     Case: 12-20695   Document: 00512963599      Page: 1   Date Filed: 03/10/2015




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

                                                                          FILED
                                 No. 12-20695
                                                                      March 10, 2015
                                                                       Lyle W. Cayce
                                                                            Clerk
NORTH CYPRESS MEDICAL CENTER OPERATING COMPANY,
LIMITED; NORTH CYPRESS MEDICAL CENTER OPERATING
COMPANY GP, L.L.C.,

                                            Plaintiffs - Appellants Cross-
                                            Appellees
v.

CIGNA HEALTHCARE; CONNECTICUT GENERAL LIFE INSURANCE
COMPANY; CIGNA HEALTHCARE OF TEXAS, INCORPORATED,

                                            Defendants - Appellees Cross-
                                            Appellants




                Appeals from the United States District Court
                     for the Southern District of Texas


Before STEWART, Chief Judge, and HIGGINBOTHAM and ELROD, Circuit
Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
      This is a dispute over an insurer’s obligation to pay a hospital for medical
services provided to insured patients. Under the insurance plans, patients are
to pay for part of their hospital bills and the insurance company covers the
rest. The parties dispute whether the hospital may discount patients’ portion
of the bills without affecting the patients’ coverage under their insurance
plans.
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                                    No. 12-20695
                                          I.
      Houston medical provider North Cypress Medical Center Operating Co.,
Ltd. and North Cypress Medical Center Operating Co. GP, LLC (collectively,
“North Cypress” or “the hospital”) sued Cigna Healthcare, Connecticut General
Life Insurance Company, and Cigna Healthcare of Texas, Inc. (collectively,
“Cigna”) for breach of healthcare plans administered or insured by Cigna.
North Cypress principally argues that Cigna failed to comply with plan terms
and underpaid for covered services. Cigna counter-claimed, arguing that it
paid more than was owed; that North Cypress as an out-of-network provider
did not charge the patients for coinsurance, but billed Cigna as if it had. The
district court dismissed or granted summary judgment on all claims.
                                   A. Cigna’s plans
      The more than 8,000 insurance plans governing the claims in this case
sort into classes along several different lines. Most are funded by employers,
with Cigna acting only as an administrator—“Administrative Services Only”
or “ASO” plans. 1 Some are funded by Cigna itself—“fully insured” plans. Some
limit out-of-network benefits to a set percentage of a charge based on Medicare
pricing—“MRC2” plans—while other plans limit reimbursement to a
percentage of rates charged by other providers in the geographic area—
“MRC1” plans. Patients generally assigned their rights under their insurance
plans to North Cypress, though Cigna disputes the existence and adequacy of
many assignments.
      In general, across the different plans members can seek care from an in-
network or out-of-network provider. In-network providers contracted with
Cigna to provide services at agreed prices. Out-of-network providers did not.



      1  Although Cigna only administered many of the plans, we will sometimes speak in
terms of what Cigna “owes” for simplicity.
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                                      No. 12-20695
Members are responsible for certain deductibles, copayments, or coinsurance
amounts, which are larger if the provider is not in the network.
       Cigna maintains that these cost-sharing mechanisms ensure that in-
network providers are less costly to patients than out-of-network providers.
For example, in some of the plans at issue, once the member satisfies the
deductible, the member’s coinsurance level at in-network providers is 80%; the
plan paying 80% and the member 20%. With an out-of-network provider, the
member faces both a higher deductible and a greater coinsurance burden; the
plan paying 60% and the member 40% of remaining costs.
       Cigna argues that these cost-sharing mechanisms are essential to lower
medical and health insurance costs; that incentivizing members to choose in-
network providers—who charge both the members and the plans less—reduces
overall plan costs, an incentive lost when an out-of-network provider does not
require patients to pay all of the coinsurance or other obligations contemplated
by the plans.
       Relatedly, some or all of the plans at issue 2 contain the following or
similar provisions:
           • “[P]ayment for the following is specifically excluded from
             this plan: . . . charges which you are not obligated to pay or
             for which you are not billed or for which you would not have
             been billed except that they were covered under this plan.” 3
           •   “[Y]ou and your Dependents may be required to pay a
               portion of the Covered Expenses for services and supplies.
               That portion is the Copayment, Deductible or Coinsurance.”
           • “Coinsurance means the percentage of charges for Covered
             Expenses that an insured person is required to pay under
             the plan.”


       2 There are thousands of plans involved in this case, but only a few appear in the
record. Both parties make broad generalizations about plan language.
       3 At least one of the plans, however, states that this exclusion does not apply if the

“expenses are considered Medically Necessary.”
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                                       No. 12-20695
           •    “The provider may bill you for the difference between the
               provider’s normal charge and the Maximum Reimbursable
               Charge, in addition to applicable deductibles, copayments
               and coinsurance.”

                        B. North Cypress and its billing practices
       North Cypress opened its Houston hospital in 2007, boasting a “5 Star
Atmosphere”       and     “all   private     patient     suites    with     upscale     room
accommodations, including wood floors and trim[ and] flat screen televisions.” 4
North Cypress and Cigna unsuccessfully negotiated for an in-network contract
prior to the opening. North Cypress then opened as an out-of-network provider
after notifying Cigna it was implementing a “prompt pay discount” program
through which some patients, for whom North Cypress was out-of-network,
would get a discount on their coinsurance obligation if they paid upfront or
within a short period of time. 5 North Cypress argues that its discount approach
made good business sense because collecting on patient medical bills is
expensive and often unrewarding.
       North Cypress calculates the total cost of care for a patient based on its
main fee schedule—called the “Chargemaster”— which contains prices usually
four to six times Medicare rates. 6 Without the prompt pay discount, a patient
might be expected to pay 40% of this total Chargemaster cost as her out-of-
network coinsurance responsibility, while Cigna would cover the other 60%. If
the total Chargemaster cost of care was $10,000, for example, the patient
would be expected to cover $4,000. Cigna does not contend that it was ever
charged more than its 60% share (here, $6,000) of the Chargemaster rates—


       4  As advertised on its website. See R. 9339.
       5   While the parties appear to agree that emergency services and services under
government-sponsored plans were not to be discounted under the “prompt pay” program,
Cigna asserts that North Cypress discounted such services as well.
        6 In the admitting process, patients acknowledge their ultimate responsibility for this

total cost of care, even the portion covered by insurance.
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                                      No. 12-20695
the dispute solely concerns the fact that the patients’ $4,000 portion of the bill
was reduced in various ways.
       When applying the prompt pay discount, rather than billing the patient
$4,000 North Cypress would calculate a much lower amount. First, instead of
starting with the total Chargemaster cost of care, North Cypress would start
with a lower base rate—125% of the Medicare rate for the services provided.
For example, instead of $10,000, the base rate might be $2,500. Then instead
of multiplying this reduced base rate by 40%, North Cigna would multiply it
by 20%—the patient’s in-network coinsurance rate. As a result of the discount,
the patient in this example would be billed only $500 rather than $4,000. In
contrast, Cigna’s responsibility was unchanged; North Cypress would file a
claim form reporting its total Chargemaster cost to Cigna and expect the
insurer to pay its 60% share—$6,000.
       If the patient paid the discounted coinsurance amount on time, North
Cypress did not bill or attempt to collect any additional amount from the
patient. 7 North Cypress would thus collect a substantially reduced amount
from the patient in exchange for prompt payment. Importantly, if Cigna
refused to pay its full 60% of the Chargemaster rate, North Cypress did not
attempt to collect that amount from the patient.
                         C. Cigna’s investigation and response
       Cigna was concerned when it learned of North Cypress’s prompt pay
discount, believing the program would undermine plan incentives designed to
encourage providers to join Cigna’s network, and patients to seek care within
that network. Despite Cigna’s concerns, it initially paid North Cypress based




       7The parties appear to dispute whether North Cypress would bill or attempt to collect
the patients’ full non-discounted portion of the bill (e.g. their full 40% of the total
Chargemaster cost) if they failed to pay the discounted amount on time.
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                                       No. 12-20695
on the Chargemaster rates as billed. 8 However, even as it was paying these
charges, Cigna mobilized an “interdisciplinary team” to address North
Cypress’s billing practices and pressure North Cypress to come in-network. 9
The team came up with a multi-pronged approach, which contemplated
making “[n]o payment or reduced payment” to North Cypress and convincing
plan sponsors to switch to cheaper MRC2 reimbursement, among other
measures. 10 Cigna’s Special Investigations Unit (“SIU”) also surveyed a few
dozen members about their experience with North Cypress and eventually
received 27 responses, 11 assertedly confirming its suspicion that North Cypress
was engaging in “fee forgiving.” 12
       In November 2008, Cigna informed North Cypress of SIU’s investigation
and adopted its “fee-forgiving protocol.” Cigna began reimbursing North
Cypress for medically necessary services at drastically reduced rates. The
sharp reduction was based on two key claims: (1) Cigna claimed that patients
were not insured for medical costs unless North Cypress billed them for the
patient coinsurance responsibility contemplated by their plans; (2) Cigna
posited that most North Cypress patients were billed only $100 or less. 13 To
reiterate, Cigna’s claim was that if North Cypress did not bill patients for their




       8 In other words, Cigna accepted the Chargemaster rate as the total cost of care
(subject to the plan’s Maximum Reimbursable Charge), and calculated its share of the cost
based on that rate.
       9 R. 9006, 9021.
       10 R. 9009.
       11 The parties dispute whether the survey was random. The district court found that

the results showed 12 members were billed nothing, 6 members were billed $102 or less, and
7 members were billed amounts of $320 or more. Two members could not remember what
they were billed. No members were billed the amount contemplated by their insurance plans.
       Cigna also points to other evidence, such as notices from North Cypress, phone calls
with North Cypress employees, and a North Cypress flier.
       12 Cigna refers to the practice of not charging members the full rate for their share of

costs under the plan, while continuing to charge Cigna its share as “fee forgiving.”
       13 A position drawn largely from the results of its modest survey.

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                                    No. 12-20695
coinsurance responsibility, the patients’ had no insurance coverage for their
medical costs. Given its position that North Cypress billed each patient $100
or less—a miniscule proportion of the plans’ anticipated patient coinsurance
responsibility—Cigna asserted that patients were only insured for a likewise
miniscule proportion of their medical costs. Cigna justified its interpretation
primarily based on language in at least some of the plans excluding from
coverage “charges which you are not obligated to pay or for which you are not
billed.”
      In practice, if a member’s plan required Cigna to pay 60% of the cost of
out-of-network care, and North Cypress reported a $10,000 total cost of care,
Cigna would not pay $6,000. Instead, Cigna would assume the patient was
billed $100; working backwards from that assumption, Cigna would calculate
the “total cost of care” to be only $250. Accordingly, it would reimburse the
hospital only $150—sixty percent of $250. Cigna told North Cypress it would
calculate payments this way until clear evidence was presented that (1) the
charges shown on the claim forms were actual charges for services rendered,
and (2) the plan member had paid the applicable out-of-network coinsurance
and deductible in accordance with the relevant plan. 14 North Cypress did not
disclose the amount it billed any particular patient. 15 The hospital appealed
some of Cigna’s payment decisions, and argues that it would have been futile
to appeal the rest.
      Under the plans funded by Cigna rather than employers, it seems clear
that Cigna directly benefited from its drastic reductions in reimbursement—
Cigna kept the money. The parties dispute whether Cigna likewise stood to



      14  When reduced payments were appealed, Cigna would likewise explain that it would
not increase payment unless it was given evidence that the patient was held financially
responsible for her portion of the total charge reported by North Cypress.
       15 Mem. and Order of August 10, 2012, 14.

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                                      No. 12-20695
gain a portion of the “savings” when it reduced payments under the more
numerous Administrative Services Only plans.
                                D. “Discount Agreements”
      Cigna employed third-party re-pricing agents. The re-pricing agents,
acting on behalf of Cigna, entered into agreements with medical providers
including North Cypress to pay negotiated amounts for particular benefit
claims. For example, a provider might accept a reduced reimbursement
amount in exchange for quick payment from the insurance plan. All
agreements stated that they were subject to the terms of the underlying plan
covering the patient. North Cypress and Cigna entered into hundreds of these
contracts with regard to specific claims. Cigna later refused to pay the
negotiated amounts agreed to in the contracts because of the same concerns
about “fee forgiving.”
                             II. District Court Proceedings
      North Cypress filed a First Amended Complaint asserting that Cigna
failed to comply with group plan terms, breached fiduciary duties, failed to
provide full and fair reviews of denied claims, violated claims procedures, and
failed to provide requested information, all in violation of ERISA. The First
Amended Complaint also asserted state-law breach of contract claims and
violations of the Texas Insurance Code. The district court dismissed the Texas
Insurance Code claims, concluding they were preempted by ERISA. 16 North
Cypress then filed a Second Amended Complaint, adding claims under the
Racketeer Influenced and Corrupt Organizations Act (“RICO”). The district
court dismissed the RICO claims under Rule 12(b)(6). 17




      16   Mem. and Order of March 2, 2011, 29-33.
      17   Mem. and Order of November 3, 2011, 21.
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                                    No. 12-20695
      Cigna filed its answer and counterclaims, asserting state-law claims for
fraud, negligent misrepresentation, and unjust enrichment. The district court
dismissed these claims, concluding they were preempted by ERISA. Cigna filed
an amended complaint asserting ERISA claims, and the parties filed cross-
motions for summary judgment.
      The district court dismissed North Cypress’s ERISA claims for want of
standing 18 and Cigna’s ERISA claims as time barred. 19 Finally, the district
court granted summary judgment against North Cypress’s breach of contract
claims, concluding there was no breach. 20
      North Cypress appeals and Cigna cross-appeals.
                                          III.
      “Standing is a question of law that we review de novo.” 21 We review “all
facts expressly or impliedly found by the district court” for clear error. 22 We
also review de novo the district court’s grant of summary judgment. 23 A party
may obtain summary judgment when “the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any,
show that there is no genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law.” 24
      We review de novo the district court’s decision to dismiss a complaint
under Federal Rule of Civil Procedure 12(b)(6), 25 accepting “as true the well-
pleaded factual allegations in the complaint.” 26 To survive a Rule 12(b)(6)


      18  Mem. and Order of June 25, 2012, 18-19.
      19  Mem. and Order of July 25, 2012, 17.
       20 Mem. and Order of August 10, 2012, 20.
       21 Rivera v. Wyeth-Ayerst Labs., 283 F.3d 315, 319 (5th Cir. 2002).
       22 Id.
       23 Ford Motor Co. v. Tex. Dep’t of Transp., 264 F.3d 493, 498 (5th Cir. 2001).
       24 Id. (quoting Fed. R. Civ. P. 56(c)).
       25 R2 Invs. LDC v. Phillips, 401 F.3d 638, 642 (5th Cir. 2005).
       26 Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007) (citing Causey v. Sewell

Cadillac–Chevrolet, Inc., 394 F.3d 285, 288 (5th Cir. 2004)).
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                                         No. 12-20695
motion to dismiss, the complaint “does not need detailed factual allegations,”
but it must provide the plaintiff’s grounds for entitlement to relief—including
factual allegations that, when assumed to be true, “raise a right to relief above
the speculative level.” 27
                                               IV.
       North Cypress appeals the district court’s rejection of its ERISA claims
for lack of standing. As the party invoking federal jurisdiction, North Cypress
bears the burden of showing that it has standing to assert a legal claim for
each of the benefit claims at issue. 28 “[W]hen considering whether a plaintiff
has Article III standing, a federal court must assume arguendo the merits of
his or her legal claim.” 29 The merits here include the question of what “charges
which you are not obligated to pay or for which you are not billed” means under
the plans, and thus the amount of reimbursement due North Cypress.
       Healthcare providers may not sue in their own right to collect benefits
under an ERISA plan, 30 but may bring ERISA suits standing in the shoes of
their patients. “It is well established that a healthcare provider, though not a
statutorily designated ERISA beneficiary, may obtain standing to sue
derivatively to enforce an ERISA plan beneficiary’s claim.” 31 North Cypress
received express assignments of rights from at least some of its patients.
       An “injury in fact—an invasion of a legally protected interest which is (a)
concrete and (b) actual or imminent, not conjectural or hypothetical”—is the




       27  Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
       28  See Nat’l Fed’n of the Blind of Tex., Inc. v. Abbott, 647 F.3d 202, 209 (5th Cir. 2011).
        29 Cole v. General Motors Corp., 484 F.3d 717, 723 (5th Cir. 2007) (quoting Parker v.

District of Columbia, 478 F.3d 370, 377 (D.C. Cir. 2007)).
        30 See 29 U.S.C. § 1132(a)(1)(B).
        31 Harris Methodist Fort Worth v. Sales Support Servs., 426 F.3d 330, 333-34 (5th Cir.

2005) (citing Tango Transport v. Healthcare Fin. Servs. LLC, 322 F.3d 888, 893 (5th Cir.
2003)).
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                                       No. 12-20695
first “irreducible constitutional minimum [element] of standing.” 32 Cigna
argues that its refusal to pay based on the full charges North Cypress reported
did not cause patients any injury because they were never at imminent risk of
out-of-pocket expenses; that North Cypress did not bill patients for the
amounts Cigna did not pay and never intended to do so. The district court
agreed with Cigna, and found the patients—and thus North Cypress—lacked
standing. We cannot agree.
                                             A.
       Cigna agreed to pay plan members money (“benefits”) to reimburse
certain medical costs incurred at out-of-network providers. 33 The patients
sought medical care from such a provider—North Cypress—and assigned to it
their rights under their Cigna plans. 34 Cigna allegedly did not pay the patients
or their assignee the full amount it owed to the patients under the contract,
and North Cypress sought to enforce its assigned contract rights against Cigna.
       The Ninth Circuit has addressed the issue of standing in this situation
head-on. 35 There, as here, the insurer argued that there was no injury in fact
to patients because they were not billed for the amount allegedly due from the
insurance plans. Further, “[d]efendants argue[d] that since [the provider]
stands in the shoes of, and can have no greater injury than, its assignors, [it]
has not suffered injury in fact.” 36 The Ninth Circuit explained that:




       32  Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992) (citations and internal
quotation marks omitted).
        33 To simplify, we speak at times of Cigna’s obligations to insureds, but we recognize

that Cigna only administers, and does not fund, many of the plans at issue. This distinction
is not of consequence in our discussion of standing.
        34 Cigna disputes the adequacy and existence of assignment for many claims. We leave

it to the district court to resolve these fact-sensitive issues on remand.
        35 Spinedex Physical Therapy USA Inc. v. United Healthcare of Ariz., Inc., 770 F.3d

1282, 1288-91 (9th Cir. 2014).
        36 Id. at 1289.

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                                       No. 12-20695
       The flaw in [the insurer’s] argument is that they would treat as
       determinative [the provider’s] patients’ injury in fact as it existed
       after they assigned their rights to [the provider]. We agree that . .
       . the patients have not suffered injury in fact after assigning their
       claims. But the patients’ injury in fact after the assignment is
       irrelevant. As assignee, [the provider] took from its assignors what
       they had at the time of the assignment. At the time of the
       assignment, Plan beneficiaries had the legal right to seek payment
       directly from the Plans for charges by non-network health care
       providers. If the beneficiaries had sought payment directly from
       their Plans for treatment provided by [the provider], and if
       payment had been refused, they would have had an unquestioned
       right to bring suit for benefits. No one . . . would contend that the
       beneficiaries would have lacked Article III standing in that
       circumstance. However, instead of bringing suit on their own
       behalf, plaintiffs assigned their claims to [the provider]. 37

Likewise, the Southern District of New York recently held that if a provider
“has alleged it is an assignee of the Patient and that [the insurer] failed to
fulfill its contractual obligations to the Patient; this is all that is required to
demonstrate Article III standing.” 38
       The reasoning of these courts has force; patients generally assign their
claims in the admissions process well before their presentment to Cigna. We
then look to the rights of the patient at the time of assignment. The fact that
the patient assigned her rights elsewhere does not cause them to disappear.
       There is more: a patient suffers a concrete injury if money that she is
allegedly owed contractually is not paid, regardless of whether she has directed
the money be paid to a third party for her convenience. 39 The patient in this


       37 Id. at 1291.
       38 Biomed Pharm., Inc. v. Oxford Health Plans (NY), Inc., No. 10 CIV. 7427 JSR, 2011
WL 803097, at *4 (S.D.N.Y. Feb. 18, 2011).
       39 See Encompass Office Solutions, Inc. v. La. Health Serv. & Indem. Co., 2013 U.S.

Dist. LEXIS 188315, at *26-27 (N.D. Tex. Sept. 17, 2013) (“Although it did not lead to a direct
out-of-pocket damage to the patient, failure to pay as directed would nonetheless . . . [injure]
the patient in that [insurers] refused to honor the directions of the insured concerning
services within the purview of the insurance contract.”); see also Katz v. Pershing, LLC, 672
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                                        No. 12-20695
circumstance is being denied use of funds rightfully hers. The fact that she has
directed the funds elsewhere does not change that reality. 40 From a different
angle, failure to pay also denies the patient the benefit of her bargain. In
purchasing her Cigna plan she agreed to pay for coverage at out-of-network
providers like North Cypress, and Cigna is failing to uphold the bargain by
paying for covered services. ERISA is designed “to protect contractually
defined benefits” 41 and has a “repeatedly emphasized purpose” of doing so. 42
The contract law concept of benefit of the bargain is a friendly fit.
       The Second Circuit has recognized that a union agreement requiring an
employer to pay benefits for retirees gave the union standing to enforce the
employer’s duty to pay those benefits. The “refusal to pay . . . injure[s] the
Union by depriving it of the benefit of its bargain. That this benefit accrues to
third parties, namely, the retirees, does not change the fact that the Union has
negotiated for the benefit and has incurred obligations . . . to secure it.” 43 In




F.3d 64, 72 (1st Cir. 2012) (“[W]e think the better view is that when a plaintiff generally
alleges the existence of a contract, express or implied, and a concomitant breach of that
contract, her pleading adequately shows an injury to her rights.”); DiCarlo v. St. Mary Hosp.,
530 F.3d 255, 263 (3d Cir. 2008) (“To have standing to assert a breach of contract claim,
plaintiffs need not wait until lawsuits against them were filed or collection agents began
harassing them . . . . The expense is incurred, whether paid or not, at the time the patient
enters a hospital with the understanding that he or she is liable for all or part of the charges
for the services to be rendered.” (citation omitted and internal quotation marks omitted)).
        The question of whether the money is in fact owed goes to the merits. Arguably, the
money is owing as soon as the patient incurs covered charges, regardless of whether they are
billed to her directly.
        40 At least some of the contracts at issue state that benefits are payable to the patient,

and will only be paid to a provider at Cigna’s option. See, for example, page 53 of Exhibit 48
to Cigna’s Motion for Summary Judgment.
        41 Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 113-14 (1989) (quoting

Massachusetts Mutual Life Ins. Co. v. Russell, 473 U.S. 134, 148 (1985)).
        42 Russell, 473 U.S. at 148.
        43 United Steel, Paper & Forestry, Rubber, Mfg., Energy, Allied Indus. & Serv. Workers

Int'l Union, AFL-CIO/CLC v. Cookson Am., Inc., 710 F.3d 470, 474-75 (2d Cir. 2013).
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                                       No. 12-20695
the union context, other circuits have recognized this right to enforce one’s
contracts, even if the benefits accrue to others. 44
       The patients contracted for coverage at out-of-network providers under
their insurance plans. The patients allegedly incurred charges for medical
care, and directed that the payments be made to the provider, but the
contracted-for payments have not been made. The patients have thus allegedly
been deprived of what they contracted for, a concrete injury.
                                              B.
       Plan members also enjoy the protection of ERISA. ERISA is designed to
promote the interests of plan participants and their beneficiaries, “and to
protect contractually defined benefits.” 45 ERISA further protects patients’
right to “full and fair review” of their claims, 46 and holds fiduciaries to certain
standards. 47 To these ends, ERISA section 502(a)(1)(B) empowers a plan
participant to sue “to recover benefits due him under the terms of the plan, to
enforce his rights under the terms of the plan or to clarify his rights to future
benefits under the plan.” 48 Congress’s creation of this cause of action has given
patients a right to enforce the insurance coverage they contracted for. They
were given a right to recompense for an actual injury and have standing to
pursue alleged breaches of this statutory duty.




       44 See Cleveland Elec. Illuminating Co. v. Util. Workers Union of Am., 440 F.3d 809,
815-16 (6th Cir. 2006); United Steelworkers of Am., AFL-CIO v. Canron, Inc., 580 F.2d 77,
80-81 (3d Cir. 1978).
       45 Firestone Tire, 489 U.S. at 113-14; see also Russell, 473 U.S. at 148.
       46 29 U.S.C. § 1133(2).
       47 See 29 U.S.C. § 1104(a)(1)(B) & (D).
       48 29 U.S.C. § 1132(a)(1)(B). ERISA further allows suit to “(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 (i) to redress such violations or (ii) to enforce any
provisions of this subchapter or the terms of the plan.” Id. at § 1132(a)(3).
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                                       No. 12-20695
                                              C.
       Tellingly, Cigna responds to the argument that patients did not get what
they bargained for in part by stating that “Cigna covered [the patients’]
claims.” 49 This goes to the merits, not standing. Cigna further urges that we
should be persuaded by courts which have found no Article III injury in the
absence of a threat that patients will be billed, 50 but these cases fail to
persuade in the face of the principles already discussed and our long
endorsement of ERISA assignments. 51 The patients here assigned their rights
under their insurance contracts to North Cypress, and North Cypress has
standing to enforce the contracts. We have consistently held that the ability of
patients to assign their claims to medical providers is both permissible and
beneficial. 52
       Nor is there any question on this record but that any patient’s injury is
caused by Cigna’s refusal to pay North Cypress as directed, and a favorable
decision awarding North Cypress damages is likely to redress the injury. The
“irreducible constitutional minimum of standing” is thus satisfied. 53 In short,




       49  Cigna Initial Br. 35-36.
       50  See, e.g., Cedars-Sinai Med. Ctr. v. Massachusetts Mut. Life Ins. Co., 67 F.3d 305,
at *3 (9th Cir. 1995) (unpublished). This case was decided in part based on a determination
that the insurer was not obligated to pay charges not billed to the patients—a question that
goes to the merits rather than to standing here. See also Am. Med. Ass'n v. United HealthCare
Corp., No. 00 CIV. 2800 (LMM), 2007 WL 1771498, at *19 (S.D.N.Y. June 18, 2007).
        51 See, e.g., Harris Methodist Fort Worth v. Sales Support Servs. Inc. Employee Health

Care Plan, 426 F.3d 330, 333-34 (5th Cir. 2005) (“It is well established that a healthcare
provider, though not a statutorily designated ERISA beneficiary, may obtain standing to sue
derivatively to enforce an ERISA plan beneficiary’s claim.”); id. at 337 (noting the benefits of
allowing assignment to health care providers, and stating that “[t]o deny standing to health
care providers as assignees of beneficiaries of ERISA plans might undermine Congress’ goal
of enhancing employees’ health and welfare benefit coverage” (quoting Hermann Hosp. v.
MEBA Med. & Benefits Plan, 845 F.2d 1286, 1289 n.12 (5th Cir. 1988))); Tango Transp. v.
Healthcare Fin. Servs. LLC, 322 F.3d 888, 892-93 (5th Cir. 2003).
        52 See supra note 51.
        53 See Lujan, 504 U.S. at 560-61.

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                                       No. 12-20695
North Cypress also has statutory standing under ERISA 54 for the benefit
claims at issue because of assignments from plan beneficiaries. 55
                                              D.
       Cigna argues that if we find standing we ought nonetheless to affirm the
grant of summary judgment against North Cypress’s benefit underpayment
claims on the merits; 56 that its reading of the plan language was “legally
correct” or otherwise within its discretion, and that its actions rested on
“substantial evidence.” 57 Analysis of Cigna’s plan interpretation proceeds in
two steps. 58 The first question is whether Cigna’s reading of the plans is
“legally correct.”      The “most important factor to consider” in the legal
correctness inquiry is whether Cigna’s “interpretation is consistent with a fair
reading of the plan[s].” 59 ERISA requires that summary plan descriptions “be
written in a manner calculated to be understood by the average plan
participant, and . . . be sufficiently accurate and comprehensive to
reasonably apprise such participants . . . of their rights and obligations.” 60
Accordingly, “ERISA plans are interpreted in their ordinary and popular sense


       54  See 29 U.S.C. §§ 1132(a)(1)(B) & (a)(3).
       55  Dallas Cnty. Hosp. Dist. v. Associates' Health & Welfare Plan, 293 F.3d 282, 285
(5th Cir. 2002) (“It is clear in this Circuit that a health care provider may possess standing
under ERISA by virtue of a valid assignment.”). As already noted, we leave it to the district
court in the first instance to resolve Cigna’s attacks on the existence and adequacy of some
of the assignments at issue.
        56 “We are not limited to the district court’s reasons for its grant of summary judgment

and may affirm . . . on any grounds supported by the record.” Vuncannon v. United States,
711 F.3d 536, 538 (5th Cir. 2013) (quoting Aryain v. Wal–Mart Stores Tex. LP, 534 F.3d 473,
478 (5th Cir. 2008) and Palmer ex rel. Palmer v. Waxahachie Indep. Sch. Dist., 579 F.3d 502,
506 (5th Cir. 2009)) (footnotes omitted).
        57 See Anderson v. Cytec Indus., Inc., 619 F.3d 505, 512 (5th Cir. 2010); Holland v.

Int’l. Paper Co. Ret. Plan, 576 F.3d 240, 246 n.2 (5th Cir. 2009); Aboul-Fetouh v. Employee
Benefits Committee, 245 F.3d 465, 472 (5th Cir. 2001). The parties appear to agree that the
plans give Cigna discretion to construe plan terms.
        58 Stone v. UNOCAL Termination Allowance Plan, 570 F.3d 252, 257 (5th Cir. 2009).
        59 Crowell v. Shell Oil Co., 541 F.3d 295, 313 (5th Cir. 2008) (quoting Gosselink v.

AT&T, Inc., 272 F.3d 722, 727 (5th Cir. 2001)).
        60 29 U.S.C. § 1022(a).

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                                      No. 12-20695
as would a person of average intelligence and experience . . . [and] must be
interpreted as they are likely to be understood by the average plan
participant.” 61 The inquiry is thus whether ordinary plan members who read
that “payment for the following is specifically excluded from this plan: . . .
charges for which you are not obligated to pay or for which you are not billed,”
would understand that they have no insurance coverage if they are not charged
for coinsurance. That is, would a plan member understand the language to
condition coverage on the collection of coinsurance, rather than simply
describing the fact that the insurance does not cover all of a patient’s costs.
Also relevant is whether Cigna denied all coverage to patients who were not
charged or “billed” for their copays or coinsurance by in-network providers. 62
       There are strong arguments that Cigna’s plan interpretation is not
“legally correct,” in which case the inquiry proceeds to determine whether
Cigna nonetheless had discretion to interpret the plan as it did. 63 On a finding
that the plans, read correctly, do not condition coverage on collection of
coinsurance, the question would be whether Cigna nevertheless had discretion
to absolve itself of responsibility for payment of the greater part of thousands
of claims. At this stage of the analysis, the inquiry would include among other
factors, whether Cigna had a conflict of interest, 64 as well as the “internal
consistency of the plan” and “the factual background of the determination and
any inferences of lack of good faith.” 65 If Cigna’s interpretation was found to
be either legally correct or within its discretion, a determination would also be


       61 Stone, 570 F.3d at 260 (internal quotation marks omitted) (quoting Crowell, 541
F.3d at 314).
       62 Another factor to consider at the “legal correctness” stage is “whether the

administrator has given the plan a uniform construction.” The third is whether
“unanticipated costs” result from the various plan interpretations. Crowell, 541 F.3d at 312.
       63 Stone, 570 F.3d at 257.
       64 Id.
       65 Threadgill v. Prudential Securities Group, Inc., 145 F.3d 286, 293 (5th Cir. 1998).

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                                      No. 12-20695
required as to whether its sweeping response to North Cypress’s charges was
based on “substantial evidence”       66   We say this much not to suggest an answer
but only to underline the many issues Cigna asks us to decide. We cannot
resolve the merits on this record, truncated as it was by the grant of summary
judgment for want of standing.
       There are thousands of plans at issue; it is evident from the sample we
find in the record, small as it is, that the plans contain significantly different
versions of key provisions. The parties also dispute whether Cigna applied its
“fee-forgiving protocol” to reduce payments for MRC2 plans or only for MRC1
plans, and whether Cigna was operating under a conflict of interest as to either
the Administrative Services Only or Cigna-funded plans. 67 Cigna also contends
that many claims at issue were denied for reasons that had nothing to do with
the fee-forgiving protocol, and that many claims suffer from a lack of proper
assignment or a failure to exhaust administrative remedies. Whether Cigna
had substantial evidence to support reducing payment on emergency room
claims specifically is also uncertain on this record. 68
       Having rejected North Cypress’s ERISA claims on standing grounds, the
district court properly did not address the merits on this record of the many
varied claims. In ruling on the claims arising from the “Discount Agreement”
contracts—we will consider them in Part V—the district court did examine



       66 Anderson, 619 F.3d at 512 (“In addition to not being arbitrary and capricious, the
plan administrator's decision to deny benefits must be supported by substantial evidence.”).
       67 The district court recognized that any conflict of interest would have to be

considered in evaluating Cigna’s plan interpretation if that interpretation was not found to
be “legally correct.” We note that we also consider conflicts of interest as part of the
“substantial evidence” inquiry. See Holland, 576 F.3d at 247-51 (considering conflict of
interest as part of assessment of evidentiary basis for denial of benefits).
       68 In some filings, the parties seem to agree that North Cypress did not apply its

discount program to MRC1 plan emergency room services, but that Cigna did apply its fee-
forgiving protocol to such claims. In others Cigna argues that it had substantial evidence on
which to reduce payment to emergency room claims.
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                                      No. 12-20695
Cigna’s interpretation of provisions in many of the plans and the evidentiary
basis for reducing payment. 69 However, that analysis is not directly applicable
to the ERISA underpayment claims because it was filtered through state
contract law and based on a much smaller universe of claims. We vacate and
remand to allow the district court a full opportunity to consider all of North
Cypress’s claims for underpayment of benefits and its other closely related
ERISA claims with a fully developed record, including claims that Cigna
breached duties owed its insureds under ERISA.
                                             V.
       We turn next to the grant of summary judgment against North Cypress’s
state contract law claims. According to the hospital, Cigna breached the terms
of the “Discount Agreements”—contracts between North Cypress and Cigna
requiring Cigna to pay a negotiated amount for specific insurance claims. The
contracts by their terms are subject to the underlying ERISA plans.
       The district court first addressed whether the Discount Agreement
claims were preempted by ERISA, which “supersede[s] any and all State laws
insofar as they may now or hereafter relate to any employee benefit plan.” 70
This provision is “intended to ensure that employee benefit plan regulation
would be ‘exclusively a federal concern,’” 71 and as such, the Supreme Court has
commented that the preemption provision is “conspicuous for its breadth” 72
and is “deliberately expansive.” 73 Nonetheless, the district court found that the



       69 Mem. and Order of August 10, 2012, 12-14, 20. Because we vacate the grant of
summary judgment against the contract claims in order to allow the district court to address
the question of ERISA preemption in the first instance, we need not review, and express no
opinion on, the district court’s decision on the merits.
       70 29 U.S.C. § 1144(a).
       71 Aetna Health Inc. v. Davila, 542 U.S. 200, 208 (2004) (quoting Alessi v. Raybestos-

Manhattan, Inc., 451 U.S. 504, 523 (1981)).
       72 FMC Corp. v. Holliday, 498 U.S. 52, 58 (1990).
       73 Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 46 (1987).

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                                       No. 12-20695
contract law claims were not preempted because North Cypress could not bring
the claims under ERISA:
       This Court has already held that Plaintiffs do not have standing to
       bring their ERISA claims. Therefore, Plaintiffs’ breach of contract
       claim is not preempted. See Montefiore Med. Center v. Teamsters
       Local 272, 642 F.3d 321, 328 n.7 (2d Cir. 2011) (explaining that the
       preempted claims must have been “brought by an individual who
       has standing to assert rights under ERISA § 502(a)(1)(B)”); . . . . 74

The court went on to rule on the merits, finding no breach because Cigna was
entitled to reduce payment under the terms of the “Discount Agreement”
contracts.
       In holding that North Cypress has standing to bring ERISA claims, we
removed the foundation of the district court’s preemption ruling. 75 The parties
have not briefed the issue of whether the Discount Agreement claims
nonetheless survive un-preempted. Accordingly, we vacate the grant of
summary judgment and remand so that the district court may consider the
question of preemption in light of our ruling on standing.
                                             VI.
       The vacating of the dismissal for want of standing does not impact the
remaining claims and we turn to them. First, we address the dismissal of North
Cypress’s claims under Texas Insurance Code sections 843.338 and 843.351 as
preempted by ERISA. These state laws set time standards for claim
determinations, specifying how long a health maintenance organization has to




       74 Mem. and Order of August 10, 2012, 4-5.
       75 The district court earlier held that the contract claims were not preempted even if
there was ERISA standing, but this 2011 decision is based on a finding that one would not
need to interpret the ERISA plans in order to resolve the contract dispute. Because this later
proved to be untrue, we do not find the court’s earlier decision persuasive. See Mem. and
Order of March 2, 2011.
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                                       No. 12-20695
pay a provider. 76 We conclude that the district court did not err in holding that
these provisions of the Texas Insurance Code are preempted.
       We have already noted ERISA’s “deliberately expansive” preemption
clause. 77 The clause is not without exception, however; the statute contains a
savings clause providing that “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.” 78
       Following the Supreme Court’s decision in Kentucky Association of
Health Plans, Inc. v. Miller, 79 we have explained:
       [F]or a state law to be deemed a ‘law . . . which regulates insurance’
       under [s]ection 1144(b)(2)(A) and thus be exempt from traditional
       ERISA preemption, such law must (1) be directed toward entities
       engaged in insurance, and (2) substantially affect the risk pooling
       arrangement between the insurer and the insured. 80

We take a “common-sense view of the matter,” 81 and look to whether the
statute is “specifically directed toward entities engaged in insurance.” 82 Here,
sections 843.338 and 843.351 both purport to regulate HMOs, which are
unquestionably entities engaged in insurance.
       Whether the law “substantially affect[s] the risk pooling arrangement
between the insurer and the insured” 83 is more complicated. The Supreme
Court has emphasized that this factor cannot be read to cover all laws that


       76  With certain exceptions, section 843.338 sets a 45-day deadline for nonelectronic
claims and a 30-day deadline for electronic claims. Section 843.351 clarifies that the prompt
payment provisions apply to out-of-network providers.
        77 Dedeaux, 481 U.S. at 46.
        78 29 U.S.C. § 1144(b)(2)(A).
        79 538 U.S. 329 (2003).
        80 Ellis v. Liberty Life Assur. Co. of Bos., 394 F.3d 262, 276 (5th Cir. 2004) (citing

Miller, 538 U.S. at 341-42).
        81 Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 365 (2002) (quoting Metro. Life

Ins. Co. v. Massachusetts, 471 U.S. 724, 740 (1985)).
        82 Miller, 538 U.S. at 342.
        83 Id.

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                                       No. 12-20695
affect an insurance company, “[o]therwise, any state law aimed at insurance
companies could be deemed a law that ‘regulates insurance.’” 84 Laws that meet
the second Miller factor are those which “alter the scope of permissible
bargains between insurers and insured,” 85 including those which “expand[] the
number of providers from whom an insured may receive health services,” 86
those governing “whether or not an insurance company must cover claims
submitted late, which dictates to the insurance company the conditions under
which it must pay for the risk it has assumed,” 87 and those determining
whether an “insured [may] seek insurance from a closed network of health-care
providers in exchange for a lower premium.” 88 In Ellis v. Liberty Life Assurance
Company of Boston, 89 we further clarified the Miller “risk pool arrangement.”
We first ruled that Miller did not cover remedial provisions, which are those
that “provide remedies to which the insured may turn when injured by the bad
faith of the insurer.” 90 We then turned to the nature of risk pools more broadly,
concluding that “[w]ithin the insurance industry, risk signifies the risk of
occurrence of injury or loss for which the insurer contractually agrees to
compensate the insured.” 91 Because the provisions in that case were not
addressed to such risk, they were preempted.




       84 Id. at 338; see also id. (“A state law requiring all insurance companies to pay their
janitors twice the minimum wage would not ‘regulate insurance,’ even though it would be a
prerequisite to engaging in the business of insurance, because it does not substantially affect
the risk pooling arrangements undertaken by insurer and insured.”).
       85 Id. at 338-39.
       86 Id. at 338.
       87 Id. at 339 n.3.
       88 Id. at 339.
       89 394 F.3d 262 (5th Cir. 2004).
       90 Id. at 277 (internal quotation marks omitted) (quoting Barber v. Unum Life Ins. Co.

of Am., 383 F.3d 134, 143 (3d Cir. 2004)).
       91 Id. (internal quotation marks omitted) (quoting Barber, 383 F.3d at 143).

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                                      No. 12-20695
       Returning to the state laws affecting the time for payment of provider
claims, 92 the inquiry now is whether the timing provisions “‘alter the scope of
permissible bargains between insurers and insureds’ and thus substantially
affect the risk-pooling ‘arrangements that insurers may offer.’” 93 The laws
certainly affect the scope of bargains between insurer and provider, given that
they prohibit the insurer from agreeing to a later payment date to the provider
than provided by statute. That is not enough. In Miller, the Supreme Court
highlighted examples of provisions which affect risk pooling, 94 including (1)
mandated-benefit laws “that require an insurer to provide a certain kind of
benefit to cover a specified illness or procedure,” 95 (2) a notice-prejudice rule
which requires the “insurers show prejudice before they may deny coverage
because of late notice,” 96 (3) a provision providing health insurance recipients
a “right to independent medical review of certain denials of benefits,” 97 and (4)
“any willing provider” statutes which limit insurers’ ability “to limit the
number of providers with access to their networks.” 98 Key to these examples is
that all of them implicate provisions which concern rights that the insured has
under the insurance contract—be that a mandatory condition of coverage or
access to certain providers. Here, the laws in question only implicate rights
between the provider and insurer, and do not obviously address the bargain
struck between insurer and insured. 99


       92 See Tex. Ins. Code. §§ 843.338, 843.351.
       93 Ellis, 394 F.3d at 277 (quoting Miller, 538 U.S. at 338-39).
       94 See Miller, 538 U.S. at 337, 339, 341.
       95 Metro. Life Ins. Co., 471 U.S. at 728.
       96 UNUM Life Ins. Co. of Am. v. Ward, 526 U.S. 358, 372 (1999).
       97 Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 359 (2002).
       98 Miller, 538 U.S. at 332.
       99 In Miller, the Court, describing the notice-prejudice rule at issue in Unum Life

Insurance Company of America v. Ward, 526 U.S. 358, held that: “[t]he notice-prejudice rule
governs whether or not an insurance company must cover claims submitted late, which
dictates to the insurance company the conditions under which it must pay for the risk that it
has assumed. This certainly qualifies as a substantial effect on the risk pooling arrangement
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                                        No. 12-20695
       Nor does this type of law obviously affect the risk pool, at least as that
term was defined by Miller. 100 In the examples the Court highlighted, the
definition of risk pool appeared to focus on two factors—the benefits an insured
has access to and, to a lesser extent, the population covered. 101 The prompt
payment statutes do not substantially affect either of these factors.
       This is not to say that the laws have no incidental effects on either the
number of insureds or their benefits. Laws governing how quickly insurers
must pay providers implicate the required cash reserves of insurers, and thus
the type of coverage the company could sustain. Such laws might also affect
the type and number of providers who choose to enter into contractual
arrangements with insurers, since payment provisions presumably have an
effect on choices of insurance networks by medical professionals. But given
Miller’s instruction, these potential indirect impacts do not “substantially
affect the risk pool arrangement between the insurer and the insured.” 102
       Two arguments remain. First, in Ellis, we held that “remedial
provisions,” which “provide remedies to which the insured may turn when




between the insurer and insured.” Miller, 438 U.S. at 399 n.3. Unlike in Miller, the laws at
issue here do not govern whether or not an insurer must pay; rather they specify the processes
by which payment must be made.
        100 While the Miller Court held that, to be saved, “a state law must substantially affect

the risk pooling arrangement between the insurer and insured,” thus conflating to some
extent the insurer/insured bargain and impact on the risk pool factor, these appear to be
distinct concepts, at least within the insurance industry. See Beverly Cohen, Saving the
Savings Clause: Advocating a Broader Reading of the Miller Test to Enable States to Protect
ERISA Health Plan Members by Regulating Insurance, 18 Geo. Mason L. Rev. 125, 144
(2010). In light of this, several courts have concluded that the term “risk pooling” has a
different meaning in the ERISA preemption context. See, e.g., Standard Ins. Co. v. Morrison,
537 F. Supp. 2d 1142, 1151 (D. Mont. 2008) (rejecting the argument that “the Court intended
lower courts to interpret ‘risk pooling’ as an insurance industry actuary would”).
        101 While none of the four examples the Court gave in Miller directly discussed the

pool size, the type of examples it gives in Ward and Metro Life do concern access to coverage.
Moreover the plain meaning of “risk pool” necessarily entails a numerosity component.
        102 Miller, 538 U.S. at 342.

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                                    No. 12-20695
injured by the bad faith of the insurer,” are preempted. 103 While Cigna argues
this rule applies here, the prompt payment statutes at issue in this case do not
provide remedies for the insured or provider in the event of late payment, and
are not remedial. 104 Second, North Cypress relies on our decision in Lone Star
OB/GYN Associates v. Aetna Health, Inc. 105 for the proposition that ERISA
preemption did not apply to prompt payment act claims. That case, looking at
a dispute between a provider and an insurance company, held that “[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 benefit plan . . . is not
preempted by ERISA.” 106 This case is inapposite. Lone Star was based on the
conclusion that the contract between the provider and insurer created an
“independent legal duty” distinct from the rights of the provider’s patients
under the ERISA plans. 107 Here, North Cypress’s state insurance code claims
were based directly on the benefits described in its patients’ ERISA plans. We
affirm the district court’s holding that the prompt payment provisions at issue
are preempted by ERISA.
                                          VII.
      North Cypress argues that it properly pled claims under RICO. The
district court held that North Cypress failed to state a plausible claim upon
which relief could be granted under any RICO provision, and thus dismissed
these claims under Rule 12(b)(6). 108
      Subsections 1962(a)-(d) of RICO essentially state that:


      103  Ellis, 394 F.3d at 277 (internal quotation marks omitted).
      104   See id. at 274-75 (recognizing that the statutes at issue “subjects insurance
companies to civil liability” if they “breach the common law duty of good faith and fair
dealing” or if they “unfairly and untimely process and treat a claim”).
       105 579 F.3d 525 (5th Cir. 2009).
       106 Id. at 530.
       107 Id. at 530-31.
       108 Mem. and Order of November 3, 2011, 6.

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                                     No. 12-20695
             (a) a person who has received income from a pattern
                 of racketeering activity cannot invest that
                 income in an enterprise;
           (b)   a person cannot acquire or maintain an interest
                 in an enterprise through a pattern of
                 racketeering activity;
           (c)   a person who is employed by or associated with
                 an enterprise cannot conduct the affairs of the
                 enterprise through a pattern of racketeering
                 activity; and
           (d)   a person cannot conspire to violate subsections
                 (a), (b), or (c). 109
Three elements are common to claims brought under any of these subsections:
“(1) a person who engages in (2) a pattern of racketeering activity, (3) connected
to the acquisition, establishment, conduct, or control of an enterprise.” 110 The
district court found that North Cypress presented sufficient facts to plead a
pattern of racketeering activity, 111 but not the individual RICO subsections.
We consider each subsection in turn.
                                    A. 18 U.S.C. § 1962(a)
      Subsection 1962(a) prohibits a person who has received income from a
pattern of racketeering activity from investing that income in an enterprise. 112
To state a claim under § 1962(a), North Cypress had to plead: “(1) the existence
of an enterprise, (2) the defendant’s derivation of income from a pattern of
racketeering activity, and (3) the use of any part of that income in acquiring
an interest in or operating the enterprise.” 113 Additionally, North Cypress had
to show a nexus between the claimed violations and injury. 114 The injury “must




      109 Crowe v. Henry, 43 F.3d 198, 203 (5th Cir. 1995).
      110 Abraham v. Singh, 480 F.3d 351, 355 (5th Cir. 2007).
      111 Mem. and Order of November 3, 2011, 7-10.
      112 Crowe, 43 F.3d at 203.
      113 St. Paul Mercury Ins. Co. v. Williamson, 224 F.3d 425, 441 (5th Cir. 2000).
      114 Id.

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                                       No. 12-20695
flow from the use or investment of racketeering income.” 115 “[A]lleging an
injury solely from the predicate racketeering acts themselves is not sufficient
because § 1962(a) does not prohibit those acts.” 116
       The district court found two deficiencies in North Cypress’s § 1962(a)
pleading. First, North Cypress did not plead that Cigna used any part of its
income to acquire an interest in or operate the alleged enterprise. 117 Second,
North Cypress did not explain how the use or investment of racketeering
income injured North Cypress. 118 North Cypress does not challenge these two
specific determinations, offering only the conclusion that it sufficiently pled a
§ 1962(a) violation. This is not sufficient. The district court did not err in
dismissing this claim.
                                     B. 18 U.S.C. § 1962(b)
       To state a claim under § 1962(b), North Cypress had to show that its
injuries “were proximately caused by a RICO person gaining an interest in, or
control of, the enterprise through a pattern of racketeering activity”—a nexus
requirement. 119 The district court found that North Cypress did not
successfully plead a nexus between its claimed injuries and Cigna’s acquisition
or maintenance of an interest in the enterprise. 120 On appeal, North Cypress
insists in general terms that it successfully pled a § 1962(b) violation, but it
does not explain how it showed such a nexus. The district court was correct in
dismissing this claim.




       115 Id.
       116 Nolen v. Nucentrix Broadband Networks Inc., 293 F.3d 926, 929 (5th Cir. 2002).
       117 Mem. and Order of November 3, 2011, 11.
       118 Id.
       119 Abraham, 480 F.3d at 357 (internal quotation marks omitted); see also Vanderbilt

Mortg. & Fin., Inc. v. Flores, 735 F. Supp. 2d 679, 701 (S.D. Tex. 2010); Blanchard & Co., Inc.
v. Contursi, No. Civ. A. 99-1758, 2000 WL 574590, at *2 (E.D. La. May 11, 2000).
       120 Mem. and Order of November 3, 2011, 12.

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                                       No. 12-20695


                                      C. 18 U.S.C § 1962(c)
       Subsection 1962(c) “prohibits any person employed by or associated with
any enterprise from participating in or conducting the affairs of the enterprise
through a pattern of racketeering activity.” 121 To state a claim under § 1962(c),
North Cypress had to demonstrate, among other things, “that the RICO person
is distinct from the RICO enterprise.” 122
       There are two Cigna enterprises involved in this case: Cigna Healthcare,
Connecticut General Life Insurance Company (“CGLIC”), and Cigna
Healthcare of Texas, Inc. (“CHT”). North Cypress asserts that CGLIC is the
“person” under § 1961(c) because it is the parent or controlling company. And
that CGLIC “has taken steps to cause [CHT] to be an ‘enterprise’ for illegal
racketeering activities under the guise and direction of Cigna’s alleged fee
forgiving investigations.” 123 But, as the district court correctly noted, simply
alleging that the parent company is the RICO person and the subsidiary is the
RICO enterprise cannot satisfy the distinctiveness requirement. 124 Because
North Cypress did not sufficiently demonstrate that CGLIC and CHT were
distinct, it did not state a plausible claim for relief. The district court was
correct in dismissing this claim.
                                     D. 18 U.S.C. § 1962(d)
       Subsection 1962(d) prohibits a conspiracy to violate §§ 1962(a), (b), or



       121 Abraham, 480 F.3d at 357 (internal quotation marks omitted) (emphasis original).
       122 Id.
       123 Second Amended Original Complaint, ¶ 88.
       124 See ISystems v. Spark Networks, Ltd., No. 10-10905, 2012 WL 3101672, at *4-5 (5th

Cir. March 21, 2012); Khurana v. Innovative Health Care Sys., Inc., 130 F.3d 143, 155 (5th
Cir. 1997), vacated on other grounds by Teel v. Khurana, 525 U.S. 979 (1998); Office
Outfitters, Inc. v. A.B. Dick Co., Inc., 83 F. Supp. 2d 772, 779-80 (E.D. Tex. 2000); Compagine
De Reassurance D’Ille de France v. New England Reinsurance Corp., 57 F.3d 56, 91-92 (1st
Cir. 1995); Lorenz v. CSX Corp., 1 F. 3d 1406, 1411-12 (3d Cir. 1993).
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                                       No. 12-20695
(c). 125 To prevail on a RICO conspiracy claim, North Cypress had to
demonstrate “(1) that two or more people agreed to commit a substantive RICO
offense and (2) that [the defendants] knew of and agreed to the overall objective
of the RICO offense.” 126 Since North Cypress failed to properly plead a claim
under §§ 1962(a), (b), or (c), it correspondingly failed to properly plead a claim
under § 1962(d). 127 The district court correctly dismissed North Cypress’s
conspiracy claims. The district court was correct in its determination that
North Cypress failed to plead a violation under any of the RICO subsections,
and we affirm.
                                             VIII.
       Two of the court’s orders were filed under seal, but the district court later
granted Cigna’s motion to unseal them 128—a decision North Cypress appeals.
We review the district court’s unsealing order for abuse of discretion. 129 The
district court’s discretion to seal records “is to be exercised charily” given the
public’s common law right of access, and we are “loath to second guess” a
decision not to seal documents. 130 However, sealing may be appropriate where
orders incorporate confidential business information. 131




       125 Word of Faith World Outreach Ctr. Church, Inc. v. Sawyer, 90 F.3d 118, 122 (5th
Cir. 1996).
       126 Chaney v. Dreyfus Service Corp., 595 F.3d 219, 239 (5th Cir. 2010) (quoting United

States v. Sharpe, 193 F.3d 852, 869 (5th Cir. 1999)).
       127 See Nolen, 293 F.3d at 930 (“The ‘failure to plead the requisite elements of either a

§ 1962(a) or a § 1962(c) violation implicitly means that [the defendant] cannot plead a
conspiracy to violate either section.’”) (quoting Simon v. Value Behavioral Health, Inc., 208
F.3d 1073, 1084 (9th Cir. 2000)); see also Pan Am. Mar., Inc. v. Esco Marine, Inc., No. C.A. B-
04-188, 2005 WL 1155149, at *8 (S.D. Tex. May 10, 2005).
       128 Mem. and Order of September 27, 2012, 1.
       129 See S.E.C. v. Van Waeyenberghe, 990 F.2d 845, 848 (5th Cir. 1993); Macias v. Aaron

Rents, Inc., 288 F. App'x 913, 915 (5th Cir. 2008).
       130 Macias, 288 F. App’x at 915.
       131 See Nixon v. Warner Commun., Inc., 435 U.S. 589, 598 (1978).

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                                   No. 12-20695
      North Cypress argues that the analysis in the two orders “is constructed
entirely from confidential business records and proprietary information.” 132
Furthermore their unsealing has caused “North Cypress’ competitive standing
[to be] substantially harmed.” 133 However, North Cypress does not identify any
particular confidential information in the orders that may cause it harm, and
much of the information therein is available elsewhere. We are not persuaded
that the district court abused its discretion in unsealing these orders.
                                        IX.
      Cigna argues that the district court erred in dismissing its ERISA
counterclaims as prescribed, holding that a two-year statute of limitations
applied and was not tolled by North Cypress’s filing suit.
                                         A.
      As there is no statute of limitations for claims under ERISA § 502(a)(3),
we look to state law for the most analogous cause of action. 134 The district court
looked to unjust enrichment, with its two-year statute of limitations, 135 while
Cigna argues that fraud—with its four-year state of limitations—is more apt.
      “Unjust enrichment claims are based on quasi-contract.” 136 Unjust
enrichment “characterizes the result of a failure to make restitution of benefits
either wrongfully or passively received under circumstances that give rise to
an implied or quasi-contractual obligation to repay.” 137 Generally, “when a
valid, express contract covers the subject matter of the parties’ dispute, there
can be no recovery under a quasi-contract theory, such as unjust



      132  North Cypress Initial Br. 57.
      133  Id. at 58.
       134 Hogan v. Kraft Foods, 969 F.2d 142, 145 (5th Cir. 1992) (citing Kennedy v.

Electricians Pension Plan, IBEW # 995, 954 F.2d 1116 (5th Cir. 1992)).
       135 Mem. and Order of July 25, 2012, 8.
       136 Fortune Production Co. v. Conoco, Inc., 52 S.W.3d 671, 683 (Tex. 2000).
       137 Foley v. Daniel, 346 S.W.3d 687, 690 (Tex. App. 2009).

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                                          No. 12-20695
enrichment.” 138 Here, the ERISA plans cover the subject matter of the dispute.
However, the Texas Supreme Court has held that “in some circumstances,
overpayments under a valid contract may give rise to a claim for restitution or
unjust enrichment.” 139
         The elements of fraud are:
         (1) that a material representation was made; (2) the
         representation was false; (3) when the representation was made,
         the speaker knew it was false or made it recklessly without any
         knowledge of the truth and as a positive assertion; (4) the speaker
         made the representation with the intent that the other party
         should act on it; (5) the party acted in reliance on the
         representation; and (6) the party thereby suffered injury. 140

Further, “[m]aterial means a reasonable person would attach importance to
and would be induced to act on the information in determining his choice of
actions in the transaction in question.” 141
         Cigna argues that its counterclaims seek redress for North Cypress’s
fraudulent over-reports of its charges. Notwithstanding the existence of a
contract, we agree with the district court that Cigna’s counterclaim is more
akin to a claim for unjust enrichment than one for fraud. 142 As the district court
carefully explained, the “counterclaim hinges on whether [] overpayments were
made in contravention of the plan terms, not on whether [North Cypress’s]


         138   City of the Colony v. North Tex. Mun. Water Dist., 272 S.W.3d 699, 731 (Tex. App.
2008).
         139Sw. Elec. Power Co. v. Burlington N. R.R. Co., 966 S.W.2d 467, 469-70 (Tex. 1998)
(listing cases).
        140 Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 337

(Tex. 2011) (quoting Aquaplex, Inc. v. Rancho La Valencia, Inc., 297 S.W.3d 768, 774 (Tex.
2009)).
        141 Id. (quoting Smith v. KNC Optical, Inc., 296 S.W.3d 807, 812 (Tex. App. 2009)).
        142 See Bombardier Aerospace Employee Welfare Benefits Plan v. Ferrer, Poirot and

Wansbrough, 354 F.3d 348, 360 (5th Cir. 2003) (stating in a different context that funds paid
out by a plan and retained in violation of plan terms constituted unjust enrichment of the
holder), abrogated on other grounds by ACS Recovery Services, Inc. v. Griffin, 723 F.3d 518
(5th Cir. 2013).
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                                        No. 12-20695
conduct was fraudulent.” 143 Indeed, given that North Cypress expressly
informed Cigna of its discounts prior to any representations about charges,
fraud seems particularly inapt. The district court correctly concluded that a
two-year statute of limitations was appropriate.
                                               B.
       Cigna also argues that the statute of limitations for its counterclaims
should have been tolled from the initial date of North Cypress’s complaint. The
district court determined that Cigna’s counterclaims were compulsory, but
that because the counterclaims sought affirmative relief the statute of
limitations should not be tolled. 144
       Although based on distinct universes of benefits claims, North Cypress’s
claims and Cigna’s counterclaims arise from the same “core of facts,” 145—North
Cypress’s prompt pay discount. The district court thus correctly determined
that Cigna’s counter-claims were compulsory because they have a logical
relationship to North Cypress’s claims. 146
       It has been observed that:


       143  Mem. and Order of July 25, 2012, 8. As the district court explained, “recovery is
not predicated upon intentional, false representations by [North Cypress]. Rather, the core
of [Cigna’s] claim is that [North Cypress] listed charges on claim forms without requiring
patients to pay the full amount of those listed charges. In turn, the ‘plans made overpayments
to [North Cypress] in the amount of the difference between the benefits that the plans paid
and the benefits to which the plan members were contractually entitled, based on the
amounts that [North Cypress] actually required them to pay.’” Id. (citations omitted).
        144 Id. at 15.
        145 A logical relationship “exists when the claim and the counterclaim arise from the

same ‘aggregate of operative facts,’ or ‘the aggregate core of facts upon which the original
claim rests activates additional rights, otherwise dormant, in the defendants.’” Rossi v. Wohl,
633 F.Supp. 2d 270, 285 (N.D. Tex. 2009) (quoting Nayani v. Horseshoe Entm’t, No. 3:06-CV-
01509-M, 2007 WL 1288047, at *2 (N.D. Tex. May 2, 2007).
        146 A counterclaim is compulsory when “(1) . . . the issues of fact and law raised by the

claim and counterclaim largely are the same; (2) . . . res judicata would bar a subsequent suit
on defendant’s claim absent the compulsory counterclaim rule; (3) . . . substantially the same
evidence will support or refute plaintiff’s claim as well as defendant’s counterclaim; [or] (4) .
. . there is [a] logical relationship between the claim and the counterclaim.” Park Club, Inc.
v. Resolution Trust Corp., 967 F.2d 1053, 1058 (5th Cir. 1992).
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                                        No. 12-20695
       [a]lthough there is some conflict on the subject, the majority view
       appears to be that the institution of plaintiff’s suit tolls or suspends
       the running of the statute of limitations governing a compulsory
       counterclaim. This approach precludes plaintiff, when the claim
       and counterclaim are measured by the same period, from delaying
       the institution of the action until the statute has almost run on
       defendant's counterclaim so that it would be barred by the time
       defendant advanced it. 147

But of course this view has most force when tolling is allowed for defensive
relief. We have repeatedly stated or suggested without holding that statutes of
limitations of counterclaims seeking affirmative relief are not tolled; stating
that “[a]s a purely defensive procedure, [recoupment] is available to defendant
so long as plaintiff’s claim survives—even though an affirmative action by
defendant is barred by limitations.” 148 We have made similar statements about
the special status of recoupment or the inapplicability of tolling to
counterclaims for affirmative relief without ever holding that affirmative
counterclaims are not tolled. 149
       Cigna urges that we should be guided by our recent unpublished holding
in Ruben A. that an affirmative-relief counterclaim to an Individuals with
Disabilities Education Act (IDEA) suit was not barred by IDEA’s statute of



       147  § 1419 Compulsory Counterclaims—Statute of Limitations, 6 Fed. Prac. & Proc.
Civ. § 1419 (3d ed.) (footnote omitted).
        148 Distribution Servs., Ltd. v. Eddie Parker Interests, Inc., 897 F.2d 811, 812-13 (5th

Cir. 1990) (“The rationale is that because recoupment is in the nature of a defense, it is never
barred by the statute of limitations so long as the plaintiff’s main action itself is timely.”).
        149 See, e.g., Pennsylvania R. Co. v. Miller, 124 F.2d 160, 162 (5th Cir. 1941)

(“Recoupment goes to the foundation of the plaintiff's claim; it is available as a defense,
although as an affirmative cause of action it may be barred by limitation.”); Matter of Gober,
100 F.3d 1195, 1207-08 (5th Cir. 1996) (“Defensive claims for recoupment are never subject
to statutes of limitations as long as the plaintiff's action is timely. Counterclaims for setoff,
however, are subject to the applicable statute of limitations just as if they were asserted as
independent actions.”) (internal citations omitted); see also Kadonsky v. United States, 216
F.3d 499, 507 n.9 (5th Cir. 2000) (“Counterclaims in the nature of recoupment filed after the
statute of limitations has run are nonetheless timely if the suit prompting the counterclaim
were timely.”).
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                                          No. 12-20695
limitations. 150 There we approvingly cited the Third Circuit’s statement that
tolling compulsory counterclaims is “the fairer rule.” 151 However, our holding
was firmly footed in IDEA’s specific statute of limitations language, which
“limits the time in which a party may ‘bring an action’ in federal court.” 152 We
determined that asserting a compulsory counterclaim is not “bringing an
action” and noted that IDEA’s express language made it unnecessary to
distinguish between affirmative and defensive counterclaims. 153
         Here, we are squarely called upon to answer the question not reached by
Ruben A.. We are persuaded and hold that compulsory counterclaims seeking
affirmative relief are not tolled. 154
                                         _____________
         We VACATE the district court’s grants of summary judgment against
North Cypress’s ERISA claims and breach of contract claims, 155 and REMAND
for further proceedings. We AFFIRM the remainder of the district court’s
judgment.




         150   Ruben A. v. El Paso Independent School District, 414 F. App’x 704, 707 (5th Cir.
2011).
         151Id. (citing Jonathan H. v. The Souderton Area Schl. Dist., 562 F.3d 527, 529 (3d
Cir. 2009).
        152 Id. (emphasis added).
        153 Id. at 706-07.
        154 Sound policy reasons support enforcing statutes of limitations. See CTS Corp. v.

Waldburger, 134 S. Ct. 2175, 2183, reh'g denied, 135 S. Ct. 23 (2014) (noting that statutes of
limitations “require plaintiffs to pursue diligent prosecution of known claims” and “promote
justice by preventing surprises through [plaintiffs’] revival of claims that have been allowed
to slumber”) (internal quotation marks omitted); Taylor v. Bunge Corp., 775 F.2d 617, 619
(5th Cir. 1985) (emphasizing the “policy of finality underlying the statute of limitations”).
        155 This includes the claims for state law damages and attorney’s fees. See Second

Amended Complaint, Counts 6, 9-11.
                                                34
