A recent case may help out of network providers, which have complete valid ERISA assignments regarding appeal and reimbursement rights, receive checks directly from insurers.
For the first time federal courts have rendered the clearest answers to date: managed care network participation is immaterial, ERISA assignment is the critical controlling factor to health-care benefits reimbursement. On August 5, 2013, a federal court concluded that Blue Cross Blue Shield of Michigan (BCBSMI) must directly pay an out-of-network provider with a valid ERISA assignment, even after his patients were already paid, and that the mistaken payments made to patients did not extinguish the BCBSMI obligation to pay the provider under ERISA.
In this case, the provider (Metcalf) is a physician who had assignments from patients to receive benefits from their ERISA governed plan for services rendered, the ERISA plan (BCBSMI) paid benefits for provider’s medical services after being put on notice of the medical provider’s assignment but the benefits were mistakenly sent to the patient. The provider sued to compel the BCBSMI to pay him the benefits as assignee of his patients even though BCBSMI had already paid the patients the benefits. BCBSMI argued that because they mistakenly paid the patients absolved them from any liability to the provider as assignee because, they reasoned, the benefits had been paid already and there were no benefits due. In addition the BCBSMI argued that provider, as assignee, only stands in the shoes of the plan participants and the plan participants had already been paid.
The opinion is a significant holding that will be useful to providers with complete valid ERISA assignments regarding appeal and reimbursement rights. The court concluded:
- BCBSMI must directly pay an out-of-network provider with a valid complete ERISA assignment, even after his patients were already paid
- The mistaken payments sent to patients did not extinguish BCBSMI obligation to pay the provider under ERISA
- The provider’s network participation is immaterial to the plan’s obligation to provide EOB disclosures, ERISA full and fair reviews and to make payment directly to the provider under ERISA
- The provider’s ERISA assignment was valid, thus entitling him to sue BCBSMI for ERISA SPD statutory penalties, (although unavailable in this case).
According to the court document, BCBSMI refused to recognize the ERISA complete assignment from an out-of-network provider, refused to provide the provider with benefits EOB, refused to consider any appeals filed by the provider, and made benefits payments to the patients directly.
Both parties filed for summary judgment on these claims.
Case info: Robert Metcalf, v. Blue Cross Blue Shield of Michigan; DaimlerChrysler North America; and Daimler Trucks N.A. LLC UAW Health Benefits Plan, Case 3:11-cv-01305-ST, United States District Court District of Oregon, Portland Division, Decided 08/05113.
Among other things, of critical significance for out-of-network provider appeals and litigation, the Court concludes the following legal points:
ERISA assignment and notice, rather PPO network participation, entitled a provider to direct reimbursement:
“As discussed elsewhere in this Opinion, defendants were on notice of the assignments entitling Metcalf to direct payment of the benefits due his patients under the Plan, irrespective of whether he was a Network Provider or Nonparticipating Provider.” according to the court document.
Even if BCBSMI already paid patients of an out-of-network provider, BCBSMI must pay again directly to the out-of-network provider:
“Thus, this court concludes that under the state law governing assignments, the debt is not discharged by the debtor who pays the assignor after receiving notice of the assignment. Even though the Plan paid benefits to the participants, its duty to pay benefits to their assignee (Metcalf) was not discharged. As a result, Metcalf, as the assignee, has a claim against the Plan for benefits mistakenly paid to each of his patients-assignors after BCBSM received notice of the assignment……That relief is available under ERISA since payment by the Plan to the patients-assignors did not extinguish the obligation to pay benefits.” according to the court document.
BCBSMI asserted that even though the assignments were valid Health care providers, such as Metcalf, are not participants or beneficiaries and, therefore, lack independent standing to sue under ERISA.
“the Ninth Circuit barred ERISA claims by medical providers, based upon assignments from their patients of the right to payment of benefits, against health care plans to recover additional payments based on their separate provider contracts with the plans. Unlike those cases, Metcalf does not seek the payment of more money from the Plan based upon an independent obligation different than money owed to the participants under the Plan. Here pursuant to the terms of the AOBs, Metcalf is suing to recover “all insurance benefits, if any, otherwise payable to [the plan participant] for services rendered” and nothing more. Therefore, Metcalf has derivative standing under ERISA as an assignee to assert the claims of his patients-assignors to recover benefits due under the Plan under 29 USC § 1132(a)(2). Although he stands in the shoes of his patients-assignors, Metcalf contends that his status as an assignee permits him to recover any benefits owed and not paid directly to him, but instead paid to his patients-assignors. This appears to be a novel issue not yet addressed by any court.” according to the court document.
After the court orders BCBSMI to pay the provider directly again, and court finds the provider’s ERISA assignment is valid and entitles the provider to sue the plan for the ERISA SPD statutory penalties, but the court explains why such statutory penalties are not available in this case:
“Given this court’s conclusion that he is entitled to payment of those benefits, the imposition of penalties serves no purpose other than as an excessive punishment for defendants failing to promptly correct their mistake of law. Accordingly, even if statutory penalties were available, this court would exercise its discretion against awarding them in this case.” according to the court document.
Out of Network Providers of all types would be well advised to obtain valid complete ERISA assignments from any and all patients. Providers should also keep a copy of this opinion for future use when disputes arise between themselves and insurers specifically when insurers have sent reimbursement checks directly to patients after being put on notice of the provider’s valid complete ERISA assignment.