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Third Party Provider Threatening DOL Action Related To Under Payment Where Anti-Assignment Permits Payments


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Can a third party service provider file a claim with the DOL for underpayment for services when the plan prohibits assignment except to the extent of payment (e.g., anti-assignment against all other rights but to receive payments)? Can they proceed with a claim when the TPA is alleging that the provider failed to provide adequate information? Any suggestions on where I can look to find more information on third parties and DOL enforcement activity on underpayment claims? Thanks in advance.

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Maybe someone with more expertise in this particular area will chime in, but I have a hard time imagining the DOL getting involved in a situation like this. The DOL exists to protect the rights of employees, and a service provider is not an employee. This sounds like a contract dispute between two businesses.

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.

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Not Labor department agency action, but there is litigation in Federal courts.  For example:


Davidowitz v. Delta Dental Plan of Cal., Inc., 946 F.2d 1476, 1481 (9th Cir. 1991) (plan’s anti-assignment provision precludes a participant from assigning her rights).


Quaresma v. BC Life & Health Ins. Co., 623 F. Supp. 2d 1110, 1128-29 (E.D. Cal. 2007) (following the plan’s anti-assignment provision, the purported assignee lacked standing).


Ward v. The Retirement Board of Bert Bell/Pete Rozelle NFL Player Retirement Plan, 643 F.3d 1331 (11th Cir. 2011) (A plan’s provision that any “benefit under the plan” will not be assigned or reached by creditors through legal process is valid and enforceable.  The court gave no effect to a State court’s order that a benefit be paid to a participant’s lawyer’s client trust account.)


Neurological Surgery Associates, P.A. v. Aetna Life Insurance Co., No. 2:12-cv-05600-SRC-CLW, 59 Empl. Benefits Cas. (BL) 1075, 2014 BL 154982, 2014 U.S. Dist. Lexis 75906, 2014 WL 2510555 (D.N.J. June 4, 2014) (health plan’s anti-assignment provision enforceable).


Aviation West Charters, LLC v. UnitedHealthcare Ins. Co., No. 2:16-cv-00436-WBS-AC (E.D. Cal. Aug. 23, 2017) (plan’s provision precluded assignment; plan not bound by its administrator’s nonobjection to an attempted assignment).


Am. Orthopedic & Sports Med. v. Independence Blue Cross, 890 F.3d 445, 2018 Empl. Benefits Cas. (BL) 173478, 2018 U.S. App. LEXIS 12637 (3d Cir. May 16, 2018) (health plan’s anti-assignment provision enforceable; yet participant might grant a power of attorney).


Med. Soc’y of N.Y. v. UnitedHealth Grp. Inc., No. 15-cv-5265, 2019 WL 1409806 (S.D.N.Y. Mar. 28, 2019) (That a plan provided discretion to pay a healthcare provider does not negate the plan’s anti-assignment provision.  And a payer’s practices were within the discretion and not a waiver.)


University Spine Center v. Aetna, Inc., No. 18-2842 (3d Cir. May 16, 2019) (declining a proposed interpretation that an anti-assignment provision must limit not only one’s right to assign but also one’s power to assign).


With little success in overcoming a health plan’s anti-assignment provisions, some healthcare providers ask a patient to appoint the provider as the claimant’s representative for the health plan’s claims procedure.  Next, we’ll see health plans’ defenses against that practice.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania



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