Marcia S. Wagner _______________________________ - PowerPoint Presentation

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Marcia S. Wagner

_______________________________ANTI-ASSIGNMENT_______________________________

459434.PPTX

BackgroundDistinction between assignee of a claim and duly authorized representative.

Authorized representative sues on behalf of a patient. Needs to disclose potential conflicts of interest. Assignees file claims in their own rights. 2

BackgroundPlan fiduciary may have an obligation to ensure participant or beneficiary knows the difference.

Designation of authorized representative does not confer standing to bring an action. If there is a valid anti-assignment provision in effect, status of a health care provider as an authorized representative will not confer standing. 3

Background

Capacity in which a party is acting may not be clear. “on my behalf” language may be ambiguous. Argument has been made that containing both statuses in one form is contradictory and makes the assignment invalid on its face. As a matter of contract law, if the intent to pass title to the chose in action is clear, an assignment will be valid. Other district courts have held that a party can be both a duly authorized representative and an assignee. 4

Status of Health Care Provider

Has constitutional standing under Article III. Does not have statutory standing under ERISA. Is neither a participant or beneficiary. Network contracts, which make contractual promisers to providers rather than to plan participants, not subject to ERISA but governed by state law. Can obtain derivative standing through a valid assignment. If a health care provider has been assigned the right to receive benefits, then it may also have the right to sue for nonpayment of benefits. 5

Scope of AssignmentEven if assignment is valid, what does it cover?

Health care provider may maintain derivative standing to assert a claim for breach of fiduciary duty under ERISA, if the claim is expressly and knowingly assigned. Claims for recoupment of funds not covered. Injunctive or declaratory judgment relief unavailable. 6

Circuit Court Treatment of Anti-Assignment ClausesSeven Circuit Courts of Appeal have upheld their validity.

1st, 2d, 3d, 5th, 9th, 10th, and 11th No circuit courts have ruled to the contrary. 7

Reasons Why Anti-Assignment Clauses are EnforceableSupreme court discussion of pension and welfare alienation benefits in

Mackey. ERISA language inconclusive. Policy arguments for and against anti-assignment clauses. Not clearly contrary to public policy. Importance of uniformity among federal courts. Terms of unambiguous contract must be enforced. Supreme court has affirmed this in ERISA context. 8

Responses - State Law Provisions

Anti-assignment clauses may be invalid under state insurance law. Louisiana Health Services and Indemnity Co. v. Rapides Healthcare System, 461 F. 3d 529 (5th Cir. 2006) - Louisiana law. Dialysis Newco, Inc. v. Health Systems Trust Health Plan, 2019 WL TBA_ (Tenn. Law purporting to invalidate plan anti-assignment clauses preempted by ERISA ) ERISA preemption issues: Griffin v.

Coca Cola Enterprises, Inc., 2017 WL 1506308 (11th Cir. 2017) (Georgia law does not render anti-assignment provision unenforceable). 9

Clause in Wrong DocumentAnti-assignment clause must be contained in a plan document. Plan document would include plan, SPD, or SMM.  

Most courts that have addressed issue have concluded that administrative services agreements are not plan documents. Plan documents generally will not incorporate administrative service agreements by reference.  See Long Island Neurological Association P.C. v. Highmark Shield, 2019 US Dist. LEXIS 46176 (E.D.N.Y. March 2019). 10

WaiverProbably no difference in outcome if federal common law of waiver or applicable state law.

Clear, unequivocal, and decisive act by a party. With knowledge of such right ―-evident purpose to surrender it. Waiver generally not established by: Routine processing of a claim form; Issuing payment at the out-of-network rate; Summarily denying the informal appeal; and Plan administrator has no affirmative duty to make provider aware of anti-assignment provision. 11

WaiverThere is circuit split between the Fifth Circuit and the Third and Ninth Circuit on a waiver issue.Petition for writ of certiorari

was filed with Supreme Court, but certiorari was denied.Issue: whether a plan administrator waives a plan’s anti-assignment provisions by fulfilling a provider’s request for benefits at initial claims processing.5th Circuit - Louisiana Health Service & Indemnity Co v. Encompass Office Solutions - waiver.3d Circuit - American Orthopedic & Sports Medicine v. Independence Blue Cross Blue Shield - not a waiver. 9th Circuit - Eden Surgical Center v. Cognizant Tech Sols. Corp. -not a waiver.

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Equitable Estoppel

Common law equitable estoppel ― conduct done or representation made intentionally or under such circumstances that it was both natural and probable that it would induce action. Conduct or representation must be relied upon; Reliance must be reasonable; and Relying party must have changed its conduct to its detriment.ERISA equitable estoppel requires: Material representation; Reasonable and detrimental reliance upon the representation; andExtraordinary circumstances.

Problem for health care provider ― not requesting relevant plan documents. 13

Response to Other Challenges

No specific language required.  Void or invalid not necessary. No distinction between coverage and benefits and rights. Limiting the right to assign is sufficient. Plan language need not limit the power to assign. No assignment documentation required. No additional text specifying the scope of the assignment, or identifying the insurer by name. Unenforceable ambiguous terms. Not contrary to Congressional intent with respect to ERISA. 14

Marcia S. Wagner

_______________________________ANTI-ASSIGNMENT_______________________________

marcia@wagnerlawgroup.com

www.wagnerlawgroup.com

A0456880.PPTX