Superior Biologics NY, Inc. v. Aetna, Inc.

Background

Superior Biologics NY, Inc. provides pharmacological treatments, including intravenous immunoglobulin drugs and therapies. It was an out-of-network provider because it had no written contract with Aetna establishing reimbursement rates. Superior alleged that it verified coverage and billing codes with Aetna before treating seven Aetna members, confirmed that prior authorization was not required, provided the services, and then billed Aetna directly.

Superior alleged that Aetna usually paid for nurses’ labor and supplies but refused to pay for the drugs themselves. It claimed that the applicable employee-benefit plans governed by the Employee Retirement Income Security Act (ERISA) covered the drugs and therapies and required higher payments. Superior sought the difference between the amounts it said the plans required and the amounts Aetna paid, alleging an aggregate shortfall of at least $3.4 million plus interest.

The amended complaint asserted two claims: a claim under ERISA for recovery of plan benefits and a New York promissory-estoppel claim. Aetna moved to dismiss under Federal Rule of Civil Procedure 12(b)(1), which permits dismissal for lack of subject-matter jurisdiction, and Rule 12(b)(6), which permits dismissal for failure to state a legally sufficient claim.

Standing and Anti-Assignment Provisions

The court addressed the jurisdictional motion first. It explained that ERISA generally allows a plan participant or beneficiary to sue for plan benefits. A healthcare provider may sue as an assignee of a participant or beneficiary if the assignment is valid and permitted by the plan.

The court reviewed the complete plan documents submitted by Aetna and found them sufficiently authenticated through a declaration from an Aetna supervisor. It also found that Superior had already had an opportunity to obtain and review the plan documents, so additional discovery was unnecessary.

The Deutsche Bank and Fashion Institute of Technology plans completely barred assignment. The Fast Retailing, Altria, and two TriNet plans permitted direct payment to an out-of-network provider but required Aetna’s written consent before an assignment. The court found that Aetna’s direct payments to Superior did not amount to consent to an assignment. It interpreted the direct-payment provisions and anti-assignment provisions as addressing different matters, rather than treating the provisions as conflicting.

Waiver

Superior argued that Aetna waived the anti-assignment provisions through partial direct payments, communications with Superior, silence during claims processing and appeals, and acceptance of claims submitted by Superior.

The court rejected that argument. It concluded that direct payment did not clearly show that Aetna intended to give up its right to enforce the anti-assignment provisions. The court also found that Aetna’s communications and silence did not establish an intentional waiver. Aetna’s conduct before and during claims processing showed that it treated Superior as a provider to whom it could make direct payments, not that it accepted Superior as an assignee with the right to sue in federal court.

Authorized Representative Theory

Superior also argued that it had standing as an authorized representative for members identified as B.L., H.R., and H.S. The court held that the ERISA regulation requiring claims procedures to allow authorized representatives to pursue benefit claims and internal appeals did not invalidate the plans’ anti-assignment or written-consent requirements for a federal lawsuit. Following decisions from courts in the Second and Third Circuits, the court concluded that authorized-representative status did not independently give Superior a right to sue under ERISA.

Disposition

The court concluded that Superior lacked standing. It granted Aetna’s motion to dismiss under Rule 12(b)(1) and did not reach the Rule 12(b)(6) arguments. The court dismissed the amended complaint with prejudice because Superior had already amended its complaint, directed the Clerk to terminate the motion, and closed the case.