24-944 Murphy Med. Assocs., LLC v. Yale Univ.
United States Court of Appeals For the Second Circuit
October Term 2024
Submitted: October 29, 2024 Decided: November 4, 2024
No. 24-944
MURPHY MEDICAL ASSOCIATES, LLC, DIAGNOSTIC AND MEDICAL SPECIALISTS OF GREENWICH, LLC, and STEVEN A.R. MURPHY, M.D.,
Plaintiffs-Appellants,
v.
YALE UNIVERSITY and YALE HEALTH PLANS,
Defendants-Appellees.
Appeal from the United States District Court for the District of Connecticut No. 22-cv-00033, Kari A. Dooley, Judge.
Before: KEARSE, SULLIVAN, and ROBINSON, Circuit Judges.
Plaintiffs, who are associated with a medical practice in Connecticut, appeal a judgment of the United States District Court for the District of Connecticut (Dooley, J.) dismissing their claims for reimbursement of the cost of COVID-19 tests provided to members of Yale Health Plans (together with Yale University, “Yale”), brought under the Families First Coronavirus Response Act (the “FFCRA”), Pub. L. No. 116-127, 134 Stat. 178 (2020), the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), Pub. L. No. 116-136, 134 Stat. 281 (2020), the Affordable Care Act, 42 U.S.C. § 300gg-19a, and the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., and for unjust enrichment, breach of contract, and violations of the Connecticut Unfair Insurance Practices Act, Conn. Gen. Stat. § 38a-816, and Connecticut Unfair Trade Practices Act, Conn. Gen. Stat. § 42-110b. On appeal, Plaintiffs argue that the district court erred when it concluded that (1) the FFCRA and CARES Act do not provide private causes of action for reimbursement; (2) Plaintiffs lacked standing to bring ERISA claims because they failed to allege that Yale Health Plan members had executed a valid assignment of benefits in their favor; (3) Plaintiffs failed to allege that they had exhausted their administrative remedies; and (4) Plaintiffs failed to state a claim for breach of contract. Plaintiffs also contend that the district court abused its discretion when it denied Plaintiffs leave to amend their complaint. We disagree with Plaintiffs as to each contention, and AFFIRM the judgment of the district court.
AFFIRMED.
Roy W. Breitenbach, Harris Beach PLLC, Uniondale, NY, for Plaintiffs-Appellants Murphy Medical Associates, LLC, Diagnostic and Medical Specialists of Greenwich, LLC, and Steven A.R. Murphy, M.D.
Michael G. Durham, Matthew H. Geelan, Carmody Torrance Sandak & Hennessey LLP, Guilford, CT, for Defendants-Appellees Yale University and Yale Health Plans.
PER CURIAM:
Murphy Medical Associates, LLC, Diagnostic and Medical Specialists of
Greenwich, LLC, and Steven A.R. Murphy, M.D. (together, “Murphy”) appeal a
judgment of the United States District Court for the District of Connecticut
2 (Dooley, J.) dismissing their claims for reimbursement of the cost of COVID-19
tests provided to members of Yale Health Plans (together with Yale University,
“Yale”), brought under the Families First Coronavirus Response Act (the
“FFCRA”), Pub. L. No. 116-127, 134 Stat. 178 (2020), the Coronavirus Aid, Relief,
and Economic Security Act (the “CARES Act”), Pub. L. No. 116-136, 134 Stat. 281
(2020), the Affordable Care Act (the “ACA”), 42 U.S.C. § 300gg-19a, the Employee
Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., and for
unjust enrichment, breach of contract, and violations of the Connecticut Unfair
Insurance Practices Act (“CUIPA”), Conn. Gen. Stat. § 38a-816, and the
Connecticut Unfair Trade Practices Act (“CUPTA”), Conn. Gen. Stat. § 42-110b.
On appeal, Murphy challenges the district court’s judgment in four respects.
First, Murphy argues the court erred when it found that it could not bring claims
under the FFCRA and CARES Act on the ground that those statutes do not provide
a private cause of action for reimbursement. Second, Murphy challenges the
district court’s conclusion that it lacked standing to bring its ERISA claims because
it failed to allege that Yale Health Plan members had executed valid assignments
of benefits in its favor. Third, Murphy argues the district court erred in concluding
that it failed to exhaust its administrative remedies under the plan. Fourth,
3 Murphy asserts the court erred in finding that it failed to state a claim for breach
of contract. And finally, Murphy argues that the district court abused its discretion
when it denied Murphy leave to amend the complaint. For the reasons set forth
below, we AFFIRM the judgment of the district court.
I. BACKGROUND
A. Facts
At the outbreak of the COVID-19 pandemic in March 2020, Murphy was one
of several healthcare providers that responded by setting up drive- and walk-
through testing sites in Connecticut and New York. In addition to COVID-19
testing, Murphy provided diagnostic testing for other respiratory viruses and
infections that may cause symptoms similar to COVID-19. Among those to whom
Murphy provided diagnostic tests from the outbreak of the pandemic through
December 2020 were members of Yale Health Plans – students, faculty, and
individuals who otherwise receive healthcare through Yale University.
In March 2020, Congress responded to the public-health emergency by
enacting the FFCRA and the CARES Act. In particular, section 6001(a) of the
FFCRA mandated that group health plans provide their members with coverage,
without imposing cost-sharing, for COVID-19 testing that was approved, cleared,
or authorized by the federal Food and Drug Administration. See 134 Stat. at 201.
4 As relevant here, the CARES Act added the specific requirement that “[a] group
health plan . . . providing coverage . . . described in section 6001(a) of [the
FFCRA]” – such as Yale Health Plans – “shall reimburse the provider of the
diagnostic testing” at either a “negotiated rate” or “in an amount that equals the
cash price for such service as listed by the provider on a public internet website.”
§ 3202, 134 Stat. at 367.
After providing diagnostic testing to members of Yale Health Plans through
2020, Murphy submitted claims for reimbursement of COVID-19 testing to the
Plans. In September 2021, Yale Health Plans informed Murphy that it would not
pay its claims.
B. Procedural History
Murphy commenced this action in January 2022, alleging federal claims
under the FFCRA, the CARES Act, the ACA, and ERISA, and state-law claims for
unjust enrichment, breach of contract, and violations of CUIPA and CUPTA. In
all, Murphy seeks $1,100,784.00 for the approximately 1,500 claims for
reimbursement of COVID-19 testing that Yale Health Plans denied.
Yale moved to dismiss the original complaint in its entirety for failure to
state a claim under Federal Rule of Civil Procedure 12(b)(6), which the district
court granted with prejudice as to all but the ERISA claims. Beginning with
5 Murphy’s federal claims, the district court held that Congress did not intend to
create a private cause for action for providers of COVID-19 testing under the
FFCRA and CARES Act, and that Murphy therefore failed to state a claim under
these federal statutes. The district court also concluded that Murphy lacked
standing to pursue its ERISA claims because its allegation that it “generally
receive[s] assignment of benefit forms from patients,” J. App’x at 120, failed to
establish that it obtained a valid assignment from the relevant members, and in
the alternative, the court concluded that Murphy did not plausibly allege that it
exhausted administrative remedies before bringing its claims in federal court. The
district court did, however, grant Murphy leave to replead its ERISA claims to
show the valid assignment of benefits and its exhaustion of administrative
remedies. Finally, Murphy conceded that its ACA claim should be dismissed
because the ACA does not provide a private cause of action.
As to Murphy’s state-law claims, the district court concluded that Murphy
failed to allege that Yale Health Plan members executed valid assignments of
benefits in its favor and therefore was unable to bring a breach-of-contract claim
against Yale. The district court further determined that Murphy failed to state an
unjust enrichment claim because it did not allege that Yale itself derived a benefit
6 from the COVID-19 tests Murphy provided, and that Murphy failed to plead a
CUTPA claim because it did not allege a specific unfair insurance act by Yale.
Murphy conceded the dismissal of its remaining CUIPA claim, and all state law
claims were dismissed with prejudice. The district court also noted that any state-
law claim would be preempted if it was brought with respect to an ERISA-
governed plan, as opposed to any non-ERISA plan Yale may offer. 1
After Murphy filed its amended complaint, the district court again
dismissed Murphy’s ERISA claims, this time with prejudice. The court concluded
that Murphy simply repeated conclusory allegations regarding the assignment of
benefits without identifying which members made such assignments and whether
they overcame the anti-assignment provision in Yale’s general policy. The court
also determined that the amended complaint failed to adequately allege
exhaustion of administrative remedies, since it did not identify the plan language
detailing the required administrative procedures or whether Murphy followed
1 Although the district court did not justify its exercise of supplemental jurisdiction over Murphy’s pendent state-law claims after dismissing its federal claims, “the parties do not dispute that all of the [state] claims asserted . . . involve the [defendant]’s alleged failure to reimburse [the plaintiff] for medical services provided to Plan beneficiaries” and therefore “are so related to [the federal] claims” under 28 U.S.C. § 1367(a) that the court’s exercise of supplemental jurisdiction was appropriate. Montefiore Med. Ctr. v. Teamsters Loc. 272, 642 F.3d 321, 332 (2d Cir. 2011) (internal quotation marks omitted).
7 those procedures. The district court did not specifically address the request in
Murphy’s opposition papers for leave to amend should it grant Yale’s second
motion to dismiss, but there is no dispute that the court’s dismissal with prejudice
operated as an effective denial.
This appeal followed.
II. DISCUSSION
We review de novo whether a plaintiff lacks a cause of action under an
applicable statute and whether a plaintiff has plausibly alleged a breach-of-
contract claim. See Am. Psychiatric Ass’n v. Anthem Health Plans, Inc., 821 F.3d 352,
357–59 (2d Cir. 2016); Robinson v. Sheet Metal Workers’ Nat’l Pension Fund, Plan A,
515 F.3d 93, 98 (2d Cir. 2008). We review the district court’s denial of leave to
amend for abuse of discretion. See Nechis v. Oxford Health Plans, Inc., 421 F.3d 96,
104 (2d Cir. 2005).
A. The FFCRA and CARES Act
Murphy concedes that neither the FFCRA nor the CARES Act contains an
express cause of action for providers seeking reimbursement for COVID-19 tests.
Nevertheless, Murphy argues that the statutes contain an implied cause of action.
In determining whether a statute implies a cause of action, we consider whether
“the text and structure of” the statute evince “congressional intent to create new
8 rights.” Alexander v. Sandoval, 532 U.S. 275, 288–89 (2001). First, we consider
whether the statute uses “‘rights-creating’ language,” meaning language that
“focus[es] on . . . the individuals protected” rather than “the person regulated.”
Id. Next, we consider whether the statute’s methods of enforcement “manifest an
intent to create a private remedy,” as opposed to “empower[ing] agencies to
enforce their regulations.” Id. at 289. Generally, “[t]he express provision of one
method of enforcing a substantive rule,” such as through an agency proceeding,
“suggests that Congress intended to preclude others,” like a private cause of
action. Id. at 290.
Here, the CARES Act’s mandate that health plans “shall reimburse”
providers of COVID-19 testing, accompanied by a description of the precise
amount of reimbursement such providers are entitled to, reflects the type of rights-
creating language that we have previously held may imply a cause of action. See
N.Y. State Citizens’ Coal. for Child. v. Poole, 922 F.3d 69, 79 (2d Cir. 2019) (finding an
implied cause of action when the act in question “uses clearly mandatory language
– ‘shall’ – [and] defines [statutory obligations] with particularity and in absolute
terms”); Briggs v. Bremby, 792 F.3d 239, 242 (2d Cir. 2015) (finding an implied cause
of action when “provisions use the mandatory ‘shall’”). But when read together
9 with section 6001 of the FFCRA – the provision that section 3202 of the CARES Act
supplements – it is clear that Congress intended for agency enforcement to be the
exclusive remedy. Specifically, section 6001(b) of the FFCRA expressly provides
that “[t]he provisions of subsection (a)” – which refer to the requirement that
health plans provide coverage for COVID-19 testing – “shall be applied by the
Secretary of Health and Human Services, Secretary of Labor, and Secretary of the
Treasury to group health plans.” 134 Stat. at 202. Therefore, taken together, the
structure of the FFCRA and CARES Act shows that Congress contemplated agency
enforcement and did not intend to create a private cause of action despite the
rights-creating language in section 3202 of the CARES Act.
Reinforcing this conclusion is the fact that Congress did expressly provide a
private cause of action for other violations of the FFCRA and CARES Act. Section
5105 of the FFCRA establishes that COVID-related denials of paid sick leave and
unlawful terminations shall be considered violations of the Fair Labor Standards
Act of 1938, 29 U.S.C. §§ 206, 215(a)(3), 216(b), provisions that allows for private
enforcement. See FFCRA § 5105, 134 Stat at 197. We have previously explained
that “Congress’s explicit provision of a private right of action to enforce one
section of a statute suggests that omission of any explicit private right to enforce
10 other sections was intentional.” Bellikoff v. Eaton Vance Corp., 481 F.3d 110, 116 (2d
Cir. 2007) (internal quotation marks omitted). We therefore conclude that the
express provision of a private cause of action in section 5105 of the FFCRA further
evinces a lack of congressional intent to provide a cause of action for providers of
COVID-19 testing under section 3202 of the CARES Act. Indeed, the only reference
to enforcement in section 3202 is that the Secretary of Health and Human Services
shall impose a monetary penalty on any provider that fails to publicize its cash
price for COVID-19 testing on its website. See § 3202(b), 134 Stat. at 367.
In short, as the Ninth Circuit recognized in Saloojas, Inc. v. Aetna Health of
California, Inc., 80 F.4th 1011, 1016 (9th Cir. 2023), section 3202 of the CARES Act
does not evince congressional intent to create a cause of action for providers of
COVID-19 testing to seek reimbursement from health plans in court. The district
court therefore properly dismissed Murphy’s claims for reimbursement under the
FFCRA and CARES Act for lack of a private cause of action.
B. ERISA
Section 502(a) of ERISA authorizes “a participant or beneficiary” of an
ERISA health plan to bring a private civil action “to recover benefits due . . . under
the terms of th[at] plan.” 29 U.S.C. § 1132(a)(1)(B). In addition, and as relevant
here, “we have carv[ed] out a narrow exception to the ERISA standing
11 requirements to grant standing to healthcare providers to whom a beneficiary has
assigned his claim in exchange for health care.” McCulloch Orthopaedic Surgical
Servs., PLLC v. Aetna Inc., 857 F.3d 141, 146 (2d Cir. 2017) (internal quotation marks
omitted). But we have made clear that providers cannot bring claims against
ERISA health plans pursuant to this exception “[a]bsent a valid assignment of a
claim,” “even if they have a direct stake in the outcome of the litigation.” Id. at 148
(internal quotation marks omitted).
We have little difficulty concluding that the district court properly
dismissed Murphy’s ERISA claims because Murphy failed to allege that Yale
Health Plan members executed a valid assignment of benefits in its favor. In its
amended complaint, Murphy alleged that “[m]any of Yale’s members who
received testing services . . . executed assignments of benefits forms,” J. App’x at
150, and attached a blank sample assignment form which reads, “I hereby assign,
transfer and set over to [Murphy] sufficient monies and/or benefits to which I may
be entitled . . . [and] my right to commence a lawsuit under [ERISA],” id. at 242.
Setting aside the question of whether any Yale Health Plan members actually
signed the form, it is undisputed that Yale’s general plan document contains an
anti-assignment provision that invalidates any assignments by its members to any
12 provider. That anti-assignment provision expressly states: “The coverage and
rights described in this Booklet are personal to the member and enrolled
dependents and cannot be assigned or transferred.” Yale Health, Yale Health
Employee Coverage Booklet 84 (2024), https://yalehealth.yale.edu/resource/yale-
health-employee-coverage-booklet. 2 We have previously held that similarly
“clear” and “definite” anti-assignment provisions in general health plans render
any members’ assignment of benefits to a healthcare provider “a legal nullity.”
McCulloch, 857 F.3d at 147 (internal quotation marks omitted).
Murphy offers no support for its argument that the FFCRA and CARES Act
somehow override this clear and unambiguous anti-assignment provision. And
while Murphy urges that such a policy would better effectuate the goals of the
Acts, we will not lightly infer congressional intent to override ERISA’s standing
requirements, as Murphy asks us to do. Nor does Murphy assert sufficient facts
to support the argument that Yale waived the clear and ambiguous anti-
assignment provision through the course of its dealings. Cf. Paneccasio v. Unisource
Worldwide, Inc., 532 F.3d 101, 109 (2d Cir. 2008) (“Promissory or equitable estoppel
2Murphy does not dispute, on appeal or below, that the anti-assignment provision contained in the 2024 version of the Employee Coverage Booklet was the anti-assignment provision in effect during the relevant period.
13 is available on ERISA claims only in extraordinary circumstances.” (internal
quotation marks omitted)). In light of these determinations, we need not address
the district court’s separate basis for dismissal – failure to exhaust administrative
remedies. Put simply, the district court properly dismissed Murphy’s claims
under ERISA for lack of standing.
C. Breach of Contract
Section 514(a) of ERISA provides that the statute “shall supersede any and
all State laws insofar as they may now or hereafter relate to any employee benefit
plan.” 29 U.S.C. § 1144(a). Through this provision, Congress preempted all state
laws that “relate to” employee benefit plans in order “to establish . . . plan
regulation as exclusively a federal concern.” Aetna Life Ins. Co. v. Borges, 869 F.2d
142, 144 (2d Cir. 1989) (internal quotation marks omitted). We have therefore held
that breach-of-contract claims seeking the recovery of benefits owed under an
ERISA-covered health plan are preempted by section 514(a). See id. at 146.
Accordingly, Murphy’s state-law claims seeking reimbursement for COVID-19
tests provided pursuant to ERISA-covered Yale health plans are clearly preempted
and must be dismissed.
Murphy also presses state-law claims based on non-ERISA Yale health
plans. Putting aside the question whether Murphy adequately alleged distinct
14 contract claims relating to non-ERISA plans in the amended complaint, it is
undisputed that there was no express contract between Murphy and Yale, and that
as a third party to the benefit plan, Murphy’s ability to bring a breach-of-contract
claim against Yale rests on whether Murphy received a valid assignment from a
Yale Health Plan member. 3 For the reasons described above, Murphy has failed
to plead a valid assignment – whether pursuant to an ERISA plan or a non-ERISA
plan – in light of the blanket anti-assignment provision in Yale’s plan document.
Absent any reason to find that this anti-assignment provision is unenforceable, the
anti-assignment provision likewise dooms its breach-of-contract claim. The
district court properly dismissed Murphy’s breach of contact claim with prejudice.
D. Leave to Amend
Finally, we address Murphy’s argument that the district court abused its
discretion when it dismissed Murphy’s claims with prejudice and effectively
denied it leave to amend. Murphy did not file a motion for leave to amend below
or propose a second amended complaint. Rather, Murphy’s brief in opposition to
Yale’s second motion to dismiss contained a catch-all request on the last page,
3Murphy challenges only the district court’s dismissal of its “express contract claim,” and does not raise any arguments related to a potential claim for breach of an implied contract formed between Murphy and Yale. Murphy Br. at 43.
15 seeking leave “to cure any pleading deficiencies” that the district court might
identify if it granted Yale’s motion. Dist. Ct. Doc. No. 49 at 19. We have previously
held that where plaintiffs have similarly “failed to make formal motions to amend
or to offer proposed amended complaints,” there is “no abuse of discretion in the
district court’s implicit denial of [the] plaintiffs’ cursory requests for leave to
amend.” In re Lehman Bros. Mortg.-Backed Sec. Litig., 650 F.3d 167, 188 (2d Cir. 2011).
In any event, “[i]t appears beyond doubt that the plaintiff[s] can prove no
set of facts in support of [their] claim[s] which would entitle [them] to relief.” In
re Tamoxifen Citrate Antitrust Litig., 466 F.3d 187, 221 (2d Cir. 2006) (internal
quotation marks omitted). Having correctly held that the above claims fail as a
matter of law, the district court did not err in denying further leave to amend.
Because “amendment would be futile,” it was proper for the district court to do
so. In re Lehman Bros. Mortg.-Backed Sec. Litig., 650 F.3d at 188.
III. CONCLUSION
For the reasons stated above, we AFFIRM the judgment of the district court.