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American Orthopedic & Sports Medicine v. Independence Blue Cross Blue Shield

United States Court of Appeals, Third Circuit

May 16, 2018

AMERICAN ORTHOPEDIC & SPORTS MEDICINE, on assignment of Joshua S., Appellant
v.
INDEPENDENCE BLUE CROSS BLUE SHIELD; HORIZON BLUE CROSS BLUE SHIELD OF NEW JERSEY

          Argued: November 15, 2017

          On Appeal from the United States District Court for the District of New Jersey (D.N.J. No. 2-16-cv-08988) Honorable Jose L. Linares, U.S. District Judge

          Samuel S. Saltman [Argued] Counsel for Appellant

          Susan M. Danielski [Argued] Gerald J. Dugan Dugan Brinkmann Maginnis & Pace Counsel for Appellee Independence Blue Cross Blue Shield

          Michael E. Holzapfel [Argued] Becker LLC Counsel for Appellee Horizon Blue Cross Blue Shield of New Jersey

          Before: AMBRO, KRAUSE, and RENDELL, Circuit Judges

          OPINION

          KRAUSE, CIRCUIT JUDGE.

         With the evolution of managed healthcare and the advent of provider networks and other cost-control mechanisms, many insurers in recent years have incorporated into their health insurance plans clauses that purport to bar insureds from assigning their claims to any third party-even the healthcare provider that rendered the service. This appeal presents the question whether such "anti-assignment clauses" are enforceable, or whether, as argued by the healthcare provider in this case whose claim was dismissed for lack of standing, they are antithetical to the Employee Retirement Income Security Act ("ERISA") and to public policy. For the reasons that follow, we conclude that anti-assignment clauses in ERISA-governed health insurance plans are enforceable, and we will therefore affirm the judgment of the District Court.

         I. Factual and Procedural History

         In October 2015, Appellant American Orthopedic and Sports Medicine performed shoulder surgery on "Joshua, " a patient who was covered by a health insurance plan issued by Appellees (the "Insurers").[1]

         After the surgery, Appellant charged Joshua for the procedure. Because Appellant did not participate in the Insurers' network, it was not limited to the fee schedule prescribed by the Insurers. Instead, it charged Joshua a total of $58, 400 and submitted a claim in that amount to the Insurers on Joshua's behalf. The claim form identified the various medical services rendered to Joshua and indicated that he had "authorize[d] payment of medical benefits" to Appellant. J.A. 38. As Appellant's charges far exceeded the plan's allowed reimbursement, the Insurers responded by processing Joshua's claim according to its out-of-network cap of $2, 633, applying his deductible of $2, 000 and his 50% coinsurance of $316, issuing him a small reimbursement check for the remaining $316, and informing him that he would still owe Appellant the remaining $58, 083.

         Dissatisfied, Appellant appealed its claim through the Insurers' internal administrative process. At the same time, it arranged for Joshua to sign a document entitled "Assignment of Benefits & Ltd. Power of Attorney, " which reflected that Joshua was assigning to Appellant his right to pursue claims under his health insurance plan for the surgery and, in the alternative, that he granted to Appellant a limited power of attorney to recover the payment on his behalf through an arbitration or lawsuit. J.A. 36. After the Insurers apparently denied the appeal, Appellant sued them in New Jersey state court for violations of ERISA and its implementing regulations, and for breach of contract. At that point, the Insurers removed the suit to federal court and moved to dismiss, pointing out that Joshua's insurance plan included an anti-assignment clause that stated, "[t]he right of a Member to receive benefit payments under this Program is personal to the Member and is not assignable in whole or in part to any person, Hospital, or other entity, " Independence Response to Court Letter *90 (filed Nov. 10, 2017) (emphasis added), [2]and arguing that Appellant therefore lacked standing to sue. The District Court agreed and dismissed Appellant's complaint, and this appeal followed.

         II. Jurisdiction and Standard of Review

         The District Court had jurisdiction under 28 U.S.C. § 1331, and we have jurisdiction under 28 U.S.C. § 1291. We exercise plenary review over a District Court's decision to dismiss for lack of standing. Leuthner v. Blue Cross & Blue Shield of Ne. Pa., 454 F.3d 120, 124 (3d Cir. 2006). To the extent that the Insurers "contest[] the sufficiency of the pleadings, " we "only consider the allegations of the complaint and documents referenced therein" and we do so "in the light most favorable to the plaintiff." In re Schering Plough Corp. Intron/Temodar Consumer Class Action, 678 F.3d 235, 243 (3d Cir. 2012) (quoting Gould Elecs. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000)).

         III. Discussion

         Appellant contends it has standing to sue here, first, because anti-assignment clauses in ERISA-governed health insurance contracts are unenforceable against healthcare providers and, second, because even if those clauses are enforceable, the Insurers waived their right to enforce it in this case. If we conclude the anti-assignment clause here is enforceable against healthcare providers, Appellant raises a third argument in the alternative, i.e., that we should remand to allow it an opportunity to correct the deficiencies in Joshua's Power of Attorney and pursue Joshua's claims on his behalf in an agency capacity. We address these arguments in turn.

         A. Enforceability of ...


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