Court Opinion

ID: 2983019
Source: CourtListenerOpinion
Date Created: 2015-09-22 20:47:56.809115+00
Date Added: 2024-06-11T12:08:46.324566
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                            File Name: 15a0587n.06

                                      Case No. 14-3437

                         UNITED STATES COURT OF APPEALS
                              FOR THE SIXTH CIRCUIT
                                                                                FILED
                                                                          Aug 17, 2015
CHILDREN’S HOSPITAL MEDICAL                       )                   DEBORAH S. HUNT, Clerk
CENTER OF AKRON,                                  )
                                                  )
       Plaintiff-Appellant,                       )      ON APPEAL FROM THE UNITED
                                                  )      STATES DISTRICT COURT FOR
v.                                                )      THE NORTHERN DISTRICT OF
                                                  )      OHIO
YOUNGSTOWN ASSOCIATES IN                          )
RADIOLOGY, INC. WELFARE PLAN;                     )
YOUNGSTOWNASSOCIATES IN                           )
RADIOLOGY INC.; PROFESSIONAL RISK                 )
MANAGEMENT,

       Defendants-Appellees.

____________________________________/

Before: KEITH, MERRITT, and BOGGS, Circuit Judges.

       MERRITT, Circuit Judge. In this action under the Employee Retirement Income

Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq., the district court decided the case on

the merits in favor of the defendants, Youngstown Associates in Radiology, Inc., the employer,

and its ERISA Plan, and Professional Risk Management, its claims administrator, and against the

plaintiff, Children’s Hospital Medical Center of Akron, a health care provider. The case can be

found at 2014 WL 1333186, No. 4:11-cv-00506 (N.D. Ohio Mar. 31, 2014). On the merits, the

court held that the plaintiff hospital, which had received an assignment of benefits from an
Case No. 14-3437
Children’s Hosp. Med. Ctr. v. Youngstown Assocs. in Radiology, Inc.

insured employee under the Plan, was not entitled to receive some $230,000 that had been

claimed by the employer for treatment, including a “clinical” or experimental drug program

administered to the minor child of the employee.

       In this appeal we do not now decide the merits issue presented in the briefs because there

is an undecided preliminary issue that the court below and the parties refer to as a “standing”

issue — a federal jurisdiction issue that the Supreme Court in Steel Co. v. Citizens for a Better

Environment, 523 U.S. 83 (1998), has directed the lower courts to decide before the merits issues

are decided. Defendants contend that the assignment received by plaintiff is not valid due to an

anti-assignment provision in the Plan and therefore plaintiff cannot bring a claim under ERISA.

The district court in this case made an erroneous choice to decide the merits issue before the

standing issue as follows:

       The parties dispute whether Plaintiff has standing to bring this action. The Court
       need not resolve that issue, however, because it finds that even if Plaintiff
       properly maintains its claims, the claims fail on the merits.

2014 WL 1333186, at *3.

       In the Steel Co. case, five members of the Supreme Court held that “standing questions,”

as distinguished from questions on the “merits,” must be decided at the outset of the case. That

order of decision is now mandatory and must be enforced by the lower courts. The Supreme

Court’s reasoning is based on the theory that such standing questions go to the constitutional

power of a federal court under the “case or controversy” provisions of Article III. If a federal

court does not have such jurisdiction, according to the doctrine adopted in the Steel Co. case, it

may not decide the merits, and hence it must decide such standing questions first. This order-of-

decision doctrine is now well established. See, e.g., Lance v. Coffman, 549 U.S. 437, 439 (2007)

(“Federal courts must determine that they have jurisdiction before proceeding to the merits.”);

                                              -2-
Case No. 14-3437
Children’s Hosp. Med. Ctr. v. Youngstown Assocs. in Radiology, Inc.

Ward v. Alt. Heart Delivery Sys., Inc., 261 F.3d 624, 626 (6th Cir. 2001) (“Standing [in an

ERISA case] is thought of as a ‘jurisdictional’ matter, and a plaintiff’s lack of standing is said to

deprive the court of jurisdiction.”).

       The mandatory nature of the Steel Co. majority’s order-of-decision holding is clear from

its rejection of Justice Breyer’s concurring opinion and his view that “[t]he Constitution does not

impose a rigid judicial ‘order of operations,’ when doing so would cause serious practical

problems.” 523 U.S. at 111. The fact that it seems to make “practical” sense to decide the

merits first in this case seems irrelevant in light of the more formalistic language of the majority

opinion turning a somewhat discretionary standard into a mandatory rule.

       Accordingly, the judgment of the district court is vacated and the case remanded to

decide the standing issue first for the reasons stated in this opinion.

                                                 -3-