Pleading “Normal Charges” Tied to FAIR Health Percentiles Suffices for ERISA MRC-1 Underpayment Claims; Providers Lack Fiduciary-Duty Standing Absent a Personal Right to the Challenged Plan Assets

I. Introduction

In Advanced Gynecology and Laparoscopy of North Jersey v. Cigna Health & Life Insurance Company; Connecticut General Life Insurance Company (3d Cir. July 13, 2026) (nonprecedential), nearly two dozen New Jersey out-of-network healthcare practices (the “Practices”) sued Cigna under ERISA, RICO, and state law. The core allegation was systematic underpayment of thousands of out-of-network claims—elective and emergency—contrary to the reimbursement terms in Cigna’s ERISA-governed plans (the “Plans”), which used “Maximum Reimbursable Charge” (MRC) methodologies.

The District Court dismissed the Practices’ third amended complaint with prejudice, largely on the view that they failed to plead their “normal charges” (as distinct from billed charges), and thus could not plausibly allege underpayment, injury, or damages. The Third Circuit affirmed in part and vacated in part, drawing key lines between: (1) sufficiently pleaded ERISA underpayment claims under MRC-1 versus insufficient pleading under MRC-2 and emergency provisions; and (2) Article III standing for ERISA fiduciary-duty theories based on plan-asset “profit” and fee theories versus misrepresentation-based theories tied to the provider’s own payment entitlement.

II. Summary of the Opinion

  • ERISA § 1132(a)(1)(B) benefits claim: Vacated dismissal as to MRC-1 elective claims (plausibly pleaded underpayment); affirmed dismissal as to MRC-2 elective claims (insufficient allegations given alternative plan calculation) and emergency claims (failure to plead absence of a negotiated amount that would control under plan terms).
  • ERISA § 1132(a)(3) fiduciary-duty claims: Affirmed dismissal for lack of standing as to cost-containment fee and interest/plan-funds-use theories (no concrete injury/right to those monies); vacated dismissal of a misrepresentation-based fiduciary-breach theory tied to alleged underpayment. Remanded for the District Court to consider whether, as assignees, the Practices may sue under § 1132(a)(3).
  • RICO: Vacated dismissal because the District Court’s injury analysis depended on the same underpayment pleading that was adequate for MRC-1.
  • State law: Affirmed dismissal of quantum meruit as ERISA-preempted; affirmed dismissal of HCAPPA claim because the statute provides no private right of action and the court would not imply one.

III. Analysis

A. Precedents Cited

1. Pleading and Rule 12(b)(6) posture

  • Rivera v. Monko and Morrow v. Balaski (en banc) supplied the standard of plenary review of Rule 12(b)(6) dismissals.
  • Phillips v. Cnty. of Allegheny anchored the requirement that courts accept factual allegations as true, construe the complaint favorably to plaintiffs, and ask whether any reasonable reading permits relief. This framing was decisive in rejecting the District Court’s view that charge variations and labeling changes necessarily defeated plausibility at the pleadings stage.

2. ERISA benefit entitlement and assignment

  • Hooven v. Exxon Mobil Corp. provided the controlling statement for § 1132(a)(1)(B): plaintiffs must plausibly allege that benefits are “due” and enforceable under the plan.
  • Although not directly disputed on appeal, the opinion referenced assignment principles in N. Jersey Brain & Spine Ctr. v. Aetna, Inc. for the proposition that an assignment of payment logically entails the right to sue for non-payment. The panel also noted Cigna did not rely on anti-assignment provisions in this appeal.

3. ERISA fiduciary standing and “concrete injury”

  • Thole v. U. S. Bank N.A supplied the core standing principle: “there is no ERISA exception to Article III,” so a plaintiff must plead a concrete injury even when alleging fiduciary breach.
  • Knudsen v. MetLife Grp., Inc. framed how financial harm must be pleaded: non-speculative monetary harm—even small—is concrete, but “supposition” cannot establish harm.
  • Edmonson v. Lincoln Nat'l Life Ins. Co. (quoted via Knudsen) supplied the “individual right” concept: standing depends on showing the plaintiff had an individual right to the withheld/retained monies such that unlawful retention injured them.
  • Hahnemann Univ. Hosp. v. All Shore, Inc. informed the remand instruction: the District Court must consider whether the Practices, as assignees, have standing to bring fiduciary-duty claims under § 1132(a)(3).

4. ERISA preemption and state-law displacement

  • Ingersoll-Rand Co. v. McClendon supplied the general ERISA preemption test for state claims premised on the existence of an ERISA plan.
  • Plastic Surgery Ctr., P.A. v. Aetna Life Ins. Co. supplied the Third Circuit’s elaboration: preemption commonly applies where the court’s inquiry must be directed to the plan, where the plan is critical to liability, or where no claim exists absent the plan. The same case was also used for the elements of quantum meruit (in a footnote) by quoting New Jersey law.

5. New Jersey implied private rights of action

  • Starkey, Kelly, Blaney & White v. Estate of Nicolaysen provided the New Jersey quantum meruit elements (as quoted in Plastic Surgery Ctr., P.A. v. Aetna Life Ins. Co.).
  • Meyer v. CUNA Mut. Ins. Soc. supplied the federal court’s obligation to predict how the New Jersey Supreme Court would rule on an unsettled state-law question.
  • R.J. Gaydos, Ins. Agency, Inc. v. National Consumer Ins. Co. provided the three-factor test for implying a private right of action in New Jersey and the admonition that New Jersey courts are reluctant to infer private rights, especially where a statute already has civil penalty mechanisms.

B. Legal Reasoning

1. ERISA § 1132(a)(1)(B): why MRC-1 claims survived

The key pleading dispute was whether the Practices adequately alleged “normal charges,” because MRC-1 plans set the MRC as the lesser of: (1) the provider’s normal charge; or (2) a policyholder-selected percentile of charges in a Cigna-selected database (alleged to be FAIR Health), with the Plans at issue allegedly pegged between the 80th and 100th percentile.

The Third Circuit held that, at the motion-to-dismiss stage, it must credit allegations that: (a) the Practices’ billed charges were their “normal” charges, (b) those normal charges were set at or around the 80th percentile of FAIR Health, and (c) Cigna reimbursed, on average, far below those charges (about 15.2% for MRC-1 claims). It rejected the District Court’s reliance on spreadsheet-label changes and limited intra-code variations as defeating plausibility, noting the cited “discrepancies” were a tiny subset of the 1,677 claims and that inferences must be drawn for plaintiffs.

Doctrinally, the holding is less about what “normal charges” ultimately are, and more about what suffices to plead them when plan terms tie reimbursement to a percentile benchmark: allegations linking the provider’s normal charge to an objective database percentile and alleging payment below the applicable percentile can be enough to plausibly allege benefits “due” under Hooven v. Exxon Mobil Corp..

2. Why MRC-2 elective claims did not survive

MRC-2 plans permitted two approaches: (1) a Cigna-developed Medicare-like schedule (the “first MRC-2 approach”); or (2) in some cases, an 80th-percentile database approach (the “second MRC-2 approach”). The Practices alleged Cigna never created the Medicare-based schedule, but the Plans expressly permitted the alternative calculation. Because the Practices did not allege that Cigna’s payments violated the second MRC-2 approach (or that Cigna was not allowed to use it for the claims at issue), they failed to plead a plan-term violation. The court’s logic was contract-like: where the plan authorizes multiple calculation methods, a complaint must plead facts showing the method used (or available) was impermissible or misapplied.

3. Why emergency underpayment claims did not survive

The sample emergency provision stated that the “allowable amount” is a negotiated amount between Cigna and the out-of-network provider; only if no amount is agreed upon does the Plan use the greatest of three benchmarks (median in-network rate, MRC, or Medicare amount). The Practices pleaded that the MRC would usually be greatest and would approximate normal charges, but they did not plead the threshold condition: that no negotiated amount existed. Because a negotiated amount would supersede the MRC, the complaint did not plausibly establish entitlement to MRC-based payment for emergency services. This is a pleading lesson about conditional plan provisions: when a plaintiff’s preferred calculation applies only upon a contractual precondition, that precondition must be alleged.

4. ERISA § 1132(a)(3) fiduciary-duty theories: standing lines drawn by “individual right”

The Practices advanced fiduciary-breach theories based on (i) cost-containment fees paid to Cigna and “Repricing Companies,” and (ii) Cigna’s use/investment of plan funds (e.g., interest-bearing accounts), seeking injunctions, removal, and disgorgement. Applying Thole v. U. S. Bank N.A and Knudsen v. MetLife Grp., Inc., the court held the Practices lacked standing because they did not plausibly show a concrete injury tied to an “individual right” to those monies under Edmonson v. Lincoln Nat'l Life Ins. Co.. In particular:

  • Cost-containment fees: even if the fee structure incentivized lower payments, the Practices did not allege a right to amounts beyond what they negotiated with Cigna, so retention/payment of the fees did not itself invade the Practices’ legally protected interest.
  • Interest/plan-funds use: the complaint did not allege the Practices had a right to interest accrued on plan funds while held by Cigna.

However, the court distinguished a misrepresentation-based fiduciary theory: that Cigna fraudulently misrepresented that the Practices were not entitled to the full value of claims accepted by the Plans, causing underpayment. That theory was tied to the Practices’ own payment entitlement (at least for MRC-1), and thus alleged non-speculative financial harm sufficient for standing. The panel vacated dismissal of that fiduciary theory and remanded for the District Court to consider, in the first instance, whether assignees may sue under § 1132(a)(3), citing Hahnemann Univ. Hosp. v. All Shore, Inc..

5. RICO: injury revived where ERISA underpayment plausibly pleaded

The District Court dismissed RICO because it found no plausible underpayment (and thus no injury). Because the Third Circuit held MRC-1 underpayment was plausibly pleaded, it vacated the RICO dismissal and remanded. Notably, the panel did not decide other RICO elements (pattern, predicate acts, causation) in detail; it focused on the injury rationale that had driven dismissal.

6. State law: ERISA preemption and no implied HCAPPA right of action

The court affirmed dismissal of:

  • Quantum meruit: preempted because the Practices’ “expectation of compensation” was premised (at least in part) on the ERISA plans; adjudicating “reasonable value” would be directed to plan terms and plan-governed reimbursement obligations, fitting the preemption principles of Ingersoll-Rand Co. v. McClendon and Plastic Surgery Ctr., P.A. v. Aetna Life Ins. Co..
  • HCAPPA: no express private right of action, and applying the New Jersey implied-right analysis from R.J. Gaydos, Ins. Agency, Inc. v. National Consumer Ins. Co., the panel predicted the New Jersey Supreme Court would not infer one—particularly given HCAPPA’s “detailed mechanism for binding arbitration” and the absence of discernable legislative intent to authorize private litigation (despite references to “judicial or quasi-judicial proceedings” in cited sections).

C. Impact

1. Pleading strategy for out-of-network ERISA reimbursement suits

  • Objective benchmark pleading helps: For plans pegged to a database percentile, alleging the provider’s normal charges were set to that percentile and alleging payment below it may suffice at Rule 12(b)(6). This reduces defendants’ ability to defeat claims early by characterizing “normal charges” as inherently vague, at least where plaintiffs tie “normal” to an external benchmark like FAIR Health.
  • Address plan alternatives and preconditions: The MRC-2 and emergency holdings are cautionary: plaintiffs must plead why the alternative plan methodology is unavailable or misapplied (MRC-2), and must plead the triggering facts for fallback calculations (no negotiated amount for emergency services).

2. Standing constraints on provider-led fiduciary-breach litigation

  • Fee/profit theories may fail without a personal entitlement: The decision reinforces that allegations of “self-dealing” with plan funds, standing alone, do not confer standing on a provider unless the provider can plead a concrete invasion of its own legally protected interest—an “individual right” to the challenged money (fees, float, interest).
  • Misrepresentation tied to underpayment is different: Where the fiduciary-breach theory is functionally a theory of being short-paid under plan terms (or being induced into accepting less), standing is more likely, subject to whether assignees can sue under § 1132(a)(3)—an issue the panel left to the District Court on remand.

3. RICO as a parallel remedy

By vacating dismissal once a plausible underpayment injury exists, the opinion signals that, at least at the pleading stage, ERISA-related underpayment allegations can supply RICO injury where the alleged racketeering schemes are the mechanism producing the underpayment. Defendants may still contest RICO’s distinct elements on remand, but early dismissal solely for lack of injury becomes harder when plan-violation underpayment is plausibly pleaded.

4. State-law channeling: ERISA preemption and HCAPPA arbitration

The quantum meruit preemption holding and the refusal to imply a private right under HCAPPA together narrow providers’ state-law workarounds in disputes that fundamentally depend on ERISA plan reimbursement. HCAPPA’s arbitration mechanism, in particular, was treated as evidence against implied private litigation remedies.

IV. Complex Concepts Simplified

  • “Normal charges” vs. “billed charges”: “Billed” is what a provider invoices; “normal” is the provider’s typical, standard charge for that service. Here, the Practices alleged the two were the same and anchored “normal” to the 80th percentile of FAIR Health—an external data benchmark.
  • MRC (Maximum Reimbursable Charge): A plan-defined ceiling (or formula) for what the insurer will treat as the allowable out-of-network amount, often tied to market data percentiles or Medicare-like schedules.
  • ERISA § 1132(a)(1)(B) vs. § 1132(a)(3): (a)(1)(B) is the classic “pay me the benefits the plan promises” claim. (a)(3) is for equitable remedies (injunction, disgorgement, removal of fiduciary) to redress ERISA violations, but still requires Article III standing and a concrete injury.
  • Article III standing (“concrete injury”): A plaintiff must show a real, personal harm—money lost, rights invaded—not just that the defendant behaved improperly. Under Thole v. U. S. Bank N.A and Knudsen v. MetLife Grp., Inc., speculation is not enough.
  • ERISA preemption: ERISA can override (“preempt”) state-law claims that depend on an ERISA plan’s existence or require interpreting plan terms to establish liability.
  • Implied private right of action: Even if a statute is violated, courts will not automatically let private parties sue unless the legislature clearly intended that remedy. New Jersey is “reluctant to infer” such rights under R.J. Gaydos, Ins. Agency, Inc. v. National Consumer Ins. Co..

V. Conclusion

The Third Circuit’s decision meaningfully clarifies pleading and standing fault lines in provider-driven out-of-network reimbursement litigation: (1) for MRC-1 plans tied to an external percentile benchmark, alleging “normal charges” pegged to that benchmark and alleging payment below it can plausibly state an ERISA underpayment claim at the motion-to-dismiss stage; (2) where plan terms provide alternative reimbursement methods or conditional triggers (MRC-2 alternatives; emergency negotiated-rate primacy), complaints must plead facts ruling out those alternatives or satisfying the trigger; (3) fiduciary-breach theories premised on plan-asset fees, float, or “self-dealing” fail on standing absent a pleaded individual right to the disputed monies, while misrepresentation-linked underpayment theories may proceed if tied to concrete financial harm; and (4) state-law end runs are constrained by ERISA preemption and by New Jersey courts’ reluctance to infer private rights of action where statutory schemes (like HCAPPA) provide alternative enforcement mechanisms such as arbitration.