To Assert or Not To Assert Assignment in Out-Of-Network Payer/Provider Disputes

By: Andrew B. Bryant

Two recent federal district court cases highlight the importance of properly pleading (or not pleading) assignment of rights in an out-of-network provider’s state law complaint for payer reimbursement.

In the Southern District of New York, plaintiff/provider filed suit in state court against Aetna, bringing various state law claims based upon the insurer’s alleged failure to pay usual and customary charges for two medically necessary surgeries performed by the out-of-network provider. Aetna removed the matter to federal district court, asserting federal question jurisdiction via the position that the provider’s claims were preempted by ERISA. While ERISA claims can only be brought by a plan participant or beneficiary, Aetna contended that because the provider received an assignment of rights from the patient in the case at hand, the provider had achieved standing under ERISA. The district court disagreed, noting while assignments can create standing under ERISA, Aetna’s own insurance policy with the patient barred assignment of the patient’s rights to a medical provider. Therefore, the patient’s assignment to the provider was ineffective, and the provider never gained standing under ERISA. Aetna offered to waive the anti-assignment provision to keep the case in federal court, but the district court dismissed this offer as an attempt to circumvent the court’s lake of subject matter jurisdiction. The district court remanded, sending the matter brought solely under state law back to state court. See, Goldberg v. Aetna, 2018 WL 1226052 (S.D.N.Y. 2018).

In an unpublished opinion from the District of New Jersey, an out-of-network provider brought a state cause of action against insurance administrator Amerihealth, alleging state law claims based upon the defendant’s alleged failure to pay usual and customary charges for pre-authorized medically necessary services to the patient. In this case, the provider had obtained an assignment of rights from the patient but did not assert this assignment in its state court complaint. Defendant payer removed the case to federal district court, arguing ERISA preemption based on assignment. The district court remanded to state court, finding that the claims were not preempted by ERISA. The district court noted that while an assignment may have been obtained, the provider did not to assert rights under the assignment. Without such an assertion, there was no basis for the third-party provider to claim standing under ERISA, and no basis for the payer to establish ERISA preempted the state law causes of action. See, East Coast Advanced Plastic Surgery v. Amerihealth, 2018 WL 1226104 (D.N.J. 2018).

The content provided here is for informational purposes only and should not be construed as legal advice on any subject.

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