In Brown v. Bluecross Blueshield of Tenn., 2016 U.S. App. LEXIS 11738 (6th Cir. 2016), Healthcare provider Harrogate Family Practice, LLC, and its owner, Amanda Brown (collectively “Harrogate”), brought suit under Section 502 of the ERISA to enjoin Blue Cross Blue Shield of Tennessee (“Blue Cross”) from recouping payments for services Harrogate provided to Blue Cross members. The district court dismissed for lack of subject matter jurisdiction, finding that Harrogate lacked standing under ERISA.
In this case, Harrogate is a healthcare provider that participates in Blue Cross networks, regularly treating patients who are participants and beneficiaries under health-benefit plans administered by Blue Cross. Per industry practice, Harrogate’s patients signed an “Assignment of Benefits Form,” allowing Harrogate to bill Blue Cross directly for payment of services. The arrangement between Harrogate and Blue Cross is governed by a Provider Agreement, which allows Blue Cross to perform post-payment audits and recoup overpayments from Harrogate in the event a payment error is detected. Harrogate objected to certain attempted recoupments, those made for so-called “ALCAT tests” (which purport to identify certain food allergies), and brought this suit.
On appeal, Harrogate argues that it has direct standing to sue as an ERISA beneficiary or, in the alternative, that it acquired derivative standing via an assignment of benefits from Blue Cross members. The Sixth Circuit Court of Appeals (the “Court”) concluded, that while Harrogate does have derivative standing through an assignment of benefits, its claim regarding recoupments falls outside the scope of that assignment, since the assigning patients have no standing to bring this suit. Therefore, the Court affirmed the judgment of the district court.