Ruling Gives Providers Standing Under ERISA

You may describe yourself as a doctor, a chiropractor, a surgeon or any other title conferred by your profession — but if you provide services to participants in a private health insurance benefit plan, you may have just gained an additional title: beneficiary. And that is good news for providers grappling with insurance company efforts to recoup payments.

A federal court recently ruled that when patients assign a health care provider the rights to their benefits — that is, the right to be reimbursed for the cost of treatment — the provider becomes entitled to the same protections guaranteed by law to plan participants. Specifically, the ruling granted a group of chiropractors standing as beneficiaries under ERISA (Employee Retirement Income Security Act), allowing them to sue insurers for violations of the notice and appeal requirements associated with adverse benefit determinations.

The insurers claimed that the assignment of benefits to the provider was not sufficient to make the provider a beneficiary under ERISA. They also argued that because the providers did not actually bill their patients for amounts retroactively denied by the insurers, the patients had not suffered any financial effects from the recoupment and therefore had not received adverse benefit determinations.

The court rejected this argument and characterized the providers as beneficiaries, based on statutory language and judicial precedent:

  • The statute defines a beneficiary as a person designated by a plan participant who is or may become entitled to a benefit under the plan. ERISA regulations, in turn, define claimants as participants and beneficiaries, and expressly confer notice and appeal rights upon a person who is a claimant.
  • A beneficiary also has a right to sue to recover benefits due under the plan or to enforce his or her rights under the terms of the plan.
  • Because the chiropractors could have sought repayment from patients for the amounts recouped by the insurance companies, they — and their assignees, the providers – were entitled to the ERISA protections related to adverse benefit determinations.

As co-lead counsel for the chiropractors, the highly experienced health care attorneys of Buttaci Leardi & Werner LLC helped to achieve this game-changing decision.

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