Opinion ID: 777313
Heading Depth: 2
Heading Rank: 2

Heading: The State's Standing as Assignee

Text: 18 We reach the same conclusion as that of the district court, that the State lacks standing to pursue this action as an assignee of the eight plan participants' right to bring an action in equity, although our reasoning differs from the district court's. The court concluded that the State lacks standing as an assignee because the civil enforcement provisions of ERISA are exclusive and provide standing only to ... specifically enumerated parties, who include plan participants and beneficiaries but not their assignees. PHS, 103 F.Supp.2d at 510. We do not reach this issue. 4 Rather, we conclude that the State, in its capacity as an assignee of the right to bring suit for equitable relief, did not suffer an injury of a nature that would confer standing upon it under Article III of the Constitution. This issue is distinct from whether PHS's practices injure the State itself independent of the assignments, a question to which we advert in our discussion of parens patriae standing in Part III of this opinion, below. 5 19 The assignments purport to transfer to the State any right of action for equitable relief possessed by the plan participants by virtue of their status as plan participants or beneficiaries. They do not, the State acknowledges, confer actual rights or benefits under ERISA on the State. Pl.'s Br. at 15-17. The right to recover benefits or to seek money damages remains with the assignors. 6 Moreover, the assignments divorce the equitable cause of action aimed at an alleged breach of fiduciary duty from the duty itself because they do not create a fiduciary duty running from PHS to the State. And the assignments do not shift the loss suffered by individual enrollees from the alleged breach of such duty from the individuals to the State. 20 Whether a party has a sufficient stake in an otherwise justiciable controversy to obtain judicial resolution of that controversy is what has traditionally been referred to as the question of standing to sue. Sierra Club v. Morton, 405 U.S. 727, 731-32, 92 S.Ct. 1361, 31 L.Ed.2d 636 (1972). 21 Article III, § 2 of the United States Constitution restricts federal courts to deciding Cases and Controversies. From this has emerged the doctrine of constitutional standing. Federal courts must determine [standing] at the threshold of every case.... It would violate principles of separation of powers for us to hear a matter that was not a case or controversy and therefore not delegated to the [federal] judiciary under Article III. 22 Vt. Right to Life Comm., Inc. v. Sorrell, 221 F.3d 376, 381-82 (2d Cir.2000) (quoting United States v. Cambio Exacto, S.A., 166 F.3d 522, 527 (2d Cir.1999); other citations omitted; second brackets in original). 23 At an irreducible constitutional minimum, Article III standing requires that the plaintiff have suffered an injury in fact — an invasion of a legally protected interest which is (a) concrete and particularized; and (b) actual or imminent, not conjectural or hypothetical. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (internal citations and quotation marks omitted); accord Vt. Agency of Natural Res. v. United States ex. rel. Stevens, 529 U.S. 765, 771, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000); St. Pierre v. Dyer, 208 F.3d 394, 401 (2d Cir.2000); Vazquez, 145 F.3d at 80; cf. Valley Forge Christian Coll. v. Ams. United for Separation of Church and State, Inc., 454 U.S. 464, 472, 102 S.Ct. 752, 70 L.Ed.2d 700 (1982) ([A]t an irreducible minimum, Art. III requires the party who invokes the court's authority to show that he personally has suffered some actual or threatened injury as a result of the putatively illegal conduct of the defendant.) (citation and internal quotation marks omitted). 7 The Supreme Court has noted, as a prudential principle[ ][,] ... that the plaintiff generally must assert his own legal rights and interests, and cannot rest his claim to relief on the legal rights or interests of third parties. Valley Forge Christian Coll., 454 U.S. at 474, 102 S.Ct. 752 (citation and internal quotation marks omitted). 24 The State does not bring suit here as a party injured itself, but as an assignee of others who assert injury. The Supreme Court has held that in at least some cases, an assignee of a claim [does have] standing to assert the injury in fact suffered by the assignor. Vt. Agency, 529 U.S. at 773, 120 S.Ct. 1858. Typically, the assignee, obtaining the assignment in exchange for some consideration running from it to the assignor, replaces the assignor with respect to the claim or the portion of the claim assigned, and thus stands in the assignor's stead with respect to both injury and remedy. For example, we have held that a healthcare provider that spends money on behalf of a patient for drugs and in return receives an assignment of the patient's rights to reimbursement under a healthcare plan has standing as assignee in a lawsuit under ERISA against the plan that refused the reimbursement. See I.V. Servs. of Am. v. Trs. of Am. Consulting Eng'rs Council Ins. Trust Fund, 136 F.3d 114, 117 n. 2 (2d Cir.1998). In I.V. Services, the injury — the unreimbursed cost of drugs prescribed for the assignor — was assumed by the assignee, and in return the right to seek redress for it passed from the patient to the provider under the assignment. We noted our agreement with our sister circuits that, under federal common law, the assignees of beneficiaries to an ERISA-governed insurance plan have standing to sue under ERISA. Id. (citations omitted). By sustaining the plaintiff's standing as a matter of federal common law, we implicitly held that healthcare providers under these circumstances have constitutional standing. 25 There are also situations where, even though an assignee incurs no injury, expense, or loss in exchange for the assignment, a valid and binding assignment of a claim (or a portion thereof) — not only the right or ability to bring suit — may confer standing on the assignee. 8 In Vermont Agency, the Supreme Court held that the plaintiff had standing under Article III to bring a qui tam 9 civil action pursuant to the False Claims Act, which allows a private person (the relator) to bring suit on behalf of the United States government and in return recover a share of the proceeds from the action. 529 U.S. at 769, 771-78, 120 S.Ct. 1858. The Court concluded that the United States' injury in fact suffices to confer standing on [the relator]. Id. at 774, 120 S.Ct. 1858. The Court explained that an adequate basis for the relator's suit for his bounty is to be found in the doctrine that the assignee of a claim has standing to assert the injury in fact suffered by the assignor. The [False Claims Act] can reasonably be regarded as effecting a partial assignment of the Government's damages claim. Id. at 773, 120 S.Ct. 1858 (footnote omitted). 10 26 The case before us differs critically from Vermont Agency and I.V. Services. The qui tam relator in the former and the healthcare provider in the latter each had a `concrete private interest in the outcome of [its] suit.' See Vt. Agency, 529 U.S. at 772, 120 S.Ct. 1858 (quoting Lujan, 504 U.S. at 573, 112 S.Ct. 2130). That is, the outcome had the potential to affect the qui tam relator and healthcare provider in a personal and individual way: They both stood, personally and individually, to recover a monetary award. See Lujan, 504 U.S. at 560 & n. 1, 112 S.Ct. 2130 (noting that an injury in fact must be particularized and defining particularized as affecting the plaintiff in a personal and individual way) (citations and internal quotation marks omitted). Furthermore, their interest in the suit was directly related to the assignors' original injuries. See Vt. Agency, 529 U.S. at 772, 120 S.Ct. 1858 (An interest unrelated to injury in fact is insufficient to give a plaintiff standing.) (citations omitted). The money damages they sought to recover would be awarded in recompense for the property interest allegedly injured by the defendants. 27 As assignee in the present case, however, the State fails to meet the injury requirement because it does not have a concrete private interest in the outcome of the suit. See id. (citation and internal quotation marks omitted). In other words, it has failed to allege that it suffered an injury in fact that is particularized. See Lujan, 504 U.S. at 560, 112 S.Ct. 2130 (citation, internal quotation marks, and footnote omitted). The actions of the defendant, as alleged, do not affect the plaintiff in a personal and individual way. 11 Id. at 560 n. 1, 112 S.Ct. 2130 (thus defining particularized). Through the assignments, the State has acquired only the right to control the equitable portion of a lawsuit seeking redress of the assignor-participants' rights under ERISA. None of the remedies being sought would flow to the State as assignee. 12 As the State puts it, [t]his case is brought solely for the benefit of the assignors and those similarly situated. Pl.'s Br. at 11 (emphasis added). Even if the assignments are valid as a contractual matter, they thus merely give the State the right to act as a nominal party. Cf. New York ex rel Abrams v. 11 Cornwell Co., 695 F.2d 34, 38 (2d Cir.1982) (holding that a quasi-sovereign interest that will support parens patriae standing must be distinguished from [ inter alia ] ... private parties' interests where the State serves merely as a nominal party), vacated in part on other grounds, 718 F.2d 22 (2d Cir.1983) (in banc). The State as an assignee therefore lacks standing under Article III of the Constitution. 28 We have no doubt about the sincerity of [the State's] stated objectives and the depth of [its] commitment to them. But the essence of standing is not a question of motivation but of possession of the requisite... interest that is, or is threatened to be, injured by the unconstitutional conduct. Valley Forge Christian Coll., 454 U.S. at 486 n. 21, 102 S.Ct. 752 (citations and internal quotation marks omitted; ellipses in original). We hold that the State as purported assignee of the right to seek equitable relief for the assignors' alleged injury lacks Article III standing because it does not, through that assignment, possess the requisite interest that is or is threatened to be injured by PHS's conduct. 13