Emsurgcare v. Avery Hager

Background

Emsurgcare and Emergency Surgical Assistant performed emergency gallbladder-removal surgery for Avery Hager at Cedars-Sinai Hospital in California on October 24, 2018. The providers billed Oxford Health Plans (NY), Inc. and Oxford Health Insurance, Inc. $103,500. Oxford paid $3,475 and later told Hager that Emsurgcare was an out-of-network provider and that Hager should not be billed beyond his required copayment, coinsurance, or deductible. The providers sought the remaining $100,025 plus interest.

The providers asserted claims under the Employee Retirement Income Security Act (ERISA), along with tort claims. The California federal court dismissed the claims against Hager and transferred the claims against Oxford to the Southern District of New York based on a forum-selection clause in Hager’s health plan. In this court, Oxford moved to dismiss the remaining claims for failure to state a claim. The providers agreed that their tortious-interference claims could not proceed at that point, leaving the ERISA benefits claim as the issue before the court.

ERISA claim

An ERISA benefits claim generally requires the plaintiff to show that the plan is covered by ERISA, that the plaintiff is a participant or beneficiary, and that benefits were wrongfully denied. The court held that healthcare providers are not ERISA beneficiaries merely because they provided medical care. A provider may proceed in the narrow circumstance where a plan beneficiary assigned the claim to the provider.

The providers alleged only in a conclusory manner that Hager had assigned his rights to them. They did not explain how the assignment occurred, allege that Hager completed and submitted the assignment form required by the plan, or identify another valid method of assignment. The court therefore concluded that they had not adequately alleged that an assignment occurred.

The court also held that the plan generally prohibited assignment of benefits or legal claims. The plan contained an exception for money due for a “surprise bill,” but the providers did not contend that their bill qualified under that exception. The plan defined a surprise bill to include certain services by a nonparticipating physician at a participating hospital or ambulatory surgical center when, among other circumstances, a participating physician was unavailable or the nonparticipating physician acted without the beneficiary’s knowledge. The providers’ allegations showed that Hager specifically requested Feizbakhsh’s services. They also did not allege facts establishing that the hospital was participating or that no participating physician was available. The court concluded that the surprise-bill exception could not support the alleged assignment on the pleaded facts.

Because the providers failed to allege a necessary element of an ERISA benefits claim, the court did not reach Oxford’s alternative arguments that the claim was time-barred or that the providers had not adequately alleged a wrongful denial of benefits. The same reasoning applied to the unidentified John Doe defendants described as Oxford’s agents or employees.

Disposition and possible amendment

The court granted Oxford’s motion to dismiss. It did not direct entry of a dismissal judgment or closure of the case. The court stated that the providers could move for leave to file a second amended complaint within 14 days if they could allege specific facts showing that the bill was a surprise bill and that Hager properly assigned his benefits, or showing that the plan’s assignment terms did not apply or were unenforceable in these circumstances. If they did not seek amendment within that period, the court stated that it would enter final judgment of dismissal, permitting an appeal to the United States Court of Appeals for the Second Circuit.