Discount Tire was consenting to a complete assign-ment. Plaintiffs have not pointed to any actions by Discount Tire evincing an intent to induce Spinedex into believing a complete assignment had occurred. The estoppel argument fails.
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C. The Anti-Assignment Clause Was Not
Waived
Plaintiffs’ final argument against enforcement of the anti-assignment clause is that Discount Tire waived this defense by failing to raise it in the ad-ministrative process. While it is true that plan ad-ministrators must preserve certain arguments by raising them during the administrative process, the presence of an anti-assignment clause is not such an argument. The lack of an effective assignment means an entity does not have standing to sue. Simon v.
Value Behavioral Health, Inc., 208 F.3d 1073, 1081-82 (9th Cir. 2000) (overruled on other grounds by
Odom v. Microsoft Corp., 486 F.3d 541 (9th Cir. 2007)). Standing cannot be waived. City of Los An-
geles v. County of Kern, 581 F.3d 841, 845 (9th Cir. 2009). Therefore, the anti-assignment clause argu-ment could not have been waived.
The Discount Tire anti-assignment clause is en-forceable, and Plaintiffs Participant 2 and Partic-
ipant 3 were not permitted to assign their claims.
IV. Participant 1 Did Not Assign All His Rights
Defendants argue Spinedex cannot pursue various statutory claims on behalf of Participant 1. Ac-cording to Defendants, the assignment executed by Participant 1 did not cover the statutory claims Spinedex now seeks to pursue. Defendants are cor-rect.
Participant 1 singed an “Assignment of Benefits” form. The form stated, in relevant part:
For the professional or medical expenses bene-fits allowable, and otherwise payable to me under my current insurance policy as payment
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toward the total charges for the professional services rendered. THIS IS A DIRECT AS-SIGNMENT OF MY RIGHTS AND BENEFITS UNDER THIS POLICY. This payment, will not exceed my indebtedness to [Spinedex], and I have agreed to pay, in a current manner, any balance of said professional service charges over and above this insurance payment.
Defendants concede this assignment gave Spinedex certain rights but argue the assignment did not give Spinedex the ability to pursue statutory claims, such as a claim for breach of fiduciary duty. Spinedex argues the assignment was a global assignment, in-cluding all statutory claims.
The level of specificity an ER1SA-assignment must have is controlled by federal common law. Texas Life,
Accident Health & Hosp. Service Ins. Guarantee As-
sociation v. Gaylord Entertainment Co., 105 F.3d 210.218 (5th Cir. 1997). The Ninth Circuit has not addressed the issue, but the Fifth Circuit has con-cluded federal common law requires an “express and knowing assignment.” Id. Under this rule, an as-signment of “the rights under, and any causes of ac-tion relating to, the covered policy” was not sufficient to assign a statutory breach of fiduciary duty claim. Id. The situation here is similar. Participant 1’s assignment was for the “rights and benefits” under the policy. There is no mention of statutory claims, and the language surrounding the assignment of “rights and benefits” indicates the assignment was aimed at claims for the payment of benefits. Because Participant 1’s assignment was not an “express” assignment of statutory claims, Spinedex cannot pursue statutory claims on Participant 1’s behalf.
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V. Plaintiffs Did Not Exhaust Their
Administrative Remedies
Defendants seek summary judgment on the claims asserted on behalf of Participant 4, Participant 5, Participant 2, Jack Adams, and Claude Aragon based on these individuals allegedly failing to ex-haust their administrative remedies. While Plaintiffs assert a variety of defenses to this argument, the undisputed evidence shows Plaintiffs did not properly exhaust.
The Ninth Circuit “long ago concluded that federal courts have the authority to enforce the exhaustion requirements in suits under ERIS A, and that as a matter of sound policy they should usually do so.”11 Vaught v. Scottsdale Healthcare Corp. Health Plan, 546 F.3d 620, 626 (9th Cir. 2008). There are, how-ever, exceptions to the exhaustion requirements. Two exceptions are “when resort to the administrative route is futile” or “where a plan fails to establish or follow ‘reasonable’ claims procedures.” Id. at 627. Plaintiffs argue both of these exceptions apply.
A. Futility
Plan participants need not exhaust their adminis-trative remedies when the administrative review “is demonstrably doomed to fail.” Diaz v. United Agr.
Employee Welfare Ben. Plan and Trust, 50 F.3d 1478,
11 Plaintiffs claim certain plans did not require the exhaustion
of administrative remedies. But “it makes no difference whether the [plan] itself explicitly requires exhaustion, because ERISA exhaustion is a judicial, not contractual doctrine.” Whitehead v.
Oklahoma Gas & Elec. Co., 187 F.3d 1184, 1190 (10th Cir. 1999). See also Alloco v. Metropolitan Life Ins. Co., 256 F. Supp. 2d 1023, 1033 n.11 (D. Ariz. 2003) (same). Moreover, the plans at issue do explicitly reference administrative exhaustion.
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1485 (9th Cir. 1995). To invoke this exception, par-ticipants must do more than make “bare assertions of futility.” Id. The facts in this case do not support a finding of futility. The undisputed evidence shows some administrative appeals resulted in the award of additional benefits. Administrative review cannot be “demonstrably doomed to fail” if it was sometimes successful.
B. Appropriate Claims Procedures
The administrative claim process is governed by Department of Labor regulations. Those “Claims Regulations” set forth specific requirements regard-ing how long plan administrators may take to adju-dicate claims as well as the required content of claim denials. “In the case of the failure of a plan to estab-lish or follow claims procedures consistent with the requirements of [the Claims Regulations], a claimant shall be deemed to have exhausted the administrative remedies available under the plan.” 29 C.F.R. § 2560.503-1(1). Plaintiffs claim the communications from Defendants did not comply with the Claims Regulations and all the claims should be deemed au-tomatically exhausted.
The Claims Regulations require, in relevant part, each claim determination contain “[deference to the specific plan provisions on which the determination is based.” 29 C.F.R. § 2560.503-1(g)(1)(ii). The Claims Regulations also require each determination contain “[a] description of the plan’s review procedures and the time limits applicable to such procedure, includ-ing a statement of the claimant’s right to bring a civil action under section 502(a) of [ERISA] following an adverse benefit determination on review.” 29 C.F.R.
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§ 2560.503-1(g)(1)(iv). Plaintiffs claim Defendants did not comply with these requirements.
When applying the Claims Regulations, courts have concluded substantial compliance is sufficient. “This means that technical noncompliance with ERISA procedures will be excused,” provided “full and fair review” of the decision is possible. Robinson v. Aetna
Life Ins. Co., 443 F.3d 389, 393 (5th Cir. 2006). In other words, noncompliance with the Claims Regula-tions will be excused if “the beneficiary was provided with a statement of reasons that allows a clear and precise understanding of the grounds for the admin-istrator’s position sufficient to permit effective re-view.” Ponsetti v. GE Pension Plan, 614 F.3d 684, 693 (7th Cir. 2010) (quotation omitted).
Plaintiffs are correct that the explanations of bene-fits (“EOBs”) provided by Defendants were often technically deficient. The EOBs regularly failed to cite the specific plan provision justifying the denial of certain claims and often failed to provide clear notice of the participants’ rights to file suit. But the tech-nical deficiencies do not rise to such a level that Plaintiffs’ failure to exhaust administrative remedies should be excused. Given the totality of the circum-stances, Plaintiffs understood which claims were be-ing denied and the basis for those denials. Moreover, there is no question Plaintiffs were already aware of their right to file suit under ERISA. The alleged technical noncompliance regarding this issue was harmless. Technical noncompliance with the Claims Regulations may support excusing administrative exhaustion in some cases. This is not such a case.12
12 A similar analysis applies to Plaintiffs’ arguments regard-
ing the alleged failure to make benefit determinations within the
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C. The Exemplars Did Not Exhaust
Because Plaintiffs were not legally excused from exhausting their claims, the issue becomes a factual one of whether Plaintiffs exhausted. The undisputed facts show Plaintiffs did not.13
i. Participant 4
Participant 4 was a participant in the Pfizer Medical Plan. The Pfizer Medical Plan offered two levels of administrative appeal. (UHG-SPINEDEX-000007680). Participant 4 received treatments from Spinedex in June 2005. Spinedex submitted claims to the United Defendants for the treatments. The United Defendants asked for additional infor-mation which Spinedex provided. On October 4, 2005, the United Defendants issued an BOB stating some claims would be paid while others were denied. Participant 4 did not submit an appeal of these de-
regulatory deadlines. It is undisputed benefit determinations were made and, accepting Plaintiffs’ calculations, the longest delay in making those determinations was approximately three months. (Most of the delays were far less.) Plaintiffs then waited years after the determinations before filing suit. The Court agrees with the analysis in Tindell v. Tree of Life, Inc., 672 F. Supp. 2d 1300, 1311 (MD. Fla. 2009) that these circumstances do not support excusing exhaustion. As stated by the Tindell court, “if a plan administrator fails to issue a timely decision on a claim for benefits or an appeal, the claimant may deem her adminis-trative remedies exhausted and immediately proceed to court. However, if the claimant waits for the plan administrator to issue a determination, then the claimant should pursue the administrative route to its end.” 672 F. Supp. 2d at 1311.
13 The Court already determined the anti-assignment clause of the Discount Tire Plan applies. Thus, the Court need not determine whether Participant 2, a participant in the Discount Tire Plan, exhausted her administrative remedies.
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nials. Participant 4 did not exhaust his adminis-trative remedies.
ii. Participant 5
Participant 5 was a participant in the Temcon Concrete Welfare Benefit Plan. This plan offered two levels of administrative appeal. (UHG-SPINEDEX-000009145). Participant 5 obtained treatment from Spinedex between October and November 2004. Spinedex submitted claims for this treatment and the United Defendants requested additional information. The United Defendants denied some of Partici-
pant 5’s claims in March 2005. Spinedex submitted an appeal of the denials in June 2005. On appeal, the United Defendants overturned some of the denials but refused to pay others. Spinedex did not submit a second level appeal. Participant 5 did not exhaust his administrative remedies.
iii. Jack Adams
Jack Adams was a participant in the Qwest Plan. That plan required one level of administrative appeal. (UHG-SPINEDEX-000008097). Between December 2001 and February 2002, Mr. Adams obtained treatment from Spinedex. Spinedex submitted claims for this treatment. Some of the claims were denied but Spinedex did not submit an appeal. Mr. Adams did not exhaust his administrative remedies.
iv. Claude Aragon
Claude Aragon was a participant in the IBM Plan. The IBM plan required two levels of administrative appeals, (UHG-SPINEDEX-000007020-000007021). Mr. Aragon was treated by Spinedex between May and August 2005, Spinedex submitted claims for this treatment. In August 2005, the United Defendants
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denied some of the claims. Spinedex did not submit an appeal. Mr. Aragon did not exhaust his adminis-trative remedies.
Exhaustion was not excused and none of the exem-plars properly exhausted. Thus, their claims must be dismissed for failure to exhaust.
D. Exhaustion Applies to Plaintiffs’
Statutory Claims
In addition to the claim for benefits, Plaintiffs have also asserted a variety of statutory claims. The gen-eral rule in the Ninth Circuit is that participants need not administratively exhaust claims based on statutory violations. That rule is qualified, however, when the statutory claims are disguised claims for benefits. Diaz, 50 F.3d at 1484 (participants may not “attach a ‘statutory violation’ sticker to his or her claim and then . . . use that label as an asserted jus-tification for a total failure to pursue the congres-sionally mandated internal appeal procedures”). The statutory claims in this case depend upon Defendants’ alleged “improper claims determinations and delega-tion of plan administrative duties.” (Doc. 132 at 23). These statutory claims are inextricably linked to the merits of Plaintiffs’ claims for benefits. That is, the statutory claims are dependent on the merits of Plaintiffs’ claim that the benefit claims were im-properly denied. In this situation, Plaintiffs should have exhausted their “statutory” claims. Because they did not, Defendants are entitled to summary judgment on the statutory claims.
VI. United Defendants Are Not Plan
Administrators
The United Defendants move for summary judg-ment on the claims asserted against them in Counts
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IV and V with respect to the Discount Tire Plan and the American Express Plan. Those counts allege improper benefit denial and the failure to supply documents. The Court previously ruled liability for both of these claims could only exist if the United Defendants were plan administrators.
The Ninth Circuit has ruled a plan administrator is “the person specifically so designated by the terms of the instrument under which the plan is operated.” Ford v. MCI Commc’ns Corp. Health & Welfare Plan, 399 F.3d 1076, 1081 (9th Cir. 2005). When no plan administrator is designated by the controlling docu-ments, the plan administrator is “the plan sponsor,” which is usually the employer. 29 U.S.C. § 1002(16)(A)(ii), (B). The Discount Tire Plan desig-nated the “Discount Tire Company/America’ s Tire Company” as the plan administrator. Thus, the United Defendants are not the plan administrator for the Discount Tire Plan. And the American Express Plan does not designate a plan administrator, meaning the plan administrator is the “sponsor” identified as the Employee Benefits Administrator Committee of American Express. Because the United Defendants are not the plan administrator of either the Discount Tire Plan or the American Express plan, Plaintiffs’ counts IV and V against the United De-fendants fail with respect to the Discount Tire Plan and the American Express Plan.
VII. The Claims Under the Martz Plan Are
Untimely
The final administrative denial for the Martz Plan participant was sent on October 1, 2004, but Spinedex waited until March 7, 2008 to file suit. The Martz Agency Welfare Benefit Plan requires participants
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file suit within two years of a final administrative denial. Defendants argue the claims against the Martz Plan are untimely. They are correct.
The limitation periods specified by plans are valid and enforceable unless they are unreasonable. Sousa
v. Unilab Corp. Class II (Non-Exempt) Members
Group Benefit Plan, 252 F. Supp. 2d 1046, 1055 (E.D. Cal. 2002). Courts have found periods as short as 45 and 90 days to be reasonable. Davidson v.
Wal-Mart Assocs. Health & Welfare Plan, 305 F. Supp. 2d 1059 (S.D. Iowa 2004); Segerdahl v.
Segerdahl Corp. Employee Stock Ownership Plan, 2006 WL 1030195 (N.D. Ill.). Plaintiffs have not presented evidence establishing the two-year limita-tions period of the Martz Plan was unreasonable. Therefore, the claims asserted against the Martz Plan are untimely.
VIII. Plaintiffs Are Not Entitled to Conduct
Discovery
In response to Defendants’ motion for summary judgment, Plaintiffs filed a motion pursuant to Fed-eral Rule of Civil Procedure 56(d).14 That Rule re-quires a court “continue a summary judgment motion upon a good faith showing by affidavit that the con-tinuance is needed to obtain facts essential to pre-clude summary judgment.” Cal Dep’t of Toxic Sub-
stances Control v. Campbell, 138 F.3d 772, 779 (9th Cir. 1998) (emphasis added). A party seeking addi-tional time to conduct discovery must show “(1) that they have set forth in affidavit form the specific facts that they hope to elicit from further discovery,
14 Plaintiffs actually moved under Rule 56(f). The 2010 Amendments to Rule 56 moved the provisions of subdivision (f) to subdivision (d) without substantial change.
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(2) that the facts sought exist, and (3) that these sought-after facts are ‘essential’ to resist the sum-mary judgment motion.” Id. Plaintiffs have failed to make this showing.
The declaration submitted in support of the Rule 56(d) motion consists of vague allegations that more discovery is needed. The declaration provides an “overview of factual and legal considerations rel-evant to Defendants’ arguments and . . . examples of specific discovery sought by Plaintiffs.” (Doc. 302 at 2). The declaration states Plaintiffs “need to conduct discovery into the policies, practices, and actions of the United Defendants relating to anti-assignment provisions.” It also states discovery “should be per-mitted . . . regarding the exact functions delegated to and/or performed by the United Defendants.” These vague allegations are far from sufficient; they do not identify the specific facts Plaintiffs will seek, that those facts exist, and that those facts are essential to resisting the summary judgment motion. Granting discovery based on these statements would violate the long standing policy precluding fishing expeditions.
The declaration is only slightly more specific re-garding the need for plan documents. Plaintiffs state they -cannot conclusively evaluate exhaustion with-out knowing how many levels of appeals are required by each plan, nor who is designated, delegated, or performing the functions and duties of the plan ad-ministrator without reviewing [all] the plan docu-ments.” But Plaintiffs admit they already possess the plan documents “effective on the date treatment was provided” and they only need additional documents because they speculate the plans might have changed after that date. (Doc. 302 at 3). Speculation cannot support a Rule 56(d) request. Margolis v. Ryan,
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140 F.3d 850, 854 (9th Cir. 1998) (“wild speculation” will not support 56(d) request); Terrell v. Brewer, 935 F.2d 1015, 1018 (9th Cir. 1991) (denial of 56(d) request proper when “the evidence sought . . . is the object of pure speculation”). Plaintiffs’ request to conduct additional discovery will be denied.
IX. Severance Is Not Appropriate
Plaintiffs’ complaint seeks relief on behalf of two class categories-the Physical Therapy Class and the VAX-D Class. (Doc. 38 at 29). Defendants move to sever the claims brought on behalf of Participant 6. These claims do not involve VAX-D treatments. In-stead, they are for a variety of other treatments pro-vided over twenty dates of service. Defendants claim severance is required as Participant 6’s claims would require an individualized inquiry into the coverage of his treatments and the sufficiency of the information submitted by Spinedex for payment of the claims. Plaintiffs respond that Participant 6’s claims fit squarely into the proposed Physical Ther-apy Class. Plaintiffs are correct.
“To join together in one action, plaintiffs must meet two specific requirements: (1) the right to relief as-serted by each plaintiff must arise out of or relate to the same transaction or occurrence, or series of transactions or occurrences; and (2) a question of law or fact common to all parties must arise in the action.” Coughlin v. Rogers, 130 F.3d 1348, 1351 (9th Cir. 1997). Plaintiffs argue Participant 6’s claims sat-isfy the first requirement in that they are part of a series of related transactions or occurrences. Those related transactions or occurrences are the denial of non-VAX-D physical therapy services.
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At this time, it appears Participant 6’s claims are sufficiently similar to the claims presented by other potential plaintiffs. Participant 6, and other po-tential plaintiffs, seek to recover benefits for non-VAX-D procedures. Defendants’ argument re-garding the uniqueness of Participant 6’s claims would be better suited to an opposition to class certi-fication.
X. Summary
In summary, Plaintiffs Spinedex, Adams, and Ara-gon do not have standing to assert their claims for benefits. Even if standing existed, many individuals did not exhaust their administrative remedies for their benefit denial claims. Because the statutory violations are inextricably linked to the benefit denial claims, participants should have exhausted their statutory violation claims as well. The United De-fendants are not plan administrators with respect to the Discount Tire Plan and the American Express Plan. Defendants are not entitled to a severance of Participant 6’s claims. The parties will be directed to submit a joint status report regarding the future of the litigation based on these conclusions.
Accordingly,
IT IS ORDERED the Motions for Summary Judgment (Doc. 237, 255) are GRANTED IN PART.
IT IS FURTHER ORDERED the Motion to Mod-ify (Doc. 291) is DENIED.
IT IS FURTHER ORDERED the Motion for Dis-covery (Doc. 300), the Motion to Strike (Doc. 352), and Motion to Appoint (Doc. 368) are DENIED.
IT IS FURTHER ORDERED the Motion to Amend (Doc. 315), the Motion to Strike (Doc. 344),
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and Motion to Supplement (Doc. 383) are GRANT-
ED.
IT IS FURTHER ORDERED the parties shall submit a joint statement regarding the future of this litigation no later than April 18, 2011.
DATED this 30th day of March, 2011.
/s/ Roslyn O. Silver Roslyn O. Silver Chief United States District Judge
cc: All non-termed counsel of record
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APPENDIX C _________
NOT FOR PUBLICATION _________
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
_________
No. 12-17604 D.C. No. 2-08-cv-00457-ROS
_________
SPINEDEX PHYSICAL THERAPY USA INCOR-PORATED; CLAUDE ARAGON; JACK ADAMS;
THE ARIZONA CHIROPRACTIC SOCIETY,
Plaintiffs-Appellants,
v.
UNITED HEALTHCARE OF ARIZONA, INC.; UNITED HEALTHCARE, INC.; UNITED
HEALTHCARE INSURANCE COMPANY; UNITED HEALTHCARE SERVICES, INC.; INGENIX, INC.; UNITED HEALTH GROUP, INC.; DEFENDANTS 5 & DINER FRANCHISE CORPORATIONGROUP
HEALTH PLAN; ABBOTT LABORATORIES GROUP HEALTH PLAN; ACOUSTIC
TECHNOLOGIES, INC. GROUP HEALTH PLAN; ADOBE DRYWALL, INC. GROUP HEALTH PLAN;
ADP TOTALSOURCE, INC. GROUP HEALTH PLAN; AFFILIATED CARDIOLOGISTS OF
ARIZONA, P.C. GROUP HEALTH PLAN; ART IN METAL U.S.A. GROUP HEALTH PLAN;
CAR-GRAPH, INC. GROUP HEALTH PLAN; CITIGROUP, INC. GROUP HEALTH PLAN;
DISCOUNT TIRE CO., INC.GROUP HEALTH PLAN; DOWNTOWN TEMPE COMMUNITY, INC.
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GROUP HEALTH PLAN; FAXWATCH, INC. GROUP HEALTH PLAN; GENERAL MOTORS
CORPORATION GROUP HEALTH PLAN; GENUINE PARTS COMPANY GROUP HEALTH PLAN; HOME DEPOT USA, INC. MEDICAL AND DENTAL PLAN; INSIGHT ENTERPRISES, INC.
GROUP HEALTH PLAN; ITC MANUFACTURING AND POWDER COATING GROUP HEALTH PLAN;
THE MARTZ AGENCY GROUP HEALTH PLAN; METLIFE SECURITIES, INC. GROUP HEALTH
PLAN; OLDCASTLE GLASS, INC. GROUP HEALTH PLAN; PINNACLE ENGINEERING, INC.
GROUP HEALTH PLAN; PFIZER, INC. GROUP HEALTH PLAN; THE PROCTER & GAMBLE COMPANY GROUP; QUALEX INC. GROUP
HEALTH PLAN; QWEST COMMUNICATIONS INTERNATIONAL INC. GROUP HEALTH PLAN,
(United Group No. 0197313); QWEST COMMUNICATIONS INTERNATIONAL INC. GROUP HEALTH PLAN, (United Group No.
0229050); REVLON CONSUMER PRODUCTS CORPORATION GROUP HEALTH PLAN;
RICHARD A. BIETZ, D.D.S., P.C. GROUP HEALTH PLAN; SHAMROCK FOODS COMPANY GROUP
HEALTH PLAN; SHASTA INDUSTRIES, INC. GROUP HEALTH PLAN; SUMCO USA
CORPORATION GROUP HEALTH PLAN; TEMCON CONCRETE CONSTRUCTION COMPANY GROUP
HEALTH PLAN; URS CORPORATION GROUP HEALTH PLAN; WATSON WILLIAMS FREIGHT AGENCY, INC. GROUP HEALTH PLAN; WELLS FARGO & COMPANY GROUP HEALTH PLAN; AMERICA WEST HOLDINGS CORPORATION
GROUP HEALTH PLAN; AMERICAN EXPRESS COMPANY GROUP HEALTH PLAN; AT & T
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CORPORATION GROUP HEALTH PLAN; DELTA AIRLINES, INC. GROUP HEALTH PLAN; HASBRO, INC. GROUP HEALTH PLAN;
HONEYWELL INTERNATIONAL, INC., GROUP HEALTH PLAN; INTERNATIONAL BUSINESS MACHINE CORPORATION GROUP HEALTH
PLAN; IRIDIUM SATELLITE, LLC GROUP HEALTH PLAN; LUCENT TECHNOLOGIES INC. GROUP HEALTH PLAN; SOUTHWEST AIRLINES
COMPANY GROUP HEALTH PLAN,
Defendants-Appellees. _________
Filed December 12, 2014 _________
ORDER _________
Before: SILVERMAN, W. FLETCHER, and BYBEE, Circuit Judges.
The panel has voted to deny the petition for re-hearing and to deny the petition for rehearing en banc, filed November 19, 2014.
The full court has been advised of the petition for en banc rehearing, and no judge of the court has re-quested a vote on the petition for rehearing en banc. Fed. R. App. P. 35(b).
The petition for rehearing and the petition for re-hearing en banc are DENIED.