Every month, the International Foundation releases the Legal and Legislative Reporter, a compilation of new employee benefits–related case summaries. Below is a summary we thought you’d be interested in. Content provided by Morgan, Lewis & Bockius LLP.
The U.S. District Court for the Northern District of Illinois grants the defendants’ motion to dismiss because the plaintiff lacks standing to sue under the Employee Retirement Income Security Act of 1974 (ERISA).
The plaintiff is an out-of-network medical provider, acting on behalf of a patient as an authorized representative who was covered by a group health care plan. The defendants include the plan and its board of trustees. The plan is governed by ERISA.
The plaintiff brought suit on behalf of a patient to enforce her rights under ERISA. The patient originally sought medical attention from an in-network provider under the plan; however, the provider did not offer the treatment that she needed. As a result, it referred her to the plaintiff, an out-of-network provider. The plaintiff treated the patient and submitted a claim for the cost of the treatment. The plan refused to cover the entirety of the claim, and the patient filed an appeal with the plan, which was denied.
Because the patient could not allegedly afford an attorney, she appointed the plaintiff as her personal representative so that it could sue the plan for the remaining balance of the bill on her behalf. The plaintiff requested copies of the administrative record for the patient’s claim but did not receive the information until over a year later, after a court ordered the defendants to comply. The plaintiff brought suit, alleging violations of ERISA for benefits owed and seeking statutory penalties for the delay in producing the patient’s administrative record. In response, the defendants brought this motion to dismiss, arguing that the plaintiff does not have standing to sue under ERISA because it is neither a participant nor a beneficiary under the plan.
The plaintiff seeks to recover benefits from the plan for services it rendered to the patient. The plaintiff also alleges a violation of the ERISA provision requiring the plan administrator to provide a participant or beneficiary with a copy of plan documents within 30 days of a request. The defendants argue that because the plaintiff is an authorized representative, it does not have standing to sue under ERISA to recover plan benefits or seek statutory penalties. This is because the plaintiff is neither a participant nor beneficiary as defined under ERISA. Accordingly, the defendants argue that the plaintiff cannot sue on the patient’s behalf because ERISA cannot confer standing to a third party. Further, the defendants argue that the plan contains antiassignment provisions that prohibit lawsuits from third parties trying to enforce a participant’s rights under the plan.
ERISA limits the parties who can bring a civil action to participants, beneficiaries and fiduciaries. The defendants argue that because the plaintiff does not fall into one of these categories, it cannot sue under the plan. The plaintiff argues that because it is merely standing in the shoes of the patient, and the patient’s standing to sue as a participant under the plan and ERISA is undisputed, the plaintiff is entitled to invoke her standing as her representative.
The Seventh Circuit, the circuit in which the Northern District of Illinois is located, has found that if Congress intended for representatives to bring suit under ERISA, it would have included this in the plain language of the statute. The court finds that in the ERISA regulations, authorized representatives are expressly permitted to file internal claims and appeals, but no standing is conferred to bring a civil action. The court further finds that Congress limited civil actions to participants and beneficiaries—Simply representing an ERISA beneficiary does not make a provider an ERISA beneficiary. The court finds that the plaintiff cites no authority under ERISA that allows authorized representatives to file suit on behalf of a participant or beneficiary and, therefore, fails to meet its burden to show that the court has jurisdiction over this claim.
In addition, the court finds that even if the plaintiff has standing under ERISA, it has not plausibly alleged that it was permitted to bring a civil action under the language of the plan. The plan’s antiassignment language states that a participant cannot assign their rights as a participant to a provider or third party, or in any way alienate their claim for benefits. The plaintiff argues that the antiassignment language is inapplicable here because the patient appointed the plaintiff as her authorized representative and did not assign her rights to it.
The court finds that the plan’s language is clear as to what actions an authorized representative may take under the plan. The defendants argue that the plaintiff’s interpretation of this provision renders the antiassignment language meaningless because it is not read in the context of the full plan. The court finds that permitting the plaintiff to contract around this provision would render the clause meaningless and would contravene ERISA’s directive for courts to enforce the terms of an ERISA plan strictly.
Accordingly, the court grants the defendants’ motion to dismiss because the plaintiff had the opportunity to plead a plausible claim but failed to do so. Instead, the plaintiff brought suit under ERISA, pursuant to which it expressly did not have standing.
OSF HealthCare System, et al. v. SEIU HealthCare IL Personal Assistants Health Plan, et al., No. 3:21-cv-50029 (N.D. Ill., May 2, 2023).