Angelina Emergency Medicine Associates PA v. Health Care Service Corporation

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

ANGELINA EMERGENCY §

MEDICINE ASSOCIATES P.A., §

et al., §

§

Plaintiffs, §

§

v. § Civil Action No. 3:18-CV-0425-X

§

HEALTH CARE SERVICE §

CORPORATION, et al., §

§

Defendants.

MEMORANDUM OPINION AND ORDER

GRANTING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

Mary Shelley’s Frankenstein tells a story of Victor Frankenstein grieving his

mother’s death and discovering a way to create human life. As a result, he created a

large, brooding, living, breathing, sentient, humanoid creature. But when Victor

looked upon the creature’s face, he did not see the beauty of life. He saw a monster.

His monster. And his monster would later go on to wreak havoc, killing those whom

Victor loved.

This case is the legal version of Frankenstein’s Monster. In 2018—a year

before the undersigned became a judge—49 physician associations brought an 11-

count complaint against Blue Cross Blue Shield, arguing it had underpaid 250,000

claims.1 It has grown larger since, broadening this legal monster to over fifty

1 Doc. 1 (original complaint) ¶ 13. As the parties note, the operative complaint in this dispute

is now the second amended complaint. See Doc. 423 at 1 n.1.

physician associations suing around fifty defendants.2 At the motion-to-dismiss

stage, the Court lopped off Counts III–VII of the operative complaint.3 The

defendants now seek to wound Frankenstein’s Monster by moving to dismiss the 182

bellwether claims4 set for trial (Doc. 423) and strike certain expert testimony,

(Docs. 417, 419). After reviewing the filings, and the law, the Court GRANTS the

defendants’ Motion for Partial Summary Judgment as to the bellwether claims and

FINDS AS MOOT the motions to strike expert testimony.

But the Court is well aware that the demise of the bellwethers doesn’t mean

the whole case is dead yet.5

I. Background

The defendants are members of the Blue Cross Blue Shield Association

(“BCBSA”). BCBSA is comprised of thirty-three independent and locally operated

Blue Cross Blue Shield Plans (“Blue Plans”). These thirty-three independent Blue

Plans are each licensed to use BlueCross BlueShield Trademarks within their

2 Doc. 55 (second amended complaint).

3 Angelina Emergency Med. Assocs. PA v. Health Care Serv. Corp., 506 F. Supp. 3d 425, 428

(N.D. Tex. 2020) (Starr, J.) (granting in part the defendants’ motion to dismiss).

4 It is somewhat unclear to the Court the precise number of bellwether claims the defendants

are seeking to dismiss. Throughout their motion, the defendants state that there are 158 bellwether

claims at issue. See e.g., Doc. 424 at 1 n.2. But in the defendants’ chart, defendants seek dismissal of

182 bellwether claims. See Doc. 435-2. Perhaps the reason for this discrepancy, 158 versus 182

bellwether claims, is because many parties have dropped out of this case while the Court was

considering this motion, response, reply, and sur-reply. See Docs. 444, 451, 456. Nevertheless, the

Court analyzed all 182 bellwether claims. To the extent this memorandum opinion and order resolves

a bellwether claim on the merits featuring a dismissed party, that party should file a motion for

reconsideration. That motion should briefly explain (1) where in the docket the party was dismissed,

(2) identify the specific bellwether claim a dismissed party seeks for this court to reconsider, and

(3) where, specifically, in this memorandum opinion the court examined the merits of that bellwether

claim. Only one motion for reconsideration per side should be filed.

5 See Jones, T., & Gilliam, T. (1975). Monty Python and the Holy Grail. Cinema 5 Distributing

(relevant clip at https://www.youtube.com/watch?v=EfOW9QrLs0o).

specific, designated service area. These service areas are geographically based,

typically a state or a portion of a state. Generally speaking, the thirty-three

independent Blue Plans are prohibited from contracting with providers outside of

their geographically based service areas.

Sometimes members need—or rather, obtain—health care services outside of

a Blue Plan’s geographically limited service area. When this occurs, the health care

provider who administered services to the member submits a claim to the local Blue

Plan (the “Host Plan”). This out-of-network submission process to the local Host Plan

is part of the BlueCard program.

The out-of-network submission process also includes a claim-shifting

component. For example, when a health care provider submits a claim for non-

contracted health care services for an out-of-state Blue Plan member to the Host Plan,

the Host Plan reviews the claim and sends it to the member’s Home Plan. In addition

to sending the claim, the Host Plan sends the proposed amount for the member’s out-

of-network health care services to the Home Plan. The Home Plan reviews the claim’s

information, processes the claim pursuant to the terms of the member’s insurance

policy, and calculates the amount the Home Plan must pay.

In 2018, approximately half-a-hundred physicians associations sued Blue

Cross Blue Shield of Texas arguing that Blue Cross Blue Shield underpaid 250,000

medical claims. Nearly a year later, plaintiffs filed the operative complaint in this

case, their second amended complaint, which now included around fifty defendants.

In December 2020, the Court dismissed Counts III, IV, V, VI, and VII of plaintiff’s

complaint. After dismissal, only Counts II, III, VIII, and IX of plaintiffs’ complaint

remained.6 In these counts, plaintiffs seek to recover benefits under individualized

health benefit plans. For the sake of judicial economy, the parties agreed to deem a

small subset of these claims, known as “bellwether claims,” as a representative

sample of all claims in this case.

The defendants now move for partial summary judgment on 182 “bellwether”

claims. While each of these 182 bellwether claims contains particular, individualized,

and unique facts concerning out-of-network health care services received by a patient,

there are also a subset of general facts common among the 182 bellwether claims.

The plaintiffs are “physician associations” comprised of various, unidentified

members. Some members of these physician groups purportedly staff emergency

rooms throughout Texas. When a patient arrives at one of these medical facilities

possibly staffed by one member of the plaintiff physician associations, the patient fills

out a series of forms provided by the medical facility. Relevant here, one of these

forms is an “assignment of benefits” form or contains an assignment-of-benefits

clause. As a preview of the upcoming resolution of this motion, these assignment-of-

benefits forms, which vary based on the specific bellwether claim at issue, are key in

determining whether the plaintiffs have standing to sue the defendants in this case.

In any event, after signing all relevant intake forms, patients receive health

care services by potentially one of the physician members in one of the plaintiffs’

6 Claims VIII and IX of plaintiffs’ complaint are claims for attorney’s fees under ERISA and

Texas law. These claims are derivative of plaintiffs remaining substantive claims. Doc. 136 at 53.

physician associations. That health care facility then submits a claim for

reimbursement to BlueCross BlueShield Texas (the services are provided in Texas)

which then transmits the claim information and allotted (pricing) amount to one of

the defendants, who then administers the patients’ health benefit plan. The claim is

then sent back to BlueCross BlueShield Texas for processing. The price of the claim,

or alternatively, the pricing of the out-of-network health care services received is the

substantive, merits issue in this motion.

II. Legal Standard

Summary judgment is appropriate only if, viewing the evidence in the light

most favorable to the non-moving party, “the movant shows that there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter of

law.”7 “A fact is material if it ‘might affect the outcome of the suit’” and “[a] factual

dispute is genuine ‘if the evidence is such that a reasonable jury could return a verdict

for the nonmoving party.’”8 Courts “resolve factual controversies in favor of the

nonmoving party, but only where there is an actual controversy, that is, when both

parties have submitted evidence of contradictory facts.”9

7 FED. R. CIV. P. 56(a).

8 Thomas v. Tregre, 913 F.3d 458, 462 (5th Cir. 2019) (alteration in original) (citing Anderson

v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).

9 Antoine v. First Student, Inc., 713 F.3d 824, 830 (5th Cir. 2013) (cleaned up).

III. Analysis

The defendants’ omnibus partial motion for summary judgment as to the

bellwether claims contains six arguments with an appendix spanning 701 exhibits

and 32,758 pages. Here’s the quick overview of those arguments.

First, the defendants argue that the plaintiffs lack standing because they lack

valid and enforceable assignments.10 Second, the defendants argue that the plaintiffs

failed to exhaust their administrative remedies under the patients’ health benefit

plans before bringing suit in this Court.11 Third, the defendants argue the plaintiffs’

claims are now time-barred because they are untimely.12 Fourth, the defendants

argue that the plaintiffs’ ERISA claims fail because the defendants are not ERISA

fiduciaries.13 Fifth, the defendants argue that they have properly paid the bellwether

claims.14 Sixth, the defendants argue that the plaintiffs sued the wrong party for a

small subset of the bellwether claims (the non-ERISA claims).15

The defendants’ first (subject-matter jurisdiction), second (exhaustion of

administrative remedies), and third (time-barred) arguments are dispositive.

A. Subject-Matter Jurisdiction

The parties dispute whether this Court has subject-matter jurisdiction over

the ERISA claims. First, the defendants note that the plaintiffs must possess “valid

10 Doc. 424 at 21–31.

11 Id. at 32–37.

12 Id. at 51–55.

13 Id. at 56–58.

14 Id. at 37–51.

15 Id. at 55–56.

and enforceable” assignment of benefits for this Court to have subject-matter

jurisdiction over the plaintiffs’ ERISA claims.16 Second, the defendants argue that

each of the plaintiffs lack “valid and enforceable” assignments in at least one of the

following four ways: (1) some patients’ health benefit plans contain valid and

enforceable anti-assignment clauses;17 some patients’ health benefit plans do not

contain valid assignments because either (2) some of the plaintiffs are not the named

assignees in patients’ health benefit plans18 or (3) some patient health benefit plans

contain only putative assignments;19 and (4) some assignments are not accompanied

by a written health benefit plan.20

In response, the plaintiffs contest each of these four categories.21 First, the

plaintiffs argue that the defendants have waived their ability to rely on the anti-

assignment clauses.22 Second, the plaintiffs argue that those health benefit plans

purportedly not naming the plaintiffs as intended assignees do in fact name the

plaintiffs as intended assignees.23 Third, the plaintiffs argue that those “putative”

16 Id. at 21–24.

17 Id. at 24–26.

18 Id. at 27–30.

19 Id. at 30–31.

20 Id. at 26.

21 Doc. 442 at 26–27.

22 Id. at 34–38.

23 Id. at 29–32.

assignments still confer standing.24 Fourth, the plaintiffs argue that those

assignments lacking a written record still confer standing.25

The Court agrees with the defendants.

1. Subject-Matter Jurisdiction of ERISA Claims Generally

As a general matter, “ERISA does not supply the provider with a basis for

bringing its claim directly against the appellants; instead, the provider’s standing to

bring this lawsuit must be derived from the beneficiary and it is subject to any

restrictions contained in the plan.”26 “An assignment is a manifestation to another

person by the owner of a right indicating his intention to transfer, without further

action or manifestation of intention, his right to such other person or third person.”27

“Once a valid assignment is made, ‘the assignor’s right to performance by the obligor

is extinguished in whole or in part and the assignee acquires a right to such

performance.’”28 “To decide whether [a party] became an assignee” for purposes of

ERISA, a court “examine[s] and consider[s] the entire writing and give[s] effect to all

provisions such that none are rendered meaningless.”29 Specifically, “[c]ontractual

terms receive their ordinary and plain meaning unless the contract indicates the

24 Id. at 32–34.

25 Id. at 27–29.

26 Dialysis Newco, Inc. v. Cmty. Health Sys. Group Health Plan, 938 F.3d 246, 250 (5th

Cir. 2019).

27 Harris Methodist Fort Worth v. Sales Support Servs. Inc. Emp. Health Care Plan, 426

F.3d 330, 334 (5th Cir. 2005) (cleaned up).

28 Id. (quoting RESTATEMENT (SECOND) OF CONTRACTS § 317(1) (1981)).

29 Id.

parties intended to give the terms a technical meaning.”30 Additionally, “[w]here a

contract is written so that it can be given a definite or certain legal meaning, it is not

ambiguous.”31 But “where a contract is subject to two or more reasonable

interpretations, it is ambiguous and extrinsic evidence may be considered.”32

“In addition, ERISA requires that the [summary plan description] be ‘written

in a manner calculated to be understood by the average plan participant, and . . . be

sufficiently accurate and comprehensive to reasonably apprise such participants and

beneficiaries of their rights and obligations under the plan.’”33 Indeed, “the very

purpose of having a summary plan description of the policy is to enable the average

participant in the plan to understand readily the general features of the policy,

precisely so that the average participant need not become expert in each and every

one of the requirements, provisos, conditions, and qualifications of the policy and its

legal terminology.”34

So if any of the plaintiffs’ 182 purported assignments fail for any of the

defendants’ argued reasons, this Court lacks jurisdiction to hear that bellwether

claim. Also, the plaintiffs assert jurisdiction in this Court and thus have “the burden

of proving it exists”—despite the fact that they are not the movants.35 This means

30 Id.

31 Id. (cleaned up).

32 Id.

33 Id. (quoting 29 U.S.C. § 1022)).

34 Hansen v. Cont’l Ins. Co., 940 F.2d 971, 981 (5th Cir. 1991) (emphasis in original), abrogated

on other grounds by Perez v. Bruister, 823 F.3d 250 (5th Cir. 2016).

35 Peoples Nat’l Bank v. Off. of Comptroller of Currency of U.S., 362 F.3d 333, 336 (5th

Cir. 2004).

that the Court will dismiss any bellwether claims where the plaintiffs have not

carried their initial burden in proving subject-matter jurisdiction exists.

2. Are Plaintiffs Named Assignees?

The defendants’ assert that many of the assignments purporting to confer

subject-matter jurisdiction fail because certain patients’ health benefit plans do not

name the plaintiffs as assignees.36 More specifically, the defendants argue that

certain health benefit plans assign the patient’s benefits to a different entity such as

a “health care facility” and not to the plaintiffs who are physician associations.37 In

response, the plaintiffs argue that their physician associations fall within one of the

various catch-all provisions such as “health care providers.”38 The Court agrees with

the defendants.

For this Court to have subject-matter jurisdiction over the ERISA claims, the

plaintiffs must be the named assignees of a patient’s health benefit plan.39 Take, for

example, an analogous case from this Court: Innova Hospital San Antonio LP and

Victory Medical Center Houston, L.P., v. Health Care Services Corp. In Innova, two

hospitals in Texas sued forty out-of-state insurance conglomerates seeking

reimbursement for products and services offered by Blue Cross Blue Shield.40 There,

36 Doc. 424 at 27–30.

37 Id. at 27–30.

38 Doc. 442 at 30–32.

39 See Harris Methodist, 426 F.3d at 334 (defining an assignment as “a manifestation to another

person” (emphasis added)); see also Innova Hosp. San Antonio LP v. Health Care Serv. Corp., No. 3:12-

CV-01607, 2019 WL 13177034, at *4 (N.D. Tex. Oct. 2, 2019) (O’Connor, J.) (holding that plaintiff

lacked derivative standing under ERISA because “the assignment of benefits unambiguously

assign[ed] the patient’s rights to” a different company).

40 Innova, 2019 WL 13177034, at *1.

the co-plaintiff Victory Medical Center claimed to be the named assignee based on

the health plan assigning the patient’s benefits to an incredibly similar name—

“Victory Parent Company LLC d/b/a ‘Victory Medical Center.’”41 This Court

disagreed.42 Instead, this Court held that the health plan assigning the plaintiff’s

rights to “Victory Parent Company LLC d/b/a ‘Victory Medical Center’” assigned

rights only to the expressly listed parent company and not the “separate legal

entit[y]” of that company’s DBA name because a DBA name “has no legal existence.”43

In short, an assignment naming one entity cannot confer jurisdiction onto a “separate

legal entit[y].”44

Here, while the text of each of the 182 bellwether claims varies, most—if not

all—of the catch-all provisions used in the patients’ health benefit plans assign the

right to pursue legal relief to an entity different than the plaintiffs. For example,

bellwether claim DW4 assigns its rights to the “Facility[] and Facility-based

physicians.”45 The plaintiffs, who are physician associations, are neither the

operating “facility” nor a “facility-based physician.” In this context, the “facility” is

the hospital or other place where DW4 received health care services. And the

“facility-based physician” would be the physician working at the place where DW4

received health care services.

41 Id. at *3 (quoting the plaintiff’s health plan).

42 Id. at *4.

43 Id.

44 Id.

45 Doc. 424-1 at 22.

The plaintiffs argue that they fall under a catch-all provision such as a “facility-

based physician” because one member in its association may have been a “facility-

based physician” at the time one of the 182 patients received medical care. The

plaintiffs’ argument fails for two reasons.

First, as an evidentiary matter, the plaintiffs have not proffered any evidence

that a member of their association was a “facility-based physician” at the time a

patient received their health care services. Sure, the plaintiffs generally state in their

responsive brief that “[w]hen patients assign their benefits to physicians who provide

them care and those physicians are part of a physician group, as Plaintiffs are, the

physician group falls within the scope of that assignment.”46 But the plaintiffs have

not provided evidence as to who those physicians might be. And “at the summary

judgment stage, [the party invoking federal-court jurisdiction] must set forth by

affidavit or other evidence specific facts to survive a motion for summary judgment.”47

The plaintiffs have not provided the evidence of which of its members in one of its

associations qualifies as a “facility-based physician.” And this Court will not assume

it has subject-matter jurisdiction at the summary-judgment stage.

But even if the plaintiffs had provided even a shred of evidence showing that

one of its members was a physician for one of the bellwether patients to fall under

the catch-all language, they still wouldn’t belong in a federal court. Again, the

plaintiffs are physician associations whose individual members may have provided

46 Doc. 442 at 32 (emphasis added).

47 Legacy Cmty. Health Services, Inc. v. Smith, 881 F.3d 358, 366 (5th Cir. 2018), as revised

(Feb. 1, 2018).

health care services in various emergency rooms in Texas. But in Texas, an

association and its members are distinct legal entities. By statute, “a professional

association has the same powers, privileges, duties, restrictions, and liabilities as a

for-profit corporation.”48

Speaking of corporations, “[u]nder Texas law, a corporation is an entity

separate from its shareholders.”49 To highlight the point that an association is not

its individual members, it’s “[a] bedrock principle of corporate law . . . that an

individual can incorporate a business and thereby normally shield himself from

personal liability for the corporation’s contractual obligations.”50 True, while this

Court is not opining on the underlying liability between one of the physician

associations and one of its members, the point stands that Texas law considers an

association and its members distinct legal entities. As a result, even assuming one

of the association’s members was a “facility-based physician” at the time DW4

received care, the facility-based physician himself would have standing to sue, not

the “separate legal entity” that is his association. To hold otherwise, that one

member-physician establishes standing for his entire association, would effectively

blend an injury to a member and its “separate legal entity.”

In short, because an association and its members are distinct legal entities

under Texas law, the Court does not have subject-matter jurisdiction here unless the

48 TEX. BUS. ORGS. CODE § 2.108.

49 Grain Dealers Mut. Ins. Co. v. McKee, 943 S.W.2d 455, 458 (Tex. 1997).

50 Willis v. Donnelly, 199 S.W.3d 262, 271 (Tex. 2006).

health benefit plan expressly assigns the right to legal relief to one of the plaintiff

associations.

The Court has reviewed each of the 182 bellwether claims and dismisses those

claims where one of the plaintiffs is not expressly named in the assignment: DBW1,

DBW3, DBW4, DBW5, DBW6, DBW8, DBW9, DBW10, DBW11, DBW13, DBW14,

DBW15, DBW16, DBW17, DBW18, DBW19, DBW20, DBW22, DBW23, DBW24,

DBW25, DBW28, DBW31, DBW32, DBW34, DBW35, DBW36, DBW37, DBW38,

DBW39, DBW40, DBW41, DBW43, DBW44, DBW45, DBW46, DBW47, DBW48,

DBW49, DBW50, DBW51/PBW55, DBW52, DBW53, DBW55, DBW56, DBW57,

DBW58, DBW65, DBW66, DBW70, DBW73, DBW74, DBW75, DBW78, DBW79,

DBW80, DBW82, DBW83, DBW85, DBW86, DBW87, DBW88, DBW89, DBW91,

DBW92, DBW93, DBW94, DBW95, DBW96, DBW97, DBW98, DBW99, DBW100,

PBW2, PBW3, PBW4, PBW5, PBW6, PBW7, PBW8, PBW9, PBW10, PBW11, PBW13,

PBW14, PBW15, PBW16, PBW17, PBW18, PBW19, PBW20, PBW21, PBW22,

PBW24, PBW25, PBW26, PBWW30, PBW31, PBW32, PBW33, PBW34, PBW35,

PBW37, PBW41, PBW43, PBW44, PBW46, PBW47, PBW48, PBW49, PBW50,

PBW52, PBW53, PBW55/DBW51, PBW56, PBW57, PBW65, PBW70, PBW71,

PBW72, PBW73, PBW74, PBW75, PBW76, PBW80, PBW81, PBW82, PBW83,

PBW84, PBW85, PBW86, PBW88, PBW89, PBW90, PBW91, PBW92, PBW93,

PBW94, PBW95, PBW96, and PBW99.51

51 As mentioned earlier, the plaintiffs have submitted no evidence that a member of one of its

associations worked at any of the health care facilities at the time a bellwether patient received care.

Therefore, the Court cannot hold that the plaintiffs fall under any of the health benefit plans’ catch-

all provisions because the Court is lacking documentary evidence that a member of one of the plaintiff

3. Putative Assignments

The defendants argue that many of the purported assignments fail because

those health benefit plans designate to another entity the right to seek further

administrative relief under the plan as an “authorized representative” instead of

assigning away the right to seek legal relief,52 which, again, is required for subject-

matter jurisdiction. In response, the plaintiffs concede that, while some patient

health benefit plans assign merely the right to pursue administrative relief as an

“authorized representative” of the patient,53 many of the patient health benefit plans

also include additional language expressly assigning away the right to pursue judicial

relief.54 The Court agrees with the plaintiffs to an extent.

Health benefit plans can designate away rights to a third party distinct from

an assignment to pursue legal relief.55 For example, the Fifth Circuit has highlighted

the distinction between a health plan designating away a “direct-payment

authorization,” which does not confer jurisdiction, and a full “assignment.”56 In the

Fifth Circuit’s words:

A direct-payment authorization means only that the beneficiary tells the

administrator to forward the checks owed to him or her on to the

provider instead. An assignment of benefits is more than that. An

associations worked at a health care facility at the relevant time. And because the plaintiffs have the

burden to prove they belong in this Court, the Court cannot merely assume that one member of the

plaintiffs’ association provided health care services at the relevant facility at the relative time.

52 Doc. 424 at 30–31.

53 Doc. 442 at 33 (“Even if the Court were to accept the assignee-authorized representative

distinction here, it would only apply to [a] small subset of the Bellwether Claims.” (emphasis added)).

54 Id. at 32–34.

55 See Dialysis Newco, Inc., 938 F.3d at 254.

56 See id.

assignment means that the provider has stepped into the metaphorical

shoes of the beneficiary and is capable of exercising all the legal rights

enjoyed by the beneficiary under the plan, to include suing the plan

and/or its administrator over disputes that might arise in the plan’s

interpretation.57

Here, the defendants argue that many of these purported assignments fall

short of assigning away the right to pursue legal relief.58 Of these contested health

benefit plans, the plaintiffs contest only bellwether PBW94 in their brief. While the

defendants are correct that PBW94’s health benefit plan contains authorized-

representative language, such as PBW94 agreeing to “appoint ETMC, and any agent

acting on its behalf, as [PBW94’s] authorized representative to pursue any claims,

penalties, and administrative . . . remedies,” PBW94’s health benefit plan also

expressly states that its authorized representative also has the power “to pursue any

. . . legal remedies on [PB94’s] behalf.”59 The language in PBW94’s health benefit

plan expressly confers the assignment of rights and not merely the right for an entity

to be an “authorized representative.”

But the question remains as to whom that assignment has been made. PBW94

assigns the right to legal relief to “ETMC.” the plaintiffs have proffered no evidence

as to ETMC’s connection with this case. ETMC does not appear to be a party in this

case. For this reason, while PBW94 does assign away the right to pursue legal

remedies to ETMC, there is no evidence connecting ETMC to this case. So the Court

would lack subject-matter jurisdiction over PBW94.

57 Id.

58 See Doc. 435-4 (chart outlining invalid assignments).

59 See Doc. 434-16 at 284; Defs.’ App. at 30,689.

The Court has reviewed the 182 bellwether claims and dismisses the claims

that solely delegate away rights other than the right to pursue legal relief, such as

the right to be an “authorized representative” on behalf of the patient: DBW3, DBW4,

DBW8, DBW9, DBW10, DBW13, DBW16, DBW17, DBW18, DBW38, DBW40,

DBW53, DBW55, DBW57, DBW58, DBW79, DBW99, PBW2, PBW5, PBW6, PBW8,

PBW11, PBW18, PBW34, PBW43, PBW44, PBW52, PBW53, PBW56, PBW57,

PBW72, PBW73, and PBW78.60

4. Existence of Assignments

The defendants argue that the Court lacks jurisdiction to hear disputes

involving 29 bellwether claims that lack a physical, written health plan.61 In

response, the plaintiffs argue that a physical, written health plan is not required to

establish jurisdiction because the plaintiffs can prove assignment through

testimonial evidence.62 The Court agrees with neither party.

As to the existence of valid assignments for purported assignments lacking a

written health benefit plan, the Court finds the opinion in Encompass Office

Solutions, Inc. v. Connecticut General Life Insurance Co. persuasive.63 In Encompass,

the Court confronted an identical issue—the assignment of patients’ health benefit

60 In this and the subsequent lists of claims the Court is dismissing, the Court made the list

exhaustive rather than just the claims that remained live until this section so the Fifth Circuit knows

the Court’s alternate and independent grounds for dismissal of a claim that is subject to dismissal on

more than one basis.

61 Doc. 424 at 26.

62 Doc. 442 at 27–29.

63 No. 3:11-CV-02487, 2017 WL 3268034, at *10 (N.D. Tex. July 31, 2017) (Lindsay, J.) (holding

that the plaintiffs raised a fact dispute as to assignment of health plans).

plans at the summary-judgment stage of litigation.64 Notably, Encompass held that

“an assignment of a claim for benefits need not be in writing to be effective unless

required by contract or statute.”65 Because of this, Encompass held that the following

witness deposition testimony was, as an evidentiary matter, enough to survive an

opposing motion for summary judgment as to whether there was a valid assignment:

We standardly have an assignment of benefits signed by every patient.

Everyone has signed one. It is nice to have the assignment of benefits

signed. So they understand unequivocally that there is a third party

involved in this called Encompass Office Solutions. It is always possible

that those assignments could have ended up, A, in the doctor’s file, B, in

anesthesia’s paperwork because we were doing all of their paperwork,

or C, could have ended up with the pre-op and postoperative notes that

are in our filing system. But we are confident that they signed them.

Now, can I find them all? Obviously not, but they were all signed one

way or another.66

Here, the plaintiffs lack written assignments for 29 of their 182 bellwether claims.

And in an attempt to avoid summary judgment on the bellwether claims in which

there is no written assignment, the plaintiffs have provided the declaration of Paul

Jordan, the Director of Revenue Assurance with SCP Health.67 Relevant here,

Jordan states that it is “standard practice” at the hospitals where one of the plaintiffs’

member physicians works to “routinely receive[] executed assignments of benefits

64 Id. at *6–10.

65 Id. at *10. It does not appear that the Fifth Circuit has held that a plaintiff can prove the

existence of a valid ERISA assignment by oral evidence alone, nor does it appear that the Fifth Circuit

has examined the issue directly. At best, in passing, the Fifth Circuit has stated “oral assurances have

low probative value in ERISA cases.” Mello v. Sara Lee Corp., 431 F.3d 440, 447 n.6 (5th Cir. 2005).

Nevertheless, without much more guidance from the Fifth Circuit, the Court will follow what was

previously held in this Court—that is, that it is possible that a plaintiff can prove the existence of a

valid ERISA assignment by oral evidence alone.

66 Id. at 9 (cleaned up).

67 See Doc. 443-3 at 2–15; Plaintiffs’ App. at 27–40.

from patients.”68 In following Encompass, Jordan’s declaration stating that hospitals

routinely administer health benefit forms to patients creates a fact dispute as to the

existence of assignments where he works, SCP Health. But Jordan’s declaration does

not create a fact dispute as to the existence of assignments at other hospitals. The

plaintiffs comprise nearly half-a-hundred physicians associations. Jordan lacks

personal knowledge as to the routines at other medical facilities besides his own. And

under the Federal Rules of Civil Procedure, the Court cannot consider portions of a

“declaration used to support or oppose a motion” for summary judgment unless it is

“made on personal knowledge.”69

The next question for the Court is to ask if the plaintiffs have carried their

burden in identifying which of these 29 bellwether claims lacking a written health

benefit plan involve health care services performed at SCP Health. They haven’t.

Again, the plaintiffs assert jurisdiction in this Court, and they have “the burden of

proving it exists.”70 Yet the plaintiffs have not directed the Court as to which of the

29 bellwether claims at issue were performed at SCP Health. Not a single one.71 As

the Fifth Circuit instructs, a “perfunctory and conclusional assertation that a

particular affidavit creates” a fact dispute “normally will not suffice” because “Judges

are not pigs, hunting for truffles buried in briefs” or worse—a 182-claim, 725-exhibit,

68 Doc. 443-3 at 3 ¶ 8; App. at 28 at ¶ 8.

69 FED. R. CIV. P. 56 (c)(4).

70 Peoples Nat’l Bank, 362 F.3d at 336.

71 Doc. 442 at 27–29 (Plaintiffs’ Response) (arguing that oral assignments can confer standing

to the plaintiffs); Doc. 449-1 (Plaintiffs’ Sur-Reply) (containing no argument as to oral assignments

and standing).

34,708-page record.72 In short, the plaintiffs have not carried their burden in proving

that Jordan’s declaration creates a fact dispute concerning the assignment of 29

bellwether claims lacking a written assignment for health services performed at

either SCP Health or elsewhere.

5. Waiver of Anti-Assignment Clauses

The defendants argue that this Court lacks subject-matter jurisdiction over a

significant majority of the bellwether claims in this case because the patients’ health

benefit plans contain anti-assignment clauses.73 In response, the plaintiffs argue

that the defendants have waived their ability to assert these anti-assignment

clauses.74 The Court agrees with the defendants.

As it pertains to those health benefit plans containing anti-assignment clauses,

“[i]f the provider lacks standing to bring the lawsuit due to a valid and enforceable

anti-assignment clause, then federal courts lack jurisdiction to hear the case.”75

Although a health benefit plan can include a jurisdiction-stripping, anti-assignment

clause, a party can be judicially estopped from asserting an anti-assignment clause

in the ERISA context.76 In the Fifth Circuit, “[t]o establish an ERISA-estoppel claim,

the plaintiff must establish: (1) a material misrepresentation; (2) reasonable and

72 See de la O v. Housing Auth. of City of El Paso, Tex., 417 F.3d 495, 501 (5th Cir. 2005)

(emphasis added) (noting that a “perfunctory and conclusional assertion that a particular affidavit

creates” a fact issue “normally will not suffice”)

73 Doc. 424 at 24–26.

74 Doc. 442 at 34–38.

75 Dialysis Newco, Inc., 938 F.3d at 250.

76 Mello, 431 F.3d at 444 ; see also Grand Parkway Surgery Ctr., LLC v. Health Care Serv.

Corp., No. 4:15-CV-0297, 2015 WL 3756492, at *2 (S.D. Tex. June 16, 2015) (“In certain circumstances,

however, the defendant may have waived or be estopped to assert the anti-assignment provision.”).

detrimental reliance upon the representation; and (3) extraordinary

circumstances.”77

In determining the ERISA-estoppel issue at the summary-judgment stage,

many district courts have held that ERISA waiver constitutes a fact dispute

resolvable only after trial; this is because district courts have held there are genuine

issues of material fact related to the “reasonable” reliance prong.78

But this Court takes direction from the Fifth Circuit. And the Fifth Circuit

has held that, as a matter of law, a party asserting an ERISA-estoppel claim cannot

“reasonably rel[y]”79 when the reliance runs contrary to the plain meaning of the anti-

assignment clause.80

To this end, the Fifth Circuit’s Mello v. Sara Lee Corp. decision warrants

additional discussion. The plaintiffs cite Hermann Hospital v. MEBA Medical and

Benefits Plan for the origin of the ERISA-estoppel theory.81 Indeed, at base, Hermann

held that a party can be estopped from relying on an anti-assignment clause.82 But

77 Mello, 431 F.3d at 444–45.

78 Jones v. Int’l Bus. Machs. Corp., No. 1:19-CV-0251, 2020 WL 6729088, at *6 (W.D. Tex. Nov.

15, 2020) (recommending that the court cannot determine ERISA estoppel at the summary-judgment

stage), report and recommendation adopted, No. 1:19-CV-0251, 2020 WL 8361930 (W.D. Tex. Dec. 29,

2020); Malbrough v. Kanawha Ins. Co., 943 F. Supp. 2d 684, 696 (W.D. La. 2013) (holding that the

court cannot determine ERISA estoppel at the summary-judgment stage); Bunner v. Dearborn Nat’l

Life Ins. Co., No. 4:18-CV-1820, 2021 WL 2119488 (S.D. Tex. May 25, 2021), aff’d, 37 F.4th 267 (5th

Cir. 2022) (determining ERISA-estoppel theory after trial).

79 Mello, 431 F.3d at 445.

80 Id. at 447 (citing Sprague v. GMC, 133 F.3d 388, 404 (6th Cir. 1998)); see also High v. E-Sys.

Inc., 459 F.3d 573, 580 (5th Cir. 2006); Cell Sci. Sys. Corp. v. La. Health Serv., 804 F. App’x 260, 266

(5th Cir. 2020) (per curiam).

81 Hermann Hosp. v. MEBA Med. & Benefits Plan, 959 F.2d 569, 574 (5th Cir. 1992), overruled

by Access Mediquip, L.L.C. v. UnitedHealthcare Ins. Co., 698 F.3d 229 (5th Cir. 2012).

82 Id.

the Fifth Circuit did not expressly adopt the ERISA-estoppel theory until 20 years

after Hermann in Mello.83 In expressly adopting the ERISA-estoppel theory, the

Mello court held, on appeal at the summary-judgment stage, that the plaintiff could

not succeed in proving ERISA-estoppel theory because the plaintiff could not satisfy

the ERISA-estoppel’s “reasonable reliance” prong when the reliance runs counter to

the anti-assignment clause’s plain language.84 And, to this point, the Fifth Circuit

has cited Mello’s holding favorably as recently as three years ago.85

Here, although every health benefit plan may differ in its language, many of

the anti-assignment clauses are unambiguous. For instance, DBW99’s health benefit

plan plainly states that the plan’s benefits “cannot be transferred”:

Benefits for covered services under this group health plan are for your

personal benefit and cannot be transferred or assigned to anyone else

without our consent. You are prohibited from assigning any claim or

cause of action arising out of or relating to this group health plan.86

The plaintiffs cannot reasonably rely in in defiance of this unambiguous language.87

Accordingly, the Court dismisses the following bellwether claims because they

contain a valid anti-assignment clause: DBW1, DBW2, DBW3, DBW4, DBW5, DBW6,

DBW11, DBW12, DBW14, DBW17, DBW18, DBW19, DBW20, DBW21, DBW24,

83 Mello, 431 F.3d at 444 (“This circuit has yet to explicitly adopt ERISA-estoppel as a

cognizable legal theory. . . . We now join other circuits in explicitly adopting ERISA-estoppel as a

cognizable theory.”).

84 Id. at 447 (“Mello’s claim cannot surmount the clear and consistent case law forbidding

recognizing reasonable reliance on informal documents in the face of unambiguous Plan terms.”).

85 See Cell Sci. Sys. Corp., 804 F. App’x at 266.

86 Doc. 443-9 at 616 (emphasis added); Defs.’ App. at 26,110 (emphasis added).

87 In addition, Plaintiffs’ waiver argument fails because they have “presented no allegation,

argument, or evidence demonstrating ‘extraordinary circumstances’”—which is the fourth and final

element of an ERISA-estoppel theory. Cell Sci. Sys. Corp., 804 F. App’x at 266 (holding that plaintiff’s

ERISA-estoppel theory fails at the summary-judgment stage).

DBW26, DBW27, DBW28, DBW29, DBW30, DBW31, DBW32, DBW3, DBW34,

DBW35, DBW36, DBW37, DBW38, DBW39, DBW40, DBW41, DBW42, DBW43,

DBW44, DBW45, DBW46, DBW47, DBW48, DBW49, DBW50, DBW52, DBW53,

DBW54, DBW57, DBW58, DBW65, DBW72, DBW76, DBW77, DBW78, DBW79,

DBW81, DBW82, DBW83, DBW84, DBW85, DBW86, DBW87, DBW88, DBW89,

DBW90, DBW91, DBW92, DBW93, DBW94, DBW95, DBW96, DBW97, DBW98,

DBW99, DBW100, PBW1, PBW2, PBW3, PBW4, PBW6, PBW12, PBW17, PBW18,

PBW19, PBW20, PBW21, PBW22, PBW24, PBW25, PBW27, PBW28, PBW29,

PBW30, PBW32, PBW33, PBW34, PBW37, PBW38, PBW39 PBW40, PBW41,

PBW42, PBW43, PBW44, PBW45, PBW46, PBW47, PBW48, PBW49, PBW50,

PBW65, PBW72, PBW76, PBW77, PBW78, PBW79, PBW81, PBW82, PBW83,

PBW84, PBW86, PBW87, PBW88, PBW89, PBW90, PBW91, PBW92, PBW93,

PBW94, PBW95, PBW96, PBW98, and PBW99.

B. Exhaustion of Administrative Remedies

for the ERISA-Governed Plans

The defendant argues that all ERISA-governed plans should be dismissed for

the plaintiffs’ failure to exhaust administrative remedies under the health benefit

plans before filing suit.88 In response, the plaintiffs argue that they’ve satisfied the

exhaustion requirement because they filed appeals for some bellwether claims to Blue

Cross Blue Shield Texas.89 In the alternative, the plaintiffs argue that they’re

88 Doc. 424 at 33–36.

89 Doc. 442 at 41–43.

excused from the exhaustion requirement because the futility exception applies.90 In

reply, the defendants argue that the plaintiffs have not exhausted their

administrative remedies because the home plans (and not Blue Cross Blue Shield

Texas) is the proper body to which the plaintiffs should have filed appeals.91 The

Court agrees with the defendants.

A claimant “denied benefits under an ERISA plan must exhaust all

administrative remedies afforded by the plan before instituting litigation for recovery

of benefits.”92 By contrast, “informal attempts to substitute for the formal claims

procedure” do not satisfy the exhaustion requirement because it “would frustrate the

primary purposes of the exhaustion requirement.”93 “Exceptions to the exhaustion

requirement exist where the available administrative remedies either are

unavailable or wholly inappropriate to the relief sought, or where the attempt to

exhaust such remedies would be a patently futile course of action.”94 For an

exhaustion requirement to be futile, it “usually involv[es] a finding of bias or hostility

on the part of the review board.”95

90 Id. at 42–43.

91 Doc. 448 at 21–22.

92 Lacy v. Fulbright & Jaworski, Ltd. Liab. P’ship Long Term Disability Plan, 405 F.3d 254,

256 (5th Cir. 2005).

93 Bourgeois v. Pension Plan for Emps. of Santa Fe Int’l Corps., 215 F.3d 475, 480 n.14 (5th

Cir. 2000).

94 Gosselink v. Am. Tel. & Tel., Inc., No. 4:97-CV-3854, 1999 WL 33737443, at *2 (S.D. Tex.

Aug. 9, 1999).

95 Gosselink, 1999 WL 33737443, at *2 (collecting cases).

Here, as an initial matter, the plaintiffs have not produced evidence that

they’ve exhausted their administrative remedies before filing suit. The health benefit

plans at issue required the plaintiffs to file appeals regarding Rule of Three

determinations to the home plan.96 As an evidentiary point, the defendants have put

evidence into the record that either: (1) the plaintiffs admit that they did not file a

formal appeal with the proper body, (2) the plaintiffs admit that they cannot confirm

or deny whether they filed a formal appeal to the proper body, and/or (3) that the

defendants have no internal record of a formal appeal to the proper body.97

The plaintiffs did not rebut the defendants’ evidentiary point. Instead, the

plaintiffs argue that the appeals process was unclear98 or that appeals filed to the

wrong body constitute exhaustion.99 While these points may or may not be true, the

Fifth Circuit requires the plaintiffs “to offer proof of its compliance with the

exhaustion requirement”100 and “informal attempts to substitute for the formal

claims procedure,” such as filing appeals to the wrong body, do not satisfy the

exhaustion requirement.101

Second, the plaintiffs’ alternative argument that they need not satisfy the

exhaustion requirement because an appeal would have been futile fares no better. To

96 See generally Doc. 443-15; see also id. at 12.

97 See Doc. 435-5 (table summarizing exhaustion of remedies).

98 Doc. 442 at 39.

99 Id. at 40.

100 Trinity Home Dialysis, Inc. v. WellMed Networks, Inc., No. 22-10414, 2023 WL 2573914,

at *5 (5th Cir. Mar. 20, 2023) (per curiam).

101 Bourgeois, 215 F.3d at 480 n.14.

prove futility, the plaintiffs must show “hostility or bias on the part of the

administrative review committee.”102 Similarly to the exhaustion requirement, the

Fifth Circuit requires plaintiffs to offer evidence of hostility or bias. Specifically, this

evidentiary showing of hostility or bias must be more than statements made by a

high-ranking company official stating that an administrative committee would reject

a hypothetical appeal.103 And a showing of hostility must be more than claiming that

an additional appeal to the same administrative body who rejected the first appeal

triggers the futility exception to the exhaustion requirement.104

Here, the plaintiffs argue for the futility exception on pages 42 through 43 of

their brief.105 In this section, the plaintiffs offer no evidentiary support suggesting

that such an appeal would have been denied on the account of a hostility or bias.106

In other words, the plaintiffs have offered even less evidentiary support than the

Fifth Circuit’s rejected evidentiary showing of a statement from a high-ranking

company employee.107 At best, in attempting to show hostility, the plaintiffs merely

repeat their earlier argument that the appeals process was unclear. The Fifth Circuit

102 McGowin v. ManPower Int’l, Inc., 363 F.3d 556, 559 (5th Cir. 2004).

103 See Bourgeois, 215 F.3d at 480.

104 Denton v. First Nat’l Bank of Waco, 765 F.2d 1295, 1300 (5th Cir. 1985).

105 Doc. 442.

106 Id. at 42–43.

107 Bourgeois, 215 F.3d at 478, 480 (holding that “we cannot excuse” plaintiff’s “failure to

exhaust” under the futility exception because the informal “exchang[ing]” of “numerous letters” with

the administrative body’s chairman stating that plaintiff’s claim “would receive no additional

consideration” is not strong enough evidentiary support “that the actual Committee would not have

considered his claim”).

has rejected this argument repeatedly.108 In rejecting this argument, the Fifth

Circuit expressly stated that plaintiffs arguing for forgiveness of the exhaustion

requirement “are bound by the plan’s administrative procedures and must use them

before filing suit even if they have no notice of what those procedures are.”109 Even

further, the Fifth Circuit “imposes a duty [on the plaintiff] to seek the necessary

information even if it has not been made available.”110 So the plaintiffs’ argument

that the appeals process was unclear falls flat in this Circuit.111

In short, the Court dismisses nearly all bellwether claims because the plaintiffs

have not met their initial evidentiary burden of providing “proof of [their] compliance

with the exhaustion requirement.”112 And in arguing futility, the plaintiffs have not

made any evidentiary showing of hostility or bias.113

108 Meza v. Gen. Battery Corp., 908 F.2d 1262, 1279–80 (5th Cir. 1990); see also Bourgeois, 215

F.3d at 480; Trinity Home Dialysis, Inc., 2023 WL 2573914, at *5; Innova, 2019 WL 13177034, at *5

(district court).

109 Bourgeois, 215 F.3d at 480.

110 Id. (rejecting the plaintiff’s argument that his exhaustion should be excused due to

incomplete plan information because Fifth Circuit case law “imposes a duty to seek necessary

information even if it has not been made available”).

111 An oddity is that the plaintiffs themselves have produced evidence of the proper appeals

process. See generally Doc. 443-15; see also id. at 12. So the Court doubts the plaintiffs’ contention

that the appeals process was unclear to the plaintiffs—associations whose members are medical

professionals—or that it was difficult to find.

112 Trinity Home Dialysis, Inc., 2023 WL 2573914, at *5; Bourgeois, 215 F.3d at 480; Meza, 908

F.2d at 1279 (rejecting the plaintiff’s argument that exhaustion was not necessary because the

defendants never provided him with a copy of the plan and instead holding that ERISA requires a

plaintiff to use a plan’s administrative procedures before filing suit even if the plaintiff does not know

what those procedures are).

113 One last point: Although the Fifth Circuit in Bourgeois held that the futility exception didn’t

apply, the Fifth Circuit ultimately excused the plaintiff’s non-exhaustion using “equitable estoppel”

principles. Bourgeois, 215 F.3d at 481; see also Swanson v. Hearst Corp. Long Term Disability Plan,

586 F.3d 1016, 1019 (5th Cir. 2009) (distinguishing Bourgeois); Gonzalez v. Aztex Advantage, 547 F.

App’x 424, 428 (5th Cir. 2013) (same). But the Court need not consider equitable estoppel because the

plaintiffs have waived it, or worse, expressly disavowed its application to this case. First, the plaintiffs

waived Bourgeois’s “equitable estoppel” defense by failing to plead it or raise it in their summary

Accordingly, the Court dismisses the following ERISA bellwether claims for

failure to exhaust administrative remedies: DBW1–21, DBW23–40, DBW42–44,

DBW46–51, DBW53–58, DBW72–85, DBW87–91, DBW93–97, DBW99, PBW1–21,

PBW23, PBW25, PBW27, PBW28, PBW30, PBW32–36, PBW39–53, PBW55–58,

PBW65–66, PBW72–74, PBW76–84, PBW86, PBW88–90, PBW93–98, and PBW100.

C. Exhaustion of Administrative Remedies for Non-ERISA Claims

judgment response. In the Fifth Circuit, “futility” and “equitable estoppel” are pled separately, and a

failing to argue one results in waiver of the other. See McGowin, 363 F.3d at 559–60 (considering

futility but not equitable estoppel). Here, most of the plaintiffs’ briefing on exhaustion is devoted to

an argument that the plaintiffs’ submission to the wrong administrative body satisfies the exhaustion

requirement. See Doc. 442 at 14–15. Moreover, the plaintiffs only argue futility (in the alternative)

in their final exhaustion paragraph, and they fail to mention equitable estoppel or even cite to

Bourgeois. See id. at 15.

But the plaintiffs go even farther than waiving equitable estoppel by affirmatively disavowing

it in their sur-reply:

[I]n connection with Plaintiffs’ exhaustion of administrative remedies, Plaintiffs do not

need to establish ERISA estoppel to demonstrate that Plaintiffs appealed the

Bellwether claims. See Dkt. 448 at 11. Plaintiffs’ arguments do not depend on whether

Defendants made material misrepresentations to Plaintiffs (indeed, the Blue Card

system does not even allow Plaintiffs to communicate directly with Defendants).

Instead, the question for the Court is whether Plaintiffs have raised a genuine material

fact the Plaintiffs exhausted their administrative remedies. The record evidence

establishes that (1) Plaintiffs appealed the bellwether claims, (2) Plaintiffs were never

provided with any meaningful reason for any of the underpayments for any of the

Bellwether claims, (3) Plaintiffs were never clearly and unambiguously instructed

where the appeals were supposed to be sent (but if anything they were told to submit

to BCBSTX), and (4) appealing was futile because BCBSTX failed to respond to appeals

and failed to provide plan documents. See Dkt. 442 at 30-35. Plaintiffs are not required

to establish ERISA estoppel to raise a genuine issue of material fact as to exhaustion.

And the fact of whether Plaintiffs have or have not established the elements of ERISA

estoppel is irrelevant.

Doc. 449-1 at 7 (emphases added). Notably, material misrepresentations by a defendant is a key fact

when determining whether Bourgeois’s “equitable estoppel” defense applies. See Bourgeois, 215 F.3d

at 481–82 (“A promissory estoppel theory would recognize such a basis when, as in the current

situation, a claimant relies to his detriment on the words and actions of high-ranking company

officers who purport to negotiate benefit decisions without actual authority” (emphases added)).

The parties next dispute whether a small subset of bellwether claims not

governed by ERISA114 should be dismissed for failure to exhaust.115 The defendants

argue that the non-ERISA bellwether claims include contractual provisions requiring

exhaustion of administrative appeals before bringing a claim in court.116 The

plaintiffs’ response is two-fold. First, the plaintiffs argue that exhaustion is first a

factual question unresolvable at the summary-judgment stage.117 Second, the

plaintiffs state that the defendants have failed to identify any non-ERISA plans

requiring exhaustion. The Court agrees with the defendants.118

The parties have identified only a single case discussing the exact topic of a

non-ERISA-governed health benefit plan contractually requiring exhaustion before

suit in a federal or state court.119 Nevertheless, at base, this issue is one of contract

114 Those claims are: DBW22, DBW41, DBW45, DBW52, DBW65, DBW66, DBW71, DBW86,

DBW92, DBW98, DBW100, PBW22, PBW24, PBW37, PBW38, PBW54, PBW75, PBW85, PBW87,

PBW91, PBW92, and PBW99.

115 The exhaustion analysis as to the bellwether claims not governed by ERISA is somewhat

unnecessary. Many of these claims have been dismissed for lacking subject-matter jurisdiction. For

example, one of the non-ERISA claims the defendants argue should be dismissed for failure to exhaust

administrative remedies is PBW24. See Defs.’ App. at 31,346; id. at 31,335. Regardless of the

exhaustion analysis, PBW24 lacks subject-matter jurisdiction because the PBW24’s health benefit

plan assigns the right to pursue legal relief to “Christus Spohn Hospital—Kleberg Hospital.” Id. at

252–53. Christus Hospital is not a plaintiff in this litigation. And even if PBW24’s health benefit plan

included catch-all language assigning the right to pursue legal relief to “Hospital physicians” (it

doesn’t), the plaintiffs’ brief does not point this Court in the direction of where it can find evidence in

the record of what members of the plaintiffs’ associations worked in the hospital at the time one of the

182 patients received health care services. Nevertheless, despite PBW24’s subject-matter deficiency,

the Court includes the exhaustion analysis so the Fifth Circuit has the benefit of knowing the Court’s

belief as to all legally fatal deficiencies in each claim.

116 Doc. 424 at 36–37.

117 Doc. 442 at 43.

118 Id.

119 Nunn v. City of Vernon, No. 07-02-0486-CV, 2003 WL 22240577, at *2 (Tex. App.—Amarillo

Sept. 30, 2003, no pet.) (mem. op.) (enforcing health plan’s contractual provision requiring

administrative exhaustion before filing suit).

interpretation, so the Court must apply traditional, cookie-cutter principles of

contract interpretation.

In Texas,120 when interpreting a contract, “courts must determine the parties’

intent as reflected in the terms of the policy itself.”121 To do this, courts “examine the

entire agreement and seek to harmonize and give effect to all provisions so that none

will be meaningless.”122 More specifically, “no one phrase, sentence, or section [of a

contract] should be isolated from its setting and considered apart from the other

provisions.”123 “Unless the [contract] dictates otherwise, [courts] give words and

phrases their ordinary and generally accepted meaning, reading them in context and

in light of the rules of grammar and common usage.”124

Here, the language used in all but two of the non-ERISA governed plans

requires exhaustion before bringing suit. For instance, DBW100 states that “You

shall not start legal action against us until You have exhausted the appeal procedure

described in this section.”125 And PBW38 mandates that “You have the right to bring

suit . . . in state or federal court (as appropriate) only after You have exhausted the

120 Neither side argue what state law applies for this issue. Both sides concede on the

subsequent topic of limitations that Texas law applies. So the Court applies Texas law to this issue

too. The Court is mindful of the fact that choice of law only becomes an issue when competing laws

diverge, and the Court is unaware of any state law that encourages judges to rewrite contracts.

121 Nassar v. Liberty Mut. Fire Ins. Co., 508 S.W.3d 254, 257–58 (Tex. 2017) (cleaned up).

122 Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd’s London, 327 S.W.3d 118, 126 (Tex.

2010).

123 Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 134 (Tex. 1994) (alteration in original).

124 RSUI Indem. Co. v. The Lynd Co., 466 S.W.3d 113, 118 (Tex. 2015) (second alteration in

original).

125 Doc. 443-9 at 773; Defs.’ App. at 26,227.

Appeal of an Adverse Decision.”126 DBW100’s and PBW38’s language expressly sets

a condition precedent (exhaustion of remedies) before filing suit.

After reviewing the record, the Court dismisses the following non-ERISA

bellwether claims for failure to exhaust administrative remedies: DBW22,127

DBW41,128 DBW65,129 DBW92,130 DBW98,131 DBW100,132 PBW24,133 PBW38,134

126 Doc. 427-2 at 60; Defs.’ App. at 7,421.

127 “You may not sue until you have completed the disputed claims process.” Def.’s App. at

3,931.

128 “The Member may not bring a lawsuit to recover Benefits under this Benefit Plan until the

Member has exhausted the administrative process described in the section entitled Individual Benefit

Determination and Appeal Procedure.” Id. at 12,903.

129 Id. at 29,112 (“This Procedure is the exclusive method of resolving any Dispute.”); id.

at 29,112–14 (describing review procedure).

130 “No Court suit shall be brought to recover on this Policy before sixty (60) days after a claim

has been submitted in accordance with the terms of this Policy.” Id. at 21,246.

131 “You should not start legal action against us until you have exhausted the appeal procedure

described in this section.” Id. at 25,994.

132 “You should not start legal action against us until you have exhausted the appeal procedure

described in this section.” Id. at 26,227.

133 “You may not take legal action against us to receive benefits earlier than 60 days after we

receive the claim.” Id. at 7,276.

134 “You have the right to bring suit (including under ERISA Section 502(a) if applicable) in

state or federal court (as appropriate) only after You have exhausted the Appeal of an Adverse

Decision, whether or not You pursue External Review.” Id. at 7,421.

PBW85,135 PBW87,136 PBW91,137 PBW92,138 and PBW99.139 As explained below, two

claims run through the gauntlet of the above arguments for summary judgment.

D. Timeliness

After reviewing the record, only two bellwether claims survive at this point:

DBW71 and PBW54. As to DBW71, the defendants raise limitations and payment.140

As to PBW54, the defendants raise exhaustion of administrative remedies,141

limitations, and other contractual limitations. Because both claims are untimely, the

Court only reaches the limitations arguments.

The defendants argue that, because Texas law imposes a four-year statute of

limitations, any bellwether claim accrued on or before February 19, 2015, which is

four years before the date of the plaintiffs’ amended complaint, is time-barred.142 In

response, while the plaintiffs agree that Texas law imposes a four-year statute of

limitations, the plaintiffs argue that any bellwether claim accrued on or before

135 See id. at 16,183–86 (describing a “Level 5 Appeal” made to a “Federal District Court” as

the last step to occur, which occurs only if you exhaust the previous stages).

136 “No Court suit shall be brought to recover on this Policy before sixty (60) days after a claim

has been submitted in accordance with the terms of this Policy.” Id. at 18,960.

137 “No Court suit shall be brought to recover on this Policy before sixty (60) days after a claim

has been submitted in accordance with the terms of this Policy.” Id. at 19,487.

138 “No Court suit shall be brought to recover on this Policy before sixty (60) days after a claim

has been submitted in accordance with the terms of this Policy.” Id. at 19,606.

139 “You shall not start legal action against us prior to the expiration of 60 days after receiving

written notice of an adverse determination.” Id. at 25,727.

140 Doc. 435-2 at 6.

141 Unlike the mandatory appeals requirements of the plans in the others claims in Section

III.C, supra, that the Court held were mandatory, PBW54’s text states that the appeals process “must

be exhausted as required by ERISA.” Defs.’ App. at 29,707. PBW54 is a non-ERISA claim, so it is

governed by contract. Id. at 31,347. ERISA doesn’t require appeals of non-ERISA claims. So there is

no contractual requirement to appeal PBW54 before filing suit.

142 Doc. 424 at 51–54.

February 19, 2014, which is four years before the date of the plaintiffs’ original

complaint, is time-barred.143 Regardless of which complaint date applies, the statute

of limitations ran on DBW71’s and PBW54’s claim before the plaintiffs filed their

original complaint.

“ERISA does not provide a statute of limitations for suits to recover

benefits.”144 Instead, “[t]he limitations period for analogous claims under state law

may fill the gap.”145 “In Texas, the most analogous state statute of limitations is the

four[-]year limitation governing suits on contracts.”146 “Alternatively, the parties

may fill the gap by agreement.”147 And as for when the clock starts, “[u]nder ERISA,

a cause of action accrues after a claim for benefits has been made and formally

denied.”148

Here, DBW71149 is a payment receipt relating to health care services

performed at Houston Methodist Hospital.150 The total for these services was

$773.00, yet the receipt indicates $114.91 was charged.151 In any event, receipt of

this alleged underpayment occurred on August 22, 2013.152 This is the accrual date

143 Doc. 442 at 54–56.

144 Faciane v. Sun Life Assurance Co. of Canada, 931 F.3d 412, 417 (5th Cir. 2019).

145 Id.

146 Dye v. Assocs. First Cap. Corp. Long-Term Disability Plan 504, 243 F. App’x 808, 809 (5th

Cir. 2007) (citing TEX. CIV. PRAC. & REM. CODE § 16.004(a)).

147 Faciane, 931 F.3d at 417.

148 Harris Methodist, 426 F.3d at 337.

149 See Doc. 431-7 at 42–45; Defs.’ App. at 11,605–09.

150 Doc. 431-7 at 43–46; Defs’ App. at 11,606–69.

151 Id. at 45, 11,608.

152 Id. at 46, 11,609.

of the claim, as there is no record of appeal.153 This predates the date of the plaintiffs’

original complaint: February 20, 2018.154

Likewise, PBW54155 is a payment remittance for healthcare services dated

January 31, 2014.156 There is no record of appeal for this claim, so the Court takes

this date as the accrual date. Applying Texas’s four-year statute of limitations,

DBW71’s claim became time-barred on August 22, 2017. And PBW54’s claim became

time-barred on January 31, 2018. This also predates the date of the plaintiffs’

original complaint: February 20, 2018.157

Therefore, the Court dismisses the two remaining claims, DBW71 and PBW54,

as time-barred.

IV. Conclusion

Accordingly, the Court GRANTS the defendants’ Motion for Partial Summary

Judgment as to the bellwether claims, (Doc. 423). The Court DISMISSES

WITHOUT PREJUDICE all bellwether claims but DBW71 and PBW54. Those

claims had issues such as exhaustion of administrative remedies and assignment

problems that deprive the Court of jurisdiction, so the Court lacks power to reach the

merits, and dismissal without prejudice is appropriate. The Court has jurisdiction

over DBW71 and PBW54, but those claims are barred by limitations, which is a

153 Plaintiffs have not provided evidence as to a different accrual date—that is, Plaintiffs have

not provided record of an appeal for these services. So the Court will use the date of the payment

receipt as the accrual date.

154 See Doc. 1.

155 See Doc. 425-3 at 262–63; Defs.’ App. at 536–37.

156 Doc. 425-3 at 263; Defs.’ App. at 537.

157 See Doc. 1.

merits issue. As such, the Court DISMISSES WITH PREJUDICE DBW71 and

PBW54. Additionally, the Court FINDS AS MOOT the Motions to Strike or Exclude

Expert Testimony, (Docs. 417, 419).

IT IS SO ORDERED this 9 day of January, 2024.

BRANTLEY S

UNITED STATES DISTRICT JUDGE

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