890 F.3d 445
3rd Cir.2018Background
- American Orthopedic performed out-of-network shoulder surgery for an insured (Joshua) and billed $58,400; insurers processed the claim under an out-of-network cap ($2,633), paid $316 after deductible/coinsurance, and informed Joshua he owed the remainder.
- American Orthopedic obtained an "Assignment of Benefits & Limited Power of Attorney" from Joshua and pursued administrative appeal after insurers denied full payment.
- Insurers removed the provider's suit to federal court and moved to dismiss, relying on the plan's anti-assignment clause stating member benefit rights are "personal" and not assignable.
- The District Court dismissed the provider's ERISA and breach-of-contract claims for lack of standing; provider appealed.
- The Third Circuit considered (1) whether anti-assignment clauses in ERISA-governed health plans are enforceable, (2) whether insurers waived enforcement, and (3) whether remand to perfect a power of attorney was appropriate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are anti-assignment clauses in ERISA-governed health plans enforceable against providers? | Such clauses are inconsistent with ERISA policy and should be unenforceable as they harm access to care and providers' remedies. | ERISA is silent on welfare-benefit assignability; Congress chose not to forbid anti-assignment clauses and courts should enforce negotiated plan terms. | Anti-assignment clauses in ERISA-governed health plans are generally enforceable. |
| Did the insurers waive the right to assert the anti-assignment clause by processing the claim, paying, and not raising it earlier? | Routine claim processing and payment and failure to raise the clause in appeals equate to waiver. | Those acts do not show a clear, unequivocal surrender of the right to assert lack of standing. | No waiver; insurer conduct did not demonstrate an evident purpose to surrender the right. |
| Can a provider proceed based on a power of attorney despite an anti-assignment clause? | A valid power of attorney would allow the provider to act as agent and litigate on the beneficiary's behalf, so remand to perfect it should be allowed. | An anti-assignment clause prevents assignments and, insurers argue, would make such powers ineffective to confer independent standing. | Power of attorney is conceptually distinct from assignment and could permit agency suit, but provider waived the remand argument; the record POA was invalid under state law. |
| Should courts displace contractual terms here based on ERISA policy or precedent? | Policy considerations and NJBSC support non-enforcement of anti-assignment clauses to protect access and remedies. | Precedent from multiple circuits endorses enforcing unambiguous contract terms; ERISA leaves assignability to contracting parties. | Third Circuit follows consensus of other circuits: enforce unambiguous anti-assignment clauses absent congressional action. |
Key Cases Cited
- Aetna Health Inc. v. Davila, 542 U.S. 200 (ERISA provides scheme for remedies and defines rights of participants and beneficiaries)
- North Jersey Brain & Spine Ctr. v. Aetna, Inc., 801 F.3d 369 (3d Cir.) (valid assignment by participant can confer standing on provider)
- Mackey v. Lanier Collection Agency & Service, Inc., 486 U.S. 825 (Silence in ERISA on welfare-plan assignment is not dispositive of congressional intent)
- McCulloch Orthopaedic Surgical Servs., PLLC v. Aetna Inc., 857 F.3d 141 (2d Cir.) (anti-assignment clauses in ERISA plans enforceable)
- City of Hope Nat’l Med. Ctr. v. HealthPlus, Inc., 156 F.3d 223 (1st Cir.) (ERISA leaves assignability to contracting parties)
- Travelers Indem. Co. v. Bailey, 557 U.S. 137 (courts enforce the terms of unambiguous private contracts)