assignment of benefits erisa

26 CFR § 1.401(a)-13 - Assignment or alienation of benefits.

Table of Popular Names

(a) Scope of the regulations. This section applies only to plans to which section 411 applies without regard to section 411(e)(2). Thus, for example , it does not apply to a governmental plan , within the meaning of section 414(d); a church plan , within the meaning of section 414(e), for which there has not been made the election under section 410(a) to have the participation , vesting , funding, etc . requirements apply; or a plan which at no time after September 2, 1974, provided for employer contributions .

(b) No assignment or alienation —(1) General rule. Under section 401(a)(13), a trust will not be qualified unless the plan of which the trust is a part provides that benefits provided under the plan may not be anticipated, assigned (either at law or in equity), alienated or subject to attachment, garnishment, levy, execution or other legal or equitable process.

(2) Federal tax levies and judgments. A plan provision satisfying the requirements of subparagraph (1) of this paragraph shall not preclude the following:

(i) The enforcement of a Federal tax levy made pursuant to section 6331.

(ii) The collection by the United States on a judgment resulting from an unpaid tax assessment.

(c) Definition of assignment and alienation —(1) In general. For purposes of this section, the terms “assignment” and “alienation” include—

(i) Any arrangement providing for the payment to the employer of plan benefits which otherwise would be due the participant under the plan , and

(ii) Any direct or indirect arrangement (whether revocable or irrevocable) whereby a party acquires from a participant or beneficiary a right or interest enforceable against the plan in, or to, all or any part of a plan benefit payment which is, or may become, payable to the participant or beneficiary .

(2) Specific arrangements not considered an assignment or alienation. The terms “assignment” and “alienation” do not include, and paragraph (e) of this section does not apply to, the following arrangements:

(i) Any arrangement for the recovery of amounts described in section 4045(b) of the Employee Retirement Income Security Act of 1974 , 88 Stat. 1027 (relating to the recapture of certain payments),

(ii) Any arrangement for the withholding of Federal, State or local tax from plan benefit payments,

(iii) Any arrangement for the recovery by the plan of overpayments of benefits previously made to a participant ,

(iv) Any arrangement for the transfer of benefit rights from the plan to another plan , or

(v) Any arrangement for the direct deposit of benefit payments to an account in a bank , savings and loan association or credit union, provided such arrangement is not part of an arrangement constituting an assignment or alienation. Thus, for example , such an arrangement could provide for the direct deposit of a participant 's benefit payments to a bank account held by the participant and the participant 's spouse as joint tenants.

(d) Exceptions to general rule prohibiting assignments or alienations —(1) Certain voluntary and revocable assignments or alienations. Not withstanding paragraph (b)(1) of this section, a plan may provide that once a participant or beneficiary begins receiving benefits under the plan , the participant or beneficiary may assign or alienate the right to future benefit payments provided that the provision is limited to assignments or alienations which—

(i) Are voluntary and revocable;

(ii) Do not in the aggregate exceed 10 percent of any benefit payment ; and

(iii) Are neither for the purpose, nor have the effect, of defraying plan administration costs .

(2) Benefits assigned or alienated as security for loans.

(i) Notwithstanding paragraph (b)(1) of this section, a plan may provide for loans from the plan to a participant or a beneficiary to be secured (by whatever means) by the participant 's accrued nonforfeitable benefit provided that the following conditions are met.

(ii) The plan provision providing for the loans must be limited to loans from the plan . A plan may not provide for the use of benefits accrued or to be accrued under the plan as security for a loan from a party other than the plan , regardless of whether these benefits are nonforfeitable within the meaning of section 411 and the regulations thereunder.

(iii) The loan, if made to a participant or beneficiary who is a disqualified person (within the meaning of section 4975(e)(2)), must be exempt from the tax imposed by section 4975 (relating to the tax imposed on prohibited transactions) by reason of section 4975(d)(1). If the loan is made to a participant or beneficiary who is not a disqualified person , the loan must be one which would the exempt from the tax imposed by section 4975 by reason of section 4975(d)(1) if the loan were made to a disqualified person .

(e) Special rule for certain arrangements —(1) In general. For purposes of this section and notwithstanding paragraph (c)(1) of this section, an arrangement whereby a participant or beneficiary directs the plan to pay all, or any portion, of a plan benefit payment to a third party (which includes the participant 's employer) will not constitute an “assignment or alienation” if—

(i) It is revocable at any time by the participant or beneficiary ; and

(ii) The third party files a written acknowledgement with the plan administrator pursuant to subparagraph (2) of this paragraph.

(2) Acknowledgement requirement for third party arrangements. In accordance with paragraph (e)(1)(ii) of this section, the third party is required to file a written acknowledgement with the plan administrator. This acknowledgement must state that the third party has no enforceable right in, or to, any plan benefit payment or portion thereof (except to the extent of payments actually received pursuant to the terms of the arrangement). A blanket written acknowledgement for all participants and beneficiaries who are covered under the arrangement with the third party is sufficient. The written acknowledgement must be filed with the plan administrator no later than the later of—

(i) August 18, 1978; or

(ii) 90 days after the arrangement is entered into.

(f) Effective date. Section 401(a)(13) is applicable as of January 1, 1976, and the plan provision required by this section must be effective as of that date. However, regardless of when the provision is adopted, it will not affect—

(1) Attachments, garnishments, levies, or other legal or equitable process permitted under the plan that are made before January 1, 1976;

(2) Assignments permitted under the plan that are irrevocable on December 31, 1975, including assignments made before January 1, 1976, as security for loans to a participant or beneficiary from a party other than the plan ; and

(3) Renewals or extensions of loans described in subparagraph (2) of this paragraph, if—

(i) The principal amount of the obligation outstanding on December 31, 1975 (or, if less, the principal amount outstanding on the date of renewal or extension), is not increased;

(ii) The loan, as renewed or extended, does not bear a rate of interest in excess of the rate prevailing for similar loans at the time of the renewal or extensions ; and

(iii) With respect to loans that are renewed or extended to bear a variable interest rate, the formula for determining the applicable rate is consistent with the formula for formulae prevailing for similar loans at the time of the renewal or extension. For purposes of subparagraphs (2) and (3) of this paragraph, a loan from a party other than the plan made after December 31, 1975, will be treated as a new loan. This is so even if the lender's security interest for the loan arises from an assignment of the participant 's accrued nonforfeitable benefit made before that date.

(g) Special rules for qualified domestic relations orders —(1) Definition. The term “qualified domestic relations order” (QDRO) has the meaning set forth in section 414(p). For purposes of the Internal Revenue Code , a QDRO also includes any domestic relations order described in section 303(d) of the Retirement Equity Act of 1984 .

(2) Plan amendments. A plan will not fail to satisfy the qualification requirements of section 401(a) or 403(a) merely because it does not include provisions with regard to a QDRO.

(3) Waiver of distribution requirements. A plan shall not be treated as failing to satisfy the requirements of sections 401 (a) and (k) and 409(d) solely because of a payment to an alternate payee pursuant to a QDRO. This is the case even if the plan provides for payments pursuant to a QDRO to an alternate payee prior to the time it may make payments to a participant . Thus, for example , a pension plan may pay an alternate payee even though the participant may not receive a distribution because he continues to be employed by the employer .

(4) Coordination with section 417 —(i) Former spouse.

(A) In general. Under section 414(p)(5), a QDRO may provide that a former spouse shall be treated as the current spouse of a participant for all or some purposes under sections 401(a)(11) and 417.

(B) Consent.

(1) To the extent a former spouse is treated as the current spouse of the participant by reason of a QDRO, any current spouse shall not be treated as the current spouse . For example , assume H is divorced from W, but a QDRO provides that H shall be treated as W's current spouse with respect to all of W's benefits under a plan . H will be treated as the surviving spouse under the QPSA and QJSA unless W obtains H's consent to waive the QPSA or QJSA or both. The fact that W married S after W's divorce from H is disregarded. If, however, the QDRO had provided that H shall be treated as W's current spouse only with respect to benefits that accrued prior to the divorce, then H's consent would be needed by W to waive the QPSA or QJSA with respect to benefits accrued before the divorce. S's consent would be required with respect to the remainder of the benefits .

(2) In the preceding examples , if the QDRO ordered that a portion of W's benefit (either through separate accounts or a percentage of the benefit) must be distributed to H rather than ordering that H be treated as W's spouse , the survivor annuity requirements of sections 401(a)(11) and 417 would not apply to the part of W's benefit awarded H. Instead, the terms of the QDRO would determine how H's portion of W's accrued benefit is paid. W is required to obtain S's consent if W elects to waive either the QJSA or QPSA with respect to the remaining portion of W's benefit .

(1) Where, because of a QDRO, more than one individual is to be treated as the surviving spouse , a plan may provide that the total amount to be paid in the form of a QPSA or survivor portion of a QJSA may not exceed the amount that would be paid if there were only one surviving spouse . The QPSA or survivor portion of the QJSA , as the case may be, payable to each surviving spouse must be paid as an annuity based on the life of each such spouse .

(2) Where the QDRO splits the participant 's accrued benefit between the participant and a former spouse (either through separate accounts or percentage of the benefit), the surviving spouse of the participant is entitled to a QPSA or QJSA based on the participant 's accrued benefit as of the date of death or the annuity starting date , less the separate account or percentage that is payable to the former spouse . The calculation is made as if the separate account or percentage had been distributed to the participant prior to the relevant date.

(ii) Current spouse. Under section 414(p)(5), even if the applicable election periods ( i.e., the first day of the year in which the participant attains age 35 and 90 days before the annuity starting date) have not begun, a QDRO may provide that a current spouse shall not be treated as the current spouse of the participant for all or some purposes under sections 401(a)(11) and 417. A QDRO may provide that the current spouse waives all future rights to a QPSA or QJSA .

(iii) Effects on benefits.

(A) A plan is not required to provide additional vesting or benefits because of a QDRO.

(B) If an alternate payee is treated pursuant to a QDRO as having an interest in the plan benefit , including a separate account or percentage of the participant 's account , then the QDRO cannot provide the alternate payee with a greater right to designate a beneficiary for the alternate payee 's benefit amount than the participant 's right. The QJSA or QPSA provisions of section 417 do not apply to the spouse of an alternate payee .

(C) If the former spouse who is treated as a current spouse dies prior to the participant 's annuity starting date , then any actual current spouse of the participant is treated as the current spouse , except as otherwise provided in a QDRO.

(iv) Section 415 requirements. Even though a participant 's benefits are awarded to an alternate payee pursuant to a QDRO, the benefits are benefits of the participant for purposes of applying the limitations of section 415 to the participant 's benefits .

Employee Retirement Income Security Act of 1974
Internal Revenue Code
Retirement Equity Act of 1984

How To Get Around ERISA Anti-Assignment Provisions

Under the Employee Retirement Income Security Act (“ERISA”), health care providers can file legal actions to recover employee benefits if they obtain a proper assignment of the patient’s benefits. Increasingly, however, ERISA plans are including in plan documents anti-assignment provisions stating that the plans will not honor assignments of benefits by their members. While providers have, in certain circumstances, been successful in avoiding these anti-assignment provisions, most federal courts have held that the anti-assignment provisions are valid and enforceable.

There are three possible ways for providers to avoid application of the anti-assignment provisions in plan documents. One way is for providers to act as the patient’s “authorized representative.” The ERISA regulations expressly provide that the “claims procedures do not preclude an authorized representative of a claimant from acting on behalf of such claimant in pursuing a benefit claim or appeal of an adverse benefit determination.” 29 C.F.R. § 2560.503–1(b)(4).

Recently, the United States Department of Labor (DOL) issued responses to Frequently Asked Questions (FAQs) addressing an entity’s ability to act as an authorized representative for ERISA beneficiaries. In the FAQs, the DOL states that beneficiaries have the right to appoint authorized representatives to act on their behalf in connection with an initial claim, an appeal of an adverse benefit determination, or both. A plan cannot preclude claimants from designating an authorized representative of their own choosing, but may establish reasonable procedures for determining whether an authorized representative has been designated, such as requiring a claimant to complete and file a form identifying any person authorized to act on his or her behalf with respect to a claim. The plan must set forth the procedures for designating an authorized representative in its Summary Plan Description (SPD). If an authorized representative has been designated to act and receive notices on a claimant’s behalf, the plan is required to deal directly with the authorized representative.

Designations of authorized representatives should specify the extent of the authorized representative’s authority. This should include the right to file appeals, receive documents, communicate with the plan, and file legal actions on behalf of the claimant. We have developed model assignment of benefits and authorized representative forms for providers to use.

A second way to avoid application of anti-assignment provisions in ERISA plans is to have the patient sign a limited power of attorney, allowing the hospital to pursue the patient’s rights in the name of the patient. In a recent case in federal court, the judge rejected the provider’s attempt to use their standard assignment of benefits form as a valid power of attorney because the state requirements had not been met. Importantly, the judge did not rule that the provider could not have proceeded on a power of attorney basis if the proper procedures for using a power of attorney form had been met. Each state has their own requirements for valid power of attorney forms. We have developed power of attorney forms for providers to use that comply with state requirements.

A third way to avoid application of an anti-assignment clause in an ERISA plan is when the plan waives the anti-assignment provision by paying the provider directly. In these circumstances, some courts have recognized that the plan cannot simultaneously forbid assignment but at the same time honor the assignment by paying pursuant to it. This route for overcoming assignment language is more unpredictable and after-the-fact than addressing the issue proactively through the authorized representative and power of attorney options mentioned above.

Ninth Circuit Reverses Decision Against United in ERISA Mental Health Class Actions
Supreme Court Poised To Decide What Allegations Make The Grade In University Fee Case, With Broader Implications For ERISA Retirement Plan Fiduciaries

Latest Posts

Department of Homeland Security Proposes Rule for Reporting of Cyber Incidents
Senators Introduce New Bill for Transparency and Oversight in Health Care Transactions and Investment
Climate Change and Human Rights - European Court Hands Down Landmark Ruling With Consequences for States and Businesses

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

Refine your interests »

Written by:

Published In:

King & spalding on:.

"My best business intelligence, in one easy email…"

Publications

The erisa edit: ninth and eleventh circuits issue mixed decisions on assignments of erisa claims.

Employee Benefits Alert

Ninth Circuit Finds Assignment of Benefits to Surgery Center "Clearly and Necessarily" Included the Right to Sue for Non-Payment

On January 10, 2024, the U.S. Court of Appeals for the Ninth Circuit determined that a district court erred in dismissing an ERISA action brought by South Coast Specialty Surgery Center, Inc. (South Coast), an ambulatory surgery center, against Blue Cross of California, d/b/a Anthem Blue Cross (Anthem), as insurer and claims administrator, for Anthem's alleged failure to fully reimburse the costs of medical services provided to South Coast's patients. The district court had reasoned that South Coast's "Assignment of Benefits" form conveyed only "the right to receive direct payment from Anthem" and not the right to sue for nonpayment of plan benefits, and that South Coast lacked independent authority to sue under ERISA. The Ninth Circuit reversed and remanded, holding that the patients' assignments of rights to South Coast were valid and included the right to sue. South Coast Specialty Surgery Ctr., Inc. v. Blue Cross of California , No. 22-55717, __F.4th__, 2024 WL 105317 (9th Cir. Jan. 10, 2024).

The dispute arose after Anthem instituted a new "pre-payment review" process that, according to South Coast, significantly reduced coverage of South Coast's services to patients – resulting in a potential shortfall exceeding $5.4 million. Previously, Anthem had processed and paid hundreds of claims submitted by South Coast on behalf of its patients without dispute. By instituting the new process, Anthem allegedly ignored ERISA plan documents; improperly required "full medical records" to evaluate the "appropriateness," "accuracy," and "correctness" of submitted claims; and rejected South Coast's claims for payment "without proper reference to the terms and conditions of the controlling ERISA plan." South Coast sued Anthem under section 502(a) of ERISA, 29 U.S.C. § 1132(a)(1)(B), for "fail[ing] to follow [p]lan terms and conditions with respect to the processing and payment of [submitted] claims."

Section 502(a) of ERISA permits a plan participant or beneficiary to bring suit to recover benefits due to them. South Coast asserted that although it could not bring a direct enforcement action under § 502(a) because it was not a plan participant or beneficiary, it could still enforce ERISA's protections because its patients had assigned to South Coast their rights to sue for non-payment of plan benefits.

The Ninth Circuit agreed. The court noted that "under ERISA's clear terms, South Coast lacks direct authority to enforce its protections" because healthcare providers are not plan participants or beneficiaries. The court held, and the parties did not dispute, however, that ERISA beneficiaries may assign their rights to reimbursement under a health plan to a healthcare provider and that assignees may bring derivative actions to enforce these rights. Thus, the true question before the court was whether the language in South Coast's "Assignment of Benefits" form created a valid assignment. The form stated:

I hereby authorize my Insurance Company to pay by check made payable and mailed directly to: [South Coast] for the medical and surgical benefits allowable, and otherwise payable to me under my current insurance policy, as payment toward the total charges for the services rendered. I understand that as a courtesy to me, the South Coast Specialty Surgery Center will file a claim with my insurance company on my behalf. However, I am financially responsible for, and hereby do agree to pay, in a current manner, any charges not covered by the insurance payment. If it is necessary to file a formal collection action, I agree to pay all costs, including reasonable attorney's fees incurred by the outpatient medical center in the collection of the outstanding fees. Actual Plan Benefits cannot be determined until the claim is received by your insurance company and is based upon their determination of medical necessity. The information received from the above stated is not a guarantee of payment.

The court applied traditional principles of contract law and relied on the "intent of the parties" to determine "what rights and remedies pass with a given assignment." It stated that the "explicit presence [of the word assignment ] in the title of a document certainly helps . . . to divine whether the parties intend that the form operate as a valid assignment." And it observed that South Coast's form used wording that "track[ed] text" the court had previously concluded "conveys a valid assignment."

Having found the assignment itself valid, the court then held that the scope of the assignment "clearly and necessarily" included the associated right to sue for non-payment. Although South Coast's form did not expressly state that it could sue insurers on its patients' behalf, the court concluded that a contrary conclusion would "make[] neither textual nor practical sense" as Anthem could deny reimbursement, which could then force South Coast to file individual collection actions against hundreds of patients, who in turn could then "pay South Coast; refuse to pay; or seek coverage from Anthem, likely resulting in potential individual actions against the insurer." Such an outcome would "stymie" the purpose of ERISA, which was meant to "protect . . . the interests of participants in employee benefit plans."

The court cautioned that not " all assignments of the right to benefits—regardless of who made the assignment and who received it— necessarily confer the right to sue under ERISA" and expressly limited its decision to "whether section 502(a) of ERISA permits a healthcare provider to bring a derivative suit, seeking the payment of benefits, when it has been given a valid assignment to do so."

In a Pair of Decisions, Eleventh Circuit Finds Assignments to Dermatologist Invalid

The Ninth Circuit's decision in the South Coast case came on the heels of pair of appeals before the Eleventh Circuit that also raised questions regarding the assignment of ERISA claims. In those cases, a dermatologist, W.A. Griffin, asserted that her patients assigned to her the right to bring ERISA claims on their behalf. In both cases, the Eleventh Circuit held that Dr. Griffin, whom the district court characterized as "a frequent pro se filer," lacked standing under ERISA.

The first appeal involved § 502(c)(1)(B) of ERISA, which provides that an administrator of an ERISA-governed health plan who fails to comply with a request for information that the administrator is required to furnish to a plan participant "may in the court's discretion be personally liable" to the participant "in an amount of up to $100 a day from the date of such failure or refusal." Invoking § 502(c)(1)(B) and asserting that she had been assigned the right to bring claims on her patient's behalf, Dr. Griffin sued Blue Cross Blue Shield Healthcare Plan of Georgia (BCBSHP) seeking to recover statutory penalties for BCBSHP's alleged failure to timely comply with her requests for plan documents. The district court dismissed Dr. Griffin's complaint and the Eleventh Circuit affirmed. Griffin v. Blue Cross Blue Shield Healthcare Plan of Georgia, Inc. , No. 23-11414, 2023 WL 8743387 (11th Cir. Dec. 19, 2023). The court noted that to have standing to bring an ERISA claim, under ERISA § 502(a)(1) the plaintiff must be either a participant or beneficiary of an ERISA plan, although a healthcare provider may obtain derivative standing for payment of medical benefits through a written assignment from the participant or beneficiary. According to the court, however, an assignment of rights does not necessarily encompass the right to pursue non-payment claims ( i.e ., those for statutory penalties), as opposed to payment claims ( i.e ., to recover benefits provided by an ERISA plan). The court therefore examined the pertinent language of the written agreement between Dr. Griffin and her patient, which stated that the patient assigned to Dr. Griffin her "rights and benefits." According to the court, this language was not "sufficiently explicit" to give Dr. Griffin the right to seek statutory penalties under ERISA.

In the second case, Griffin v. AT&T Services, Inc . , No. 23-11408, 2023 WL 8852925 (11th Cir. Dec. 21, 2023), Dr. Griffin had brought claims for breach of fiduciary duty against AT&T Services, Inc., again based on a patient's assignment of rights. But because the plan at issue contained an express anti-assignment provision, the district court concluded that the plan participant was "prohibited from assigning her rights and benefits to Griffin" and it dismissed the case. On appeal, the Eleventh Circuit observed that "[a]lthough assignments are generally recognized, an 'unambiguous anti-assignment provision in an ERISA-governed welfare benefit plan is valid and enforceable.'" Thus, "[i]f there is an unambiguous anti-assignment provision, the healthcare provider will lack derivative standing and cannot maintain the ERISA action." The district court had, in fact, found the anti-assignment provision to be unambiguous, and Dr. Griffin did not challenge that finding on appeal. Because Dr. Griffin abandoned that issue before the Eleventh Circuit, the court was "compelled to affirm."

Comment Period Extended for No Surprises Act IDR Operations Proposed Rule

On January 17, 2024, the Departments of Health and Human Services, Labor, and the Treasury (collectively, the Departments) and the Office of Personnel Management (OPM) issued a notice reopening the period for submitting comments on the proposed rule, " Federal Independent Dispute Resolution (IDR) Operations ." That rulemaking, published on November 3, 2023, proposed requirements related to the IDR process established under the No Surprises Act (NSA), including new requirements for disclosing information along with the initial payment or notice of denial of payment for certain items and services subject to the surprise billing protections in the NSA and when initiating the IDR process and the provision of certain Claim Adjustment Reason Codes (CARCs) and Remittance Advice Remark Codes (RARCs) with paper or electronic remittances. Additionally, the proposed rule would define bundled payment arrangements and would amend certain requirements related to the open negotiation period, initiation of the IDR process, eligibility determinations, batched disputes, extensions due to extenuating circumstances, selection of the certified IDR entity, and the collection of administrative fees and certified IDR entity fees. Lastly, the proposed rule would require plans and issuers to register in the IDR portal. The comment period for that proposed rule, which closed on January 2, 2024, is being reopened to allow interested parties to submit comments on how that proposal is impacted by the final rule on IDR fees, "Federal Independent Dispute Resolution Process Administrative Fee and Certified IDR Entity Fee Ranges," issued on December 21, 2023. The new comment deadline is 14 days after publication of the extension notice in the Federal Register, which is scheduled to take place January 22, 2023, so the new comment deadline is expected to be February 5, 2024.

The information contained in this communication is not intended as legal advice or as an opinion on specific facts. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. For more information, please contact one of the senders or your existing Miller & Chevalier lawyer contact. The invitation to contact the firm and its lawyers is not to be construed as a solicitation for legal work. Any new lawyer-client relationship will be confirmed in writing. This, and related communications, are protected by copyright laws and treaties. You may make a single copy for personal use. You may make copies for others, but not for commercial purposes. If you give a copy to anyone else, it must be in its original, unmodified form, and must include all attributions of authorship, copyright notices, and republication notices. Except as described above, it is unlawful to copy, republish, redistribute, and/or alter this presentation without prior written consent of the copyright holder.

An Alternative Approach to an ERISA Litigation Conundrum

Recently, a three-judge panel in the Court of Appeals for the Ninth Circuit overturned a district court dismissal of an out-of-network provider’s claims against Blue Cross and Blue Shield of Illinois (“BCBSIL”). The unanimous panel found that BCBSIL had waived its right to raise the anti-assignment clauses in the applicable plan documents as a basis for dismissal of the provider’s claims because BCBSIL did not raise the anti-assignment clauses as a defense to the provider’s claims during the administrative appeal of the claims. ( Beverly Oaks Physicians Surgical Ctr., LLC v. Blue Cross and Blue Shield of Illinois, No. 19-55820 (9 th Cir. 12/17/20) (motion for reconsideration and reconsideration en banc currently pending).)

After providing some additional background, this article considers an alternative legal theory that courts could consider in similar cases that would have affirmed the district court’s dismissal of the case, but with no harm to the plan member whose claim was being appealed. This approach may more closely align with the approach taken by most courts in other Circuits when ruling on motions to dismiss provider claims based the existence of a valid anti-assignment provision.

Background on Provider Rights under ERISA

In all Circuits a federal court may only allow a provider’s claim for benefits under an ERISA plan to proceed if the provider has a valid assignment of plan benefits from the plan member. That is because Section 502 of ERISA, which sets forth the exclusive remedies available under ERISA, expressly identifies plan participants or beneficiaries (jointly “plan members”) as the only persons authorized to bring judicial claims for plan benefits under Section 502(a)(1)(b).

In addition, while ERISA prohibits the assignment of retirement plan benefits, there is no similar restriction on the assignment of welfare plan benefits under ERISA plans to providers. As a result, the courts have generally recognized that a provider with a valid assignment of benefits “steps into the shoes” of a plan member and may seek judicial review of an adverse benefit determination under Section 502(a)(1)(b). In such a case, a federal court would have subject matter jurisdiction under ERISA to hear the provider’s claim.

Background on Anti-Assignment Provisions

The courts also generally hold that anti-assignment provisions in ERISA plans are enforceable and will invalidate a purported assignment of benefits. Where an ERISA plan has a valid anti-assignment provision a court will generally grant a motion to dismiss a provider’s claim for failure to state a claim for relief under Section 12(b)(6) of the Federal Rules of Civil Procedure based on an anti-assignment provision invalidating the assignment. In addition, case law also limits the assignment-based rights that a provider may assert to those rights that were clearly assigned by the member.

An exception may arise when, based on the specific facts in the case, a court finds that the ERISA plan, through its conduct, either waived the anti-assignment provision or should be equitably estopped from raising it under general principles of law. While there is not complete unanimity among the Circuits in how these principles apply in this context, generally the mere fact of direct communication by the ERISA plan with the provider – or even exercising a contractual right to elect to make payment directly to the provider – is not sufficient to result in a waiver of, or estoppel with respect to, the anti-assignment defense.

Background on DOL Claims Regulation

In addition to ERISA Section 502, which identifies the various judicial remedies available under ERISA, Section 503 requires administrators of ERISA plans to (i) provide plan members with adequate and timely notice of any adverse benefit determination (i.e., any determination giving rise to any financial responsibility for the plan member) and (ii) afford plan members a reasonable opportunity for a full and fair review by an appropriate fiduciary of any decision denying a claim.

The DOL in turn has promulgated detail regulations governing what constitutes a reasonable claims procedure for purposes of Section 503. DOL Reg. § 2560.503-1 et seq . One such portion of the regulation expressly provides that the plan’s claims procedure may “not preclude an authorized representative” of a plan member from acting on behalf of the plan member in pursuing an appeal of an adverse benefit determination.

Background on the Case

BCBSIL approved the provider’s claims for payment at issue in Beverly Oaks but reimbursed the provider an amount less than the provider’s billed charges.

The provider unsuccessfully appealed the amount of payments and then sued BCBSIL under Section 502(a)(1)(B) of ERISA in order to recover additional professional fees for the same surgical services.

In its original and multiple amended complaints, the provider argued that BCBSIL either had waived or was equitably estopped from asserting any anti-assignment provisions in the ERISA plans because it had failed to raise the anti-assignment provision either during the provider’s initial coverage confirmation calls or during the appeal of the claims.

After dismissing two prior versions of the complaint based on the anti-assignment provisions in the plans, the district court granted BCBSIL’s motion to dismiss with prejudice citing two recent unpublished opinions from the Ninth Circuit involving a similar pricing dispute and anti-assignment defense. ( Brand Tarzana Surg. Inst. v. Intl. Longshore and Warehouse – Union Pacific Maritime Welfare Plan, 706 F. App’s 442 (9 th Cir. 2017) and Eden Surgical Ctr. v. Cognizant Tech. Solutions Corp. 720 F. App’x 862 (9 th Cir. 2018).) The courts in both cases found that the failure of the plan to notify a provider during the ERISA appeal of the anti-assignment defense did not result in a waiver of the anti-assignment defense. Both cases distinguished their holding from that in Harlick v. Blue Shield of California, 686 F.3d 299 (9th Cir. 2012), in which the Ninth Circuit first indicated that failure to address a potential defense to a plan member’s claim during an administrative appeal could result in waiver of the defense. In distinguishing the case, both panels reasoned that the anti-assignment defense did not go to the merits of the claims being appealed, but rather only to the provider’s right to litigate the claims, which was an appropriate defense to raise for the first time during the litigation.

In Harlick, an actual plan member, not a provider, appealed a denial of her claims for coverage for benefits received while staying in a residential treatment facility. The insurer of the ERISA plan relied on the fact that such services were not covered under the plan when denying the appeal. However, the Ninth Circuit in Harlick determined that to the extent the services were medically necessary the insurer was required to cover them under the California Mental Health Parity Act. When the insurer sought to challenge that finding, the court held that the insurer could not raise a substantive defense based on the lack of medical necessity, as that defense was not raised during the administrative appeal as a defense to the claim.

The Ninth Circuit had also interpreted the scope of Harlick in the context of an anti-assignment clause in Spindex Physical Therapy USA, Inc. v. United Healthcare of Arizona, Inc., 770 F. 3d 1382 (9 th Cir. 2014). The panel in Spindex held that an insurer acting on behalf of an ERISA plan had not waived the anti-assignment provision by paying the provider directly, which it had the discretion to do, notwithstanding the anti-assignment provision. Moreover, the panel held that there was no waiver because there was nothing in the record to prove that the insurer knew that the provider was pursuing an administrative appeal based on an assignment , rather than as an authorized representative of the plan member . As noted above, a properly authorized representative must be allowed to represent the plan member (but not its own interests) under the U.S. Department of Labor’s claims regulations.

In Beverly Oaks , the panel distinguished the holding in Spindex based simply on the fact that a provider had checked the assignment box on its claim form and, therefore, the ERISA plan had notice that the provider had an assignment. However, nothing in the DOL’s claims regulations gives a provider with an assignment the right to step into the shoes of the plan member and represent its own interests, not those of the plan member, during an administrative appeal. Moreover, the DOL’s claims regulations allow a provider to act as the authorized representative of a plan member in pursuing an administrative appeal with or without an assignment.

The panel in Beverly Oaks had before it the actual assignments that in theory were signed by the plan members and the assignment forms clearly listed the provider as the plan member’s “designated authorized representative.” Nevertheless, contrary to the holding in Spindex, the panel held the mere existence of an assignment was determinative.

The Alternative

In the Ninth Circuit, a failure by an ERISA plan to raise a substantive defense during the administrative review process can result in a waiver of the defense at the litigation stage. However, nothing in Spindex or other binding Ninth Circuit authority required the panel in Beverly Oaks to find that the rule should apply to non-substantive defenses that only become relevant at the litigation stage or to apply Harlick just because the ERISA plan knows that the provider has an assignment. The holding in Spindex should be limited to situations where the ERISA plan knows the provider is appealing in its capacity as an assignee of the claim and not as an authorized representative.

From an ERISA perspective, the DOL has concluded that a full and fair review procedure requires that a plan member be able to designate a third party to represent the interests of the plan member in an appeal of a claim denial or other adverse benefit determination. The DOL has not extended that right to a third party who is only taking its own interests into account and not representing the interests of the plan member.

A better approach would be for courts either to limit the holding in Harlick to defenses that apply to the plan member or limit the holding in Spindex to situations, as was the case in Spindex , where the provider has made it clear that it is filing an appeal in its capacity as an assignee (i.e., acting at least in part in its own interest) and not as an authorized representative of the plan member.

In the latter case, the ERISA plan would be free to confirm with the plan member that the plan member is comfortable with allowing the provider to proceed in the capacity as an assignee and not as a representative of the plan member. Further, it would allow the plan member to understand the consequences of the provider’s approach. Finally, this alternative would also create a less subjective and more definitive rule that would protect ERISA plans from unknowingly waiving a non-substantive defense.

There would not appear to be any downside from the plan member’s perspective with this approach, only more knowledgeable decision-making. Even if the provider itself might be precluded from suing the ERISA plan to dispute the amount of the payment received, the plan member would remain free to seek such a remedy and the provider free to assist in the process.

Michael H. Woolever

Partner/Retired

Related Insights

Ai regulatory and legal issues today: a conversation with natasha allen, the complex terrain of the video game industry: challenges and opportunities, utah enacts h.b. 55, impacting the use of confidentiality clauses in employment settlement agreements.

INSIGHT: An Ounce of Prevention—The Importance of Early Review of Assignment of Benefits and Powers of Attorney

By Anthony P. La Rocco, George P. Barbatsuly, Stacey A. Hyman, and Alyssa F. Conn

Introduction

One of the most frequently litigated issues in reimbursement cases brought by in- and out-of-network healthcare providers against insurers is provider standing, or a provider’s right to file a lawsuit to recover for services it provided to its patients. This is because the health insurance industry bases the rights and responsibilities that one party owes to another on contract law. While network contracts often dictate that insurers pay in-network providers directly for services, providers who do not participate in the networks have no independent legal right to payment from the insurer as such providers do not share a contractual relationship with the plan.

Accordingly, these providers must ensure that patients assign their rights to benefits under the health insurance plan to the non-participating provider via an assignment of benefits (“AOB”). Under a valid AOB, the provider “steps into the shoes” of the patient with respect to the contract between the patient and the insurer and may pursue the same benefits that the patient would have been able to pursue him or herself. Without a valid AOB, courts have been clear that the provider has no legal standing to sue the health insurer for payment.

Additionally, participating providers should also obtain and maintain irrevocable AOBs from their patients, despite network contractual language directing payment. Possessing a valid AOB is often a legal prerequisite to submitting a claim, even under the participation agreement, and participation status may change. Moreover, providers may not be participating with all insurers and assignments provide an alternative basis for recovery.

However, the road to recovery on claims is not as simple as merely executing an AOB: insurers frequently challenge the scope of AOBs, requiring courts to analyze them and determine whether the language sufficiently confers standing on the provider to assert a claim. The case law on assignments is, therefore, constantly evolving. The following article explores some of the common issues surrounding crafting and obtaining valid AOBs from patients as well as alternative avenues to survive a standing challenge where plans contain anti-assignment clauses.

What Kind of Language Should the Assignment of Benefits Contain?

An AOB should be “broadly specific”: It should be broad enough to cover all conceivable rights and claims the provider could bring under the plan, but specific enough in that it enumerates the rights in order to survive challenges of overbreadth. These enumerated rights should include, but are not limited to: the right to appeal, the right to request plan documents, the right to pursue claims for benefits, and the right to pursue claims for equitable relief/breaches of fiduciary duties.

The below examples provide AOB language ranked in order from least likely to confer standing to most likely.

Least Likely to Confer Standing : “I authorize insurance payments to be made to [PROVIDER] for services provided at [PROVIDER’S FACILITY].”

This AOB simply authorizes payments to be made, but does not give the provider any right to pursue payment or other remedies. Therefore, this language would likely be insufficient to confer legal standing.

Improved language : “I authorize [PROVIDER] to appeal to my insurance company on my behalf . . . . I hereby assign to [PROVIDER] all payments for medical services rendered to myself or my dependents.”

This language would, at least, give the provider the right to sue for payment under ERISA Section 502(a). However, the language is still lacking as it does not give the provider the right to pursue claims for equitable relief or for breaches of fiduciary duties.

An example of even better, (albeit not perfect) language : “I voluntarily consent to the collection and testing of my specimen, and all future testing, performed by [the Laboratories] or [their] affiliated laboratories unless I give written notice that I have revoked my consent. I authorize my insurance company to pay and mail directly to [the Laboratories] or [their] affiliated laboratories all medical benefits for payment of services rendered. I also authorize [the Laboratories] or [their] affiliated laboratories to endorse any checks received on my behalf for payment of services provided. I hereby irrevocably assign to [the Laboratories] or [their] affiliated laboratories all benefits under any policy of insurance, indemnity agreement, or any collateral source as defined by statute for services provided. This assignment includes all rights to collect benefits directly from my insurance company and all rights to proceed against my insurance company in any action, including legal suit, if for any reason my insurance company fails to make payment of benefits due. This assignment also includes all rights to recover attorney’s fees and costs for such action brought by the provider as my assignee.

The language here is “broadly specific” in that it enumerates with specificity a myriad of rights the provider seeks to have the patient assign. One federal appeals court found that similar assignment language clearly applied to claims against fully-insured health insurance plans, and at least arguably applied to self-funded plans. The court sent the case back to the trial court for further discovery on whether this language applied to self-funded plans. Health care providers can remove this uncertainty up front by having their assignment of benefit forms specifically refer to self-funded plans.

When Should the Provider Require the Assignment to Be Executed?

The best time to have a patient execute an assignment of benefits is at or before the time that services are provided. This is because it is often difficult to track down patients later when a provider must submit a large volume of claims that have gone unpaid. Ideally, these forms are executed together with other intake forms, such as consent for treatment and privacy policies/releases.

If the AOB is not obtained prior to the services, courts will still generally permit assignments that are executed after treatment, at least absent a showing of prejudice to the insurer. Furthermore, although logistical challenges may sometimes ensue where a patient is incapacitated or deceased, courts have upheld the validity of AOBs executed by spouses of such patients.

Navigating Anti-Assignment Provisions in Plans

Some patient plans contain anti-assignment language that prohibits the patient from assigning his or her benefits. This language is a challenge to a provider’s ability to establish standing. Courts are however, split on the issue. Some courts hold that an unambiguous anti-assignment clause is enforceable and can invalidate a patient’s assignment. In these cases, the courts have focused on the freedom of contracting parties.

Other courts hold that an anti-assignment clause is not, in and of itself, dispositive of whether a provider has standing. Anti-assignment clauses are subject to traditional contract defenses, such as fraud, misrepresentation, and unconscionability. For example, if a clause is buried in illegible “fine print” or if it was plainly neither intended nor likely to be read by the other party, those circumstances might support an inference of fraud. Other considerations include: ambiguity in the clause, the scope of the clause, course of dealing, and waiver or estoppel arguments.

An example of anti-assignment language that is completely prohibitory would be: “The benefits of the Contract or Certificate are personal to the Subscriber and are not assignable by the Subscriber in whole or in part to a Non-Member hospital or provider, or to any other person or entity.”

Another example of language that permits assignment only with consent would be: “You may not assign your Benefits under the Plan to a non-Network provider without our consent.”

Providers may, however, still recover in circumstances where the plans contain valid anti-assignment provisions. Recently, for example, the Third Circuit, in American Orthopedic & Sports Med. v. Indep. Blue Cross Blue Shield , 2018 BL 173478 (3d Cir., No. 17-1663, 5/16/18), recognized an alternative basis under which health care providers may obtain standing to sue in federal court. Where a patient grants a valid power of attorney to a health care provider, the Third Circuit has now recognized that a health care provider may pursue a claim for reimbursement on the patient’s behalf, even if the ERISA plan contains a valid and enforceable anti-assignment clause. The court explained that, whereas a plan can limit a beneficiary’s ability to assign claims as a matter of contract law, an anti-assignment clause does not prevent the beneficiary from assigning the health care provider to act as the beneficiary’s agent, any more than it would strip the beneficiary of his or her own interest in the claim.

In sum, while there is no “one size fits all” approach, a simple direction of payment often does not survive scrutiny and will likely be challenged by insurers. Thus, prudent providers will want to work with experienced healthcare counsel to craft assignment language to encompass all of the patient’s rights under the plan and, if applicable, take advantage of the Third Circuit alternative basis for standing by including language that creates a valid power of attorney.

Anthony P. La Rocco is the Managing Partner of K&L Gates’ Newark office. He leads a national health care team involved in significant reimbursement litigation matters on behalf of health care providers against various insurance companies’ health benefits plans and their third party administrators related to under-payment and non-payment of claims for a variety of covered medical testing procedures conducted across the United States. Tony can be reached at [email protected] .

George P. Barbatsuly is a Partner in K&L Gates’ Newark office. His health care and ERISA disputes experience includes representing health care providers in disputes with payer insurance companies, health benefits plans, and third party administrators. George can be reached at [email protected] .

Stacey A. Hyman is an Associate in K&L Gates’ Newark office. She focuses her practice on commercial disputes and insurance coverage, specifically insurance reimbursement recovery. Stacey can be reached at [email protected] .

Alyssa F. Conn is an Associate in K&L Gates’ Newark office. She focuses her practice on a range of complex commercial litigation and insurance coverage disputes in federal and state courts, including healthcare and ERISA disputes. Alyssa can be reached at [email protected] .

Learn more about Bloomberg Law or Log In to keep reading:

Learn about bloomberg law.

AI-powered legal analytics, workflow tools and premium legal & business news.

Already a subscriber?

An official website of the United States government.

Here’s how you know

The .gov means it’s official. Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you’re on a federal government site.

The site is secure. The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

American Rescue Plan
Coronavirus Resources
Disability Resources
Disaster Recovery Assistance
Equal Employment Opportunity
Guidance Search
Health Plans and Benefits
Registered Apprenticeship
International Labor Issues
Labor Relations
Leave Benefits
Major Laws of DOL
Other Benefits
Retirement Plans, Benefits and Savings
Spanish-Language Resources
Termination
Unemployment Insurance
Veterans Employment
Whistleblower Protection
Workers' Compensation
Workplace Safety and Health
Youth & Young Worker Employment
Breaks and Meal Periods
Continuation of Health Coverage - COBRA
FMLA (Family and Medical Leave)
Full-Time Employment
Mental Health
Office of the Secretary (OSEC)
Administrative Review Board (ARB)
Benefits Review Board (BRB)
Bureau of International Labor Affairs (ILAB)
Bureau of Labor Statistics (BLS)
Employee Benefits Security Administration (EBSA)
Employees' Compensation Appeals Board (ECAB)
Employment and Training Administration (ETA)
Mine Safety and Health Administration (MSHA)
Occupational Safety and Health Administration (OSHA)
Office of Administrative Law Judges (OALJ)
Office of Congressional & Intergovernmental Affairs (OCIA)
Office of Disability Employment Policy (ODEP)
Office of Federal Contract Compliance Programs (OFCCP)
Office of Inspector General (OIG)
Office of Labor-Management Standards (OLMS)
Office of the Assistant Secretary for Administration and Management (OASAM)
Office of the Assistant Secretary for Policy (OASP)
Office of the Chief Financial Officer (OCFO)
Office of the Solicitor (SOL)
Office of Workers' Compensation Programs (OWCP)
Ombudsman for the Energy Employees Occupational Illness Compensation Program (EEOMBD)
Pension Benefit Guaranty Corporation (PBGC)
Veterans' Employment and Training Service (VETS)
Wage and Hour Division (WHD)
Women's Bureau (WB)
Agencies and Programs
Meet the Secretary of Labor
Leadership Team
Budget, Performance and Planning
Careers at DOL
Privacy Program
Recursos en Español
News Releases
Economic Data from the Department of Labor
Email Newsletter

The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans.

ERISA requires plans to provide participants with plan information including important information about plan features and funding; provides fiduciary responsibilities for those who manage and control plan assets; requires plans to establish a grievance and appeals process for participants to get benefits from their plans; and gives participants the right to sue for benefits and breaches of fiduciary duty.

There have been a number of amendments to ERISA, expanding the protections available to health benefit plan participants and beneficiaries. One important amendment, the Consolidated Omnibus Budget Reconciliation Act (COBRA) , provides some workers and their families with the right to continue their health coverage for a limited time after certain events, such as the loss of a job. Another amendment to ERISA is the Health Insurance Portability and Accountability Act which provides important protections for working Americans and their families who might otherwise suffer discrimination in health coverage based on factors that relate to an individual's health. Other important amendments include the Newborns' and Mothers' Health Protection Act, the Mental Health Parity Act, the Women's Health and Cancer Rights Act, the Affordable Care Act and the Mental Health Parity and Addiction Equity Act.

In general, ERISA does not cover group health plans established or maintained by governmental entities, churches for their employees, or plans which are maintained solely to comply with applicable workers compensation, unemployment, or disability laws. ERISA also does not cover plans maintained outside the United States primarily for the benefit of nonresident aliens or unfunded excess benefit plans.

Webpages on This Topic

Compliance Assistance Provides publications and other materials to assist employers and employee benefit plan practitioners in understanding and complying with the requirements of ERISA as it applies to the administration of employee retirement and welfare benefit plans.

Consumer Information on Health Plans Provides fact sheets, booklets, and other health plan information from the Department's Employee Benefits Security Administration.

Tax and accounting regions

Asia Pacific
Europe, Middle East, and Africa
Latin America
North America
News & media
Risk management
thomsonreuters.com
More Thomson Reuters sites

Health Plan’s Anti-Assignment Clause Is Enforceable

EBIA

July 5, 2018 · 5 minute read

American Orthopedic & Sports Medicine v. Independence Blue Cross Blue Shield, 2018 WL 2224394 (3rd Cir. 2018)

Available at http://www2.ca3.uscourts.gov/opinarch/171663p.pdf

A health care provider, attempting to recover payment for services provided to a participant in an ERISA health plan, brought this lawsuit after an unsuccessful claim and appeal via the plan’s internal claims process. The provider was acting under an assignment of benefits from the participant. The trial court dismissed the case, ruling that the provider did not have standing (i.e., was not permitted to bring the lawsuit) because the plan stated that the right to payment for benefits is personal to the participant and is not assignable. (In general, courts permit providers or other entities to pursue claims on behalf of participants so long as the plan terms do not prohibit or restrict assignments.) The provider appealed, arguing that preventing plan participants from allowing providers to try to recover payment for their services is antithetical to ERISA and public policy.

The Third Circuit rejected the provider’s arguments, noting that, while ERISA expressly prohibits assignment of pension benefits, it is silent as to assignment of welfare benefits. This silence could be interpreted to mean that anti-assignment clauses must be enforceable or, alternatively, that Congress intended to preserve participants’ rights to assign benefits—the court found applicable case law inconclusive. Finding the parties’ policy arguments on the pros and cons of anti-assignment clauses similarly unpersuasive, the court looked to other circuits for guidance. According to the court, all circuit courts to address the issue have concluded that ERISA leaves the issue of whether a plan permits or prohibits the assignment of benefits to the “negotiations of the contracting parties,” and that the “terms of an unambiguous private contract must be enforced.” On this basis, the other circuits have enforced anti-assignment clauses in ERISA plans, and this one followed suit. The provider’s alternate argument—that the insurer, by its actions, waived its right to enforce the anti-assignment clause—was also unsuccessful. And the provider’s attempt to rely on the limited power of attorney included in the assignment document was rejected for procedural reasons. Accordingly, the Third Circuit affirmed the trial court’s dismissal.

EBIA Comment: As the court noted, the enforceability of anti-assignment clauses in ERISA plans is well established in every circuit that has considered similar arguments from providers. The cases generally do not address who are the “contracting parties” in an ERISA plan; as a practical matter, neither individual participants nor providers (whether in-network or out-of-network) have much opportunity to negotiate the terms of the plan document. Providers will have to turn to other mechanisms to attempt recovery; the court appeared to leave open the possibility that providers acting under a power of attorney may be able to pursue claims on behalf of ERISA plan participants. Meanwhile, a trial court in the Third Circuit has promptly applied this ruling to various anti-assignment clauses in pending cases (see, e.g., Univ. Spine Ctr. v. Anthem Blue Cross Blue Shield (D. N.J. 2018) For more information, see EBIA’s ERISA Compliance manual at Sections XI.E (“Assignment of Benefits”) and XXXVI.G (“Who Can File ERISA Benefits Litigation?”). See also EBIA’s Self-Insured Health Plans manual at Section IX.E (“Recommended Plan Provisions”).

Contributing Editors: EBIA Staff.

Join our community

Webcast and events

Browse all our upcoming and on-demand webcasts and virtual events hosted by leading tax, audit, and accounting experts.

When Do COVID-19-Related Extended HIPAA Special Enrollment Periods End?

ACA Preventive Health Services Mandate to Remain in Effect During Braidwood Appeal

CMS Issues Guidance on Elimination of MHPAEA Opt-Out Elections by Self-Insured Non-Federal Governmental Health Plans

How AI transformed the tax and accounting profession in 2023

Commissioner Werfel indicates e-filing of Form 941-X coming soon

Keeping up with tax regulatory compliance

Fiduciary governance: Handling participant claims and appeals and provider disputes

Nov 6, 2023

By Damian Myers , Yelena Gray , Lena Gionnette and Annie Zhang

Understanding claims and appeals procedures can help plans avoid costly mistakes.

What’s the impact?

Plan and claims administrators should follow the plan’s claims and appeals provisions to avoid inadvertently triggering complainant-friendly review standards.
Minimize risk in disputes by understanding how healthcare providers can assert ERISA rights against a plan.
Exercise caution when handling document requests and/or disputing plan reimbursements—failure to properly handle these requests can result in liability.

As we near the end of our Health and Welfare Plan Fiduciary Governance Series, we turn to a basic fiduciary function—handling participant claims and appeals and healthcare provider disputes. Although this is a basic fiduciary function that is guided by regulatory claims and appeals procedures, even the slightest missteps can prove costly. Additionally, healthcare providers (to whom plan participants often assign their rights or delegate as representatives) are increasingly disputing health plan reimbursements and administrative practices. When claims and appeals are filed, or providers acting on behalf of participants request information or dispute payment, health plan fiduciaries must be ready to act within defined timeframes set by Department of Labor (DOL) regulations.

Background on Claims and Appeals and Fiduciary Status

Section 503 of the Employee Retirement Income Security Act of 1974 (ERISA) states that plans must notify plan participants of claim denials and provide a right to appeal those denials subject to procedures established by the DOL. Those procedures (found in 29 C.F.R. § 2560.503-1) are comprehensive and contain detailed rules related to (i) when claims and appeals must be filed, (ii) when claims administrators must respond to claims and appeals, (iii) the content of the notice of claims or appeals denials, (iv) rights related to external review, and (v) when plan participants are able to bring legal action in court. For group health plans not grandfathered from the market reforms of the Affordable Care Act, the agencies added substantial additional requirements to the internal claims and appeals process.

These claims and appeals provisions are generally referred to as “internal” because they are procedures that must be embedded within employee benefit plans and do not involve courts or arbitration. Importantly, plan participants must fully complete (or “exhaust”) the internal claims and appeals before bringing legal action under ERISA. It is important that claims administrators comply with the regulatory claims and appeals procedures because failure to do so can have the following negative impacts:

Deemed Exhaustion

As noted above, plan participants must exhaust their internal claims and appeals procedures before bringing action in court. However, if a claims administrator fails to follow the plan’s claims and appeals provisions, the plan participant can seek to bring litigation prior to exhaustion by arguing that the claims administrator’s failure to follow the rules amounts to “deemed exhaustion.” Whether or not a deemed exhaustion argument carries the day depends on the facts and circumstances, but claims administrators should strive to avoid these issues by following the plan’s claims and appeals procedures.

De Novo Standard of Review

If a claims administrator follows the procedures and a participant exhausts the internal process, any litigation seeking payment of benefits brought by the participant would be subject to a plan-friendly “arbitrary and capricious” standard of review. Under this standard of review, the plaintiff would need to show that the claims administrator acted arbitrarily and capriciously when denying a claim and/or subsequent appeal. Importantly, the court’s review would be limited solely to the materials contained within the internal claims and appeals administrative record. However, if a claims administrator fails to follow the claims and appeals procedures, a court could disregard the claims administrator’s determination and the administrative record and, instead, conduct a fresh (or de novo) review of the claim and appeal, including any additional information that may not have been considered by the claims administrator.

Following the claims and appeals procedures can seem straightforward, but there are several claims and appeals-related issues that claims administrators might face. A few of those issues are described below.

Claims Administrator as an ERISA Fiduciary

In the health and welfare plan context, claims administration is almost always delegated to a third party. For fully insured plans, the insurance carrier will be the claims administrator. For self-funded plans, claims administration is generally delegated to the third-party administrator (TPA). Occasionally, TPAs delegated claims and appeals authority will seek to disclaim or minimize their fiduciary status through the services agreement. TPAs seeking to disclaim fiduciary status typically argue that their functions are ministerial in nature—they are simply applying the coverage rules set forth in the plan and are not exercising any discretion. After all, the hallmark of ERISA fiduciary status is discretionary authority or responsibility.

Long-standing guidance and case law have made clear that whether a person or entity is an ERISA fiduciary is not determined via contract or by some written delegation (except, perhaps, fiduciaries specifically identified as fiduciaries in plan documents (e.g., named fiduciaries). Rather, a person or entity will be considered a fiduciary if the person or entity functions as one. In other words, if a TPA is exercising discretion when administering claims and appeals, the TPA is an ERISA fiduciary. Given the complexity of health and welfare plan coverage rules, especially with medical and prescription drug benefits, it is very unlikely that a TPA can administer claims without exercising some discretion. Thus, in most cases, the TPA claims administrator would be considered a functional ERISA fiduciary despite any agreement provisions to the contrary.

From time to time, a claims administrator will even leave the responsibility for handling final decisions on appeal with the employer. An employer typically does not have the expertise to review claims, nor does it want to access the sensitive health information of its employees. In practice, the claims administrator would be processing appeals but shifting the liability to the employer. Employers should carefully review their agreements with claims administrators to avoid assuming responsibility for handling final appeals decisions.

The fact that a claims administrator is likely an ERISA fiduciary does not absolve the plan administrator of fiduciary responsibility for claims and appeals. Yes, the actual administration of the claims and appeals can be delegated to a TPA claims administrator, but plan administrators still have a fiduciary obligation to monitor service providers. Thus, plan administrators need to know and understand the claims and appeals process employed by their vendors, including the content of explanation of benefits provided to participants on claims denied in whole or in part.

Assignment of ERISA Rights and Designation of Authorized Representative

ERISA establishes several participant and beneficiary rights—for example, the right to request certain plan-related documents and the right to bring legal action to recover benefits. Those rights do not extend to healthcare providers owed payment from the health plan. However, there are two key avenues through which a provider can assert ERISA rights against a plan—through assignment and through designation as an authorized representative.

First, a plan participant may wish to assign ERISA rights to a third party. In particular, a provider who is disputing payment may ask a participant to assign the right to request plan documents or the right to bring legal action against a plan or plan administrator.

Second, ERISA allows plan participants to designate an authorized representative to act on the participant’s behalf. Once a designation is made, the authorized representative will be able to assert all ERISA rights available to the participant. Unlike in the case of assignment, the rights must be asserted on the participant’s behalf. For example, a provider assigned ERISA rights can file litigation as the plaintiff. In contrast, as an authorized representative, the provider would need to file any lawsuit in the name of the plaintiff. However, if a provider waived the individual’s obligation to pay any outstanding claim payments, the provider would have no claim on behalf of the individual.

These two avenues may seem functionally equivalent; a provider can eventually achieve their aim either as an assignee or as an authorized representative. There is one key difference—plans can expressly prohibit the assignment of ERISA rights. Anti-assignment clauses in health and welfare plans are common and have been judicially upheld as enforceable. The ability to designate an authorized representative, however, cannot be restricted. Remember, however, that the participant must himself or herself have a claim; otherwise, the provider does not have the shoes in which to step. At the very least, plan administrators should review their plans and consider whether to add or enhance anti-assignment language. Legal counsel needs to be consulting on the enhanced contractual provisions.

Plan Overrides

From time to time, participants who have had a claim or appeal denied by the claim administrator will reach out to the plan administrator to ask for an exception or for some help in getting the claim administrator to reconsider. Although TPAs, particularly of self-insured plans, will typically permit the plan administrator to override a claim or appeal determination (albeit occasionally with the agreement from the plan administrator to hold the TPA harmless), there are risks in doing so.

First, plan administrators have a fiduciary obligation to follow the terms of the plan documents. If the plan’s terms and conditions are clearly inconsistent with the override, the overriding plan administrator could later be found to have violated ERISA’s fiduciary requirements. Where the plan’s terms are ambiguous, the override may not actually conflict with the plan documents (and, thus, the risk of a fiduciary breach is lower). Depending on the underlying issue, plan administrators could avoid the fiduciary risk by amending the plan going forward to align with the override.

Second, as with any ad hoc exceptions to a general rule, overrides set precedents and risk inconsistent application. Plan administrators need to be mindful of the reasons for granting an override because similar reasons may also apply in a future override request. If an override request were granted but then another similar request is later denied, the participant that is denied could claim that the plan administrator is acting arbitrarily with respect to plan interpretation and administration.

Although having the contractual right to override a claims administrator’s determination is preferred, the best practice is for plan administrators to utilize that right sparingly and only when the plan administrator either disagrees with the claim administrator’s interpretation of an ambiguous term or is prepared to amend the plan.

Provider Document Requests and Payment Disputes

Finally, over the past five years or so, providers (either directly or through third-party services) have been sending letters to plan administrators seeking copies of plan documents or disputing plan reimbursements. These letters are almost always from out-of-network providers, ranging from simple document requests under ERISA § 104(b)(4) to 20–30 page-long allegations of illegal activity. Whatever the nature of the letter, plan administrators need to treat them seriously, as failure to properly handle these requests could result in liability. Set forth below are key steps to take when handling these letters, and we recommend that any plan administrator consult with legal advisors when responding.

When the letter from a provider comes in, confirm whether there has been an assignment of ERISA rights (if permitted under the plan) or a properly signed designation from the participant that the provider is acting as an authorized representative. If there is no indication of either, the plan administrator can simply respond to the provider by stating that in the absence of an assignment (if permitted under the plan) or a signed authorization to act on behalf of the participant, the plan administrator will not substantively respond to the letter.

If the provider letter reflects an appropriate assignment or designation, the plan administrator should review the letter closely and determine what actions are necessary. If the letter requests documents, the plan administrator should work with counsel to produce only those documents required under ERISA § 104(b)(4). If claims-related information is requested, it is unlikely that the plan administrator will have access to that information. In that case, the claims-related request would be forwarded to the claims administrator, who would then send the information directly to the provider. Plan administrators have 30 days to respond to ERISA § 104(b)(4) requests and failure to do so can result in a $110 per day penalty.

If the letter does not request documentation but, instead, simply disputes payment or administrative practices, the plan administrator should forward the letter to the claims administrator and request confirmation that the claim was handled properly or, if it was not handled properly, ascertain how and when it will be corrected. An important question to ask the claims administrator is whether the provider (as assignee or authorized representative) has exhausted the plan’s internal claims and appeals procedures. Oftentimes, providers dispute initial claims denials without following the plan’s claims and appeals procedures. If the claims administrator confirms that the claim was handled in accordance with plan terms, the plan administrator should work with counsel to determine how best to respond. In many cases, the best response may be to simply refer the provider to the claims administrator as the party with claims and appeals responsibility.

Plan sponsors should be sure their plan documents and service agreements contain provisions that properly protect the plan sponsor with regard to claims and appeals determinations. And although actual claims and appeal determinations are usually managed by third-party claims administrators, plan administrators still play an important role. Whether evaluating plan document disclosure requests or considering an override request, plan administrators should follow their fiduciary obligations when handling those issues. Despite delegations to third-party service providers, plan administrators are still responsible for the plan’s overall compliance.

Insights And Happenings

Bringing it all together — health and welfare plan fiduciary compliance reviews, stock purchase agreement, fiduciary governance: hipaa and cybersecurity best practices.

Subscribe to stay informed of the latest legal news, alerts, and business trends. Subscribe

Purported Assignment and Power of Attorney Held Invalid in Provider’s Suit to Recover Health Benefits

On December 4, 2018 United States District Judge Noel L. Hillman dismissed a suit for unpaid medical bills by a healthcare provider against its patient’s ERISA-governed health benefits plan, finding the assignment/power of attorney proffered by the provider deficient and invalid, while agreeing with the plan that its anti-assignment provision was both valid and enforceable. Citing and expanding upon Third Circuit precedent from earlier in the year, the court particularly scrutinized the document alleged to be a power of attorney signed by the patient, finding it wanting under New Jersey law.

In Enlightened Solutions, LLC v. United Behavioral Health , No. 18-6672, 2018 U.S. Dist. LEXIS 205799 (D.N.J. Dec. 4, 2018), the plaintiff-provider had provided detox and rehab treatment to a patient for his addiction. The provider submitted claims to the plan pursuant to an Assignment of Benefits entered into between the provider and the patient. Some claims were paid, though others were not. The defendants (the plan and its administrator) moved to dismiss the provider’s unpaid claims asserting the operative ERISA plan’s anti-assignment provision as precluding the provider’s attempts to seek reimbursement on behalf of its patient. This, they contended, was so even in instances where the plan had paid some of the claims, like here, given the plan’s explicit language that such payments do not constitute a waiver of the anti-assignment provision. The plan further argued that the provider lacked standing for breach of fiduciary duty and similar claims because such are only available to the patient himself.

The Plan’s Anti-Assignment Provision

The subject anti-assignment provision states :

Non-Assignment of Claims .

A Claimant may not assign his/her Claim under the Plan to a Nonparticipating Provider without the Plan’s express written consent. Regardless of this prohibition on assignment, the Plan may, in its sole discretion, pay a Nonparticipating Provider directly for Covered Expenses rendered to a Claimant. Payment to a Nonparticipating Provider does not constitute a waiver, and the Plan retains a full reservation of all rights and defenses.

Provider’s Arguments

Admittedly, the patient did not get the plan’s written consent to assign his claims. Despite this explicit condition, the provider nonetheless sought to make the anti-assignment provision unenforceable by arguing waiver and estoppel since some of their claims had been paid. The provider also alleged ambiguity in the plan language and that the assignment signed by the patient constitutes a power of attorney. Each of these theories was ultimately found unavailing by the court, as having been squarely addressed by the Third Circuit earlier this year in American Orthopedic & Sports Medicine v. Independence Blue Cross and Blue Shield , 890 F.3d 445, 453 (3d Cir. 2018).

Third Circuit’s Teachings

The court summarized the guidance of the Third Circuit in American Orthopedic as follows:

the terms of an unambiguous private contract must be enforced;
unambiguous anti-assignment clauses in ERISA-governed health benefit plans are enforceable;
routine processing of claims does not amount to an insurer’s waiver to enforce an anti-assignment clause; and
a valid anti-assignment clause does not preclude a medical provider who holds a valid power of attorney from asserting the participant’s claims against the ERISA plan.

Applying these precepts to the case at hand, the court found that the clear and unambiguous language of the plan precludes a participant from assigning his claims to a nonparticipating provider without the plan’s written consent. Moreover, the explicit, clear and unambiguous language of the plan states that payment to a nonparticipating provider does not constitute a waiver and that this is an enforceable contract term. The court also ruled that the assignment of benefits document signed by the patient did not constitute a valid power of attorney under New Jersey law, carefully analyzing the applicable statutes.

Powers of Attorney Under New Jersey Law

While noting that American Orthopedics held that a valid anti-assignment of benefits clause does not preclude a plan beneficiary’s medical provider from advancing claims against a plan pursuant to a power of attorney, the court emphasized that in order to do so the provider must actually hold a valid power of attorney . The patient’s signed document under review simply did not satisfy the requirements of a power of attorney under New Jersey law. The court explained that in New Jersey,

“power of attorney” “means a duly signed and acknowledged written document in which a principal authorizes an agent to act on his behalf.” N.J.S.A. 46:2B-10. “A power of attorney must be in writing, duly signed and acknowledged in the manner set forth in R.S. 46:14-2.1.” N.J.S.A. 46:2B-8.9. The maker of the power of attorney “shall appear before an officer specified in R.S. 46:14-6.1 and acknowledge that it was executed as the maker’s own act.” N.J.S.A. 46:14-2.1. “The officer taking an acknowledgement or proof shall sign a certificate stating that acknowledgement or proof,” and the certificate must also state: “(1) that the maker or the witness personally appeared before the officer; (2) that the officer was satisfied that the person who made the acknowledgement or proof was the maker of or the witness to the instrument; (3) the jurisdiction in which the acknowledgement or proof was taken; (4) the officer’s name and title; (5) the date on which the acknowledgement was taken.” Id.

Power of Attorney Requirements Not Satisfied

The document the provider wished to construe as a power of attorney in Enlightened Solutions was titled “Assignment of Benefits/Release of Medical Information.” The formalities of a valid power of attorney were held not met on multiple grounds. To start, the content of the document the patient signed was found to relate only to permission for the provider to release his medical information to, and seek payment from, his insurance company, not to act on his behalf in any broader capacity. Further, the staff member whose name was typed—not signed—on the document underneath the patient’s signature as merely being “present” when it was signed, was not identified as an “officer” under N.J.S.A. 46:14-6.1 and the other requirements of a proper acknowledgement under N.J.S.A. 46:14-2.1 were absent. The plain language of the New Jersey statute clearly requires acknowledgement by a designated officer for a power of attorney to be valid. The court concluded that the document the provider sought to rely upon simply did not satisfy the requirements of a power of attorney under New Jersey law and that amendment of the complaint to assert claims based on this document as a power of attorney would be futile.

Consequently, having found a valid anti-assignment provision and an invalid assignment of benefit claims and invalid power of attorney, the provider’s complaint was dismissed.

If you have any questions or would like more information, please contact Elizabeth A. Venditta vendittae@whiteandwilliams.com ; 215-864-6392) or Timothy A. Carroll ( carrollt@whiteandwilliams.com ; 215-864-6218).

PRACTICE AREAS

Life, Health, Disability and ERISA
Cherry Hill
Center Valley
Philadelphia

By using this site, you agree to our updated Privacy Policy and our Terms of Use .

IMAGES

ERISA
What Is ERISA?
ERISA: What to Know & Do as a Benefit Plan Fiduciary
Fillable Online ASSIGNMENT OF BENEFITS ERISA AUTHORIZED REPRESENTATIVE
The Ultimate Guide to The ERISA Law
Everything You Need to Know About ERISA Life Insurance Policies

VIDEO

The work integrated assignment benefits
Class Assignment Benefits of Yoga
assignment ka sahi tarika ✌🏻 benefits of studying in IGNOU 👍🏻#shorts #assignment #ignou #viralvideo
elisa
ERISA: Benefits Discrimination and Interference
Examples of Claims Covered by ERISA

COMMENTS

26 CFR § 1.401(a)-13
(2) Benefits assigned or alienated as security for loans. (i) Notwithstanding paragraph (b)(1) of this section, a plan may provide for loans from the plan to a participant or a beneficiary to be secured (by whatever means) by the participant's accrued nonforfeitable benefit provided that the following conditions are met. (ii) The plan provision providing for the loans must be limited to loans ...
How To Get Around ERISA Anti-Assignment Provisions
The ERISA regulations expressly provide that the "claims procedures do not preclude an authorized representative of a claimant from acting on behalf of such claimant in pursuing a benefit claim ...
Best Practices in Administering Benefit Claims #3
Plan sponsors generally have wide latitude to limit, or prohibit altogether, the assignment of benefits. In considering anti-assignment provisions, there are two other points to remember: First, ERISA allows participants to designate authorized representatives to act on their behalf through the claims process.
Benefit Claims Procedure Regulation FAQs
The regulation, at § 2560.503-1 (e), defines a claim for benefits, in part, as a request for a plan benefit or benefits made by a claimant in accordance with a plan's reasonable procedure for filing benefit claims. A claim for group health benefits includes pre-service claims (§ 2560.503-1 (m) (2)) and post-service claims (§ 2560.503-1 (m) (3)).
The ERISA Edit: Ninth and Eleventh Circuits Issue Mixed Decisions on
Ninth Circuit Finds Assignment of Benefits to Surgery Center "Clearly and Necessarily" Included the Right to Sue for Non-Payment. On January 10, 2024, the U.S. Court of Appeals for the Ninth Circuit determined that a district court erred in dismissing an ERISA action brought by South Coast Specialty Surgery Center, Inc. (South Coast), an ambulatory surgery center, against Blue Cross of ...
Powers of Attorney: The Anti-Anti-Assignment
Courts have long recognized both that ERISA allows for the assignment of welfare benefits such as healthcare reimbursements, and that anti-assignment clauses in ERISA plans are valid and enforceable. 1 Because it would be virtually impossible to state a claim for insured health and welfare benefits under ERISA without alleging the existence of ...
2020 Year-End ERISA Disputes Update
The assignment of benefits remains a critical issue in ERISA health plan litigation. Under ERISA § 502(a), only "a participant or beneficiary" may sue an insurer to recover benefits owed to her or to enforce her rights under her plan. 29 U.S.C. § 1132(a)(1)(B).
Recent Case Law Regarding Health Plan Assignment of Benefits
Recent Case Law Regarding Health Plan Assignment of Benefits. By David Eckhardt on October 19, 2018. Posted in Employee Benefits, Labor & Employment. There were several recent court decisions that have addressed the right of medical providers, acting under assignments of ERISA plan benefits from patients, to seek plan documents and summary plan ...
An Alternative Approach to an ERISA Litigation Conundrum
The courts also generally hold that anti-assignment provisions in ERISA plans are enforceable and will invalidate a purported assignment of benefits. Where an ERISA plan has a valid anti-assignment provision a court will generally grant a motion to dismiss a provider's claim for failure to state a claim for relief under Section 12(b)(6) of ...
INSIGHT: An Ounce of Prevention—The Importance of Early Review of
The best time to have a patient execute an assignment of benefits is at or before the time that services are provided. This is because it is often difficult to track down patients later when a provider must submit a large volume of claims that have gone unpaid. ... His health care and ERISA disputes experience includes representing health care ...
ERISA: Are Out-of-network Providers Protected?
Most members and contracted providers expect and/or take for granted Employee Retirement Income Security Act (ERISA) of 1974 law and assignment of benefits (AOB). But for non-participating (non-par) providers, the ability to receive insurance reimbursement directly, get an accountable description of a patient's benefits, or file a suit for ...
ERISA
ERISA. The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans. ERISA requires plans to provide participants with plan information including important information ...
An Erisa Compliance Handbook
A threshold condition for an investment or an account to be subject to ERISA is whether a "benefit plan investor," as defined in ERISA, is involved. "Benefit plan investors" include: n Employee benefit plans subject to ERISA (and related trusts), such as pension plans, 401(k) plans and Taft-Hartley (multiemployer) plans, but not:
Health Plan's Anti-Assignment Clause Is Enforceable
The Third Circuit rejected the provider's arguments, noting that, while ERISA expressly prohibits assignment of pension benefits, it is silent as to assignment of welfare benefits. This silence could be interpreted to mean that anti-assignment clauses must be enforceable or, alternatively, that Congress intended to preserve participants ...
PDF Assignment of Benefits Guide
Assignment of Benefits. A procedure whereby a beneficiary/patient authorizes the administrator of the program to forward payment for a covered procedure directly to the treating dentist. This is done using box #37 on the ADA claim form. The below image shows the specific instructions for how to complete box #37 for use with assignment of benefits.
Fiduciary governance: Handling participant claims and appeals and
Assignment of ERISA Rights and Designation of Authorized Representative. ERISA establishes several participant and beneficiary rights—for example, the right to request certain plan-related documents and the right to bring legal action to recover benefits. Those rights do not extend to healthcare providers owed payment from the health plan.
Erisa
Obtain written authorization to represent the patient by having an appropriate Assignment of Benefits ... (DOL) Pension and Welfare Benefits Administration provides the final regulation of employee benefit plans covered by ERISA: § 2560.503 - 1 Claims procedure § 147.136 Internal claims and appeals and external review processes; Sample Appeal ...
Benefit of Anti-Assignment Provisions in ERISA Health Plans
August 29, 2016. An anti-assignment provision can be an effective tool for ERISA-governed health plans to fend off lawsuits from out-of network providers. ERISA has nothing within its statutory text that prohibits participants from assigning their rights under a health plan to a third party. Medical providers routinely require patients to ...
PDF ASSIGNMENT OF BENEFITS and ASSIGNMENT OF RIGHTS TO PURSUE ERISA
This constitutes an express and knowing assignment of ERISA breach or fiduciary duty claims and other legal and/or administrative claims. [Physician or Practice] as my assignee and my designated authorized representative may bring suit against any such health care benefit plan, employee benefit plan, plan administrator or
Ninth Circuit Affirms Derivative Standing of Provider with Valid
Moreover, while the form did "not expressly state that South Coast could sue insurers on its patients' behalf," the court concluded that the "scope of South Coast's patients' assignment of benefits clearly and necessarily includes the right to sue for non-payment of benefits under section 502(a) of ERISA."
PDF Assignment of Benefits / Erisa Authorized Representative Form
Representative with respect to a benefit plan governed by the provisions of ERISA as provided in 29 C.F.R. §2560.5031(b)(4) with respect to any healthcare expense incurred as a result of the services I received from Provider and, to the extent permissible under the law, to claim on my behalf, such benefits,
Purported Assignment and Power of Attorney Held Invalid in Provider's
On December 4, 2018 United States District Judge Noel L. Hillman dismissed a suit for unpaid medical bills by a healthcare provider against its patient's ERISA-governed health benefits plan, finding the assignment/power of attorney proffered by the provider deficient and invalid, while agreeing with the plan that its anti-assignment provision was both valid and enforceable.
Anti-Assignment Provision Does Not Prevent the Grant of Power of Attorney
Although the Third Circuit Court of Appeals ruled in American Orthopedic & Sports Medicine vs. Independence Blue Cross Blue Shield, that a group health plan's anti-assignment provision was valid, this does not prevent a health care service provider from representing a plan participant under a power of attorney agreement. Facts.A group health plan participant underwent a surgical procedure at ...