Abc Services Group, Inc. v. Aetna Health and Life Insurance Company

• Court: Court of Appeals for the Ninth Circuit
• Decided: October 6, 2023
• Docket: 22-55631
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS OCT 6 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

ABC SERVICES GROUP, INC., in its No. 22-55631 capacity as assignee for the benefit of creditors for Morningside Recovery, LLC, D.C. No. 8:19-cv-00243-DOC-DFM Plaintiff-Appellant,

v. MEMORANDUM*

AETNA HEALTH AND LIFE INSURANCE COMPANY; et al.,

Defendants-Appellees.

Appeal from the United States District Court for the Central District of California David O. Carter, District Judge, Presiding

Submitted October 3, 2023** Pasadena, California

Before: GRABER, MENDOZA, and DESAI, Circuit Judges.

Plaintiff ABC Services Group, Inc., appeals the district court’s dismissal with

prejudice of its second amended consolidated complaint. We have jurisdiction under

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2).

- 28 U.S.C. § 1291. We review de novo the district court’s dismissal under Federal

Rule of Civil Procedure 12(b)(6), DB Healthcare, LLC v. Blue Cross Blue Shield of

Ariz., Inc., 852 F.3d 868, 873 n.5 (9th Cir. 2017), and we review for an abuse of

discretion the district court’s denial of leave to amend, Or. Clinic, PC v. Fireman’s

Fund Ins., 75 F.4th 1064, 1073 (9th Cir. 2023). We affirm.

1. The district court did not err by dismissing Plaintiff’s complaint under

Rule 12(b)(6) because (1) Plaintiff lacks derivative authority to sue under the

Employee Retirement Income Security Act of 1974 (“ERISA”), and (2) Plaintiff

failed to plead ERISA claims sufficiently.

First, Plaintiff lacks derivative authority to bring ERISA claims as a second

assignee. Under 29 U.S.C. § 1132(a)(1)(B), only a “participant or beneficiary” has

authority to sue to recover ERISA benefits. An exception allows health care

providers to sue on their patients’ behalf if the patients assign their claims to the

provider in exchange for health care. That exception furthers ERISA’s purpose of

protecting employees’ rights to health benefits. Simon v. Value Behav. Health, Inc.,

208 F.3d 1073, 1081 (9th Cir. 2000), overruled on other grounds by Odom v.

Microsoft Corp., 486 F.3d 541 (9th Cir. 2007). But where, as here, a health care

provider reassigns its patients’ claims to a non-provider third party that has no

relationship to the patients, the third party cannot file those claims on behalf of the

2 patients. Id.1 Because allowing this type of transaction “would be tantamount to

transforming health benefit claims into a freely tradable commodity,” id., Plaintiff

lacks authority to sue.

Second, even if Plaintiff had authority to sue, it failed to plead ERISA claims

adequately. After years of litigation and multiple amended complaints, Plaintiff

asserts near-identical, generalized allegations on information and belief against all

Defendants. But the allegations do not identify any Defendant’s particular plan terms

conferring a benefit on patients, nor do they specify any Defendant’s particular

conduct in denying such a benefit. See, e.g., Doe v. CVS Pharmacy, Inc., 982 F.3d

1204, 1213 (9th Cir. 2020) (holding that, to plead a claim under 29 U.S.C.

§ 1132(a)(1)(B), a “plaintiff must allege ‘the existence of an ERISA plan,’ and

identify ‘the provisions of the plan that entitle [the plaintiff] to benefits’” (quoting

Almont Ambulatory Surgery Ctr., LLC v. UnitedHealth Grp., Inc., 99 F. Supp. 3d

1110, 1155 (C.D. Cal. 2015))). Plaintiff need not recite every relevant term of every

relevant plan, but it must do more than broadly allege that dozens of insurers with

distinct plans all violated the same generalized obligation to reimburse mental health

1 Plaintiff argues that this court should apply Bristol SL Holdings, Inc. v. Cigna Health & Life Ins. Co., 22 F.4th 1086 (9th Cir. 2022), to expand third-party derivative authority to bring ERISA claims. But Bristol only “modest[ly]” extended derivative authority to a health care provider’s successor-in-interest through bankruptcy proceedings under “unique circumstance[s]” that do not exist here. Id. at 1091, 1092.

3 and substance abuse treatment. E.g., Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)

(holding that Rule 8’s pleading standard “does not require ‘detailed factual

allegations,’” but it “demands more than an unadorned, the-defendant-unlawfully-

harmed-me accusation” (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555

(2007))).

2. The district court did not abuse its discretion by denying leave to

amend. Plaintiff forfeited any challenge to the district court’s denial of leave to

amend by failing to raise the issue in its opening brief. Smith v. Marsh, 194 F.3d

1045, 1052 (9th Cir. 1999).

AFFIRMED.