Ninth Circuit Declines to Bar Healthcare Provider’s Lawsuit Based on Anti-assignment Provision in ERISA Health Plan

As many healthcare providers have experienced, anti-assignment provisions in ERISA health plans can be a full-stop to recovering unpaid claims. In good news, the Ninth Circuit Court of Appeals recently decided Martin Luther King, Jr. Community Hospital v. Community Insurance Company dba Anthem Blue Cross Blue Shield, et al., No. 19-55053, __F.App’x__, 2020 WL 5870513 (9th Cir. Oct. 2, 2020), which is a decided win for providers.

In this case, the Ninth Court considered a trial court’s award of damages in favor of Martin Luther King, Jr. Community Hospital (“MLK”), for services rendered to employees of Budco— the sponsor of the ERISA plan (the “Plan”). Budco’s employees made covered visits to MLK. Although the employees had assigned their benefit payments to MLK, Anthem—the Plan administrator—ignored the assignments, and made payments directly to the employees, who were beneficiaries under the Plan. The employees retained these payments. When MLK sought payment, Anthem ignored the request. Anthem, in refusing to pay MLK, asserted that an “anti-assignment” provision was part of the Plan and justified its payments directly to the employees.

To recover the assigned payments, MLK asserted two grounds in support of its claims. First, MLK asserted that the language of the anti-assignment provision did not prohibit the assignments. The district court did not rule on this contention. Second, MLK asserted that the district court should ignore the anti-assignment provision because it was not part of the Plan.

The district court awarded summary judgment and undisputed damages to MLK by construing the Plan documents to include benefits but ruling that the anti-assignment language was not part of the Plan documents. The Ninth Circuit affirmed on two grounds. First, that the language of the anti-assignment provision did not allow Anthem to ignore the assignments. Although this contention was raised in the district court, the district court did not rely on it in support of its judgment. Second, and alternatively, that the district court correctly ignored the anti-assignment provision.

The attorneys at Kantor & Kantor are very well-versed in the nuances of ERISA. If you have questions about your health and long-term disability benefits, please call Kantor & Kantor for a free consultation at 888-569-6013 or use our online contact form.

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