Although the Third Circuit Court of Appeals ruled in American Orthopedic & Sports Medicine vs. Independence Blue Cross Blue Shield, that a group health plan’s anti-assignment provision was valid, this does not prevent a health care service provider from representing a plan participant under a power of attorney agreement.
Facts. A group health plan participant underwent a surgical procedure at an out-of-network medical service provider. When the plan refused to pay the amount charged by the provider, the provider sued the plan and its insurer, saying that the participant had signed an “Assignment of Benefits & Ltd. Power of Attorney” which assigned to the provider the participant’s right to pursue claims under the plan for the surgery and, in the alternative, granted to the provider a limited power of attorney to pursue the claim on his behalf through arbitration or lawsuit.
Plan provisions 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.”
Note. To prevent health care providers from bringing lawsuits against group health plans, many plan sponsors include anti-assignment provisions in their plan documents or insurance contracts. Such provisions either completely prohibit, or substantially limit, participants’ ability to assign their rights under the plan. Thus, even when a plan participant knowingly (or unknowingly) assigns all rights to a health care provider, that assignment will be void if the plan expressly prohibits such an assignment.
A power of attorney gives a third party the authority to act for another person (in this case the participant) in specified legal or financial matters.
Decision. Noting that other jurisdictions have upheld anti-assignment clauses, the Third Circuit agreed that the plan’s anti-assignment clause was valid. However, it noted that assignments and powers of attorney differ in important aspects An assignment transfers ownership of a claim to the provider, giving it standing to assert those rights and to sue on its own behalf. A power of attorney, on the other hand, does not transfer an ownership interest in the claim.
Therefore, although the anti-assignment clause is enforceable, it does not, by itself, prevent the participant from granting a power of attorney. To the contrary, because the participant retains ownership of his claim, he may give the provider the authority to assert the claim in court on his behalf.