Recent Court Decision Highlights Importance of Clear Anti-Assignment Language in Health Plan Documents

A recent, comprehensive court ruling in the Southern District of New York upheld an anti-assignment clause in a health plan. The court made a point of addressing each of the arguments advanced in Medical Society of the State of New York vs. UnitedHealth Group, (SDNY, March 28, 2019) to ensure clear precedent was set for future cases. While this isn’t the first court to rule in favor of the health plan on this issue, it is the most complete ruling to date.

A group of out-of-network providers brought the case claiming that benefits for plan participants had been designated to them. They had obtained an assignment of benefits, a designation as authorized representative, and a general power of attorney from the plan participants. UnitedHealth argued that the assignment was invalid because the plan specifically prohibited the assignment of benefits. The providers argued that, due to the following three actions, UnitedHealth essentially waived their anti-assignment provision. The court found that none of the three actions cited below showed evidence of clear intent to waive the anti-assignment clause in the health plan.

  • UnitedHealth remitted payments directly to plan providers,
  • UnitedHealth sent notices of claim denials directly to plan providers as well as a notice stating that the providers could appeal the denial if properly authorized by the patient/plan participant, and
  • UnitedHealth provided offset payments to providers.

Health plans have been fighting similar lawsuits regarding anti-assignment clauses for years, so getting a clear and well-argued win helps provide precedent in future cases. While a case argued in the Southern District of New York isn’t precedent across the nation, with other courts across the country ruling similarly, the logic laid out by the New York court can certainly be cited as persuasive in future cases.

It is important in any case for plan providers to ensure that their plan documents have clear and unambiguous anti-assignment language both in the health plan documents themselves as well as in the shorter summary plan descriptions provided to plan participants to ensure they understand their rights with the health plan. Without this language clearly included in the documentation, the health plan in the New York case would not have been able to make the argument. Any waivers to this anti-assignment policy should be in writing and signed by both the plan provider and the plan participant.

Rulings like this one from the Southern District of New York help guide the team of experienced benefits attorneys at Hall Benefits Law when drafting, editing, and updating plan documentation. We make sure to include language that protects the best interest of our clients, including well located and clearly stated anti-assignment clauses. To learn more, reach out to our team by calling 678-439-6236, or visit the Hall Benefits Law website.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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