Alkon v. Cigna Health and Life Ins. Co., 2021 WL 3362562 (D. N.J. 2021)
An out-of-network health care provider performed surgery on a participant in an ERISA health plan. After receiving payment for less than 1% of the billed charges and unsuccessfully seeking additional reimbursement using the plan’s internal claims process, the provider sued the plan and its claims administrator. The court dismissed the case, agreeing with the plan and claims administrator that the provider did not have the right, under ERISA, to bring the lawsuit. (In legal terms, he lacked standing.) The court explained that ERISA authorizes only plan participants and beneficiaries to sue for benefits. Providers, lacking direct authority to sue under either of these categories, may obtain derivative standing through an assignment from a participant or beneficiary—but here, that pathway was blocked by an anti-assignment clause.
The participant had executed an assignment of benefits and a designation of authorized representative, each of which purportedly authorized the provider to bring a lawsuit on the participant’s behalf with respect to the services provided. But the plan’s terms prohibited participants from assigning to any party, including health care providers, their right to plan benefits and any other ERISA rights, including the right to file a lawsuit. The provider argued that standing was conferred by ERISA’s requirement that authorized representatives be allowed to act on a claimant’s behalf in pursuing benefit claims. But this provision, noted the court, applies only to internal claims and appeals, not lawsuits; status as an authorized representative does not negate an anti-assignment provision or otherwise independently create standing. The court noted that a potential alternative avenue for recovery when faced with an anti-assignment clause is a power of attorney (see our Checkpoint article). However, the court explained that it was unlikely that a health care provider would qualify as an attorney-in-fact under applicable state law. Moreover, the provider made no attempt to demonstrate that the authorized representative designation complied with applicable state-law procedural requirements for powers of attorney.
EBIA Comment: Preapproval communications regarding the surgery indicated that coverage would be at out-of-network levels but did not specify reimbursement rates or payment terms. It is possible that disputes like this one may be alleviated by the Consolidated Appropriations Act, 2021 requirement for providers to furnish plans with good faith estimates and for plans to provide participants with advanced explanations of benefits (see our Checkpoint article). In any event, this case reinforces the advantage of anti-assignment clauses from the plan’s perspective. The court questioned whether precluding providers from seeking adequate reimbursement is consistent with ERISA’s principles, but noted that this question is one for Congress. For more information, see EBIA’s ERISA Compliance manual at Sections XI.E (“Assignment of Benefits”), XXXIV.D.3 (“Definition of Authorized Representative”), 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”). You may also be interested in our upcoming webinar “Required Notices for Group Health Plans: Is Your Inventory Up-to-Date?“ (live on 11/10/2021).
Contributing Editors: EBIA Staff.