Assignments Give Health-Care Providers ERISA Standing

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

By Jo-el J. Meyer

Sept. 11 — Health plan participants' assignment of benefits to health-care providers needn't explicitly state that the participants are assigning their right to bring a lawsuit under ERISA in order for the provider to bring suit under the federal statute, the U.S. Court of Appeals for the Third Circuit ruled.

The appeals court rejected Aetna Inc.'s argument that a patient's assignment of benefits must explicitly state that the participant is assigning the right to sue before a provider has standing to bring an Employee Retirement Income Security Act action to recover benefits. An assignment of benefits that gives the health-care provider the right to payment of benefits implicitly gives that provider the right to sue under ERISA to recover such benefits, the court said.

North Jersey Brain & Spine Center (NJBSC) filed an ERISA lawsuit against Aetna after it refused to pay for medical services NJBSC provided to health plan participants. Aetna argued that NJBSC didn't have ERISA standing because, although the participants had assigned their right to benefits to the center, the assignments didn't transfer to it the right to bring a lawsuit under ERISA to recover benefits. NJBSC is a neurosurgical medical practice in Bergen County, N.J.

The U.S. District Court for the District of New Jersey agreed with Aetna and dismissed the lawsuit for lack of standing. NJBSC appealed, arguing that it had standing under ERISA by virtue of the assignment of benefits it received from the participant.

Assignments Gave Standing to Sue

The appeals court reversed, agreeing with NJBSC that the participant assignments gave it standing to sue Aetna under ERISA even if the assignments didn't explicitly state that they carried with them the right to sue to recover benefits.

“We hold that as a matter of federal common law, 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). An assignment of the right to payment logically entails the right to sue for non-payment,” Judge Michael A. Chagares said in writing for the court.

The court noted that every federal appeals court to have considered the issue has found that assignments of the right to payment of benefits carry with them the right to sue under ERISA to recover such benefits.

The court cited some policy reasons that supported its ruling: namely, that patients will be more likely to seek health-care services and doctors will be more likely to treat if they know that the assignment of benefits can be enforced against insurers in court. “It does not seem that the interests of patients or the intentions of Congress would be furthered by drawing a distinction between a patient’s assignment of her right to receive payment and the medical provider’s ability to sue to enforce,” the court said.

The opinion was joined by Judges Thomas M. Hardiman and Patty Shwartz.

NJBSC was represented by Mazie Slater Katz & Freeman, LLC, Roseland, N.J. Aetna was represented by Connell Foley LLP, Cherry Hill, N.J.

To contact the reporter on this story: Jo-el J. Meyer in Washington at

To contact the editor responsible for this story: Cathleen O'Connor Schoultz at

Text of the opinion is at


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