Two Federal Court Decisions Support Zuckerman Spaeder’s Unique Use of ERISA on Behalf of Health Providers

In two recent decisions, the U.S. Court of Appeals for the Third Circuit decided that health care providers are the assignees of their patients’ legal rights and can bring action under the Employment Retirement Income Security Act of 1974 (ERISA). The decisions reinforce Zuckerman Spaeder LLP’s legal approach, developed by partners D. Brian Hufford and Jason S. Cowart, of using ERISA on behalf of doctors to challenge health insurance industry practices.

In one of the two cases, North Jersey Brain & Spine Center v. Aetna, Inc., Mr. Hufford, Mr. Cowart, and firm partner Caroline E. Reynolds filed an amicus brief on behalf of the American Medical Association (AMA) and the Medical Society of New Jersey. With their years of experience using ERISA to support healthcare providers’ claims against insurance industry practices, the attorneys argued against a District Court ruling that said providers do not have standing to sue an insurer based on having patient payment rights assigned to them.

On September 11, the U.S. Court of Appeals for the Third Circuit reversed the District Court’s order, stating that this question has been considered and resolved in previous court decisions. The Third Circuit wrote: “We hold that as a matter of federal common law, when a patient assigns payment of insurance benefits to a healthcare provider, that provider gains standing to sue for that payment under ERISA.” The judges added: “Every United States Court of Appeals to have considered this question has found, as we do, that an assignment of benefits is sufficient to confer ERISA standing.”

In the other case, American Chiropractic Association, Steven G. Clarke, D.C., and Carol A. Lietz v. American Specialty Health Incorporated, American Specialty Health Networks, Inc., Connecticut General Life Insurance Company, and Cigna Corporation, Mr. Hufford and Mr. Cowart argued in support of a chiropractor’s right to bring ERISA action, even if the assignment of benefits makes clear that the patient remains responsible for payments. The Third Circuit wrote: “While [chiropractor] Clarke’s assignment made clear that the patient remained ‘financially responsible for all charges whether or not they are paid by insurance,’ this does not mean that the assignment did not give him the right to take steps to collect payment from the patient’s insurer. As other courts have held, a patient’s continued responsibility to pay her provider amounts not covered by the insurance carrier is not a basis to vitiate the assignment.”

Zuckerman Spaeder’s success in using ERISA to challenge health insurer practices, such as take-backs and recoupments, has been driven by a novel legal approach developed by Mr. Hufford and Mr. Cowart. Their work has led to historic and precedent-setting wins – including a $350 million recovery for providers in 2010 that was the largest settlement of an ERISA benefit class action in history.

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Kalie Hardos
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