IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 02-60284

TANGO TRANSPORT,

Plaintiff– Counter Defendant– Appellee,

versus

HEALTHCARE FINANCIAL SERVICES LLC,

Defendant – Counter Claimant – Appellant.

Appeal from the United States District Court

for the Southern District of Mississippi

March 12, 2003

Before GARWOOD, JONES, and STEWART, Circuit Judges.

CARL E. STEWART, Circuit Judge:

The disputed issues on appeal turn on whether our holding in Hermann Hosp. v. MEBA

Medical & Benefits Plan

, 845 F.2d 1286, 1289 (5th Ci r. 1988) (“ H ermann I ”) limit s derivative

standing to sue for ERISA benefits only to health care providers who have a valid assignment from

a plan participant or beneficiary. The district court construed our decision in Hermann I to limit t he

assignment of ERISA benefits to healthcare providers. For the reasons that follow, we decline, once2

again, to read into ERISA an anti-alienation provision that prevents assignme nts of enforcem ent

rights of employee welfare plans. Rather, we hold that the assignee of a health care provider who has

a valid assignment from the plan participant or beneficiary has derivative standing to bring a cause

o f act io n to recover benefits from an ERISA-governed employee welfare plan. Accordingly, we

REVERSE and REMAND.

I. Factual and Procedural Background

Plainti ff/Co unter Defendant Tango Transport (“Tango”) leased a tractor-trailer from Rocket

Transportation. Alice Huff (“Huff”), a Rocket Transportati on employee, was hired to drive the

t ract o r-trailer. Huff became a participant in a medical benefits plan governed by the Emplo yee

Retirement Income Se curity Act of 1974, 29 U.S.C. § 1001 e t seq. (ERISA) and sponsored by

Tango. When the tractor-trailer lease expired on March 27, 1997, Huff left Rocket Transportati on

for Jackson Rapid Delivery Services (“Rapid”). Rapid maintained a group health plan through Blue

Cross and Blue Shield, under which Huff acquired medical coverage on July 1, 1997.

On four occasions in June and in September 1997, Huff rece ived medical treatment from

Mississippi Baptist Medical Center (“MBMC”) at a total cost of $104,152.64. On each visit, Huff

executed an assignment of benefits to MBMC. The relevant language of each assignment provided:

I hereby assign payment of hospital benefits directly to Mississippi Baptist Med ical Center

herein specified and otherwise payable to me but not to exceed the hospital’s regular charges

for this period of hospitalization. This assignment also appli es to attending and consulting

physicians. I understand I am financially responsible for charges not covered by the

assignment. This assignment cove r s all insurance claims, including Medigap, filed by the

hospital and physician for this admission.

On March 19, 1998, MBMC, in turn, assigned Huff’s outstanding accounts to Healthcare Financial

Services (“Healthcare”). The relevant language of the assignment provided:1 On March 19, 1998, MBMC executed two separate assignments to Healthcare, one to collect

$51,591.51 and the other for $52,561.13 for a to t al of $104,152.64. Both contained the identical

language provided.

3 I, Richard M. Williams, General Manager of MBMC

– OP, in co nsideration of the sum of

One Dollar ($1.00), and other good and valuable consideration, the receipt of which is hereby

acknowledged do hereby sell, assign and transfer Healt hcare Financial Services, LLC, the

following described accounts totaling [$104,152.64] now due and owing by Alice Huff.

. .

. With full power unto the said Heathcare Financial Services, LLC, and his assigns, to sue for,

collect and give acquittance for the same, to his or their own use. 1

Healthcare filed suit against Huff for the balance on those accounts, and Huff filed a petition for

bankruptcy relief, eventually obtaining a discharge of debt under 11 U.S.C. § 727. Healthcare then

sought reimbursement of Huff’s medical expenses from Tango. Tango responded by filing a

declaratory judgment action in the district court seeking a declaration that Healthc are had not

received a valid as signment and therefore, did not have standing to sue Tango. Healthcare

counterclaimed seeking payment of insurance claims and damages for breach of fiduciary duty. Both

parties moved for summary judgment on H ealt hcare’s counterclaim. The district court granted

summary judgment to Tango finding t hat Healthcare does not have standing to sue for insurance

benefits under ERISA. Healthcare now appeals.

II. Standard of Review

We review the district court’s grant of summary judgment de novo

. Young v. Equifax Credit Info.

Servs. Inc. , 294 F.3d 631, 635 (5th Cir. 2002). Summary judgment is appropriate only “if t he

pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits,

if any, show that there is no genuine issue as to any material fact and that the moving party is entitled

to a judgment as a matter of law.” F ED

. R. C IV

. P. 56(c).4

III. Discussion

The two issues on appeal are: 1) whether Healthcare has derivative standing to sue Tango under

ERISA and 2) whether Healthcare is an agent of MBMC for the purposes of bringing a claim for the

payment of insurance claims. We discuss each issue in turn.

A. Standing under ERISA

To examine whether Healthcare has derivative standing under ERISA, we must first determine

whether Huff has stand ing to enforce plan benefits under ERISA. Second, we must determine

whether MBMC has standing under ERISA by way of Huff’s assignment of her benefits. Finally, we

must decide whether MBMC’s assignment of its benefits to Health care confers standi ng under

ERISA.

1. Huff has standing to enforce plan benefits under ERISA

Section 1132(a) confers standing to enumerated parties, namely, plan participants bring a civil

action to enforce provisions of ERISA. ERISA provides that “[a] civil action may be brought by a

participant or beneficiary ... to recover benefits due him under the terms of his plan, to enforce his

rights under the terms of the plan, or to clarify his rig hts to future benefi ts under the term s of the

plan.” 29 U.S.C. § 1132(a)(1). A “participant” is “an employee or former employee of an employer,

. . . who is or may become eligible to receive a benefit of any type from an employee benefit plan.”

Id

. at § 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 . at § 1002(8). In

this case, Tango sponsored an ERISA health benefits plan for Huff, a former employee. Thus, Huff

is a plan participant who has ind ependent standing to seek enforcement of her rights and recover2 There is some dispute as to the scope of Huff’s assignment to MBMC, discussed infra

.

5 benefits under the terms the plan as provided by ERISA. Huff assigned, most, if not all of those rights

to MBMC. 2

2. MBMC has standing under ERISA

a. Standing

ERISA contemplates two type s o f employee benefit plans -- employee welfare plans and

employee pension plans. See 29 U.S.C. § 1002(1), (3). An “employee welfare benefit plan” or

“welfare plan” is “a plan, fund, or program [which] was established for the purpose of providing for

its participants or their beneficiaries, through the purchase of insurance or otherwise,

. . . medical,

surgical, or hospital care benefits.” Id

. at § 1002(1). The ERISA plan at issue in this case is a welfare

benefit plan. The statute also provides for enforcement mechanisms, including a cause of action

against plan administrators for breaches of fiduciary duty and for the enforcement of certain notice

requirements. Id

. at §§ 1109, 1132(c). As discussed supra , standing to bring such claims, however,

is limit ed to participants, beneficiaries, the Secretary, or fiducia ries. See Id . at § 1132(a).

Nevertheless, this Court, like many of our sister Circuits, recognize s derivative standing which

permits suits in th e co nt ext o f ERISA-governed employee welfare benefit plans, to be brought by

certain non-enumerated parties. See Hermann Hosp. v. MEBA Medical & Benefits Plan , 845 F.2d

1286, 1289 (5th Cir. 1988) (“ Hermann I ”); I.V. Servs. of Am., Inc. v. Trustees of the Am. Consulting

Eng’rs Council Ins. Trust Fund , 136 F.3d 114, 117 n.2 (2d Cir. 1998); C agle v. Bruner , 112 F.3d

1510, 1515 (11th Cir. 1997); Yarde v. Pan Am. Life Ins. Co.

, No. 94-1167, 1995 WL 539736 at *5

(4th Cir. Sept. 12, 1995); Lutheran Med. Ctr. of Omaha, NE v. Contractors, Laborers, Teamsters

& Eng’rs Health & Welfare Plan

, 25 F.3d 616, 619-20 (8th Cir. 1994); C romwell v. Equicor-6

Equitable HCA Corp. , 944 F.2d 1272, 1277-78 (6th Cir. 1991); M isic v. Bldg. Serv. Employees

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

In Hermann I , this Court permitted a hospital that had obtained an assignment of benefits from

a patient to sue the patient’s ERISA-governed health plan for reimbursement. Although the hospital

was not an enumerated party under section 1132, this Court found that the hospit al had standing

derived from its status as the assignee of the be neficiary’s welfare plan. 845 F.2d at 1289-90. The

Court noted that Congress included an anti-assignment provision per taining to ERISA-governed

pension plans. Id

. As we explained Congress was silent with regard to such a provision for health

care benefits. There is no “language in the statute which even remotely suggests that such assignments

are pro scribed or ought in any way to be limited.” I d

. As a matter of policy, the Court furthe r

reasoned that “[a]n assignment to a healthcare provider facilitates rather than hampers the employee’s

receipt of health benefits.” Id . at 1289.

Mirro ring the same reasoning espoused in H ermann I

, the Supreme Court observed that a n

assignment of an employee welfare benefit plan is no t expressly barred under ERISA. M ackey v.

Lanier Collection Agency & Service, Inc.

, 486 U.S. 825 (1988). In M ackey , a collection agency

obtained money judgments against several plan participants who were trustees of an ERISA-governed

employee welfare benefit plan. Id

. at 8 27. To collect the money judgments, the collection agency

sought to garnish the plan benefits under state garnishment law. Id

. at 828. T he plan parti ci pants

argued that the state law method of enfor cement – garnishment – was preempted by ERISA. The

Supreme Court determined that the col lect io n agency was entitled to seek garnishment and its

analysis rested on Congress’s express intent to bar assignment s and alienation of ERISA pension

plans. Section 1056(d) of ERISA provides that “[e]ach pension plan shall provide that benefits3 Hermann I was remanded to the district court to determine whether the hospital had a valid

assignment from th e plan beneficiary. On remand, the district court dismissed and the hospital

appealed resulting in Hermann II

.

7 provided under the plan may not be assigned or alienated.” Id

. at 836. It noted that “Congress did not

enact any similar provision applicable to ERISA welfare benefit plans, such as the one at issue in this

case.” Id

. (emphasis in orig inal). The Supreme Court further explained that “such omissions are

significant ones” because Congress “had before it a provision to bar” the same assignments but chose

not to do so. I d

. at 837. Thus, it held that “ERISA does not forbid garnishment of an ERISA welfare

benefit plan, even where the purpose is to collect judgments against plan participants.” Id . at 841.

Like the plans in Hermann I and Mackey , the plan in this case is an ERISA-governed employee

welfare benefit plan. Under Hermann I

, an assignee of a plan participant has derivative standing to

bring a cause of action for enforcement under ERISA. If MBMC has a valid assignment from Huff,

a plan participant, then MBMC has derivative standing to bring a cause of action against Tango under

ERISA.

b. Assignment

Tango argues that the assignment of insurance benefits to MBMC did not include Huff’s breach

of fiduciary duty claim against Tango because the assignment language only covers direct payment

of benefits to MBMC and all insurance claims. In Hermann Hospital v. MEBA Medical & Benefits

Plan (“ Hermann II ”), this Court concluded that the “right to sue for payment of benefits provided by

[the hospital] belonged solely to [the hospital] as a result of the assignment.” 959 F.2d 569, 574 (5th

Cir. 1992). 3 Thus, we reiterated our holding in Hermann I that the hospital “has standin g as an

assignee to seek recovery of payment for the benefits it provided.” I d

. at 576. In so holding, we

explained that “the authorization language represents nothing more than cautious and prudent ‘belt4 In its Complaint to the district court, Tango sought inter alia

, “a declaration that there was not

a valid assignment between Alice Huff and Mississippi Baptist Medical Center since there were no

insurance benefits to assign from Alice Huff to Mississippi Baptist Medical Center, and that any such

assignment would not have included her claims or cause of action against Tango.” Because th e

district court concluded that “Healthcare lacks standing to bring a claim for benefits under ERISA,”

it sua sponte granted to Tango a declaration that “Healthcare cannot bring a claim against Tango for

insurance benefits allegedly owed under the subject ERISA-qualified plan.” The district court, then,

mooted “all other declaratory relief requested by Tango.”

8 and suspenders’ drafting.” Id

. at 574. Although there is some dispute as to the scope of Huff’s

original assignment to MBMC, both parties concede that Huff assigned at least some hospital benefits

to MBMC and that MBMC, in turn, executed a valid assignment of those benefits to Healthcare. The

district court did not rule on the scope of Huff’s assignment to MBMC and therefore, this issue is not

properly before this Court on appeal. 4 The dispute on appeal centers on Healthcare’s standing as an

assignee to assert Huff’s claim.

3. Healthcare has derivative standing to sue Tango

.

The question of Healthcare’s standing turns on the construction given to Hermann I

. Tango seeks

a narrow construction of Hermann I

. According to Tango, Hermann I

, did not recognize a theory of

derivative standing based on the unrestricted abilit y to assign welfare plan benefits, instead it simply

created a judicial exception in favor of health care providers to section 1132. Tango’s argument is

unpersuasive. In holding that ERISA does not prohibit the assignment of welfare benefit s t o a

hospital, this Court noted that there is no “language in the statute which even remotely suggests that

such assignments are proscribed or ought in any way be limited.” 845 F.2d at 1289 (emphasis added).

Healthcare’s asserti on that H ermann I extends to it derivative standing is based on the wel l

established principle that the assignee is placed in the same position as the assignor. Healthcare argues

that such derivative standing to recover health care benefits fro m ERISA-governed welfare plans9

advances the underlying policy goals of ERISA. We find that allowing the health care provider to use

an assignee to recover ERISA benefits does nothing to frustrate the goals or purposes of ERISA.

Consistent with the plain language of section 1132(a), ERISA con f ers derivative standing to

enforce rights under an employee welfare benefit plan. Herman n I , 845 F.2d at 1289. Nowhere i n

Hermann I did we suggest th at our construction of ERISA created a judicial exception to the

enumeration of parties in section 1132 designated standing to sue under ERISA. Rather, our decision

to extend derivative standing to the hospital was grounded in the structure of ERISA, specifically,

the “absence of an anti-assignment clause applicable to health benefits.” Id

. Moreover, other Circuits

that evoke derivative standing comport with similar reasoning

. For example, citing Hermann I , the

Sixth Circuit noted that “[t]he underlying premise of the derivative standing doctrine is that ERISA

health care benefits are assignable.” Cromwell , 944 F.2d at 1277-78. Hermann I extends derivative

standing based on the structure of ERISA and “the principle that the assignee stands in the shoes of

his assignor.” 845 F.2d at 1290 n.14.

In addition to following Hermann I

, granting Healthcare derivative standing is also consistent with

the Supreme Court’s decision in Mackey

, 486 U.S. 825 (1988). As we discussed supra

, the Supreme

Court in Mackey used similar reasoning when it held that ERISA’s anti-assignment/alienation

provisions for pension benefit plans di d no t preclude a collection agency from attaching welfare

benefit plans. Id

. at 836. Acco rding to the Supreme Court, the absence of such anti-alienation

protecti on with respect to ERISA welfare benefit plans must mean that the benefits of those plans are

freely alienable. Id

. at 837. Because ERISA-gov erned welfare plans are alienable, to hold that the

original participant can alienate them, but that a subsequent assignee cannot, would make little sense.

It is likewise nonsensical for an original health care provider assignee to receive both welfare benefits5 We note that the method of civil enforcement chosen by MBMC is immaterial to this analysis.

10 and the right to enforce them via derivative standing, but a subsequent assignee can receive only the

benefits, but not the right to sue to enforce them.

Wha t ever rights Huff assigned to MBMC, those rights “to sue for payment provided by [the

hospital] belong solely” to MBMC. Hermann II

, 959 F.2d at 573. MBMC was free to assign its rights

to Healthcare placing Healthcare in its shoes to enforce those rights under ERISA. 5 As the Supreme

Court in Mackey explained, a collection agency is entitled to seek garnishment because “ERISA does

not provide an enforcement mechanism for collecting judgments won” in civil enforcement actions.

“[O]therwise, there would be no way to enforce such a judgment won against an ERISA plan.” Here,

MBMC chose t o assign to Healthcare its rights to sue Tango and to collect debts due on Huff’s

accounts. In this case, the assignee takes what the assignor had.

As we noted in Hermann I

, denying derivative st anding t o health care providers would harm

participants or beneficia ries because it would “discourage providers from becoming assignees and

possibly from helping beneficiaries who were unable to pay them ‘up-front.’” 845 F.2d at 1290 n.13.

Likewise, granting derivative standing to the assignees of health care providers helps plan participants

and beneficiaries by encouraging providers to accept participants who are unable to pay up front.

Conversely, to bar health care providers from assigning their rights under ERISA, and shift ing the risk

of non-payment to a third-party, would chill health care providers’ willingness to accept a patient.

Third parties like Healthcare will only be willing to purchase an assignment from a heal th care

provider if they can be assured that they will be afforded standing to sue for reimbursement. We need

not reach whether all assignees or sub-assignees of plan participants have standing to sue. In this case,11

however, rather than harming participants of ERISA-governed welfare plans, extending Hermann I

will almost surely benefit them.

B. Healthcare as an agent of MBMC

Healthcare argues that it also has derivative standing as an agent of MBMC. Relying on state law,

the district court found that Healthcare had filed suit on its own behalf and therefore, cannot be

considered an agent of MBMC. In this appeal, Healthcare maintains that the district court erred in

applying state law to determine its status as an agent, and instead, t he district court should have

applied federal common law. We need not decide this issue, however, because both parties agree that

MBMC assigned its full rights to Healthcare. We have al ready held that Healthcare has derivative

standing as an assignee of MBMC.

IV. Conclusion

There is no express language in the statute that prohibits a health care provider who has a valid

assig nment from the plan participant or beneficiary to subsequently assign its rights to enforce an

ERISA-governed employee welfare benefit plans. To read an anti-alienation provision into section

1132 of ERISA would hinder the underlying goals of ERISA and the effective provision of medical

services. Healthcare has derivative standing to enforce the very same rights MBMC had as an

assignee of Huff’s benefits. Accordingly, we REVERSE the district court’s holding that Healthcare

does not have derivative standing and REMAND to the district court to determine the scope of

Huff’s assignment to MBMC consistent with this opinion.

REVERSED and REMANDED.