Can Health Care Providers use ERISA for Delayed Payment of Claims?
On November 10, 2010, the United States District Court for the Southern District of Texas issued a Memorandum and Order regarding ERISA and delayed payment of claims. In the case of North Cypress Medical Center, et al. v. Med Solutions, Inc., Civil Action H-10-2608, plaintiffs, North Cyprus Medical Center Operating Company, Ltd. and North Cyprus Medical Center Operating Company GP, LLC (collectively “North Cyprus”), a 150-bed hospital facility sued defendant, Med Solutions, Inc., a third party administrator for several insurers for alleged intentional delayed payment for health care claims. Plaintiffs brought an action for breach of fiduciary duty under ERISA.
Defendant filed a motion to dismiss the fiduciary breach claims, arguing that plaintiff lacked standing because plaintiff was not a plan “participant,” “beneficiary” or “fiduciary” under ERISA. Plaintiff argued that it had standing because plaintiff had a valid written assignment for payment of claims from its patients. The court dismissed the plaintiff’s claims because even though the plaintiff had a valid assignment for claims payments, the language in the assignment did not create an express and knowing assignment to plaintiff to sue for breach of fiduciary duty.
Other jurisdictions have decided similar cases involving ERISA standing and assignments. This particular case suggests that health care providers who want to preserve their ERISA remedies should be proactive in obtaining more specific assignments from their patients. Health care providers should seek the assistance of experienced counsel in health care and ERISA matters in this regard. A valid and well-structured assignment may allow a health care provider to proceed with an action for breach of fiduciary duty to challenge an insurer or administrator’s prepayment review process and failure to pay claims promptly.
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