Judge Reed O’Conner of the Federal District Court for the Northern District of Texas recently granted Summary Judgment to Blue Cross and Blue Shield of Minnesota (“BCBS-MN”) in a case brought by a Texas hospital under ERISA to recover benefits for denied and underpaid claims.  The case had originally been brought by two Texas hospitals against forty Blue Cross and Blue Shield plans, but most of the claims had settled, leaving only Victory Medical Southcross’s claims against BCBS-MN for services provided to eight patients at the time of the ruling.

The Court granted summary judgment to BCBS-MN, finding that “[d]ue to the absence of valid and enforceable assignments of benefits to Plaintiff from the covered patients, Plaintiff lacks standing to sue Defendant for breach of its patient’ health plans.”  Quoting from Fifth Circuit precedent, the Court recognized that although providers are not participants or beneficiaries of ERISA plans, the law is “well established that a healthcare provider … may obtain standing to sue derivatively to enforce an ERISA beneficiary’s plan.”  The Court found, however, that the plaintiff hospital did not have valid assignments of benefits to confer derivative standing because it produced an assignment of benefit form from only one of the eight patients and that document assigned the patient’s benefits to Victory Parent Company. LLC d/b/a Victory Medical Center, which was a separate legal entity from Victory Medical Southcross. 

In its ruling, the Court found two additional procedural bars to some of the claims.  Specifically, it found that five of the patients had not exhausted their administrative remedies before bringing suit, which the Court considered “fatal.”  In addition, it found that two of the patients’ claims were time-barred by Minnesota’s two-year statute of limitations for contract claims, which applied because, in the absence of its own statute of limitations, ERISA looks to analogous statutes of limitations in state law.

This decision demonstrates the importance for providers to ensure that they obtain assignments of benefits from all of their patients and that these documents clearly assign to the correct corporate entity the right to receive benefits under a patient’s plan and to pursue all causes of action necessary to recover these benefits.

The case is Innova Hospital San Antonio LP and Victory Medical Center Houston, L.P v. Health Care Service Corporation, et al., Civil Action No. 3:12-cv-01607-O.  A copy of the opinion is attached here.