Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-12-17604/USCOURTS-ca9-12-17604-0/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 

---

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

SPINEDEX PHYSICAL THERAPY USA

INCORPORATED; CLAUDE ARAGON;

JACK ADAMS; THE ARIZONA

CHIROPRACTIC SOCIETY,

Plaintiffs-Appellants,

v.

UNITED HEALTHCARE OF ARIZONA,

INC.; UNITED HEALTHCARE, INC.;

UNITED HEALTHCARE INSURANCE

COMPANY; UNITED HEALTHCARE

SERVICES, INC.; INGENIX, INC.;

UNITED HEALTH GROUP, INC.;

DEFENDANTS 5 & DINER FRANCHISE

CORPORATION GROUP HEALTH

PLAN; ABBOTT LABORATORIES

GROUP HEALTH PLAN; ACOUSTIC

TECHNOLOGIES, INC. GROUP

HEALTH PLAN; ADOBE DRYWALL,

INC. GROUP HEALTH PLAN; ADP

TOTALSOURCE, INC. GROUP HEALTH

PLAN; AFFILIATED CARDIOLOGISTS

OF ARIZONA, P.C. GROUP HEALTH

PLAN; ART IN METAL U.S.A. GROUP

HEALTH PLAN; CAR-GRAPH, INC.

GROUP HEALTH PLAN; CITIGROUP,

INC. GROUP HEALTH PLAN;

DISCOUNT TIRE CO., INC. GROUP

No. 12-17604

D.C. No.

2:08-cv-00457-

ROS

OPINION

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 1 of 33
2 SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE

HEALTH PLAN; DOWNTOWN TEMPE

COMMUNITY, INC. GROUP HEALTH

PLAN; FAXWATCH, INC. GROUP

HEALTH PLAN; GENERAL MOTORS

CORPORATION GROUP HEALTH

PLAN; GENUINE PARTS COMPANY

GROUP HEALTH PLAN; HOME DEPOT

USA, INC. MEDICAL AND DENTAL

PLAN; INSIGHT ENTERPRISES, INC.

GROUP HEALTH PLAN; ITC

MANUFACTURING AND POWDER

COATING GROUP HEALTH PLAN; THE

MARTZ AGENCY GROUP HEALTH

PLAN; METLIFE SECURITIES, INC.

GROUP HEALTH PLAN; OLDCASTLE

GLASS, INC. GROUP HEALTH PLAN;

PINNACLE ENGINEERING, INC.

GROUP HEALTH PLAN; PFIZER, INC.

GROUP HEALTH PLAN; THE PROCTER

& GAMBLE COMPANY GROUP;

QUALEX INC. GROUP HEALTH PLAN;

QWEST COMMUNICATIONS

INTERNATIONAL INC. GROUP

HEALTH PLAN, (United Group No.

0197313); QWEST

COMMUNICATIONS INTERNATIONAL

INC. GROUP HEALTH PLAN, (United

Group No. 0229050); REVLON

CONSUMER PRODUCTS

CORPORATION GROUP HEALTH

PLAN; RICHARD A. BIETZ, D.D.S.,

P.C. GROUP HEALTH PLAN;

SHAMROCK FOODS COMPANY

GROUP HEALTH PLAN; SHASTA

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 2 of 33
SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE 3

INDUSTRIES, INC. GROUP HEALTH

PLAN; SUMCO USA CORPORATION

GROUP HEALTH PLAN; TEMCON

CONCRETE CONSTRUCTION

COMPANY GROUP HEALTH PLAN;

URS CORPORATION GROUP HEALTH

PLAN; WATSON WILLIAMS FREIGHT

AGENCY, INC. GROUP HEALTH PLAN;

WELLS FARGO & COMPANY GROUP

HEALTH PLAN; AMERICA WEST

HOLDINGS CORPORATION GROUP

HEALTH PLAN; AMERICAN EXPRESS

COMPANY GROUP HEALTH PLAN;

AT&T CORPORATION GROUP

HEALTH PLAN; DELTA AIRLINES,

INC. GROUP HEALTH PLAN; HASBRO,

INC. GROUP HEALTH PLAN;

HONEYWELL INTERNATIONAL, INC.,

GROUP HEALTH PLAN;

INTERNATIONAL BUSINESS MACHINE

CORPORATION GROUP HEALTH

PLAN; IRIDIUM SATELLITE, LLC

GROUP HEALTH PLAN; LUCENT

TECHNOLOGIES INC. GROUP HEALTH

PLAN; SOUTHWEST AIRLINES

COMPANY GROUP HEALTH PLAN,

Defendants-Appellees.

Appeal from the United States District Court

for the District of Arizona

Roslyn O. Silver, Senior District Judge, Presiding

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 3 of 33
4 SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE

Argued and Submitted

April 7, 2014—San Francisco, California

Filed November 5, 2014

Before: Barry G. Silverman, William A. Fletcher,

and Jay S. Bybee, Circuit Judges.

Opinion by Judge W. Fletcher

SUMMARY*

ERISA

The panel reversed in part, affirmed in part, and vacated

in part the district court’s summary judgment in a healthcare

provider’s action, as assignee and would-be assignee of

health plan beneficiaries, seeking payment of denied benefit

claims under the Employee Retirement Income Security Act.

The panel held that the healthcare provider, Spinedex

Physical Therapy USA, Inc., had Article III standing as

assignee of plan beneficiaries to bring claims for payment of

benefits against defendant health plans and their claims

administrator and insurer. The panel held that Spinedex was

not assigned the right to bring claims for breach of fiduciary

duty. The panel held that plaintiff Arizona Chiropractic

Society, a non-profit association of chiropractors, lacked

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 4 of 33
SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE 5

associational standing to bring suit against the claims

administrator.

The panel held that an individual plan beneficiary’s claim

for breach of fiduciary duty was time-barred. The panel held

that Spinedex’s claims as assignee of beneficiaries under the

Martz Agency Plan and the Acoustic Technologies Plan were

not time-barred.

The panel held that the anti-assignment provision of the

Discount Tire Plan precluded assignment by Plan

beneficiaries to Spinedex.

The panel vacated in part and reversed in part the district

court’s holdings that another individual beneficiary’s claim

for breach of fiduciary duty was not exhausted, that the

claims administrator was not a proper defendant for benefit

claims under the American Express Plan, and that some of the

claims assigned to Spinedex were not administratively

exhausted. The panel remanded the case to the district court.

COUNSEL

Joseph Creitz (argued), Joseph A. Creitz Law Offices, San

Francisco, California; Joseph A. Garofolo, Garofolo Law

Group, P.C., San Francisco, California, for PlaintiffsAppellants.

Nicholas James Pappas (argued) and Jared R. Friedmann,

Reed Lawrence Collins, Weil Gotshal & Manges LLP, New

York, New York; John Clifton West, Brownstein Hyatt

Farber Schreck, LLP, Phoenix, Arizona, for DefendantsAppellees.

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 5 of 33
6 SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE

Marcia Elizabeth Bove (argued), United States Department of

Labor, Washington, D.C., for Amicus Curiae Secretary of

Labor.

OPINION

W. FLETCHER, Circuit Judge:

Defendant United Healthcare (“United”) is the claims

administrator for as many as forty-four defendant health plans

(the “Plans”; collectively with United, “Defendants”). For

most but not all of the Plans, United insures plan benefits. 

All of the Plans are governed by the Employee Retirement

Income Security Act of 1974 (“ERISA”).

As assignee and would-be assignee of Plan beneficiaries,

health care provider Spinedex filed suit against United and

the Plans seeking payment of denied benefit claims. The

Arizona Chiropractic Society (“ACS”), as well as individual

Plan beneficiaries Jack Adams and Claude Aragon, joined the

suit as plaintiffs in an amended complaint. The amended

complaint alleged improper denials of benefits as well as

breaches of fiduciary duty.

The district court granted summary judgment to all

defendants, holding, inter alia, that Spinedex lacked Article

III standing to bring claims as an assignee. We reverse in

part, affirm in part, vacate in part, and remand. We hold that

Spinedex had Article III standing as assignee of Plan

beneficiaries to bring claims for payment of benefits. We

hold, further, (1) that Spinedex was not assigned the right to

bring claims for breach of fiduciary duty; (2) that ACS does

not have associational standing to bring suit against United;

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 6 of 33
SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE 7

(3) that Adams’ claim for breach of fiduciary duty is timebarred; (4) that Spindex’s claims as assignee of beneficiaries

under the Martz Agency Plan and the Acoustic Technologies

Plan are not time-barred; and (5) that the anti-assignment

provision of the Discount Tire Plan precluded assignment by

Plan beneficiaries to Spinedex. Finally, we vacate or reverse,

and remand for further proceedings, the district court’s

holdings that Aragon’s claim for breach of fiduciary duty was

not exhausted, that United is not a proper defendant for

benefit claims under the American Express Plan, and that

some of the claims assigned to Spinedex were not

administratively exhausted.

I. Background

United serves as claims administrator for Plans named as

defendants in this suit. United’s role includes processing

claims for benefits, interpreting and applying plan provisions,

reviewing appeals, and issuing payments in accordance with

the terms of the Plans. For most but not all of the Plans,

United insures the benefits.

During the period relevant to this suit, Spinedex was a

physical therapy clinic whose patients included Plan

beneficiaries. Spinedex’s patients signed several documents

in connection with their treatment: a new patient form (the

“Enrollment Form”); a form consenting to Spinedex’s billing

policies (the “Financial Policy”); an assignment of benefits

form (the “Assignment”); and an “Authorization of

Representation” form (the “Authorization”). The Enrollment

Form allowed patients to provide their contact information

and medical history. It also included a statement in which

patients acknowledged that they were liable for all costs of

the services rendered. The Financial Policy disclosed

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 7 of 33
8 SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE

Spinedex’s fees and practices relating to insurance coverage

and the submission of claims. It provided that patients would

be responsible for any treatment costs not covered by their

health insurance plan. The Assignment assigned to Spinedex

its patients’ “rights and benefits” under their respective Plans. 

The Authorization stated that Spinedex was authorized to

represent patients in administrative or civil proceedings that

might be necessary to pursue payment of benefits under their

health insurance plans.

The Plans paid benefits differently depending on whether

or not a health care provider was part of United’s network. 

For health care services rendered by network providers, the

Plans made payments directly to those providers. For health

care services not rendered by network providers, Plan

beneficiaries were required to seek payment from their

respective Plans. A typical Plan provision states, “When you

receive Covered Health Services from a non-Network

provider, you are responsible for requesting payment from

us.” Almost all of the Plans allowed written assignment of

claims for services rendered by non-network providers,

without requiring the consent of the Plans for such

assignment. A typical Plan provision states, “If a Subscriber

[i.e., a Plan beneficiary] provides written authorization to

allow this, all or a portion of any Eligible Expenses due to a

provider may be paid directly to the provider instead of being

paid to the Subscriber.”

After treating patients covered by defendant Plans,

Spinedex submitted claims to United. United paid some

claims, but denied others in whole or in part. Although

Spinedex’s Enrollment Form and Financial Policy both stated

that patients were responsible to Spinedex for unpaid

balances, Spinedex did not seek payment from its patients.

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 8 of 33
SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE 9

In March 2008, Spinedex filed a complaint under

29 U.S.C. § 1132(a), seeking payment of the denied claims. 

In July 2008, plaintiffs, including Spinedex, ACS, Adams,

and Aragon, filed a Second Amended Complaint. The

complaint alleged, inter alia, improper denials of benefits by

United and the Plans, and breaches of fiduciary duty by

United.

The district court granted summary judgment to

Defendants. This appeal followed.

II. Standard of Review

We review de novo a district court’s grant of summary

judgment. In re Syncor ERISA Litig., 516 F.3d 1095, 1100

(9th Cir. 2008). We review de novo a district court’s Article

III standing determination. L.A. Haven Hospice, Inc. v.

Sebelius, 638 F.3d 644, 654 (9th Cir. 2011). We review de

novo a dismissal on statute of limitations grounds. Donoghue

v. Orange Cnty., 848 F.2d 926, 929 (9th Cir. 1987). 

“Because the potential applicability vel non of exhaustion

principles is a question of law, we consider it de novo.” Diaz

v. United Agric. Emp. Welfare Benefit Plan & Trust, 50 F.3d

1478, 1483 (9th Cir. 1995).

III. Discussion

A. Spindex’s Standing to Bring Claims for Payment of

Benefits

The district court held that Spinedex, as an assignee of its

patients’ claims for payment of benefits, does not have

Article III standing to bring those claims. We disagree.

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 9 of 33
10 SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE

“ERISA provides for a federal cause of action for civil

claims aimed at enforcing the provisions of an ERISA plan.” 

Reynolds Metals Co. v. Ellis, 202 F.3d 1246, 1247 (9th Cir.

2000) (citing 29 U.S.C. § 1132(e)(1)). To have standing to

state a claim under ERISA, “a plaintiff must fall within one

of ERISA’s nine specific civil enforcement provisions, each

of which details who may bring suit and what remedies are

available.” Id. (citing 29 U.S.C. §§ 1132(a)(1)–(9)). 

ERISA’s civil enforcement provision, 29 U.S.C. § 1132(a),

identifies only plan participants, beneficiaries, fiduciaries,

and the Secretary of Labor as “[p]ersons empowered to bring

a civil action.” See Misic v. Bldg. Serv. Emps. Health &

Welfare Trust, 789 F.2d 1374, 1378 (9th Cir. 1986). As a

non-participant health care provider, Spinedex cannot bring

claims for benefits on its own behalf. It must do so

derivatively, relying on its patients’ assignments of their

benefits claims. See id. at 1377–79; see also Franchise Tax

Bd. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S.

1, 27 (1983).

Defendants do not dispute that Spinedex patients would

have had standing under ERISA and Article III to bring suit

on their own behalf under the Plans of which they are

beneficiaries. Nor do they dispute that Plan beneficiaries

have a right under ERISA to assign their claims for payment

of benefits. Nor, finally, do they dispute that the terms of

most of the Plans explicitly allow beneficiaries to assign their

claims for payment of benefits to non-network providers that

have rendered health care services. But Defendants seek to

avoid the consequence of the foregoing by contending that

Spinedex, despite its status as assignee, lacks Article III

standing to bring suit for payment of benefits.

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 10 of 33
SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE 11

The three elements of Article III standing are familiar:

[A] plaintiff must show (1) it has suffered an

“injury in fact” that is (a) concrete and

particularized and (b) actual or imminent, not

conjectural or hypothetical; (2) the injury is

fairly traceable to the challenged action of the

defendant; and (3) it is likely, as opposed to

merely speculative, that the injury will be

redressed by a favorable decision.

Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC),

Inc., 528 U.S. 167, 180–81 (2000). Defendants point out that

Spinedex has not sought payment from its patients for claims,

or portions thereof, that United and the Plans have refused to

pay. Defendants argue that because Spinedex has not sought

payment from its assigning patients for any shortfall, those

patients do not have the “injury in fact” necessary for Article

III standing. Defendants argue that since Spinedex stands in

the shoes of, and can have no greater injury than, its

assignors, Spinedex has not suffered injury in fact.

We are aware of no circuit court that has accepted

defendants’ argument. In the one circuit case directly on

point, HCA Health Services of Georgia, Inc. v. Employers

Health Insurance Co., 240 F.3d 982 (11th Cir. 2001), the

Eleventh Circuit squarely rejected the argument. Employers

Health Insurance (“EHI”) claimed that HCA lacked Article

IIIstanding because it had never billed its patient-assignor for

the amount EHI refused to pay. EHI argued that because the

patient was not harmed by its refusal to pay, he lacked Article

III standing to bring this action himself and that, as a result,

assignee HCA also lacked Article III standing. Id. at 991. 

The Eleventh Circuit rejected this argument, holding that “as

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 11 of 33
12 SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE

a provider-assignee, [HCA] ha[d] standing to sue for the

recovery of benefits.” Id.; see also Pac. Shores Hosp. v.

United Behavioral Health, No. 12-55210, 2014 WL 4086784

(9th Cir. Aug. 20, 2014); Connecticut v. Physicians Health

Servs. of Conn., Inc., 287 F.3d 110, 117 (2d Cir. 2002); I.V.

Servs. of Am., Inc. v. Trs. of Am. Consulting Eng’rs Council

Ins. Trust Fund, 136 F.3d 114, 117 n.2 (2d Cir. 1998)

(collecting cases).

The Supreme Court case most directly on point is Sprint

Communications Co. v. APCC Services, Inc., 554 U.S. 269

(2008), in which payphone operators were owed money by

long-distance carriers. The amounts of money owed were

small, and payphone operators found it useful to assign

unpaid claims to “aggregators.” Id. at 271. In return for a

fee, the aggregators agreed to pursue the payphone operators’

claims against the carriers, by filing suit if necessary. The

aggregators agreed to remit the proceeds of the suits (minus

their fee) to the payphone operators. At issue in Sprint

Communications were claims by a group of aggregators who

had taken assignments from about 1,400 payphone operators

and who had brought suit against AT&T, Sprint, and other

carriers. AT&T moved to dismiss, arguing that the

aggregators had no standing under Article III. The

centerpiece of AT&T’s argument was that because the

aggregators were assignees for the sole purpose of collection,

with no interest in the proceeds of the suits beyond the

collection of their fee, they had insufficient interest to support

Article III standing.

Based on an extensive historical analysis of the history of

assignments, the Court concluded that the aggregators had

standing. It wrote:

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 12 of 33
SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE 13

[H]istory and precedent are clear on the

question before us: Assignees of a claim,

including assignees for collection, have long

been permitted to bring suit. A clear

historical answer at least demands reasons for

change. We can find no such reasons here,

and accordingly we conclude that the

aggregators have standing.

Id. at 275. Even apart from the historical pedigree of

assignees, the Court concluded that the aggregators had

standing under modern Article III doctrine. It wrote:

Petitioners argue . . . that the aggregators

have not themselves suffered any injury in

fact and that the assignments for collection

“do not suffice to transfer the payphone

operators’ injuries.” It is, of course, true that

the aggregators did not originally suffer any

injury caused by the long-distance carriers;

the payphone operators did. But the payphone

operators assigned their claims to the

aggregators lock, stock, and barrel. And

within the past decade we have expressly held

that an assignee can sue based on his

assignor’s injuries. In Vermont Agency [of

Natural Resources v. United States ex rel.

Stevens, 529 U.S. 765 (2000)], we considered

whether a qui tam relator possesses Article III

standing to bring suit under the False Claims

Act, which authorizes a private party to bring

suit to remedy an injury (fraud) that the

United States, not the private party,

suffered. . . . [I]n Vermont Agency we stated

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 13 of 33
14 SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE

quite unequivocally that “the assignee of a

claim has standing to assert the injury in fact

suffered by the assignor.”

Id. at 286 (citations omitted). The Court pointed out that

federal courts routinely entertain suits in which the plaintiffs

do not themselves obtain benefits—for example, trustees

bringing suit on behalf of their trusts; guardians ad litem

bringing suit on behalf of their wards; assignees in

bankruptcy bringing suit to benefit bankrupt estates; and

executors bringing suits to benefit testator estates. Id. at

287–88.

Chief Justice Roberts, writing for himself and three

others, dissented. He contended that the aggregators had no

Article III standing because they were paid a flat fee and had

no stake in any recovery obtained from the carriers. He

wrote:

[R]espondents are authorized to bring suit on

behalf of the payphone operators, but they

have no claim to the recovery. Indeed, their

take is not tied to the recovery in any way. 

[Respondents’ compensation is] not based on

the measure of damages ultimately awarded

by a court or paid by petitioners as part of a

settlement. Respondents received the

assignments only as a result of their

willingness to assume the obligation of

remitting any recovery to the assignors, the

payphone operators.

Id. at 300–01 (Roberts, C.J., dissenting).

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 14 of 33
SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE 15

Sprint Communications was a difficult case (to the degree

that a five-four split is an indication of difficulty) because the

aggregators had no stake in the outcome of the suits beyond

their fee. That is, the aggregators were not assigned an

interest in the claims; rather, they were assigned the claims

for the sole purpose of collection, and were obligated to remit

the entire proceeds (minus a fee) to the assignors. The

difficulty presented by Sprint Communications does not exist

in the case before us. Precisely the interest that the dissenters

found lacking in Sprint Communications is present here. 

Spinedex’s patients assigned the entirety of their claims

against the Plans, and Spinedex, as assignee, is permitted to

keep all amounts recovered in suits brought on those claims. 

The fact that Spinedex has chosen not to seek payment from

its assignors, despite its contractual right to do so, does not

mean that Spinedex had no right to recover benefits under the

Plans from Defendants. It means only that Spinedex has

decided not to pursue its legal rights against its assignors.

The flaw in Defendants’ argument is that they would treat

as determinative Spinedex’s patients’ injury in fact as it

existed after they assigned their rights to Spinedex. We agree

with Defendants that Spinedex has not sought to recover from

its patients any shortfall in Spinedex’s recovery from the

Plans, and that the patients have not suffered injury in fact

after assigning their claims. But the patients’ injury in fact

after the assignment is irrelevant. As assignee, Spinedex took

from its assignors what they had at the time of the

assignment. At the time of the assignment, Plan beneficiaries

had the legal right to seek payment directly from the Plans for

charges by non-network health care providers. If the

beneficiaries had sought payment directlyfrom their Plans for

treatment provided by Spinedex, and if payment had been

refused, they would have had an unquestioned right to bring

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 15 of 33
16 SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE

suit for benefits. No one, including Defendants in this suit,

would contend that the beneficiaries would have lacked

Article III standing in that circumstance. However, instead

of bringing suit on their own behalf, plaintiffs assigned their

claims to Spinedex.

Under Vermont Agency, it is black-letter law that an

assignee has the same injury as its assignor for purposes of

Article III. As the Court wrote in Sprint Communications,

“[I]n Vermont Agency we stated quite unequivocally that ‘the

assignee of a claim has standing to assert the injury in fact

suffered by the assignor.’” 554 U.S. at 286; see also Misic,

789 F.2d at 1378 n.4 (“[A]n assignment cannot create rights

in the assignee not held by the assignor. . . . [Rather,] the

assignee stands in the shoes of the assignor, and, if the

assignment is valid, has standing to assert whatever rights the

assignor possessed.”). Defendants themselves concede that

assignee Spinedex stands in the shoes of its assignors. At the

time of the assignment, the Plan beneficiaries had Article III

standing. Therefore, as assignee, Spinedex also has Article

III standing.

In addition to holding that Spinedex lacked Article III

standing, the district court issued alternative holdings on a

number of issues relevant to Spinedex’s ability to bring suit. 

We address those holdings as necessary in the following

sections.

B. Spinedex’s Claims for Breach of Fiduciary Duty

The district court held that Spinedex’s patients did not

assign their rights to Spinedex to bring claims for breach of

fiduciary duty. We agree.

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 16 of 33
SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE 17

The Assignments signed by Plan beneficiaries assigned to

Spinedex the right to seek payment of claims directly from

their Plans. In relevant part, the Assignments provided that

the Plans would make payments directly to Spinedex for

services rendered. Any such payments would be considered

payment toward the total charges for the

professional services rendered. THIS IS A

DIRECT ASSIGNMENT OF MY RIGHTS

AND BENEFITS UNDER THIS POLICY. 

This payment, will not exceed my

indebtedness to the above mentioned assignee,

and I have agreed to pay, in a current manner,

any balance of said professional service

charges over and above this insurance

payment.

(Capitalization in the original.)

Spinedex’s argument that the patients assigned their right

to sue for breach of fiduciary duty depends on the meaning of

the word “rights” in the capitalized sentence. Spinedex

argues that the word “benefits” refers to payments to nonnetwork providers for services rendered. It argues, further,

that “rights” and “benefits” have different meanings, and that

the word “rights” cannot refer to benefits. “Rights” must

instead refer to rights to bring claims for breach of fiduciary

duty.

Spinedex’s argument is divorced from context. The entire

focus of the Assignment is payment for medical services

provided by Spinedex. The Assignment nowhere indicates

that, by executing the assignment, patients were assigning to

Spinedex rights to bring claims for breach of fiduciary duty. 

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 17 of 33
18 SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE

See Britton v. Co-op Banking Grp., 4 F.3d 742, 746 (9th Cir.

1993) (“[I]t is essential to an assignment of a right that the

[assignor] manifest an intention to transfer the right to

another person . . . .” (quoting Restatement (Second) of

Contracts § 324 (1981))). To the contrary, the entirety of the

Assignment indicates that patients intended to assign to

Spinedex only their rights to bring suit for payment of

benefits. See id. (noting that the purported assignment

document did not contain language that could be considered

an effective assignment of the rights at issue and stating that

instead, “the plain language of the contract indicate[d] that

the parties had just the opposite intent”). Because Spinedex

was assigned only the right to bring claims for payment of

benefits, Spinedex has no right to bring claims for breach of

fiduciary duty.

C. Standing of Arizona Chiropractic Society

The district court held that the Arizona Chiropractic

Society (“ACS”) does not have associational standing to

bring suit. We agree.

ACS is a non-profit association of chiropractors. It

contends that Defendants have improperly refused to pay for

“decompression therapy” and other specified therapies, or

have paid for such therapies at an improperly low rate. It

seeks declaratory and injunctive relief on behalf of its

members against such allegedly improper practices.

Associational standing has three requirements.

[A]n association has standing to bring suit on

behalf of its members when: (a) its members

would otherwise have standing to sue in their

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 18 of 33
SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE 19

own right; (b) the interests it seeks to protect

are germane to the organization’s purpose;

and (c) neither the claim asserted nor the

relief requested requires the participation of

individual members in the lawsuit.

Hunt v. Wash. State Apple Adver. Comm’n, 432 U.S. 333, 343

(1977). Because ACS cannot satisfy the third requirement, it

does not have standing to seek prospective relief on behalf of

its members.

Under the third requirement, an association has standing

only to seek relief that would not require the participation of

its individual members. See Alaska Fish & Wildlife Fed’n &

Outdoor Council, Inc. v. Dunkle, 829 F.2d 933, 938 (9th Cir.

1987); see also Pa. Psychiatric Soc’y v. Green Spring Health

Servs., Inc., 280 F.3d 278, 286 (3d Cir. 2002) (holding that an

industry group has associational standing where it is pursuing

only injunctive and declaratory relief and “the heart of its

complaint involves systemic policy violations that will make

extensive individual participation unnecessary”). The relief

ACS seeks in the Second Amended Complaint would require

the participation of its individual members. The complaint

alleges that in some cases payment was wrongfully withheld

altogether, and other cases wrongfully withheld only in part. 

Further, the complaint refers to a number of different

therapies, not limited to “decompression therapy,” for which

payment has been allegedly wrongfully withheld or limited. 

Finally, the complaint alleges that “ACS’s members and their

patients have suffered actual injury as a result of the

violations of ERISA herein alleged.” The complaint thus

alleges variations in payments wrongfully withheld, in the

treatments for which payment has been withheld, and in the

individual situations of ACS members. Because of these

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 19 of 33
20 SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE

multiple variations, specific to individual members of ACS,

we conclude that the violations of which ACS complains are

not susceptible to judicial treatment as “systematic policy

violations that . . . make extensive individual participation

unnecessary.” Pa. Psychiatric Soc’y, 280 F.3d at 286.

D. Claims of Adams and Aragon

The district court dismissed the claims of plaintiffs Jack

Adams and Claude Aragon as barred by the statute of

limitations and by their failure to exhaust. We agree with

respect to Adams, and affirm. But we vacate the district

court’s dismissal of Aragon’s claim and remand for further

proceedings.

Adams and Aragon are beneficiaries, respectively, of the

International Business Machines Plan and the Qwest

Communications International Plan. Adams and Aragon

allege that they were “improperly denied benefits in violation

of ERISA and the terms of [their] Plan[s].” Adams was

treated by Spinedex between December 2001 and February

2002. Aragon was treated by Spinedex between May and

August 2005. Spinedex submitted claims for payment, which

were denied.

Adams andAragon, like other Spinedex patients, assigned

to Spinedex the right to seek payment of benefits directly

from their Plans. Because Adams and Aragon assigned their

right to seek payment from their Plans, they may not

themselves seek payment of those claims. See Hahnemann

Univ. Hosp. v. All Shore, Inc., 514 F.3d 300, 307 n.5 (3d Cir.

2008) (“[I]f there is a valid assignment, the hospital becomes

the only claimant because the original claimant gives up her

claim by the assignment.” (citing Principal Mut. Life Ins. Co.

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 20 of 33
SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE 21

v. Charter Barclay Hosp., Inc., 81 F.3d 53, 55–56 (7th Cir.

1996))).

However, neither Adams nor Aragon assigned their

claims for breach of fiduciary duty. The district court denied

both of their claims, on the grounds that Adams’ claim was

time-barred and that Aragon had not exhausted his

administrative appeals. We agree with respect to Adams. 

Adams’ claim is time-barred because he was on notice in

December 2004, at the latest, of the facts giving rise to his

claim. The statute of limitations is three years, and Adams

did not file suit until 2008.

The district court denied Aragon’s claim on the ground

that he had not exhausted his administrative appeals. 

However, as a general rule, exhaustion is not required for

statutory claims like Aragon’s. See Horan v. Kaiser Steel

Ret. Plan, 947 F.2d 1412, 1416 n.1 (9th Cir. 1991). 

Defendants argue that exhaustion is required because

Aragon’s statutory claim is no more than a “disguised”

benefit claim. See Diaz, 50 F.3d at 1484 (rejecting the

argument that an ERISA claimant can “attach a ‘statutory

violation’ sticker to his or her [denial of benefits] claim and

then . . . use that label as an asserted justification” for failure

to exhaust). But that is not so. As the district court found,

United’s alleged statutory violations were “willful and

systematic, as contemplated in Massachusetts Mutual

[Insurance Co. v. Russell, 473 U.S. 134 (1985)],” and

Aragon’s complaint sought injunctive relief that “clearly will

benefit the Plans.” Aragon’s statutory claim thus is not a

“disguised” claim for benefits, and he need not have

exhausted. We therefore reverse the district court’s dismissal

of Aragon’s claim for breach of fiduciary duty.

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 21 of 33
22 SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE

The district court did not consider whether, in the case’s

current procedural posture, Aragon has Article III standing. 

That is, it did not consider whether Aragon would have

standing to bring a claim for breach of fiduciary duty if he

cannot pursue his claim for denial of benefits because he has

assigned it to Spinedex. Cf. Glanton ex rel. ALCOA

Prescription Drug Plan v. AdvancePCS Inc., 465 F.3d 1123,

1125 (9th Cir. 2006) (“There is no redressability, and thus no

standing, where (as is the case here) any prospective benefits

depend on an independent actor who retains ‘broad and

legitimate discretion the courts cannot presume either to

control or to predict.’” (quoting ASARCO, Inc. v. Kadish,

490 U.S. 605, 615 (1989))). We therefore remand Aragon’s

case to the district court to consider that question in the first

instance.

E. Spinedex’s Claims Against the Martz Agency Plan and

the Acoustic Technologies Plan

The district court held that claims assigned to Spinedex

by beneficiaries of the Martz Agency Plan and the Acoustic

Technologies Plan are time-barred by limitations periods

contained in the Plans. We disagree.

The summary plan descriptions (“SPDs”) for both Plans

contain two-year limitations periods for claims of benefits. 

There is no question that Spinedex’s action was filed after the

expiration of the two-year period. However, we hold that

because the limitation periods were not properly disclosed in

the SPDs, these provisions are unenforceable.

Because SPDs serve as “the employee’s primary source

of information regarding employment benefits,” Bergt v. Ret.

Plan for Pilots Employed by MarkAir, Inc., 293 F.3d 1139,

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 22 of 33
SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE 23

1143 (9th Cir. 2002), they are subject to a number of statutory

and regulatory requirements. In particular, “circumstances

which may result in disqualification, ineligibility, or denial or

loss of benefits” must be clearly disclosed in the SPD. 

Scharff v. Raytheon Co. Short Term Disability Plan, 581 F.3d

899, 904 (9th Cir. 2009) (internal quotation marks omitted)

(quoting 29 U.S.C. § 1022(b)). A limitation of the time for

bringing suit qualifies as a circumstance “which may result in

disqualification, ineligibility, or denial or loss of benefits.” 

Id. at 906 (internal quotation marks omitted) (quoting

29 U.S.C. § 1022(b)).

A Department of Labor regulation imposes specific

requirements for the placement and format in an SPD of a

provision falling under § 1022(b). The language of the

regulation is clear, though a little convoluted: “The

description or summary of restrictive plan provisions need

not be disclosed in the summary plan description in close

conjunction with the description or summary of benefits,

provided that adjacent to the benefit description the page on

which the restrictions are described is noted.” 29 C.F.R.

§ 2520.102-2(b). That is, either (1) the description or

summary of the restrictive provision must be placed “in close

conjunction with the description or summary of benefits,” or

(2) the page on which the restrictive provision is described

must be “noted” “adjacent to the benefit description.” The

SPDs for the Martz Agency and Acoustic Technologies Plans

comply with neither requirement.

The two SPDs are almost identical. The Martz Agency

Plan has 76 numbered pages; the Acoustic Technologies Plan

has 77. Both have ten sections. Section 1 is entitled “What’s

Covered—Benefits.” Section 2 is entitled “What’s Not

Covered—Exclusions.” Sections 1 and 2 of the Martz

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 23 of 33
24 SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE

Agency Plan are on pages 3 through 36; they are on pages 3

through 38 of the Acoustic Technologies Plan. Section 9 of

the Plans is entitled “General Legal Provisions.” The SPDs

for each Plan contain a provision, contained in Section 9,

specifying a two-year limitations period for bringing legal

action. The limitations provision is labeled “Limitation of

Action,” and it is the sixteenth of nineteen provisions. The

fifteen earlier provisions in Section 9 are labeled “Your

Relationship with Us,” “Our Relationship with Providers and

ParticipatingEmployers,” “Your Relationship with Providers

and Participating Employers,” “Notice,” “Statements by

Participating Employer or Subscriber,” “Incentives to

Providers,” “Incentives to You,” “Interpretation of Benefits,”

“Administrative Services,” “Amendments,” “Clerical Error,”

“Information and Records,” “Examination of Covered

Persons,” “Workers’ Compensation not Affected,” and

“Refund of Overpayments.” The provision is on page 66 of

the Martz Agency Plan and page 69 of the Acoustic

Technologies Plan.

In Scharff, we employed a “reasonable plan participant”

standard in analyzing 29 C.F.R. § 2520.102-2(b). Scharff,

581 F.3d at 907. Because “[t]he one-year deadline for filing

suit regarding disability claims was, logically, placed at the

end of the disability chapter,” we held in Scharff that the

placement satisfied § 2520.102-2(b). Id. We noted that a

“reasonable plan participant applying for disability benefits

would be expected to read, in its entirety, the Disability

chapter of the SPD, as it explains the rules relating to the

benefits for which she is applying.” Id. (emphasis in

original).

This case is a far cry from Scharff. The “Limitation of

Action” provision, buried deep in Section 9, is not in “close

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 24 of 33
SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE 25

conjunction” to benefits provisions, Sections 1 and 2. Nor is

there any reference, adjacent to the benefits description, to the

page number on which the “Limitation of Action” provision

appears. Defendants contend that Section 8, entitled “When

Coverage Ends,” is a benefits provision within the meaning

of the regulation. We disagree. But even if Section 8 were

a benefits provision, the limitation provision contained in

Section 9, coming after fifteen unrelated provisions in that

section, is hardly “in close conjunction” with Section 8.

If we were to hold that the placement of the limitation

provision in Section 9 satisfies Scharff’s “reasonable plan

participant” standard under § 2520.102-2(b), we would, in

effect, require a plan beneficiary to read every provision of an

SPD in order to ensure that he or she did not miss a limitation

provision. Such a requirement is what the regulation is

specifically designed to avoid. We therefore conclude that

limitations periods in the SPDs for the Martz Agency and

Acoustic Technologies Plans were not disclosed in

compliance with 29 C.F.R. § 2520.102-2(b). Because they

were not so disclosed, they are unenforceable.

F. Anti-Assignment Provision in the Discount Tire Plan

The district court held that an anti-assignment provision

in the Discount Tire Plan prevented Spinedex’s patients from

assigning claims under that Plan. We agree.

Anti-assignment clauses in ERISA plans are valid and

enforceable. Davidowitz v. Delta Dental Plan of Cal., Inc.,

946 F.2d 1476, 1481 (9th Cir. 1991). It is uncontested that

the Discount Tire Plan contains an anti-assignment provision. 

However, Plaintiffs argue that United (1) consented to the

assignments by sending Explanation of Benefits (“EOB”)

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 25 of 33
26 SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE

letters indicating that certain payments had been assigned to

Spinedex, and (2) waived any right to enforce the antiassignment provision by failing to raise it during the firstlevel administrative appeals process. We disagree with both

arguments. We address them in turn.

First, the SPD for the Discount Tire Plan provides, “You

may not assign your Benefits under the Plan to a nonNetwork provider without our consent. The Claims

Administrator may, however, in their discretion, pay a nonNetwork provider directly for services rendered to you.” 

(Emphasis added.) The word “our,” as used in the Plan, is

defined in the Introduction to the SPD: “When we use the

words ‘we,’ ‘us,’ and ‘our’ in this document, we are referring

to the Plan Sponsor.” The employer, Discount Tire

Company, is the Plan Sponsor.

Acting as claims administrator, United sent EOB letters

to Discount Tire Plan beneficiaries stating “PAYMENT

ASSIGNED TO PROVIDER.” We construe United’s

statement as an exercise of its discretionary authority. Under

the explicit terms of the Plan, United had the discretionary

authority only to send payments directly to non-network

providers. United did not have authority to consent to

assignment of benefits; only the Plan Sponsor had that

authority. There is no evidence in the record that the

Discount Tire Company consented to any assignment.

Second, we wrote in Harlick v. Blue Shield of California:

A plan administrator may not fail to give a

reason for a benefits denial during the

administrative process and then raise that

reason for the first time when the denial is

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 26 of 33
SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE 27

challenged in federal court . . . . The general

rule, . . . in this circuit and in others, is that a

court will not allow an ERISA plan

administrator to assert a reason for denial of

benefits that it had not given during the

administrative process.

686 F.3d 699, 719–20 (9th Cir. 2012). That is, an

administrator may not hold in reserve a known or reasonably

knowable reason for denying a claim, and give that reason for

the first time when the claimant challenges a benefits denial

in court. But in the case before us, Defendants did not

improperly assert a new reason in the district court. In

Hermann Hospital v. MEBA Medical & Benefits Plan, the

Fifth Circuit rejected a plan’s argument that “there was never

a reason to assert the non-assignment clause until [the

provider] formally claimed an assignment in its lawsuit.” 

959 F.2d 569, 574 (5th Cir. 1992), overruled on other

grounds by Access Mediquip, LLC v. UnitedHealthcare Ins.

Co., 698 F.3d 229 (5th Cir. 2012) (en banc). The court held

that the plan was “estopped to assert the anti-assignment

clause . . . because of its protracted failure to assert the clause

when [the provider] requested payment pursuant to a clear

and unambiguous assignment.” Id. at 575; see also Harlick,

686 F.3d at 720 (“ERISA and its implementing regulations

are undermined where plan administrators have available

sufficient information to assert a basis for denial of benefits,

but choose to hold that basis in reserve rather than

communicate it to the beneficiary.” (internal quotation marks

and citations omitted)).

Unlike in Hermann, there is no evidence that United was

aware, or should have been aware, during the administrative

process that Spinedex was acting as its patients’ assignee. So

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 27 of 33
28 SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE

far as United knew, Spinedex was acting merely as an

authorized representative charged with filing, collecting, or

appealing a claim on behalf of the patient. Defendants

therefore did not waive their objection to the assignment in

the district court when it became clear, for the first time, that

Spinedex was claiming as an assignee.

G. United as a Proper Defendant

The district court held that United was not a proper

defendant for claims brought under the American Express and

Discount Tire Plans. (The proper-defendant issue is relevant

only to claims brought under the American Express Plan

because, as we held above, the anti-assignment provision of

the Discount Tire Plan prevented assignment to Spinedex.) 

We are unable to determine with certainty a proper basis to

affirm or reverse the district court’s holding.

Spinedex contends, under our analysis in Cyr v. Reliance

Standard Life Insurance Co., 642 F.3d 1202 (9th Cir. 2011)

(en banc), that United is a proper defendant. Cyr had sued

Reliance Standard Life, which was the plan insurer, but was

neither the plan nor an administrator of the plan. We

overruled previous decisions in which we had held “that only

a benefit plan itself or the plan administrator of a benefit plan

covered under ERISA is a proper defendant” in a suit for

benefits under 29 U.S.C. § 1132(a)(1)(B). Id. at 1203–04. 

We noted that the text of § 1132(a)(1)(B) does not limit the

classes of defendants that may be sued, and we held that suit

may successfully be brought against a defendant under this

section “as long as that party’s individual liability is

established.” Id. at 1207. We concluded that because

Reliance was a plan insurer, responsible for paying legitimate

benefits claims, it was “a logical defendant for an action by

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 28 of 33
SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE 29

Cyr to recover benefits due to her under the terms of the plan

and to enforce her rights under the terms of the plan.” Id.

As the district court noted, the reach of Cyr was left

unclear in our opinion. But we read it to hold that proper

defendants under § 1132(a)(1)(B) for improper denial of

benefits at least include ERISA plans, formally designated

plan administrators, insurers or other entities responsible for

payment of benefits, and de facto plan administrators that

improperly deny or cause improper denial of benefits. Suits

under § 1132(a)(1)(B) to recover benefits may be brought

“against the plan as an entity and against the fiduciary of the

plan.” Hall v. Lhaco, Inc., 140 F.3d 1190, 1194 (8th Cir.

1998) (emphasis added) (collecting cases). A fiduciary is any

entity that “exercises any discretionary authority or

discretionary control respecting management of such plan or

exercises any authority or control respecting management or

disposition of its assets . . . [or] has any discretionary

authority or discretionary responsibility in the administration

of such plan.” 29 U.S.C. § 1002(21)(A); see LifeCare Mgmt.

Servs. LLC v. Ins. Mgmt. Adm’rs Inc., 703 F.3d 835, 844–45

(5th Cir. 2013) (holding that a third-party administrator that

neither was designated as the plan administrator nor was

responsible for paying claims was nonetheless a proper

defendant based on the control it exercised over benefits

claims processing).

With the appeal in its current posture, we cannot be

certain of the status of United. Unlike most of the defendant

Plans, the American Express Plan is self-insured. It is thus

clear that United is not, based on a responsibility to pay

benefits, a proper defendant under Cyr. But it is not clear

whether United is a formally designated or de facto

administrator. The district court held that United is not an

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 29 of 33
30 SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE

administrator of the American Express Plan. It wrote that

“the American Express Plan does not designate a plan

administrator, meaning the plan administrator is the ‘sponsor’

identified as the EmployeeBenefitsAdministrator Committee

of American Express.” But in their brief to us, Defendants

state without qualification, “United was a claims

administrator for each of the 44 Plans named as defendants.”

We are unable to reconcile the district court’s holding

with Defendants’ apparent concession. We therefore vacate

the district court’s holding that United is not a proper

defendant for claims brought under the American Express

Plan and remand for further proceedings on this issue.

H. Exhaustion of Administrative Remedies

Defendants argued in the district court that some claims

were barred due to a failure to exhaust administrative

remedies. The district court ultimately dismissed on other

grounds, the most important of which was its holding that

Spinedex had no Article III standing to bring claims as the

patients’ assignee. However, the district court concluded that

“[e]ven if standing existed, many individuals did not exhaust

their administrative remedies for their benefit denial claims.” 

We vacate and remand on this issue.

“As a general rule, an ERISA claimant must exhaust

available administrative remedies before bringing a claim in

federal court.” Barboza v. Cal. Ass’n of Prof’l Firefighters,

651 F.3d 1073, 1076 (9th Cir. 2011). However, Plaintiffs

argue that, because a number of patients’ plans did not

expressly require exhaustion, those claims should not now be

barred for failure to exhaust. Plaintiffs further argue that

even where the plans require exhaustion of administrative

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 30 of 33
SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE 31

remedies, the claims should be “deemed” exhausted as a

result of United’s failure to follow appropriate claims

procedures.

“ERISA seeks to avoid saddling plaintiffs . . . with the

burdens and procedural delays imposed by inartfully drafted

plan terms.” Kirkendall v. Halliburton, Inc., 707 F.3d 173,

181 (2d Cir. 2013). Where plan documents could be fairly

read as suggesting that exhaustion is not a mandatory

prerequisite to bringing suit, claimants may be affirmatively

misled by language that appears to make the exhaustion

requirement permissive when in fact it is mandatory as a

matter of law.

[E]xempting from the general exhaustion

requirement those plan participants who

“reasonablyinterpret” their ERISA plan not to

impose an exhaustion requirement will have

the salutary effect of encouraging employers

and plan administrators to clarify their plan

terms and, thereby, of leading more

employees to pursue their benefits claims

through their plan’s claims procedure in the

first instance.

Id. at 180 (quoting Watts v. BellSouth Telecomms., Inc.,

316 F.3d 1203, 1209 (11th Cir. 2003)).

Several of the Plans contain language which could

reasonably be read as making optional the administrative

appeals process. For example, the Temcon Concrete Plan

says that “[i]n the interest of saving time and money, you are

encouraged to complete all steps in the complaint process . . .

before bringing any legal action against us.” (Emphasis in

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 31 of 33
32 SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE

original.) A number of our sister circuits have held that a

claimant need not exhaust when the plan does not require it. 

See, e.g., Watts, 316 F.3d at 1209–10 (“If a plan claimant

reasonably interprets the relevant statements in the summary

plan description as permitting her to file a lawsuit without

exhausting her administrative remedies, and as a result she

fails to exhaust those remedies, she is not barred by the

court-made exhaustion requirement from pursuing her claim

in court.”); Kirkendall, 707 F.3d at 180. We arguably

adopted the same rule in Nelson v. EG & G Energy

Measurements Group, Inc., 37 F.3d 1384 (9th Cir. 1994), and

we do so explicitly today. In Nelson, we rejected a

defendant’s contention “that the plaintiffs were required to

bring their valuation claims before the Administrative

Committee prior to seeking relief from the courts,” observing

that “[n]othing in the Plan requires such action prior to

instituting suit.” Id. at 1388.

Even where a plan expressly requires exhaustion of

administrative remedies, 29 C.F.R. § 2560.503-1(l) provides

that where a plan fails “to establish or follow claims

procedures consistent with the requirements of this section,”

claimants are “deemed to have exhausted [their]

administrative remedies.” See Barboza, 651 F.3d at 1076. 

The Secretary of Labor, appearing as amicus in this case,

interprets 29 C.F.R. § 2560.503-1(l) as allowing exceptions

for de minimis deviations in certain circumstances, but

requiring “deemed exhaustion” for violations more serious

than de minimis violations. An agency’s interpretation of its

own ambiguous regulation is entitled to deference. See Auer

v. Robbins, 519 U.S. 452, 461 (1997). Because the

Secretary’s interpretation is not “plainly erroneous or

inconsistent with the regulation,” id., we adopt it here. Where

United’s failure to comply with claims procedures went

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 32 of 33
SPINEDEX PHYSICAL THERAPY V. UNITED HEALTHCARE 33

beyond mere de minimis violations, patients’ claims must be

deemed exhausted under 29 C.F.R. § 2560.503-1(l).

Because the district court held that Spinedex lacked

Article III standing to bring claims as an assignee, it did not

perform a claim-by-claim analysis of exhaustion. We

therefore remand to the district court to make this

determination in the first instance. On remand, for each

claim for which failure to exhaust is at issue, the district court

should determine whether: (1) the plan required exhaustion

of administrative remedies; (2) the claim must be deemed

exhausted due to United’s noncompliance with the claims

procedures; and (3) the claim was in fact exhausted.

Conclusion

We hold that Spinedex had Article III standing to bring

benefit claims against Defendants as assignee of its patients. 

Its injury in fact is the same injury its assignees had at the

time of the assignment. Our other holdings are recited in the

body of our opinion and need not be repeated here.

REVERSED in part, AFFIRMED in part, VACATED

in part, and REMANDED. Each party shall bear its own

costs on appeal.

 Case: 12-17604, 11/05/2014, ID: 9301940, DktEntry: 69-1, Page 33 of 33