1. Case Name: American Psychiatric Assoc. v. Anthem, Health Plans. United States District Court for the District of Connecticut, September 25, 2014
2. Type of Treatment Services Denied: Reimbursement rates
- Plaintiff: Aaron Panner, Mathew Seligman, Kellogg, Huber, Hansen, Todd, Evans & Figel, PLLC; Melissa Federico, Elizabeth Stewart, Murtha Cullina LLP
- Defendant: Eroca Knievel, Peter Bisio, Hogan Lovells, U.S., LLP, Matthew Geelna, Michael Durham, Donahue, Durham & Noonan, P.C.
4. Format: Ruling on Defendants’ Motion to Dismiss
- ERISA Claim? Yes
- Class Action or Individual Action? Individual
- Defendant? Insurance Company and Stockholder of Insurance Company
- Type of Insurance Plan? Self-Insured Employer Plan
- Type of Coverage Denial? Administrative
6. Legal Pointer: None.
7. Legal Issues and Causes of Action: Plaintiffs, a collection of individuals, doctors and professional associations, allege in their Second Amended Complaint that Defendants utilize methodologies to determine insurance reimbursement rates for mental health services that are not comparable to those Defendants utilize in determining reimbursement rates for medical and surgical services in breach of their fiduciary obligations to their plan holders under the Parity Act and ERISA. Plaintiffs also allege that, in doing so Defendants have breached contracts between Anthem and the doctors, which prohibit Anthem from discriminating against patients on the basis of their health status, and that Anthem has tortuously interfered with the business relationships between these doctors and their patients.
- Ruling: Defendants moved to dismiss the Second Amended Complaint, contending 1) that the doctors and professional organizations lack third-party and associational standing to assert these claims and 2) that Plaintiffs have failed to state a claim for breach of fiduciary duty under ERISA. Defendants’ Motion to Dismiss was granted as to Counts One through Three in the basis that Plaintiffs lack standing and have failed to state a claim and the Court declined to exercise supplemental jurisdiction over the remaining state law claims.
8. Narrative Case Description: Plaintiffs allege that Defendants violated the Parity Act because they generally reimburse psychiatrists less than they reimburse non-psychiatric physicians who provide comparable medical services and impose onerous administrative requirements on psychiatrists which can interfere with the doctor’s ability to provide quality care. More specifically, Plaintiffs allege that Defendants’ conduct prevented participants and beneficiaries like B.G. and S.M. from receiving the mental health services they need, limited their access to in network providers and treatment and often times forced them to change mental health providers.
Statutory Standing for Dr. Savulak based on B.S. and S.M.’s Assignment of Claims (Count II)
Dr. Savulak brought her claims based on an assignment from her patients, B.G. and S.M. Defendants contend that the purported assignment of claims from B.G. and S.M. to Dr. Savulak was invalid, because both of their plans contain anti-assignment provisions that prohibit assignment. Plaintiffs maintained that the anti-assignment provisions were inapplicable because they refer only to benefits, and B.G. and S.M. have instead assigned legal claims for breach of fiduciary duty. For the purposes of this motion, the Court assumed that there was a cognizable distinction between rights to receive benefits and legal claims for breach of ERISA fiduciary duty and that the anti-assignment policy provisions did not preclude assignment of B.G.’s and S.M.’s ERISA claims.
Statutory Assignability under ERISA
The Court next determined whether or not Plaintiffs’ assignment would confer standing under ERISA § 502(a)(3), which allows suits to be brought only by a participant, beneficiary, or fiduciary of an ERISA-regulated plan. The narrow exception to the ERISA standing requirements that allows patients to assign claims for the payment of healthcare services provides standing only to healthcare providers to whom a beneficiary has assigned his claim in exchange for health care. Here, the patients purport to assign to their doctors only their right, title, and interest in any claim or cause of action in law or in equity, i.e., the right to bring this lawsuit challenging financial and treatment limitations that impact patient access to mental health services. There are no facts pled to suggest that this assignment was in consideration for medical treatment. As such, the Court concluded that the medical-care-provider exception did not apply in the context of this case and there was no other basis for standing under ERISA. Accordingly, Dr. Savulak lacks standing for Count Two based on the assignment from B.C. and S.M.
Third Party Statutory Standing for Dr. Zanker and Dr. Savulak (Counts Two and Three)
Plaintiffs contend that Dr. Zanker and Dr. Savulak have statutory standing to assert ERISA claims on behalf of their patients by virtue of the doctor-patient relationship independent of any assignments. Defendants contend that there can be no standing to bring an ERISA claim absent a valid assignment.
A litigant may assert the rights of a third party when the litigant (1) has suffered injury in fact (2) has a close relationship with the third party; and (3) there is some hindrance to the third parties asserting their own rights. Plaintiffs noted that courts have generally recognized physicians’ authority to pursue the claims of their patients. However, the Court noted that such cases generally involved physicians asserting the constitutional basic protection to the woman’s right to choose rather than statutory rights. Here, Plaintiffs did not assert any constitutional claims on behalf of their patients. Additionally, the Court opined that the only case cited by Plaintiffs that arguably supported their statutory standing theory was Pennsylvania Psychiatric, where a divided Third Circuit panel held that psychiatrists had third party standing to assert claims on behalf of their patients that managed health care organizations impaired the quality of health care provided by psychiatrists to their patients by refusing to authorize necessary psychiatric treatment, excessively burdening the reimbursement process and impeding other vital care. Although Pennsylvania Psychiatric had been removed to federal court on ERISA preemption grounds, the claims originally pled were state law tort and contract claims and the Third Circuit did not discuss whether ERISA allowed third party statutory standing. The Court further stated that no court to date had read Pennsylvania Psychiatric as conferring third party statutory standing under ERISA and such a reading would be inconsistent with Second Circuit precedent, which has read ERISA as strictly limiting the universe of plaintiffs who may bring certain civil actions, with the narrow exception for assignment of claims to healthcare providers in exchange for health care, which this Court found inapplicable. As such, the Court concluded that ERISA precluded the theory of third party statutory standing that Plaintiffs advanced for Counts Two and Three.
Article III Standing by the Association Plaintiffs (Count 1)
The Association Plaintiffs’ contend that they have standing to bring the ERISA claim in Count One on behalf of their members’ patients based on a theory of associational standing. However, the Court noted that an association has standing to bring suit on behalf of its members under Article III only when its members would otherwise have standing to sue in their own right. Because the Court concluded that the Association Plaintiffs’ members lack third party standing, the Association Plaintiffs’ also lack standing for Count One.
Failure to State a Claim
Defendants contend that Plaintiffs’ ERISA § 502(a)(3) claims, alleging a breach of fiduciary duty must fail because the Complaint does not plausibly allege that Defendants were acting as fiduciaries. Specifically, Defendants contend that because the Complaint challenges their rate setting on a system-wide basis regardless of the particulars of the individual plan, the challenged conduct relates to a business decision rather than a fiduciary function. Plaintiffs do not challenge Defendants’ discretionary determination of eligibility for benefits under the terms of the plan documents but rather dispute the substantive decisions that Defendants have made in setting reimbursement rates to reduce the fees paid to psychiatrists. The Court concluded that general fiduciary duties under ERISA are not triggered by corporate business decisions.
9. Additional Comments: The Court declined to exercise supplemental jurisdiction over Plaintiffs’ remaining state claims.
10. Website: https://www.leagle.com/decision/infdco20141112636
11. Practical Implications and Lessons Learned: Plaintiffs should be aware of any contractual provisions that prohibit assignment, as it could impede the case moving forward on its merits.
12. All Legal Theories Presented in Case: Violation of Parity Act, Breach of Fiduciary Duty under ERISA, Breach of Contract
13. Successful Legal Theories in Case: None.