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examining whether declaratory judgment defendant had standing to bring a coercive action under ERISA against plaintiff
Summary of this case from Ohio v. Nobile & Thompson Co.Opinion
Civil Action No. 01-2601, Section: "R" (2)
December 16, 2002
ORDER AND REASONS
Plaintiff Ochsner Health Plan filed a claim for declaratory relief and damages against defendant Northern Louisiana Physician Hospital Organization ("NLPHO") asserting that NLPHO breached a Network Access Agreement by failing to properly administer claims. The Court dismissed plaintiff's claim for lack of subject matter jurisdiction in March of 2002. Plaintiff then successfully moved the Court to allow plaintiff the opportunity to amend its complaint. Defendant now moves the court to dismiss the complaint, as amended, for lack of subject matter jurisdiction under Rule 12(b)(1) of the Federal Rules or in the alternative, to dismiss for failure to state a claim under Rule 12(b)(6). For the following reasons, the Court grants defendant's motion.
I. Background
A. Factual Background
Ochsner Health Plan is a licensed health maintenance organization ("HMO") operating for profit and incorporated in Louisiana. (Amended Compl. ¶ 2.) It provides access to healthcare services for both prepaid group and individual subscribers. Ochsner is also a "Medicare+Choice" organization that administers Medicare benefits on behalf of the United States Department of Health and Human Services through its "Total Health 65 Health Services" plan. ( Id.) NLPHO is a Louisiana corporation that conducts contracting on behalf of physicians, hospitals, and other health care providers. ( Id. ¶ 3.) At oral argument, defendant indicated that NLPHO is owned in part by the health care providers on whose behalf it performs contracting services, but that NLPHO also negotiates contracts on behalf of health care providers with no ownership stake.
In September of 1998, Ochsner and NLPHO entered into a Network Access Agreement ("Agreement"), a capitated arrangement under which Ochsner agreed to make specified payments to NLPHO and NLPHO agreed to provide medical care to the beneficiaries to which Ochsner is obligated to provide health care services. These beneficiaries included members of both Ochsner's ERISA and Medicare products. ( Id. ¶ 12.) The Agreement obligated NLPHO sign subcontracts with a sufficient number of physicians and other health care providers. NLPHO assumed the risk that the capitated payments would cover the cost of the claims that these health care providers would seek in exchange for the provision of health care. In addition, the Agreement provided that beginning on January 1, 1999, Ochsner agreed to use NLPHO's provider network to supply healthcare services for its subscribers. ( Id.) In return, NLPHO agreed to perform all medical management duties, such as determining the appropriate level of medical care to be received by each beneficiary. ( Id. ¶ 16-20.) On April 1, 1999, NLPHO, with oversight by Ochsner, was to assume responsibility for paying and processing claims from participating providers for services to Ochsner beneficiaries. ( Id.) NLPHO could determine the eligibility for payment of each claim. Although NLPHO could itself authorize giving medical care and making payments, it required Ochsner's approval before it could deny access to medical care. NLPHO also agreed to implement certain electronic billing systems so that Ochsner's Medical Director could review whether payments were properly made. ( Id. ¶ 22.)
Plaintiff alleges that NLPHO breached the Agreement when it (1) failed to administer claims properly; (2) failed to implement the electronic formatting system needed to transmit claims and payment data between NLPHO and Ochsner; (3) failed to pay health care providers; and (4) diverted the capitation funds paid by Ochsner to pay for non-Ochsner participants' claims. ( Id. ¶ 28.)
Ochsner asserts that when it learned that NLPHO diverted capitation funds to satisfy other obligations, it contacted NLPHO to determine whether it was fiscally solvent. ( Id. ¶ 27.) Ochsner alleges that NLPHO was non-responsive and threatened to declare bankruptcy if Ochsner attempted to change the Agreement. ( Id.) In response, Ochsner withheld capitation payments required by the Access Agreement from July 1, 1999 through October 31, 1999. Ochsner claims that it used these funds to pay health care providers. Then, Ochsner resumed exclusive responsibility for claims administration on November 1, 1999. Meanwhile, a substantial number of health care providers continued to seek reimbursement from NLPHO for claims processed between April 1, 1999 and October 31, 1999.
In November 1999, the Louisiana Department of Insurance (DOI) intervened, and the three parties entered into an Accord which provided that Ochsner would release $10.2 million in withheld capitation payments to pay claims made between April 1, 1999 and October 31, 1999, and that DOI would oversee the claims payment process to ensure that the funds were used to pay only those providers specified under the Agreement. ( Id. ¶ 31-32; Ex. 12.) The Accord recognized that Ochsner regained responsibility for claims administration as of November 1, 1999.
Ochsner contends that after the Accord, NLPHO failed to meet its contractual responsibilities to pay healthcare providers, failed to pay interest, and failed to provide Ochsner with data necessary for Ochsner to perform its management and auditing functions. ( Id. ¶ 34.) On March 9, 2000, with the urging of DOI, Ochsner tendered an offer to NLPHO of an amount of money in excess of that required under the capitation provisions of the Access Agreement. ( Id. ¶ 36.) NLPHO rejected the offer and demanded that Ochsner assume sole financial responsibility for all claims made from October 31, 1998 to December 31, 1999. ( Id. ¶ 37-38; Ex. 14.) Ochsner claims that it already paid NLPHO all the capitation payments required by the Agreement for that time period. In March of 2000, NLPHO sent boxes of unpaid claims totaling approximately $8 million back to Ochsner. ( Id. ¶ 40.)
B. Procedural Background
On August 23, 2001, Ochsner filed a declaratory judgment action in this Court against NLPHO seeking a determination that Ochsner fulfilled its obligation under the Agreement to furnish capitation payments and that any excess amounts owed to healthcare providers should be paid by NLPHO. (Original Compl.) The Court dismissed this compliant for lack of subject matter jurisdiction. Plaintiff moved the Court to allow plaintiff an opportunity to amend its complaint. The Court granted plaintiff's motion.
In its amended complaint, Ochsner seeks "declaratory relief holding that NLPHO cannot seek payment of the $8 million in ERISA and Medicare claims for which NLPHO has demanded payment;" declaratory relief that NLPHO breached the Access Agreement; and, "equitable and remedial relief for the losses caused to OHP's employer and Medicare plans by NLPHO's improper administration of claims related to those plans." (Amended Compl., at 1-2, 32-33.) NLPHO moves to dismiss this case for lack of subject matter jurisdiction under Rule 12(b)(1), asserting that this Court lacks jurisdiction under both ERISA and Medicare. NLPHO also moves to dismiss Ochsner's claims for failure to state a claim pursuant to Rule 12(b)(6).
II. Discussion
A. Legal Standard
An action must be dismissed if it appears that the Court does not possess subject matter jurisdiction over the plaintiff's claims. FED. R. CIV. P. 12(b)(1), (h)(3). As the party invoking jurisdiction, the plaintiff carries the burden of establishing subject matter jurisdiction. Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377, 114 S.Ct. 1673, 1675 (1994). Unlike the district court's review of a Rule 12(b)(6) motion to dismiss, the Court may examine evidence outside of the pleadings when deciding a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction. It is well established that the district court may base its decision on a Rule 12(b)(1) motion on "`(1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; and (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts.'" Barrera-Montenegro v. United States, 74 F.3d 657, 659 (5th Cir. 1996) (quoting Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir. 1981)); see also MCG, Inc. v. Great Western Energy Corp., 896 F.2d 170, 176 (5th Cir. 1990).
B. Federal Jurisdiction Under ERISA
Plaintiff first asserts that this Court has jurisdiction of its lawsuit under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001-1461. Section 502 of ERISA, 29 U.S.C. § 1132 (a), lists the parties that may file a civil action under ERISA and provides, in pertinent part:
A civil action may be brought —
(1) by a participant or beneficiary — (A) for the relief provided for in subsection (c) of this section, or (B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan;
(2) by the Secretary, or by a participant, beneficiary or fiduciary for appropriate relief under section 1109 of this title;
(3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violated 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 provision of this subchapter or the terms of the plan . . . .29 U.S.C. § 1132 (a). Ochsner asserts that jurisdiction lies for declaratory relief under § 1132(a)(1) and for equitable relief under §§ 1132(a)(2) and (3).
1. Declaratory Relief Under § 1132(a)(1)
a. The Federal Declaratory Judgment Act
The Federal Declaratory Judgment Act, codified at 28 U.S.C. § 2201, is a procedural statute, not a jurisdictional statute. See Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 15-16, 103 S.Ct. 2841, 2849-50 (1983); Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671-72, 70 S.Ct. 876, 878-79 (1950). Accordingly, federal jurisdiction is proper only if this case comes within an express congressional grant of jurisdiction. Federal courts have jurisdiction "of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. The "well-pleaded complaint" rule further limits federal-question jurisdiction to those cases in which the plaintiff's own complaint establishes that the action arises under federal law. See Franchise Tax Bd., 463 U.S. at 10, 103 U.S. at 2846-47; Louisville Nashville R.R. v. Mottley, 211 U.S. 149, 152, 29 S.Ct. 42, 43 (1908).
An action for declaratory judgment is merely a substitute for a more traditional action for damages or injunctive relief. As a result, the Court must consider whether a well-pleaded complaint in such a traditional action would present a federal issue. See Franchise Tax Bd., 463 U.S. at 19-20, 103 S.Ct. at 2851-52 ("Federal courts have regularly taken original jurisdiction over declaratory judgment suits in which, if the declaratory judgment defendant brought a coercive action to enforce its rights, that suit would necessarily present a federal question.") (dictum); Public Serv. Comm'n v. Wycoff Co., 344 U.S. 237, 248, 73 S.Ct. 236, 242 (1952) (noting that when the complaint in a declaratory judgment action seeks to assert a defense to impending or threatened state court action, the character of the threatened action, and not of the defense, determines existence of federal-question jurisdiction) (dictum). The Court therefore, must determine whether NLPHO can bring a traditional or coercive action against Ochsner under § 1132(a)(1).
b. Discussion
Ochsner asserts that jurisdiction arises under § 1132(a)(1) because NLPHO could bring a coercive action against Ochsner to recover unpaid benefits. In Hermann Hospital v. MEBA Medical Benefits Plan, 845 F.2d 1286, 1290 (5th Cir. 1988), the Fifth Circuit held that standing to pursue an action described in 29 U.S.C. § 1132 (a) is exclusive to the three types of parties identified in the statute: participants, beneficiaries and fiduciaries. Hermann, 845 F.2d at 1288-89. Standing under § 1132(a)(1), however, is limited by the statute to "participants" and "beneficiaries." Even though the hospital in Hermann did not fit within these categories, the Fifth Circuit nevertheless found that a hospital may have derivative standing to sue to recover benefits as the assignee of a plan beneficiary — an enumerated party. Id. at 1290 (citing Misic v. Building Service Employee's Health, 789 F.2d 1374, 1377 (9th Cir. 1986)); see also Dallas County Hospital District v. Associates' Health and Welfare Plan, 293 F.3d 282 (5th Cir. 2002). The Fifth Circuit noted that the purposes of ERISA are furthered by such a rule, for "assignment to a health care provider facilitates rather than hampers the employee's receipt of health benefits." Hermann, 845 F.2d at 1290. Based on plaintiff's original complaint, this Court held in its Order and Reasons of March 14, 2002, that NLPHO did not have standing to sue under § 1132(a)(1) because it was neither a participant nor a beneficiary, nor the assignee of a beneficiary.
In its amended complaint, Ochsner asserts, upon information and belief, that when the healthcare providers that are members of NLPHO's network rendered healthcare services to Ochsner's beneficiaries, these providers obtained an assignment of these participants' benefits. (Amended Compl. ¶ 39(a).) Under Hermann, this would give the hospitals and doctors who signed contracts with NLPHO standing to sue under ERISA as assignees. But this does not necessarily mean that NLPHO has standing. Ochsner tries, unsuccessfully, to bridge this gap in two ways.
First, Ochsner asserts that the health care providers assigned to NLPHO the interests that they obtained from the beneficiaries. In support of this argument Ochsner points to the fact that NLPHO sent boxes of unpaid claims back to Ochsner for payment. The act of sending boxes of unpaid claims back to Ochsner may signal a dispute, but it does not necessarily signal that an assignment took place. Indeed, a plain reading of Ochsner's complaint indicates that no such assignment took place. In obligating NLPHO to "subcontract" with "a sufficient number" of health care providers, the original Network Access Agreement distinguished NLPHO from the health care providers who would ultimately deliver health care services. (Amended Complaint, Ex. 5, Network Access Agreement, at 3.) If the health care providers were not timely paid for providing health care services, the target of their fury would be NLPHO. Thus, NLPHO can hardly be considered the assignee of the health care providers. To be sure, NLPHO is owned in part by some of the health care providers with whom it contracts. But the physicians' claims for the provision of medical care are separate from their interests, if any, as owners of NLPHO. NLPHO is a corporation that has a separate legal status from its owners. This status entitles NLPHO to assert a claim against Ochsner for breach of contract, but it does not entitle NLPHO to bring a claim as an assignee of the health care providers with whom it signed subcontracts. Similarly, the complaint does not indicate that NLPHO acts as an agent on behalf of the health care providers with whom it signs subcontracts. In the Network Access Agreement NLPHO warrants that it has authority on behalf of health care providers "to enter into agreements for the provision of" health care services, but nowhere does NLPHO indicate that it acts as the agent of health care providers in seeking reimbursement of claims. (Amended Complaint, Ex. 7 ¶¶ 2.5 and 3.1.) And even if NLPHO could act as an agent, the Fifth Circuit does not extend to agents the same authority to bring civil actions under ERISA that it extends to assignees. See Nickel v. Estes, 122 F.3d 294, 298 (5th Cir. 1997).
Second, citing to principles of associational standing, Ochsner contends that the health care providers with whom NLPHO signed subcontracts to sue are "members" of NLPHO such that NLPHO has standing to sue on their behalf. An association has standing to bring a suit on behalf of its members when: (1) its members would otherwise have standing to sue in their own right; (2) the interests it seeks to protect are germane to the organization's purpose; and (3) neither the claim asserted nor the relief requested requires the participation of individual members. Hunt v. Washington State Apple Advertising Comm'n, 432 U.S. 333, 343, 97 S.Ct. 2434, 2441, 53 L.Ed.2d 383 (1977); Friends of the Earth, Inc. v. Chevron Chemical Co., 129 F.3d 826, 827-28 (5th Cir. 1997). The Court assumes without deciding the questionable premise that NLPHO is the type of association that can bring a lawsuit on behalf of its membership. Nevertheless, NLPHO may not bring a lawsuit on behalf of its members to recover unpaid claims because doing so requires individualized proof of amounts owed. Because claims for damages require a high level of individual participation, they fail to meet the third prong of the Hunt analysis. Self-Insurance Institute of America v. Korioth, 53 F.3d 694, 696 (5th Cir. 1995); Air Transp. Ass'n v. Reno, 80 F.3d 477, 484-85 (D.C. Cir. 1996). Therefore, NLPHO may not take advantage of associational standing to recover benefits on behalf of its membership.
Ochsner relies on the Third Circuit's decision in Pennsylvania Psychiatric Society v. Green Spring Health Services, Inc., 280 F.3d 278 (3d Cir. 2002), to support its assertion that principles of associational standing apply to NLPHO. In that case, an association of psychiatrists filed suit against HMOs on behalf of its member psychiatrists. The association asserted that the defendant HMOs refused to authorize and to reimburse the doctors for medically-necessary mental health treatment. The Third Circuit held that because, on appeal, the psychiatrist's association sought only declaratory and injunctive relief, they met the third prong of the Hunt analysis. The Third Circuit held that the plaintiff's claims involved injunctive relief for "systemic policy violations" that did not require individual member participation. Psychiatric Society, 280 F.3d at 286. Here, nothing in the record indicates that NLPHO would, as did the plaintiff in Psychiatric Society, seek to enjoin the HMO from denying access to necessary medical care. Rather, Ochsner asserts that NLPHO, on behalf of its member doctors and hospitals, would sue Ochsner to recover unpaid claims. This would require the individual participation of its members. Thus, NLPHO does not have associational standing to bring a coercive action on behalf of the health care providers with whom it signed subcontracts pursuant to the Network Access Agreement.
2. Equitable Relief Under 29 U.S.C. § 1132 (a)(2)
Although Ochsner did not assert jurisdiction under 29 U.S.C. § 1109 and 1132(a)(2) in its amended complaint and in its brief in opposition to defendant's motion to dismiss, Ochsner did make such an assertion at oral argument. Specifically, Ochsner asserts that this Court has jurisdiction to grant Ochsner equitable relief for losses to the plan sustained when NLPHO breached its fiduciary responsibilities by commingling the capitation payments with other funds.
A person is a "fiduciary" with respect to an employee benefit plan "to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets . . . or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan." 29 U.S.C. § 1002 (21) (A). Fiduciaries must "discharge their duties with respect to a plan solely in the interest of the participants and beneficiaries." Pegram v. Herdrich, 530 U.S. 211, 223, 120 S.Ct. 2143, 2151 (2000). Section 1109 provides that a fiduciary that breaches a fiduciary duty "shall be personally liable to make good to such plan any losses to the plan resulting from each such breach . . . ." 29 U.S.C. § 1109. Congress did not intend for this provision to authorize any relief except for the plan itself. Massachusetts Mutual Life Insurance Company v. Russell, 473 U.S. 134, 144, 105 S.Ct. 3085, 3091 (1985). Section 1132(a)(2) enables a fiduciary to bring a civil action for appropriate relief under § 1109. 29 U.S.C. § 1132 (a)(2).
Section 1109(a) provides that:
Any person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this subchapter shall be personally liable to make good to such plan any losses to the plan resulting from each such breach, and to restore to such plan any profits of such fiduciary which have been made through use of assets of the plan by the fiduciary, and shall be subject to such other equitable or remedial relief as the court may deem appropriate, including removal of such fiduciary. A fiduciary may also be removed for a violation of section 1111 of this title.29 U.S.C. § 1109 (a)
Section 1132(a)(2) provides that "[a] civil action may be brought . . . by the Secretary, or by a participant, beneficiary or fiduciary for appropriate relief under section 1109 of this title." 29 U.S.C. § 1132(a)(2).
To prevail in this § 1109 action, Ochsner must establish (1) that it has standing to sue as a fiduciary under § 1132(a)(2); (2) that NLPHO is a co-fiduciary which possessed a fiduciary duty to manage the capitation payments solely in the interest of plan participants and beneficiaries; (3) that NLPHO breached these duties; and (4) that NLPHO's breach of these duties caused losses to the plan. Physicians Healthchoice, Inc. v. Trustees of Automotive Employee Benefit Trust, 988 F.2d 53, 55 (8th Cir. 1993); see also McDonald v. Provident Indemnity Life Insurance Company, 60 F.3d 234, 237 (5th Cir. 1995). The Court will first address whether Ochsner's complaint states a claim that NLPHO's alleged mismanagement of the capitation payments caused losses to the plan. This entails an analysis of whether the capitation payments are "plan assets."
Although the term "plan assets" is not defined in ERISA, § 1101(b)(2) unambiguously provides that assets obtained by an insurer through the issuance of a "guaranteed benefit policy" are not to be treated as plan assets. 29 U.S.C. § 1101 (b)(2); John Hancock Mutual Life Insurance Co. v. Harris Trust and Savings Bank, 510 U.S. 86, 96, 114 S.Ct. 517, 524 (1993); Rapides Regional Medical Center v. American United Life Insurance Company, 938 F. Supp. 380, 383 (W.D.La. 1996). This provision provides that:
In the case of a plan to which a guaranteed benefit policy is issued by an insurer, the assets of such plan shall be deemed to include such policy, but shall not, solely by reason of the issuance of such policy, be deemed to include any assets of such insurer. For purposes of this paragraph:
(A) The term "insurer" means an insurance company, insurance service, or insurance organization, qualified to do business in a State.
(B) The term "guaranteed benefit policy" means an insurance policy or contract to the extent that such policy or contract provides for benefits the amount of which is guaranteed by the insurer. Such term includes any surplus in a separate account, but excludes any other portion of a separate account.29 U.S.C. § 1101 (b)(2) (emphasis added). The Supreme Court has noted that this safe harbor from fiduciary responsibilities is "confined" to those assets obtained solely by the issuance by the insurer of an insurance policy or contract that provides for benefits the amount of which is guaranteed. Harris Trust, 510 U.S. at 96, 114 S.Ct. at 524. Importantly, the contract between the insurer and the plan must allocate the investment risk to the insurer. Id.; Variable Annuity Life Insurance Co. v. Clark, 13 F.3d 833, 837 (5th Cir. 1994). Thus, when an insurer receives premiums in exchange for offering guaranteed benefits, the insurer is on the line to deliver the guaranteed benefits. But the premiums that it receives in exchange for delivering the guaranteed benefits are not considered "plan assets," as "the premiums become assets of the company" and are managed along with the insurer's other assets. Peoria Union Stock Yards Company Retirement Plan v. Penn Mutual Life Insurance Company, 698 F.2d 320, 327 (7th Cir. 1983). ERISA thereby frees the insurer, the party assuming the risk of profit or loss, to manage its assets, including premiums, in accord with its business interests. Meanwhile, state regulations ensure the insurer's solvency and ability to deliver the guaranteed benefits. Cate v. Blue Cross and Blue Shield of Alabama, 434 F. Supp. 1187, 1190 (N.D.Tenn. 1977). Regardless of whether an insurer such as Ochsner may be a fiduciary to the plan because it exercises some discretion over the administration of the plan, ERISA does not impose upon insurers any fiduciary responsibilities to manage premiums solely for the benefit of plan beneficiaries. Section 1101(b)(2) frees insurers from such fiduciary responsibilities. Indeed, the Supreme Court has noted that even when an HMO is a fiduciary to a plan because it administers the plan, it is not a fiduciary to the extent that it administers or exercises discretionary authority over its own HMO business. Pegram, 530 U.S. at 223, 120 S.Ct. at 2151.
Here, Ochsner is neither the plan nor an agent of the plan. (Amended Complaint, Ex. 3, Health Services Agreement, at 1 and 16.) Instead, Ochsner is an insurer that agreed to provide to plan beneficiaries certain guaranteed benefits — clearly-defined health insurance benefits — in exchange for fixed premiums per beneficiary. (Amended Complaint, Ex. 3, Health Services Agreement.) Thus, Ochsner's arrangement with the plan is a "guaranteed benefit policy" within the meaning of § 1101(b)(2). It follows that the premiums paid to Ochsner cease to be "plan assets" and are received as general revenues. Because the premiums are not considered plan assets, Ochsner maintains no fiduciary responsibilities to manage such assets solely in the interest of plan beneficiaries.
As part of Ochsner's contract with NLPHO to deliver guaranteed benefits, it offered as consideration capitation payments. The capitation payments flowed from Ochsner's general revenues into NLPHO's general revenues. At no time were these capitation payments ever "plan assets." If NLPHO commingled these assets with other assets as Ochsner alleges, NLPHO may have breached its contract with Ochsner and may have caused losses to Ochsner, but it did not cause losses to the plan. Therefore, this Court cannot maintain jurisdiction under §§ 1109 and 1132(a)(2) because Ochsner's complaint, even when construed in a light most favorable to the plaintiff, does not state a claim to recover losses sustained by the plan.
3. Equitable Relief Under 29 U.S.C. § 1132 (a)(3)
Plaintiff also asserts that it is entitled to seek "equitable relief" pursuant to § 1132(a)(3)(B) for the improper administration of its ERISA members' claims. Section 1132(a)(3)(B) enables participants, beneficiaries or fiduciaries to obtain "appropriate equitable relief (i) to redress [violations of any provision of this subchapter] or (ii) to enforce any provisions of this subchapter or the terms of the plan." 29 U.S.C. § 1132 (a)(3)(B). Among other things, this provision enables a fiduciary to sue a co-fiduciary or a "party-in-interest" for engaging in transactions prohibited by 29 U.S.C. § 1106. See Concha v. London, 62 F.3d 1493, 1500 (9th Cir. 1995). Relief under § 1132(a)(3) is limited to remedies available in equity, such as injunction, mandamus and restitution; recovery may not include compensatory or punitive damages. Mertens v. Hewitt Associates, 508 U.S. 248, 257, 113 S.Ct. 2063, 2069 (1993). Assuming that Ochsner is a fiduciary with standing to sue under § 1132(a)(3), see Pegram, 530 U.S. at 223, 120 S.Ct. at 2151; (Order and Reasons, March 14, 2002), the inquiry then becomes whether Ochsner alleges in its amended complaint that (1) defendant is a fiduciary or "party-in-interest" that (2) engaged in a transaction prohibited by § 1106(3) for which equitable relief is available. Matassarin v. Lynch, 174 F.3d 549, 566 (5th Cir. 1999). The Court turns first to the question of whether Oschner is seeking "equitable relief" within the meaning of § 1132(a)(3).
To establish jurisdiction under § 1132(a)(3), Ochsner need not establish losses to the plan, for whether a party engaged in a transaction prohibited by § 1106 does not turn on whether harm was done to the plan. Instead, § 1106 is a per se ban against the enumerated transactions. Matassarin v. Lynch, 174 F.3d 549, 566 (5th Cir. 1999) (citing Varity Corp. v. Howe, 516 U.S. 489, 496, 116 S.Ct. 1065, 1075-76 (1996)).
The complaint, as amended, indicates that Oschner is seeking "equitable and remedial relief for the losses caused . . . by NLPHO's improper administration of claims . . . ." (Amended Compl. ¶ 1.) Plaintiff, however, seeks neither an injunction, nor restitution, nor mandamus. ( Id. ¶ 62.) Instead, plaintiff seeks a declaration that NLPHO is responsible for $8 million in unpaid claims, as well as remedial monetary relief for losses caused by defendant's breach of contract. ( Id.) At bottom, this lawsuit concerns whether plaintiff owes defendant money under the terms of the Network Access Agreement, or whether defendant owes plaintiff money for breaching the same.
Given that the contract between the parties has long since expired, it is difficult to envision what sort of equitable relief Ochsner could possibly seek.
The Supreme Court recently reiterated that the only relief available under § 1132(a)(3) are "`those categories of relief that were typically available in equity.'" Great-West Life Annuity Insurance Company v. Knudson, 534 U.S. 204, 122 S.Ct. 708, 712 (2002) (quoting Mertens, 508 U.S. at 256, 113 S.Ct. at 2063); Bauhaus USA, Inc. v. Copeland, 292 F.3d 439 (5th Cir. 2002). This includes injunctions, mandamus and restitution. Mertens, 508 U.S. at 257, 113 S.Ct. at 2069. Money damages, on the other hand, are "the classic form of legal relief." Great-West, 122 S.Ct. at 713. Indeed, when a party "seek[s], in essence, to impose personal liability on [another party] for a contractual obligation to pay money," that action is "`quintessentially an action at law.'" Id. (quoting Wal-Mart Stores, Inc. v. Wells, 213 F.3d 398, 401 (7th Cir. 2000). Because Ochsner seeks legal relief, the Court is compelled to conclude that it lacks jurisdiction under § 1132(a)(3) to hear Ochsner's claim.
Because the Court finds that Ochsner does not seek equitable relief, it need not proceed to consider Ochsner's assertion that NLPHO is a "fiduciary" responsible for violating 29 U.S.C. § 1106. See Reich v. Lancaster, 55 F.3d 1034, 1046 (5th Cir. 1995); American Federation of Unions Local 102 Health Welfare Fund v. Equitable Life Insurance Society of the United States, 841 F.2d 658, 663 (5th Cir. 1988). Nor need the Court consider whether NLPHO is a "party in interest" that may be held responsible for violating 29 U.S.C. § 1106 (a). See Harris Trust and Savings Bank v. Salomon Smith Barney, 530 U.S. 238, 248, 120 S.Ct. 2180, 2188 (2000).
C. Federal Jurisdiction under Medicare
Ochsner asserts that jurisdiction lies under 42 U.S.C. § 405 (g), which the Supreme Court has identified as "the sole avenue for judicial review for all claims arising under the Medicare Act." Heckler v. Ringer, 466 U.S. 602, 615, 104 S.Ct. 2013, 2022 (1984). In its Order and Reasons of March 14, 2002, the Court found that it may not exercise jurisdiction over Ochsner's complaint under Medicare because the claims involved do not arise under Medicare. Even if the Court were to now find that Ochsner's complaint does arise under Medicare, it would not have jurisdiction over this lawsuit under § 405(g) because neither Ochsner nor NLPHO has exhausted administrative remedies.
Section 405(g) provides that:
"Any individual, after any final decision of the Commissioner of Social Security made after a hearing to which he was a party, irrespective of the amount in controversy, may obtain a review of such decision by a civil action commenced within sixty days after the mailing to him of notice of such decision or within such further time as the Commissioner of Social Security may allow. Such action shall be brought in the district court . . . ."42 U.S.C. § 405 (g). Ochsner's complaint does not indicate that a final decision in this matter has been made by the Commissioner of Social Security. Lifecare Hospitals, Inc. v. Ochsner Health Plan, Inc., 139 F. Supp.2d 768 (W.D.La. 2001) is the lone case to which Ochsner cites to support its assertion of jurisdiction, but this case confirms the idea that a plaintiff seeking jurisdiction in a federal court under § 405(g) must first, as expressly provided in the statute, exhaust all administrative remedies. Because neither Ochsner nor NLPHO exhausted the administrative remedies available to parties seeking to recover unpaid medicare claims, the Court may not exercise jurisdiction over this matter pursuant to 42 U.S.C. § 405 (g).
Last, Ochsner asserts that jurisdiction lies under 28 U.S.C. § 1345. This statute provides that:
"Except as otherwise provided by Act of Congress, the district courts shall have original jurisdiction of all civil actions, suits or proceedings commenced by the United States, or by any agency or officer thereof expressly authorized to sue by Act of Congress."28 U.S.C. § 1345. Through its "Total Health 65 Health Services Agreement," Ochsner serves as a fiscal intermediary that administers funds under the authority of the United States. Ochsner has not, however, identified an act of Congress that expressly authorizes Medicare+Choice providers in general, or Ochsner in particular, to bring suit in federal court on behalf of the United States. Ochsner's reliance on Minnesota Senior Federation v. United States, 273 F.3d 805 (8th Cir. 2001), is misapplied, for in that case the plaintiff sued the United States asserting that the Medicare+Choice program was unconstitutional. The Minnesota Senior court did not discuss jurisdiction under § 1345. Therefore, the Court finds that it does not have jurisdiction under 28 U.S.C. § 1345.
D. Supplemental Jurisdiction Under 28 U.S.C. § 1367
The statute authorizing supplemental jurisdiction provides in pertinent part:
"[I]n any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution."28 U.S.C. § 1367 (a). Because the Court has determined that it does not have jurisdiction over any of plaintiff's claims, it may not exercise supplemental jurisdiction.
III. Conclusion
For the foregoing reasons, the Court grants defendant's motion to dismiss for lack of subject matter jurisdiction.