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Court Finds Direct Payment to Provider Does Not Automatically Waive ERISA Plan’s Anti-Assignment Provision

Blogs, Erisa

A federal court last week denied a request to certify a class in a putative class action brought by health care providers who, after receiving payments from Blue Cross Blue Shield (“BCBS”), allegedly “were subjected to retroactive requests for repayment of all or a portion of such payments or had subsequent payments withheld as an offset against the amount allegedly owed.”

The United States District Court for the Northern District of Illinois, in Pennsylvania Chiropractic Ass’n v. Blue Cross Blue Shield Ass’n, No. 09C5619, 2011 WL 6819081 (N.D.Ill. Dec. 28, 2011), the plaintiffs’ “central argument” that a common question existed concerning whether defendants violated ERISA through “uniform policies in making repayment demands.” Id. at *5.

The defendants successfully argued that the matter was fact-specific, because of individual questions regarding, inter alia, whether “the plaintiff had the right to enforce, through a valid assignment, the plan participants’ right sunder ERISA to collect benefits. . . .” Id.

The court explained that “ERISA does not prohibit a participant from assigning a claim for health and welfare benefits, but it also does not preclude a health and welfare plan from prohibiting assignments.”  Id. at *6. Thus, the court noted that a “number of the plans at issue, in this case, contained anti-assignment provisions.”

In response to defendants’ assertion of non-assignability, the plaintiffs, in this case, contended that the defendants’ waived the anti-assignment provisions “by dealing directly with plaintiff’s as service providers.” The court, on this issue, noted that “[t]hough there is no controlling authority on the point –indeed there is little authority at all — there is law supporting the proposition that direct payment to a provider does not waive reliance on a plan’s anti-assignment provision is the plan also authorizes direct payment.”

Accordingly, the court held that whether the Plan waived the anti-assignment provisions is not appropriate for determination on a class-wide basis due to a large number of plans involved in the case. Ultimately, although the court also considered alternative class categories, the court denied the plaintiffs’ motion for certification as to any proposed class.