2015 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

9-11-2015

North Jersey Brain & Spine Cen v. Aetna Inc

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"North Jersey Brain & Spine Cen v. Aetna Inc" (2015). 2015 Decisions. Paper 969.

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 14-2101

_____________

NORTH JERSEY BRAIN

& SPINE CENTER,

Appellant

v.

AETNA, INC.

Appeal from the United States District 

Court for the District of New Jersey 

(No. 2-13-cv-05286)

District Judge: Hon. William J. Martini

____________

Argued: November 19, 2014

____________

Before: CHAGARES, HARDIMAN, and SHWARTZ,

Circuit Judges.

(Filed: September 11, 2015)

Eric D. Katz, Esq. [ARGUED]

David M. Estes, Esq.

Mazie Slater Katz & Freeman, LLC

103 Eisenhower Parkway

Roseland, NJ 07068

Counsel for Appellant
2

Edward S. Wardell, Esq. [ARGUED]

Christine S. Orlando, Esq.

Thomas Vecchio, Esq.

Thomas M. Blewitt, Jr., Esq.

Connell Foley LLP

Liberty View Building

457 Haddonfield Road, Suite 230

Cherry Hill, NJ 08002

Counsel for Appellee

D. Brian Hufford, Esq. [ARGUED]

Jason S. Cowart, Esq.

Zuckerman Spaeder

1185 Avenue of the Americas, 31st Floor

New York, NY 10036

Counsel for Amici Curiae American Medical 

Association, Medical Society of New Jersey

Michael P. Abate, Esq.

Dinsmore & Shohl

801 Pennsylvania Avenue, N.W.

Washington, DC 20004

Counsel for Amici Curiae Americas Health 

Insurance Plans

____________

OPINION

 ____________

CHAGARES, Circuit Judge.

This is an action for unpaid insurance benefits brought 

under the Employee Retirement Income Security Act of 1974 

(“ERISA”), 29 U.S.C. § 1001, et seq. Plaintiff North Jersey 

Brain & Spine Center (“NJBSC”) appeals an order entered by 

the United States District Court for the District of New Jersey

dismissing its complaint for lack of standing under ERISA. 

The question presented on appeal is whether a patient’s 

explicit assignment of payment of insurance benefits to her 

healthcare provider, without direct reference to the right to 
3

file suit, is sufficient to give the provider standing to sue for 

those benefits under ERISA § 502(a), 29 U.S.C. § 1132(a). 

Because we find that such an assignment does confer 

standing, we will reverse the order of the District Court and 

remand this action for further proceedings.

I.

NJBSC is a neurosurgical medical practice located in 

Bergen County, New Jersey. NJBSC treated three patients 

who were members of ERISA-governed healthcare plans 

administered by defendant-appellee Aetna, Inc. Prior to 

surgery, each patient executed an assignment that read, in 

relevant part: “I authorize [NJBSC] to appeal to my 

insurance company on my behalf. . . . I hereby assign to 

[NJBSC] all payments for medical services rendered to 

myself or my dependents.” Appendix (“App.”) 21. NJBSC 

reserved the right to bill the patients for any amount not 

covered by their insurance. Following treatment, Aetna 

allegedly underpaid or refused to pay claims for each of the 

patients. NJBSC filed suit against Aetna in the New Jersey 

Superior Court for non-payment of benefits pursuant to § 

502(a) of ERISA, 29 U.S.C. § 1132(a). Aetna removed the 

case to the United States District Court for the District of 

New Jersey.

On March 6, 2014, the District Court dismissed 

NJBSC’s complaint, holding that the assigned rights to 

payment did not give NJBSC standing to sue under ERISA. 

The District Court acknowledged, both in its March 6 opinion 

and in its order permitting NJBSC to file this interlocutory 

appeal, that the district was split as to whether an assignment 

of payments was sufficient to confer standing under § 

502(a).

1

 

1 Compare Wayne Surgical Ctr., LLC v. Concentra Preferred 

Sys., Inc., No. 06-928, 2007 WL 2416428, at *4 (D.N.J. Aug. 

20, 2007) (“[I]t is illogical to recognize that . . . a valid 

assignee has a right to receive the benefit of direct 

reimbursement from its patients’ insurers but cannot enforce 

this right.”), with MHA, LLC v. Aetna Health, Inc., No. 12-

2984, 2013 WL 705612, at *7 (D.N.J. Feb. 25, 2013) (“[T]he 

Court respectfully disagrees with the view that there is no 
4

II.2

This Court exercises plenary review over district court 

orders dismissing a complaint for lack of standing. Baldwin 

v. Univ. of Pittsburgh Med. Ctr., 636 F.3d 69, 74 (3d Cir. 

2011). “[W]hen standing is challenged on the basis of the 

pleadings, we accept as true all material allegations in the 

complaint, and . . . construe the complaint in favor of the 

complaining party.” FOCUS v. Allegheny Cnty. Court of 

Common Pleas, 75 F.3d 834, 838 (3d Cir. 1996) (quoting 

Pennell v. City of San Jose, 485 U.S. 1, 7 (1988) (quotation 

marks omitted)).3

 

distinction between an assignment of a right to payment and 

an assignment of plan benefits. It is only the latter that 

creates derivative standing in a provider assignee to sue under 

§ 502.” (internal quotation marks and citations omitted)).

2 The District Court had jurisdiction pursuant to 28 U.S.C. § 

1331. Because the District Court “certifie[d] in writing that 

its order involve[d] ‘a controlling question of law as to which 

there is substantial ground for difference of opinion[,]’” this 

Court has jurisdiction to review NJBSC’s interlocutory 

appeal. Johnson v. SmithKline Beecham Corp., 724 F.3d 

337, 340 n.4, 344-45 (3d Cir. 2013) (quoting 28 U.S.C. § 

1292(b)).

3 The motion to dismiss before the District Court was filed 

under Federal Rule of Civil Procedure 12(b)(6). Ordinarily, 

Rule 12(b)(1) governs motions to dismiss for lack of 

standing, as standing is a jurisdictional matter. But the 

Supreme Court has warned that “when Congress does not 

rank a statutory limitation on coverage as jurisdictional, 

courts should treat the restriction as nonjurisdictional in 

character.” Arbaugh v. Y&H Corp., 546 U.S. 500, 516 

(2006). Several United States Courts of Appeals have 

therefore treated challenges to a plaintiff’s status as an ERISA 

plan “participant” as nonjurisdictional. See, e.g., Leeson v. 

Transamerica Disability Income Plan, 671 F.3d 969, 978 (9th 

Cir. 2012); Lanfear v. Home Depot, Inc., 536 F.3d 1217, 

1221 (11th Cir. 2008); Harzewski v. Guidant Corp., 489 F.3d 

799, 803-04 (7th Cir. 2007). This case deals with a party 

claiming derivative rather than direct status as a participant, 
5

III.

Section 502(a) of ERISA empowers “a participant or 

beneficiary” to bring a civil action “to recover benefits due to 

him under the terms of his plan.” 29 U.S.C. 1132(a). See

Pascack Valley Hosp. v. Local 464A UFCW Welfare 

Reimbursement Plan, 388 F.3d 393, 400 (3d Cir. 2004) 

(citing 29 U.S.C. § 1132(a)(1)(B)). A “participant” is “any 

employee or former employee of an employer, or any 

member or former member of an employee organization, who 

is or may become eligible to receive a benefit of any type 

from an employee benefit plan which covers employees of 

such employer or members of such organization, or whose 

beneficiaries may be eligible to receive any such benefit.” 29 

U.S.C. § 1002(7). A “beneficiary” is “a person designated by 

a participant, or by the terms of an employee benefit plan, 

who is or may become entitled to a benefit thereunder.” Id. § 

1002(8). Healthcare providers that are neither participants 

nor beneficiaries in their own right may obtain derivative 

standing by assignment from a plan participant or beneficiary. 

CardioNet, Inc. v. Cigna Health Corp., 751 F.3d 165, 176 

n.10 (3d Cir. 2014). 

This case presents the question of what type of 

assignment is necessary to confer derivative standing. 

NJBSC argues that an assignment of the right to payment is 

sufficient. Aetna, by contrast, urges us to hold that an 

assignment must explicitly include not just the right to 

 

but that does not change the analysis. Whether NJBSC has 

gained derivative status involves a merits-based 

determination. This is not a case where an alleged federal 

claim “appears to be immaterial and made solely for the 

purpose of obtaining jurisdiction.” Bell v. Hood, 327 U.S. 

678, 682 (1946). Therefore, the motion to dismiss was 

properly filed under Rule 12(b)(6). For purposes of our 

review, however, a motion for lack of statutory standing is 

effectively the same whether it comes under Rule 12(b)(1) or 

12(b)(6). See Warren Gen. Hosp. v. Amgen Inc., 643 F.3d 

77, 83 n.7 (3d Cir. 2011) (“Under most circumstances, ‘[a] 

dismissal for lack of statutory standing is effectively the same 

as a dismissal for failure to state a claim.’” (quoting Baldwin, 

636 F.3d at 73).
6

payment but also the patient’s legal claim to that payment if a 

provider is to file suit.

4

ERISA itself is silent on the issue of derivative 

standing and assignments. In such situations, “it is well 

settled that Congress intended that the federal courts would 

fill in the gaps by developing, in light of reason, experience, 

and common sense, a federal common law of rights and 

obligations imposed by the statute.” Teamsters Pension Trust 

Fund of Phila. & Vicinity v. Littlejohn, 155 F.3d 206, 208 (3d 

Cir. 1998); see also Firestone Tire & Rubber Co. v. Bruch, 

489 U.S. 101, 110 (1989) (“[W]e have held that courts are to 

develop a federal common law of rights and obligations under 

ERISA-regulated plans.” (quotation marks omitted)).

We hold that as a matter of federal common law, when 

a patient assigns payment of insurance benefits to a healthcare 

provider, that provider gains standing to sue for that payment 

under ERISA § 502(a). An assignment of the right to 

payment logically entails the right to sue for non-payment. 

See I.V. Servs. of Am., Inc. v. Inn Dev. & Mgmt., Inc., 7 F. 

Supp. 2d 79, 84 (D. Mass. 1998) (“An assignment to receive 

payment of benefits necessarily incorporates the right to seek 

payment. . . . [T]he right to receive benefits would be hollow 

 

4 Both NJBSC and Aetna argue that we resolved this issue in 

prior opinions. Aetna contends that in Community Medical 

Center v. Local 464A UFCW Welfare Reimbursement Plan, 

143 F. App’x 433, 436 (3d Cir. 2005), this Court recognized a 

distinction between an assignment of benefits and an 

assignment of the legal claim to those benefits. But the 

distinction was made in dicta, and in any case Community 

Medical Center was a non-precedential opinion. NJBSC 

claims we held in CardioNet that a provider with derivative 

standing may assert “whatever rights the assignor[s] 

possessed.” 751 F.3d at 178. But that statement applied to 

the CardioNet plaintiffs specifically, not provider-assignees 

generally. The assignment at issue in CardioNet expressly 

included “all . . . rights (without limitation) under the

Employee Retirement Income Security Act of 1974 . . . along 

with any other rights under federal or state law that [they] 

may have as related to the reimbursement of coverage for the 

uncovered treatment.” Id. (quotation marks omitted). The 

assignments here do not contain such limitless language.
7

without such enforcement capabilities.”). After all, the 

assignment is only as good as payment if the provider can 

enforce it. See Conn. State Dental Ass’n v. Anthem Health 

Plans, Inc., 591 F.3d 1337, 1352 (11th Cir. 2009) (“[A]n 

assignment furthers ERISA’s purposes only if the provider 

can enforce the right to payment.”). Every United States 

Court of Appeals to have considered this question has found, 

as we do, that an assignment of benefits is sufficient to confer 

ERISA standing. See, e.g., id.; Tango Transp. v. Healthcare 

Fin. Servs. LLC, 322 F.3d 888, 889 (5th Cir. 2003) (holding 

that an assignment of the right to sue the insurer was valid 

where the assignment read, “I hereby assign payment of 

hospital benefits directly to Mississippi Baptist Medical 

Center herein specified and otherwise payable to me”); I.V. 

Servs. of Am. v. Inn Dev. & Mgmt., 182 F.3d 51, 54 n.3 (1st 

Cir. 1999) (holding that an assignment of only the right to 

payment “easily clear[ed]” the low hurdle of a colorable 

claim for derivative standing, and the argument that an 

assignment to receive payment did not include the right to file 

suit “wrongly conflate[d] two distinct inquiries” as to 

standing and scope (quotation marks omitted)); Cromwell v. 

Equicor-Equitable HCA Corp., 944 F.2d 1272, 1275 (6th Cir. 

1991) (suggesting the assignment of all payments due under 

the terms of the contract was sufficient to give the assignee 

derivative standing); Misic v. Bldg. Serv. Emps. Health & 

Welfare Trust, 789 F.2d 1374, 1378-79 (9th Cir. 1986) (per 

curiam) (holding that the assignment of patients’ rights to 

reimbursement gave a provider ERISA standing in their 

place).

In coming to the same conclusion as our sister circuits, 

we are guided by Congress’s intent that ERISA “protect . . . 

the interests of participants in employee benefit plans,” 29 

U.S.C. § 1001(b), and our conviction that the assignment of 

ERISA claims to providers “serves the interests of patients by 

increasing their access to care.” CardioNet, 751 F.3d at 179. 

It does not seem that the interests of patients or the intentions 

of Congress would be furthered by drawing a distinction 

between a patient’s assignment of her right to receive 

payment and the medical provider’s ability to sue to enforce 
8

that right.5 The value of such assignments lies in the fact that 

providers, confident in their right to reimbursement and 

ability to enforce that right against insurers, can treat patients 

without demanding they prove their ability to pay up front. 

Patients increase their access to healthcare and transfer 

responsibility for litigating unpaid claims to the provider, 

which will ordinarily be better positioned to pursue those 

claims. See Hermann Hosp. v. MEBA Med. & Benefits Plan, 

845 F.2d 1286, 1289 n.13 (5th Cir. 1988) (“[P]roviders are 

better situated and financed to pursue an action for benefits 

owed for their services.”). These advantages would be lost if 

an assignment of payment of benefits did not implicitly 

confer standing to sue. See Conn. State Dental, 591 F.3d at 

1352. As the United States Court of Appeals for the Fifth 

Circuit observed, if providers’ “status as assignees does not 

entitle them to federal standing against [insurers], providers 

would either have to rely on the beneficiary to maintain an 

ERISA suit, or they would have to sue the beneficiary. Either 

alternative . . . would discourage providers from becoming 

assignees and possibly from helping beneficiaries who were 

unable to pay them ‘up-front.’” Hermann Hosp., 845 F.2d at 

1289 n.13; see also Cagle v. Bruner, 112 F.3d 1510, 1515 

(11th Cir. 1997) (per curiam) (“If provider-assignees cannot 

sue the ERISA plan for payment, they will bill the participant 

or beneficiary directly for the insured medical bills, and the 

participant or beneficiary will be required to bring suit against 

the benefit plan when claims go unpaid. On the other hand, if 

provider-assignees can sue for payment of benefits, an 

assignment will transfer the burden of bringing suit from plan 

 

5 We note that where a provider retains the right to bill the 

patient for unpaid medical fees, interpreting an assignment of 

the right to payment as an assignment of the patient’s § 502

claim could create a risk that, if the provider sought recourse 

against the patient instead of the insurer, the patient would be 

responsible for the bill for healthcare services but lack a § 502 

remedy against her insurers. Such a case would require a 

court to determine whether an implied term of the assignment 

is that a provider must make a reasonable effort to collect 

from the insurer before attempting to collect from the patient. 

Of course, that factual scenario is not before us as NJBSC has 

brought its claims against Aetna alone. We therefore reserve 

that question for a case that requires its resolution.
9

participants and beneficiaries to providers[, who] are better 

situated and financed to pursue an action for benefits owed 

for their services.” (quotation marks and citations omitted)).

We note, moreover, that reading an assignment of 

benefits to confer standing under § 502(a) advances the public 

interest in uniform interpretation of ERISA. It is a significant 

advantage for ERISA-plan participants if basic rules 

governing assignments and standing to sue do not change 

when they cross circuit lines. Cf. Menkes v. Prudential Ins. 

Co. of Am., 762 F.3d 285, 292 (3d Cir. 2014) (joining other 

United States Courts of Appeals in declining to unbundle 

closely related components of an ERISA plan and noting 

ERISA’s goal of “uniform regulation ‘is impossible . . . if 

plans are subject to different legal obligations in different 

States’”); Krishna v. Colgate Palmolive Co., 7 F.3d 11, 16 (2d 

Cir. 1993) (“There is a strong interest in uniform, 

uncomplicated administration of ERISA plans.”). 

Based on the practical concerns described above, 

Congress’s intent to protect plan participants, the interests of 

increasing patients’ access to healthcare, and the interest in 

uniform interpretation of ERISA, we conclude that an 

assignment of the right to payment is sufficient to confer 

standing to sue for payment under ERISA § 502(a)(1).

IV.

For the foregoing reasons, we will reverse the District 

Court’s order dated March 6, 2014 and remand this action for 

further proceedings.