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Anti-Assignment Provision Valid – D.N.J.

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  • Anti-Assignment Provision Valid – D.N.J.

    Anti-Assignment Provision Valid – D.N.J.

    Attached is a case out of the District of New Jersey, University Spine Center v. Aetna, Inc. This case is before the court on a motion to dismiss. Plaintiff is a medical provider who was assigned benefits by a patient. Defendant paid approximately $7,000 on a $300,000 bill and, after exhausting administrative remedies, Plaintiff filed suit for the applicable remainder bill amount. Defendant moved to dismiss citing to an anti-assignment provision in the policy. Plaintiff makes several arguments (outlined below) as to why the anti-assignment clause is invalid. The court disagreed found that the anti-assignment was valid.

    In opposition, Plaintiff argues that it is not barred froin bringing this action, because the anti-assignment clause only limits Patient’s right to assign his rights or benefits to Plaintiff and not Patient’s power to do so. (ECF No. 10 at 5—6). According to Plaintiff, the anti-assignment clause’s limit on Patient’s right to assign his rights or benefits to Plaintiff is essentially “a covenant not to assign” and any violations by Patient can be remedied by money damages, but does not void the purported assignment. (Id. at 5). Plaintiff argues that the only way that Patient could be prevented from assigning his rights or benefits to Plaintiff is if the anti-assignment clause expressly limits Patient’s power to do so, which the anti-assignment clause here does not. (Id. at 6). In making this argument, Plaintiff relies on a Third Circuit case that does not pertain to ERISA and that applies New Jersey law. See Be/-Ray Co. v. CViernrite (PTY) Ltd., 181 F.3d 435, 442 (3d Cir. 1999).

    Plaintiff further argues that the anti-assignment clause is unenforceable against it as a health care provider, relying on a decision from the Court of Appeals for the Fifth Circuit. (ECF No. 10 at 11—13). That Fifth Circuit decision interpreted anti-assignment clauses, such as the one at issue here, to apply only to third-party assignees who may obtain assignments to cover unrelated debts. Hermanii Hosp. v. MEBA Med. & Benefits Plan, 959 f.2d 569, 575 (5th Cir. 1992) (“We interpret the anti-assignment clause as applying only to unrelated, thitd-party assignees—other than the health care provider of assigned benefits—such as creditors who might attempt to obtain voluntary assignments to cover debts having no nexus with the Plan or its benefits, or even involuntary alienations such as attempting to garnish payments for plan benefits.”), overruled on other grounds by Access Mediqttip, L.L.C. v. United Health Care Ins. Co., 698 F.3d 229 (5th Cir. 2012).

    The Court rejects both of Plaintiff s arguments because they are contrary to the recognized law in this district. Though the Third Circuit has not specifically spoken on the enforceability of anti-assignment clauses in ERISA-governed plans, a majority of circuits, as well as courts in the Third Circuit, have given effect to anti-assignment provisions such as the one in this case and denied standing. See, e.g., Physicians Mutltispecialty Grp. v. Health Care Plan of Horton Homes, Inc., 371 F.3d 1291, 1296 (11th Cir. 2004) (“[A]n unambiguous anti-assignment provision in an ERISA-governed welfare benefit plan is valid and enforceable.”); LeTourneau Lifelike Orthotics & Prosthetics, Inc. 1’. Wal-Mart Stores, Inc., 298 F.3d 348, 353 (5th Cir. 2002) (reversing the district court and holding that anti-assignment clause in ERISA plan was enforceable and distinguishing Hermann Hosp., 959 F.2d at 575); City of Hope Nat ‘1 Med. Ctr. v. HealthPlus Inc., 156 f.3d 223, 229 (1st Cir. 1998) (“[W]e hold that ERISA leaves the assignability or nonassignability of health care benefits under ERISA-regulated welfare plans to the negotiations of the contracting parties.”); St. Francis Reg ‘1 Med. Ctr. v. Blue Cross & Bltte Shield ofKan., Inc., 49 F.3d 1460, 1465 (10th Cir. 1995) (“ERISA’s silence on the issue of assignability of insurance benefits leaves the matter to the agreement of the contracting parties.”); Davidowitz v. Delta Dental Plan, Inc., 946 F.2d 1476, 1481 (9th Cir. 1991) (“The court concludes that ERISA welfare plan payments are not assignable in the face of an express non-assignment clause in the plan.”); Advanced Orthopedics & Sports Med. v. Blue Cross Blue Shield of Mass.. No. 14-7280 (FLW), 2015 U.S. Dist. LEXIS 93855, at *9 (D.N.J. July 20, 2015) (“[C]ourts routinely enforce antiassignment clauses contained in ERISA-governed welfare plans.”); Prof’l Orthopedic Assocs., PA v. Carefirst BlueCross BlueShield, No. 14-4486 (MAS), 2015 U.S. Dist. LEXIS 84996, at *10 (D.N.J. June 30, 2015) (“[T]he majority of circuits addressing the [anti-assignment enforceability] question as well as other courts in this district have considered the issue and held such provisions to be enforceable.”); Specialty Sttrgeiy of Middletown v. Aetna, No. 12-4429 (JLL), 2014 U.S. Dist. LEXIS 85371, at * 10 (D.N.J. June 24, 2014) (“Courts in the District of New Jersey have thus far held that unambiguous anti-assignment provisions in group healthcare plans are valid and enforceable.”). Therefore, a clear and unambiguous anti-assignment clause is enforceable against Plaintiff and will void any purported assignment of Patient’s rights or benefits.

    Plaintiff asserts that the anti-assignment clause is ambiguous. (ECF No. 10 at 10).
    Specifically, Plaintiff attempts to parse the first and second sentences of the anti-assignment clause. (Id.). According to Plaintiff, when the sentences are read separately, the anti-assignment clause does not clearly state that the “coverage” or “rights” under the plan may not be assigned to a provider. (Id.). However, the Court disagrees, afier carefully reviewing the anti-assignment clause, and finds it to be clear and unambiguous. As noted above, under the anti-assignment clause: “Coverage and [Patient’s] rights under this plan may not be assigned. A direction to pay a provider is not an assignment of any right under this plan or of any legal or equitable right to institute any court proceeding.” (ECF No. 6-1 at 6).

    As the Third Circuit has explained, contracts must be read as a whole, rather than in isolation. See Ill. Nat’l Ins. Co. v. Wyndham Worldwide Operations, Inc., 653 F.3d 225, 231 (3d
    Cir. 2011) (citing Hardy cx rd. Dowdell v. Abdul-Matin, 198 N.J. 95, 100—102 (2009)). When reading the anti-assignment clause as a whole, it is obvious that the first sentence of the antiassignment clause prohibits any assignment of benefits under the plan. The second sentence, which according to Plaintiff, renders the entire anti-assignment clause ambiguous, merely provides further explanation that direction to pay a provider directly does not constitute an assignment of benefits. As such, the Court concludes that the anti-assignment clause is not ambiguous and therefore is enforceable. See Progressive Spine & Orthopedics, LLC v. Anthem Blue Cross Blue Shield, No. 17-536 (KM)(MAH), 2017 U.S. LEXIS 147466, at *16_17 (D.N.J. Sept. 11,2017) (upholding similar anti-assignment clause language). As the Court acknowledged above, and has acknowledged in several previous opinions, see, e.g., Univ. Spine Ctr. v. Aetna Inc., Civil Action No. 17-7825 (JLL), 2017 U.S. Dist. LEXIS 209101, at *7 (D.N.J. Dec. 19, 2017), a valid and enforceable anti-assignment clause, like the one in this case, prevents Patient from assigning his rights or benefits to Plaintiff. In the absence of an assignment from Patient, Plaintiff does not have standing to bring this action. Accordingly, Plaintiffs Complaint must be dismissed.
    Attached Files

  • #2
    Leila, thanks for posting this case. Wouldn't the designation of authorized rep argument have made a difference?


    • #3
      I could see where the medical provider would use the designation of authorized representative to have standing to sue on the claimant's behalf. I'm wondering if the court would see that as a thinly veiled attempt to get around the anti-assignment provision.


      • #4
        I suppose it would depend on the documentation.