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Anti-Assignment Clause Valid, But Healthcare Providers May Have an Out – 3rd Cir.

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  • Anti-Assignment Clause Valid, But Healthcare Providers May Have an Out – 3rd Cir.

    Anti-Assignment Clause Valid, But Healthcare Providers May Have an Out – 3rd Cir.

    Attached is a published case out of the Third Circuit, American Orthopedic & Sports Medicine v. Independent Blue Cross Blue Shield, et. al. This case is before the Court on appeal from the district court which held that an anti-assignment provision in an ERISA governed policy was valid. Plaintiff is an out-of-network medical provider who performed surgery on a patient. The patient executed an “Assignment of Benefits & Ltd. Power of Attorney.” After exhausting administrative remedies, Plaintiff sued defendant for only paying $2,633 under the policy’s out-of-network cap. Defendant moved to dismiss on the grounds of the anti-assignment provision in the policy and the district court granted the motion. The Third Circuit agreed with the district court and held that the anti-assignment provision was enforceable.

    Of interest in this opinion is that the Court noted that, even though the anti-assignment provision was valid, Plaintiff could have brought the suit via the limited power of attorney. However, the Court found that Plaintiff waived that argument since it did not raise the argument in its briefs.

    C. Power of Attorney

    If we reach this point in our analysis, Appellant has requested that we nonetheless vacate and remand so that it can perfect an alternative basis for standing: the power of attorney that it acknowledges was deficient under applicable state law. Appellant Suppl. Letter Br. 1 (Nov. 7, 2017); see also Oral Arg. at 8:30 (“[T]he technical requirements are not there.”).9 The Insurers, for their part, argue that remand would be futile because “[a]n anti-assignment clause encompasses and applies to a limited power-of-attorney . . . just as forcefully as it applies to a general ‘assignment,’” Horizon Suppl. Letter Br. 1 (Nov. 7, 2017), and because “there is no appreciable distinction between” assignments and powers of attorney, id. at 3.

    The Insurers are mistaken. Assignments and powers of attorney differ in important respects with distinct consequences for the power of a plan trustee to contractually bind an insured. An assignment purports to transfer ownership of a claim to the assignee, giving it standing to assert those rights and to sue on its own behalf. See Sprint Commc’ns Co. v. APCC Servs., Inc., 554 U.S. 269, 271 (2008). Thus, a plan trustee can limit the ability of a beneficiary to assign claims because, among the parties’ “power to limit the rights created by their agreement,” Restatement (Second) of Contracts § 322 cmt. a (1981), is the power to restrict ownership interest to particular holders. A power of attorney, on the other hand, “does not transfer an ownership interest in the claim,” W.R. Huff Asset Mgmt. Co. v. Deloitte & Touche LLP, 549 F.3d 100, 108 (2d Cir. 2008), but simply confers on the agent the authority to act “on behalf of the principal,” In re Complaint of Bankers Tr. Co., 752 F.2d 874, 881 (3d Cir. 1984).

    As these principles apply here, our holding today that the anti-assignment clause is enforceable means that Joshua, as plan beneficiary, did not transfer the interest in his claim, but it does not mean that Joshua cannot grant a valid power of attorney. To the contrary, because he retains ownership of his claim, Joshua, as principal, may confer on his agent the authority to assert that claim on his behalf, and the anti-assignment clause no more has power to strip Appellant of its ability to act as Joshua’s agent than it does to strip Joshua of his own interest in his claim. See Titus v. Wallick, 306 U.S. 282, 289-90 (1939) (noting that a power of attorney did not “operate as an assignment to vest the attorney with such title or interest as will enable him to maintain the suit in his own name”); W.R. Huff, 549 F.3d at 108 (concluding that “a mere power-of-attorney . . . does not confer standing to sue in the holder’s own right,” whereas “an assignment of claims transfers legal title or ownership of those claims and thus fulfills the constitutional requirement of an ‘injury-in-fact’”). Indeed, the Insurers’ argument that anti-assignment clauses preclude principals from granting a power of attorney to their agents not only lacks support; it also seems particularly ill-suited for the healthcare context where patients must rely on their agents when they anticipate even short-term incapacitation after medical procedures, see Powers v. Fultz, 404 F.2d 50, 51 (7th Cir. 1968), and where those who anticipate longer-term unavailability, like deployed service members or those suffering from progressive conditions, depend on their designated agents to handle their medical claims and other affairs in their absence, see, e.g., Bartholomew v. Blevins, 679 F.3d 497, 499 (6th Cir. 2012) (deployed service members); Jay E. Hayden Found. v. First Neighbor Bank, N.A., 610 F.3d 382, 384 (7th Cir. 2010) (incompetent persons).

    Accordingly, we reject the Insurers’ contention that the presence here of a valid anti-assignment clause renders futile any remand for Appellant to perfect its power of attorney. Nonetheless, we decline to remand for a different reason: Appellant waived its arguments concerning the power of attorney by failing to raise them in its opening or reply brief and, indeed, did not address the significance of the power of attorney until we invited it to do so in supplemental briefing. See United States v. Quillen, 335 F.3d 219, 224 (3d Cir. 2003).
    Attached Files

  • #2
    Leila-Thanks for posting this case in light of our short discussion regarding Authorized Rep..

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    • #3
      Yes, I thought about that as I was reading this case! I'll be interested to see if healthcare providers test this theory out.

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