morning ladies and gentlemen ready for argument in pennsylvania chiropractic association against independence hospital indemnity plan mr shelley the morning has made it please the court i'm anthony shelley here on behalf of the appellant independent hospital indemnity plan the district court prompted by the apple e's in this case adopted a novel theory for permitting medical medical providers to sue under ri it said they had direct standing to sue because their risk of beneficiaries the district court's ruling distorts arista transforming it into one that protects providers as opposed to just employees it's the decision that only around for years already been courts and most notably recently by the second circuit in the rojas decision and we think the second circuit was right the district court was wrong and therefore that the district court's decisions because they're wrong for many reasons should be reversed in their entire first start with the difference between direct standing and derivative standing because it's really key to understanding the case first of all direct standing one of the standing have to do with this case well it's the parties and it might have to do with whether the plaintiffs are beneficiaries as to risk or uses that term but that's a distinct term from stand there anything other than here other than the question whether they are holdings of lexmark against static control components year and a half ago i don't know why lawyers are paying no attention to the supreme court but you can count on us to pay attention to the supreme court so my question again is there anything here other than the question whether they are beneficiaries as a risky uses that term that's the main question whether they are beneficiaries i would also say that if they were the scope of the injunction is too broad right i that i understand and then there'd be a target i'm trying to figure out whether you are using standing in anything like the way the supreme court wants that term used or whether this is again just a little bit of jargon that is  unrelated to how the supreme court uses the word standing is unrelated to the way the supreme court you are like so let's use the right terminology let's do that let's begin then with the definitions that are relevant to the right terminology participant and beneficiary so a participant under risk is an employee or former employee of an employer who is or may become eligible to receive the benefits and a beneficiary is a person designated by a participant or by the terms of an employee benefit plan who is or may be coming title to a benefit so to be a beneficiary there are two requirements one is a designation requirement have to be designated by the by the participant or by the employee benefit plans terms and second there's a requirement that even if there is a designation you have to receive benefits the judge can only found that there were both types of standing cause or a both types of designations but the you can even skip over the designation idea because the second requirement that even if there were proper designations there was no benefit that the providers received there was no risk to benefit and i'd like to read from the just a few sentences from the the rojas case from the second circuit which payments for medical services rendered and coverage for illness or services received the only type of benefit arista gives in a welfare benefit plan is coverage for medical services needed or received it doesn't provide for some sort of benefit to providers for services they rendered the court said that that was essentially the end of the matter because a provider even if somehow designated properly never receives a benefit they don't they might receive a benefit in the in the dictionary sense that they get an advantage or they get payment and everyone wants payment so payment is beneficial to them but they aren't receiving and a risk to benefit which is the coverage the guarantee that in the event of sickness or illness you won't go bankrupt because you have to pay your own medical bills so in that sense that really ends the case they aren't beneficiaries for that reason and what the the epilogues say in response is first of all well there are lots of cases out there where providers have been allowed to sue under ressa but those are not like they sought those are not cases where they met the they sought to meet the definition of beneficiary instead those are cases where a participant or beneficiary that did meet the definition then under the common law signed their right and the party stood in the shoes as as the beneficiary participant so they weren't they they didn't satisfy the definition but under common law rules they became a beneficiary so then you're so right there is it is possible to have a provider and a patient under those circumstances be beneficiaries of a project that even under those circumstances you described it's possible and for the provider and the patient to be a beneficiary it well in terms of the assignment once the assignment is may but what's the assignment is made the patient is no longer relevant because all the rights of transferred to the provider but the provider can only sue in the same way the assign or the patient could have sued the so the the patient has to have been injured first of all and has to have assigned the right correctly in this case that theory doesn't work either but judge kelly really didn't even get to it so then so then that's another question i believe we agree with you on the beneficiary point shouldn't we re man to the district court to make findings on the scope and bring liddy of any assignment i don't think so your honor because there it's really a futile  futile effort and i'd like to just address that for a second one is that if there were assignments and again the rowhouse case gets into this the patients were never liable for anything the in the sense of there is  dispute about whether the providers could be payment or not and we say they couldn't but would rojas says is that if the insurer never sought money the recoupment here from the participant themselves or the beneficiary themselves there's nothing to the dispute becomes exclusively one between the provider and the insurance company because there there's nothing that the insurance company has ever sought from in the recoupment for instance from the individual so you can't assign something there's nothing negative that's occurring from the insurance company in that recruitment situation and so if there's a correct assignment it doesn't matter it doesn't matter in that situation because there's nothing being assigned the only money sought here was from the providers now they had a right if they didn't like that they had a contract is just a book mentioned as contract waters pennsylvania state sure it's law there are remedies in state courts if they didn't like that we don't think they would win but that doesn't suddenly get them into the world of a recess trying to sue on behalf of  pennsylvania the other thing i want to mention judge williams is that on the assignment there descended backs of the district court not only did does it make it's not necessary because independence never sought any money from the individuals who would be the sign s but more of this court's decision and more land makes clear that assignments are backward looking you can only assign past past remedies that can be  assign future looking rights so what you have here is that the providers want future looking injunctions that give them appeal rights and procedures going forward for future recruitments that's never something you can assign under addition to the ones we stated in our brief why derivative standing excuse me why going back to the district court for this assignment theory would be unnecessary in addition this case is really one brought by the p c a for the most part and you really can't have represented the standing in that sense in the more constitutional sense for an organization that in a in a setting where you have to go and look at the individual assignments of all of their members the provisions of the plans of all of the of all of the participants and determine well what's the assignment say in this case and what does the plan say in this case that the anti assignment provisions and so therefore we would say that  to send it back for the additional encouragers williams that you suggested would not be i would not be necessary here really in response to all this the vini appellee say while there are lots of these other cases out there that don't really fit our mold kennedy they say fits the mold here and kennedy is a case that really can't be stretched to the degree that the pelleas want here and that's because in fact in kennedy the court was pretty clear that what they were doing was looking to the injury of the actual patients in that case and when since the patient had no liability in the case then the provider lost on the merits and so that looks a lot more like the provider wasn't a beneficiary in the first instance in addition the court the court clarified ten of the first indicator and then and moreland an indicator the court noted that under the kennedy theory when an assigned assignee provider gets into federal court under the definitions of of arista it does so because it stands in the shoes to use those words to cater uses those words stands in the shoes of the of the participant or beneficiary and can only sue to the extent that the participant or beneficiary could so that again doesn't look like the provider can actually itself satisfy the definition and then in addition ten years later in moreland the court again talked about what kennedy meant and talks about ten of the meant that with an assignment the provider act as the participant or the beneficiary who made the assignment that can't be th that the provider meets the definition of beneficiary because then they would just be a beneficiary they wouldn't be a participant or beneficiary with a do through the sign as they become a participant or beneficiary through that route the of the assignments in the commonwealth so we would say that the way in which the courts help the district court held the los did that it had that it had beneficiaries before it was incorrect they didn't meet the deaf and the providers didn't meet the definition of beneficiary and in addition to send it back now to see if they could get their derivative lee through the assignment theory has a whole host of problems that really make it make it futile a couple of other points i'd like to mention one is that even if you found that the per the providers were properly before the court in aristocles the relief the court awarded was an injunction and that's really not an appropriate form of relief for violation of supposed claims regulations we don't we of course don't think any claims while claims violations occurred because in fact these were not beneficiaries or participants who were seeking the procedures and in fact they had no authorized representative forms of any type to act on behalf in a appeal on behalf of the particular participants or beneficiaries but in any event what the deal well says is the remedy for any kind of violations for claims or for claims violations or procedural violations right below so there's no basis for awarding attorneys fees against us on shifting fees under rissa but even if we were wrong we followed this issue of whether their benefits year we followed the case law that was out there hook line and sinker every court of appeals for instance to have addressed this issue of whether provider meets the definition of beneficiaries how opposite is held the way we want them to hold the rojas court again stated and so to argue that we weren't substantially justified which is the test under the attorney fee under the attorney for the analysis it's impossible in that situation even as the district judge agreed that we were within within our realm of action because he stayed the injunction because reasonable people could disagree about the merits of the case but then he awarded fees against us saying we weren't substantially justified so that doesn't all hold together and so we think again the decisions of below should be reversed and there's really no reason again for a man that should have been in state court in pennsylvania  ensuring the benefits are properly paid and heard i want to make sure that you agree with the answer mr shelley gave to my question the do the two individual chiropractors here have contracts with the defendant yes plan group contract and it detailed the benefits that were available under the plan and the coverage issues for what services could be provided under the plans exhibit fifty nine was a keystone evidence of coverage  refers to as a as a handbook and throughout the document oh no i'm trying to be clear where do i go to see the plans i'm not interested in him well no these are part these are in fact are the plans for example when i was in the evidence of coverage when it identifies what are the terms of the plan it specifies that any right to the member to receive benefits under the contract and handbook it says they h m o is not liable under the contract fact what these are the way these systems work is that there will be a contract that independence has entered into with the plan the plan will stablish a process to it to provide insurance it will then hot it hires engine independent to provide the insurance and issues a document that isn't evidence of coverage that summarized the details what are the rights and remedies resupplying well your honor i heard there are lots of contracts in paul in the carrying out  that's why i asked where do i go to find the plans on which this suit necessarily rests if it is a claim by a beneficiary of a plan your honor i think the issue is these two documents are in fact represent the contractual terms that is a form not what i asked i asked for a location of a plan and not a location of a contract that may help implement a plan if this is a well i think the for the problem here your honor is the way the system works within the healthcare context the evidence of coverage is what all the parties recognized for purposes of benefits and they're right that i don't care what parties recognize maybe insurance contracts could carry out a plan there may be contracts provider agreements between insurers and medical providers but they aren't the plan in order to have a suit by a beneficiary under a plan it has  enforce the terms of a plan that's why i want to see a plan well i apologize for struggling here but your honor but i believe the real in terms of the way every court has ever addressed the issue when there is a dispute over benefit payments what the problem here your honor don't let me tell you what my my basic problem hope you can see my basic problem they our our decision in kennedy the plaintiff was an ask any of a claim directly  the plaintiffs in this suit seem to be people who have contracts you call them provider agreements with an insurance company and your just assuming that these contracts are plans  a player but that's the thing you have to establish if you're going to bring yourself within the scope of kennedy and asserting it loudly doesn't establish it well i think first of all there's two separate issues while it's true that our providers have separate contracts that makes them in network providers that's not what exhibits fifty nine and thirty eight are there's a separate contract that a provider has that says we are going to be providing some health care services to plan members to insure parties and in exchange for that we'll be reimbursed our cost that is not what exhibits fifty nine and thirty eight are exhibits fifty nine and thirty eight are the documents issued by the plan to state these are the contractual rights that the members have to receive health care services in exchange for payment of payment of benefits then there are literally would be no other document and certainly none has been identified by independents or otherwise that stopped that details what are the contractual remedies available now when during the disorder the course of discovery we in fact asked for discovery to produce plan documents these are doctors that were produced when independent made a summary judgment motion under the plans these are doctors they referred to and i would suggest that virtually every case that has addressed what plan documents are there looking at the evidence of coverage that's not the contract for the provider that is the contract that governs what benefits and services are are owed to beneficiaries under the plan so i understand that there may be some other documented effectively says we've established a plan and under it by establishing that we now are going to rely on the evidence of coverage issued by independen to detail the legal rights under this plan one of the points you make is that disputes over the amount of payment are ordinary contract disputes why isn't that inconsistent with your view that money is the benefit that makes one a beneficiary well the issue your honor on those cases in a start i think with the past cat case in the third circuit but most courts have recognized it is that if there's a dispute  effect if your provider you provide a service and your into separate contract says i'm entitled to one hundred dollars for that you only paid me fifty the plane does not govern whether it's one hundred or fifty the plan says if you're in network we're go pay you sub to the contract as long as you don't have to look at the plan documents then it's going to be it's an issue that arrives under the network contract but nevertheless the benefits is the amount of money that is paid for providing health care s the montefiore case in the second circuit made that clear where it described both in their work and out of narrow context and it said that however you frame it when you pay money under the plan you are reimbursing for the cost of medical services and it's  right to receive that money that that in fact is the benefit under the plan and i think that that's where you really look at that that the problem with the rojas case in fact every state every court but up until rojas has recognised that the that it's to give standing to get to make it the ab provider a beneficiary in the decatur case it says if you get a designation to receive benefits that makes you a statutory beneficiary sidings the definition  the first ricocheted on i must say i just don't understand it and i'm no staring at eleven thirty two a one b which is what this claim rests on and it says a civil action may be brought and i quote to recover benefits due him under the terms of a plan to enforce his rights under the terms of the plan or to clarify his rights to future benefits under the terms of our plan if there has to be a plan not not a contract implementing a plan not but these exhibits the evidence of coverage is a plan document as defined by the part of labor that controls what are the benefits available under the plan and it's incorporated into the plan the plan incorporates it and relies on the evidence  seeking to implement or apply the anti retaliation provision of a risk because the in network provider had been excluded from the network and so they were challenging something that did not involve interpret in plan terms interpret what benefits were available moreover the plan in that case did not designate a participant i think what's critical here is if you look at the definition of beneficiary it's very broadly written under it does not say it's merely the employee or the designated that the  dependents of the employees it says it's any person which is defined to include corporations and associations who may become intitled to the benefit and in our case the plans of the doctors do in fact do that in the rojas case the plan documented issue which was an evidence of coverage merely specified that the money will go to the patient and the insurance company has the discretion to decide to pay the provider first circuit in danka for example explicitly address that and said that the whole purpose of an aggressive plan is to reimburse parties for receiving services it's not the services themselves independence is not health care provider when they've received assignments designating them as the recipients in the i think two court cases that are critical here are the central state versus neural behavioral health and the trustmark ace's those cases both involved the identical issue to us before this court unusual stretching language but all judge can only did was apply the law of this circuit and most other courts which hold that when a provider is what the party entitle to the money for services that provider is also entitled to challenge the benefit i think here it's an important case is the principal case by judge the principal decision where this court extended the holdings in in kennedy and found that  provider who's been designated to receive money for providing services is a beneficiary under arrest but not only that that provider is also then intitled to the notice in appeal right of a recess under twenty nine u s c eleven thirty three and the and what the court held there was the only issue is did the insurance company have notice or understand that there had been a an assignment here of course it's clear because the documents themselves specify i mean if you look at independence  brief on page twenty five they can see that these documents in fact provide that the benefit payments will go directly to the providers the sole test witness at trial linda patterson for independence she also testified or believe it's page three seventy four of the transcript that the plans that they issue and she referred to them as the plan when she was citing these two documents she specified that the money goes to the providers and i would highlight there with with linda patterson she testified that when you look at when you when independent is trying to evaluate what benefits are available under the plan you look at these documents exhibits thirty eight exhibit fifty nine that is the document that the that independence looks at to determine what benefits are available and she made clear that the money goes to the provider now i think what we have to look at here is is sort of the world that that's being structured but by the two parties the plaintiff's argument is that a re designed to ensure benefits are properly payable and to ensure that insurance companies properly interpret the plans and the benefits available when they're making benefit denials we are arguing that when the money is going to the provider the whether providers can challenge what the insurers are doing it's whether they can challenge it under a wrestler or whether they have to challenge it under the law of contracts but the issue here though your honor is that is that a the this court held that a risk that would preempt a challenge between an insurance company and a provider you know prep state law challenges to recoupment and repayment of benefits because the while it's true fifty nine but the insurer is busy saying these are not claims by beneficiaries were to benefits and therefore it's outside the scope of the rest i'm just trying to wrap my head around that your claim apparently that if your client negotiate contract with an insurer calling for a particular procedures to be use to resolve disputes between the insurer and in network providers those procedures are preempted by russia is that really  balance bill to provide the patients the patients were liable for the independence has taken has it has conceded that the that the patients were liable and the provider who were designated to receive the produce the payments and independence went after them for it were entitled to challenge it if you look at the policy here independent counsel ok thank you isn't going to help one way or the other well i don't i don't her suck and comprehend why there was a trial in this case this is a statutory claim anyway we agree though that there's no plan documents properly before the court as a beneficiary suing derivative lee where they have the assignment where there's no anti signer provision where the member where the the patient is on the hook in the insurers going after them none of that a none of that occurs here so the idea that this turns on right of payment versus rate