Opinion ID: 3044284
Heading Depth: 3
Heading Rank: 2

Heading: ERISA Allegations

Text: The district court did, however, incorrectly interpret the Settlement Agreement and thereby abused its discretion with respect to certain of the ERISA claims. ERISA claims “could [not] have been asserted” on or before the Effective Date to the extent that they were based on denials or underpayments following the Effective Date. WellPoint contends that the ERISA claims “arise from the exact same alleged course of conduct that underlies the entire UCR MDL Complaint” in that the claims are based entirely on an alleged scheme that WellPoint improperly used the Ingenix database to price claims for out-of-network services. Appellee Br. at 45. The Magistrate Judge agreed with WellPoint. The R&R states: Plaintiffs enjoy the broad and sweeping nature of the Settlement Agreement’s release. Plaintiffs’ ERISA and contractual claims asserted in the UCR [MDL] all pertain to WellPoint’s practices regarding the fee-for-service claims and the calculation of the UCRs. The very same practice and WellPoint’s alleged improper use of the Ingenix database were expressly addressed in the [MDL 1334] Complaints. MDL D.E. (R&R) 6116 at 16. There is no dispute that a claim could have arisen before the Effective Date if facts forming the basis of the claim existed prior to the Effective Date. We assume, without deciding, that the District Court correctly concluded that the ERISA claims arise out of the “facts, acts, events, transactions, 29 Case: 12-14013 Date Filed: 06/18/2014 Page: 30 of 51 occurrences, courses of conduct, representations, omissions, circumstances or other matters” at issue in MDL 1334. However, the District Court’s conclusion – that “all of Physician Plaintiffs’ claims arose ‘from acts that occurred before the effective date’ of the WellPoint Settlement and are, similarly, barred” – does not follow. Id. at 21. That conclusion does not complete the analysis because Appellants contend, in part, that even if the necessary factual basis upon which Appellants could assert their ERISA claims did exist at the time of the Effective Date, the claims nevertheless could not have been asserted at that time. Put another way, if the ability to “assert” an ERISA cause of action for denial of these benefits only occurred after the Effective Date of the Settlement Agreement, then § 13.1(a) would not bar such a claim. Our resolution of this issue hinges in large part on at what point an ERISA claim can be asserted. 12 A similar issue arose in Paris v. Profit Sharing Plan for Emp. of Howard B. Wolf, 637 F.2d 357, 361 (5th Cir. Feb. 17, 1981). In Paris, we considered whether we had jurisdiction – there, whether the claim arose under federal jurisdiction – to review a district court’s determination that appellants were not entitled to certain benefits under ERISA. The jurisdictional question turned on 12 Dictionaries offer a broad definition of the word “assert” and provide no guidance as to whether “assert” in the Settlement Agreement requires the filing of a lawsuit. See, e.g., Black’s Law Dictionary 124 (8th ed. 2004) (“1. To state positively. 2. To invoke or enforce a legal right.”); Oxford English Dictionary Online, http://english.oxforddictionaries.com (last visited Mar. 18, 2014) (defining assert as to “state a fact or belief confidently and forcefully”). 30 Case: 12-14013 Date Filed: 06/18/2014 Page: 31 of 51 whether the claim arose before the date on which ERISA took effect: January 1, 1975. Id. at 359. If the claim arose on the date of the claimant’s termination, it would predate the Effective Date of ERISA. If it arose upon the denial of benefits, it would post-date the Effective Date, and thus arise under federal law. We held that we did have jurisdiction, observing that “for purposes of ERISA a cause of action does not accrue until an application [for benefits] is denied.” Id. at 361. This holding was followed by this Court in Gulf Life Ins. Co. v. Arnold, 809 F.2d 1520, 1525 (11th Cir. 1987). Accordingly, an ERISA lawsuit cannot be filed in federal court until a claim is denied. In keeping with this conclusion, Appellants' ERISA claims based on the denial or underpayment of benefits following the Effective Date cannot meet the could have been asserted prong of § 13.1 of the Settlement Agreement because, absent a denial or underpayment on or before the Effective Date, such claims would not have accrued. Appellants set forth a number of allegations that meet these criteria. For instance, the Second Consolidated Amended Complaint alleges that, following the Effective Date, Dr. Schwendig provided emergency medical services to patients participating in a plan that WellPoint administered. UCR MDL D.E. 113-1 (Second Consol. Am. Compl.) ¶¶ 224. Dr. Schwendig was allegedly underpaid, appealed the purported underpayments, and was unable to recoup the amount owed to him. Id. at ¶ 228. Likewise, in November and December of 2007, 31 Case: 12-14013 Date Filed: 06/18/2014 Page: 32 of 51 Dr. Kavali purportedly provided medical services, was underpaid for those services, and was given no apparent mechanism for appealing the underpayment. Id. at ¶¶ 254-56, 259. Because ERISA claims stemming from the denial or underpayment of benefits following the Effective Date “could [not] have been asserted” on the Effective Date, the District Court erred in enjoining the Appellants from pursuing such claims. WellPoint argues that another section of the Settlement Agreement, titled Covenant Not to Sue, supports its interpretation and the District Court’s Contempt Order. We disagree. Section 13.2(a) states that the releasing parties will not participate in litigation “based upon or related to any Released Claim.” In effect, WellPoint argues that any underpayment must be related to this settlement simply by virtue of being an underpayment. But the inclusion of an Effective Date into the Settlement Agreement clearly contrasts the idea of barring all claims against WellPoint in perpetuity. The Covenant Not to Sue section does not apply to claims that could not have been asserted prior to the Effective Date and, therefore, does not bar such claims. We note briefly that, even though § 13.5 broadens the scope of the release, it does not go so far as to release claims where the full factual basis required to legally state a cause of action, such that the cause of action “could have been asserted,” did not exist as of the Effective Date. In § 13.5, Appellants agreed to 32 Case: 12-14013 Date Filed: 06/18/2014 Page: 33 of 51 “fully, finally and forever” release “any known or unknown, suspected or unsuspected, contingent or non contingent claim with respect to the subject matter of the provisions of § 13, whether or not concealed or hidden, without regard to the discovery or existence of such different or additional facts.” Settlement Agreement § 13.5. This section broadly releases any claim that could have been brought, at the time of the Effective Date, based on the existence of facts – whether they be known or unknown – as of the Effective Date. The language of this section does not, however, go so far as to release claims based on facts occurring after the Effective Date.13 Furthermore, the Settlement Agreement does release post-Effective Date claims in certain narrow instances. In §13.1(b), which addresses claims against BCBSA, the release language makes clear that the parties agreed to “forever abandon and discharge any and all Claims that exist now or that might arise in the future” where such claims “are based on conduct by any of the Released Parties that occurred on or before the Effective Date and are, or could have been asserted by any Releasing Party . . . .” Settlement Agreement § 13.1(b). If the parties had 13 Undoubtedly, certain facts existed that could have given rise to some ERISA claims, even if not the ones presently at issue, and Appellants had knowledge of those facts. For example, the Second Consolidated Amended Complaint alleges that WellPoint underpaid for benefits for many years prior to the Effective Date of the Settlement Agreement. Denial of proper payment for those benefits may have constituted an ERISA claim that could have been asserted prior to the Effective Date. Appellants should have explicitly excluded such ERISA claims in the release, but did not do so. This, however, has no bearing on ERISA claims based on underpayment for procedures performed after the Effective Date. 33 Case: 12-14013 Date Filed: 06/18/2014 Page: 34 of 51 intended the scope of § 13.1(a) to mirror that of 13.1(b), which expressly releases claims that could arise after the Effective Date – although based on conduct that existed prior to the effective date – the parties would have used such language in § 13.1(a). Accordingly, at least some of Appellants’ ERISA claims “could [not] have been asserted” on the Effective Date. The Settlement Agreement does not release them, and the Injunction must be vacated as to such claims.