Cob Clearinghouse Corporation, also known as Digital Healthcare, Inc. v. Aetna U.s. Healthcare, Inc.

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RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2004 FED App. 0097P (6th Cir.)
File Name: 04a0097p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
COB CLEARINGHOUSE
CORPORATION, also known as
Digital Healthcare, Inc.,
Plaintiff-Appellant,
v.
AETNA U.S. HEALTHCARE,
INC.; GREAT WEST LIFE AND
ANNUITY INSURANCE CO.;
BLUE CROSS & BLUE SHIELD
OF KANSAS CITY;
CONNECTICUT GENERAL LIFE
INSURANCE COMPANY,
Defendants-Appellees.
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No. 02-3645
Appeal from the United States District Court
for the Northern District of Ohio at Cleveland.
No. 02-00020—Patricia A. Gaughan, District Judge.
Argued: December 12, 2003
Decided and Filed: April 5, 2004
2 COB Clearinghouse Corp. v. Aetna
U.S. Healthcare, Inc., et al.
No. 02-3645
*The Honorable William O. Bertelsman, United States District Judge
for the Eastern District of Kentucky, sitting by designation.
Before: SILER and COOK, Circuit Judges;
BERTELSMAN, District Judge.*
_________________
COUNSEL
ARGUED: Steven M. Ott, OTT & ASSOCIATES,
Cleveland, Ohio, for Appellant. Andrew S. Pollis, HAHN,
LOESER & PARKS, Cleveland, Ohio, for Appellees.
ON BRIEF: Steven M. Ott, OTT & ASSOCIATES,
Cleveland, Ohio, for Appellant. Andrew S. Pollis, Robert J.
Fogarty, HAHN, LOESER & PARKS, Cleveland, Ohio,
Mark J. Schwemler, ELLIOTT, REIHNER, SIEDZKOWSKI
& EGAN, Blue Bell, Pennsylvania, Christopher S. Williams,
Henry G. Grendell, CALFEE, HALTER & GRISWOLD,
Cleveland, Ohio, Shaunda A. Patterson-Strachan, Stephen H.
Goldberg, Waldemar J. Pflepsen, Jr., JORDEN BURT LLP,
Washington, D.C., for Appellees.
_________________
OPINION
_________________
COOK, Circuit Judge. Plaintiff-Appellant, COB
Clearinghouse Corp. (COB), appeals the district court’s
dismissal of its claims against Aetna U.S. Healthcare, Inc.,
Great West Life and Annuity Insurance Company, Blue Cross
and Blue Shield of Kansas City, and Connecticut General Life
Insurance Co. (collectively the Insurers). We affirm.

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No. 02-3645 COB Clearinghouse Corp. v. Aetna
U.S. Healthcare, Inc., et al.
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1Aetna filed a Motion to Dismiss, in which Connecticut General and
Great-West joined. Upon disposition, the district court also granted a
dismissal, sua sponte, to Blue Cross & Blue Shield.
I. BACKGROUND
A. Procedure
COB filed a Complaint against the Insurers, alleging that it
was an authorized agent of Goodyear Tire & Rubber
(Goodyear), Bridgestone-Firestone, Inc. (Bridgestone),
Babcock & Wilcox, Progressive Processing, Inc.
(Progressive), FirstMerit Bank (FirstMerit), Cambridge
Industries, Inc. (Cambridge), and State Industries, Inc. (State)
(collectively the Employers). The Employers provide
ERISA-regulated health care benefits plans to their employees
and their employees’ dependents. COB claimed that it
represented the interests of the Employers pursuant to
contracts it had entered into with each Employer.
The Insurers, on the other hand, contracted with different
employers to provide similar health care benefits through
non-ERISA health insurance policies.
The Complaint set forth five claims. Count One alleged a
violation of the Employee Retirement Income Security Act
(“ERISA”), and Count Two alleged “federal common law
claims.” Counts Three through Five alleged claims for unfair
and deceptive insurance practices, bad faith, and unjust
enrichment.
The Insurers1 filed Motions to Dismiss the Complaint
pursuant to Federal Rules of Civil Procedure 12(b)(1) and
12(b)(6), arguing that COB lacked standing to bring the
claims and failed to state a claim upon which relief could be
granted. The district court agreed, finding that COB had no
standing to bring Counts One and Two and, therefore, the
4 COB Clearinghouse Corp. v. Aetna
U.S. Healthcare, Inc., et al.
No. 02-3645
2The district court also found that Counts One and Two failed to state
a claim upon which relief could be granted. COB alleged several errors
challenging that determination, and the Insurers alleged an alternative
argument for affirming the district court’s decision. Due to our
disposition of the issue of CO B’s standing, it is not necessary for us to
address these other issues.
3See Ohio Adm inistrative Code § 3901 -1-56(G).
4In some cases, the insurance policy at issue may also incorporate the
provisions of the NAIC Mode l Regulations. See Bap tist Mem’l Hosp. v.
Pan American Life Ins. Co., 45 F.3d 992 , 995 (6th Cir. 1995).
district court had no subject matter jurisdiction over the case.2
Counts Three through Five were dismissed as state law claims
which were preempted by ERISA. COB has appealed only
the district court’s dismissal of Counts One and Two.
B. Coordination of Benefits Issues
COB’s Complaint raised allegations relating to
“coordination of benefits” issues. The necessity for health
insurers to coordinate health benefits arises when two (or
more) health care plans provide benefits to the same
individual. The insurers must then determine who is
primarily and who is secondarily liable for the payment of
that individual’s health care benefits. This determination can
sometimes be made by reviewing the provisions of the
individual insurance contracts. In some instances, however,
the insurance contracts may conflict. For example, each may
state that it provides only secondary coverage under the
circumstances. See McGurl v. Trucking Employees of North
Jersey Welfare Fund, Inc., 124 F.3d 471, 473 (3d Cir. 1997).
Many states, including Ohio,3 have resolved these conflicts
by adopting part or all of the Model Regulations set forth by
the National Association of Insurance Commissioners
(NAIC), an independent group of state insurance regulatory
commissioners. See McGurl, 124 F.3d at 483.4 That state

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No. 02-3645 COB Clearinghouse Corp. v. Aetna
U.S. Healthcare, Inc., et al.
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law would apply in cases where coordination of benefits is
required between two plans which are not subject to ERISA.
ERISA, however, provides no guidance on coordination of
benefits issues. See Regents of the Univ. of Mich. v.
Employees of Agency Rent-a-Car Hosp. Assoc., 122 F.3d 336,
339 (6th Cir. 1997). In cases involving two ERISA-regulated
plans, therefore, federal courts have fashioned federal
common law to resolve these issues. McGurl, 124 F.3d at
484 (adopting “employer first” rule, providing that plan
which covers beneficiary as employee is primary and plan
which covers beneficiary as dependent of employee is
secondary). See also PM Group Life Ins. Co. v. Western
Growers Assur. Trust, 953 F.2d 543, 548 (9th Cir. 1992);
Reinforcing Iron Workers v. Mich. Bell Tel. Co., 746 F. Supp.
668, 670-71 (E.D. Mich. 1990) (adopting the “birthday rule,”
declaring plan of employee whose birthday occurs earlier in
the year primarily responsible for medical benefits of a minor,
where parents are both covered by separate ERISA plans).
COB alleged that, in this case, certain beneficiaries were
insured both under one of the Employers’ self-funded ERISA
plans and under one of the Insurers’ non-ERISA policies.
COB claimed that the Insurers’ policies were primary,
presumably because the coordination of benefits clauses of
the applicable insurance contracts conflicted. COB then
argued that the district court should extend the federal
common law established in McGurl to these cases that
involve only one ERISA-regulated plan. Under such a rule,
COB contends that the Employers paid claims for which the
Insurers were primarily liable and they were only secondarily
liable.
C. COB’s Contracts with the Employers
COB bases its claim to being an authorized agent of the
Employers upon the contract—called either the “Audit
Agreement” or the “Recovery Service Agreement”—that it
6 COB Clearinghouse Corp. v. Aetna
U.S. Healthcare, Inc., et al.
No. 02-3645
entered into with each Employer. While the contracts with
the seven Employers were each slightly different, the
agreements generally provided that COB would review each
Employer’s records, use its “proprietary systems” to
determine if the Employer made payments under its health
care plan for which the Employer was only secondarily liable,
and attempt to collect payment from the party that COB
believed to be primarily liable in exchange for a percentage of
the amounts recovered.
The relevant provisions of the Goodyear, Bridgestone,
Progressive, Babcock & Wilcox, and FirstMerit agreements
were substantively identical. Each of these five agreements
contained an “agency clause,” appointing COB its agent for
certain purposes:
[Employer will] make [COB,] and its contractors, [the
Employer’s] agents for the purpose of carrying out an
audit of coordination of benefits issues, and the
subrogation and collection of indemnities due as a result
of such audit as provided for and privileged by standard
rules [or law] (for example, Section 3902.13(F) of the
Ohio Revised Code or the rule[s] of the [NAIC], as
interpreted by the state at issue on any given claim).
Those agreements then required COB to make three attempts
to collect every claim and “further pursue every claim of a
value exceeding $500.00 for the period of at least one year, or
until collection of the correct indemnity, or settlement of the
claim, whichever occurs first.” The agreements all provided,
however, that COB would “commence no litigation in the
name of [the Employer], or on its behalf, without prior notice
to [the Employer].”
The other two agreements were similar. The State
agreement differed in that it authorized COB to report
potential claims to State, but did not authorize COB to pursue
them. The Cambridge agreement differed in that it authorized

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U.S. Healthcare, Inc., et al.
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COB to “conduct litigation to recover amounts owed” without
requiring prior notice to Cambridge.
II. ANALYSIS
The district court dismissed those counts COB
appeals—Counts One and Two of COB’s Complaint—on the
ground that COB did not have standing to bring the case.
“We review a district court’s decision to grant a motion to
dismiss for lack of subject matter jurisdiction de novo.”
Joelson v. United States, 86 F.3d 1413, 1416 (6th Cir. 1996).
“For purposes of ruling on a motion to dismiss for want of
standing, both the trial and reviewing courts must accept as
true all material allegations of the complaint, and must
construe the complaint in favor of the complaining party.”
Warth v. Seldin, 422 U.S. 490, 501 (1975). Having invoked
the jurisdiction of the federal courts, however, it is the
plaintiff’s burden to demonstrate that jurisdiction is proper.
See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992);
Kardules v. City of Columbus, 95 F.3d 1335, 1346 (6th Cir.
1996).
Assuming, as we must, that COB was an authorized agent
of the Employers under the terms of the parties’ agreements,
we must determine whether such an authorized agent has
standing under ERISA to pursue these claims.
8 COB Clearinghouse Corp. v. Aetna
U.S. Healthcare, Inc., et al.
No. 02-3645
5COB did not identify the ERISA provision under which it brought
its Comp laint. The district court, however, broadly interpreted the
Comp laint and assumed that the action was brought pursuant to 29 U.S.C.
§ 1132(a)(3), which was the pro vision identified b y CO B in its brief in
opposition to the M otion to Dismiss. There was some dispute before the
district court regarding whether COB sought equitable relief or monetary
damages. We note that 29 U.S.C. § 1132(a)(3), which provides for
equitable relief, allows “participants, beneficiaries, and fiduciaries” to
bring claims, while 29 U.S.C. § 11 32(a)(1), which provides for monetary
damages, only allows “participants and beneficiaries” to file suit. Like the
district court, we will assume that COB brought the action pursuant to 29
U.S.C. § 1132 (a)(3), as that is the only section which gives rise to any
argument that COB has standing in this case.
ERISA strictly limits standing. 29 U.S.C. § 1132(a)(3)5
provides, in pertinent part, that:
A civil action may be brought -
. . .
(3) by a participant, beneficiary, or fiduciary (A) to
enjoin any act or practice which violates 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
provisions of this subchapter or the terms of the plan
. . . .
And courts narrowly construe ERISA to permit only the
parties specifically enumerated to bring suit. See Simon v.
Value Behavioral Health, Inc., 208 F.3d 1073, 1081 (9th Cir.
2000) (citing Franchise Tax Bd. v. Constr. Laborers Vacation
Trust for S. Cal., 463 U.S. 1, 27 (1983)). See also
Teagardener v. Republic-Franklin Inc. Pension Plan, 909
F.2d 947, 951 (6th Cir. 1990) (narrowly construing proper
parties under 29 U.S.C. § 1132(a)(1)). Indeed, even an
assignee of a participant, beneficiary, or fiduciary is generally
not permitted to maintain an ERISA claim. See Simon v.

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No. 02-3645 COB Clearinghouse Corp. v. Aetna
U.S. Healthcare, Inc., et al.
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Belwith Int’l, Inc., 3 Fed. Appx. 363, 364 (6th Cir. 2001). It
is undisputed that COB was neither a participant, a
beneficiary, nor a fiduciary according to the dictates of the
statute. COB argues, nevertheless, that the Employers whom
it represented were fiduciaries and that as the agent of the
Employers, it could bring suit.
Whether an employer who is also an ERISA plan sponsor
is a fiduciary of the plan generally requires a detailed analysis
of the employer’s actions and whether those actions were
performed in the employer’s fiduciary capacity. See Hunter
v. Caliber Sys., Inc., 220 F.3d 702, 718 (6th Cir. 2000).
“[W]e must examine the conduct at issue to determine
whether it constitutes ‘management’ or ‘administration’ of the
plan, giving rise to fiduciary concerns, or merely a business
decision that has an effect on an ERISA plan not subject to
fiduciary duties.” Id. (citations and internal quotations
omitted). But even assuming that the Employers were
fiduciaries who had a right to file suit pursuant to 29 U.S.C.
§ 1132(a)(3), that assumption does not confer standing on
COB to sue in its own name as the Employers’ agent.
Restatement (Second) of Agency § 372(2) (1958) provides
that “an agent does not have such an interest in a contract as
to entitle him to maintain an action at law upon it in his own
name merely because he is entitled to a portion of the
proceeds as compensation for making it or because he is
liable for its breach.”
III. CONCLUSION
Given COB’s lack of standing, we affirm the decision of
the district court.

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