THIRD CIRCUIT JOINS OTHER CIRCUITS IN CONFERRING ERISA STANDING ON HEALTH PROVIDERS WHO RECEIVE PAYMENT ASSIGNMENTS FROM PATIENTS

In New Jersey Brain & Spine Center v. Aetna, Inc., No. 14-2101, 2015 WL 5295125 (3d Cir. Sept. 11, 2015), a case that the court designated as precedential, the Third Circuit recently cured a split in its own district courts, and in the process joined every other circuit court that has spoken on the issue, and determined that a general payment assignment to a medical provider by a patient confers standing to sue under ERISA for non-payment.

Plaintiff was a medical practice that had treated three patients who were members of ERISA-governed health plans administered by Aetna. Each of the patients had executed an assignment that read: “I authorize [NJBSC] to appeal to my insurance company on my behalf  . . . . I hereby assign to [NJBSC] all payments for medical services rendered to myself or my dependents.” Aetna allegedly refused to pay and/or underpaid certain claims and NJBSC sued in New Jersey state court for non-payment of benefits under section 502(a) of ERISA. Aetna removed the case to the U.S. District Court, which dismissed the complaint for lack of standing, holding that an assignment to a right of payment did not confer standing to sue under ERISA.

On appeal, NJBSC argued that the assignment of the right of payment was sufficient to confer standing while Aetna argued that an assignment “must explicitly include not just the right to payment but also the patient’s legal claim to that payment if a provider is to file suit.” The appeals court determined as a matter of federal common law that “when a patient assigns payment of insurance benefits to a healthcare provider, that provider gains standing to sue for that payment under ERISA § 502(a).” It further opined that an assignment of the right to payment logically entails the right to sue for non-payment and noted that every other circuit court that has considered the question has determined that such an assignment for payment also confers standing to sue for non-payment.

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