Pending before this Court is Defendant 84 LUMBER COMPANY MEDICAL BENEFITS PLAN'S ("Medical Plan") Motion to Dismiss (Document No. 2), as well as Motions for Summary Judgment filed by Plaintiff Children's Hospital of Pittsburgh ("Children's Hospital") (Document No. 13) and by the Medical Plan (Document No. 11).
Medical Plan is an employee welfare benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), 29 U.S.C. § 1002(1). Medical Plan provides medical, surgical and hospital benefits to eligible employees and dependents. (Complaint P 3, Memorandum in Support of Motion to Dismiss, p.1).
John Hood was an employee of 84 Lumber Company, and was a participant, within the meaning of 29 U.S.C. § 1002(7), of the Medical Plan and eligible for benefits provided under the Plan. On March 15, 1990, Julianna Hood, wife of John Hood, gave birth to their biological daughter, Jennifer Hood. As a result of a life-threatening medical condition, Jennifer Hood was transferred from Erie, Pennsylvania, to Children's Hospital on March 17, 1990. Children's Hospital alleges that from March 17, 1990, until Jennifer Hood's death on March 24, 1990, it rendered medical services to Jennifer Hood totalling $ 35,173.23. (Complaint, P 10).
Children's Hospital alleges in its complaint
that Medical Plan has arbitrarily and capriciously denied Children's Hospital's claim for payment for the medical services it provided to Jennifer Hood.
Medical Plan avers that, as a matter of law, the conduct of the Plan's trustee in denying coverage was neither arbitrary nor capricious. (Motion to Dismiss, P 10).
II. MOTION TO DISMISS
Medical Plan asserts two separate legal arguments in support of its Motion to Dismiss: (i) Medical Plan first alleges that, as a matter of law, the conduct of Medical Plan's trustee was neither arbitrary nor capricious, thus Medical Plan asserts that the complaint must be dismissed for failure to state a claim upon which relief may be granted (Memorandum in Support of Motion to Dismiss, pp. 3-8); and, (ii) Secondly, Medical Plan asserts that Children's Hospital has no standing to bring the instant ERISA action (Memorandum in Support of Motion to Dismiss, pp. 8-10).
B. Standard of Review
In deciding a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), the court must accept the well-pleaded factual allegations as true. A claim should not be dismissed for failure to state a claim unless it appears beyond a doubt that the non-moving party can prove no set of facts in support of its allegations which would entitle it to relief. Conley v. Gibson, 355 U.S. 41, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957); Marshall-Silver Constr. Co. v. Mendel, 894 F.2d 593, 595 (3d Cir. 1990). In making this determination, the court must construe the pleading in the light most favorable to the non-moving party. Budinsky v. Pennsylvania Dep't of Envtl. Resources, 819 F.2d 418, 421 (3d Cir. 1987). For the reasons set forth below, Medical Plan's Motion to Dismiss as to standing is denied with prejudice, and the balance of the Motion to Dismiss is denied without prejudice.
i) Arbitrary and Capricious
Medical Plan's Motion to Dismiss for failure to state a claim upon which relief may be granted shall be treated as a motion for summary judgment and disposed of as provided in Rule 56 because matters outside the pleading were presented to and not excluded by the court. See Fed. R. Civ. P. 12 (b).
Therefore, the issues raised in Medical Plan's Motion to Dismiss for failure to state a claim upon which relief may be granted will be discussed and considered in conjunction with this Court's disposition of Medical Plan's pending Motion for Summary Judgment.
Medical Plan contends that Section 502 of ERISA provides that a civil action may only be brought under ERISA by a plan "participant," "beneficiary," "fiduciary," or by the Secretary of Labor. Therefore, Medical Plan claims that because Children's Hospital is an "assignee" of the benefits under the Plan, it has no standing in the instant action. (Motion to Dismiss, p.4, citing Health Scan, Ltd. v. Travelers Ins. Co., 725 F. Supp. 268, 269 (E.D. Pa. 1989)). This Court concludes that Medical Plan's contention lacks merit and must be denied.
As a preliminary matter, this Court recognizes that there is no binding authority which is dispositive of this particular ERISA-standing issue.
Additionally, this Court acknowledges that there is currently a division among the district courts of this circuit as to whether an assignee has standing to bring an ERISA claim. See Allergy Diagnostics Lab. v. The Equitable, 785 F. Supp 523 (W.D. Pa. 1991) and Nationwide Mut. Ins. Co. v. Teamsters Health & Welfare Fund, 695 F. Supp. 181, 185 (E.D. Pa. 1988) (an assignee does not have standing to bring an ERISA action.) Contra Northwestern Inst. of Psychiatry v. Travelers Ins. Co., No. 92-1520, 1992 WL 236257 (E.D. Pa. Sept. 3, 1992), on recons. in part, 1992 WL 331521 (E.D. Pa. Nov. 3, 1992), Winter Garden Medical Ctr. v. Montrose Foods Prods. of Pa., Inc., No. 91-2327, 1991 WL 124577 (ED. Pa. July 3, 1991), Albert Einstein Medical Ctr. v. National Benefit Fund for Hosp. & Health Care Employees, 740 F. Supp 343 (E.D. Pa. 1989) and Hahnemann Medical College & Hosp. v. Stone, No. 86-7059, 1987 WL 17568 (E.D. Pa. Sept. 24, 1987) (an assignee of a plan participant has standing to bring an ERISA cause of action against the Plan.)
This Court holds that Children's Hospital may be deemed a beneficiary, as defined by 29 U.S.C. § 1002(8), and as a result, has proper standing to bring this ERISA action. Section 1002(8) defines "beneficiary" as:
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. § 1002(8).
Medical Plan contends, in its Motion to Dismiss, that standing under ERISA does not extend to one who has taken an assignment from a plan participant. On the contrary, Children's Hospital asserts that it became an ERISA-beneficiary as a result of the assignment, as well as a result of the plan's universal assignment provision.
This Court agrees with Children's Hospital.
In reaching it decision, the Court relies on several well-reasoned decisions of various district courts in this circuit. See Winter Garden Medical Ctr., 1991 WL 124577, **1-2 (health care provider became beneficiary under ERISA-regulated benefit plan as a result of an assignment because such assignment indicates a clear intent for the participant to designate the provider as a beneficiary for the purpose of section 1002(8) of ERISA). See also Hahnemann Medical College & Hosp., 1987 WL 17568, *2 ("if Congress had intended to create confusion and increased costs for ERISA beneficiaries by precluding the relatively simple assignment procedure so widely used in the health care industry, Congress would have said so in large black letters. There is nothing to that effect found in ERISA."); and, Albert Einstein Medical Ctr., 740 F. Supp. at 350 (in dicta, ". . . I believe that ERISA does not forbid assignment by a beneficiary of his right to reimbursement to a health care provider nor does it forbid an ERISA plan from reimbursing the health care provider directly.")
Based upon consideration of the plain language of the statute, as well as the relevant case law authority, this Court concludes that, as a result of the assignment of benefits and as a result of the universal assignment provision of the Medical Plan, Children's Hospital may be deemed a beneficiary as defined above, and may therefore assert a claim under ERISA. This approach to the interpretation of the statute is entirely consistent and faithful to the Third Circuit's instruction that the statute be accorded a narrow and literal construction. Compare Northwestern Inst. of Psychiatry, 1992 WL 236257, *4, citing ILGWU, 764 F.2d at 153 (section 1132(a) of ERISA must be read narrowly and literally.)
For the above-mentioned reasons, Medical Plan's Motion to Dismiss for lack of standing is denied with prejudice. Additionally, Medical Plan's Motion to Dismiss for failure to state a claim upon which relief may be granted shall be treated as a motion for summary judgment and will be considered, and disposed of, in conjunction with this Court's disposition of Medical Plan's pending Motion for Summary Judgment.
III. MOTIONS FOR SUMMARY JUDGMENT
Both parties to this litigation have Motions for Summary Judgment pending before this Court. Children's Hospital's position, in support of its motion, is that no genuine issue exists to any material fact that would support Medical Plan's refusal to pay the hospital bill of Jennifer Hood.
(Children's Hospital's Motion for Summary Judgment, P 26). Particularly, Children's Hospital contends that: (1) Medical Plan does not require that a Dependent Enrollment Form be completed in order for a newborn to be covered for the first thirty-one (31) days of life, (2) Medical Plan does not require that a parent enroll a dead child, (3) Medical Plan acted improperly in the administration of this matter as it has inconsistently applied the Medical Plan's provision regarding the enrollment of newborns, and (4) Medical Plan should be estopped from denying coverage based upon their actions. (Children's Hospital's Motion for Summary Judgment, P 26).
Medical Plan, in its Motion for Summary Judgment, asserts that it is entitled to summary judgment because: (1) As a matter of law, and based on undisputed facts, the conduct of its trustee was neither arbitrary nor capricious, (2) Mr. Hood's failure to properly enroll Jennifer Hood in the plan precludes coverage, and (3) ERISA preempts Children's Hospital's estoppel claim.
B. Standard of Review
In interpreting Rule 56 of the Federal Rules of Civil Procedure,
the United States Supreme Court has ruled:
The plain language . . . mandates entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. In such a situation, there can be no genuine issue as to material fact, since a complete failure of proof concerning an essential element of the non-moving party's case necessarily renders all other facts immaterial.