24-944 Murphy Med. Assocs., LLC v. Yale Univ.

United States Court of Appeals For the Second Circuit

October Term 2024

Submitted: October 29, 2024 Decided: November 4, 2024

No. 24-944

MURPHY MEDICAL ASSOCIATES, LLC, DIAGNOSTIC AND MEDICAL SPECIALISTS OF GREENWICH, LLC, and STEVEN A.R. MURPHY, M.D.,

Plaintiffs-Appellants,

v.

YALE UNIVERSITY and YALE HEALTH PLANS,

Defendants-Appellees.

Appeal from the United States District Court for the District of Connecticut No. 22-cv-00033, Kari A. Dooley, Judge.

Before: KEARSE, SULLIVAN, and ROBINSON, Circuit Judges.

Plaintiffs, who are associated with a medical practice in Connecticut, appeal a judgment of the United States District Court for the District of Connecticut (Dooley, J.) dismissing their claims for reimbursement of the cost of COVID-19 tests provided to members of Yale Health Plans (together with Yale University, “Yale”), brought under the Families First Coronavirus Response Act (the “FFCRA”),

Stat. 178 (2020), the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”),

Stat. 281 (2020), the Affordable Care Act, 42 U.S.C. § 300gg-19a, and the Employee Retirement Income Security Act of 1974 (“ERISA”),

et seq., and for unjust enrichment, breach of contract, and violations of the Connecticut Unfair Insurance Practices Act, Conn. Gen. Stat. § 38a-816, and Connecticut Unfair Trade Practices Act,

-110b. On appeal, Plaintiffs argue that the district court erred when it concluded that (1) the FFCRA and CARES Act do not provide private causes of action for reimbursement; (2) Plaintiffs lacked standing to bring ERISA claims because they failed to allege that Yale Health Plan members had executed a valid assignment of benefits in their favor; (3) Plaintiffs failed to allege that they had exhausted their administrative remedies; and (4) Plaintiffs failed to state a claim for breach of contract. Plaintiffs also contend that the district court abused its discretion when it denied Plaintiffs leave to amend their complaint. We disagree with Plaintiffs as to each contention, and AFFIRM the judgment of the district court.

AFFIRMED.

Roy W. Breitenbach, Harris Beach PLLC, Uniondale, NY, for Plaintiffs-Appellants Murphy Medical Associates, LLC, Diagnostic and Medical Specialists of Greenwich, LLC, and Steven A.R. Murphy, M.D.

Michael G. Durham, Matthew H. Geelan, Carmody Torrance Sandak & Hennessey LLP, Guilford, CT, for Defendants-Appellees Yale University and Yale Health Plans.

PER CURIAM:

Murphy Medical Associates, LLC, Diagnostic and Medical Specialists of

Greenwich, LLC, and Steven A.R. Murphy, M.D. (together, “Murphy”) appeal a

judgment of the United States District Court for the District of Connecticut

2 (Dooley, J.) dismissing their claims for reimbursement of the cost of COVID-19

tests provided to members of Yale Health Plans (together with Yale University,

“Yale”), brought under the Families First Coronavirus Response Act (the

“FFCRA”),

Stat. 178 (2020), the Coronavirus Aid, Relief,

and Economic Security Act (the “CARES Act”),

Stat. 281

(2020), the Affordable Care Act (the “ACA”), 42 U.S.C. § 300gg-19a, the Employee

Retirement Income Security Act of 1974 (“ERISA”),

et seq., and for

unjust enrichment, breach of contract, and violations of the Connecticut Unfair

Insurance Practices Act (“CUIPA”), Conn. Gen. Stat. § 38a-816, and the

Connecticut Unfair Trade Practices Act (“CUPTA”),

-110b.

On appeal, Murphy challenges the district court’s judgment in four respects.

First, Murphy argues the court erred when it found that it could not bring claims

under the FFCRA and CARES Act on the ground that those statutes do not provide

a private cause of action for reimbursement. Second, Murphy challenges the

district court’s conclusion that it lacked standing to bring its ERISA claims because

it failed to allege that Yale Health Plan members had executed valid assignments

of benefits in its favor. Third, Murphy argues the district court erred in concluding

that it failed to exhaust its administrative remedies under the plan. Fourth,

3 Murphy asserts the court erred in finding that it failed to state a claim for breach

of contract. And finally, Murphy argues that the district court abused its discretion

when it denied Murphy leave to amend the complaint. For the reasons set forth

below, we AFFIRM the judgment of the district court.

I. BACKGROUND

A. Facts

At the outbreak of the COVID-19 pandemic in March 2020, Murphy was one

of several healthcare providers that responded by setting up drive- and walk-

through testing sites in Connecticut and New York. In addition to COVID-19

testing, Murphy provided diagnostic testing for other respiratory viruses and

infections that may cause symptoms similar to COVID-19. Among those to whom

Murphy provided diagnostic tests from the outbreak of the pandemic through

December 2020 were members of Yale Health Plans – students, faculty, and

individuals who otherwise receive healthcare through Yale University.

In March 2020, Congress responded to the public-health emergency by

enacting the FFCRA and the CARES Act. In particular, section 6001(a) of the

FFCRA mandated that group health plans provide their members with coverage,

without imposing cost-sharing, for COVID-19 testing that was approved, cleared,

or authorized by the federal Food and Drug Administration. See 134 Stat. at 201.

4 As relevant here, the CARES Act added the specific requirement that “[a] group

health plan . . . providing coverage . . . described in section 6001(a) of [the

FFCRA]” – such as Yale Health Plans – “shall reimburse the provider of the

diagnostic testing” at either a “negotiated rate” or “in an amount that equals the

cash price for such service as listed by the provider on a public internet website.”

§ 3202, 134 Stat. at 367.

After providing diagnostic testing to members of Yale Health Plans through

2020, Murphy submitted claims for reimbursement of COVID-19 testing to the

Plans. In September 2021, Yale Health Plans informed Murphy that it would not

pay its claims.

B. Procedural History

Murphy commenced this action in January 2022, alleging federal claims

under the FFCRA, the CARES Act, the ACA, and ERISA, and state-law claims for

unjust enrichment, breach of contract, and violations of CUIPA and CUPTA. In

all, Murphy seeks $1,100,784.00 for the approximately 1,500 claims for

reimbursement of COVID-19 testing that Yale Health Plans denied.

Yale moved to dismiss the original complaint in its entirety for failure to

state a claim under Federal Rule of Civil Procedure 12(b)(6), which the district

court granted with prejudice as to all but the ERISA claims. Beginning with

5 Murphy’s federal claims, the district court held that Congress did not intend to

create a private cause for action for providers of COVID-19 testing under the

FFCRA and CARES Act, and that Murphy therefore failed to state a claim under

these federal statutes. The district court also concluded that Murphy lacked

standing to pursue its ERISA claims because its allegation that it “generally

receive[s] assignment of benefit forms from patients,” J. App’x at 120, failed to

establish that it obtained a valid assignment from the relevant members, and in

the alternative, the court concluded that Murphy did not plausibly allege that it

exhausted administrative remedies before bringing its claims in federal court. The

district court did, however, grant Murphy leave to replead its ERISA claims to

show the valid assignment of benefits and its exhaustion of administrative

remedies. Finally, Murphy conceded that its ACA claim should be dismissed

because the ACA does not provide a private cause of action.

As to Murphy’s state-law claims, the district court concluded that Murphy

failed to allege that Yale Health Plan members executed valid assignments of

benefits in its favor and therefore was unable to bring a breach-of-contract claim

against Yale. The district court further determined that Murphy failed to state an

unjust enrichment claim because it did not allege that Yale itself derived a benefit

6 from the COVID-19 tests Murphy provided, and that Murphy failed to plead a

CUTPA claim because it did not allege a specific unfair insurance act by Yale.

Murphy conceded the dismissal of its remaining CUIPA claim, and all state law

claims were dismissed with prejudice. The district court also noted that any state-

law claim would be preempted if it was brought with respect to an ERISA-

governed plan, as opposed to any non-ERISA plan Yale may offer. 1

After Murphy filed its amended complaint, the district court again

dismissed Murphy’s ERISA claims, this time with prejudice. The court concluded

that Murphy simply repeated conclusory allegations regarding the assignment of

benefits without identifying which members made such assignments and whether

they overcame the anti-assignment provision in Yale’s general policy. The court

also determined that the amended complaint failed to adequately allege

exhaustion of administrative remedies, since it did not identify the plan language

detailing the required administrative procedures or whether Murphy followed

1 Although the district court did not justify its exercise of supplemental jurisdiction over Murphy’s pendent state-law claims after dismissing its federal claims, “the parties do not dispute that all of the [state] claims asserted . . . involve the [defendant]’s alleged failure to reimburse [the plaintiff] for medical services provided to Plan beneficiaries” and therefore “are so related to [the federal] claims” under

(a) that the court’s exercise of supplemental jurisdiction was appropriate. Montefiore Med. Ctr. v. Teamsters Loc. 272,

(2d Cir. 2011) (internal quotation marks omitted).

7 those procedures. The district court did not specifically address the request in

Murphy’s opposition papers for leave to amend should it grant Yale’s second

motion to dismiss, but there is no dispute that the court’s dismissal with prejudice

operated as an effective denial.

This appeal followed.

II. DISCUSSION

We review de novo whether a plaintiff lacks a cause of action under an

applicable statute and whether a plaintiff has plausibly alleged a breach-of-

contract claim. See Am. Psychiatric Ass’n v. Anthem Health Plans, Inc.,

,

357–59 (2d Cir. 2016); Robinson v. Sheet Metal Workers’ Nat’l Pension Fund, Plan A,

(2d Cir. 2008). We review the district court’s denial of leave to

amend for abuse of discretion. See Nechis v. Oxford Health Plans, Inc.,

(2d Cir. 2005).

A. The FFCRA and CARES Act

Murphy concedes that neither the FFCRA nor the CARES Act contains an

express cause of action for providers seeking reimbursement for COVID-19 tests.

Nevertheless, Murphy argues that the statutes contain an implied cause of action.

In determining whether a statute implies a cause of action, we consider whether

“the text and structure of” the statute evince “congressional intent to create new

8 rights.” Alexander v. Sandoval,

, 288–89 (2001). First, we consider

whether the statute uses “‘rights-creating’ language,” meaning language that

“focus[es] on . . . the individuals protected” rather than “the person regulated.”

Next, we consider whether the statute’s methods of enforcement “manifest an

intent to create a private remedy,” as opposed to “empower[ing] agencies to

enforce their regulations.”

. Generally, “[t]he express provision of one

method of enforcing a substantive rule,” such as through an agency proceeding,

“suggests that Congress intended to preclude others,” like a private cause of

action.

.

Here, the CARES Act’s mandate that health plans “shall reimburse”

providers of COVID-19 testing, accompanied by a description of the precise

amount of reimbursement such providers are entitled to, reflects the type of rights-

creating language that we have previously held may imply a cause of action. See

N.Y. State Citizens’ Coal. for Child. v. Poole,

(2d Cir. 2019) (finding an

implied cause of action when the act in question “uses clearly mandatory language

– ‘shall’ – [and] defines [statutory obligations] with particularity and in absolute

terms”); Briggs v. Bremby,

(2d Cir. 2015) (finding an implied cause

of action when “provisions use the mandatory ‘shall’”). But when read together

9 with section 6001 of the FFCRA – the provision that section 3202 of the CARES Act

supplements – it is clear that Congress intended for agency enforcement to be the

exclusive remedy. Specifically, section 6001(b) of the FFCRA expressly provides

that “[t]he provisions of subsection (a)” – which refer to the requirement that

health plans provide coverage for COVID-19 testing – “shall be applied by the

Secretary of Health and Human Services, Secretary of Labor, and Secretary of the

Treasury to group health plans.” 134 Stat. at 202. Therefore, taken together, the

structure of the FFCRA and CARES Act shows that Congress contemplated agency

enforcement and did not intend to create a private cause of action despite the

rights-creating language in section 3202 of the CARES Act.

Reinforcing this conclusion is the fact that Congress did expressly provide a

private cause of action for other violations of the FFCRA and CARES Act. Section

5105 of the FFCRA establishes that COVID-related denials of paid sick leave and

unlawful terminations shall be considered violations of the Fair Labor Standards

Act of 1938,

, 215(a)(3), 216(b), provisions that allows for private

enforcement. See FFCRA § 5105, 134 Stat at 197. We have previously explained

that “Congress’s explicit provision of a private right of action to enforce one

section of a statute suggests that omission of any explicit private right to enforce

10 other sections was intentional.” Bellikoff v. Eaton Vance Corp.,

(2d

Cir. 2007) (internal quotation marks omitted). We therefore conclude that the

express provision of a private cause of action in section 5105 of the FFCRA further

evinces a lack of congressional intent to provide a cause of action for providers of

COVID-19 testing under section 3202 of the CARES Act. Indeed, the only reference

to enforcement in section 3202 is that the Secretary of Health and Human Services

shall impose a monetary penalty on any provider that fails to publicize its cash

price for COVID-19 testing on its website. See § 3202(b), 134 Stat. at 367.

In short, as the Ninth Circuit recognized in Saloojas, Inc. v. Aetna Health of

California, Inc.,

(9th Cir. 2023), section 3202 of the CARES Act

does not evince congressional intent to create a cause of action for providers of

COVID-19 testing to seek reimbursement from health plans in court. The district

court therefore properly dismissed Murphy’s claims for reimbursement under the

FFCRA and CARES Act for lack of a private cause of action.

B. ERISA

Section 502(a) of ERISA authorizes “a participant or beneficiary” of an

ERISA health plan to bring a private civil action “to recover benefits due . . . under

the terms of th[at] plan.”

(a)(1)(B). In addition, and as relevant

here, “we have carv[ed] out a narrow exception to the ERISA standing

11 requirements to grant standing to healthcare providers to whom a beneficiary has

assigned his claim in exchange for health care.” McCulloch Orthopaedic Surgical

Servs., PLLC v. Aetna Inc.,

(2d Cir. 2017) (internal quotation marks

omitted). But we have made clear that providers cannot bring claims against

ERISA health plans pursuant to this exception “[a]bsent a valid assignment of a

claim,” “even if they have a direct stake in the outcome of the litigation.”

(internal quotation marks omitted).

We have little difficulty concluding that the district court properly

dismissed Murphy’s ERISA claims because Murphy failed to allege that Yale

Health Plan members executed a valid assignment of benefits in its favor. In its

amended complaint, Murphy alleged that “[m]any of Yale’s members who

received testing services . . . executed assignments of benefits forms,” J. App’x at

150, and attached a blank sample assignment form which reads, “I hereby assign,

transfer and set over to [Murphy] sufficient monies and/or benefits to which I may

be entitled . . . [and] my right to commence a lawsuit under [ERISA],”

.

Setting aside the question of whether any Yale Health Plan members actually

signed the form, it is undisputed that Yale’s general plan document contains an

anti-assignment provision that invalidates any assignments by its members to any

12 provider. That anti-assignment provision expressly states: “The coverage and

rights described in this Booklet are personal to the member and enrolled

dependents and cannot be assigned or transferred.” Yale Health, Yale Health

Employee Coverage Booklet 84 (2024), https://yalehealth.yale.edu/resource/yale-

health-employee-coverage-booklet. 2 We have previously held that similarly

“clear” and “definite” anti-assignment provisions in general health plans render

any members’ assignment of benefits to a healthcare provider “a legal nullity.”

McCulloch,

(internal quotation marks omitted).

Murphy offers no support for its argument that the FFCRA and CARES Act

somehow override this clear and unambiguous anti-assignment provision. And

while Murphy urges that such a policy would better effectuate the goals of the

Acts, we will not lightly infer congressional intent to override ERISA’s standing

requirements, as Murphy asks us to do. Nor does Murphy assert sufficient facts

to support the argument that Yale waived the clear and ambiguous anti-

assignment provision through the course of its dealings. Cf. Paneccasio v. Unisource

Worldwide, Inc.,

(2d Cir. 2008) (“Promissory or equitable estoppel

2Murphy does not dispute, on appeal or below, that the anti-assignment provision contained in the 2024 version of the Employee Coverage Booklet was the anti-assignment provision in effect during the relevant period.

13 is available on ERISA claims only in extraordinary circumstances.” (internal

quotation marks omitted)). In light of these determinations, we need not address

the district court’s separate basis for dismissal – failure to exhaust administrative

remedies. Put simply, the district court properly dismissed Murphy’s claims

under ERISA for lack of standing.

C. Breach of Contract

Section 514(a) of ERISA provides that the statute “shall supersede any and

all State laws insofar as they may now or hereafter relate to any employee benefit

plan.”

(a). Through this provision, Congress preempted all state

laws that “relate to” employee benefit plans in order “to establish . . . plan

regulation as exclusively a federal concern.” Aetna Life Ins. Co. v. Borges,

(2d Cir. 1989) (internal quotation marks omitted). We have therefore held

that breach-of-contract claims seeking the recovery of benefits owed under an

ERISA-covered health plan are preempted by section 514(a). See

.

Accordingly, Murphy’s state-law claims seeking reimbursement for COVID-19

tests provided pursuant to ERISA-covered Yale health plans are clearly preempted

and must be dismissed.

Murphy also presses state-law claims based on non-ERISA Yale health

plans. Putting aside the question whether Murphy adequately alleged distinct

14 contract claims relating to non-ERISA plans in the amended complaint, it is

undisputed that there was no express contract between Murphy and Yale, and that

as a third party to the benefit plan, Murphy’s ability to bring a breach-of-contract

claim against Yale rests on whether Murphy received a valid assignment from a

Yale Health Plan member. 3 For the reasons described above, Murphy has failed

to plead a valid assignment – whether pursuant to an ERISA plan or a non-ERISA

plan – in light of the blanket anti-assignment provision in Yale’s plan document.

Absent any reason to find that this anti-assignment provision is unenforceable, the

anti-assignment provision likewise dooms its breach-of-contract claim. The

district court properly dismissed Murphy’s breach of contact claim with prejudice.

D. Leave to Amend

Finally, we address Murphy’s argument that the district court abused its

discretion when it dismissed Murphy’s claims with prejudice and effectively

denied it leave to amend. Murphy did not file a motion for leave to amend below

or propose a second amended complaint. Rather, Murphy’s brief in opposition to

Yale’s second motion to dismiss contained a catch-all request on the last page,

3Murphy challenges only the district court’s dismissal of its “express contract claim,” and does not raise any arguments related to a potential claim for breach of an implied contract formed between Murphy and Yale. Murphy Br. at 43.

15 seeking leave “to cure any pleading deficiencies” that the district court might

identify if it granted Yale’s motion. Dist. Ct. Doc. No. 49 at 19. We have previously

held that where plaintiffs have similarly “failed to make formal motions to amend

or to offer proposed amended complaints,” there is “no abuse of discretion in the

district court’s implicit denial of [the] plaintiffs’ cursory requests for leave to

amend.” In re Lehman Bros. Mortg.-Backed Sec. Litig.,

(2d Cir. 2011).

In any event, “[i]t appears beyond doubt that the plaintiff[s] can prove no

set of facts in support of [their] claim[s] which would entitle [them] to relief.” In

re Tamoxifen Citrate Antitrust Litig.,

(2d Cir. 2006) (internal

quotation marks omitted). Having correctly held that the above claims fail as a

matter of law, the district court did not err in denying further leave to amend.

Because “amendment would be futile,” it was proper for the district court to do

so. In re Lehman Bros. Mortg.-Backed Sec. Litig.,

.

III. CONCLUSION

For the reasons stated above, we AFFIRM the judgment of the district court.

16