Anti-assignment clauses in ERISA health plans are useful to plan sponsors in fending off lawsuits by out-of-network providers. Federal courts have consistently upheld anti-assignment provisions contained in the plan document and/or the summary plan description (SPD); however, a recent ERISA case serves as a warning about the unintentional waiver of anti-assignment provisions.
The US Court of Appeals for the 9th Circuit held that the anti-assignment provisions in various ERISA plans administered or insured by Blue Cross and Blue Shield of Illinois had been waived against an out-of-network medical provider that had called to pre-authorize/verify benefits for various participants, provided services, and submitted the claims for such participants indicating the provider was acting as the assignee of the participants. See Beverly Oaks Physicians Surgical Center, LLC v. Blue Cross and Blue Shield of Illinois. The 9th Circuit found that Blue Cross and Blue Shield should have addressed the anti-assignment provision either at the time of the pre-authorization/verification calls or at the time of the subsequent claims submitted by the providers that checked the box on the forms indicating the provider was acting as an assignee of the participants. Blue Cross and Blue Shield’s claims adjudication either denied the services altogether or paid a small percentage of the billed charges and the denial letter did not raise the anti-assignment provision as a basis to deny payments. The first time Blue Cross and Blue Shield raised the anti-assignment provision was to defend the litigation. The 9th Circuit reversed and remanded the case on the basis that Blue Cross and Blue Shield’s actions resulted in the waiver of the anti-assignment provision and that, in the event it is necessary in the resolution of the case, the provider’s equitable estoppel argument is available as well based on Blue Cross and Blue Shield’s misrepresentation of the availability of benefits.
The key points we learn from this case are:
- Raise the anti-assignment provision early in the claims process.
- If possible, provide a script to claims administrator’s customer service employees who handle pre-authorization/verification calls for the plan so they can inform participants/providers of the anti-assignment provision at the time of verifying or pre-authorizing services for participants.
- Include anti-assignment language in adverse benefit determination, appeal response, and plan document disclosure letters.
→Best practices: Point to the page references in the governing plan document and Summary Plan Description and provide a copy of the SPD or an excerpt with the letter. Make the language bold in the response letter and raise it before providing the substance of the letter (e.g., before describing the documents being disclosed pursuant to a request for disclosure, include a paragraph regarding the anti-assignment language in the plan and SPD).
For assistance with reviewing your governing plan document and anti-assignment provisions or drafting response letters to out-of-network provider requests, please reach out to any member of our team.