Eden Surgical Center v. Cognizant Technology Solutions ( 2018 )

FILED
NOT FOR PUBLICATION
APR 26 2018
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
EDEN SURGICAL CENTER, No. 16-56422
Plaintiff-Appellant, D.C. No.
2:15-cv-01633-RGK-E
v.
COGNIZANT TECHNOLOGY MEMORANDUM*
SOLUTIONS CORP., in its capacity as
Plan Administrator of the Cognizant
Group Health Plan; and COGNIZANT
GROUP HEALTH PLAN,
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of California
R. Gary Klausner, District Judge, Presiding
Argued and Submitted April 12, 2018
Pasadena, California
Before: ROGERS,** BYBEE, and WATFORD, Circuit Judges.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable John M. Rogers, United States Circuit Judge for the
U.S. Court of Appeals for the Sixth Circuit, sitting by designation.
Page 2 of 4
The district court properly granted summary judgment for Defendants on
Eden Surgical Center’s claims under the Employee Retirement Income Security
Act of 1974 (ERISA).
Eden concedes that its sole basis for standing is as an assignee. It also
concedes that the benefit plan contained a valid anti-assignment provision, which,
if enforceable, would bar its suit. Eden argues, however, that the doctrines of
equitable estoppel and waiver render the provision unenforceable. We take each
argument in turn.
Reasonable reliance on a material misrepresentation is one of the
requirements necessary to establish an equitable estoppel claim. Pisciotta v.
Teledyne Indus., Inc., 91 F.3d 1326, 1331 (9th Cir. 1996). Eden contends that
Aetna, the claims administrator, made two misrepresentations: First, a week or so
before the surgery, Aetna incorrectly advised Eden regarding the applicable
reimbursement rate; and second, roughly four months after the surgery, Aetna
mistakenly told Eden that the benefit plan did not contain an anti-assignment
provision.
We will assume that Eden can invoke equitable estoppel as to the first
misrepresentation. But that first misrepresentation is irrelevant to the standing
analysis, the dispositive issue here, because a misrepresentation concerning the
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reimbursement rate has no impact on whether the anti-assignment provision is
enforceable or not. As to the second misrepresentation, it is at least potentially
relevant to whether the anti-assignment provision can be enforced. But Eden’s
equitable estoppel claim fails because Eden could not have reasonably relied on
Aetna’s misrepresentation in deciding to file suit. Eden could have—and should
have—attempted to obtain the plan documents from the purported assignor to
verify whether the plan contained an anti-assignment provision, if knowledge of
that fact was indeed critical to its decision to file suit. The undisputed facts
establish, however, that Eden did not attempt to obtain the plan documents from its
purported assignor until after it had already filed this action. In these
circumstances, any reliance Eden placed on Aetna’s misrepresentation concerning
the existence of an anti-assignment provision was unreasonable.
Eden’s waiver argument is likewise unavailing. While it is true that a “plan
administrator may not fail to give a reason for a benefits denial during the
administrative process and then raise that reason for the first time when the denial
is challenged in federal court,” Harlick v. Blue Shield of Cal., 686 F.3d 699, 719
(9th Cir. 2012), that is not what happened here. Defendants raised the anti-
assignment provision after the suit commenced to contest Eden’s standing to sue,
not as a reason to deny benefits. In fact, as the district court properly noted, no
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benefits were payable here because the beneficiary’s deductible had not been met.
In addition, although Eden takes issue with Defendants’ pre-litigation conduct—in
particular, its silence in response to Eden’s administrative appeals—Eden cites no
authority for the proposition that Defendants had an affirmative duty to make it
aware of the anti-assignment provision. For these reasons, waiver is inapplicable.
Because the anti-assignment provision is valid and enforceable, Eden lacks
derivative standing to sue. See DB Healthcare, LLC v. Blue Cross Blue Shield of
Ariz., Inc., 852 F.3d 868, 876 (9th Cir. 2017).
AFFIRMED.