CONNECTICUT GENERAL LIFE INSURANCE COMPANY; CIGNA HEALTH AND LIFE INSURANCE COMPANY, Plaintiffs - Appellants
HUMBLE SURGICAL HOSPITAL, L.L.C., Defendant-Appellee
from the United States District Court for the Southern
District of Texas.
BARKSDALE, DENNIS, and CLEMENT, Circuit Judges.
BROWN CLEMENT, CIRCUIT JUDGE.
tasked with deciding whether the district court erred when it
granted judgment for Humble Surgical Hospital
("Humble") on its claims for damages against the
Connecticut General Life Insurance Company and its
parent-corporation, Cigna Health and Life Insurance Company,
(collectively, "Cigna") under the Employee
Retirement Income Security Act of 1974 (ERISA) §§
502(a)(1)(B) and 502(a)(3). The district court failed to
apply the required abuse of discretion analysis; other courts
have upheld Cigna's interpretation of its insurance
plans; and there was substantial evidence supporting
Cigna's interpretation. Accordingly, we reverse the
district court. Moreover, as Cigna is not a named plan
administrator, we reverse the district court's award of
ERISA penalties against Cigna. We vacate in part the district
court's dismissal of Cigna's claims against Humble.
Finally, we vacate the district court's award of
attorneys' fees and remand for further consideration.
is a managed healthcare company that oversees both ERISA and
welfare benefit plans, as well as private policies for health
insurers. Humble is a five-bed, physician-owned hospital in
Harris County, Texas, that is considered an
"out-of-network" provider under Cigna insurance
plans. Between 2010 and the commencement of this suit in
2016, it performed hundreds of non-emergency procedures on
of its admissions process, Humble required patients to sign a
form that included an irrevocable "Assignment of
Benefits"-which made Humble the beneficiary of ERISA
plans and non-ERISA contracts. The admissions form also
included a personal guarantee that the patient would
"pay . . . for all services and products administered to
the patient." For each claim submitted to Cigna, Humble
certified that it had previously acquired this assignment of
several months after Humble opened, Cigna processed
Humble's claims without dispute, relying on two
third-party repricing entities to negotiate
"allowable" amounts and pricing agreements. Then in
October 2010-after processing a $168, 980 charge for "a
fairly noncomplex, outpatient surgical procedure"-Cigna
began flagging Humble's claims and funneling them through
its Special Investigations Unit. As part of its
investigation, Cigna sent surveys to all of its members who
had received treatment at Humble and had their claims paid by
Cigna. On the basis of 113 members' responses, Cigna
concluded that Humble was engaged in
"fee-forgiving"-i.e., waiving patients'
co-insurance or deductible fees. Cigna also concluded that
Humble was intentionally inflating its prices to increase
2011, Cigna forwarded Humble an inquiry, seeking an
explanation of Humble's collection policy regarding
patient deductibles, co-pays, and co-insurances. It further
requested the patient ledgers of ten specific patients. In
response, Humble assured Cigna that "it is the policy of
[Humble] to hold its patients responsible for the full
payment of their respective out-of-network responsibilities
and obligations for services rendered at our facility."
It also provided Cigna with a summary chart containing
"collection notes" for each of the specified
accounts. Nevertheless, Cigna continued to suspect Humble was
engaged in fee-forgiving, and refused to process Humble's
claims without proof that the member had fully paid his
co-pay or co-insurance. If a member paid less than his full
co-pay or co-insurance, Cigna would pay what it deemed to be
its "proportionate share, " in accordance with
Cigna's own interpretation of the exclusionary language
contained in its self-funded plans.
sued Humble, seeking over $5 million in alleged overpayments.
Humble then counterclaimed under ERISA and Texas state common
law, alleging among other things: (1) underpayment,
nonpayment, or delayed payment of 595 claims; (2) breach of
fiduciary duty; and (3) failure to comply with requests for
nine-day bifurcated bench trial, Humble moved for Judgment on
Partial Findings, which the district court granted. The
district court concluded that Cigna's claims and defenses
failed as a matter of law. The district court awarded Humble
$11, 392, 273 in damages and $2, 299, 000 in penalties.
parties then moved for attorneys' fees. The district
court denied Cigna's motion and awarded Humble $2, 743,
790 in attorneys' fees. Cigna timely appealed.
appeal from a bench trial, this court review[s] the factual
findings of the trial court for clear error and conclusions
of law de novo." George v. Reliance
Standard Life Ins. Co., 776 F.3d 349, 352 (5th Cir.
2015) (internal quotation marks omitted) (alterations in
original). "Under de novo review, we apply the same
standard to the Plan Administrator's decision as did the
district court." Id. (quoting Holland v.
Int'l Paper Co. Ret. Plan, 576 F.3d 240, 246 (5th
Cir. 2009)). "[W]hen an administrator has discretionary
authority with respect to the decision at issue, the standard
of review should be one of abuse of discretion."
Vega v. Nat'l Life Ins. Servs., Inc., 188 F.3d
287, 295 (5th Cir. 1999) (en banc), overruled on other
grounds by Metro. Life Ins. Co. v. Glenn, 554 U.S. 105
Cigna's Exclusionary Language Defense Cigna contends that
"[t]he district court's judgment that Cigna
underpaid Humble's claims should be reversed." Cigna
does not dispute that it consistently refused to pay the
billed charges on hundreds of its member accounts for medical
procedures performed at Humble. Instead, Cigna raised its
interpretation of the exclusionary language in its plans as
an affirmative defense. ...