Anti-Assignment Clauses with Payment Carve-Outs Confer ERISA Standing to Sue for Nonpayment; Chargemaster “Normal Charges” Are Plausibly Pleaded at the Motion-to-Dismiss Stage

1. Introduction

In Hudson Hospital Opco LLC v. Cigna Health and Life Insurance Co (3d Cir. July 16, 2026) (nonprecedential), three New Jersey hospitals—CarePoint Christ Hospital, Bayonne Medical Center, and Hoboken University Medical Center (collectively, the “Hospitals”)—sued Cigna Health and Life Insurance Company and Connecticut General Life Insurance Company (collectively, “Cigna”) under ERISA.

The Hospitals alleged that, from 2016 to 2021, Cigna underpaid out-of-network claims under numerous ERISA-governed health plans (the “Plans”), which specified reimbursement methodologies: MRC-1, MRC-2, or R&C. The Hospitals also alleged that Cigna’s “cost-containment program” created improper incentives and constituted fiduciary self-dealing.

The District of New Jersey dismissed the ERISA claims with prejudice—primarily on the view that the Hospitals did not adequately plead their “normal charges” (as distinct from “billed charges”) and thus failed to plead underpayment. The Third Circuit affirmed in part, vacated in part, and remanded.

2. Summary of the Opinion

  • Standing / Anti-assignment: For 29 plans containing anti-assignment language plus a specific clause authorizing payment to providers, the Third Circuit held the payment authorization functions as a carve-out that permits assignment of payment and therefore allows providers to sue for nonpayment. For seven other plans with anti-assignment provisions and no carve-out, the standing question was left for the District Court on remand.
  • ERISA benefits (§ 1132(a)(1)(B)): The court vacated dismissal as to MRC-1 and MRC-2 plans, holding that at the motion-to-dismiss stage the Hospitals plausibly alleged (i) their “normal charges” via Chargemasters and claim submissions, (ii) the relevant FAIR Health benchmarks, and (iii) underpayment below plan-required amounts. The court affirmed dismissal as to R&C plans due to variable plan language and insufficient allegations about how Cigna set R&C amounts (e.g., what percentile or metric was used).
  • ERISA fiduciary duty (§ 1132(a)(3)): The court affirmed dismissal for lack of Article III standing because the Hospitals did not plausibly allege a legally cognizable entitlement to the “cost-containment” fees Cigna paid itself under plan agreements, as required to show concrete financial harm.

3. Analysis

A. Precedents Cited

1) Appellate waiver/forfeiture

The panel deemed forfeited an argument raised only in a footnote, invoking Fed. Trade Comm'n v. AbbVie Inc. This reinforced a strict approach to appellate presentation: undeveloped or “in passing” arguments do not preserve issues for review.

2) Pleading standard on a Rule 12(b)(6) motion

The court framed its review using familiar Third Circuit standards, citing Rivera v. Monko, Morrow v. Balaski (en banc), and Phillips v. Cnty. of Allegheny: accept well-pleaded facts as true, construe them in the plaintiff’s favor, and ask whether any reasonable reading permits relief. This point became dispositive in rejecting the District Court’s skepticism toward the Hospitals’ “normal charges” allegations.

3) Interpreting ERISA plan terms under federal common law of contract

To interpret plan language (including anti-assignment provisions), the panel relied on Baldwin v. Univ. of Pittsburgh Med. Ctr. and contract-canon cases Schulz v. U.S. Boxing Ass'n and Caldwell Trucking PRP v. Rexon Tech. Corp., applying the principle that specific provisions qualify or control over general boilerplate when the two are in tension.

4) Anti-assignment clauses and provider standing via assignment of payment

The opinion harmonizes three key Third Circuit decisions:

  • Am. Orthopedic & Sports Med. v. Indep. Blue Cross Blue Shield: anti-assignment clauses in ERISA health plans are “generally enforceable.” This sets the baseline rule favoring plan enforcement.
  • N. Jersey Brain & Spine Ctr. v. Aetna, Inc.: “assignment of the right to payment logically entails the right to sue for non-payment.” This supplies the doctrinal bridge from payment assignment to ERISA standing.
  • The present decision: where a plan broadly bars assignment but specifically authorizes payment to providers, the specific authorization operates as a carve-out permitting assignment of payment—and thus standing to sue for that payment.

5) What it means for benefits to be “due” under § 1132(a)(1)(B)

Citing Hooven v. Exxon Mobil Corp. and Fleisher v. Standard Ins. Co., the court emphasized that a plaintiff must plead a legally enforceable right to the benefits claimed. The Hospitals satisfied this for MRC-1/MRC-2 plans by alleging plan formulas, their “normal charges,” the relevant benchmarks, and reimbursement below those amounts.

6) Article III standing for ERISA § 1132(a)(3) fiduciary-duty claims

The court applied Supreme Court standing limits from Thole v. U. S. Bank N.A, reiterating that ERISA does not relax Article III’s concrete-injury requirement. It then applied Third Circuit standing analysis from Knudsen v. MetLife Grp., Inc., which requires non-speculative allegations of financial harm, and it quoted Edmonson v. Lincoln Nat'l Life Ins. Co. for the proposition that a plaintiff must show a right to the withheld/retained monies to establish injury from retention.

B. Legal Reasoning

1) Anti-assignment language + payment authorization = a functional carve-out

The court’s key interpretive move was contractual: even if an anti-assignment clause is sweeping (“any attempt to assign such rights shall be void”), a neighboring clause stating the participant “may…authorize Cigna to pay” benefits to a non-participating provider is more specific and therefore qualifies the general bar. Under N. Jersey Brain & Spine Ctr. v. Aetna, Inc., that payment authorization supports provider standing to sue for nonpayment because the right to payment necessarily implies the right to litigate payment denial/underpayment.

Importantly, the panel also addressed language in some plans warning that payment authorization should not be “interpret[ed]” as assignment of “any other rights.” The court treated the Hospitals as seeking only the right expressly carve-out assignable: the right to payment (not broader ERISA causes of action beyond payment enforcement).

2) Pleading “normal charges” via Chargemaster allegations is sufficient at dismissal stage (MRC-1/MRC-2)

The District Court’s dismissal turned on a factual skepticism: “normal charges” cannot be conflated with “billed charges.” The Third Circuit held that skepticism was incompatible with Rule 12(b)(6): the Hospitals alleged (i) their Chargemasters are public lists of standard charges, (ii) they billed Cigna those Chargemaster amounts via claim forms and itemized statements, and (iii) those billed amounts are their “normal charges.” Taking those allegations as true—as required by Phillips v. Cnty. of Allegheny—the complaint plausibly alleged the “lesser of” comparison required by MRC-1 and MRC-2.

The court also accepted, at this stage, allegations that: (a) the “database selected by Cigna” referenced in the plans was FAIR Health (and that the relevant percentile was 80% or sometimes 90%), and (b) for MRC-2, Cigna never developed the contemplated Medicare-based schedule, triggering the alternative approach tied to the 80th percentile database measure. With these premises, the Hospitals plausibly alleged that plan-required payment should have been at or near their Chargemaster “normal charges” (net of cost-sharing) and that Cigna paid less for thousands of claims.

3) R&C claims failed because plan language variation and discretion defeated a uniform underpayment inference

For R&C plans, the court drew a sharp line: unlike MRC-1 and MRC-2, the Hospitals admitted the R&C “reimbursement language varies.” Some R&C clauses referenced “usual or customary” charges; others referenced “average claims data”; still others gave Cigna broad discretion to consider “various factors.” Because the complaint did not identify a consistent operative metric—especially what FAIR Health percentile or other benchmark Cigna used—underpayment could not be inferred across R&C plans. Thus, dismissal of the R&C portion of the § 1132(a)(1)(B) claim was affirmed.

4) Fiduciary-duty standing failed because alleged “self-dealing” did not establish a legally protected entitlement to the disputed fees

The Hospitals’ fiduciary theory was that Cigna’s “cost-containment program” paid Cigna and partners a percentage of “savings,” incentivizing underpayment. But for Article III standing, the court required a concrete financial injury traceable to the challenged retention of money. Under Knudsen v. MetLife Grp., Inc. and Edmonson v. Lincoln Nat'l Life Ins. Co., that requires alleging the plaintiff had a right to the retained amounts. The complaint did not plausibly allege the Hospitals were entitled to the program fees (which were paid to Cigna under agreements with the Plans), as opposed to being entitled only to proper claim reimbursement under plan terms. Without that entitlement, the asserted injury remained too speculative or mismatched to the relief sought (disgorgement of fees), so the § 1132(a)(3) claim was dismissed.

C. Impact

1) Litigation consequences for provider ERISA cases involving anti-assignment clauses

The decision strengthens provider arguments that payment-authorization clauses can operate as carve-outs even when anti-assignment language is broad. Practically, plans and insurers that want to bar provider suits may need to draft payment clauses with greater clarity (or accept that payment authorization can support payment assignment standing). Conversely, providers will likely focus on locating and pleading the payment-authorization language as the “specific provision” that qualifies general anti-assignment boilerplate.

2) Pleading guidance for underpayment claims tied to reimbursement formulas

For formula-driven reimbursement methodologies (like MRC-1/MRC-2), the court signals that plaintiffs can plausibly plead “normal charges” by describing Chargemaster rates, claim submission practices, and consistent plan mechanics—without attaching every plan document at the complaint stage, especially where defendants do not dispute the general methodology descriptions. This may lower early dismissal rates for well-pleaded, high-volume underpayment disputes.

3) R&C claims will require plan-specific allegations

The opinion also serves as a caution: where plan terms vary and the administrator has discretion, plaintiffs must plead how the administrator actually set R&C amounts (e.g., the specific benchmark, percentile, database field, or contractual factors used) and tie underpayment to that plan-specific standard. General allegations that “it’s FAIR Health” will be insufficient without the missing operational details.

4) Fiduciary-duty claims: standing turns on entitlement to the challenged funds, not generalized incentive allegations

Even where a compensation arrangement allegedly incentivizes underpayment, a provider seeking equitable relief under § 1132(a)(3) must connect the requested remedy (e.g., disgorgement of fees) to a concrete injury grounded in a legally protected entitlement. Incentive allegations alone may support a narrative, but they do not substitute for an entitlement-based injury theory under Thole v. U. S. Bank N.A and Knudsen v. MetLife Grp., Inc..

4. Complex Concepts Simplified

  • Out-of-network: A provider without a negotiated contract rate with the insurer; reimbursement is governed by plan formulas rather than contracted prices.
  • Chargemaster: A hospital’s listed standard prices for services/supplies; the Hospitals alleged these reflect their “normal charges.”
  • MRC (Maximum Reimbursable Charge): A plan-defined ceiling on what the insurer must pay, often the lesser of provider charges or a database/percentile benchmark.
  • FAIR Health database: A large claims-based dataset used to estimate customary charges and payments in a geographic area; here alleged to be the “database selected by Cigna.”
  • R&C (Reasonable and Customary): A flexible reimbursement concept often linked to “usual” charges in an area; it can vary widely depending on plan wording and discretion granted.
  • Anti-assignment clause: Plan language attempting to prevent members from assigning plan rights (like the right to be paid) to providers.
  • ERISA § 1132(a)(1)(B): The main vehicle to sue for benefits “due” under the plan (i.e., enforcing plan payment terms).
  • ERISA § 1132(a)(3): A provision allowing equitable relief to redress ERISA violations; still requires Article III standing and a concrete injury.
  • Article III standing: A constitutional requirement that the plaintiff suffered a concrete injury traceable to the defendant and redressable by the court.

5. Conclusion

The Third Circuit’s decision does two main things. First, it treats plan payment-authorization provisions as meaningful carve-outs that can overcome general anti-assignment language for purposes of provider standing to sue for nonpayment. Second, it confirms that at the motion-to-dismiss stage, hospitals can plausibly plead “normal charges” through Chargemaster-based allegations and survive dismissal on formulaic reimbursement claims (MRC-1/MRC-2), while generalized R&C underpayment theories will fail absent plan-specific operational details. At the same time, the opinion underscores that ERISA fiduciary-duty claims seeking equitable remedies must be anchored in a concrete, entitlement-based injury—not merely alleged incentive misalignment.