USCA1 Opinion

        August 11, 1992         [NOT FOR PUBLICATION]

                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT
                                 ____________________


        No. 91-2335

                           ORESTE MORCELO-MARTINEZ, ET AL.,

                               Plaintiffs, Appellants,

                                          v.

                               WELFARE FUND ILA-PRSSA,

                                 Defendant, Appellee.


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                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                           FOR THE DISTRICT OF PUERTO RICO

                    [Hon. Jaime Pieras, Jr., U.S. District Judge]
                                             ___________________

                                 ____________________

                                        Before

                                 Breyer, Chief Judge,
                                         ___________
                        O'Scannlain,* and Cyr, Circuit Judges.
                                               ______________

                                 ____________________

            John Ward-Llambias for appellants.
            __________________
            Roberto E.  Vega-Pacheco with whom Trias,  Acevedo &  Otero was on
            ________________________           ________________________
        brief for appellee.


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        *Of the Ninth Circuit, sitting by designation.





















                    Per Curiam.  The Morcelos brought this action against 
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          Mr. Morcelo's employer-provided health care insurer for 

          reimbursement of medical expenses pursuant to the Employee 

          Retirement Income Security Act ("ERISA"), 29 U.S.C.   1132.  The 

          trial court dismissed the complaint for failure to state a claim 

          upon which relief could be granted.  Fed. R. Civ. P. 12(b)(6).  We 

          now affirm.

                    Mr. Morcelo was advised by his doctor to seek heart 

          surgery in Texas.  The defendant allegedly denied coverage for 

          such treatment and the surgery was eventually performed in Puerto 

          Rico and paid for by the Medicaid program of the Puerto Rico 

          Department of Health.  The Morcelos assigned "any right to 

          remuneration, payment or aid for medical expenses which I or which 

          any other person may have" to the Medicaid Program.  The district 

          court concluded that the Morcelos lacked standing to bring this 

          action since they were not the real parties in interest after 

          having assigned all their rights to reimbursement of medical 

          expenses to the Medicaid Program.  

                                          I.

                    Mr. Morcelo argues that he is entitled to recover the 

          difference between what the Medicaid Program paid for his less 

          expensive operation in Puerto Rico and what an operation in Texas 

          would have cost.  He analogizes his attempted recovery to the 

          collateral source rule under which a tortfeasor cannot lessen his 

          liability because the injured party receives assistance from a 

          separate source.  Without reaching the merits of the claim, 



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          however, we must agree with the district court that the Morcelos' 

          ERISA claim is barred for lack of standing.

                    We are persuaded by its express language that the 

          assignment effectively assigned any and all rights regarding 
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          medical services for this procedure to Medicaid, not just the 

          right to payment for the particular services he received.  Hence, 

          the Morcelos are not the real parties in interest in this action 

          and could not state a claim against the Welfare Fund.  Fed. R. 

          Civ. P. 17(a); Maddalone v. Okada Shosen, KK, 756 F.2d 886, 887 
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          (1st Cir. 1985) (once injured worker settles with workers 

          compensation insurer, the insurer is the real party in interest).  

          Consequently, the district court properly dismissed the action  

          against the Welfare Fund. 

                                         II.

                    The trial court also properly dismissed Mrs. Morcelo's  

          pendent state claims for various tort remedies.  Once the court 

          dismissed the federal ERISA claim, it had the discretion also to 

          dismiss the pendent state claims.  28 U.S.C.   1367(c)(3); United 
                                                                     ______

          Mine Workers v. Gibbs, 383 U.S. 715, 726 (1966).
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                    Affirmed.
                    Affirmed.
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