Keith Feder, M.D., Inc. v. U.S. Bancorp
- Laura Provinzino
- 0:24-cv-04236
- U.S. District Court · District of Minnesota
- 12
In Kevin Feder, M.D., Inc. v. U.S. Bancorp, Judge Provinzino dismissed with prejudice a medical provider's lawsuit seeking nearly $550,000 in health plan benefits, ruling that the provider lacked the legal right to sue because the plan's anti-assignment clause was valid and the provider failed to plausibly allege that the plan's claims administrator acted as U.S. Bancorp's legal agent.
Medical providers who obtain assignments of ERISA health plan benefits from patients and then seek to sue the plan sponsor when claims are denied. This ruling means that if the plan contains a valid anti-assignment clause and the plan sponsor delegated claims-processing discretion to an independent third-party administrator (rather than controlling its day-to-day decisions), the provider generally cannot establish that the administrator's conduct waived the anti-assignment clause on the plan sponsor's behalf — and therefore lacks the legal right to sue the plan sponsor under ERISA.
What happened
In Kevin Feder, M.D., Inc. v. U.S. Bancorp, a California medical practice (Feder) treated a U.S. Bancorp employee (identified only as R.M.) and obtained a written assignment of R.M.'s health plan benefits so Feder could seek reimbursement directly from the plan. Feder billed nearly $550,000 for services but was paid only about $30,000. The plan, governed by a federal law called ERISA (the Employee Retirement Income Security Act), contained a clear anti-assignment clause — a rule prohibiting patients from transferring their benefit rights to outside medical providers without consent. Because of that clause, Feder could not legally stand in R.M.'s shoes to sue for the unpaid benefits unless it could show the clause had been waived or did not apply.
Feder argued that the plan's third-party claims administrator, United Healthcare Services, Inc. (UHS), effectively waived the anti-assignment clause by processing some of Feder's claims without objecting to the assignment and without mentioning the anti-assignment rule. The court had already dismissed an earlier version of Feder's complaint because Feder only ever communicated with UHS — not with U.S. Bancorp directly — and waiver can only be based on actions of the party being sued or that party's legal agent. The court gave Feder a chance to amend the complaint to allege either direct conduct by U.S. Bancorp or that UHS was legally acting as U.S. Bancorp's agent. Feder's amended complaint focused on the agency theory, claiming that because U.S. Bancorp delegated claims-processing authority and discretion to UHS, UHS was U.S. Bancorp's agent.
Judge Provinzino rejected that argument and granted U.S. Bancorp's motion to dismiss, this time with prejudice — meaning Feder cannot refile the case. The court explained that a true agency relationship requires the principal (here, U.S. Bancorp) to control not just what the agent does, but how it does it on a day-to-day basis. The amended complaint itself admitted that UHS had full delegated discretion to decide claims and appeals; U.S. Bancorp had no role in those daily decisions. The plan documents confirmed this. The court also rejected Feder's backup argument based on 'apparent authority' — the idea that U.S. Bancorp held UHS out as its agent — because Feder's own allegations showed it knew UHS operated independently. Because further amendment would almost certainly be futile given the plan's own language, the court dismissed the case with prejudice and directed that final judgment be entered.
The detailed version
- Kevin Feder, M.D., Inc. v. U.S. Bancorp, No. 24-cv-4236 (LMP/SGE), United States District Court, District of Minnesota
- Laura M. Provinzino, United States District Judge
- September 2, 2025
Background and Procedural History
Plaintiff Kevin Feder, M.D., Inc. ('Feder') is a medical provider that treated R.M., an employee of U.S. Bancorp and a beneficiary of U.S. Bancorp's Medical and Wellness Plan (the 'Plan'). The Plan is an employer-sponsored health benefit plan governed by the Employee Retirement Income Security Act ('ERISA'), 29 U.S.C. § 1132(a)(1)(B). United Healthcare Services, Inc. ('UHS') served as the Plan's third-party claims administrator.
From January 6, 2020, through July 17, 2023, Feder provided R.M. with surgery, injections, and physical therapy, billing nearly $550,000. Before treating R.M., Feder obtained a written assignment of benefits from R.M. — a document transferring R.M.'s right to receive plan benefits directly to Feder. Feder submitted claims to UHS representing that it held this assignment. UHS paid some claims (totaling approximately $30,000) without expressly objecting to the assignment, but denied the remainder. Feder filed multiple administrative appeals over 2020–2024; UHS ultimately indicated that its decisions were final.
The Plan's Summary Plan Descriptions (SPDs) for all relevant years (2020–2023) contained explicit anti-assignment clauses. The 2020–2021 SPDs prohibited assignment of benefits to out-of-network providers without UnitedHealthcare's consent and stated that direct payment to such a provider was not a waiver of the prohibition. The 2022–2023 SPDs were even more categorical, prohibiting any assignment or transfer of benefits and stating that the Plan would not recognize claims brought by third-party assignees, who would also lack standing to sue.
Feder brought suit under ERISA to recover R.M.'s unpaid benefits. The court had previously granted U.S. Bancorp's first motion to dismiss, holding that Feder could not demonstrate waiver of the anti-assignment clause because Feder only communicated with UHS — not U.S. Bancorp — and waiver under Minnesota law must be based on the actions of the party against whom waiver is sought or its agents. The court found the original complaint had not plausibly alleged that UHS was U.S. Bancorp's agent. Feder was granted leave to amend.
Amended Complaint
Feder's amended complaint pursued the agency theory, alleging that (1) U.S. Bancorp delegated to UHS 'authority and discretion to decide internal claims and appeals relating to ERISA claims for benefits'; (2) UHS therefore decided on U.S. Bancorp's behalf whether to pay providers directly or accept assignments; (3) UHS accepted these responsibilities; and (4) U.S. Bancorp delegated these responsibilities because it is primarily a bank and UHS has health insurance expertise.
Legal Standard
The court applied the Federal Rule of Civil Procedure 12(b)(6) standard, accepting all factual allegations as true and drawing reasonable inferences in Feder's favor. To survive, the complaint must state a plausible claim for relief (Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007); Ashcroft v. Iqbal, 556 U.S. 662 (2009)).
Agency Analysis
Under Minnesota law, an agency relationship requires: (1) the principal's manifestation of consent; (2) the agent's acquiescence; and (3) the principal's control over the agent. The court focused entirely on the third element — control — finding it dispositive.
The court emphasized that the 'right of control' is a 'critical element': the principal's control must extend not merely to what is to be accomplished but primarily to how it is done on a daily basis (citing A.P.I., Inc. Asbestos Settlement Trust v. Home Insurance Co., 877 F. Supp. 2d 709 (D. Minn. 2012); Frankle v. Twedt, 47 N.W.2d 482 (Minn. 1951)). 'Detailed authoritative control' is required; mere designation of work to another party is insufficient (Urban ex rel. Urban v. American Legion Post 184, 695 N.W.2d 153 (Minn. Ct. App. 2005)).
The court found that Feder's own amended complaint defeated its agency argument. Feder alleged that U.S. Bancorp 'delegated authority and discretion' to UHS to decide claims and appeals — meaning UHS, not U.S. Bancorp, controlled how claims were processed. The Plan SPD confirmed that UHS had 'discretion to determine whether a service/procedure is medically necessary' and that U.S. Bancorp 'delegated to [UHS] the discretion and authority to decide whether a treatment or supply is a covered health service.' This showed no 'detailed authoritative control' by U.S. Bancorp over UHS's day-to-day claims decisions.
The court rejected Feder's three counter-arguments: - Right to terminate: U.S. Bancorp's ability to terminate UHS as claims administrator does not create an agency relationship; the same right exists in non-agency contracts, such as those with independent contractors. - Plan compliance requirement: Requiring UHS to follow the Plan's terms addresses only what UHS must do, not how it performs daily tasks. UHS retained discretion over actual claims decisions. - Apparent authority: Apparent authority requires the principal to hold the agent out as having authority, or knowingly permit the agent to assume it, and requires the third party to have actual knowledge of that holding-out. Here, the SPD showed U.S. Bancorp delegated full discretion to UHS — inconsistent with control. Moreover, Feder's own pleadings admitted awareness of UHS's independent discretion, negating any claim of actual knowledge of an agency relationship.
Standing and ERISA
Because Feder failed to plausibly allege that UHS was U.S. Bancorp's agent, it could not establish that U.S. Bancorp waived the anti-assignment clause through UHS's conduct. Without a valid assignment or waiver, Feder lacked statutory standing under ERISA to sue for R.M.'s benefits. See Peterson ex rel. E v. UnitedHealth Group Inc., 913 F.3d 769, 773 n.3 (8th Cir. 2019).
Dismissal With Prejudice
The court dismissed the amended complaint with prejudice rather than allowing further amendment. Dismissal with prejudice is appropriate when a plaintiff has had opportunities to amend but has not cured the defects, or when amendment would be futile. Here, Feder had already amended once and still failed to allege a plausible agency relationship. More importantly, both Feder's own allegations and the plain language of the SPD made it highly unlikely that Feder could ever plausibly allege the required 'control' element. Further amendment would almost certainly be futile.
Disposition
U.S. Bancorp's motion to dismiss (ECF No. 54) was granted. Feder's amended complaint (ECF No. 53) was dismissed with prejudice. The court directed that judgment be entered accordingly.
Reviewer note from the AI+
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