Home > Blog > Blog > Health Insurance > Ninth Circuit Finds Assignment of Rights Gives Surgery Center Authority to Sue Anthem for Non-Payment of Benefits

Ninth Circuit Finds Assignment of Rights Gives Surgery Center Authority to Sue Anthem for Non-Payment of Benefits

In Coast Specialty Surgery Ctr., Inc. v. Blue Cross of California, No. 22-55717, __F.4th__, 2024 WL 105317 (9th Cir. Jan. 10, 2024), the Ninth Circuit held that Plaintiff-Appellant South Coast Specialty Surgery Center, Inc. had the authority to file a lawsuit seeking payment of plan benefits under ERISA § 502(a) by virtue of valid assignment of benefits from its patients. The district court dismissed South Coast’s ERISA claims upon determining that South Coast’s Assignment of Benefits form conveyed only the right to receive direct payment from Anthem, not the right to sue, and that Ninth Circuit precedent dictates South Coast lacked authority to sue under ERISA. The Ninth Circuit reversed the district court’s determination and held that a healthcare provider does have derivative authority to enforce ERISA’s protections if it has received a valid assignment of rights, and South Coast’s Assignment of Benefits effectuated an assignment permitting it to sue Anthem for unpaid claims.

South Coast operates an ambulatory surgery center where it provides medical services to patients enrolled in ERISA-governed health benefit plans. It requires patients to execute an Assignment of Benefits form which reads:

Assignment of Benefits

I hereby authorize my Insurance Company to pay by check made payable and mailed directly to: [South Coast] for the medical and surgical benefits allowable, and otherwise payable to me under my current insurance policy, as payment toward the total charges for the services rendered. I understand that as a courtesy to me, the South Coast Specialty Surgery Center will file a claim with my insurance company on my behalf. However, I am financially responsible for, and hereby do agree to pay, in a current manner, any charges not covered by the insurance payment. If it is necessary to file a formal collection action, I agree to pay all costs, including reasonable attorney’s fees incurred by the outpatient medical center in the collection of the outstanding fees.

Actual Plan Benefits cannot be determined until the claim is received by your insurance company and is based upon their determination of medical necessity. The information received from the above stated is not a guarantee of payment.

When Anthem rejected about 150 of South Coast’s claims, resulting in an alleged underpayment of about $5.4 million dollars, South Coast sued Anthem claiming that it failed to follow ERISA plan requirements. The district court granted Anthem’s motion to dismiss, and South Coast appealed.

As explained by the Ninth Circuit, South Coast’s appeal raises two questions. “First, does a healthcare provider have derivative authority to enforce ERISA’s protections if it has received a valid assignment of rights? And second, did South Coast’s patients effectuate such an assignment, permitting the medical provider to sue Anthem under ERISA?

In answering the first question, the court noted long standing Ninth Circuit precedent permitting healthcare providers to bring derivative claims on behalf of their patients when they have a valid assignment of benefits. See e.g., Spinedex Physical Therapy USA Inc. v. United Healthcare of Arizona, Inc., 770 F.3d 1282, 1288 (9th Cir. 2014).

Second, the court found that the Assignment of Benefits validly assigns South Coast the right to sue for non-payment of benefits under ERISA, where the form is titled “Assignment of Benefits,” authorizes the patient’s insurance company to pay South Coast for the allowable benefits and requires the patient to pay for any charges not covered by insurance. The court found that the form’s wording clearly conveys that the provider and patient intended it to operate as a valid assignment for the payment of benefits. Even though the form does not expressly state that South Coast may sue the insurers on the patient’s behalf, “an assignment of the right to benefits generally includes the right to sue for nonpayment of benefits.” The court explained that its decision aligns with her sister circuits’ opinions regarding derivative authority to sue via assignment under ERISA. To construe the Assignment of Benefits as not permitting South Coast to sue would stymie Congress’s purpose in enacting ERISA and would result in numerous small lawsuits by individuals against their insurer. Construing an assignment of benefits as including the right to sue for non-payment increases patient access to healthcare and transfers responsibility for litigating unpaid claims to the provider, an entity in a much better position to pursue those claims than the individual patient.

The court did limit its decision by stating that it does not hold that all assignments confer the right to sue under ERISA. The court explained that the decision does not give standing to third parties, with no relationship to the beneficiary, that purchase assignments of claims for the purpose of litigating them. The “decision is limited to whether section 502(a) of ERISA permits a healthcare provider to bring a derivative suit, seeking the payment of benefits, when it has been given a valid assignment to do so.”


facebook twitter shop

*Please note that this blog is a summary of a reported legal decision and does not constitute legal advice. This blog has not been updated to note any subsequent change in status, including whether a decision is reconsidered or vacated. The case above was handled by other law firms, but if you have questions about how the developing law impacts your ERISA benefit claim, the attorneys at Roberts Disability Law, P.C. may be able to advise you so please contact us.

Get The Help You Need Today

Inner form image


Contact Us

We know how to get your insurance claim paid. Call today at:
(510) 230-2090

Close Popup