You know that patients typically assign rights under a health insurance plan to the provider of medical services. This is accomplished by signing an assignment form upon intake/admission. Then, the healthcare provider sends the claim directly to, and receives reimbursement directly from, the patient’s health insurance company for services rendered to the patient.
But what happens when the ERISA-governed health insurance plan has an anti-assignment provision?
Anti-assignment provisions are enforceable. As a result, health care providers lack standing to bring a claim for reimbursement.
The recent case of University of Wisconsin Hospitals v. Aetna Health & Life Ins. Co., 2015 WL 6736983 (W. D. Wis., November 3, 2015) highlights the point.
FACTS: Chandra Aschenbrener, an insured under an ERISA-governed Aetna health insurance policy, incurred $16,893 in hospital expenses. The plan specified that benefits may not be assigned to another party, including the right to bring legal action. The University of Wisconsin Hospital sued Aetna, seeking reimbursement for medical expenses.
COURT HELD: Anti-Assignment Provisions Enforceable.
- “Courts are to strictly enforce the terms of ERISA plans where possible.” Op. at 5.
- “[I]n order for a beneficiary to collect a plan’s benefits, the assignment by a participant to the beneficiary must comport with the insurance plan.” Op. at 5.
- “[C]ircuits have overwhelmingly held that anti-assignment clauses in ERISA employee welfare benefit plans are enforceable, and therefore medical provider plaintiffs lack standing to pursue payment as ‘beneficiaries.’” Op. at 8.
- “In order for [the hospital] to become a beneficiary, Aschenbrener must designate it as such. The plan, however, specifies unambiguously that the benefit rights may not be assigned….The plan also expressly states that a direction to pay a provider, directly or otherwise, is not an assignment of any right and that a direction to pay does not extend to a provider any legal right to initiate court proceedings.” Op. at 8 (emphasis in original).
KEY TAKE AWAY: Anti-assignment clauses in ERISA employee welfare benefit plans are enforceable. As a result, medical providers lack standing to pursue payment as “beneficiaries.” See, e.g., Physicians Multispecialty Grp. v. Health Care Plan of Horton Homes, Inc., 371 F.3d 1291, 1295 (11th Cir. 2004) (“an assignment is ineffectual if the plan contains an unambiguous anti-assignment”) (citing cases from the First, Ninth and Tenth Circuits);Letourneau Lifelike Orthotics & Prosthetics, Inc. v. Wal–Mart Stores, Inc., 298 F.3d 348, 353 (5th Cir. 2002) (plaintiff lacked standing under ERISA because anti assignment clause was enforceable).