Lakeview NeuroCare Pennsylvania, Inc. v. Independence Blue Cross
1:17-cv-00396
M.D. Penn.Oct 5, 2017Background
- Lakeview NeuroCare operated an out-of-network residential care facility and treated insured patient "JA." IBC insured JA through agent Magellan.
- Lakeview alleges IBC (through Magellan) repeatedly authorized and reauthorized JA’s care for ~18 months, requested bill clarifications, and made at least one payment, while Lakeview billed monthly for services.
- Lakeview claims IBC ultimately paid only one month ($28,550) and owes ~$212,800 for JA’s care.
- The IBC policy contains express non-assignment clauses prohibiting assignment of benefits without insurer consent.
- Lakeview sued asserting multiple claims including breach of contract; IBC moved to dismiss the breach claim (and sought dismissal of the complaint) arguing JA’s assignment to Lakeview was invalid under the non-assignment clause.
- The magistrate judge denied IBC’s motion to dismiss in full, concluding the complaint plausibly alleges a post-loss assignment and factual conduct (repeated authorizations/payments) inconsistent with enforcement of the non-assignment clause.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of non-assignment clause | Post-loss assignment is valid and non-assignment clause is void as against public policy because JA’s right to payment vested after loss; alternatively, IBC’s repeated authorizations constitute consent | The policy’s clear, unambiguous non-assignment clause bars any assignment without written insurer consent, so Lakeview lacks standing to sue for breach | Denied dismissal: court held, accepting allegations, assignment occurred after the loss (vesting of payment right), and IBC’s conduct (reauthorizations/payments) undermines enforcement of the clause or suggests consent; non-assignment did not bar the breach claim |
| Adequacy of breach-of-contract pleading | Complaint pleads formation, breach, and damages based on alleged authorizations, billing, and outstanding balance | IBC contends there is no contract between IBC and Lakeview because JA’s assignment was invalid | Court found plaintiff alleged sufficient facts to state a plausible breach claim and refused to dismiss under Rule 12(b)(6) |
| Effect of insurer conduct (authorizations/payments) on assignment consent | Conduct (weekly reauthorizations, bill corrections, payment) manifests consent and fixed insurer liability | IBC maintains written consent required and none was given | Court concluded the alleged conduct is inconsistent with strict enforcement of non-assignment and supports denial of dismissal |
| Scope of motion addressing other claims | Plaintiff argued motion only addressed breach, so other claims should remain | IBC briefed only breach; sought dismissal in full | Court denied motion in full because IBC failed to carry burden on breach; thus remaining claims not dismissed |
Key Cases Cited
- High-Tech-Enters., Inc. v. Gen. Accident Ins. Co., 635 A.2d 639 (Pa. Super. Ct.) (upholding non-assignment clause where insured did not obtain insurer's written consent)
- Egger v. Gulf Ins. Co., 903 A.2d 1219 (Pa.) (post-loss assignments of accrued payment rights generally unenforceable against public policy; insurer's risk not increased after loss)
- Nat’l Mem’l Servs., Inc. v. Metro. Life Ins. Co., 49 A.2d 382 (Pa.) (predecessor authority recognizing post-loss assignments are not precluded)
- Viola v. Fireman’s Fund Ins. Co., 965 F. Supp. 654 (E.D. Pa.) (federal court applying Pennsylvania law upholding post-loss assignments and explaining vested right to indemnity after loss)