                                        In the

         United States Court of Appeals
                       For the Seventh Circuit
                            ____________________  

Nos.  14-­‐‑2322,  14-­‐‑3174  &  15-­‐‑1274  
PENNSYLVANIA   CHIROPRACTIC   ASSOCIATION,   MARK   BARNARD,  
and  BARRY  A.  WAHNER,  
                                         Plaintiffs-­‐‑Appellees,  
                                          v.  

INDEPENDENCE   HOSPITAL   INDEMNITY   PLAN,   INC.,   formerly  
known  as  Independence  Blue  Cross,  
                                        Defendant-­‐‑Appellant.  
                            ____________________  

             Appeals  from  the  United  States  District  Court  for  the  
               Northern  District  of  Illinois,  Eastern  Division.  
               No.  09  C  5619  —  Matthew  F.  Kennelly,  Judge.  
                            ____________________  

        ARGUED  SEPTEMBER  9,  2015  —  DECIDED  OCTOBER  1,  2015  
                      ____________________  

        Before  EASTERBROOK,  KANNE,  and  WILLIAMS,  Circuit  Judg-­‐‑
es.  
     EASTERBROOK,  Circuit  Judge.  Two  chiropractors  and  an  as-­‐‑
sociation  of  chiropractors  filed  this  suit  against  an  insurance  
company.  They  contend  that,  when  determining  how  much  
to  pay  for  services  rendered  to  patients,  the  insurer  failed  to  
use   the   procedures   required   by   29   U.S.C.   §1133,   part   of   the  
2                                                        Nos.  14-­‐‑2322  et  al.  

Employee   Retirement   Income   Security   Act   (ERISA).   Plain-­‐‑
tiffs’  ability  to  invoke  ERISA  depends  on  their  being  “benefi-­‐‑
ciaries”   of   a   plan   established   under   that   law.   See   29   U.S.C.  
§1132(a)(1)(B).  Over  the  course  of  19  opinions  that  aggregate  
more   than   200   single-­‐‑spaced   pages,   the   district   court   con-­‐‑
cluded  that  plaintiffs  are  beneficiaries  and  awarded  damages  
plus   injunctions   requiring   the   insurer   to   follow   §1133   and  
the  Department  of  Labor’s  regulation,  29  C.F.R.  §2560.503–1,  
when   making   decisions   about   coverage   and   level   of   pay-­‐‑
ment  under  insurance  policies.  
     The  insurer  operates  a  preferred-­‐‑provider  system  that  of-­‐‑
fers   patients   better   benefits,   or   lower   co-­‐‑payments,   when  
they  patronize  medical  providers  who  have  agreed  with  the  
insurer   to   accept   lower   reimbursements   (per   procedure)   in  
exchange  for  a  better  flow  of  business.  The  two  chiropractor  
plaintiffs   have   signed   such   contracts,   which   the   parties   call  
“participating   provider”   or   “network”   agreements.   Provid-­‐‑
ers  bill  the  insurer  directly  and  do  not  know  (or  care)  wheth-­‐‑
er  a  given  patient  obtained  the  coverage  as  part  of  an  ERISA  
welfare-­‐‑benefit   plan   or   through   some   other   means,   such   as  
an  affinity-­‐‑group  policy  or  an  insurance  exchange  under  the  
Affordable  Care  Act.  
     The   current   dispute   concerns   the   amounts   providers   re-­‐‑
ceive   under   their   participating-­‐‑provider   contracts,   not   any  
particular   ERISA   plan.   The   insurer   believes   that   its   policies  
and   contracts   promise   to   reimburse   particular   services   on   a  
capitation  basis  (a  health  maintenance  organization  receives  
a  fixed  payment  per  patient  per  year,  without  regard  to  the  
amount   of   value   of   services   rendered),   while   the   plaintiffs  
believe  that  the  insurer  must  use  a  fee-­‐‑for-­‐‑service  system.  If  
the   insurance   policy   calls   for   capitation   payment,   providers  
Nos.  14-­‐‑2322  et  al.                                                       3  

who   are   outside   a   HMO   cannot   receive   payment   for   a   par-­‐‑
ticular  class  of  services.  After  reimbursing  some  services  on  
a  fee-­‐‑for-­‐‑service  basis,  the  insurer  declared  that  it  had  made  
a   mistake   and   recouped   by   reducing   future   payments   for  
other  services  that  the  insurer  acknowledged  were  compen-­‐‑
sable.  Plaintiffs  insist  that  it  could  not  do  this  without  offer-­‐‑
ing  hearings  under  §1133  and  the  implementing  regulations,  
while   the   insurer   says   that   the   right   procedures   to   use   are  
those  specified  by  contract.  
    In   siding   with   the   plaintiffs,   the   district   court   required  
the   insurer   to   use   procedures   that   are   designed   for   retail-­‐‑
level   disputes   between   a   plan’s   participants   and   their   em-­‐‑
ployer   (or   plan   administrator)   rather   than   procedures   de-­‐‑
signed   for   wholesale-­‐‑level   disputes   between   an   insurer   and  
providers  under  network  contracts.  If  that  is  what  ERISA  re-­‐‑
quires,   then   a   mismatch   between   the   procedures   and   the  
kind  of  dispute  involved  is  no  concern  of  the  judiciary’s.  But  
the  insurer  maintains  that  it  is  not  what  ERISA  requires,  be-­‐‑
cause   (in   its   view)   plaintiffs   are   neither   participants   in   nor  
beneficiaries  of  welfare-­‐‑benefit  plans.  
      Section   1133   requires   “every   employee   benefit   plan”   to  
make  available  to  each  “participant”  and  “beneficiary”  pro-­‐‑
cedures  that  the  Secretary  of  Labor  may  supplement  by  reg-­‐‑
ulation.  Section  1132(a)(1)(B)  permits  participants  and  bene-­‐‑
ficiaries  to  sue  in  federal  court  to  enforce  this  duty.  The  par-­‐‑
ties  dispute  whether  the  plaintiffs  have  “standing”  to  litigate  
under  §1132  and  §1133.  That’s  a  misnomer.  Standing  means  
the  combination  of  injury  in  fact,  causation,  and  redressabil-­‐‑
ity.   See   Lujan   v.   Defenders   of   Wildlife,   504   U.S.   555,   560–61  
(1992).  No  one  doubts  that  the  plaintiffs  have  shown  all  three  
of   these.   The   issue   in   this   suit   is   not   whether   chiropractors  
4                                                          Nos.  14-­‐‑2322  et  al.  

have   standing   but   whether   their   claim   comes   within   the  
zone  of  interests  regulated  by  a  specific  statute.  The  Supreme  
Court   stressed   in   Lexmark   International,   Inc.   v.   Static   Control  
Components,  Inc.,  134  S.  Ct.  1377,  1386  (2014),  the  importance  
of  keeping  standing  distinct  from  statutory  coverage.  So  we  
avoid   the   language   of   standing   and   ask   instead   whether  
plaintiffs   are   participants   or   beneficiaries   as   ERISA   uses  
those  words—both  of  which  are  defined  terms.  
      Plaintiffs  concede  that  they  are  not  participants  under  the  
definition  in  29  U.S.C.  §1002(7).  A  participant  is  an  employee  
or   former   employee   who   seeks   a   plan’s   benefits.   But   plain-­‐‑
tiffs   describe   themselves   as   beneficiaries.   That   word   is   de-­‐‑
fined   in   §1002(8):   “The   term   ‘beneficiary’   means   a   person  
designated  by  a  participant,  or  by  the  terms  of  an  employee  
benefit   plan,   who   is   or   may   become   entitled   to   a   benefit  
thereunder.”   We   held   in   Kennedy   v.   Connecticut   General   Life  
Insurance  Co.,  924  F.2d  698  (7th  Cir.  1991),  that  when  a  “par-­‐‑
ticipant”   assigns   to   a   medical   provider   the   right   to   receive  
the   participant’s   entitlement   under   the   plan,   this   makes   the  
provider   a   “beneficiary”   under   §1002(8).   Plaintiffs   and   the  
district   court   rely   principally   on   Kennedy   for   the   conclusion  
that  they,  too,  are  beneficiaries.  
    The  problem  with  this  contention  all  but  catapults  off  the  
page:   a   “beneficiary”   is   a   person   designated   “by   a   partici-­‐‑
pant”   or   “by   the   terms   of   an   employee   benefit   plan,”   and  
plaintiffs  are  neither.  (The  parties  call  these  two  possibilities  
“derivative   standing”   and   “direct   standing.”   We   use   the  
statutory  language  instead.)  Plaintiffs  do  not  rely  on  a  valid  
assignment  from  any  patient.  Nor  do  they  rely  on  a  designa-­‐‑
tion   in   a   plan.   Instead   they   rely   on   their   contracts   with   an  
insurer.   That   does   not   meet   the   definition   in   §1002(8).   No  
Nos.  14-­‐‑2322  et  al.                                                          5  

employee’s  benefits  are  at  issue  and  none  had  to  pay  an  ex-­‐‑
tra  penny  as  a  result  of  the  insurer’s  treatment  of  some  pro-­‐‑
cedures  as  capitation  based  rather  than  fee-­‐‑for-­‐‑service  based;  
plans’  duties  to  their  participants  are  unaffected  by  this  liti-­‐‑
gation.  
      It  became  clear  at  oral  argument  that  plaintiffs  deem  eve-­‐‑
ry  insurer  (perhaps  every  policy)  to  be  a  “plan.”  When  asked  
why,  their  counsel  replied  that  a  big  insurer  is  bound  to  im-­‐‑
plement   some   plan   or   other.   An   employer   (defined   in  
§1002(5))  establishes  a  plan;  the  plan’s  administrator  (anoth-­‐‑
er  defined  term,  see  §1002(16)(A))  may  contract  for  insurance  
to   implement   that   plan;   indeed,   an   employer   may   offer   a  
particular   policy   of   insurance   as   the   plan.   But   this   does   not  
equate   the   insurer   to   the   plan,   for   “welfare   plan”   is   itself   a  
defined  term:  “any  plan,  fund,  or  program  which  was  here-­‐‑
tofore   or   is   hereafter   established   or   maintained   by   an   em-­‐‑
ployer  or  by  an  employee  organization,  or  by  both,  to  the  ex-­‐‑
tent   that   such   plan,   fund,   or   program   was   established   or   is  
maintained   for   the   purpose   of”   providing   medical   or   other  
fringe  benefits.  29  U.S.C.  §1002(1).  
      The  defendant,  which  used  to  be  known  as  Blue  Cross  of  
Greater  Philadelphia  but  changed  its  name  when  it  expand-­‐‑
ed   its   territory   and   services,   is   not   “established”   or   “main-­‐‑
tained”  by  any  employer.  It  was  established  in  1938,  long  be-­‐‑
fore  ERISA,  and  exists  independently  of  employers  and  their  
plans.   It   now   covers   more   than   seven   million   people,   far  
more   than   any   ERISA   plan.   That   some   employers’   plans  
provide  benefits  through  an  insurer  does  not  make  the  poli-­‐‑
cy  “the  plan.”  And  plaintiffs’  contracts  are  with  an  insurer  in  
its   role   as   insurer,   not   any   employer   or   plan   sponsor;   the  
network  contracts  cover  all  dealings  with  the  insurer  rather  
6                                                          Nos.  14-­‐‑2322  et  al.  

than   the   administration   of   a   particular   plan.   The   insurer   is  
the   sole   defendant;   no   participant,   employer,   plan   sponsor,  
or  plan  administrator  is  a  litigant.  The  district  court’s  injunc-­‐‑
tions  regulate  the  dealings  between  medical  providers  and  a  
particular  insurer,  not  between  plaintiffs  and  plan  sponsors.  
Plaintiffs’  view  that  any  document  related  to  a  plan  is  itself  a  
plan   was   rejected   by   the   Supreme   Court   in   CIGNA   Corp.   v.  
Amara,  563  U.S.  421,  131  S.  Ct.  1866,  1877–78  (2011).  
     The  Second  Circuit  recently  held  that  a  network  contract  
between   a   medical   provider   and   an   insurer   does   not   make  
that   provider   a   “beneficiary”   under   ERISA.   See   Rojas   v.  
CIGNA   Health   &   Life   Insurance   Co.,   793   F.3d   253   (2d   Cir.  
2015).  Plaintiffs  insist  that  Rojas  contradicts  this  circuit’s  ap-­‐‑
proach,  established  in  Kennedy,  but  we  have  explained  why  
Kennedy  and  similar  opinions  do  not  support  plaintiffs’  posi-­‐‑
tion.   Rojas   concludes   that   every   circuit   that   has   addressed  
the   subject   has   distinguished   between   providers’   status   as  
assignees  of  particular  claims  to  benefits  and  providers’  sta-­‐‑
tus  as  voluntary  members  of  a  network  established  by  an  in-­‐‑
surer.  See  793  F.3d  at  258,  discussing  Spinedex  Physical  Thera-­‐‑
py  USA  Inc.  v.  United  Healthcare  of  Arizona,  Inc.,  770  F.3d  1282,  
1289  (9th  Cir.  2014);  Hobbs  v.  Blue  Cross  Blue  Shield  of  Alabama,  
276   F.3d   1236,   1241   (11th   Cir.   2001);   and   Ward   v.   Alternative  
Health  Delivery  Systems,  Inc.,  261  F.3d  624,  627  (6th  Cir.  2001).  
The   language   of   those   other   decisions   is   not   as   clean   as   the  
Second  Circuit’s—and  the  Second  Circuit’s  use  of  “standing”  
as  a  synonym  for  statutory  coverage  itself  leaves  something  
to   be   desired—but   our   review   of   the   decisions   in   other   cir-­‐‑
cuits   leads   us   to   agree   with   Rojas   that   the   distinction   be-­‐‑
tween   assignment   of   particular   claims   and   status   as   an   in-­‐‑
network   provider   is   supported   by   the   case   law.   And,   more  
to  the  point,  it  is  supported  by  the  language  of  ERISA.  
Nos.  14-­‐‑2322  et  al.                                                             7  

     Plaintiffs   express   concern   that   ERISA’s   preemption  
clause,   29   U.S.C.   §1144(a),   will   disable   them   from   enforcing  
procedural  protections  negotiated  by  contract.  But  state  law  
regulating   insurance   is   outside   the   scope   of   that   clause.   See  
29  U.S.C.  §1144(b)(2)(A);  Rush  Prudential  HMO,  Inc.  v.  Moran,  
536  U.S.  355  (2002);  Fontaine  v.  Metropolitan  Life  Insurance  Co.,  
No.   14-­‐‑1984   (7th   Cir.   Sept.   4,   2015).   The   state   law   of   insur-­‐‑
ance  contracts  is  a  form  of  state  law  regulating  insurance  and  
is  enforceable  whether  or  not  a  given  insurer  sells  its  policy  
to  employers.  We  need  not  distort  the  word  “beneficiary”  in  
order  to  enable  medical  providers  to  contract  for  and  enforce  
procedural  rules  about  how  insurers  pay  for  medical  care.  
     Plaintiffs  are  not  “beneficiaries”  as  ERISA  uses  that  term,  
so   they   are   not   entitled   to   the   procedures   established   by  
§1133   and   the   implementing   regulations.   They   may   have  
contract   claims,   but   as   the   parties   are   not   of   completely   di-­‐‑
verse   citizenship   a   federal   court   cannot   adjudicate   them.  
(Plaintiffs   have   not   contended   that   contract   issues   could   or  
should  be  resolved  under  the  supplemental  jurisdiction.  See  
28   U.S.C.   §1367.   Indeed,   plaintiffs   have   not   contended   that  
the   insurer   broke   any   contractual   promise.)   The   damages  
and  injunctions  therefore  must  be  vacated,  and  the  award  of  
attorneys’  fees  to  plaintiffs  falls  with  them.  
                                                                          REVERSED  
