Court Grants Motion to Dismiss Out-of-Network Compensation Suit

On Tuesday, a District of New Jersey judge granted a motion to dismiss in a case brought against Aetna that addresses an attempt to sue for failure to properly compensate out-of-network medical providers by Aetna.

The case is governed by the federal Employee Retirement Income Security Act (ERISA) statutes and interpretations. Under current ERISA doctrine, the court explained, an employer health plan is permitted to have contractual provisions or limitations on issues that are not currently occupied by the statute itself. For this case, the current doctrine permits health plans to include an anti-assignment clause that prohibits the enforcement of assignment of benefit agreements between out-of-network medical providers and patients. This prevents out-of-network providers from pursuing the insurance company directly for underpayment of claims without the direct assistance of the patient, which can be hard to obtain and expensive.

For this case, the medical provider provided services to a patient under an ERISA plan with an anti-assignment clause. However, instead of seeking an assignment of benefits, the medical provider sought a full power of attorney. The court noted that while assignments of benefits can grant standing to pursue a claim in the name of the patient, the anti-assignment clause prohibited that action. A power of attorney, unlike an assignment of benefits, does not grant the recipient direct standing to pursue claims in the grantee’s name, which lead to the dismissal of the suit for lack of standing.

The plaintiffs are represented by Callagy Law. The defendants are represented by Connell Foley