Opinion ID: 4549171
Heading Depth: 3
Heading Rank: 2

Heading: Relevant Developments in the Healthcare

Text: Profession 11 At the core of modern developments in welfare plan structure are two competing values: choice and cost. Historically, doctors in the United States worked on a “fee-forservice” basis. Pegram v. Herdrich, 530 U.S. 211, 218 (2000). Doctors established set fee schedules for their services and treated patients in accordance with their best judgment, billing 11 We provide only a brief overview of the emergence of managed care as relevant to a basic understanding of the role of out-of-network providers in that setting and the different payment methods that pertain to this category of providers. A comprehensive treatment of the subject, to which we do not aspire here, can be found in Paul Starr’s Pulitzer Prize-winning book The Social Transformation of American Medicine. See generally Paul Starr, The Social Transformation of American Medicine: The Rise of a Sovereign Profession and the Making of a Vast Industry (1982). 12 either the patient or an insurer for the costs of services after they were provided. See id. The incentive under this system generally was for healthcare providers to provide patients with “more care, not less,” but that, in turn, gave rise to concerns about mounting healthcare costs that outstripped the value of care provided. Id. Responding to a perceived need to cut costs, starting in the 1960s and continuing through today, welfare plans increasingly shifted to “managed care” models of healthcare, epitomized by Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs). Id. at 218–19; see also DiFelice, 346 F.3d at 464 (Becker, J., concurring); J. Scott Andresen, Is Utilization Review the Practice of Medicine?, Implications for Managed Care Administrators, 19 J. Legal Med. 431, 431 & n.6 (1998). Managed care organizations aim to reduce healthcare costs without sacrificing quality of care by creating networks of doctors or preferred providers who enter into provider agreements with set fee arrangements and agree to adhere to certain cost-cutting measures in exchange for a steady stream of patients. 12 See, e.g., CardioNet, Inc. v. Cigna Health Corp., 12 Perceived tension between the goals of cost effectiveness and quality of care has spawned a robust debate over the merits of managed care. See, e.g., Kent G. Rutter, Note, Democratizing HMO Regulation to Enforce the “Rule of Rescue,” 30 U. Mich. J.L. Reform 147, 154 (1996) (explaining that proponents of managed care “maintain that their plans reduce health care costs by cutting waste and by avoiding serious illness through an emphasis on preventative care” while critics contend that the “cost-reducing techniques” harm the quality of care by “deny[ing] patients the ‘medically necessary’ treatment that HMOs are obligated to provide” 13 751 F.3d 165, 168–69 (3d Cir. 2014) (describing provider agreement); Pascack Valley Hosp., Inc. v. Local 464 A UFCW Welfare Reimbursement Plan, 388 F.3d 393, 402–03 (3d Cir. 2004) (citing Blue Cross of Cal. v. Anesthesia Care Assocs. Med. Grp., Inc., 187 F.3d 1045, 1050–54 (9th Cir. 1999)) (same); see also Gregory F. Jacob, A Pox on Both Their Houses: North Cypress Med. Ctr. Op. Co., Ltd. v. Aetna Life Ins. Co., 26 ERISA Litig. Rep., Nov. 2018 (describing the bargain in-network providers strike: “reduced compensation” in exchange for “increased patient volume”). These organizations, in essence, restrict an individual’s choice of healthcare providers in exchange for access to and cost effectiveness of the healthcare they provide. In striving for efficiency, managed care organizations have a strong incentive simultaneously to bring providers innetwork, which over time increases the network’s bargaining power, and to reduce unexpected charges from out-of-network providers, whose billing practices may vary significantly from those of in-network providers. See Am. Orthopedic & Sports Med. v. Indep. Blue Cross Blue Shield, 890 F.3d 445, 452 (3d Cir. 2018). To achieve these interlocking goals, many plans, including J.L.’s and D.W.’s, restrict or discourage the use of out-of-network providers. See Kent G. Rutter, Note, Democratizing HMO Regulation to Enforce the “Rule of Rescue,” 30 U. Mich. J.L. Reform 147, 150 (1996). But as apparent in the consolidated cases before us, in-network providers are not always able to meet an individual’s healthcare needs, and in other cases, an individual may seek (citation omitted)). The merits of that evolving debate are beyond the scope of this opinion. 14 out-of-network care either unwittingly or out of necessity. These circumstances raise one of the questions at the core of this case: Must out-of-network providers seek payment from patients upfront, or are there viable alternative avenues to secure compensation for services provided? Until recently, one oft-traveled avenue has been the “assignment of benefits,” allowing the provider to submit claims to and receive payment directly from insurers in the patient’s stead. See CardioNet, 751 F.3d at 179 (citation omitted). Assignments became commonplace because only plan “participant[s]” and “beneficiar[ies],” not healthcare providers, are expressly authorized to bring section 502(a) causes of action. 29 U.S.C. § 1132(a)(1)(B); see Pascack Valley Hosp., 388 F.3d at 400; see also DB Healthcare, LLC v. Blue Cross Blue Shield of Ariz., Inc., 852 F.3d 868, 875 (9th Cir. 2017) (collecting cases). But a valid assignment allows a healthcare provider to stand in the shoes of the “participant” or “beneficiary” and thereby to obtain not only the right to benefits due under the plan, but also the capacity to bring suit for non-payment under section 502(a). See N. Jersey Brain & Spine Ctr. v. Aetna, Inc., 801 F.3d 369, 372–73 (3d Cir. 2015); CardioNet, 751 F.3d at 176 n.10. Thus, for a time, practitioners, almost universally, obtained assignments of benefits from patients. Am. Orthopedic & Sports Med., 890 F.3d at 451. Not so in recent years. To curtail this new fount of section 502(a) litigation, decrease their exposure to out-of-network claims, and encourage providers to come in network, insurers began inserting anti-assignment provisions in plans. Id. at 450. Anti-assignment provisions place out-of-network providers in the unenviable position of having to “bill[] the beneficiary 15 directly” and, should payment not be forthcoming, of having either to “rely on the beneficiary to maintain an ERISA suit” or to sue the beneficiary directly. CardioNet, 751 F.3d at 179 (citation omitted). Neither option for recouping compensation is likely to optimize resources or be good for business. See Am. Orthopedic & Sports Med., 890 F.3d at 451. Nonetheless, as a matter of federal common law, we recently joined our sister circuits in holding that anti-assignment provisions, like other unambiguous terms in a contract, are enforceable. See id. at 453. While we left open the possibility that a patient could grant her provider a valid power of attorney to pursue claims for benefits on her behalf, see id. at 454–55, for most out-ofnetwork providers, the rising prevalence of anti-assignment provisions signals the proverbial end of the road for relief under section 502(a). The anti-assignment provision in D.W.’s plan is emblematic of this trend. In response, out-of-network providers like the Center have attempted to secure a new foothold—a promise of payment from the insurer in advance of any services. And that, in turn, has given rise to a different class of claims for non-payment— common law claims like those here, including for breach of contract, unjust enrichment, and promissory estoppel. Aetna does not dispute that such claims would not be preempted if they sought to enforce a “single standalone agreement” that made no mention of the plan and explicitly identified the discrete services to be performed and the “dollar amount” for those services. Oral Arg. Tr. at 35–36. In that circumstance, Aetna concedes, the claims would not “relate to” an ERISA plan but to a freestanding contract, and they would seek not to recoup benefits due under the terms of the plan, but to enforce obligations that arose out of an oral promise of payment made “precisely because there [was] no ERISA plan coverage.” 16 Mem’l Hosp. Sys. v. Northbrook Life Ins. Co., 904 F.2d 236, 246 (5th Cir. 1990). 13 To put a fine point on it, those claims could not be brought under section 502(a), even by J.L. or D.W., because Aetna’s alleged liability would flow not from the plans, but from an independent agreement reached between the Center and Aetna to which neither J.L. nor D.W. was a party. See Access Mediquip L.L.C. v. UnitedHealthcare Ins. Co., 662 F.3d 376, 383, 385–86 (5th Cir.), rehearing en banc granted, 678 F.3d 940 (5th Cir.), opinion reinstated, 698 F.3d 229 (5th Cir. 2012) (en banc); Hospice of Metro Denver, Inc. v. Grp. Health Ins. of Okla., Inc., 944 F.2d 752, 754, 756 (10th Cir. 1991); Mem’l Hosp., 904 F.2d at 250. And here we come to the crux of the problem. As out-ofnetwork providers migrate from accepting assignment of plan benefits from the insured to forming their own agreements with the insurers, many have not yet developed a standard form of contract. 14 Instead, as borne out in the case before us, they 13 See also In Home Health, Inc. v. Prudential Ins. Co. of Am., 101 F.3d 600, 605–06 (8th Cir. 1996); Meadows v. Emp’rs Health Ins., 47 F.3d 1006, 1010 (9th Cir. 1995); Hospice of Metro Denver, Inc. v. Grp. Health Ins. of Okla., Inc., 944 F.2d 752, 754–55 (10th Cir. 1991). 14 It is odd indeed that a pre-service agreement that sets forth the services to be provided alongside the dollar amounts to be paid is not yet common practice for out-of-network providers, particularly where a given provider operates as a large-scale, sophisticated business entity, as it would provide both parties with clarity and avoid the thicket of issues we find ourselves in today. 17 enter into ad hoc arrangements in which the provider agrees to render services (which are not covered by the terms of the plan) in exchange for a promise of payment by the insurer. But for those payment terms, as here, the parties sometimes default to the rate of payment under the plan. And that default resurrects the question of whether a subsequent claim for nonpayment then “relate[s] to” the plan and is therefore preempted after all. To that preemption question, we now turn.