Keith Feder, M.D., Inc. v. U.S. Bancorp
- Laura Provinzino
- 0:24-cv-04236
- U.S. District Court · District of Minnesota
- 12
In Kevin Feder, M.D., Inc. v. U.S. Bancorp, Judge Provinzino dismissed with prejudice a medical provider's ERISA benefits claim because the provider failed to plausibly allege that the plan's claims administrator was the plan sponsor's legal agent.
Out-of-network medical providers who obtain assignments of benefits from patients covered by employer-sponsored ERISA health plans containing anti-assignment clauses. This ruling illustrates that such providers may lack standing to sue the plan sponsor for unpaid claims when they dealt exclusively with a third-party claims administrator who operated with independent discretion, and that the claims administrator's conduct will not be imputed to the plan sponsor without a sufficiently specific allegation of day-to-day control.
What happened
Kevin Feder, M.D., Inc. ('Feder') is a medical provider that treated a patient, R.M., who was covered by an employer-sponsored health plan sponsored by U.S. Bancorp and governed by ERISA (the Employee Retirement Income Security Act, a federal law regulating employer benefit plans). Feder obtained an assignment from R.M. — meaning R.M. transferred the right to collect insurance benefits directly to Feder — and then sought reimbursement of nearly $550,000 from the plan. The plan, however, contained an anti-assignment clause prohibiting exactly that kind of transfer, and Feder received only about $30,000.
Feder argued that U.S. Bancorp had waived (given up) its right to enforce the anti-assignment clause through the conduct of United Healthcare Services, Inc. (UHS), the third-party administrator that processed claims. The court had previously dismissed Feder's original complaint because Feder had only dealt with UHS, not U.S. Bancorp directly, and the original complaint had not adequately alleged that UHS was acting as U.S. Bancorp's legal agent. The court gave Feder one chance to fix the complaint by pleading either direct waiver by U.S. Bancorp or a proper agency relationship between U.S. Bancorp and UHS.
In Kevin Feder, M.D., Inc. v. U.S. Bancorp, Judge Provinzino granted U.S. Bancorp's motion to dismiss the amended complaint with prejudice, meaning Feder cannot refile. The court found that Feder's own allegations — and the plain language of the plan documents — showed that U.S. Bancorp had delegated full discretion over claims decisions to UHS, which is the opposite of the detailed day-to-day control that Minnesota law requires to establish an agency relationship. Because Feder could not show agency, it could not show waiver, and without waiver the anti-assignment clause stripped Feder of the legal standing to sue for R.M.'s benefits under ERISA. The court also rejected an apparent-authority theory, concluding that Feder's own pleadings showed it knew UHS operated with independent discretion, not as U.S. Bancorp's agent.
The detailed version
- Keith Feder, M.D., Inc. v. U.S. Bancorp · No. 0:24-cv-04236
- Laura M. Provinzino
- Sept. 2, 2025
Background
Plaintiff Kevin Feder, M.D., Inc. ('Feder') is a medical services provider that treated R.M. from January 6, 2020, through July 17, 2023, providing surgery, injections, and physical therapy, billing nearly $550,000. R.M. is a beneficiary of U.S. Bancorp's Medical and Wellness Plan (the 'Plan'), an employer-sponsored health plan governed by ERISA (the Employee Retirement Income Security Act, 29 U.S.C. § 1132(a)(1)(B)). U.S. Bancorp is both R.M.'s employer and the Plan's sponsor. United Healthcare Services, Inc. ('UHS') served as the Plan's third-party claims administrator.
Before providing services, Feder obtained an assignment from R.M. — a transfer of R.M.'s right to receive Plan benefits directly to Feder. Feder submitted claims to UHS asserting this assignment. UHS paid some claims directly to Feder without initially objecting to the assignment or mentioning the Plan's anti-assignment clause, but ultimately denied most claims; Feder received only approximately $30,000.
The Plan's Summary Plan Descriptions (SPDs) for 2020–2023 all contained anti-assignment clauses. The 2020–2021 SPDs prohibited assignment 'without UnitedHealthcare's consent' and clarified that direct payments to providers did not constitute consent. The 2022–2023 SPDs were even broader, prohibiting any assignment or transfer of benefits and declaring that the Plan would not recognize claims brought by third parties, who would also lack standing to bring independent or derivative claims.
Procedural History
Feder filed this action to recover benefits under ERISA § 502(a)(1)(B). U.S. Bancorp moved to dismiss the original complaint, arguing the anti-assignment clause was valid and enforceable. The court granted that motion but gave Feder leave to amend, explaining that a waiver finding under Minnesota law must be based on actions of the party against whom waiver is sought or its agents, and that because Feder only communicated with UHS — not U.S. Bancorp — Feder needed to plead either (1) direct actions by U.S. Bancorp supporting waiver, or (2) that UHS was U.S. Bancorp's agent such that UHS's conduct could be imputed to U.S. Bancorp.
Feder filed an amended complaint pursuing the agency theory. U.S. Bancorp again moved to dismiss.
Legal Standard
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) requires the complaint to state a claim to relief that is 'plausible on its face.' The court accepts all factual allegations as true and draws all reasonable inferences in the plaintiff's favor.
Analysis
Agency: The Control Element
Under Minnesota law, an agency relationship has three elements: (1) manifestation of consent by the principal; (2) acquiescence by the agent; and (3) control exerted by the principal over the agent. The court focused solely on the third — control — because the amended complaint failed to plausibly allege it.
Minnesota law requires the principal's right to control to be 'extensive,' governing not merely what is to be done but primarily how it is to be done. Mere designation of work to another party does not create an agency relationship; 'detailed authoritative control' is required.
The court found that Feder's own amended complaint undermined its agency theory. The amended complaint alleged that U.S. Bancorp 'delegated authority and discretion' to UHS to decide claims and appeals, and that UHS itself 'decides' whether to approve claims and accept assignments. These allegations, the court held, describe UHS exercising independent discretion — the opposite of the control a principal must exert over an agent. The Plan documents (the SPDs) reinforced this conclusion, stating that UHS 'has the discretion to determine whether a service/procedure is medically necessary' and that U.S. Bancorp delegated to UHS 'the discretion and authority to decide whether a treatment or supply is a covered health service.'
Feder's Counterarguments Rejected
Feder offered three counterarguments, all of which the court rejected:
1. Right to terminate: Feder argued U.S. Bancorp's ability to terminate UHS as claims administrator showed control. The court held that a termination right exists in non-agency relationships (such as with independent contractors) and does not alone transform a party into an agent.
2. Requirement to abide by Plan terms: Feder argued UHS had to follow the Plan framework, showing U.S. Bancorp controlled UHS. The court held this addresses only what UHS must accomplish generally, not how UHS conducts the daily work of processing claims, making medical necessity determinations, accepting assignments, and calculating expenses — all of which the Plan documents and Feder's own allegations confirm UHS does at its own discretion.
3. Apparent authority: Feder briefly argued that even without actual agency, UHS had apparent authority — authority a principal holds an agent out as possessing, or knowingly permits an agent to assume. The court rejected this theory for two reasons: (a) the SPDs showed U.S. Bancorp delegated full discretion to UHS rather than holding it out as a controlled agent; and (b) Feder did not allege it had 'actual knowledge' that UHS was held out by U.S. Bancorp as its agent — in fact, Feder's own pleadings showed Feder knew UHS operated with independent discretion.
Consequence: No Standing to Sue
Because Feder failed to plausibly allege an agency relationship between U.S. Bancorp and UHS, it could not show that U.S. Bancorp waived enforcement of the anti-assignment clause through UHS's conduct. Without a valid waiver, the anti-assignment clause stood, and it was undisputed that the clause divested Feder of statutory standing to bring a benefits-due claim under ERISA. The court cited the Eighth Circuit's decision in Peterson ex rel. E v. UnitedHealth Grp. Inc., 913 F.3d 769 (8th Cir. 2019), for this proposition.
Dismissal With Prejudice
The court dismissed the amended complaint with prejudice rather than granting another opportunity to amend. Under applicable standards, dismissal with prejudice is appropriate when a plaintiff has shown persistent pleading failures despite prior opportunities to amend, or when amendment would be futile. Here, Feder had already been given one opportunity to cure the original complaint's defects and failed to do so. Moreover, based on Feder's own allegations and the plain SPD language — which affirmatively establish UHS's independence from U.S. Bancorp's control — the court found it 'improbable' that Feder could ever plausibly allege the control element necessary to establish agency.
Disposition
U.S. Bancorp's Motion to Dismiss (ECF No. 54) was granted, and Feder's amended complaint (ECF No. 53) was dismissed with prejudice. The court ordered that judgment be entered accordingly.
Read the full 12-page opinion on CourtListener, the free public archive maintained by the Free Law Project.