In Rojas v. Cigna Health and Life Ins. Co., 793 F.3d 253, 258 (2d Cir. 2015), the Second Circuit joined several other circuits in holding that “healthcare providers are not ‘beneficiaries’ of an ERISA welfare plan by virtue of their in-network status or their entitlement to payment.” As a result, they do not have standing to sue under ERISA, barring the existence of other factors.
The plaintiffs in Rojas were a medical practice and its two owners (collectively Rojas). Rojas was an in-network medical provider for the defendants, Cigna Health and Life Insurance Company and Connecticut General Life Insurance Company (collectively Cigna). The Cigna Benefit Plan at issue provided that “All medical benefits are payable to you [the patient]. However, at the option of [Cigna], all or part of them may be paid directly to the person or institution on whose charge [the] claim is based. … When benefits are paid to you or your Dependent, you or your Dependent is responsible for reimbursing the Provider.” Cigna-covered Rojas patients would assign to Rojas the right to collect payment for their medical services directly from Cigna.
In 2013, Cigna performed a routine investigation of reimbursement claims filed by Rojas to determine whether they were consistent with Cigna’s coverage requirements about medical necessity. Cigna determined that they were not because Rojas was ordering blood tests to test for allergies instead of skin tests as required by Cigna coverage. Cigna determined that it had overpaid Rojas $844,344.52 for the allergy blood tests and demanded reimbursement. After further discussions, Cigna terminated Rojas as an in-network provider.
District Court Finding
Rojas filed a lawsuit in the United States District Court for the Southern District of New York alleging, among other things, that its termination as an in-network provider was a violation of the anti-retaliation provision of ERISA, 29 U.S.C. §1140, and demanding that it be reinstated as an in-network provider. Rojas also moved for a temporary restraining order (TRO) and a preliminary injunction to prevent Cigna from terminating it as an in-network provider. The district court denied the request for a TRO, finding that Rojas lacked standing under ERISA; ERISA anti-retaliation claims may be brought only by a “participant, beneficiary, or fiduciary” of an ERISA plan, and the court found that Rojas was not a “beneficiary” under ERISA.
Second Circuit Conclusion
On appeal to the Second Circuit, Rojas argued that it was in fact an ERISA beneficiary, making two alternative arguments. First, it argued the language of the Benefit Plan and the way it structures payments made Rojas a beneficiary. Second, it argued it was a “participant-designated beneficiary” by virtue of assignments made to it by its patients. The Second Circuit rejected both arguments.
As a threshold matter, the Second Circuit noted the plaintiffs filed suit under the wrong agreement, as their status as an in-network provider was conferred by their Provider Agreement with Cigna, not by the Benefit Plan between Cigna and its insureds. The Court then noted plaintiffs did not take the opportunity to change their claim after this error was pointed out by the Court during oral argument.
With respect to the first argument, the Court stated healthcare providers were not included as ERISA beneficiaries: “Beneficiary, as it is used in ERISA, does not without more encompass healthcare providers. Although the term ‘benefit’ is not defined in ERISA, we are persuaded that Congress did not intend to include doctors in the category of ‘beneficiaries.’” The benefit belonged to the patients, not to Rojas. The fact that Cigna provided for the possibility of direct reimbursement of medical providers under the Benefit Plan did not make the providers beneficiaries because, as the Court noted, “that right to payment does not a beneficiary make.” This conclusion was supported by the assignments signed by Rojas patients because if Rojas had a right to direct payment, the assignments would not have been necessary.
In reaching this conclusion, the Court stated that its interpretation was consistent with every circuit that had considered the question, including the Sixth, Ninth and Eleventh.
The Second Circuit also ruled that Rojas’s status as its patients’ assignee did not give it standing under ERISA. The assignments only gave Rojas the right to pursue the patients’ claims for payment, but did not include the right to pursue any other category of ERISA claims. Therefore, the patients did not assign a right to sue under ERISA’s anti-retaliation provision, the provision under which Rojas sought relief. The assignment argument also failed under common law because the patients could assign only their own rights. Because they had not been removed from the Cigna network as providers and Cigna did not seek reimbursement from them for the overpaid claims, the patients had no anti-retaliation claim to assign.
This decision provides valuable clarification of the rights of healthcare providers under ERISA and the severe limitations on their potential standing to sue as ERISA beneficiaries. Providers are not ERISA beneficiaries by default, and any rights that they may have under ERISA are derivative of their patients who are beneficiaries under an ERISA plan. It is also a valuable reminder to providers to seek relief from insurance companies under the provider’s own provider contract, and not the contract between the insureds and the insurer.