Appendix — Louisiana Health Health Service Service & Indemnity Co Co. v. Rapides Rapides Healthcare Healthcare (No. 06-839)

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APPENDIX A

DECISION OF THE UNITED STATES COURT OF

APPEALS FOR THE FIFTH CIRCUIT

AUGUST 16, 2006

United States Court of Appeals,

Fifth Circuit.

LOUISIANA HEALTH SERVICE & INDEMNITY CO.,

d/b/a Blue Cross and Blue Shield of Louisiana, Plaintiff-

Intervenor Defendant-Appellant,

RAPIDES HEALTHCARE SYSTEM; State of Louisiana;

Charles R. Foti, Jr., Attorney General for the State of

Louisiana, Defendants-Appellees,

Dauterive Hospital, Intervenor Defendant-Appellee.

No. 04-31114.

461 F.3d 529

Aug. 16, 2006.

Appeal from the United States District Court for the Middle

District of Louisiana.

Before HIGGINBOTHAM, DeMOSS and OWEN, Circuit

Judges.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

Section 40:2010 of the Louisiana Revised Statutes requires

insurance companies to honor all assignments of benefit

claims made by patients to hospitals. This case asks us to

decide whether the Employee Retirement Income Security

Act of 1974 preempts the assignment statute to the extent

that it applies to fully insured ERISA plans. We hold that

Louisiana's assignment statute is not preempted.

The relevant facts in this case are undisputed. Section

40:210 [sic] of the Louisiana Revised Statutes (the

“assignment statute”) provides, in relevant part:

Itemized statement of billed services by hospitals.

No insurance company, employee benefit trust, self-

insurance plan, or other entity which is obligated to

reimburse the individual or to pay for him or on his behalf

the charges for the services rendered*531 by the hospital

shall pay those benefits to the individual when the itemized

statement submitted to such entity clearly indicates that the

individual's rights to those benefits have been assigned to the

hospital. When any insurance company, employee benefit

trust, self-insurance plan, or other entity has notice of such

assignment prior to such payment, any payment to the

insured shall not release that entity from liability to the

hospital to which the benefits have been assigned, nor shall

such payment be a defense to any action by the hospital

against the entity to collect the assigned benefits. '

The assignment statute is included in the “State Department

of Hospitals” chapter of Louisiana's Public Health and Safety

code. As the title indicates, the statute imposes various

additional requirements on hospitals regarding itemized

statements of billed services to patients. Those

requirements are not at issue in this case.

Two hospitals, defendant Rapides Health Care System and

intervenor Dauterive Hospital (collectively, “the Hospitals”),

' La.Rev.Stat. Ann. § 40:2010 (2004).

complained to the Louisiana Department of Insurance

(“DOI”) that Louisiana Health Service & Indemnity Co.,

d/b/a Blue Cross and Blue Shield of Louisiana, failed to

comply with the assignment statute after the Hospitals

terminated their participating provider agreements with Blue

Cross. While the DOI investigated the complaints,

ultimately concluding that Blue Cross's policy provisions

violated the assignment statute, Blue Cross filed the present

case against Rapides, the State of Louisiana, and the

Louisiana attorney general, seeking a declaration that the

assignment statute is preempted by ERISA to the extent that

it applies to ERISA employee welfare benefit plans insured

or administered by Blue Cross. Dauterive intervened.

All health insurance plans issued and administered by Blue

Cross contain provisions governing the assignment of

benefits. The parties agree that all provisions are

substantially similar to the following:

Direct Payment to Member

1. All benefits payable by the Company [Blue Cross] under

this Benefit Plan and any amendment hereto are personal to

the Member and are not assignable in whole or in part by the

Member. The Company has the right to make payment to a

Hospital, Physician, or other Provider (instead of to the

member) for Covered Services which they provided while

there is in effect between the Company and any such

Hospital, Physician, or other Provider an agreement calling

for the Company to make payment directly to them. In the

absence of an agreement for direct payment, the Company

will pay to the Member and only the Member those Benefits

called for herein and the Company will not recognize a

member's attempted assignment to, or direction to pay,

another, except as required by law.

3. If the Company has offered a Hospital, Physician, or other

Provider an agreement for direct payment by the Company,

but there is no such agreement in effect when Covered

Services are rendered to a Member by such Hospital,

Physician, or other Provider, the Company will not recognize

a Member's attempted assignment to, or direction to pay,

such Hospital, Physician, or other Provider. The Company

will pay to the Member and only the Member *532 those

Benefits called for in this Benefit Plan and any amendment

thereto.

Blue Cross divides hospitals into “participating providers”

and “nonparticipating providers.” Blue Cross's agreement

with participating providers includes a provision allowing or

requiring direct payment to ihe provider. With

nonparticipating providers, there is no agreement, and,

pursuant to the above language, Blue Cross will not honor a

patient's assignment of benefits to the provider. The burden

is then on the nonparticipating provider to collect its fees

directly from the patient. Blue Cross does not dispute that

its refusal to honor assignments to nonparticipating providers

violates the assignment statute.

Blue Cross moved for summary judgment on the ERISA

preemption issue in August 2001. Finding only an indirect

economic effect on ERISA plans, the district court denied

summary judgment, reasoning that the assignment statute

“facilitate[d] and promote[d] the goals of ERISA” and that it

was a health-care regulation within an area of state law that

Congress did not intend to preempt. As such, the district

court did not need to consider whether the statute was saved

from preemption as a law regulating insurance. In the

alternative, the court concluded that the language of Blue

Cross's health care plan requires compliance, because the

anti-assignment provision says that such assignments will

. 92

not be honored “except as required by law.

Over the next two years, Blue Cross and the Hospitals

litigated various other claims that were later settled and are

not at issue on appeal. In June 2004, both parties filed

motions for summary judgment on the preemption issue.

Blue Cross argued that the Supreme Court's intervening

decision in Aetna Health Inc. v. Davila * and the Third

Circuit's decision in Barber v. UNUM Life Insurance Co. *

required preemption of the assignment statute because it

conflicted with the exclusive enforcement provision in

ERISA. Adopting its previous ruling and reasoning, the

district court denied Blue Cross's motion and granted the

motions filed by the State of Louisiana and the Hospitals.

The court concluded that because ERISA is silent regarding

assignment of health benefits, the assignment statute does

not alter an existing ERISA provision and, thus, was not

conflict preempted. The court distinguished Davila and

Barber as cases involving state statutes that altered existing

ERISA provisions. Blue Cross timely appealed. We have

jurisdiction under 28 U.S.C. § 1291.

First, we address whether the plain language of Blue Cross's

ERISA plans requires compliance with the assignment

statute. If so, then we would not need to reach the

preemption questions. ° If the ERISA plans at issue do not

* La. Health Serv. & Indem. Co. v. Rapides Healthcare Sys., 213

F.Supp.2d 650 (M.D.La.2002) (Brady, J.).

3542 US. 200, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004).

* 383 F.3d 134 (3d Cir.2004).

> See Arana v. Ochsner Health Plan, 352 F.3d 973, 976 (Sth Cir.2003)

(declining to reach preemption question where no conflict existed); see

require compliance with the assignment statute, then we

must address Blue Cross’s two-prong preemption attack.

Blue Cross contends, first, that the assignment statute is *533

preempted because it conflicts with ERISA's exclusive

enforcement scheme. ° Second, Blue Cross contends that the

assignment statute is preempted as a statute that “relate[s] to”

ERISA. ’ Finally, should we conclude that the assignment

statute is preempted as a statute that relates to ERISA, we

must determine whether it is “saved” from preemption as a

law regulating insurance.* Our review is de novo. ”

Attempting to displace the preemption issue, the Hospitals

contend that there is no conflict between Blue Cross's ERISA

plans and the assignment statute because the plan prohibits

assignments “except as required by law.” The Hospitals

contend that this language modifies the express plan terms to

require compliance with Louisiana's assignment statute.

Blue Cross argues that this provision is trumped by a

subsequent provision of the policy, which states that the plan

is governed by Louisiana law “except when preempted by

federal law.” The district court agreed with the Hospitals,

concluding that Blue Cross's policy provisions are

“automatically amended ... to conform to the requirements”

also Ashwander v. Tenn. Valley Authority, 297 U.S. 288, 347, 56 S.Ct.

466, 80 L.Ed. 688 (1936) (Brandeis, J., concurring) (“The Court will not

pass upon a constitutional question although properly presented by the

record, if there is also present some other ground upon which the case

may be disposed of.”).

° Employee Retirement Income Security Act of 1974 § 502(a), 29 U.S.C.

§ 1132(a) (2004).

"Id. § 514(a), 29 U.S.C. § 1144(a).

® Id. § 514(b)(1)(A), 29 U.S.C. § 1144(b)(1)(A).

” Provident Life & Accident Ins. Co. v. Sharpless, 364 F.3d 634, 640 (Sth

Cir.2004); Frank v. Delta Airlines, Inc., 314 F.3d 195, 197 (Sth

Cir.2002).

of the assignment statute. '°

[1] We disagree. Neither policy provision displaces the

preemption analysis in this case. ERISA plans must always

conform to state law, but only state law that is valid and not

preempted by ERISA. The presence of the phrase “except

as preempted by law” serves no additional purpose, as all

state laws are potentially subject to ERISA's preemptive

force. The two provisions do not forestall determination of

the preemption question. To that, we now turn.

(2] Article VI's Supremacy Clause may entail preemption of

state law in any of three ways: by express provision, by

implication, or by a conflict between state and federal law. |!

Blue Cross advances two separate preemption arguments:

first, Blue Cross contends that Louisiana's assignment statute

conflicts with ERISA's exclusive enforcement scheme;

second, Blue Cross contends that the assignment statute is

expressly preempted as it is a law that “relate[s] to”

employee benefit plans. Neither argument persuades.

[3][4] Under general principles of conflict preemption, a law

is preempted “to the extent that it actually conflicts with

federal law,” '? that is, when it is impossible to comply with

both state and federal law. '? Further, a state law is conflict

*534 preempted when it “stands as an obstacle to the

'° La. Health Svc. & Indem. Co., 213 F.Supp.2d at 657.

'' See Pac. Gas & Elec. Co. v. State Energy Res. Conservation & Dev.

Comm'n, 461 U.S. 190, 203-04, 103 S.Ct. 1713, 75 L.Ed.2d 752 (1983);

Rice, 331 U.S. at 230, 67 S.Ct. 1146.

i English v. Gen. Elec. Co., 496 U.S. 72, 79, 110 S.Ct. 2270, 110

L.Ed.2d 65 (1990).

'° Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 248, 104 S.Ct. 615, 78

L.Ed.2d 443 (1984); Florida Lime & Avocado Growers, Inc. v. Paul,

373 U.S. 132, 142-43, 83 S.Ct. 1210, 10 L.Ed.2d 248 (1963).

accomplishment and execution of the full purposes and

objectives of Congress.”"*

In Aetna Health Inc. v. Davila, the Supreme Court

reaffirmed that “any state-law cause of action that duplicates,

supplements, or supplants the ERISA civil enforcement

remedy conflicts with the clear congressional intent to make

the ERISA remedy exclusive and is therefore pre-empted. sa

Davila involved a Texas statute that created a cause of action

for any person injured by a plan administrator's failure to

exercise ordinary care in the handling of coverage decisions.

Recognizing ERISA's “ ‘comprehensive legislative scheme’

” and “ ‘integrated system of procedures for enforcement,’

*!® the Court stated that ERISA's enforcement provision, §

502(a), was “essential to accomplish[ing] Congress' purpose

of creating a comprehensive statute for the regulation of

employee benefit plans.”'’ As ERISA § 502(a)(1)(B)

already provided a cause of action for a plan participant to

recover wrongfully denied benefits,’* the alleged injuries

covered by the Texas statute were duplicative and, thus,

preempted.”

'* Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 85 L.Ed. 581

(1941); Pac. Gas & Elec. Co., 461 U.S. at 203-04, 103 S.Ct. 1713.

'S §42 U.S. 200, 209, 124 S.Ct. 2488, 159 L.Ed.2d 312; see also Pilot

Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54-56, 107 S.Ct. 1549, 95 L.Ed.2d

39 (1987); Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 143-45, 111

S.Ct. 478, 112 L.Ed.2d 474 (1990).

'6 Davila, 542 U.S. at 208, 124 S.Ct. 2438 (quoting Massachusetts Mut.

Life Ins. Co. v. Russell, 473 U.S. 134, 147, 105 S.Ct. 3085, 87 L.Ed.2d

96 (1985) (internal quotation marks and citation omitted)).

'? Davila, 542 U.S. at 208, 124 S.Ct. 2488; 29 U.S.C. § 1132(a).

'S BRISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B) (“A civil action

may be brought-(1) by a participant or beneficiary ... (B) to recover

benefits due to him under the terms of his plan, to enforce his rights

under the terms of the plan, or to clarify his rights to future benefits under

the terms of the plan.”).

'* Davila, 542 U.S. at 214, 124 S.Ct. 2488. At the district court, Blue

Cross also relied on the Third Circuit's decision in Barber vy. Unum Life

Insurance Co. of Am., which considered a Pennsylvania statute providing

Blue Cross contends that Davila is controlling because the

assignment statute provides a “separate vehicle” for asserting

benefits claims, creating a remedy that “duplicates,

supplements, or supplants” ERISA's exclusive enforcement

scheme. According to Blue Cross, the assignment statute

gives hospitals, to which benefits have been assigned in

contravention of the plan's express terms, a state-law cause

of action against the ERISA plan to collect the assigned

benefits. Further, Blue Cross contends the statute creates a

supplemental remedy, as it provides that any payment to the

participant, in accordance with plan terms, does not release

the plan from liability to the hospital. To Blue Cross, the

statute authorizes double recovery against the ERISA plan.

[5] Louisiana's assignment statute is readily distinguishable

from the Texas law providing a negligence cause of action

for the denial of benefits. First, unlike the *535

enforcement provisions at issue in Davila, ERISA is silent

on the assignability of employee welfare benefits; it neither

prohibits assignments nor mandates recognition of

assignments. *” The Texas statute at issue in Davila was

punitive damages for the bad faith denial of insurance claims. 383 F.3d

134, 136 (3d Cir.2004). That court, relying on Davila, concluded that

the statute created a conflict with ERISA's exclusive enforcement

scheme. /d. at 141. For the same reasons Davila is not controlling,

Barber is not persuasive. See also Cicio v. John Does 1-8, 385 F.3d 156

(2d Cir.2004) (finding a state law malpractice claim preempted by

ERISA because it would provide consequential and punitive damages in

connection with a benefits claim); Land v. CIGNA Healthcare of Fla.,

381 F.3d 1274 (11th Cir.2004) (state law medical malpractice claim

preempted).

*° Hermann Hosp. v. MEBA Med. & Benefits Plan, 845 F.2d 1286, 1289

(Sth Cir.1988) (“Hermann I’) (“ERISA contains no anti-assignment

provision with regard to health care benefits of ERISA-governed medical

plans, nor is there any language in the statute which even remotely

suggests that such assignments are proscribed or ought in any way to be

limited.”); cf ERISA § 206(d)(1), 29 U.S.C. § 1056(d)(1) (providing,

preempted, in large part, because of the specific enforcement

provisions provided by Congress. 2! Second, the assignment

statute does not create an additional means to enforce

payment of benefits under an ERISA plan. The Texas

statute at issue in Davila, in contrast, imposed a “duty” on

any health maintenance organization “to exercise ordinary

care when making health care treatment decisions” and

imposed liability for any damages proximately caused by a

failure to exercise ordinary care.” The assignment of

benefits from the patient to the hospital results solely in the

transfer of the cause of action provided by § 502(a) from the

patient to the hospital. The assignee takes what the assignor

had; no more, no less.> The assignment statute merely

with certain exceptions, that “[eJach pension plan shall provide that

benefits provided under the plan may not be assigned or alienated”).

2! Davila, 542 U.S. at 208-09, 124 S.Ct. 2488. As the Court noted in

Pilot Life,

{T]he detailed provisions of § 502(a) set forth a comprehensive

civil enforcement scheme that represents a careful balancing of

the need for prompt and fair claims settlement procedures

against the public interest in encouraging the formation of

employee benefit plans. The policy choices reflected in the

inclusion of certain remedies and the exclusion of others under

the federal scheme would be completely undermined if ERISA-

plan participants and beneficiaries were free to obtain remedies

under state law that Congress rejected in ERISA.

Pilot Life Ins., 481 U.S. at 54, 107 S.Ct. 1£49; see also Russell, 473 US.

at 146, 105 S.Ct. 3085 (“The six carefully integrated civil enforcement

provisions found in § 502(a) ... provide strong evidence that Congress

did not intend to authorize other remedies that it simply forgot to

incorporate expressly.”).

2 See Tex. Civ. Prac. & Rem.Code Ann. § 88.002(a) (Vernon 2004) (“A

health insurance carrier, health maintenance organization, or other

managed care entity for a health care plan has the duty to exercise

ordinary care when making health care treatment decisions and is liable

for damages for harm to an insured or enrollee proximately caused by its

failure to exercise ordinary care.”). After Davila, the Texas legislature

clarified that § 88.002(a) did not apply to employee benefit plans

regulated by ERISA. See id. § 88.015.

*? Tango Transport v. Healthcare Fin. Servs., 322 F.3d 888, 894 (Sth

10a

passes the sole enforcement mechanism-ERISA § 502-from

patient to hospital; it does not impose any additional

obligation on the ERISA plan administrator, nor does it

_create additional or separate means of enforcement. **

In addition, Blue Cross argues that the assignment statute

authorizes a “double recovery” of employee welfare benefits.

According to Blue Cross, it must pay benefits to a patient, in

conformance with the express terms of the plan, but that such

payment will not discharge liability to a provider that has

been assigned the patient's benefits claim. This argument is

similarly without merit. Blue Cross's obligation to pay the

provider only arises if *536 Blue Cross has notice of the

assignment.” If Blue Cross complies with the assignment,

then it only pays one time; if Blue Cross ignores the

assignment, then it risks paying a claim twice. Failure to

follow the law cannot create preemption concerns. Should

Blue Cross pay a patient after receiving notice that the

patient assigned her benefits claim to a hospital, Blue Cross

can seek recovery from the person improperly paid (here, the

patient),”° and Blue Cross recognizes the availability of this

remedy in its plan terms, as it reserves the right to recover

improper payments.

We conclude that Louisiana's assignment statute is not in

conflict with the exclusive enforcement mechanism provided

by ERISA. We now turn to Blue Cross's contention that the

statute is preempted as a law that “relate[s] to” employee

Cir.2003); Hermann Hosp. v. MEBA Med. and Benefits Plan, 959 F.2d

569, 572 (Sth Cir.1992) (“Hermann IT’).

** See Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 379, 122

S.Ct. 2151, 153 L.Ed.2d 375 (2002) (recognizing that “a state regulatory

scheme that provides no new cause of action under state law and

authorizes no new form of ultimate relief” is not preempted).

> See La.Rev.Stat. Ann. § 40:2010.

*° See Bombardier Aerospace Emp. Wel. Benef. Plan v. Ferrer, Poirot

and Wansbrough, 354 F.3d 348, 356-58 (Sth Cir.2003).

lla

benefit plans.

[6] Congress expressly provides that ERISA “shall supersede

any and all State laws insofar as they now or hereafter relate

to” any employee benefit plan.”’ Our task is to determine

whether the assignment statute “relate[s] to” employee

benefit plans. The “unhelpful text” of ERISA's preemption

provision neither directs, nor informs, our inquiry;> rather,

we gain insight solely from the Supreme Court's application

of the provision to particular state statutes.

The Supreme Court directs that a law “relates to” an

employee benefit plan if “it has a connection with or

reference to such a plan.’ A state law “refers” to an

ERISA plan if it acts “immediately and exclusively upon

ERISA plans” or if “the existence of an ERISA plan is

essential to the law's operation.”*’ A law does not refer to an

7 ERISA § 514(a), 29 U.S.C. § 1144(a).

8 New York State Conference of Blue Cross & Blue Shield Plans v.

Travelers Ins. Co., 514 U.S. 645, 654, 115 S.Ct. 1671, 131 L.Ed.2d 695

(1995).

29 Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103 S.Ct. 2890, 77

L.Ed.2d 490 (1983).

*” Cal. Div. of Labor Enforcement v. Dillingham Constr., 519 U.S. 316,

324-25, 117 S.Ct. 832, 136 L.Ed.2d 791 (1997) (referencing Mackey v.

Lanier Collection Agency & Svc., Inc., 486 U.S. 825, 828-30, 108 S.Ct.

2182, 100 L.Ed.2d 836 (1988), in which the Court held that ERISA

preempted a state statute that expressly prohibited garnishment of

employee welfare plan benefits). \

*' Dillingham, 519 U.S. at 324-25, 117 S.Ct. 832 (referencing District of

Columbia v. Greater Wash. Bd. of Trade, 506 U.S. 125, 130, 113 S.Ct.

580, 121 L.Ed.2d 513 (1992), in which the Court held that ERISA

preempted a state statute that applied only to employers who provided

health insurance coverage, and /ngersol!-Rand Co. v. McClendon, 498

U.S. 133, 139, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990), in which the

Court held that ERISA preempted a common-law cause of action

premised on the existence of an ERISA plan).

12a

ERISA plan if it applies neutrally to ERISA plans and other

types of plans.” The “reference to” prong is inapplicable

here, as the assignment statute operates without regard to the

existence of ERISA plans and does not immediately and

exclusively act on such plans: it applies to insurance

companies, employee benefit trusts, self-insurance plans, and

*537 other entities that are obligated to reimburse

individuals for the charges incurred for hospital services.”

Thus, the assignment statute is preempted only if it has a

“connection with” ERISA plans.

We discern no precise formula for calculating whether a state

law has an impermissible connection with an employee

benefit plan. The Supreme Court broadly instructs us to

look at the objectives of ERISA and the nature and effect of

the state law on ERISA plans.** In cases like this one, in

which Blue Cross contends that federal law bars state action

in a field of traditional state regulation,” we start with the

assumption that “the historic police powers of the States

were not to be superseded by [ERISA] unless that was the

clear and manifest purpose of Congress.”*® Preemption will

2 Dillingham, 519 U.S. at 325-28, 117 S.Ct. 832 (refusing to hold that a

state statute pertaining to approved apprenticeship programs “referred to”

ERISA plans because not all such programs were ERISA plans); see

also Corporation Health Ins. v. Tx. Dep't of Ins., 215 Fd 526, 535 (Sth

Cir.2000), op. modified, 314 F.3d 784 (Sth Cir.2002).

*3 See La.Rev.Stat. Ann. § 40:2010; cf Mackey, 486 U.S. at 829, 108

S.Ct. 2182 (holding that a Georgia garnishment statute that solely applied

to ERISA employee benefit plans was preempted).

* Dillingham, 519 U.S. at 325, 117 S.Ct. 832 (quoting Travelers, 514

U.S. at 656, 115 S.Ct. 1671).

°° See, e.g., PeBuono v. NYSA-ILA Med. & Clinical Svcs., 520 U.S. 806,

814, 117 S._t. 1747, 138 L.Ed.2d 21 (1997) (noting that “the historic

police powers of the State include the regulation of matters of health and

safety” (citing Hillsborough County v. Automated Med. Laboratories,

Inc., 471 U.S. 707, 715, 105 S.Ct. 2371, 85 L.Ed.2d 714 (1985))).

325, 117 S.Ct. 832; Rice, 331 U.S. at 230, 67 S.Ct. 1146.

l3a

‘not occur if a state law has only a “tenuous, remote, or

peripheral” connection with covered employee benefit

plans.”’

Both parties agree that ERISA is silent on the assignability

of employee welfare benefits. As is often the case,

congressional silence whispers sweet nothings in the ears of

both parties. Blue Cross contends that silence implies that

Congress intended to leave the assignment of employee

welfare benefits to the free negotiations of the contracting

parties; the Hospitals, in contrast, contend that silence

speaks and it says that Congress did not intend to preclude

statutes mandating enforcement of assignments, especially

when considered in light of the express prohibition on the

assignment of pension benefits.** Congressional silence

cannot dictate our conclusion in this case, but we consider

what Congress did in order to determine what Congress

intended to preclude the states from doing.

Likewise, both parties direct our attention to our prior

precedent concerning assignment of benefits. We have held

that an assignee has derivative standing to enforce claims

under ERISA § 502, thus permitting assignments when not

precluded by the plan terms.” We have also~held that,

absent a statute to the contrary, an anti-assignment provision

*? Greater Wash. Bd. of Trade, 506 U.S. at 130, 113 S.Ct. 580.

8 See ERISA § 206(d)(1), 29 U.S.C. § 1056(d)(1); cf Mackey v.

Lanier Collection Agency & Serv., 486 \J.S. 825, 829, 108 S.Ct. 2182,

100 L.Ed.2d 836 (1988) (concluding that a general state garnishment

statute's application to employee welfare benefits was not preempted by

ERISA because ERISA was silent about enforcement mechanisms for

money judgments whereas ERISA explicitly prohibited assignment of

pension benefits).

* See Hermann Hosp. v. MEBA Med. & Benefits Plan, 845 F.2d 1286,

1289 & n. 13 (Sth Cir. 1988).

14a

in a plan is permissible-under-ERISA.”” None of this *538

resolves the question in this case-namely, whether

Louisiana's assignment statute is preempted under ERISA §

514 as a state law that “relate[s] to” employee welfare

benefits.

Blue Cross relies primarily on the Supreme Court's decision

in Egelhoff v. Egelhoff,’' which concerned a Washington

statute that revoked by operation of law the designation of a

spouse as the beneficiary of all nonprobate assets, including

ERISA plan benefits, upon dissolution of marriage.*? The

Court found fault with two aspects of the Washington

statute. First, the statute bound ERISA plan administrators

“to a particular choice of rules for determining beneficiary

status." To the Court, the statute forced administrators to

pay benefits to beneficiaries chosen by state law, rather than

those specified in the plan documents. This conflicted with

ERISA's requirements _t that fiduciaries administer plans “in

accordance with*the documents and instruments governing

the plan’”* and that fiduciaries make payments to

beneficiaries “designated by_a participant or by the terms of

[the] plan.”*°

See LeTourneau Lifelike Orthotics & Prosthetics, Inc., 298 F.3d 348,

352 (Sth Cir.2002) (holding that anti-assignment provisions are not per

se invalid as applied to health care providers); see also Physicians

Multispecialty Group v. The Health Care Plan of Horton Homes, Inc.,

371 F.3d 1291, 1295-96 (11th Cir.2004); City of Hope Nat'l Med. Ctr. v.

HealthPlus, Inc., 156 F.3d 223, 229 (1st Cir.1998); Davidowitz v. Delta

Dental Plan of Cal., Inc., 946 F.2d 1476, 1480-81 (9th Cir.1991).

*! §32 U.S. 141, 121 S.Ct. 1322, 149 L.Ed.2d 264 (2001).

* See Wash. Rev.Code § 11.07.010(2)(a) (1994) (“If a marriage is

dissolved or invalidated, a provision made prior to that event that relates

to the payment or transfer at death of the decedent's interest in a

nonprobate asset in favor of or granting an interest or power te the

decedent's former spouse is revoked.”).

** Egelhoff, 532 U.S. at 147, 121 S.Ct. 1322.

“ Id. (citing ERISA § 402(b)(4), 29 U.S.C. § 1102(b)(4)).

* Jd. (citing ERISA § 3(8), 29 U.S.C. § 1002(8)).

154

Second, the Court found the Washington statute interfered

with one of the “primary” goals of ERISA: establishing a

uniform administrative scheme with a set of standard

procedures to guide processing of claims and disbursement

of benefits.“° The existence of the Washington statute

required plan administrators to look’ beyond the plan

documents to the effects of state law before making

payments to beneficiaries. Exacerbated by various choice-

of-law problems, the statute's burden on plan administrators

was not militated by provisions protecting administrators

from liability unless they had actual knowledge of the

dissolution of marriage and permitting administrators to

refuse payment until resolving who was a_ proper

beneficiary.”

Blue Cross finds both faults in the assignment statute. First,

Blue Cross contends Egelhoff is controlling because

Louisiana's assignment statute binds ERISA plans to a set of

rules that govern to whom benefits must be paid in

contravention of the plan documents. We disagree. The

Washington statute operated as a rnatter of law, invalidating

a plan's designation of beneficiary upon dissolution of

marriage. Louisiana's assignment statute, in contrast,

requires an affirmative act by the plan participant; it

enforces the free will of the plan participant, which is

consistent with ERISA's choice of beneficiary. As

recognized by the Court in Ege/hoff, ERISA directs that

administrators must pay beneficiaries who are “designated

by a participant or by the terms of [the] plan.”** The

Washington statute imposed a third *539 alternative,

“© Id.; Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 9, 107 S.Ct. 2211,

96 L.Ed.2d 1 (1987).

* Egelhoff, 532 U.S. at 148-50, 121 S.Ct. 1322.

“8 Id. at 147, 121 S.Ct. 1322 (citing ERISA § 3(8), 29 US.C. §

1002(8)).

16a

requiring payment to beneficiaries designated “by operation

of law.” _—Louisiana's assignment statute, in contrast, is

consistent with the express terms of ERISA-leaving the

beneficiary determination to either the person designated by

the participant or the person designated by the plan.

We also disagree with Blue Cross's contention that

application of the assignment statute will impermissibly

interfere with nationally uniform plan administration. To be

sure, ERISA was enacted, in large measure, “to establish a

uniform administrative scheme” with “a set of standard

procedures to guide processing claims and disbursement of

benefits.””” | However, a statute's impact on nationally

uniform plan administration must be evaluated in light of the

particular burden the statute imposes on plan administration.

The greater the impact, the greater the burden. As the Court

recognized in Egelhoff, “all state laws create some potential

for lack of uniformity.” ~°

Here, the burden on plan administrators is minimal,

especially given that Louisiana requires all insurance claims

to be submitted on a uniform claim form that includes space

for indicating whether benefits have been assigned. *'

” Fort Halifax Packing Co., 482 U.S. at 9, 107 S.Ct. 2211; see also

Davila, 542 U.S. at 208, 124 S.Ct. 2488 (“The purpose of ERISA is to

provide a uniform regulatory regime over employee benefit plans.”);

Ingersoll-Rand, 498 U.S. at 142-45, 111 S.Ct. 478; Meiropolitan Life

Ins. Co. v. Taylor, 481 U.S. 58, 64-66, 107 S.Ct. 1542, 95 L.Ed.2d 55

(1987).

°° Egelhoff, 532 U.S. at 150, 121 S.Ct. 1322; see also Rush Prudential

HMO, Inc. v. Moran, 536 U.S. 355, 365, 122 S.Ct. 2151, 153 L.Ed.2d

375 (recognizing that “it was beyond dispute” that a state statute that

required all insured benefit plans “to submit to an extra layer of review

for certain benefit denials” had a substantial effect on ERISA plans).

*! See La.Rev.Stat. Ann. § 22:213(A)(14) (“Notwithstanding any other

law to the contrary, including Paragraph (4) of this Subsection, all claims

shall be processed in conformity with the uniform claim form issued by

the [DOI].”).

17a

Further, the assignment statute will not create any additional

paperwork for Blue Cross and, in fact, it may lesson Blue

Cross's administrative responsibilities. | With or without

assignment, Blue Cross will pay benefits only one time, and

payment is triggered upon submission of a claim form. To

Blue Cross, it should not matter whether that claim form

comes from the plan participant, as provided in the plan

documents, or from the hospital, as assignee of the

participant's benefits claim. Further, as pointed out by

amicus curiae, most hospitals file claims with insurance

companies electronically, which mitigates the administrative

burden. The burden seems greater when many individuals

[sic] plan participants must each individually file claims with

Blue Cross, especially given the intricacies of coverages,

deductibles, and retentions of most health care plans. By

consolidating many different individual claims, hospitals can

channel expertise in the benefits process. Tellingly, Blue

Cross concedes that it must honor assignments made under

non-ERISA plans, which suggests that it already has in place

some administrative mechanism for complying with the

statute. Taken together, the burden imposed by the

assignment statute, especially given its consistency with

ERISA § 3(8), is minimal, militating concerns over the

statute's effect on nationally uniform plan administration.

We acknowledge that both the Eighth and Tenth Circuits

have concluded that ERISA preempts similar assignment

statutes.” After review of those decisions, as *540 well as

intervening Supreme Court prececient, we are convinced that

Louisiana's assignment statute does not have the

impermissible connection with ERISA plans.

*? See Ar. Blue Cross & Blue Shield v. St. Mary's Hosp., Inc., 947 F.2d

1341 (8th Cir.1991); St. Francis Reg’l Med. Ctr. v. Blue Cross & Blue

Shield of Ks., Inc., 49 F.3d 1460 (10th Cir. 1995).

18a

Both the Eighth and Tenth Circuits interpreted ERISA's

silence on the assignability of benefits claims as leaving the

issue to the free negotiation and agreement of the parties.”’

As we have already noted, congressional silence points in

both directions: either leaving assignment of employee

welfare benefits to the parties or leaving room for state

regulation, should a state desire to intervene. In Mackey v.

Lanier Collection Agency & Service, the Supreme Court

interpreted congressional silence as to the garnishment of

employee welfare benefits not to preempt application of a

general garnishment statute to employee welfare benefits,

especially in light of an express prohibition on the

garnishment of employee pension benefits. ~~ Likewise,

ERISA specifically precludes assignment of pension plan

benefits.” As such, “there is no ignoring the fact that, when

Congress was adopting ERISA, it had before it a provision to

bar the [assignment of ERISA plan benefits], and chose to

impose that limitation only with respect to ERISA pension

benefit plans, and not ERISA welfare benefit plans.”

Moreover, both the Eighth and Tenth Circuits decided the

preemption question prior to the Supreme Court's rejection,

starting in Travelers, of an “uncritical literalism” in the

application of ERISA's “unhelpful text.” °’ As we have

> $t. Mary's Hosp., 947 F.2d at 1349 (“[I]f Congress intended that

ERISA participants could negotiate plan provisions governing the right

to assign welfare benefits, it is more likely that Congress wouid say

nothing at all about welfare benefit assignment.”); St. Francis, 49 F.3d at

1464 (“We interpret ERISA as leaving the assignability of benefits to the

free negotiations and agreement of the contracting parties.”).

* 486 U.S. 825, 836, 108 S.Ct. 2182, 100 L.Ed.2d 836.

** ERISA § 206(d)(1), 29 U.S.C. § 1056(d)(1).

°© Mackey, 486 U.S. at 837, 108 S.Ct. 2182.

*” 514 U.S. 645, 656, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995); see also

Cal. Div. Of Labor Enforcement v. Dillingham Constr., 519 U.S. 316,

117 S.Ct. 832, 136 L.Ed.2d 791 (1997); DeBuono v. NYSA-ILA Med. &

Clinical Servs. Fund, 520 U.S. 806, 117 S.Ct. 1747, 138 L.Ed.2d 21

(1997); Boggs v. Boggs, 520 .U.S. 833, 117 S.Ct. 1754, 138 L.Ed.2d 45

19a

previously noted, the Supreme Court has returned “to a

traditional analysis of preemption, asking if a state regulation

frustrated the federal interest in uniformity.””* Neither the

Eighth nor Tenth Circuits operated with the starting

assumption that Congress did not intended [sic] to preempt

state law in an area of traditional state regulation.”

Finally, both parties offer differing accounts of what is

“best” in the public's interest. The Hospitals, with support

*541 from the State of Louisiana and amicus curiae AARP

and the Louisiana Hospital Association, argue that the

assignment statute facilitates delivery of medical treatment to

patients, especially low-income patients. To Blue Cross, the

assignment statute deprives Blue Cross of a significant

carrot-the availability of direct payments. Although

recognizing that consumers benefit when Blue Cross pays

hospitals directly, Blue Cross uses the availability of direct

payments as an important incentive for hospitals to join its

provider networks, which requires reduced rates for medical

care.

Neither policy choice is absurd, but the preemption inquiry is

not resolved by or concerned with arguments of policy. We

(1997) (applying traditional preemption analysis in concluding state

testamentary laws were preempted as applied to an ERISA pension fund).

*® Corp. Health Ins., Inc. v. Tx. Dep't oj Ins., 215 F.3d 526, 533 (Sth

Cir.2000), op. mod. and reinstated, 314 F.3d 784 (Sth Cir.2002). This

view is in accord with that of other circuits. See Wright Elec. v. Mn.

State Bd. of Elec., 322 F.3d 1025, 1029 (8th Cir.2003) (collecting cases).

*° St. Mary's Hosp., 947 F.2d at 1350 (“We reject St. Mary's argument

that preemption is not appropriate because the assignment statute is an

exercise of traditional state power ..... Alihough the Supreme Court has

not discussed the relevance of this factor, its failure to consider this

criterion when deciding ERISA preemption cases is telling.” (citing FMC

Corp. v. Holliday, 498 U.S. 52, 111 S.Ct. 403, 112 L.Ed.2d 356 (1990),

and Mackey, 486 U.S. 825, 108 S.Ct. 2182, 100 L.Ed.2d 836 (1988)); Sz.

Francis, 49 F.3d at 1464 (relying largely on the Eighth Circuit's decision

in St. Mary's Hospital)).

20a

operate between two conflicting principles: On the one

hand, Congress passed ERISA, a comprehensive statute with

a “clearly expansive” preemption provision.” On the other

hand, the Supreme Court requires our analysis to start with

the assumption that ERISA was not intended to derozate the

historic police powers of the states. ®' The second

assumption does not eliminate the first, but we walk a fine

line between permissible and impermissible state regulation

in this context. As we conclude that Louisiana's assignment

statute is not preempted by ERISA, we leave the public

policy decision to Louisiana's legislative body. They have

chosen assignment of benefit claims over inducing hospitals

to enter into Blue Cross's provider networks. Nothing in

ERISA requires us to alter that choice.

As we conclude that Louisiana's assignment statute is not

preempted by ERISA, we need not consider whether the

statute 1s saved from preemption as a law regulating

insurance.”

Accordingly, the district court's judgment is AFFIRMED.

OWEN, Circuit Judge, concurring:

® See Cal. Div. of Labor Standards Enforcement v. Dillingham Constr.,

519 U.S. 316, 324, 117 S.Ct. 832, 136 L.Ed.2d 791 (1997) (collecting

various descriptions of ERISA's preemption provision).

*' N.Y. State Conference of Blue Cross & Blue Shield Plans v. Travelers

Ins. Co., 514 U.S. 645, 654-55, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995).

® ERISA § 514(b)(2)(A), 29 U.S.C. § 1144(b)(2)(A) (“Except as

provided in subparagraph (B), nothing in this subchapter shall be

construed to exempt or relieve any person from any law of any State

which regulates, insurance, banking, or securities.”).

2la

I concur in the judgment. We need not resolve whether

section 40:2010 of the Louisiana Revised Statutes “relates

to” an employee benefit plan within the meaning of 29

U.S.C. § 1144(a)' and the Supreme Court's decisions

interpreting and applying that provision. Section 40:2010 is

saved from preemption under 29 U.S.C. § 1144(b)(2)(A) as

a law that “regulates insurance.” Section 40:2010's

application to the ERISA benefit plans at issue is accordingly

not preempted. :

*542 |

Louisiana Health Service & Indemnity Co., doing business

as Blue Cross and Blue Shield of Louisiana, insures and

administers employee benefit plans that are subject to

ERISA. In providing and administering health care benefits,

Blue Cross has contracted with hospitals, physicians and

others, whom it calls Participating Providers, and agreed to

provide direct payment for services rendered to plan

oeneficiaries. - If a plan beneficiary obtains the services of a

non-Participating Provider, Blue Cross will reimburse the

plan beneficiary but will not make direct payment to the non-

Participating Provider. The terms of the ERISA plans that

' That section states:

Except as provided in subsection (b) of this section, the

provisions of this subchapter and subchapter III of this chapter

shall supersede any and all State laws insofar as they may now

or hereafter relate to any employee benefit plan described in

section 1003(a) of this title and not exempt under section

1003(b) of this title. This section shall take effect on January 1,

1975. 29US.C. § 1144(a).

? Id. § 1144(b)(2)(A) (“Except as provided in subparagraph (B), nothing

in this subchapter shall be construed to exempt or relieve any person

from any law of any State which regulates insurance, banking, or

securilies.”’).

22a

Blue Cross insures or administers are congruent with Blue

Cross's method of doing business and provide that

assignments by a plan beneficiary to providers other than

Participating Providers will not be honored.

I agree with the panel majority that the ERISA plans Blue

Cross insures or administers contravene section 40:2010 of

the Louisiana Revised Statutes. Section 40:2010 requires

insurers to pay benefits directly to a hospital when the

insurer has notice that a beneficiary has assigned benefits to

that hospital. Section 40:2010 provides:

Not later than ten business days after the date of discharge,

each hospital in the state which is licensed by the

Department of Health and Hospitals shall have available an

itemized statement of billed services for individuals who

have received the services from the hospital. The

availability of the statement shall be made known to each

individual who receives service from the hospital before the

individual is discharged from the hospital, and a duplicate

copy of the billed services statement shall be presented to

each patient within the specified ten day period. No

insurance company, employee benefit trust, self-insurance

plan, or other entity which is obligated to reimburse the

individual or to pay for him or on his behalf the charges for

the services rendered by the hospital shall pay those benefits

to the individual when the itemized statement submitted to

such entity clearly indicates that the individual's rights to

those benefits have been assigned to the hospital. When any

insurance company, employee benefit trust, self-insurance

plan, or other entity has notice of such assignment prior to

such payment, any payment to the insured shall not release

said entity. from liability to the hospital to which the benefits

have been assigned, nor shall such payment be a defense to

any action by the hospital against that entity to collect the

assigned benefits. However, an interim statement shall be

23a

provided when requested by the patient or his authorized

agent.”

Assuming, arguendo, that Blue Cross is correct in

contending that the directives in this statute regarding

assignments of benefits “relate to” an ERISA employee

benefit plan, the Louisiana statute is saved from preemption

by the saving clause in 29 U.S.C. § 1144(b)(2)(A). That

clause says: “Except as provided in subparagraph (B),

nothing in this subchapter shall be construed to exempt or

relieve any person from any law of any State which regulates

insurance, banking, or securities.” The *543 Supreme Court

has held that through this saving clause, state laws-may

indirectly regulate employee benefit plans that are insured.”

The Court has explained, “an insurance company that insures

a plan remains an insurer for purposes of state laws

‘purporting to regulate insurance,’ ” and an “ERISA plan is

consequently bound by state insurance regulations insofar as

* La.Rev.Stat. Ann. § 40:2010 (2001).

* 29 U.S.C. § 1144(b)(2)(A). Subparagraph B, referenced in this

subsection, is the so-called “deemer clause” and provides:

Neither an employee benefit plan described in section 1003(a)

of this title, which is not exempt under section 1003(b) of this

title (other than a plan established primarily for the purpose of

providing death benefits), nor any trust established under such a

plan, shall be deemed to be an insurance company or other

insurer, bank, trust company, or investment company or to be

engaged in the business of insurance or banking for purposes of

any law of any State purporting to regulate insurance

companies, insurance contracts, banks, trust companies, or

investment companies. /d. § 1144(b)(2)(B).

* See FMC Corp. v. Holliday, 498 U.S. 52, 61, 111 S.Ct. 403, 112

L.Ed.2d 356 (1990) (holding “employee benefit plans that are insured are

subject to indirect state insurance regulation”); Metro. Life Ins. Co. v.

Massachusetts, 471 U.S. 724, 747, 105 S.Ct. 2380, 85 L.Ed.2d 728

(1985) (recognizing “a distinction between insured and uninsured plans,

leaving the former open to indirect regulation while the latter are not”).

24a

they apply to the plan's insurer.” Accordingly, even though

the insured employee benefit plans Blue Cross insures or

administers’ may provide that assignments will not be

honored, those provisions must give way to state law to the

extent ERISA's insurance saving clause applies.* It is

unnecessary to resolve whether the “deemer’ clause,

contained in 29 U.S.C. § 1144(b)(2)(B), precludes the

application of the ERISA saving clause to self-funded

ERISA benefit plans that Blue Cross might administer but

not insure because the State of Louisiana concedes that it has

not attempted to enforce section 40:2010 with regard to self-

funded ERISA plans and Blue Cross does not contend that it

administers any self-funded plans to which the State of

Louisiana has sought to apply section 40:2010.”

Blue Cross does contend, though, that La.Rev.Stat. Ann. §

40:2010 does not “regulate[ | insurance” within the meaning

of ERISA's insurance saving clause. The Supreme Court's

decision in Kentucky Association of Health Plans, Inc. v.

FMC Corp., 498 U.S. at 61, 111 S.Ct. 403 (quoting 29 U.S.C. §

1144(b)(2)(B)).

” See Ky. Ass'n of Health Plans, Inc. v. Miller, 538 U.S. 329, 336 n. 1,

123 S.Ct. 1471, 155 L.Ed.2d 468 (2003) (stating that administration by

noninsuring HMO's of even a self-insured plan “suffices to bring them

within the activity of insurance for purposes of § 1144(b)(2)(A)”).

* See UNUM Life Ins. Co. of Am. v. Ward, 526 U.S. 358, 375-76, 119

S.Ct. 1380, 143 L.Ed.2d 462 (1999) (rejecting the argument that an

ERISA plan's terms always control, observing “insurers could displace

any state regulation simply by inserting a contrary term in plan

documents” which “would virtually ‘rea{d] the saving clause out of

ERISA’ ” (quoting Metro. Life, 471 U.S. at 741, 105 S.Ct. 2380)).

* See generally Ky. Ass'n, 538 U.S. at 336 n. 1, 123 S.Ct. 1471

(discussing the “deemer clause” and the reach of the saving clause when

an insurance company or HMO acts only as an administrator of a self-

insured ERISA plan); Rush Prudential HMO, Inc. v. Moran, 536 U.S.

355, 372 n. 6, 122 S.Ct. 2151, 153 L.Ed.2d 375 (2002) (discussing the

possibility that an HMO may provide only administrative services for a

self-funded plan and stating that a state law “would not be ‘saved’ as an

insurance law to the extent it applied to self-funded plans’’).

25a

Miller'’ provides considerable guidance in resolving this

question. The Court announced it was “mak{ing] a clean

break from the [three] McCarran-Ferguson factors” it had

referenced in prior opinions and held “that for a state law to

be deemed a ‘law ... which regulates insurance’ under §

1144(b)(2)(A), it must satisfy two requirements.” Those

are 1) “the state law must be specifically directed toward

entities engaged in insurance” and 2) “the state law must

substantially affect the risk *544 pooling arrangement

between the insurer and the insured.”"”

With regard to the first requirement, Kentucky Association

explained that “laws of general application that have some

bearing on insurers do not qualify” as a state law “

‘specifically directed toward’ the insurance industry,”'* and

“not all state laws ‘specifically directed toward’ the

insurance industry will be covered by § 1144(b)(2)(A).””

“{I]nsurers must be regulated ‘with respect to their insurance

practices.’ ” '°

At issue in Kentucky Association was a state statute that

prohibited health insurers from discriminating against any

provider located within the geographic coverage area of a

health benefit plan and willing to meet the terms and

conditions for participation established by that insurer and a

corollary statute that directed that any chiropractor who

agreed to the terms, conditions and rates of a health care

benefit plan must be permitted to serve as a participating

'° 538 U.S. 329, 123 S.Ct. 1471, 155 L.Ed.2d 468 (2003).

'" Id, at 341-42, 123 S.Ct. 1471.

2 Id. at 342, 123 S.Ct. 1471.

'° Id. at 334, 123 S.Ct. 1471 (citing Pilot Life Ins. Co. v. Dedeaux, 481

U.S. 41, 50, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987),

Id.

'° Id. (quoting Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 366,

122 S.Ct. 2151, 153 L.Ed.2d 375 (2002)).

26a

primary chiropractic provider." The Supreme Court held

that the ERISA saving clause saved these “any-willing-

provider” statutes from preemption. The Court reasoned

that the statutes “ ‘regulate[d]’ insurance by imposing

conditions on the right to engage in the business of

insurance.” '”

With regard to the second requirement for application of the

insurance saving clause, the Court concluded that the statutes

at issue in Kentucky Association “substantially affect{ed] the

risk pooling arrangement between [the] insurer and [the]

insured” because “[b]y expanding the number of providers

from whom an insured may receive health services, [any-

willing-provider] laws alter the scope of permissible bargains

between insurers and insureds.”'* The Court likened the

any-willing-provider laws' impact to that of “mandated-

benefit laws [it] upheld in Metropolitan Life, the notice-

prejudice rule [it] sustained in UNUM, and the independent-

review provisions [it] approved in Rush Prudential.”””

The Louisiana statute before us is directed toward entities

that engage in isurance-“[any] insurance company,

employee benefit trust, self-insurance plan, or other entity

which is obligated to reimburse the individual or to pay for

him or on his behalf the charges for the services rendered by

the hospital.”*° The statute's inclusion of “self-insured

plans” does not preclude it from qualifying as a law that

'© Id. at 331-32, 123 S.Ct. 1471.

'? 7d. at 338, 123 S.Ct. 1471.

'* Id. at 338-39, 123 S.Ct. 1471.

'9 Jd. at 339, 123 S.Ct. 1471 (referring to Metro. Life Ins. Co. v.

Massachusetts, 471 U.S. 724, 105 $.Ct. 2380, 85 L.Ed.2d 728 (1985),

UNUM Life Ins. Co. of Am. v. Ward, 526 U.S. 358, 119 S.Ct. 1380, 143

L.Ed.2d 462 (1999), and Rush Prudential HMO, Inc. v. Moran, 536 U.S.

355, 122 S.Ct. 2151, 153 L.Ed.2d 375 (2002)).

*? La.Rev.Stat. Ann. § 40:2010.

27a

“regulates insurance.””' Even benefit plans that are self-

funded “engage in the same sort of risk pooling

arrangements as separate entities that provide insurance to an

employee benefit plan,” and in the absence*545 of §

1 144(b)(2)(B) (the “deemer clause”), self-funded plans could

be regulated by states under the insurance saving clause.”

The Supreme Court has said, “We do not think [a state law's]

application to self-insured non-ERISA plans forfeits its

status as a ‘law ... which regulates insurance’ under 29

U.S.C. § 1144(b)(2)(A).” > Likewise, nothing in the text of

La.Rev.Stat. Ann. § 40:2010 regarding assignments

indicates that the term “other entity which is obligated to

reimburse the individual or to pay for him or on his behalf

the charges for the services rendered” means anything other

than an entity that is engaging is some sort of risk pool

arrangement to provide benefits.

The fact that the Louisiana law requiring insurers to honor

assignments of benefits to hospita!s appears in a statute that

also requires hospitals to provide an itemized bill to patients

within ten days is of no moment. The provisions that are

directed at insurance companies are not directed at hospitals,

and mere inclusion of those provisions with other separable

regulations does not preclude the provisions aimed at

insurers from qualifying as laws “regulatiing] insurance”

under ERISA's insurance saving clause. Nor is it of any

2! See Ky. Ass'n, 538 U.S. at 336 n. 1, 123 S.Ct. 1471 (discussing the

interplay between the insurance saving clause in 29 U.S.C. §

! 144(b)(2)(A) and the deemer clause in 29 U.S.C. § 1144(b)(2)(B)).

Id.

> Id.; see also Rush Prudentiai, 536 U.S. at 372, 122 S.Ct. 2151

(observing that because the “deemer clause” provides an exception to the

saving clause, a state law would not be saved under 29 U.S.C. §

1144(2)(b)(A) to the extent is appled to self-funded plans, but

nevertheless, “there is no reason to think Congress would have meant

such minimal application to noninsurers to remove a state law entirely

from the category of insurance regulation”).

28a

significance that section 40:2010 is not within Louisiana's

insurance code. The State of Louisiana has, through section

40:2010, directly regulated insurance by imposing conditions

on the right to engage in the business of insurance in that

State.

The Louisiana statute before us satisfies the second

requirement identified in Kentucky Association as well.

Section 40:2010 substantially affects the risk pooling

arrangement between the insurer and the insured in much the

same way as the state law at issue in Kentucky Association.

With regard to the any-willing-provider statutes at issue in

Kentucky Association, the Supreme Court held that those

statutes altered the scope of permissible bargains between

insurers and insured and observed that Kentucky insureds

could “[nJo longer ... seek insurance from a closed network

of health-care providers in exchange for a lower premium.”

Section 40:2010 similarly alters the scope of permissible

bargains between insurers and insureds by prohibiting anti-

assignment agreements. There is evidence in the record

before us that some Louisiana hospitals who were not

Participating Providers refused to accept Blue Cross

beneficiaries as patients because Blue Cross would not honor

patients’ assignments of benefits, and Blue Cross would not

pay non-Participating Providers directly. Section 40:2010

expands insureds’ access to hospitals by removing this

obstacle to treatment. Blue Cross must treat all hospitals

equally with regard to assignments of benefits. Section

40:2010 also has the effect of requiring insurers like Blue

** See Ky. Ass'n, 538 U.S. at 337-38, 123 S.Ct. 1471 (concluding that the

any-willing-provider statute at issue regulated insurance and likening the

statute to a state law requiring all licensed attorneys to participate in ten

hours of continuing legal education, which, the Court said, would be a

statute regulating the practice of law).

*° fd. at 339, 123 S.Ct. 1471.

29a

Cross to make allowance for instances in which they

erroneously pay a beneficiary directly because payment to

the beneficiary is not a defense to the *546 insurer's

obligation to pay the provider.”° Although Blue Cross might

seek to recover an erroneous payment from a beneficiary,

some beneficiaries will not have the means, or will refuse, to

repay. The unrecoverable costs associated with pursuing

beneficiaries paid in error must additionally be taken into

account. These considerations have the effect of increasing

premiums and spreading the risk of erroneous payments

among policyholders.

Section 40:2010 of the Louisiana Revised Statutes is also

similar to the statute at issue in FMC Corp. v. Holliday,

which prohibited insurers from exercising subrogation nghts

against an insured's tort recovery.” The Supreme Court

concluded that the anti-subrogation statute would be saved

from preemption to the extent that it applied to insured

ERISA employee benefit plans, but the statute was

preempted to the extent it applied to self-insured plans.”*

I would hold that ERISA's insurance saving clause applies to

La.Rev.Stat. Ann. § 40:2010. The only remaining question

is whether section 40:2010 conflicts with ERISA's civil

enforcement scheme.

Blue Cross contends that section 41):2010 creates a remedy in

addition to those set forth in ERISA. That remedy, Blue

26 See La.Rev.Stat. Ann. § 40:2010 (2001).

*7 498 U.S. 52, 55 n. 1, 111 S.Ct. 403, 112 L.Bd.2d 356 (1990).

8 Id. at 61, I11 S.Ct. 403 (holding that the state statute “returns the

matter of subrogation to state law ... [uJnless the statute is excluded from

the reach of the saving clause by virtue of the deemer clause”).

30a

Cross contends, is the right to obtain a “double payment” in

instances in which Blue Cross has notice of an assignment

and pays the beneficiary instead of the hospital to whom the

benefits have been assigned. The Supreme Court held in

Aetna Health Inc. v. Davila that “even a state law that can

arguably be characterized as ‘regulating insurance’ will be

preempted if it provides a separate vehicle to assert a claim

for benefits outside of, or in addition to, ERISA's remedial

scheme.” ~”

ERISA's remedial scheme is set forth in 29 U.S.C. § 1132.

That section authorizes a participant or beneficiary “to

recover benefits due to him under the terms of his plan, to

enforce his rights under the terms of the plan, or to clarify his

rights to future benefits under the terms of the plan.”* This

section “clearly contemplates” that a money judgment may

be obtained against benefit plans.*'

Nothing in ERISA prevents a participant or beneficiary from

assigning his or her rights to welfare benefits, which include

health care benefits. Notably, ERISA affirmatively

prohibits assignment of pension benefits.’ This distinction

led the Supreme Court to conclude that “Congress' decision

to remain silent coneeming the attachment or garnishment of

ERISA welfare pian benefits ‘acknowledged and accepted

? $42 U.S. 200, 217-18, 124 S.Ci. 2488, 159 L.Ed.2d 312 (2004).

*° 29 U.S.C. § 1132(a)(! (B).

*' Mackey v. Lanier Collection Agency & Serv., Inc., 486 U.S. 825, 832-

33 & n. 7, 108 S.Ct. 2182, 100 L.Ed.2d 836 (1988).

*2 29 U.S.C. § 1056(d)(1) (“Each pension plan shall provide that benefits

provided under the plan may not be assigned or alienated.”); see also

Mackey, 486 U.S. at 836, 108 S.Ct. 2182 (discussing anti-alienation

provisions in 29 U.S.C. § 1056(d)(1) and stating, “Congress did not

enact any similar provision applicable to ERISA welfare benefit plans”).

3la

the practice, rather than prohibiting it.’ ”°? This Circuit has

held that assignees*547 of welfare plan benefits have

standing to enforce plan benefits under ERISA.

An assignment of a plan beneficiary's right to receive welfare

benefits does nothing more than transfer the right to be paid

to the assignee. It does not create new rights outside of

ERISA. Blue Cross argues that barring payment to a

beneficiary as a defense and requiring payment to an

assignee even if payment ‘has been made to the beneficiary

creates a new right outside of ERISA's remedial scheme.

This contention has no merit. Suppose a plan administrator

paid benefits to a former spouse rather than the current

spouse of a participant. That mistake would not relieve the

plan administrator of its obligation to pay the correct person.

The Louisiana statute does not enlarge the rights, causes of

action, or remedies of beneficiaries or their assignees.

Section 40:2010 simply directs te whom payment must be

made once there has been a valid assignment and the plan

has received notice of that assignment.

** KK

For the foregoing reasons, { concur in the judgment.

C.A.5 (La.),2006.

Louisiana Health Service & Indem. Co. v. Rapides

Healthcare System,

461 F.3d 529, 38 Employee Benefits Cas. 1897

> Mackey, 486 U.S. at 837-38, 108 S.Ct. 2182 (quoting Alessi v.

Raybestos-Manhattan, Inc., 451 U.S. 504, 516, 101 S.Ct. 1895, 68

L.Ed.2d 402 (1981)).

** Tango Transp. v. Healthcare Fin. Servs. LLC, 322 F.3d 888, 892 (5th

Cir.2003); see also Hermann Hosp. v. MEBA Med. & Benefits Plan, 845

F.2d 1286, 1289-90 (Sth Cir. 1988).

32a

APPENDIX B

RULING AND JUDGMENT OF

THE UNITED STATES DISTRICT COURT,

MIDDLE DISTRICT OF LOUISIANA

OCTOBER 12, 2004

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF LOUISIANA

LOUISIANA HEALTH SERVICE

& INDEMNITY COMPANY d/b/a

BLUE CROSS AND BLUE SHIELD

OF LOUISIANA

CIVIL ACTION

VERSUS

NO. 00-694-D

RAPIDES HEALTHCARE SYSTEM

and STATE OF LOUISIANA, EX REL

RICHARD P. IEYOUB, ATTORNEY

GENERAL FOR THE STATE OF

LOUISIANA JUDGE BRADY

RULING ON MOTIONS FOR SUMMARY

JUDGMENT

This matter is before the court on a motion for

summary judgment (doc. 266) filed by the plaintiff,

Louisiana Health Service & Indemnity Company d/b/a Blue

Cross and Blue Shield of Louisiana (“Blue Cross”).

33a

Also before the court are motions for summary

judgment filed by defendant, Rapides Healthcare System

(“Rapides”), and intervenor, Dauterive Hospital

(“Dauterive”) (doc. 263), and by defendant State of

Louisiana (doc. 260). Defendants’ motions are opposed

(doc. 280) and (doc. 282).

Subject matter jurisdiction is based on federal

question pursuant to 28 U.S.C. §1331 because the

interpretation of the Employee Retirement Income Security

Act, 29 U.S.C. §1101, [sic] et seq. (“ERISA”) is necessary

for resolution of the dispute.

BACKGROUND

The court clearly documented the factual background

of this lawsuit in its prior ruling (doc. 102) dated April 15,

2002.' There, this court denied Blue Cross’s first motion for

summary judgment (doc. 50) holding ERISA does not

preempt the Louisiana Assignment Statute, La. R.S. 40:2010,

as applied to employee benefit plans insured or administered

by Blue Cross.

Blue Cross filed the instant motion for summary

judgment (doc. 266) again alleging ERISA preempts the

provisions of La. R.S. 40:2010 as applied to fully insured

employee benefit plans insured or administered by Blue

Cross. Blue Cross is seeking to have this court vacate its

prior decision and enter judgment in its favor, declaring that

ERISA preempts La. R.S. 40:2010 to the extent its

enforcement is sought with respect to ERISA plans.

Conversely, Defendants argue they are entitled to summary

judgment in accordance with the court’s ruling on April 15,

2002.

' See Louisiana Health Serv. & Indem. Co. v. Rapides Healthcare

System, 213 F. Supp. 2d 650 (M.D. La. 2902).

34a

SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate when the

pleadings, answers to interrogatories, admissions, and

affidavits on file indicate that there is no genuine issue of

material fact and that the moving party is entitled to

judgment as a matter of law. See Celotex Corp. v. Catrett,

477 U.S. 317, 322 (1986). Although this court considers the

evidence in the light most favorable to the non-movant, the

non-movant may not merely rest on allegations set forth in

the pleadings. Instead, the non-movant must show that there

is a genuine issue for trial. See Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 248-49 (1986). If, once ihe non-movant

has been given the opportunity to raise a genuine factual

issue, nu reasonable juror could find for the non-movant,

summary judgment will be granted. See Celotex Corp., 477

U.S. at 322; see also Fed. Rule Civ. P. 56(c).

ANALYSIS

Blue Cross argues the recent case of Barber v.

UNUM Life Ins. Co. of America, ioe

2004 WL 1964500 (3™ Cir. September 7, 2004) is supportive

of its argument that ERISA preempts the Louisiana

Assignment Statute. The court does not agree with Blue

Cross’s application of Barber to the facts in the present

lawsuit.

In Barber, the issue was whether ERISA preempted

Pennsylvania’s bad faith statute for insurance claims. /d. at

*|. The state statute at issue in Barber permitted the

plaintiff to seek punitive damages from the defendant for

allegedly denying disability benefits in bad faith.

ERISA’s exclusive civil enforcement provision

permits an ERISA-plan participant to recover benefits, to

35a

obtain a declaratory judgment that he is entitled to benefits,

and to enjoin an improper refusal to pay. 29 U.S.C. §

1132(a). Therefore, the Pennsylvania statute permitted a

form of recovery (i.e. punitive damages) which was not

included in 29 U.S.C. § 1132(a). The Third Circuit found a

state statute is preempted by ERISA if it provides a form of

ultimate relief in a judicial forum that added to the judicial

remedies provided by ERISA. /d. at *4. Thus, the court

held the Pennsylvania statute was subject to conflict

preemption.

However, the Louisiana Assignment Statute is

different than the Pennsylvania statute in Barber.

Specifically, ERISA is silent on the issue of assignability of

benefits in insurance plans and the Louisiana statute does not

alter an existing ERISA provision. As noted in this court’s

previous ruling,” the Fifth Circuit has specifically found that

ERISA permits assignments of health care benefits.’

Therefore, the court is unpersuaded that the Barber decision

is applicable in the instant lawsuit. *

In accordance with the court’s previous ruling,’ and

the aforementioned reasoning, the court finds that the

> Id.

> See Hermann v. Hosp. v. MEBA Medical Benefit Plan, 845 F.2d 1286

(5" Cir. 1988).

* Blue Cross accurately states the Barber court relied in part on the

analysis set forth in Aetna Health, Inc. v. Davilaa = S.Ct _,

2004 WL1373230 (June 21, 2004). The state law at issue in Aetna

permitted claims for failure to exercise ordinary care in the handling of

coverage decisions. Thus, the state law conflicted with the notion that

individuals who allege they have been denied benefits are restricted to

the civil enforcement provisions of ERISA. 29 U.S.C. § 1132(a)(1)(B).

The Louisiana Assignment statute is distinguishable from the state law in

Aetna because the Louisiana law does not alter any existing ERISA

rovisions. ~

See Louisiana Health Serv., 213 F. Supp. 2d 650 (M.D. La. 2002).

36a

Louisiana Assignment Statute, La. R.S. 40:2010, is not

conflict preempted by ERISA and finds the defendants are

entitled to summary judgment.

Accordingly, the motion for summary judgment (doc.

266) filed by the plaintiff, Blue Cross, is hereby DENIED.

Furthermore, the motions for summary judgment

(doc. 263) and (doc. 260) filed by defendants, Rapides and

the State of Louisiana, are hereby GRANTED.

Baton Rouge, Louisiana, October 12", 2004.

7, s/James J. Brady _ _

JAMES J. BRADY, DISTRICT JUDGE

MIDDLE DISTRICT OF LOUISIANA

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF LOUISIANA

LOUISIANA HEALTH SERVICE

& INDEMNITY COMPANY d/b/a

BLUE CROSS AND BLUE SHIELD

OF LOUISIANA

CIVIL ACTION

VERSUS

NO. 00-694-D

RAPIDES HEALTHCARE SYSTEM

and STATE OF LOUISIANA, EX REL.

RICHARD P. IEYOUB, ATTORNEY

GENERAL FOR THE STATE OF

LOUISIANA JUDGE BRADY

JUDGMENT

For written reasons assigned,

IT IS ORDERED, ADJUDGED AND DECREED

that judgment be entered in favor of the defendants, Rapides

Healthcare System and the State of Louisiana, and

intervenor, Dauterive Hospital Corp. and against the

plaintiff, Blue Cross, and this action is hereby dismissed.

Baton Rouge, Louisiana, October 12", 2004.

s/James J. Brady

JAMES J. BRADY, DISTRICT JUDGE

MIDDLE DISTRICT OF LOUISIANA

38a

APPENDIX C

DECISION OF

THE UNITED STATES DISTRICT COURT,

MIDDLE DISTRICT OF LOUISIANA

APRIL 15, 2002

United States District Court,

M.D. Louisiana.

LOUISIANA HEALTH SERVICE & INDEMNITY

COMPANY d/b/a Blue Cross and Blue

Shield of Louisiana,

Vv.

RAPIDES HEALTHCARE SYSTEM and State of

Louisiana, ex rel. Richard P. leyoub,

Attorney General for the State of Louisiana.

No. Civ.A.00-694-D.

213 F.Supp.2d 650

April 15, 2002.

*651 RULING ON MOTION FOR SUMMARY

JUDGMENT

BRADY, District Judge.

This matter is before the court on a motion for summary

judgment (doc. 50) filed by the plaintiff, Louisiana Health

Service & Indemnity Company d/b/a Blue Cross and Blue

Shield of Louisiana ("Blue Cross"). The motion is opposed,

and amicus curiae briefs have been filed on behalf of the

defendants by the Louisiana Department of Insurance and

the Louisiana Hospital Association. Subject matter

jurisdiction is based on federal question pursuant to 28

U.S.C. § 1331 because the interpretation of the Employee

39a

Retirement Income Security Act, 29 U.S.C. § 1101, [sic] et

seq. ("ERISA") is necessary for resolution of the dispute.

Blue Cross filed this lawsuit seeking a declaration that

ERISA preempts the provisions of La. R.S. 40:2010 (the

"Louisiana Assignment Statute") as applied to employee

benefit plans governed by ERISA and _ insured or

administered by Blue Cross. The lawsuit was filed because

the Louisiana Department of Insurance, acting upon

complaints submitted by defenciant Rapides Healthcare

System ("Rapides"), had issued findings that health

insurance policies issued or administered by Blue Cross

violated various state laws, including the Louisiana

Assignment Statute. Blue Cross seeks a declaratory

judgment based on ERISA's broad preemption provision in

order to prevent actions being brought against it for violation

of the Louisiana statute.

FACTUAL BACKGROUND

Blue Cross underwrites, provides, and administers various

forms of health care service plans for individual and group

members who become subscribers. A portion of the health

benefit plans that Blue Cross insures and administers are

employee welfare benefit plans governed by ERISA. ERISA

defines an "employee welfare benefit plan" as one

"established or maintained by an employer or by an

employee organization" for the purpose of providing

employees with "medical, surgical, or hospital care or

benefits, or benefits in the event of sickness, accident,

disability, [or] death," whether these benefits are provided

"through the purchase of insurance or otherwise." See 29

U.S.C. § 1002(1).

Aye, part of its plan administration, Blue Cross enters into

individual and group contracts to provide health benefits to

40a

subscribers and also enters into contracts with various health

care providers for the provision of health care services to its

subscribers. When Blue Cross has a contract with a health

care provider that includes a provision allowing for direct

payment to the provider, then Blue Cross will make payment

directly to that provider. However, Blue Cross’ insurance

contracts all provide that, in the absence of such an

agreement with the provider for direct payment, Blue Cross

will pay benefits only to the subscriber (the patient), and it

will not recognize the patient's attempted assignment of

benefits to the provider. Therefore, Blue Cross will pay a

hospital or provider directly only if such hospital or provider

has an agreement with Blue Cross for direct payment.

Otherwise, Blue Cross will only pay benefits to the patient,

and then it is the patient's responsibility to make sure that the

provider is paid.

Blue Cross' refusal to recognize certain assignments of

benefits by patients is included as a provision in its contracts

for health benefit plans, including its ERISA plans.

Although ERISA establishes uniform procedural standards

concerning reporting, disclosure, and fiduciary responsibility

of plan administrators, it does not regulate the substantive

content and terms of employee benefit plans. See *652

Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724,

105 S.Ct. 2380, 85 L.Ed.2d 728 (1985). ERISA requires that

an employee benefit plan be administered “in accordance

with the documents and instruments governing the pian."

See 29 U.S.C. § 1104(a)(1)(D). Therefore, Blue Cross

argues that, in order to comply with ERISA, it must act in

accordance with its ERISA plan provisions and refuse to

honor assignments of benefits to providers that do not have a

contract with Blue Cross.

However, Blue Cross' refusal to honor assignments is in

direct conflict with the Louisiana Assignment Statute, La.

4la

R.S. 40:2010, which requires Blue Cross and other insurers

to honor all patients’ assignments of benefits, even if the

benefits are assigned to a provider that does not have a

contract with Blue Cross providing for direct payment.

Section 2010, entitled "Itemized statement of billed services

by hospitals," appears within Title 40 of the Louisiana

Revised Statutes, "Public Health and Safety," Chapter 11,

"State Department of Hospitals," Part I, "Organization and

Powers," and provides in its entirety:

Not later than ten business days after the date of discharge,

each hospital in the state which is licensed by the

Department of Health and Hospitals shail have available an

itemized statement of billed services for individuals who

have received the services from the hospital. The

availability of the statement shall be made known to each

individual who receives service from the hospital before

the individual is discharged from the hospital, and a

duplicate copy of the billed services statement shall be

presented to each patient within the specified ten day

period. No insurance company, employee benefit trust,

self-insurance plan, or other entity which is obligated to

reimburse the individual or to pay for him or on his behalf

the charges for the services rendered by the hospital shall

pay those benefits to the individual when the itemized

statement submitted to such entity clearly indicates that the

individual's rights to those benefits have been assigned to

the hospital. When any insurance company, employee

benefit trust, self-insurance plan, or other entity has notice

of such assignment prior to such payment, any payment to

the insured shall not release said entity from liability to the

hospital to which the benefits have been assigned, nor shall

such payment be a defense to any action by the hospital

against that entity to collect the assigned benefits.

However, an interim statement shall be provided when

42a

requested by the patient or his authorized agent. (emphasis

added),

The italicized language is the focus of this lawsuit. Blue

Cross argues that it cannot comply with both ERISA and La.

R.S. 40:2010, and therefore, it asks this court to find that

ERISA preempts the provisions of La. R.S. 40:2010 with

respect to ERISA plans insured or administered by Blue

Cross.

However, the State of Louisiana and Rapides (collectively

"the defendants") argue that Blue Cross should not be

permitted to violate Louisiana insurance law simply by

"uttering the phrase ERISA preemption." They argue that

the assignment of insurance benefits has long been a custom

and tradition in the insurance industry, respected by

insurance companies, protected by the Commissioner of

Insurance, and mandated by state law. In fact, Blue Cross

honored assignments of insurance benefits up until a little

over a year ago. The defendants argue that Blue Cross is now

refusing to honor assignments in an effort to punish its

insured members who desire the freedom to select their own

health care providers, rather than using only health care

providers that have a contract with Blue Cross. The *653

defendants assert that ERISA does not preempt the Louisiana

Assignment Statute because the Assignment Statute

promotes the goals and purpose of ERISA and falls within

the scope of state law which Congress never intended ERISA

to preempt.

SUMMARY JUDGMENT STANDARD

Summary judgment is appfopriate when the pleadings,

answers to interrogatories, admissions, and affidavits on file

indicate that there is no genuine issue of material fact and

that the moving party is entitled to judgment as a matter of

‘ 43a

law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106

S.Ct. 2548, 91 L.Ed.2d 265 (19865). Although this court

considers the evidence in the light most favorable to the non-

movant, the non-movant may not merely rest on allegations

set forth in the pleadings. Instead, the non-movant must

show that there is a genuine issue for trial. See Anderson v.

Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S.Ct. 2505,

91 L.Ed.2d 202 (1986). If, once the non-movant has been

given the opportunity to raise a genuine factual! issue, no

reasonable juror could find for the non-movant, summary

judgment will be granted. See Celotex Corp., 477 U.S. at

322, 106 S.Ct. 2548; see also Fed. Rule Civ. P. 56(c).

ANALYSIS

{1] ERISA contains a broad preemption provision declaring

that the federal statute "shall supersede any and all State laws

insofar as they may now or hereafter relate to any employee

benefit plan" covered by ERISA. See 29 U.S.C. § 1144(a).

Courts have interpreted this preemption clause expansively,

observing that it was intended to displace all state laws that

fall within its sphere and that its language was designed "to

establish ... plan regulation as exclusively a federal concern."

CIGNA Healthplan of Louisiana, Inc. v. State of Louisiana,

ex rel. leyoub, 82 F.3d 642, 646 (Sth Cir.1996) (quoting

Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 138, 111

S.Ct. 478, 482, 112 L.Ed.2d 474 (1.990)). The phrase "relate

to" has been given a commonsense meaning, and a state law

"relates to" an employee benefit plan "in the normal sense of

the phrase, if it has a connection with or reference to such a

plan." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103

S.Ct. 2890, 77 L.Ed.2d 490 (1983); Metropolitan Life, 471

U.S. at 739, 105 S.Ct. 2380. It has repeatedly been held that

ERISA preempts state laws that mandate employee benefit

structures or their administration. See New York State

Conference of Blue Cross & Blue Shield Plans v. Travelers

44a

Ins. Co., 514 U.S. 645, 115 S.Ct. 1671, 131 L.Ed.2d 695

(1995); see also CIGNA Healthplan, 82 F.3d at 647.

For example, the Fifth Circuit has held that ERISA preempts

“any willing provider" statutes, which are statutes mandating

that no licensed health care provider who agrees to the terms

and conditions of a preferred provider contract shall be

denied the right to become a preferred provider. In CIGNA

Heaithplan of Louisiana, Inc. v. State of Louisiana, ex rel.

leyoub, the Fifth Circuit found that Louisiana's "any willing

provider" statute "related to" an ERISA plan because it

specifically referred to entities that constituted ERISA-

qualified plans and because it mandated the structures of

employee benefit plans. See CIGNA Healthplan, 82 F.3d at

647-648. ERISA plans that chose to offer coverage by

preferred provider organizations (PPOs) were limited by the

Louisiana statute to using PPOs of a certain’ structure, i.e., a

structure that included every willing, licensed provider. /d.

at 648. The court found that the statute mandated that

certain benefits available to ERISA plans be constructed in a

particular manner, and therefore, the statute delineated the

very structure of ERISA plans and impermissibly *654

bound plan administrators to a particular structure. /d. at

649. |

Blue Cross argues that the Louisiana Assignment Statute

attempts to bind it to a particular choice of rules as to how to

pay health care benefits. Blue Cross claims that the

Assignment Statute commands it to pay benefits in

accordance with state law, rather than "in accordance with

the documents and instruments governing the plan."

Therefore, according to Blue Cross, there is an

impermissible conflict between the state law and ERISA, and

the state law must be preempted.

Although the Supreme Court has interpreted the language of

45a

ERISA's preemption clause broadly, it has recognized in

more recent cases that “the term ‘relate to' cannot be taken ‘to

extend to the furthest stretch of its indeterminacy,’ or else ‘for

all practical purposes preemption would never run its course.’

" Egelhoff v. Egelhoft. e Breiner, 532 U.S. 141, 121

S.Ct. 1322, 149 LI ¢ 64 (2001): Travelers, 514 U.S. at

655, 115 S.Ct. 167 ‘he Court has found that some state

laws may affect employee benefit plans in too tenuous,

remote, or peripheral a manner to justify a finding that the

law “relates to” the plan. See C/GNA Healthplan, 82 F.3d at

647; see also Shaw, 463 U.S. at 100, 103 S.Ct. 2890. The

defendants argue that, in a tnlogy of recent cases,’ the

Supreme Court has begun to move away from a broad

reading of ERISA's preemption clause and toward a more

traditional analysis of preemption.

For example, in the first of the three cases, a unanimous

Supreme Court held that ERISA does not preempt state laws

that have only an indirect economic effect on the relative

costs of various health insurance packages available to

ERISA-qualified plans. See Travelers, 514 U.S. at 668, 115

S.Ct. 1671. This is because an indirect economic influence

does not bind plan administrators to any particular choice,

and therefore, it does not function as a regulation of an

ERISA plan itself. Jd. at 659, 115 S.Ct. 1671.

The defendants argue that, with these three cases, the

Supreme Court has begun to narrow the broad scope of

ERISA preemption. They point out that in New York State

Conference of Biue Cross & Blue Shield Plans v. Travelers

' New York State Conference of Blue Cross & Blue Shield Plans v.

Travelers Ins. Co., 514 U.S. 645, 115 S.Ct. 1671, 131 L.Ed.2d 695

(1995); California Division of Labor Stendards Enforcement v.

Dillingham Construction, N.A., Inc., 519 U.S. 316, 117 S.Ct. 832, 136

L.Ed.2d 791 (1997); De Buono v. NYSA-ILA Medical and Clinical

Services Fund, 520 U.S. 806, 117 S.Ct. 1747, 138 L.Ed.2d 21 (1997).

46a

Ins. Co., the Supreme Court noted that it never assumes

lightly that Congress has derogated state regulation, but

instead begins with the presumption that Congress does not

intend to supplant state law. Jd. at 654, 115 S.Ct. 1671. The

Court further stated that, in areas of traditional state

regulation, it works on the "assumption that the historic

police powers of the States were not to be superseded by the

Federal Act unless that was the clear and manifest purpose of

Congress." /d. at 654, 115 S.Ct. 1671. The Court also

recognized that, in determining whether a state law has a

forbidden connection with ERISA plans, it is necessary to go

beyond the unhelpful text of the preemption clause and look

instead to "the objectives of the ERISA statute as a guide to

the scope of the state law that Congress understood would

survive, as well as to the nature of the effect of the state law

on ERISA plans." Egelhoff, 532 U.S. at 147, 121 S.Ct. 1322;

Travelers, 514 U.S. at 656, 115 S.Ct. 1671.

(2}(3] The defendants argue that, instead of applying an all

encompassing and *655 unrestricted rule of preemption,

courts should consider the intent and purpose of ERISA and

the specific facts of the case to determine whether a state law

relates to an ERISA plan in some way and whether it should

be deemed preempted because of an impermissible

interference with the scheme of the ERISA statute. This

court agrees with the defendants. One of Congress’ goals in

enacting ERISA was to enhance the health and welfare

benefits of employees, and the Louisiana Assignment Statute

should not be preempted because it does not interfere with

this goal but, in fact, facilitates it. The Fifth Circuit has

specifically recognized that an assignment of benefits to a

health care provider facilitates rather than hampers the

employee's receipt of health benefits. See Hermann Hosp. v.

MEBA Medical & Benefits Plan, 845 F.2d 1286 (Sth

Cir.1988). First of all, it keeps the employee from having to

pay health care costs up front out of his own pocket.

47a

Furthermore, health care providers are better equipped and

financed to pursue an action for the payment of benefits.

The honoring of benefit assignments to health care providers

promotes efficiency in plan administration by streamlining

the claims process and removing the patients from the

payment process. ;

Not only does the Louisiana Assignment Statute facilitate

and promote the goals of ERISA, it also constitutes a general

health care regulation and is within the scope of state law

that Congress did not intend ERISA to preempt. The

Supreme Court has stated that general health care regulation

has historically been a matter of local concern and that there

is nothing in the language of ERISA to indicate that

Congress intended to displace such general health care

regulation. See Travelers, 514 U.S. at 661, 115 S.Ct. 1671.

In fact,-ERISA is completely silent on the issue of the

assignability of benefits in insurance plans. ERISA

specifically sets forth a prohibition against the assignment of

employee pension benefits, but Congress chose not to

include a parallel bar against the assignability of health care

benefits. Congress’ silence on the issue of the assignability

of health care benefits gives rise to an inference that

Congress intended to treat such benefits differently, and that

Congress does not intend to enact a policy precluding their

assignability. See Mackey v. Lanier Collection Agency &

Serv., Inc., 486 U.S. 825, 836-37, 108 S.Ct. 2182, 100

L.Ed.2d 836 (1988); see also Hermann Hosp., 845 F.2d at

1289.

Based on Congress’ decision to remain silent on the issue,

the Fifth Circuit has specifically found that ERISA permits

assignments of health care benefits. Hermann Hosp., 845

F.2d at 1289. Therefore, there is no conflict between ERISA

and the Louisiana Assignment Statute. ERISA's silence on

the issue of the assignability of health care benefits indicates

48a

that Congress intended to allow the states to make their own

decisions regarding assignability.

Blue Cross points out that other circuits have refused to

interpret ERISA's silence on the issue of assignability of

health care benefits as an invitation to the states to adopt

their own rules pertaining to assignability. City of Hope

National Medical Center v. Healthplus, Inc., 156 F.3d 223,

229 (Ist Cir.1998); St. Francis Regional Medical Center v.

Blue Cross & Blue Shield of Kansas, 49 F.3d 1460, 1464

(10th Cir.1995). Instead, they interpret ERISA's silence as

leaving the assignability of benefits to the free negotiations

and agreement of the contracting parties. However, this

court does not subscribe to the reasoning espoused by those

circuits. The assignability of health care benefits has

historically been a matter of local concern, and this court

finds that Congress did not intend for ERISA to preempt

state laws concerning assignability. Congress' *656 silence

on the issue, when considered along with the goals and

objectives of ERISA, indicates that the Louisiana

Assignment Statute should not be preempted by ERISA.

Blue Cross also argues that a recent Supreme Court case,

Egelhoff v. Egelhoff, mandates a finding of ERISA

preemption in the instant case. At issue in Egelhoff was a

Washington statute that provided that the designation of a

spouse as the beneficiary of a nonprobate asset (which

included employee benefit plans) would be automatically

revoked upon divorce. Egelhoff v. Egelhoff, ex rel. Breiner,

532 U.S. 141, 121 S.Ct. 1322, 149 L.Ed.2d 264 (2001). The

Supreme Court held that ERISA preempted the state

beneficiary designation statute to the extent it applied to

ERISA plans. /d. at 147, 121 S.Ct. 1322. The statute

required ERISA plan administrators to pay beneficiaries

chosen by state law, rather than the beneficiaries identified in

the plan documents. Therefore, the Court concluded that the

49a

statute had an impermissible connection with ERISA plans

because it bound plan administrators to a particular choice of

rules for determining beneficiary status. /d. at 147, 121 S.Ct.

1322.

Blue Cross asserts that the Louisiana Assignment Statute,

like the statute at issue in Egelhoff, purports to bind an

ERISA plan administrator to a particular choice of rules

concerning the payment of benefits. However, this court

does not agree and instead finds that Egelhoff does not

require a finding of preemption in this case. In Egelhoff, the

Court found that the state statute was preempted because it

violated ERISA's requirement that the plan be administered

"in accordance with the documents and instruments

governing the plan," making payments to a "beneficiary"

who is "designated by a participant, or by the terms of [the]

plan." /d. at 147, 121 S.Ct. 1322; see also 29 U.S.C. §

1104(a)(1)(D); see also 29 US.C. § 1002(8). The

Washington statute at issue in Egelhoff provided that a plan

participant's designation of a _ beneficiary would

automatically be invalidated by operation of state law,

without any affirmative act by the participant, and in spite of

any existing designation in the documents and instruments

governing the plan. Therefore, the statute effectively allowed

the state of Washington to designate the beneficiary to

receive plan benefits, in contravention of ERISA.

However, the Louisiana Assignment Statute is different

because it does not invalidate, revoke, or alter a plan

participant's designation of a beneficiary. A "beneficiary" is

"a person * designated by a participant, or by the terms of an

employee benefit plan, who is or may become entitled to a

benefit thereunder." See 29 U.S.C. § 1002(8). An

assignment of benefits is a designation of a beneficiary by a

? Under 29 U.S.C. § 1002(9), the term "person" includes natural persons

and juridical persons such as corporations and other entities.

50a

plan participant as contemplated by ERISA's definition of

"beneficiary." This is because a participant's assignment of

benefits to his health care provider makes the assignee a

person who is "entitled to a benefit" under the plan. Kennedy

v. Connecticut General Life Ins. Co., 924 F.2d 698, 700 (7th

Cir.1991). Such a designation is expressly permitted by

ERISA. The Louisiana Assignment Statute only becomes

applicable when a plan participant has made such an

affirmative designation, through the assignment of his

benefits. Therefore, the statute does not allow the state of

Louisiana to designate the beneficiary, as occurred in

Egelhoff, but rather the Assignment Statute honors a

designation made by a participant, as expressly contemplated

by ERISA.

*657 Because ERISA already requires Blue Cross, as a plan

administrator, to make payments to a beneficiary designated

by a plan participant, the Louisiana Assignment Statute does

not conflict with ERISA. At most, the statute has only an

indirect economic effect on ERISA plans because it takes

away some of Blue Cross' bargaining power when

negotiating to attract new health care providers to join its

network. Such an indirect economic effect is not sufficient

to justify a finding that the statute "relates to" an ERISA

plan. See Travelers, 514 U.S. at 668, 115 S.Ct. 1671.

Therefore, after considering the intent and purpose of

ERISA as well as the nature of the effect that the Louisiana

Assignment Statute has on ERISA plans, the court finds that

ERISA does not preempt the Louisiana Assignment Statute,

La. R.S. 40:2010, as applied to employee benefit plans

insured or administered by Blue Cross.

Furthermore, the court finds that the language of Blue Cross'

health care plans requires that Blue Cross honor a patient's

assignment of benefits. This is because the anti-assignment

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provisions in the Blue Cross plans state that assignments of

benefits will not be honored "except as required by law."

ERISA is silent on the issue of assignment of health care

benefits, and therefore, "except as required by law" must

necessarily refer to requirements of state law, including

Louisiana's requirement in La. R.S. 40:2010 that assignments

of benefits are honored.

Moreover, Blue Cross' policies issued in Louisiana contain a

clause providing that any policy term that conflicts with state

law is amended to conform to state law. As a result, Blue

Cross' anti-assignment provision is automatically amended,

by the terms of the policy, to conform to the requirements of

the Louisiana Assignment Statute, and Blue Cross is required

to honor assignments of benefits.

Accordingly, the motion for summary judgment (doc. 50)

filed by the plaintiff, Louisiana Health Service & Indemnity

Company d/b/a Blue Cross and Blue Shield of Louisiana, 1s

hereby DENIED.

52a

APPENDIX D

ORDER OF THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

DENYING PETITION FOR REHEARING EN BANC

SEPTEMBER 15, 2006

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 04-31114

LOUISIANA HEALTH SERVICES & INDEMNITY CO.,

doing business as Blue Cross Blue Shield of Louisiana

Plaintiff - intervenor Defendant - Appellant

RAPIDES HEALTHCARE SYSTEM; STATE OF

LOUISIANA; CHARLES R FOTI JR, Attorney General for

the State of Louisiana;

Defendants - Appellees

DAUTERIVE HOSPITAL

Intervenor Plaintiff - Appellee

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Appeal from the United States District Court for the

Middle District of Louisiana, Baton Rouge.

ON PETITION FOR REHEARING EN BANC

(Opinion 8/16/06, 5 Cir., ' F. 3d

)

Before HIGGENBOTHAM, DeMOSS, and OWEN, Circuit

Judges.

PER CURIAM:

( X ) Treating the Petition for Rehearing En Banc as a

Petition for Panel Rehearing, the Petition for Panel

Rehearing is DENIED. No member of the panel nor judge in

regular active service of the court having requested that the

court be polled on Rehearing En Banc (FED. R. App. P. and

5" CIR. R. 35), the Petition for Rehearing En Banc is

DENIED.

( ) Treating the Petition for Rehearing En Banc as a

Petition for Panel Rehearing, the Petition for Rehearing is

DENIED. The court having been polled at the request of one

of the member of the court and a majority of the judges who

are in regular active service and not disqualified not having

voted in favor (FED. R. APP. P. and 5" CIR. R. 35), the

Petition for Rehearing En Banc is DENIED.

ENTERED FOR THE COURT

__/s/ Higginbotham

United States Circuit Judge

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APPENDIX E

JUDGMENT OF THE UNITED STATES COURT OF

APPEALS FOR THE FIFTH CIRCUIT, ISSUED AS

MANDATE

SEPTEMBER 25, 2006

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 04-31114

Docket No. 3:00-CV-694-D

LOUISIANA HEALTH SERVICES & INDEMNITY CO.,

doing business as Blue Cross Blue Shield of Louisiana

Plaintiff - Intervenor Defendant - Appellant

RAPIDES HEALTHCARE SYSTEM; STATE OF

LOUISIANA; CHARLES R FOTI JR, Attorney General for

the State of Louisiana;

Defendants - Appellees

DAUTERIVE HOSPITAL

Intervenor Plaintiff - Appellee

Appeal from the United States District Court for the

Middle District of Louisiana, Baton Rouge.

Before HIGGINBOTHAM, DeMOSS, and OWEN, Circuit

Judges.

JUDGMENT

This cause was considered on the record on appeal

and was argued by counsel.

It is ordered and adjudged that the judgment of the

District Court is affirmed.

IT IS FURTHER ORDERED that appellant pay to

appellees the costs on appeal to be taxed by the Clerk of this

Court.

OWEN, Circuit Judge, concurs.

ISSUED AS MANDATE: SEP 25 2006

56a

APPENDIX F

UNITED STATES CONSTITUTION,

ARTICLE VI, CLAUSE 2

This Constitution, and the laws of the United States which

shall be made in pursuance thereof; and all treaties made, or

which shall be made, under the authority of the United

States, shall be the supreme law of the land; and the Judges

in every State shall be bound thereby, anything in the

Constitution or laws of any State to the contrary

notwithstanding.

S7a

APPENDIX G

ERISA PROVISIONS

29 U.S.C. § 1002. Definitions

For purposes of this subchapter:

.... (8) The term "beneficiary" means a person designated

by a participant, or by the terms of an employee benefit plan,

who is or may become entitled to a benefit thereunder.

29 U.S.C. § 1102. Establishment of plan

(a) Named fiduciaries

(1) Every employee benefit plan shall be established and

maintained pursuant to a written instrument.

(b) Requisite features of plan

Every employee benefit plan shall--

.... (4) specify the basis on which payments are made to

and from the plan.

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29 U.S.C. § 1104. Fiduciary duties

(a) Prudent man standard of care

(1) Subject to sections 1103(c) and (d), 1342, and 1344 of

this title, a fiduciary shall discharge his duties with respect to

a plan solely in the interest of the participants and

beneficiaries and--

(D) in accordance with the documents and instruments

governing the plan insofar as such documents and

instruments are consistent with the provisions of this

subchapter and subchapter III of this chapter.

29 U.S.C. § 1132. Civil enforcement

(a) Persons empowered to bring a civil action

A civil action may be brought--

(1) by a pinion or beneficiary--

(A) for the relief provided for in subsection (c) of this

section, or

(B) to recover benefits due to him under the terms of his

plan, to enforce his rights under the terms of the plan, or

to clarify his rights to future benefits under the terms of

the plan;

(2) by the Secretary, or by a participant, beneficiary or

59a

fiduciary for appropriate relief under section 1109 of this

title;

(3) by a participant, beneficiary, or fiduciary (A) to enjoin

any act or practice which violates any provision of this

subchapter or the terms of the plan, or (B) to obtain other

appropriate equitable relief (1) to rearess such violations or

(ii) to enforce any provisions of this subchapter or the

terms of the plan;

(e) Jurisdiction

(1) Except for actions under subsection (a)(1)(B) of this

section, the district courts of the United States shall have

exclusive jurisdiction of civil actions under this subchapter

brought by the Secretary or by a participant, beneficiary,

fiduciary, or any person referred to in section 1021(f)(1) of

this title. State courts of competent jurisdiction and district

courts of the United States shall have concurrent jurisdiction

of actions under paragraphs (1)(B) and (7) of subsection (a)

of this section.

(f) Amount in controversy; citizenship of parties

The district courts of the United States shall have

jurisdiction, without respect to the amount in controversy or

the citizenship of the parties, to grant the relief provided for

in subsection (a) of this section in any action.

(g) Attorney's fees and costs; awards in actions involving

delinquent contributions

60a

(1) In any action under this subchapter (other than an action

described in paragraph (2)) by a participant, beneficiary, or

fiduciary, the court in its discretion may allow a reasonable

attorney's fee and costs of action to either party.

29 U.S.C. § 1144. Other laws

(a) Supersedure; effective date

Except as provided in subsection (b) of this section, the

provisions of this subchapter and subchapter III of this

chapter shall supersede any and all State laws insofar as they

may now or hereafter relate to any employee benefit plan

described in section 1003(a) of this title and not exempt

under section 1003(b) of this title. This section shall take

effect on January 1, 1975.

(b) Construction and application

(1) This section shall not apply with respect to any cause of

action which arose, or any act or omission which occurred,

before January |, 1975.

(2)(A) Except as provided in subparagraph (B), nothing in

this subchapter shall be construed to exempt or relieve any

person from any law of any State which regulates insurance,

banking, or securities.

(B) Neither an employee benefit plan described in section

1003(a) of this title, which is not exempt under section

1003(b) of this title (other than a plan established primarily

for the purpose of providing death benefits), nor any trust

6la

established under such a plan, shall be deemed to be an

insurance company or other insurer, bank, trust company, or

investment company or to be engaged in the business of

insurance or banking for purposes of any law of any State

purporting to regulate insurance companies, insurance

contracts, banks, trust companies, or investment companies.

62a

APPENDIX H

LA. REV. STAT. ANN. § 40:2010

LOUISIANA REVISED STATUTES

TITLE 40. PUBLIC HEALTH AND SAFETY

CHAPTER 11. STATE DEPARTMENT OF HOSPITALS

PART I. ORGANIZATION AND POWERS

§ 2010. Itemized statement of billed services by hospitals

Not later than ten business days after the date of discharge,

each hospital in the state which is licensed by the

Department of Health and Hospitals shall have available an

itemized statement of billed services for individuals who

have received the services from the hospital. The

availability of the statement shall be made known to each

individual who receives service from the hospital before the

individual is discharged from the hospital, and a duplicate

copy of the billed services statement shall be presented to

each patient within the specified ten day period. No

insurance company, employee benefit trust, self-insurance

plan, or other entity which is obligated to reimburse the

individual or to pay for him or on his behalf the charges for

the services rendered by the hospital shall pay those benefits

to the individual when the itemized statement submitted to

such entity clearly indicates that the individual's rights to

those benefits have been assigned to the hospital. When any

insurance company, employee benefit trust, self-insurance

plan, or other entity has notice of such assignment prior to

such payment, any payment to the insured shall not release

said entity from liability to the hospital to which the benefits

have been assigned, nor shall such payment be a defense to

any action by the hospital against that entity to collect the

assigned benefits. However, an interim statement shall be

provided when requested by the patient or his authorized

agent.

APPENDIX I

BLUE CROSS SAMPLE PLAN EXCERPT:

DIRECT PAYMENT PROVISION

Direct Payment to Member

1. All benefits payable by the Company under this Benefit

Plan and any amendment hereto are personal to the Member

and are not assignable in whole or in part by the Member.

The Company has the right to make payment to a Hospital,

Physician, or other Provider (instead of to the Member) for

Covered Services which they provide while there is in effect

between the Company and any such Hospital, Physician, or

other Provider an agreement calling for the Company to

make payment directly to them. In the absence of such an

agreement for direct payment, the Company will pay to the

Member and only the Member those Benefits called for

herein and the Company will not recognize a member’s

attempted assignment to, or direction to pay, another, except

as required by law.

2. Hospitals, Physicians, and other Providers which have

agreed with the Company or another Blue Cross and Blue

Shield Benefit Plan for such direct payment are, by reason of

such agreements, “Participating Hospitals,” “Participating

Physicians” (often called ‘Key Physicians”), or

“Participating other Providers,” respectively, and are referred

to collectively as “Participating Providers.” Those Hospitals,

Physicians, and other Providers which do not have such |

agreements for direct payment are “Nonparticipating

Hospitals,” “Nonparticipating Physicians,” and

“Nonparticipating other Providers,’ respectively, and are

referred to collectively as “Nonparticipating Providers.”

64a

3. If the Company has offered a Hospital, Physician, or

other Provider an agreement for direct payment by the

Company, but there is no such arrangement in effect when

Covered Services are rendered to a Member by such

Hospital, Physician, or other Provider, the Company will not

recognize a Member’s attempted assignment to, or direction

to pay, such Hospital, Physician, or other Provider. The

Company will pay to the Member and only the Member

those Benefits called for in this Benefit Plan and any

amendment thereto.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.