SEYFARTH SYNOPSIS: The Ninth Circuit recently dealt another major blow to healthcare providers that attempt to bring suits as assignees of their individual patients, holding that an ERISA plan’s anti‑assignment provision bars a provider’s suit even where the plan mistakenly told the provider that no such anti‑assignment provision exists.
On April 26, 2018, the United States Court of Appeals for the Ninth Circuit confirmed, yet again, the deference it pays to anti‑assignment provisions set forth in ERISA plans. In Eden Surgical Center v. Cognizant Technology Solutions Corp., No. 16‑56422 (9th Cir.), the appellate court affirmed a district court’s grant of summary judgment in favor of the defendant plan administrator and against a healthcare provider purporting to bring claims for ERISA benefits as an assignee of the provider’s patients.
Eden Surgical is not unique in its affirmation that anti‑assignment provisions in ERISA plans preclude providers from suing the plans as assignees. Time and again, the Ninth Circuit has barred would-be assignees from pursuing their patients’ claims. See, e.g., DB Healthcare, LLC v. Blue Cross Blue Shield of Ariz., Inc., 852 F.3d 868, 876 (9th Cir. 2017); Brand Tarzana Surgical Institute v. ILWU‑PMA Welfare Plan, 706 Fed. App’x 442, 443 (9th Cir. 2017) Spinedex Physical Therapy USA Inc. v. United Healthcare of Arizona, Inc., 770 F.3d 1282 (9th Cir. 2014). Rather, Eden Surgical is noteworthy for its recognition of the resilience of anti‑assignment provisions in spite of seemingly bad facts. In that case, the Ninth Circuit barred the provider’s suit even though the plan’s representative “mistakenly told Eden that the benefit plan did not contain an anti‑assignment provision.” The Ninth Circuit placed the onus on the healthcare provider to “attempt to obtain the plan documents from the purported assignor [the patient] to verify whether the plan contained an anti‑assignment provision, if knowledge of that fact was critical to its decision to file suit.” The provider’s failure to “attempt to obtain the plan documents from its purported assignor until after it had already filed [the] action” rendered any reliance by the provider on the plan’s misrepresentation “unreasonable” as a matter of law.
Eden Surgical also reiterates the Ninth Circuit’s conclusion that a plan does not waive enforcement of its anti‑assignment provision by not raising the provision during the administrative claims review process. As the Ninth Circuit has held in similar cases, an ERISA plan’s anti‑assignment provision is not a reason to deny ERISA benefits during the administrative claims review process, but, instead, is a litigation defense that need not be raised until a purported assignee improperly files suit. See, e.g., Brand, 706 Fed. App’x at 443. Lest there be any doubt, the Ninth Circuit explained in Eden Surgical that ERISA plans do not have “an affirmative duty to make [a provider] aware of the anti‑assignment provision.”
As out of network healthcare providers continue to devise novel theories upon which to pursue ERISA plans for medical benefits, Eden Surgical provides welcome comfort. The Ninth Circuit has yet again confirmed its commitment to enforcing anti‑assignment provisions in ERISA plans as a bar to providers’ suits as purported assignees of their patients. This commitment holds even where, as in Eden Surgical, the plan makes the unfortunate mistake of disclaiming the existence of the anti‑assignment provision.