     Case: 13-20649       Document: 00513081260         Page: 1     Date Filed: 06/16/2015




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                           United States Court of Appeals
                                                                                    Fifth Circuit

                                       No. 13-20649                               FILED
                                                                              June 16, 2015
                                                                             Lyle W. Cayce
ELECTROSTIM MEDICAL SERVICES, INCORPORATED,                                       Clerk

               Plaintiff – Appellant,

v.

HEALTH CARE SERVICE CORPORATION, a Mutual Legal Reserve
Company,

               Defendant – Appellee.




                   Appeals from the United States District Court
                        for the Southern District of Texas.
                              USDC No. 4:11-CV-2745


Before PRADO, ELROD, and GRAVES, Circuit Judges.
PER CURIAM:*
       Electrostim Medical Services, Inc. (Electrostim) appeals the district
court’s dismissal of its second amended complaint. For the reasons explained
below, we affirm in part and reverse in part the district court’s judgment of
dismissal, and we remand this case for further proceedings.




       * Pursuant to 5th Cir. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5th Cir.
R. 47.5.4.
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                                 No. 13-20649
                                       I.
      Electrostim appeals from a judgment of dismissal for failure to state a
claim upon which relief can be granted; therefore, “we accept all well-pleaded
facts as true and view those facts in the light most favorable to the plaintiff.”
Montoya v. FedEx Ground Package Sys., Inc., 614 F.3d 145, 146 (5th Cir. 2010)
(internal quotation marks and alterations omitted). Electrostim is a Florida
medical-equipment company that provides electro-stimulating devices and
related services to patients in different states. Blue Cross Blue Shield of Texas
(BCBSTX) is a division of Health Care Service Corp. (HCSC) that does business
in Texas. In 2007, Electrostim and BCBSTX entered into a participating-
provider agreement under which BCBSTX agreed to pay Electrostim for
properly submitted claims for “Covered Services rendered to Subscribers.” The
agreement defined “Covered Services” as “those health services specified and
defined as Covered Services under the terms of a Subscriber’s Health Plan.”
“Subscribers” included the patients to whom Electrostim supplied equipment
and services and who were also beneficiaries of insurance policies administered
by BCBSTX or another Blue Cross Blue Shield entity. BCBSTX terminated its
provider agreement with Electrostim effective August 1, 2010. Electrostim’s
lawsuit concerns claims that arose both before and after the effective date of
the termination.
      Electrostim sued BCBSTX in state court, alleging that BCBSTX
wrongfully terminated the provider agreement. Electrostim then amended its
complaint to seek relief for its unpaid claims, asserting claims for: breach of
the provider agreement; unjust enrichment; breach of implied contract; third-
party beneficiary rights; quantum meruit; suit on account; violation of prompt-
payment statutes; violation of ERISA, 29 U.S.C. § 1132(a); breach of ERISA
fiduciary duty, 29 U.S.C. § 1109; and declaratory judgment. The first amended
complaint did not identify the claims that BCBSTX allegedly failed to pay to
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                                  No. 13-20649
Electrostim. BCBSTX removed to the U.S. District Court for the Southern
District of Texas on the basis of diversity and moved for dismissal. During that
motion’s pendency, BCBSTX prepared a spreadsheet of all the claims that it
believed were at issue.
      When Electrostim provided its own spreadsheets that did not correspond
with the one provided by BCBSTX, the district court held a hearing, which took
place on August 2, 2012. The court dismissed the first amended complaint by
oral pronouncement, ordering Electrostim to file a second amended complaint
that clarified the source and nature of the claims and what the causes of action
were. It also ordered Electrostim to provide a complete list of the healthcare
claims at issue. The district court did not elaborate on all of the defects that it
perceived in the first amended complaint, and no written dismissal order
followed the oral pronouncement that the district court made at the hearing.
Rather, at the hearing, the district court focused on its perception that the
complaint lacked clarity as to the causes of action and claims in dispute, and
the consequent difficulty of determining preemption issues. In fact, the district
court specifically stated that Electrostim “may have a breach of contract
claim.”
      Electrostim’s second amended complaint asserted the same causes of
action as the previous one and yet again did not identify the healthcare claims
at issue. At a hearing held on August 29, 2012, the district court ordered the
parties to exchange additional information regarding the claims, and in
particular, it ordered BCBSTX to provide specific information about the
reasons for claim denials. BCBSTX then moved to dismiss the second amended
complaint for failure to state a claim.
      In October 2012, BCBSTX identified approximately 8,800 claims that
Electrostim had submitted during the relevant time period before termination


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of the provider agreement. Of these pre-termination claims, BCBSTX had
denied 2,296 without any payment: 1
   • 77 claims for patients covered by BCBSTX plans, namely:
          • 74 claims under the federal employee program for which BCBSTX
             served as administrator;
          • 1 claim under a Texas state government plan for which BCBSTX
             served as administrator;
          • 2 claims under employer-sponsored plans for which BCBSTX
             served as administrator; and
   • 2,219 “BlueCard” claims for patients who had healthcare plans
       administered by Blue Cross Blue Shield entities other than BCBSTX
       and for which the decision to deny coverage was made by an entity
       other than BCBSTX.
BCBSTX also identified 273 claims that Electrostim submitted to BCBSTX for
products and services rendered after termination of the provider agreement.
In addition to these post-termination claims, Electrostim contended that its
lawsuit also put at issue around 20,000 other post-termination claims that had
been submitted to, and denied by, Blue Cross Blue Shield entities other than
BCBSTX. Electrostim contended that it would have submitted these claims to
BCBSTX had the provider agreement not been terminated.
       At a hearing held on February 25, 2013, the district court discussed,
among other things, the 20,000 post-termination claims that Electrostim had
submitted to entities other than BCBSTX, advising Electrostim that either
those claims would have to be submitted to BCBSTX, or Electrostim might


      1  Because it viewed the second amended complaint as focusing exclusively on denied
claims, BCBSTX did not believe that the lawsuit put at issue any partially paid claims, but
rather only those claims that had been denied outright. Indeed, during the August 29, 2012
hearing, BCBSTX acknowledged that the majority of the claims that Electrostim had
submitted to BCBSTX were partially paid rather than denied outright.
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                                     No. 13-20649
wish to add the other entities as defendants. However, at a hearing held on
April 23, 2013, the district court suggested that submitting the additional
20,000 post-termination claims to BCBSTX would be a waste of time because,
as the parties agreed, the proper entities to review these claims were those
located in the states in which the patients resided or received services, and
many of Electrostim’s patients resided and received services in states other
than Texas. The district court did not, however, order Electrostim to refrain
from submitting the additional 20,000 claims to BCBSTX. Indeed, the district
court opined that Electrostim’s lawsuit was not ripe as to the 20,000 additional
claims because they had not been submitted to (and denied by) BCBSTX,
suggesting that Electrostim might still wish to submit the 20,000 additional
claims to BCBSTX so that they could be made a part of the lawsuit. Even so,
Electrostim never submitted these additional claims to BCBSTX. 2
      At the April 23, 2013 hearing, the district court determined, with
Electrostim’s consent, that it would consider BCBSTX’s spreadsheets to be
incorporated in the second amended complaint for the purpose of resolving the
motion to dismiss.       Thereafter, the district court received supplemental
briefing by both parties that focused on the two broad categories of claims at
issue (pre-termination and post-termination).              With the benefit of this
supplemental briefing, the district court granted BCBSTX’s motion to dismiss.
The court concluded that each count of the complaint failed to state a plausible
claim for relief, and it entered an order of dismissal with prejudice. After the




      2  Electrostim’s asserted basis for holding BCBSTX responsible for these 20,000
additional claims was that but for the termination of the provider agreement, Electrostim
would have continued submitting these claims to BCBSTX and BCBSTX would have
continued forwarding them to the appropriate entities. However, as explained below,
Electrostim now concedes that the termination was proper. Therefore, Electrostim no longer
has any basis upon which to hold BCBSTX liable for the 20,000 additional claims.
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                                 No. 13-20649
district court denied Electrostim’s motion to amend the judgment, Electrostim
timely appealed.
                                       II.
      We conduct a de novo review of a district court’s Rule 12(b)(6) dismissal,
applying the same standard that the district court used. Gen. Elec. Capital
Corp. v. Posey, 415 F.3d 391, 395 (5th Cir. 2005). To assess a complaint’s legal
sufficiency under Rule 12(b)(6), we must accept all well-pleaded factual
allegations and, viewing them in the light most favorable to the plaintiff,
determine whether the plaintiff has stated a “plausible”—as opposed to merely
“speculative” or “conceivable”—claim that he is entitled to relief. Bell Atlantic
Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007); see also Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009). In so doing, we disregard a complaint’s unsupported legal
conclusions, for “‘a formulaic recitation of the elements of a cause of action’”
will not suffice to state a plausible claim. Iqbal, 556 U.S. at 678 (quoting
Twombly, 550 U.S. at 555). Rather, a complaint must allege “enough factual
matter (taken as true) to suggest” the elements required for a claim. Twombly,
550 U.S. at 556.
      When a complaint has properly been dismissed, the district court has
discretion whether to grant leave to amend, and we will not disturb the district
court’s ruling unless it abused that discretion. Simmons v. Sabine River Auth.
La., 732 F.3d 469, 478 (5th Cir. 2013). That discretion, however, is limited
because under Rule 15, the district court “should freely give leave when justice
so requires.” Fed. R. Civ. P. 15(a)(2). “[U]nless there is a substantial reason
to deny leave to amend, the discretion of the district court is not broad enough
to permit denial.” Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594, 598 (5th Cir.
1981); see also id. at 598–600 (holding that a district court erred in denying
leave to amend where amendment would not be futile, the plaintiff did not
unduly delay, there were not repeated failures to cure the deficiency, and no
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                                      No. 13-20649
prejudice would result to the opposing party). Repeated failure to cure a
complaint’s     deficiencies    and     futility   of   amendment       are    legitimate
considerations for denying leave to amend. In re Southmark Corp., 88 F.3d
311, 314–15 (5th Cir. 1996).
                                           III.
        Before we discuss the claims that are at issue in this appeal, we identify
those claims which are not. In its responses to BCBSTX’s motion to dismiss
the second amended complaint, Electrostim abandoned its claims for
declaratory judgment and breach of ERISA fiduciary duty. In addition, in its
Rule 59(e) motion to amend the judgment, Electrostim acknowledged that its
breach-of-contract claim failed to the extent that it related to BCBSTX’s
termination of the provider agreement and refusal to review the termination,
and any attempt to amend that claim as to those two theories would be futile.
Electrostim also acknowledges that before the district court, it abandoned its
claim for suit on a sworn account.
        Moreover, at oral argument on appeal, Electrostim expressly abandoned
its quantum meruit claim.        In addition, Electrostim’s initial brief fails to
provide any discussion at all on its prompt payment and unjust enrichment
claims. Because its initial brief fails to develop any argument why it pleaded—
or can amend its complaint to plead—the required elements for these claims,
Electrostim has abandoned any challenge to the district court’s dismissal of
those claims. See United States v. Scroggins, 599 F.3d 433, 446–47 (5th Cir.
2010) (summarizing our briefing requirements for adequately raising an issue
on appeal); Am. States Ins. Co. v. Bailey, 133 F.3d 363, 372 (5th Cir. 1998)
(“Failure to provide any legal or factual analysis of an issue results in waiver.”);
Cinel     v.   Connick,    15    F.3d     1338,     1345    (5th     Cir.   1994)    (“An
appellant abandons all issues not raised and argued in its initial brief on
appeal.”).
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                                        No. 13-20649
       What is left of the complaint, then, for purposes of this appeal, are
Electrostim’s claims for: (1) breach of the provider agreement by failure to pay
claims for covered services; (2) third-party beneficiary rights; (3) suit on an
open account; (4) breach of implied contract; and (5) violation of ERISA, 29
U.S.C. § 1132(a).
                                              IV.
       We now examine whether the complaint stated a plausible claim for
relief as to those causes of action that Electrostim has not abandoned. As the
district court did, we divide our discussion of Electrostim’s causes of action
between the pre-termination and post-termination claims.
                                               A.
                                               1.
       The district court noted that at a hearing, Electrostim conceded that “the
vast majority of the disputed claims in this suit arose under ERISA plans.”
The district court concluded that to the extent Electrostim’s state-law claims
concerned claims governed by ERISA plans, they were preempted by ERISA
and should be dismissed on that basis. 3 We agree that to the extent that the
claims at issue are governed by ERISA, ERISA preempts Electrostim’s state-
law claims. However, we conclude that Electrostim should have been granted
leave to amend, as Electrostim can re-plead its state-law claims to avoid
ERISA preemption as to ERISA-governed claims that BCBSTX partially paid.
       Section 502(a) of ERISA provides: “A civil action may be brought by 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



       3The district court also concluded that all state-law causes of action as to the 74 claims
that arose under the federal employee program for which BCBSTX served as administrator
were preempted by the Federal Employees Health Benefits Act, 5 U.S.C. §§ 8901–8914.
Electrostim does not challenge that determination on appeal.
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to future benefits under the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B).
ERISA’s civil-enforcement scheme “completely preempts any state-law cause
of action that ‘duplicates, supplements, or supplants’ an ERISA remedy.” Lone
Star OB/GYN Assocs. v. Aetna Health, Inc., 579 F.3d 525, 529 (5th Cir. 2009)
(quoting Aetna Health, Inc. v. Davila, 542 U.S. 200, 209 (2004)). Whether
ERISA preempts a state-law claim based on a provider agreement turns on
whether the agreement “creates a legal duty independent of the ERISA plan.”
Id. at 530 (internal quotation marks omitted). In particular, “[a] claim that
implicates the rate of payment as set out in the Provider Agreement, rather
than the right to payment under the terms of the [ERISA] benefit plan, . . . is
not preempted by ERISA.” Id.
       Electrostim argues that its state-law claims were based not only on its
right to payment under the terms of patients’ ERISA plans, but also on the
payment rate to which Electrostim was entitled under the provider agreement.
Although Electrostim presented a payment-rate argument to the district court
and has therefore preserved that argument for appeal, 4 we agree with
BCBSTX that Electrostim’s complaint, on its face, did not seek recovery for
partially paid claims, but rather sought recovery only for those claims which
had been denied in whole. Nowhere does the complaint allege that BCBSTX
paid claims but failed to pay the rates specified in the provider agreement.
Rather, Electrostim alleged only that BCBSTX failed to pay claims for which
Electrostim had a right to receive payment. This is exactly the type of right-



       4  BCBSTX argues that Electrostim never raised a payment-rate argument in the
district court and that it has thus waived that issue in this appeal. See Celanese Corp. v.
Martin K. Eby Constr. Co., 620 F.3d 529, 531 (5th Cir. 2010) (“The general rule of this court
is that arguments not raised before the district court are waived and will not be considered
on appeal.”). BCBSTX is incorrect. In its response to BCBSTX’s supplemental brief
supporting its motion to dismiss the second amended complaint, Electrostim contended that
its lawsuit sought to recover not only for wholly denied claims, but also for partially paid
claims.
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to-payment claim for which ERISA preempts state-law causes of action. See
Lone Star OB/GYN, 579 F.3d at 530–31 (ERISA completely preempts state-
law right-of-payment claims that call for a determination of whether a service
is covered, because patients’ ERISA plans—not the provider agreement—
dictate coverage). Because Electrostim’s state-law claims are premised on
Electrostim’s right to receive payment under the terms of patients’ ERISA
plans, those claims are preempted by ERISA to the extent that the disputed
claims arose under ERISA plans, and the district court did not err in
dismissing them to that extent and on that basis. 5
       However, there was another set of claims that were partially paid, rather
than denied outright, and Electrostim can assert non-preempted state-law
claims based on the rate at which these claims were paid. At the August 29,
2012 hearing, BCBSTX acknowledged that the majority of the claims that
Electrostim had submitted to BCBSTX were partially paid rather than denied
outright. In its response to BCBSTX’s supplemental brief in support of the
motion to dismiss, Electrostim specifically drew the district court’s attention
to these partially paid claims and argued that its lawsuit challenged not only
the denial of claims, but also the rate at which claims were paid. As we have
explained, ERISA does not preempt state-law claims based on an allegedly
improper rate of payment in violation of a provider agreement. Therefore,
Electrostim has demonstrated, both to the district court and to this court, that
because Electrostim can amend its complaint to put at issue the rate at which
BCBSTX paid the partially paid claims, amendment would not be futile. In
addition, because the district court did not explain in its first dismissal why



       5 As explained above, on appeal, Electrostim does not challenge the district court’s
separate conclusion that all state-law causes of action as to the 74 claims that arose under
the federal employee program for which BCBSTX served as administrator were preempted
by the Federal Employees Health Benefits Act, 5 U.S.C. §§ 8901–8914.
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                                  No. 13-20649
Electrostim’s state-law claims were preempted by ERISA, Electrostim did not
repeatedly fail to cure the deficiency. Therefore, we hold that the district court
erred when it denied leave to amend Electrostim’s state-law claims.            On
remand, Electrostim should be permitted to amend its state-law claims to
include its non-preempted rate-of-payment theory.
                                        2.
      To the extent that the disputed claims did not arise under ERISA-
governed plans and Electrostim’s state-law claims were therefore not
preempted by ERISA, the district court concluded that the state-law claims
failed for additional reasons. As to the breach-of-contract claim, the district
court concluded that Electrostim failed to plead facts showing that BCBSTX
breached the provider agreement by failing to make payments to which
Electrostim was entitled under the agreement. The complaint did, of course,
allege that BCBSTX failed to pay Electrostim’s “covered claims.” However,
according to the district court, Electrostim alleged no facts suggesting that it
was entitled to payment for the claims that it submitted. As we noted earlier,
the provider agreement did not obligate BCBSTX to pay all claims submitted
by Electrostim for services rendered to subscribers.        Rather, it required
payment only of claims submitted by Electrostim for “[c]overed [s]ervices.”
Whether services were covered, in turn, depended upon whether the
subscribers’ health plans designated them as covered. Because it believed that
Electrostim had failed to provide a basis for inferring that the services
Electrostim had rendered were covered services, the district court concluded
that Electrostim had failed to state a claim for breach of the provider
agreement.
      The district court should not have dismissed Electrostim’s claim for
breach   of   the   provider   agreement.        “The   essential   elements    of
a breach of contract claim are the existence of a valid contract, performance or
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                                   No. 13-20649
tendered performance by the plaintiff, breach of the contract by the defendant,
and damages sustained as a result of the breach.” City of the Colony v. N. Tex.
Mun. Water Dist., 272 S.W.3d 699, 739 (Tex. App.—Fort Worth 2008, pet.
dism’d). In its second amended complaint, Electrostim alleged the existence
and validity of the provider agreement and attached a copy.              Electrostim
alleged that it performed under the agreement by providing its services and
products to subscribers. Electrostim further alleged that BCBSTX breached a
specific provision of the agreement—the provision obligating BCBSTX to pay
Electrostim’s claims for covered products and services. Cf. Williams v. Wells
Fargo Bank, N.A., 560 F. App’x 233, 238 (5th Cir. 2014) (affirming dismissal of
a breach-of-contract claim on the basis that the complaint did not identify the
provision that the defendant allegedly breached). Electrostim also described
these    services    and   products   in    some   detail;    namely,   it   provided
electrostimulating devices to alleviate various medical ailments.            Finally,
Electrostim alleged that BCBSTX’s failure to pay claims—which were
eventually itemized in spreadsheets—caused Electrostim to sustain damages.
We conclude that these allegations are sufficiently detailed to permit “the
reasonable inference that the defendant is liable for the misconduct alleged,”
Iqbal, 556 U.S. at 678, and, in particular, the reasonable inference that
BCBSTX breached the provider agreement by failing to pay claims for covered
services. Therefore, the district court erred in dismissing Electrostim’s breach-
of-contract claim.
                                           3.
        As to Electrostim’s claim for third-party beneficiary rights, the district
court concluded that Electrostim had failed to plead facts showing that it was
a third-party beneficiary of its patients’ health-insurance contracts with
BCBSTX. On appeal, Electrostim argues that it properly pleaded its third-
party beneficiary claim because all insurers agree that they will pay their
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insureds’ healthcare providers for covered products and services.            Thus,
Electrostim argues, it is a third-party beneficiary to the health-insurance
contracts between its patients and BCBSTX. Electrostim’s argument runs
contrary to settled Texas law.
      Texas courts have found “no support for the proposition that healthcare
providers . . . are ipso facto third-party beneficiaries of their patients’ health-
insurance contracts with standing to enforce such contracts.” Galveston Indep.
Sch. Dist. v. Clear Lake Rehab. Hosp., L.L.C., 324 S.W.3d 802, 811 n.2 (Tex.
App.—Houston [14th Dist.] 2010, no pet.); see also Hermann Hosp. v. Liberty
Life Assurance Co. of Boston, 696 S.W.2d 37, 41 (Tex. App.—Houston [14th
Dist.] 1985, writ ref’d n.r.e.) (hospital not a third-party beneficiary of a
patient’s insurance policy merely because it would be the ultimate recipient of
funds). Rather, a plaintiff must allege facts showing that the contracting
parties intended to make it a third-party beneficiary. MCI Telecomms. Corp.
v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 652 (Tex. 1999) (a plaintiff may assert
third-party beneficiary status only when the contract contains a clear
indication that the parties intended to confer a direct benefit to the plaintiff);
cf. S. Coast Spine & Rehab. PA v. Brownsville Indep. Sch. Dist., No. 13-11-
00270-CV, 2014 WL 1789546, at *4–5 (Tex. App.—Corpus Christi Apr. 30,
2014, no pet.) (although conclusory allegation that healthcare provider is a
third-party beneficiary “by operation of law” is insufficient, a provider may
bring suit when insurance contracts required patients to assign their rights to
the provider).
      In the second amended complaint, Electrostim grounded its third-party-
beneficiary claim on the mere fact that it would be the ultimate recipient of
funds under patients’ insurance policies. This is insufficient, as a matter of
Texas law, to plausibly allege that Electrostim can sue as a third-party


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                                   No. 13-20649
beneficiary of its patients’ BCBSTX insurance contracts. Thus, the district
court did not err when it dismissed Electrostim’s third-party beneficiary claim.
      The district court’s denial of leave to amend, however, was error. In its
Rule 59(e) motion before the district court and in its briefs on appeal,
Electrostim argued that it can correct the deficiency in its third-party
beneficiary claim by pleading that it received assignments from its patients.
“Where, as here, the plaintiff files a motion for reconsideration and requests
leave to amend following a dismissal with prejudice, ‘the considerations for
[the] Rule 59(e) motion are governed by [Federal Rule of Civil Procedure]
15(a).’ We therefore review the district court’s denial . . . for abuse of discretion,
in light of the limited discretion afforded by Rule 15(a).” United States ex rel.
Spicer v. Westbrook, 751 F.3d 354, 367 (5th Cir. 2014) (first two alterations in
original) (quoting Rosenzweig v. Azurix Corp., 332 F.3d 854, 864 (5th Cir.
2003)) (footnote and citations omitted). Electrostim’s receipt of assignments
would provide a separate legal basis for Electrostim to sue under its patients’
insurance policies with BCBSTX.          See Ostrovitz & Gwinn, LLC v. First
Specialty Ins. Co., 393 S.W.3d 379, 387 (Tex. App.—Dallas 2012, no pet.) (“[A]
party must show either privity or third-party-beneficiary status in order to
have standing to sue for breach of contract. Privity exists if the defendant was
a party to an enforceable contract with either the plaintiff or someone who
assigned his or her cause of action to the plaintiff.” (citation omitted)); First-
Citizens Bank & Trust Co. v. Greater Austin Area Telecomms. Network, 318
S.W.3d 560, 566 (Tex. App.—Austin 2010, no pet.) (“An assignee stands in the
shoes of the assignor and may assert those rights that the assignor could
assert, including bringing suit.”). Therefore, because Electrostim has shown—
both to the district court and to this court on appeal—that amendment would
not be futile, and because Electrostim has not repeatedly failed to cure the
deficiency, the district court erred when it denied Electrostim leave to amend
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                                  No. 13-20649
its third-party beneficiary claim. On remand, Electrostim should be afforded
an opportunity to amend to state this claim.
                                       4.
      The district court also concluded that Electrostim failed to state a claim
for suit on an open account. Under Texas law, “[a]n open account exists where
parties have conducted past and current dealings in a financial account; it
remains open as long as the parties expect to conduct future dealings in the
account. . . . A suit on an open account is—among other things—one which
arises out of the general course of dealing between a debtor and creditor.”
Facility Ins. Corp. v. Emp’rs Ins. of Wausau, 357 F.3d 508, 513 (5th Cir. 2004).
The essential elements of a suit-on-account claim are: “(1) that there was a sale
and delivery of the merchandise; (2) that . . . the prices are charged in
accordance with an agreement or in the absence of an agreement, they are the
usual, customary and reasonable prices for that merchandise; and (3) the
amount is unpaid.” Hose Pro Connectors, Inc. v. Parker Hannifin Corp., 889
S.W.2d 555, 558 (Tex. App.—Houston [14th Dist.] 1994, no writ). However, a
suit on an account “need not be restricted to suits involving physical items,”
and it may instead involve the performance of services. Facility Ins. Corp., 357
F.3d at 513.
      The district court concluded that Electrostim failed to allege that it
provided a good or service to BCBSTX, that the parties have conducted past
dealings establishing an account, and that the parties expected to conduct
future dealings in that account.     We do not agree.       As the district court
observed, the complaint describes goods and services that Electrostim provided
to BCBSTX’s subscribers, not to BCBSTX.            However, the district court
overlooked the complaint’s allegation that this provision of covered products
and services to subscribers was itself the service that Electrostim provided to
BCBSTX.        Moreover, Electrostim alleged that it provided this service to
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                                  No. 13-20649
BCBSTX on an open account, the charges were usual, customary, and
reasonable, and a balance remained due on the account. Electrostim also
attached to the complaint an affidavit from its Chief Executive Officer
describing the alleged account. Therefore, Electrostim stated a plausible claim
for suit on an open account, and the district court erred in dismissing this
claim.
                                        5.
      The district court also dismissed Electrostim’s ERISA claim. In short,
the court concluded that Electrostim could not bring an action under ERISA
because it failed to specify language in any ERISA plan entitling it to benefits,
and it had also failed to allege any assignment of the insureds’ rights under an
ERISA plan.      Furthermore, the district court concluded that even if
Electrostim’s ERISA claim did not suffer from these flaws, it still could not
state a claim under ERISA against BCBSTX for the 2,219 BlueCard claims
because BCBSTX did not control the administration of those claims. In other
words, according to the district court, Electrostim failed to allege facts showing
that BCBSTX—rather than other Blue Cross Blue Shield entities—exercised
control over the BlueCard claim denials.
      The district court correctly dismissed Electrostim’s ERISA claim. Under
ERISA, a “participant or beneficiary” in an ERISA-governed plan may sue “to
recover benefits due to him under the terms of his plan” or “to enforce his rights
under the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B). Electrostim alleged in
the complaint that it “is a participant or beneficiary as defined in ERISA,” but
it provided no factual support for this bare legal conclusion. ERISA defines
“participant” as “any employee or former employee of an employer, or any
member or former member of an employee organization, who is or may become
eligible to receive a benefit . . . from an employee benefit plan.” 29 U.S.C.
§ 1002(7).   The complaint provided no factual allegations to support the
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                                  No. 13-20649
conclusion that Electrostim was a “participant.” In addition, Electrostim did
not plead facts showing that it was a “beneficiary.” We have held that “ERISA
does not countenance third-party beneficiary claims,” and a healthcare
provider cannot show that it is a “beneficiary” in an ERISA-governed plan
unless it has been so-designated by the participant or the plan document itself.
Dallas Cnty. Hosp. Dist. v. Assocs.’ Health & Welfare Plan, 293 F.3d 282, 289
(5th Cir. 2002). Electrostim did not allege this type of beneficiary designation.
      Even though Electrostim did not plausibly allege that it was a plan
participant or beneficiary, it could still sue to recover benefits or enforce rights
if it received a valid assignment from a plan participant or beneficiary. See
Hermann Hosp. v. MEBA Med. & Benefits Plan, 845 F.2d 1286, 1289–90 (5th
Cir. 1988), overruled in part on other grounds by Access Mediquip, L.L.C. v.
UnitedHealthCare Ins. Co., 698 F.3d 229, 230 (5th Cir. 2012) (en banc). In
short, although “[h]ealthcare providers may not sue in their own right to collect
benefits under an ERISA plan,” they “may bring ERISA suits standing in the
shoes of their patients” by showing that they have received assignments of
rights from their patients.     N. Cypress Med. Ctr. Operating Co. v. Cigna
Healthcare, 781 F.3d 182, 191 (5th Cir. 2015). The complaint did not, however,
allege any such assignments. Therefore, Electrostim’s ERISA claim failed
because Electrostim did not plausibly allege that it was a participant,
beneficiary, or assignee entitled to assert a claim under 29 U.S.C.
§ 1132(a)(1)(B).
      Moreover, the district court’s denial of leave to amend was not an abuse
of discretion. Before the district court, Electrostim simply asserted, without
elaboration, that it could cure any defects if its ERISA claim were deemed
insufficient; it did not argue that it could amend its ERISA claim by alleging
that it received assignments from its patients. Nor did it raise that argument
in its initial brief on appeal. Instead, Electrostim waited until its reply brief
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                                     No. 13-20649
on appeal to raise this argument. By choosing to wait until the eleventh hour
to finally explain how it could cure the defect that the district court identified,
Electrostim has waived its challenge to the district court’s denial of leave to
amend on the basis of its conclusion that amendment of the ERISA claim would
be futile. See Celanese Corp. v. Martin K. Eby Constr. Co., 620 F.3d 529, 531
(5th Cir. 2010) (“The general rule of this court is that arguments not raised
before the district court are waived and will not be considered on appeal.”);
Jones v. Cain, 600 F.3d 527, 541 (5th Cir. 2010) (“Arguments raised for the
first time in a reply brief are generally waived.”); see also United States ex rel.
Adrian v. Regents of Univ. of Cal., 363 F.3d 398, 404 (5th Cir. 2004) (leave to
amend properly denied when plaintiff did not indicate “what additional facts
he could plead that would correct the deficiencies in his previous complaints”). 6
                                            B.
       We now discuss the district court’s dismissal of the second amended
complaint as it related to the claims that Electrostim submitted after
termination of the provider agreement. As for the state-law claims, we analyze
them against the backdrop of our conclusion that for ERISA-preemption
purposes, Electrostim should be permitted leave to amend its complaint to put
at issue not only the claims that were denied in full, but also the claims that
were partially paid.
                                            1.
      As an initial matter, we agree with the district court that Electrostim
cannot state a claim against BCBSTX based on the claims that it never
submitted to BCBSTX. As noted above, before filing its lawsuit, Electrostim



       6 Because we uphold the district court’s dismissal with prejudice of Electrostim’s
ERISA claim, we need not address Electrostim’s argument that in concluding that BCBSTX
was not the proper party defendant as to the BlueCard claims, the district court improperly
converted the motion to dismiss into one for summary judgment. See Fed. R. Civ. P. 12(d).
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                                  No. 13-20649
submitted only 273 post-termination claims to BCBSTX.                 Electrostim
submitted approximately 20,000 more post-termination claims to other Blue
Cross Blue Shield entities in an attempt to comply with a new—or, perhaps,
newly enforced—Blue Cross Blue Shield national policy requiring that claims
be submitted to the entity located in the state where the patient resided or the
products or services were provided. These claims were denied or returned by
these other entities without processing, and Electrostim did not submit them
to BCBSTX before filing its lawsuit.         Nevertheless, Electrostim sued only
BCBSTX; it did not sue any of the other entities to which it submitted post-
termination claims. Electrostim’s only basis for asserting that BCBSTX is
liable for failing to pay these claims is that Electrostim would have submitted
them to BCBSTX had BCBSTX not terminated the provider agreement.
However, because Electrostim has abandoned its claim that BCBSTX’s
termination breached the provider agreement, Electrostim no longer has any
colorable basis on which to assert that BCBSTX is liable for the 20,000
additional post-termination claims.
      Electrostim’s only argument in response is that the district court ordered
it not to submit the additional post-termination claims to BCBSTX. However,
the record reveals that the district court did no such thing. It is true that while
the district court initially advised Electrostim to submit the additional 20,000
post-termination claims to BCBSTX, it later advised that doing so would be a
waste of time. Critically, though, the district court never ordered Electrostim
to refrain from submitting the additional 20,000 claims to BCBSTX. Indeed,
at the April 23, 2013 hearing, the district court even opined that Electrostim’s
lawsuit was not ripe as to the 20,000 additional claims because they had not
been submitted to (and denied by) BCBSTX, suggesting that Electrostim might
still wish to submit the 20,000 additional claims to BCBSTX so that they could
be made a part of the lawsuit. Electrostim concedes that it never submitted
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                                 No. 13-20649
the additional claims to BCBSTX or sued the entities to which Electrostim had
submitted the claims, and those claims thus cannot form the basis for
Electrostim’s lawsuit against BCBSTX.
                                       2.
      The district court correctly concluded that Electrostim’s breach-of-
contract claim fails as to the post-termination claims because there was no
longer a contract between the parties, and amendment would be futile.
However, in the second amended complaint, Electrostim also sought recovery
for breach of implied contract, and it has clarified on appeal that its implied-
contract claim relates only to the post-termination claims.
      Under Texas law, “[t]he elements of a contract, express or implied, are
identical.” Plotkin v. Joekel, 304 S.W.3d 455, 476 (Tex. App.—Houston [1st
Dist.] 2009, pet. denied) (internal quotation marks omitted).        “[T]he real
difference between express contracts and those implied in fact is in the
character and manner of proof required to establish them.” Id. at 476–77
(alteration in original) (internal quotation marks omitted). “[T]he elements of
either type of contract are (1) an offer, (2) an acceptance, (3) a meeting of the
minds, (4) each party’s consent to the terms, and (5) execution and delivery of
the contract with the intent that it be mutual and binding.” Id. at 476 (internal
quotation marks omitted). To state a claim for breach of an implied contract,
a plaintiff must plead the existence of a valid implied contract, performance or
tendered performance by the plaintiff, breach of the implied contract by the
defendant, and damages resulting from the breach. See City of the Colony, 272
S.W.3d at 739.
      In the second amended complaint, Electrostim sought recovery for
breach of implied contract to the extent that the claims it submitted “fall
outside of the [provider agreement].” Electrostim alleged that all of the claims
it submitted were for covered services, that BCBSTX had previously paid such
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                                 No. 13-20649
claims, and that its failure to pay the claims violated an implied contract that
required BCBSTX to pay Electrostim for its covered claims. Without any
elaboration, Electrostim alleged that “[t]he parties entered into an implied
contract whose terms included that if [Electrostim] provided BCBSTX’s
insureds with covered services and products, BCBSTX would pay [Electrostim]
for its [c]laims based on those covered services and products provided.”
      The district court concluded that Electrostim had failed to allege all the
elements required for breach of an implied contract, and that its implied-
contract claim “essentially duplicates the quantum meruit and unjust
enrichment cause of action.” We agree that dismissal of the implied-contract
claim was warranted. Electrostim provided no facts to support its vague
allegation that after termination of the provider agreement, the parties
entered into an implied contract.        “A pleading that offers ‘labels and
conclusions’ or ‘a formulaic recitation of the elements of a cause of action will
not do.’”   Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555).
Electrostim also failed to allege facts showing that the parties had a meeting
of the minds as to the essential terms of any implied contract.
      The district court also correctly denied leave to amend regarding
Electrostim’s implied-contract claim. In its Rule 59(e) motion, Electrostim
asserted, for the first time and without elaboration, that it could cure the
defects that the district court identified in an amended pleading. It never
explained precisely how it could allege the required elements for an implied-
contract claim. Nor has it done so on appeal; it has merely repeated its hollow
and unsupported contention that if given an opportunity to re-plead, it can
allege the required elements. By failing to argue before the district court or
this court on appeal precisely how it could successfully amend its implied-
contract claim, Electrostim has waived any challenge to the district court’s
denial of leave to amend based on its conclusion that amendment would be
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                                 No. 13-20649
futile. See Celanese Corp., 620 F.3d at 531 (“The general rule of this court is
that arguments not raised before the district court are waived and will not be
considered on appeal.”); Jones, 600 F.3d at 541 (“Arguments raised for the first
time in a reply brief are generally waived.”); see also United States ex rel.
Adrian, 363 F.3d at 404 (leave to amend properly denied when plaintiff did not
indicate “what additional facts he could plead that would correct the
deficiencies in his previous complaints”).
                                       3.
      For the same reasons explained in our discussion of the pre-termination
claims, we hold that as to the post-termination claims, the district court
correctly dismissed Electrostim’s claims for third-party beneficiary rights and
violation of ERISA, but it incorrectly dismissed Electrostim’s claim for suit on
an open account.     We also hold, again for the reasons explained in our
discussion of the pre-termination claims, that the district court did not err in
denying leave to amend the ERISA claim, but it did err in denying leave to
amend the claim for third-party beneficiary rights.
                                       V.
      For the foregoing reasons, we AFFIRM IN PART and REVERSE IN
PART the district court’s judgment of dismissal, and we REMAND this case
for further proceedings consistent with this opinion.        The district court
correctly dismissed, with prejudice, Electrostim’s claims for violation of ERISA
and breach of implied contract. However, Electrostim stated claims for breach
of the provider agreement and suit on an open account. Moreover, on remand,
Electrostim should be permitted to re-plead its third-party beneficiary claim,
and it should also be permitted to re-plead its claims for breach of the provider
agreement, third-party beneficiary rights, and suit on an open account to
incorporate its rate-of-payment theory.


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