Judge Dismisses Doctor’s Bid to Overturn Non-Assignment Clause

On Tuesday, the court issued a decision regarding a motion for reconsideration and re-argument in a case brought against Empire Healthchoice Assurance, Inc. et al. The case, filed in the Eastern District of New York, was originally dismissed for lack of standing of the plaintiff to pursue the claims. The plaintiff doctor’s office had provided treatments for patients who were members of ERISA plans that had a non-assignment clause prohibiting the patients from assigning the benefits of their plan to the doctor’s office directly.

The Employee Retirement Income Security Act permits an employer health plan 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.

In this case, the doctor’s office’s reconsideration argument was that it was not the benefits that were being assigned, but the right to file a lawsuit. The court noted that this argument failed because of the requirement in New York that an assignment of the right to sue include a beneficial interest. Without the underlying right to benefits, there are no actual damages that assigning the right to the cause of action would provide the plaintiff and since the benefits cannot be assigned due to the anti-assignment clause there would be no cause of action.

The plaintiff is represented by Quadrino Law Group. The defendants are represented by Foley & Lardner and Brody O’Connor & O’Connor.