On January 10, 2024, the Ninth Circuit Court of Appeals (the Ninth Circuit) ruled that an assignment of benefits includes the right of South Coast Specialty Surgery Center, Inc. (South Coast) to sue Blue Cross of California dba Anthem Blue Cross (Anthem) under ERISA Section 502(a) for Anthem’s alleged failure to fully reimburse the costs of medical services provided to South Coast’s patients. The Ninth Circuit reversed the district court’s dismissal of South Coast’s claim and remanded the case to the district court for further action.

Prior to 2019, South Coast submitted claims for services provided to Anthem participants and received payment from Anthem pursuant to assignments of benefits, which South Coast required patients to sign as a condition of treatment. The relevant wording of the assignment read, “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, (South Coast) will file a claim with my insurance company on my behalf.” In 2019, however, Anthem instituted a “prepayment review“ process, which significantly curtailed its coverage for the costs of South Coast’s procedures. South Coast alleges that Anthem failed to follow ERISA plan requirements and failed to provide appropriate benefits for approximately 150 claims, resulting in a potential shortfall exceeding $5.4 million.

ERISA allows plan participants, plan beneficiaries, and plan fiduciaries to sue insurers and plan administrators but South Coast is not a plan participant, beneficiary, or fiduciary in the Anthem plans. The district court ruled that the assignment of benefits gave South Coast the right to bill Anthem directly, but the assignment did not include the right to sue to enforce collection. The Ninth Circuit, however, concluded that “an assignment of the right to receive benefits generally includes the right to sue for nonpayment of benefits,” a conclusion, the Ninth Circuit said, that aligns with its prior opinions as well as other circuits’ opinions. But the Ninth Circuit noted they were not holding that all assignments of the right to benefits – regardless of who made the assignment and who received it – necessarily confer the right to sue under ERISA. Rather, the decision was limited to whether Section 502(a) of ERISA permits a healthcare provider to bring a suit seeking the payment of benefits when it has been given a valid assignment to do so.

Although carriers and TPAs typically address claims for most group health plans, employers may want to be aware of this decision.

South Carolina Specialty Surgical Center, Inc. v Blue Cross of California dba Anthem Blue Cross »