Takeaways From a Recent Opinion on Assignments of Benefits in Payer Disputes

Granting in part and denying in part a motion to dismiss filed by Aetna Inc. and CVS Health Corporation, the court allowed certain claims to proceed based on the specific wording of assignment forms used by the provider. 

The ruling narrowed the scope of Abira Medical Laboratories LLC’s case but permitted breach of contract and breach of the covenant of good faith and fair dealing claims tied to a subset of assignments containing explicit language conveying “all rights and benefits” under patients’ health plans. The decision offers important guidance for health care providers seeking to preserve their ability to pursue reimbursement disputes against payers. 

Background 

Abira alleged that Aetna and CVS failed to pay approximately $20.6 million for laboratory services provided to insured patients. According to the complaint, the defendants either failed to respond to properly submitted claims or relied on pretextual reasons to deny payment. 

Abira asserted claims for breach of contract, breach of the covenant of good faith and fair dealing, and wrongful denial of benefits under the Employee Retirement Income Security Act of 1974 (ERISA). Aetna and CVS moved to dismiss, arguing that Abira lacked standing because it had not adequately alleged valid assignments of rights from its patients. 

The Court’s Opinion 

Assignment Language Was Sufficient — But Only for Some Claims

The court held that Abira plausibly alleged valid assignments for a limited subset of claims. In reaching that conclusion, the court focused on language contained in certain patient intake documents stating, “I hereby assign all rights and benefits under my health plan and direct payments be made to [Abira] for laboratory services furnished to me by [Abira].” 

The court found that this language plausibly reflected the patients’ intent to convey “all rights and benefits” under their health plans and that the subject matter of the assignment was sufficiently identified. Claims supported by this language survived the motion to dismiss. 

By contrast, the court drew a sharp distinction between this explicit assignment language and provisions that merely granted Abira power of attorney. As the court explained, “standing alone, a power of attorney does not enable the grantee to bring suit in his own name.” Claims supported only by power-of-attorney language were dismissed. 

The court also noted that Aetna and CVS could revisit the issue at a later stage if discovery showed that the parties intended to grant only a power of attorney rather than a full assignment of claims. 

State-Law Claims Limited to Non-ERISA Plans 

The court permitted Abira’s state-law claims for breach of contract and breach of the covenant of good faith and fair dealing to proceed only with respect to health plans not governed by ERISA. In its opposition brief, Abira clarified that it was limiting those claims to non-ERISA plans, thereby avoiding a dispute over ERISA preemption. 

ERISA Claim Dismissed on Pleading Grounds 

With respect to ERISA-governed plans, the court concluded that Abira had adequately alleged an assignment sufficient to establish ERISA standing, relying on the same “all rights and benefits” language. Nevertheless, the court dismissed the ERISA claim because Abira failed to identify specific plan terms that were allegedly breached. 

The court rejected Abira’s argument that it lacked access to plan documents, reasoning that Abira could have obtained those documents from the patients who had executed valid assignments. 

Key Takeaways for Health Care Providers 

• An adequate assignment of benefits is often a prerequisite to suit. 

• Assignment forms should clearly convey the right to bring claims. 

• Power of attorney is not a substitute for an assignment. 

• Multi-state providers should favor broad, uniform assignment language. 

Bottom Line 

Assignment-of-benefits forms are often treated as routine paperwork, but this decision illustrates how critical their wording can be in payer disputes. Without a clear and comprehensive assignment, providers risk losing the ability to pursue reimbursement claims in court. Providers should periodically review and update their assignment language to ensure it aligns with their enforcement goals and jurisdictional requirements.