Ninth Circuit Rules Assignee Health Care Providers May Sue Health Plans Under ERISA For Payment Of Benefits

In an opinion with mixed implications for both insurers and health care providers, the U.S. Court of Appeals for the Ninth Circuit recently ruled that when plan beneficiaries assign their claims for payment of benefits to their health care provider, the provider has standing to sue the health plan under ERISA. Importantly, however, the court also held in Spinedex Physical Therapy v. United Healthcare of Arizona, Inc. No. 12-17604, 2014 U.S. App. LEXIS 21132 (9th Cir. Nov. 5, 2014) that anti-assignment provisions in health plans are enforceable. Additionally, the court held that, as written, the assignments only encompassed claims for benefits, not for breach of fiduciary duty.

Background

Spinedex Physical Therapy (the clinic) is a chiropractic physical therapy clinic. The clinic's patients signed an "Authorization of Representation" form that assigned to the clinic the patients' rights and benefits under their respective health plans and stated that the clinic was authorized to represent patients in legal proceedings that might be necessary to pursue payment of benefits under their health insurance plans.

The defendants are United Healthcare (United) and 44 health plans governed by ERISA for which United Healthcare is the claims administrator (the Plans). Under the Plans, for out-of-network care, Plan beneficiaries were required to request payment from their respective Plans. Almost all of the Plans allowed written assignment of claims for services rendered by non-network providers, without requiring the consent of the Plans for the assignment. This allowed the non-network provider to be paid directly by the Plan, instead of the Plan paying the patient, who would then have to reimburse the provider.

After treating patients covered by the Plans, the clinic submitted claims to United, some of which were denied in whole or part. The clinic did not seek payment from its patients for denied claims, even though it had the right to do so. The clinic sued United and the Plans alleging improper denial of benefits, and sued United alleging breach of fiduciary duty. The United States District Court for the District of Arizona granted summary judgment for the defendants, and the clinic appealed.

Health Care Provider Has Article III Standing to Sue for Validly Assigned Claims

Reversing the district court, the Ninth Circuit found that the clinic, as an assignee of its patients' claims for payment of benefits, has Article III standing to bring those...