Appeals court resurrects precedent-setting suit against Aetna

The Third U.S. Circuit Court of Appeals has reversed a lower-court decision in a case about the rules governing when healthcare providers can sue health insurers for payment of benefits, the New Jersey Law Journal reports.

In its ruling in North Jersey Brain & Spine Center v. Aetna, the appeals court found that a healthcare provider has standing to sue an insurer for payment of health benefits if a patient has assigned the provider the right to payment of these benefits. The assignment of benefits rules--under the Employee Retiree Income Security Act--are in place to let providers treat patients without asking them to pay up-front.

The New Jersey provider had sued Aetna on behalf of three patients enrolled in its health plans, claiming the insurer underpaid or refused to pay claims once the patients received treatment. Aetna had countered by arguing that the assignment of benefits agreement has to explicitly state that providers have the right to sue, not just imply it.

A district court had sided with Aetna and dismissed the provider's complaint, but the recent higher court ruling reversed that decision. In its ruling, the Third Circuit Court noted that five other appeals courts have decided that assignment of benefits gives providers the legal standing to sue.

The court's decision emphasizes that "when a dispute arises regarding insurance coverage for healthcare treatment, it is the doctor that is in the best position, both professionally and financially, to challenge that insurance decision, not the patient," attorney Eric Katz, who represented the New Jersey provider, told the New Jersey Law Journal.

Meanwhile, a New York law enacted in July takes the concept even further, stating that a consumer can avoid paying surprise out-of-network healthcare expenses by completing an assignment of benefits form and sending it to their health plan and provider, FierceHealthPayer reported. And other states may take similar steps, because as FierceHealthFinance reports, the issue of "surprise bills" has gained increasing prominence in recent months.

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