Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_12-cv-00952/USCOURTS-casd-3_12-cv-00952-1/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 29:1001 E.R.I.S.A.: Employee Retirement

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

RHONDA ESPY,

Plaintiff,

CASE NO. 12cv952-LAB (WMc)

ORDER GRANTING MOTION TO

vs. DISMISS

INDEPENDENCE BLUE CROSS,

Defendant.

Plaintiff Rhonda Espy, believing that her sleep study and bariatric lap band surgeries

would be mostly paid for by a health plan (the “Plan”), underwent the procedures. Defendant

Independent Blue Cross paid far less of Espy’s claim than she expected. She filed suit,

bringing ERISA-related claims. After two unsuccessful attempts at amendment, she failed

to oppose Blue Cross’s second motion to dismiss the second amended complaint (“SAC”).

The Court had also ordered Espy to show cause why the Court had jurisdiction, and she filed

no response to that either. Because she had been warned about the consequence of failure

to file written opposition, the Court construed this as her consent to the motion’s being

granted. The Court accepted Espy's non-opposition as her consent to entry of the order of

dismissal, and granted the motion. Espy then appealed. 

The Ninth Circuit determined that the Court should have considered alternatives to

dismissal. The panel remanded with instructions to vacate the dismissal of the SAC, albeit

without addressing the jurisdictional issue. Although the panel suggested that it thought

- 1 - 12cv952

Case 3:12-cv-00952-LAB-JLB Document 37 Filed 08/07/18 PageID.<pageID> Page 1 of 16
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Espy's complaint could have survived the motion to dismiss, it made clear that was merely

dicta and should not be relied on. (See Mandate, Docket no. 26, at 3 ("We are not in a

position to assess the merits of Espy's action, but it seems likely that her complaint could

have survived at the motion to dismiss stage if the motion had been considered on the

merits.")) The panel did not address the jurisdictional issues, or comment on Espy's failure

to respond to the Court's order to show cause. Jurisdiction and the merits of Espy’s claims

are therefore appropriate matters for the Court to decide. United States v. Cote, 51 F.3d 178,

182 (9th Cir. 1995) (quoting In re Sanford Fork & Tool Co., 160 U.S. 247, 256 (1895)) (on

remand, district court may “consider and decide any matters left open by the mandate”).

On remand, the Court vacated the dismissal, but ordered Espy to respond to its order

to show cause, and also to file her opposition to the motion to dismiss. Because the panel

opined that, in spite of having failed to file an opposition, Espy might show up at the hearing

and present her arguments there, the Court's order clarified that if Espy failed to oppose the

motion again, no oral argument would be held. (See Docket no. 25, 2:3–13).) The Court also

explained that fairness demands that the parties have a chance to prepare their rebuttal or

response, and that Espy should not expect to make any points at oral argument that she has

not raised in her written opposition. (Id. at 2:9–13.) The Court also cautioned that a hearing

would be held only if the Court determined it was appropriate, and that the matter might be

submitted on the papers without oral argument. (Docket no. 25.)

In addition to the required briefing, Espy filed a surreply to Blue Cross's reply brief. 

By discrepancy order, the Court accepted this for filing.

Jurisdiction

Blue Cross raised the issue of standing, which is jurisdictional, by pointing out that its

records suggested Espy had assigned her benefits. In view of the obligation of federal courts

to confirm their own jurisdiction before reaching the merits, see Steel Co. v. Citizens for a

Better Environ., 523 U.S. 83, 94 (1998), the Court directed Espy to explain whether she did

or did not assign her benefits. Espy responded ambiguously, failing to comply with the

Court's direction that she squarely address this issue. The Court then ordered her to file a

- 2 - 12cv952

Case 3:12-cv-00952-LAB-JLB Document 37 Filed 08/07/18 PageID.<pageID> Page 2 of 16
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

memorandum showing why her complaint should not be dismissed for lack of standing. This

was to be supported by a declaration under penalty of perjury stating unequivocally whether

she had assigned her benefits. If she had assigned her benefits, it would be her assignee

and not Espy who had standing to sue. See Blue Cross of Calif. v. Anesthesia Care Assocs.

Medical Group, Inc., 187 F.3d 1045, 1051 (9th Cir.1999) (citing Misic v. Building Serv.

Employees Health & Welfare Trust, 789 F.2d 1374, 1377 (9th Cir.1986)). As the party

invoking the Court’s jurisdiction, Espy bears the burden of establishing it. See Spokeo, Inc.

v. Robins, 136 S. Ct. 1540, 1547 (2016). And until she does so, jurisdiction is presumed to

be lacking. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994).

She has now filed a declaration, which is little better than before. She did not file a

separate memorandum. If this were the first time, Court would ordinarily accept her factual

declaration at face value for now. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561

(1992) (holding that the party invoking federal jurisdiction bears the burden fo establishing

the elements of standing at each stage of litigation). The problem here is that Espy has been

told several times what she needs to show, and has not done it. All the Court has to base its

decision on is her own opinion about the legal effect of something she signed, which she

does not attach or quote.

The declaration says she has not assigned her “patient rights and benefits” under the

Plan. Yet at the same time, it says she has directed her insurance company to send her

benefit check payments directly to ACSC. This merely repeats what was known before. (See

Docket no. 25 at 2:25–3:1.) 

The Plan does not include an anti-assignment clause. In the absence of such a

clause, “ERISA does not forbid assignment by a beneficiary of his right to reimbursement

under a health care plan to the health care provider.” Misic v. Bldg. Serv. Emps. Health and

Welfare Tr., 789 F.2d 1374, 1377 (9th Cir. 1986) (per curiam). See also Spinedex Physical

Therapy USA Inc. v. United Healthcare of Arizona, Inc., 770 F.3d 1282, 1297 (9th Cir. 2014))

(a plan’s anti-assignment clause can prevent effective assignments). 

/ / /

- 3 - 12cv952

Case 3:12-cv-00952-LAB-JLB Document 37 Filed 08/07/18 PageID.<pageID> Page 3 of 16
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Recently, the question of whether assignment of payments constituted an assignment

for purposes of ERISA has been debated in other federal courts, and the Court has taken

care to review these. As discussed in Dual Diagnosis Treatment Center, Inc. V. Blue Cross

of Calif., 2016 WL 6892140 at *4–*5 (C.D. Cal., Nov. 22, 2016) the Third and Sixth Circuits

have determined that assigning the right to payment confers on a provider standing to sue

for those benefits under ERISA. The corollary is that if an assignment of rights is effective

then the plan participant (i.e., the patient) loses standing — at least, for the limited purposes

of that one claim. 

Recently, the Ninth Circuit clarified that the assignment of a right to payment (e.g., to

a health care provider) does not act as a more general assignment of benefits. See

generally, DB Healthcare, LLC v. Blue Cross Blue Shield of Arizona, Inc., 852 F.3d 868 (9th

Cir. 2017). The right to payment and the right to sue for that payment can be assigned. Id.

at 876. Doing so would not assign other rights under ERISA, however, such as the right to

sue for breach of fiduciary duty. Id. But for reasons discussed below, the only possibly viable

claim Espy has is a claim for payment. If she has assigned that to ACSC, then she may

have assigned to ACSC the right to sue for that payment. 

In DB Healthcare, the Ninth Circuit treated an authorization of payment directly to a

provider, even without use of the term “assign” or “assignment,” as an assignment of limited

rights to payment under ERISA. Id. at 876. And if the right to payment was assigned, then

the provider would have the right to sue. Misic, 789 F.2d at 1377–78. If that happened,

ACSC — the one with the right to receive payment — would have suffered the compensable

injury, rather than Espy. “[A] valid assignment confers upon the assignee standing to sue

in place of the assignor.” Id. at 1378 (emphasis added). See also Spinedex, 770 F.3d at 1293

(participants who assigned their right to seek payment could not thereafter seek payment of

those claims themselves). 

Viewing Espy’s declaration in detail, she apparently has not retained the right to sue.

She says, in pertinent part:

/ / /

- 4 - 12cv952

Case 3:12-cv-00952-LAB-JLB Document 37 Filed 08/07/18 PageID.<pageID> Page 4 of 16
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2. I did not assign my patient rights and benefits under my health plan.

3. I directed my insurance company to send my benefit check payments

directly to the providers for medical services rendered.

4. I did not sign an authorization of representation that assigned to the

medical providers my patient rights and benefits under my health plan, nor

did I authorize the providers to represent me in legal proceedings that might

be necessary to pursue appropriate payment of benefits under my insurance

plan.

(Docket no. 27 at 2:3–9.) Measuring this against the very simple term that DB Healthcare

treated as an assignment (“I Hereby Authorize My Insurance Benefits to Be Paid Directly to

the Physician,” 852 F.3d at 876) it appears Espy probably has assigned to ACSC her right

to payment for the procedures she underwent. That is not to say she assigned all her ERISA

rights to ACSC. See id. at 876. But the only right that is really at issue here is the right to

payment, and that apparently belongs to ACSC. The fact that she never mentioned

authorizing ACSC to sue or to represent her in court does not change anything. See id. at

877 n.7 (“An assignment of the right to receive payment of benefits generally includes the

limited right to sue for non-payment under § 502(a)(1)(B).”) Her own beliefs about the effect

of all this merely amounts to a legal conclusion, which need not be accepted as true — and

in light of DB Healthcare and other precedent, cannot be accepted.

This does not appear to be merely a case of inartful drafting, or a pro se litigant who

misunderstands legal subtleties. Rather, it appears Espy really cannot establish standing to

sue for non-payment. Blue Cross’s briefing points out forms that suggest she intended to

and did assign her right to payment. Furthermore, the issue has been raised repeatedly. She

has told to be specific and unambiguous, and apparently cannot in good faith say any more

than she already has. 

Mindful of the Supreme Court’s instruction that jurisdiction is presumed to be lacking

until it is affirmatively shown, see Kokkonen 511 U.S. at 377, the Court finds that Espy lacks

standing to sue for additional payment.

Because she attempts to raise other claims, the Court will address those on the

merits. But even with regard to her claim for additional payment, some discussion of the

- 5 - 12cv952

Case 3:12-cv-00952-LAB-JLB Document 37 Filed 08/07/18 PageID.<pageID> Page 5 of 16
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

merits is appropriate. As the Supreme Court has explained, even if a claim is barred for some

other reason it may be appropriate to discuss why a party would lose on the merits. See

Carey v. Saffold, 536 U.S. 214, 225–26 (2002). Here, the law regarding assignments and

standing does not appear to be firmly settled, and it is possible another panel of the Ninth

Circuit might not follow DB Healthcare’s assumption that authorization of payments to a

provider amounted to an assignment. See Saffold at 225–26 (explaining that reaching the

merits may be appropriate in order to give a reviewing court alternative grounds for decision).

It may also be helpful to show a pro se litigant “that it was not merely a procedural

technicality that precluded [her] from obtaining relief.” Id. at 226. 

Legal Standards

A Rule 12(b)(6) motion to dismiss tests the sufficiency of the complaint. Navarro v.

Block, 250 F.3d 729, 732 (9th Cir. 2001). In ruling on a motion to dismiss, the Court accepts

all allegations of material fact in the complaint as true and construes them in the light most

favorable to the non-moving party. Cedars–Sinai Medical Center v. National League of

Postmasters of U.S., 497 F.3d 972, 975 (9th Cir. 2007).

The pleading standard is governed by Bell Atlantic Corp. v. Twombly, 550 U.S. 544

(2007) and Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). To avoid dismissal, the complaint

must “give the defendant fair notice of what the . . . claim is and the grounds upon which it

rests” and its factual allegations must “raise the right to relief above a speculative level.”

Twombly, 550 U.S. at 555. The complaint must contain enough factual allegations that, if

accepted as true, would state a claim for relief that is “plausible on its face.” Iqbal, 556 U.S.

at 678.

The scope of review on a motion to dismiss for failure to state a claim is ordinarily

limited to the contents of the complaint, including attached documents, as well as any

“documents whose contents are alleged in a complaint and whose authenticity no party

questions, but which are not physically attached to the pleading, may be considered in ruling

on a Rule 12(b)(6) motion to dismiss.” Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir.1994),

overruled on other grounds by Galbraith v. County of Santa Clara, 307 F.3d 1119 (9th Cir.

- 6 - 12cv952

Case 3:12-cv-00952-LAB-JLB Document 37 Filed 08/07/18 PageID.<pageID> Page 6 of 16
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2002). The court may treat such a document as “part of the complaint, and thus may assume

that its contents are true for purposes of a motion to dismiss under Rule 12(b)(6).” United

States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003).

In ruling on a motion to dismiss, the Court need not accept conclusory allegations.

See Iqbal, 556 U.S. at 678. Nor does the Court accept as true factual allegations

contradicted by documents attached to the complaint or incorporated by reference into the

complaint. See Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010).

Because Espy is proceeding pro se, the Court construes her pleadings liberally, as

it has done throughout this case. See Eldridge v. Block, 832 F.2d 1132, 1137 (9th Cir. 1987).

That being said, the Court cannot supply facts she has not pled. See Ivey v. Board of

Regents of the Univ. of Alaska, 673 F.2d 266, 268 (9th Cir.1982). Nor can the Court make

her arguments for her, suggest how she should litigate her claims, or otherwise serve as her

counsel. See Jacobsen v. Filler, 790 F.2d 1362, 1364–66 (9th Cir. 1986).

In the course of this litigation, the Court has ruled on a number of issues. Except to

the extent they are inconsistent with the panel’s order, those issues are law of the case. In

the absence of any extraordinary reason to do so, they will not be reconsidered or set aside.

See Hall v. City of Los Angeles, 697 F.3d 1059, 1067 (9th Cir. 2012). 

Dismissal of the Amended Complaint, and Filing of the SAC

In its order dismissing Espy’s first amended complaint, the Court dismissed certain

claims with prejudice, but gave her leave to amend others. It did not give her leave to add

new claims.

Originally, Espy alleged she was entitled to payment for two surgeries and a sleep

study. The sleep study accounted for a relatively small portion of her claim, and the amount

Blue Cross paid towards that claim was proportionately much higher than for the surgeries.1

Then in her amended complaint she mentioned only the surgeries. In her SAC, she added

the sleep study back. But she has never developed any separate claim based on it, or tried

1

 Exhibits show that $406.49 of the $5,810.00 bill for the sleep study was approved

for payment. (SAC, Ex. C.) 

- 7 - 12cv952

Case 3:12-cv-00952-LAB-JLB Document 37 Filed 08/07/18 PageID.<pageID> Page 7 of 16
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

to show why Blue Cross should have paid more towards it. Rather, she treats all procedures

as related, and as governed by the same Plan provisions.

The SAC brings three claims: a claim for wrongful denial of benefits under 29 U.S.C.

§ 1102(a)(2) (ERISA § 502(a)(2)); a claim for breach of fiduciary duty under 29 U.S.C.

§ 1109; and a claim for benefits under an equitable estoppel theory. She asks for judgment

for “the full amount due” under the plan ($48,802.79), attorney’s fees and costs, and interest.

Motion to Dismiss

Unopposed Arguments

Espy only opposed in part Blue Cross's motion to dismiss. Because this is her second

chance to oppose the motion, and because she has repeatedly been warned of the

consequences of failure to oppose, the Court has no realistic option but to treat her failure

to oppose as an admission that she has no argument to make. The Court cannot make her

arguments for her, see Jacobsen, 1364–65, and allowing claims to linger that Espy herself

has shown no inclination to prosecute runs counter to the interests of justice, economy, and

efficiency. See Fed. R. Civ. P. 1.

With respect to the claims Espy herself has not defended, the panel has made clear

the Court is obligated to consider each of the factors set forth in Ghazali v. Moran before

treating her failure to oppose as an abandonment of the issues. Those factors are:

(1) the public's interest in expeditious resolution of litigation; (2) the court's

need to manage its docket; (3) the risk of prejudice to the defendants; (4) the

public policy favoring disposition of cases of their merits; and (5) the

availability of less drastic sanctions.

46 F.3d 52, 53 (9th Cir. 1995).

All five factors weigh against Espy. After two rounds of amendment, this case is still

at the motion to dismiss stage, and is no closer to resolution. Blue Cross has borne extra

litigation expenses and thus far has been denied finality. And after multiple reminders and

cautions, it does not appear any more likely now that Espy can offer meritorious arguments

against dismissal of her claims. In fact, all indications are that she cannot. In short, to the 

/ / /

- 8 - 12cv952

Case 3:12-cv-00952-LAB-JLB Document 37 Filed 08/07/18 PageID.<pageID> Page 8 of 16
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

extent Espy did not oppose the motion to dismiss, there is no reason to do anything other

than dismiss those claims.

Specifically, Blue Cross argues that the Second Amended Complaint (SAC) fails to

allege any extraordinary circumstances to support her equitable estoppel claim, see Pisciotta

v. Teledyne Indus., Inc., 91 F.3d 1326, 1331 (9th Cir. 1996), and that she has failed to allege

how Blue Cross violated its fiduciary duties towards her. It also argues that as a pro se

litigant she cannot recover attorney’s fees.

Under Ninth Circuit precedent, an ERISA beneficiary seeking to recover benefits

under an equitable estoppel theory must both plead and prove, as part of her claim,

"extraordinary circumstances." Pisciotta, 91 F.3d at 1331; Spink v. Lockheed Corp., 125

F.3d 1257, 1262 (9th Cir. 1997) (holding that a plaintiff must allege extraordinary

circumstances). “‘Extraordinary circumstances’ generally involve acts of bad faith on the part

of the employer, attempts to conceal a significant change in an ERISA plan, or affirmative

acts of fraud." Biba v. Wells Fargo & Co., 2010 WL 4942559 (N.D. Cal., Nov. 10, 2010)

(citing cases). A single misrepresentation is not enough. See Capianco v. Long-Term

Disability Plan of Sponsor Uromed Corp., 247 Fed. App’x. 885, 887 (9th Cir. 2007) (holding

that summary judgment in favor of benefit plan was proper, where plaintiff had "shown at

most one instance of [it] misrepresenting its coverage"). The SAC does not plead any

extraordinary circumstances, Blue Cross asserts there are none, and Espy does not disagree

nor does she attempt to show she could plead them. Because this required element is

missing, and because Espy cannot correct this defect, her equitable estoppel claim is subject

to dismissal with prejudice. 

Espy also does not explain how Blue Cross violated its fiduciary duty, or why she

would be entitled to attorney’s fees. 

These are not the SAC’s only defects, however. As discussed below, all of Espy’s

claims, even the ones she attempted to defend in her opposition, must fail. Because Espy 

could not prevail on the merits for other reasons, treating these arguments as abandoned is

appropriate under Ghazali.

- 9 - 12cv952

Case 3:12-cv-00952-LAB-JLB Document 37 Filed 08/07/18 PageID.<pageID> Page 9 of 16
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Entitlement to Additional Payment

Espy does, however, argue that she is entitled to additional payment under the Plan’s

terms. The SAC quotes and attaches portions of a Plan document that Espy relies on to

establish her claim.2 Although she mentions three different procedures, she treats all three

as subject to the same Plan terms. Blue Cross argues that, under the terms of the Plan, Espy

is not entitled to relief. 

The heart of the dispute is a clause that provides as follows:

a. For services provided by Non-Preferred Facility Providers that have no

contractual arrangement with the Carrier, “Covered Expenses” means the

lesser of the: (a) Facility Provider’s allowable charges; (b) Medicare

Allowable Payment, or © Reasonable and Customary Charge for the

Covered Services.

(SAC, ¶ 14.) Although Blue Cross paid a portion of Espy’s claim, it did not pay for most of the

services provided by her health care provider Ambulatory Care Surgery Center (“ACSC”).

She agrees ACSC was a non-preferred facility provider that did not have a contract with Blue

Cross, and that this clause governs her claim. The only real question concerns the meaning

of subclause (b), the Medicare Allowable Payment. 

Espy argues that Medicare does not have an “Allowable Payment” for the procedures

that were performed on her, because ACSC is an outpatient facility, and Medicare will only

“allow for” the procedure to be done in a hospital. (SAC, ¶ 15.) She supports this with a

copy of the Medicare National Coverage Determinations Manual in effect at the time. 

Therefore, she concludes, “Medicare has no rates” for this procedure as performed on her,

and subclause (b) does not apply here. (Id.) Her interpretation, at its heart, is that the

absence of a Medicare fee schedule for a particular type of service means either that the

“Medicare Allowable Payment” does not exist, or else that it is limitless.

2

 The Court’s earlier orders explain why the Court is treating this, as well as the

documents attached to the motion to dismiss, as Plan documents. See Espy v.

Independence Blue Cross, 2013 WL 1164364 at *2 and n.1 (S.D. Cal., Mar. 20, 2013). No

party has ever challenged the authenticity of any of these documents, or argued that they are

not Plan documents. In fact, the document Espy attaches to the SAC and identifies as the

Plan document is a printout of an earlier document Blue Cross attached to its first motion to

dismiss. (See SAC, Ex. A (Docket no. 15 at 21) (attaching portions of Docket no. 3-4 with

CM/ECF identifiers, and hand-annotating it “*The Plan”).)

- 10 - 12cv952

Case 3:12-cv-00952-LAB-JLB Document 37 Filed 08/07/18 PageID.<pageID> Page 10 of

 16
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

This is based on an erroneous reading of an incomplete version of the Plan document,

and also in part on a misreading of the Medicaid Manual she cites. The Manual in fact says

that bariatric lap band procedures, such as the type Espy underwent 

are only covered when performed at facilities that are: (1) certified by the

American College of Surgeons as a Level 1 Bariatric Surgery Center . . .; or

(2) certified by the American Society for Bariatric Surgery as a Bariatric

Surgery Center of Excellence . . . .

(SAC, Ex. B (Docket no. 15 at 24).) The Manual includes a list of approved facilities, which

does not include ACSC.3 Espy has hand-annotated these pages, showing that these are the

provisions she is relying on. 

As an initial matter, Espy is wrong to read the Manual as she does. The Manual

provides that procedures must take place in one of the approved facilities in order to be

covered. It does not, as she argues, leave open the question of what payment is allowed for

procedures that take place in other facilities. Instead, it makes clear those are not covered,

and Medicare will not pay anything for them.

The capitalized terms in the clause quoted above are defined terms, and definitions

are provided in a separate section of the document. Espy highlights all of those definitions

except one, that for “Medicare Allowable Payment.” (See SAC, Ex. A (Docket no. 15 at

15–21).) But even though she did not attach this particular page it to the SAC, it is part of

the document she selected pages from to attach to the SAC, and whose authenticity and

applicability she affirms. (See Docket no. 3-4 at 62.) Blue Cross, however, did attach that

page to its motion to dismiss, and cited it. The Plan document defines “Medicare Allowable

Payment” as “the payment amount, as determined by the Medicare program, for a Covered

Service or supply.”4

 (Docket no. 16-3 at 62.) This definition makes no reference to the

existence of fee or rate schedules, and does not leave the amount undefined. Rather, it

3

 ACSC’s letter to Blue Cross suggests that ACSC may have erroneously believed it

was an approved facility. (See SAC, Ex. E (ACSC’s letters to Blue Cross, referring to its San

Diego facility as a “Medicare certified surgery center”).) 

4

 “Covered Service” here is a defined term within the Plan document, and refers to

whether a service or supply is covered by the Plan. It does not refer to whether a service 

is covered by Medicare.

- 11 - 12cv952

Case 3:12-cv-00952-LAB-JLB Document 37 Filed 08/07/18 PageID.<pageID> Page 11 of

 16
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

defines the term as whatever “payment amount” the “Medicare program” has determined. 

By refusing to pay anything for the type of procedure Espy had, the Medicare program has

determined that the “payment amount” is zero. 

Under the clause Espy is relying on, this means Blue Cross pays nothing for this

procedure. That is not the same as saying it is “not covered” under the Plan, however. What

it means is that Blue Cross pays nothing for the cost of the surgical procedure itself. Blue

Cross did pay some other expenses, such as a portion of her claim attributable to the

facilities charge. Unfortunately for Espy, that portion was relatively minor compared to the

cost of the surgeries.

The Court finds the terms of the Plan unambiguously provide that the payment for the

procedures that Espy had was zero. Her claim to enforce the terms of the Plan document

therefore fails and must be dismissed.

Estoppel Claims

“ERISA preempts state equitable estoppel claims but a party may assert a federal

equitable estoppel claim in an ERISA action.” Qualls By and Through Qualls v. Blue Cross

of California, Inc., 22 F.3d 839, 845 (9th Cir. 1994) (citing Greany v. W. Farm Bureau, 973

F.2d 812 (9th Cir. 1991)). Among other things, this requires that the party show that the

provisions of the plan were ambiguous, and that oral representations interpreting the plan

were made to the employee. Id. at 846. These are only threshold questions, and meeting

these two conditions does not by itself establish an equitable estoppel claim. All it means is

that the inquiry can go further. Greany, 973 F.2d at 822, n.9. A plaintiff cannot avail herself

of an estoppel claim based on representations that would modify the plan. Id. at 822. Under

ERISA, oral agreements or modifications cannot be relied on to contradict or override a

plan’s written terms. Richardson v. Pension Plan of Bethlehem Steel Corp., 112 F.3d 982,

986 n.2 (9th Cir. 1997).

Here, neither condition is met. The Plan provision is not ambiguous. But more than

that, Blue Cross only made representations to ACSC, not to Espy, and the communications

did not involve an interpretation of the Plan. Espy’s exhibits show that ACSC called Blue

- 12 - 12cv952

Case 3:12-cv-00952-LAB-JLB Document 37 Filed 08/07/18 PageID.<pageID> Page 12 of

 16
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Cross to ask for information. (SAC, Ex. B and E.) Specifically, an employee of ACSC asked

about pre-approval and about benefits, such as whether Espy was covered, whether the

procedure was covered, what her deductible was, and the coverage rate. (Ex. B.) The

exhibits show that the calls did not concern interpretation of the Plan’s language or some

ambiguity in it. (Ex. E (“When we called for benefits . . . .”)) 

The SAC and exhibits confirm that it was an employee of ACSC, not Espy, who spoke

with Blue Cross, that any representations Blue Cross made were to ACSC, and that Espy

heard about Blue Cross’s remarks indirectly. (SAC, ¶¶ 12, 20, 21.) Although Espy

characterizes these representations as having been made to her (id., ¶ 31), this is an

unreasonable interpretation of events. She has not alleged facts suggesting that ACSC was

acting as her agent or representative when it called Blue Cross, or that Blue Cross thought

it was speaking to Espy or to her representative or agent, nor could she. The exhibits and

other allegations show that ACSC was calling on its own behalf, to reassure itself about

payment, and that Blue Cross believed it was speaking to ACSC. (Id., ¶ 24, Ex. B and E.) 

In her surreply, Espy agrees she never spoke with Blue Cross. Instead, she argues

that she directed ACSC to verify her benefits with Blue Cross, and to provide her with a copy

of whatever benefit-related document Blue Cross provided her. (Docket no. 32 at 2:1–8.) 

This would not make ACSC her agent for purposes of asking about an ambiguity in the Plan,

however. According to the surreply, Espy wanted ACSC to verify her eligibility for benefits,

and to provide her a copy of Blue Cross’s approval letter. She does not allege that she had

a question about Plan terms, or even that she looked at the Plan document at that time. And

the letters she points to as making representations were addressed to ACSC, not to her.

They concern approval of coverage, not Plan terms. They don’t say how much Blue Cross 

will pay under the Plan. Rather, they include a disclaimer about payment, and note that the

approval was based on the information ACSC had submitted. 

The records also do not show that ACSC’s employee asked about whether it qualified

as an approved facility, or told Blue Cross ACSC was not an approved facility. If anything,

the exhibits suggest ACSC incorrectly believed it was an approved facility. (SAC, Ex. E

- 13 - 12cv952

Case 3:12-cv-00952-LAB-JLB Document 37 Filed 08/07/18 PageID.<pageID> Page 13 of

 16
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

(ACSC’s letter, referring to the facility where the surgery was performed as a “Medicare

certified surgery center”). 

Nothing in the allegations or in any of the exhibits suggests that in providing

information to ACSC, Blue Cross intended to induce Espy to undergo surgery, or to do so

in an unapproved facility, or to expect a certain level of payment. ACSC might have been

able to make an estoppel-based claim here, had it joined as a plaintiff. See The Meadows

v. Employers Health Ins., 47 F.3d 1006, 1008 (9th Cir. 1995) (holding that ERISA did not

preempt claim by healthcare provider based on insurer’s representation about patient

coverage). But Espy cannot.

Because any representations Blue Cross made about the Plan were to ACSC and not

to Espy, she cannot prevail on an estoppel claim. See Bernstein v. Health Net Life Ins. Co.,

2013 WL 12095240, at *5 (S.D. Cal., Apr. 4, 2013) (citing Pisciotta, 91 F.3d at 1331 and

Greany, 973 F.2d at 821) (“Moreover, and fatal to Plaintiff’s instant claim,. . . the Plaintiff can

only prevail [on an estoppel claim] if the representations were made to him, rather than to a

third party on his behalf.”)

The exhibits also make clear that ACSC’s employee spoke to Blue Cross about

matters of interest to ACSC, not about the Plan document or interpretation of allegedly

ambiguous Plan language. (See SAC, Ex. B.) The letters Blue Cross sent to ACSC

approving coverage for the procedures (id.) prominently mention that approval for coverage

is not a guarantee of payment. And they mention that authorization was based on the

information ACSC had provided to Blue Cross. Even if ACSC thought it had secured

promises of payment at a particular rate, these notices would have disabused it of that

notion.

The standard for an estoppel claim is clearly not met here, and this claim cannot be

saved by amendment. 

Breach of Fiduciary Duty

Espy had abandoned her breach of fiduciary duty claim when she amended her

complaint the first time, and (without leave) added it back without leave when she amended

- 14 - 12cv952

Case 3:12-cv-00952-LAB-JLB Document 37 Filed 08/07/18 PageID.<pageID> Page 14 of

 16
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

the second time. The SAC identifies 29 U.S.C. § 1109 as authorizing this claim. Espy’s

theory is that by wrongly denying her claim, Blue Cross breached a duty to act in her best

interests. She asks for damages for this alleged breach.

Espy cannot prevail on a breach of fiduciary claim based merely on denial of benefits. 

“A fiduciary's mishandling of an individual benefit claim does not violate any of the fiduciary

duties defined in ERISA.” Amalgamated Clothing & Textile Workers Union, AFL–CIO v.

Murdock, 861 F.2d 1406, 1414 (9th Cir.1988). Amalgamated Clothing & Textile Workers

Union, AFL-CIO v. Murdock, 861 F.2d 1406, 1414 (9th Cir. 1988) (citing Mass. Mut. Life Ins.

Co. v. Russell, 473 U.S. 134, 146 (1985)). Even if she could some broader practice that

harmed participants more generally, she has no standing to raise other participants’ claims.

And as a pro se litigant she cannot bring claims on behalf of a class.

In her surreply, Espy attempts to recharacterize this issue, claiming that the breach

consisted of “drafting and administering an ambiguous plan . . . .” (Docket no. 32 at 7:25–27.) 

Even assuming the Plan document were ambiguous, this would not create a cause of action

for breach of fiduciary duty. See Toohey v. Wyndham Worldwide Corp. Health & Welfare

Plan, 673 F. Supp. 2d 1223, 1231 (D. Or. 2009) (rejecting argument that drafting an

ambiguous plan term creates a claim for breach of fiduciary duty). The proper remedy would

be to construe the relevant provision in Espy’s favor. See id. By the same token,

administering a plan that later turns out to be ambiguous is not a breach of fiduciary duty.

The Court cannot construe this as a claim under 29 U.S.C. § 1132(a)(1)(B) (ERISA

§ 502(a)(1)(B)). This section authorizes suits to recover benefits due under the Plan. But for

reasons discussed above, she is not entitled to benefits, and this claim would fail. 

Attorney’s Fees

Although the Court dismissed Espy’s claim for attorney’s fees, she added it back in

her SAC. As a pro se litigant who is not an attorney, Espy cannot recover attorney’s fees.

See Espy, 2013 WL 1164364 at *4; Gemmel v. Systemhouse, Inc., 2009 WL 3157263, at *18

(D. Ariz., Sept. 28, 2009) (citing Kay v. Ehrler, 499 U.S. 432, 435–37 (1991)).

/ / /

- 15 - 12cv952

Case 3:12-cv-00952-LAB-JLB Document 37 Filed 08/07/18 PageID.<pageID> Page 15 of

 16
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Conclusion and Order

The Court finds that, as to her claim for payment, Espy has failed to meet her burden

of establishing standing. Even if that claim were not being dismissed for lack of jurisdiction,

it would be dismissed on the merits. Espy’s other claims must also be dismissed, and her

complaint cannot be saved by amendment. This action is DISMISSED WITHOUT LEAVE

TO AMEND.

IT IS SO ORDERED.

DATED: August 6, 2018 ___________________________________

HONORABLE LARRY ALAN BURNS

United States District Judge 

- 16 - 12cv952

Case 3:12-cv-00952-LAB-JLB Document 37 Filed 08/07/18 PageID.<pageID> Page 16 of

 16