Gables Insurance Recovery, Inc. v. Blue Cross and Blue Shield of Florida, Inc.

Case: 15-10459 Date Filed: 12/01/2015 Page: 1 of 14

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT
________________________

No. 15-10459
________________________

D.C. Docket No. 1:14-cv-24098-UU

GABLES INSURANCE RECOVERY, INC.,
as assignee of South Miami Chiropractic LLC,

Plaintiff - Appellant,

versus

BLUE CROSS AND BLUE SHIELD OF FLORIDA, INC.,

Defendant - Appellee.

________________________

Appeal from the United States District Court
for the Southern District of Florida
________________________

(December 1, 2015)
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Before MARCUS and JILL PRYOR, Circuit Judges and RESTANI, * Judge.

PER CURIAM:

Gables Insurance Recovery, Inc. (“Gables”) appeals the district court’s

omnibus order denying its motion to remand and granting Blue Cross and Blue

Shield of Florida, Inc.’s (“Florida Blue”) motion to dismiss. The district court held

that because the Employee Retirement Income Security Act of 1974 (“ERISA”),

29 U.S.C. § 1132(a)(1)(B), completely preempts Gables’s claims, the court had

subject matter jurisdiction. The district court then dismissed Gables’s claims

without prejudice for failure to exhaust ERISA administrative remedies. Gables

argues on appeal that the district court erred in determining there was complete

preemption. After careful consideration and with the benefit of oral argument, we

conclude that the district court had subject matter jurisdiction, and we affirm the

district court’s judgment.

I.
This case arises out of a dispute between a healthcare provider, South Miami

Chiropractic, LLC, and an insurer, Florida Blue. South Miami Chiropractic

provided services to an insured under a Florida Blue health insurance plan. The

terms of Florida Blue’s insurance contract with its insured govern its payment to

medical providers for services they provide to its insureds. When South Miami

*
Honorable Jane A. Restani, Judge for the United States Court of International Trade,
sitting by designation.
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Chiropractic sought payment from Florida Blue, the insurer failed to pay. South

Miami Chiropractic then assigned its right to payment to Gables, which sought to

collect from Florida Blue.

Gables sued Florida Blue in state court, alleging six causes of action. The

complaint began by reciting the “facts common to all causes of action.” Compl.

¶¶ 1-13 (Doc. 1-2).1 As pled, the case arose out of Florida Blue’s breach of its

common law duties under the health insurance contract with its insured, as well as

other express and implied agreements between South Miami Chiropractic and

Florida Blue. Gables maintained that it could pursue its claims both as the

“successor in interest to the rights of the medical provider as an intended third

party beneficiary of the pertinent health insurance contract” and also based on

agreements directly between South Miami Chiropractic and Florida Blue. Id. ¶ 4.

Gables expressly disclaimed that it was seeking relief under ERISA, asserting that

it was “bring[ing] this action based on state claims only.” Id. ¶ 6.

Counts I and III of the complaint were essentially the same; they alleged a

breach of contract based on Florida Blue’s failure to pay South Miami Chiropractic

under the health insurance plan. Gables alleged that Florida Blue had issued a

health insurance policy to its insured and agreed to pay providers, like South

Miami Chiropractic, for services rendered to the insured. Based on this obligation,

1
Citations to “Doc.” refer to docket entries in the district court record in this case.
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Gables alleged, South Miami Chiropractic was an “intended third party beneficiary

of the health insurance contract between [Florida Blue] and the patient/insured.”

Id. ¶ 17; see also id. ¶¶ 41, 47. Gables also alleged that at the time South Miami

Chiropractic provided the services, the insured was covered by “the insurance

contract between the insured[] and [Florida Blue]” and that South Miami

Chiropractic obtained all necessary authorizations from Florida Blue before

treating the insured. Id. ¶¶ 19-20; see also id. ¶¶ 41-43. After Florida Blue

allegedly failed to pay according to the insurance policy, Gables sought in Counts I

and III to recover as assignee of South Miami Chiropractic’s third party

beneficiary rights.

In Count II, Gables alleged that Florida Blue breached an oral contract with

South Miami Chiropractic. This count, pled in the alternative, incorporated by

reference the facts common to all causes of action and several facts alleged in

Count I. The allegations incorporated by reference included that South Miami

Chiropractic was a third party beneficiary of the health insurance contract between

Florida Blue and the insured and also that the insured was eligible for benefits

under the insurance contract. Gables further alleged that South Miami

Chiropractic contacted Florida Blue to confirm coverage “under the subject health

care plan” and that Florida Blue agreed to pay South Miami Chiropractic for

services provided to the insured because the insured “was covered under the health

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care plan.” Id. ¶¶ 31-32. Gables claimed that Florida Blue’s failure to pay

breached the oral contract created during that communication.

Gables’s remaining claims for quantum meruit, open account, and account

stated incorporated by reference its allegations in Counts I, II, and III that Florida

Blue failed to pay amounts owed pursuant to its health insurance contract with the

insured and that, during communications confirming coverage, Florida Blue orally

agreed that there was coverage under the health insurance policy and thus it would

pay for service.

Florida Blue removed this action to federal court based on federal question

jurisdiction, claiming that ERISA governed the claims and completely preempted

Gables’s complaint. After removal, Florida Blue moved to dismiss the complaint,

contending that South Miami Chiropractic had failed to exhaust its administrative

remedies as mandated under ERISA. Gables opposed the motion to dismiss and

moved to remand the case to state court. The district court granted Florida Blue’s

motion to dismiss, denied Gables’s motion to remand, and dismissed the action

without prejudice. Although Gables brought only state law claims, the district

court held that ERISA complete preemption applied and therefore federal question

jurisdiction existed. The court also found that Gables had failed to exhaust

administrative remedies. This appeal followed.

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II.

On appeal, Gables argues that the district court erred in determining that

there was complete preemption and thus federal question jurisdiction. Gables does

not challenge the district court’s finding that it failed to exhaust administrative

remedies. Thus, we consider only whether Gables’s causes of action were

completely preempted. “We review de novo denials of motions to remand as well

as preemption determinations.” Conn. State Dental Ass’n v. Anthem Health Plans,

Inc., 591 F.3d 1337, 1343 (11th Cir. 2009).

Generally, a complaint alleging only state law claims is not removable to

federal court based on federal subject matter jurisdiction. Id. “The test ordinarily

applied for determining whether a claim arises under federal law is whether a

federal question appears on the face of the plaintiff’s well-pleaded complaint.” Id.

We have recognized that “[c]omplete preemption is a narrow exception to the well-

pleaded complaint rule and exists where the preemptive force of a federal statute is

so extraordinary that it converts an ordinary state law claim into a statutory federal

claim.” Id.

There is no dispute in this case that Gables pled only state law causes of

action. 2 The question before us is whether these state law claims are completely

2
We are not bound by the labels used in the complaint or Gables’s disclaimer that ERISA
does not govern its claims. “[M]erely referring to labels affixed to claims to distinguish between
preempted and non-preempted claims is not helpful because doing so would elevate form over
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preempted by section 502(a) of ERISA. Section 502(a) creates a private right of

action for a plan participant or beneficiary to recover benefits due under the terms

of a health insurance plan. 29 U.S.C. § 1132(a). This section “has such

‘extraordinary’ preemptive power that it ‘converts an ordinary state common law

complaint into one stating a federal claim for purposes of the well-pleaded

complaint rule.’ ” Conn. State, 591 F.3d at 1344 (quoting Metro. Life Ins. Co. v.

Taylor, 481 U.S. 58, 65 (1987)). Thus, even though pled as state common law

claims, if Gables’s “causes of action [are] within the scope of the civil enforcement

provisions of § 502(a)[,] [they are] removable to federal court.” Taylor, 481 U.S.

at 66.

To determine whether a cause of action is within the scope of section 502(a),

we apply the two-part test established in Aetna Health Inc. v. Davila, 542 U.S. 200,

210 (2004). We ask “(1) whether the plaintiff could have brought its claim under

§ 502(a); and (2) whether no other legal duty supports the plaintiff’s claim.” Conn.

State, 591 F.3d at 1345. If we answer these two questions in the affirmative, the

claim is completely preempted. In this case, we consider the two parts of the

Davila test in reverse order.

substance and allow parties to evade the pre-emptive scope of ERISA.” Conn. State, 591 F.3d at
1350 (quoting Aetna Health Inc. v. Davila, 542 U.S. 200, 214 (2004)) (internal quotation marks
omitted).
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A.

Gables argues that its claims arise out of a separate duty independent of the

ERISA plan; in other words, they do not depend on whether Florida Blue has a

duty to pay for services under the ERISA plan. We disagree.

Gables essentially brought two types of claims. In Counts I and III, Gables

asserted third party beneficiary claims based on a breach of the underlying ERISA

plan. In Counts II, IV, V, and VI, Gables alleged contractual or quasi-contractual

claims that purportedly are based on Florida Blue’s oral agreements to cover the

services rendered. Neither set of claims arises out of a separate duty independent

of the ERISA plan.

Because Gables’s third party beneficiary claims necessarily depend upon a

breach of the ERISA plan, they do not arise out of a separate duty independent of

the plan. Under Florida law, to succeed as a third party beneficiary on a breach of

contract claim, the plaintiff must prove “(1) existence of a contract; (2) the clear or

manifest intent of the contracting parties that the contract primarily and directly

benefit the third party; (3) breach of the contract by a contracting party; and

(4) damages to the third party resulting from the breach.” Found. Health v.

Westside EKG Assocs., 944 So. 2d 188, 195 (Fla. 2006) (internal quotation marks

omitted). Thus, a necessary element of a third party beneficiary claim is a breach

of the underlying contract. Absent a wrongful denial of benefits under the ERISA

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plan—the contract—Gables cannot succeed on a third party beneficiary breach of

contract claim. Counts I and III do not arise out of a duty independent of the

ERISA plan.

Gables’s claims based on the alleged oral agreement confirming coverage

also are not based upon a legal duty independent of the ERISA plan. In Counts II,

IV, V, and VI, Gables incorporated its general allegations that the insured was

eligible for benefits under the health insurance contract and that Florida Blue

breached its common law duties under that contract. Gables then specifically

alleged that its remaining claims arose when South Miami Chiropractic contacted

Florida Blue “to confirm coverage of the patient and for the subject services under

the subject health care plan,” and Florida Blue agreed “that the patient was covered

under the health care plan.” Compl. ¶¶ 31-32; see also id. ¶¶ 49, 58, 65

(incorporating ¶¶ 31-32). Thus, the complaint expressly tethers Florida Blue’s

preauthorization to its obligations under the ERISA insurance plan. Aside from the

allegation that Florida Blue confirmed coverage under the plan, Gables pled no

specific facts to support a contractual or quasi-contractual duty owed to South

Miami Chiropractic. As pled, Counts II, IV, V, and VI are supported by no other

legal duty; therefore, the second part of the Davila test is satisfied.

B.

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Returning to the first part of the Davila test, whether Gables could have

brought its claim under section 502(a) of ERISA, we must consider whether

Gables’s claims fall within the scope of ERISA and also whether Gables has

standing to sue under ERISA. Conn. State, 591 F.3d at 1350. First, we readily

conclude that Gables’s claims fall within ERISA’s scope. In Davila, the Supreme

Court held that a claim alleging a wrongful denial of coverage under the terms of

an ERISA-regulated employee benefits plan falls within the scope of ERISA. 542

U.S. at 214. And, as explained above, despite Gables’s efforts to distance its

claims from the ERISA plan, each count is based expressly on Florida Blue’s

alleged breach of the ERISA-regulated employee health benefits plan—that is, an

alleged wrongful denial of coverage under the plan.

Second, Gables has standing to sue under ERISA. To maintain an action

under ERISA, a plaintiff must have statutory standing, meaning the plaintiff has

the right to make a claim under section 502(a). See Physicians Multispecialty Grp.

v. Health Care Plan of Horton Homes, Inc., 371 F.3d 1291, 1294 (11th Cir. 2004).

Aside from the Secretary of Labor, ERISA permits only two categories of persons

to sue for benefits: plan beneficiaries and plan participants. 29 U.S.C.

§ 1132(a)(1)(B). “Healthcare providers . . . are generally not ‘participants’ or

‘beneficiaries’ under ERISA and thus lack independent standing to sue under

ERISA.” Physicians Multispecialty Grp., 371 F.3d at 1294.

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There is, however, an exception to this general rule. “[A] healthcare

provider may acquire derivative standing to sue under ERISA by obtaining a

written assignment from a ‘participant’ or ‘beneficiary’ of his right to payment of

medical benefits.” Conn. State, 591 F.3d at 1347. We announced this rule in

Cagle v. Bruner, explaining that nothing in ERISA prohibits a healthcare provider

from acquiring “derivative standing based upon an assignment of rights” from a

participant or beneficiary. 112 F.3d 1510, 1515 (11th Cir. 1997). We recognized

that “the interests of ERISA plan participants and beneficiaries are better served by

allowing provider-assignees to sue ERISA plans” because the providers “are better

situated and financed to pursue an action for benefits owed for their services.” Id.

(internal quotation marks omitted).

Gables readily admits that a provider-assignee would have standing to sue

under the ERISA plan for purposes of complete preemption, but it argues that it

lacks standing under ERISA because it is a sub-assignee and not the healthcare

provider. We have never drawn the line Gables urges us to draw and decline to do

so now. Limiting derivative standing to assignee healthcare providers is

inconsistent with the reasoning underlying our decision in Cagle. Just as nothing

in ERISA’s statutory language prohibits healthcare providers from obtaining

derivative standing through assignment, nothing in the statutory language prohibits

non-healthcare providers from obtaining derivative standing through a sub-

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assignment. See Cagle, 112 F.3d at 1515; see also Tango Transp. v. Healthcare

Fin. Servs. LLC, 322 F.3d 888, 891 (5th Cir. 2003) (explaining that no language in

ERISA “even remotely suggests that such assignments are proscribed or ought in

any way to be limited” (internal quotation marks omitted)). Moreover, “allowing

the health care provider to use an assignee to recover ERISA benefits does nothing

to frustrate the goals or purposes of ERISA.” Tango Transp., 322 F.3d at 893. To

the contrary, allowing a provider to assign the right to bring suit may protect plan

participants by transferring the burden of bringing suit from healthcare providers

who may be unable to collect on denied claims unless they outsource the collection

effort to a third party. Accordingly, consistent with decisions of some of our sister

circuits, we conclude that Gables has derivative standing as an assignee. See id.;

see also Mut. Life Ins. Co. of N.Y. v. Yampol, 840 F.2d 421, 427 (7th Cir. 1988)

(holding that an insurance company assignee of a fiduciary of an ERISA trust has

standing to sue under 29 U.S.C. § 1132(a)(2)); Brown v. Sikora & Assocs., Inc.,

311 F. App’x 568, 571 (4th Cir. 2008) (“[I]t may be that in the proper case

assignees other than health care providers have derivative standing under

ERISA.”).

We acknowledge that, in a series of cases involving one litigious plaintiff,

other circuits have held that derivative standing is limited to “healthcare providers

to whom a beneficiary has assigned his claim in exchange for health care.” Simon

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v. Gen. Elec. Co., 263 F.3d 176, 178 (2d Cir. 2001); accord Simon v. Cyprus Amax

Minerals Health Care Plan, 12 F. App’x 839, 841 (10th Cir. 2001); Simon v.

Belwith Int’l, Inc., 3 F. App’x 363, 364-65 (6th Cir. 2001); Simon v. Value Behav.

Health, Inc., 208 F.3d 1073, 1081-82 (9th Cir. 2000), overruled in part on other

grounds by Odom v. Microsoft Corp., 486 F.3d 541 (9th Cir. 2007); see also Simon

v. Allstate Emp. Grp. Med. Plan, 263 F.3d 656, 658-59 (7th Cir. 2001) (affirming

dismissal on res judicata grounds but noting that other circuits have rejected the

plaintiff’s assertion of derivative standing because he was not a health care

provider). In each of these cases, Stephen Simon alleged that an insured assigned

benefits claims to the healthcare provider, which in turn reassigned the benefits

claims to Mr. Simon. Mr. Simon then repeatedly filed claims against the insurer

that suffered from a variety of legal defects. See Allstate, 263 F.3d at 659

The Ninth Circuit explained in Simon v. Value Behavioral Health, Inc. that it

limited derivative standing to health care providers to avoid “transforming health

benefit claims into a freely tradable commodity.” 208 F.3d at 1081. The Ninth

Circuit expressed concern that recognizing derivative standing beyond the health

care provider “could lead to endless reassignment of claims[] and . . . would allow

third parties with no relationship to the beneficiary to acquire claims solely for the

purpose of litigating them.” Id. We do not share this concern in this case. As we

recognized in Cagle, allowing assignments for the purposes of bringing suit

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generally “facilitates rather than hampers the employee’s receipt of health

benefits” because the assignee likely is better positioned to pursue an action for

benefits. Cagle, 112 F.3d at 1515 (quoting Hermann Hosp. v. MEBA Med. &

Benefits Plan, 845 F.2d 1286, 1289 (5th Cir. 1988), overruled in part on other

grounds by Access Mediquip, L.L.C. v. UnitedHealthcare Ins. Co., 698 F.3d 229,

230 (5th Cir. 2012)(en banc)). And, like the Fifth Circuit in Tango Tranport,

“[w]e need not reach whether all assignees or sub-assignees of plan participants

have standing to sue.” Tango Tranpsort, 322 F.3d at 894. Today, we decide only

that Gables has standing to sue under the ERISA plan as a sub-assignee of the plan

participant.3

III.

Because both parts of the Davila test are satisfied, we hold that Gables’s

claims are completely preempted. Accordingly, the district court properly

exercised jurisdiction over Gables’s complaint on removal from state court and

denied Gables’s motion to remand.

AFFIRMED.

3
Gables also argues that the scope of the assignment from South Miami Chiropractic to
Gables is limited, excluding claims for payment under the ERISA plan, and thus it lacks standing
as an assignee. Gables’s own allegations belie this argument. Gables pled that South Miami
Chiropractic assigned to Gables its “rights and all available causes of action associated with
those rights, to collect benefits under [the health insurance] claim.” Compl. ¶ 25. The alleged
assignment plainly includes South Miami Chiropractic’s right to payment under the ERISA plan,
and the “assignment of the right to payment is enough to create standing.” Conn. State, 591 F.3d
at 1352.

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