The ruling of a U.S. court of appeal last month weighed whether physicians who are assigned insurance policy benefits have the right to bring lawsuits against insurers that fail to pay correctly for medically necessary services provided to covered patients.
The decision was a victory for physicians and patients. The appeals court concluded that an assignment of the right to payment is sufficient to confer standing to sue under the Employee Retirement Income Security Act of 1974 (ERISA). In so doing, it resolves several conflicting lower court rulings.
Easy assignment to ERISA claims denied
The North Jersey Brain and Spine Center (NJBSC) operated on three patients who were insured under employee benefit plans administered by Aetna. NJBSC obtained assignments “to all payments for medical services rendered” from each of these patients. All three surgeries were medically necessary and authorized by Aetna, yet the insurer denied or underpaid each of the claims. NJBSC appealed to Aetna without success and so filed a suit under ERISA.
A district court agreed with Aetna that the current assignments were insufficient. More specific language was required for patients to assign their full policy benefits to physicians, which would allow physicians to assert ERISA benefit claims.
The trial court’s ruling essentially meant that standard assignments of benefits weren’t sufficient to give physicians grounds to file a lawsuit. Instead, physicians would be limited to whatever the insurance company happened to pay, even if that payment was less than the amount required under the patient’s insurance policy.
Reversal of the decision: Rights to claims under ERISA upheld
On appeal, the U.S. court of appeals reversed the lower court decision. The appeals court concluded that “we are guided by Congress’s intent that ERISA ‘protect … participants in employee benefit plans,’ and our conviction that the assignment of ERISA claims to providers ‘serves the interests of patients by increasing their access to care.’”
Physicians willingly provide medical care without demanding up-front payments because they are confident that, if necessary, they can pursue remedies under ERISA for denied or underpaid insurance benefits.
Decades of legal precedent have allowed physicians to enforce their assignments of benefits by bringing ERISA claims in court. Physicians’ ability to deal directly with insurance companies when there is an issue with how a claim has been paid not only saves the patient who may be ill from dealing with overwhelming administrative processes but also prevents financial constraints from interfering in the patient-physician relationship.
The Litigation Center of the AMA and State Medical Societies filed an amicus brief in support of NJBSC claiming, “patient assignments vary widely in their particular wording, reflecting physicians’ expectation that, so long as the assignment transfers the patient’s right to insurance benefit payments, it concomitantly transfers standing to enforce that right through ERISA litigation.”
“Patients can obtain medical care without being required to pay up front and await payment of their insurance benefits in the future,” the brief said. This “financial hardship … would cause many patients with health insurance to be unable to afford lifesaving treatments.”
Other ERISA cases, past and present
- A case before the Supreme Court of the United States will determine whether a technicality will stand in the way of reform efforts and keep the insurance payment process cloaked in mystery.
- A U.S. appeals court ruling gave legal power to patients who face unfair scrutiny or rejection of their mental health claims and enabled their physicians to stand up for this vulnerable population in court.
- A federal court decided it was permissible for a large health insurer to terminate two physicians from its network following a dispute over the necessity of medical services they provided.
