“Although the Court recognizes the POA was not executed under circumstances discussed by the Circuit, the Circuit did not limit the use of a POA solely to those circumstances. To the contrary, the Third Circuit merely pointed to the foregoing language as illustrative of why POAs were fitting in the healthcare context. Id. Indeed, the American Orthopedic court confronted factual circumstances akin to the present manner (that is, a POA executed after the insurance company declined to pay the requested amount) and, as noted, the Circuit found that POAs were permissible even when anti-assignment clauses were present. Id. at 448, 454-55.

         Moreover, although the RDPAA appears to contemplate that a POA would be executed in the case of disability or incapacity of the principal, see, e.g., N.J. Stat. Ann. §§ 46:2B-8.2, 8.3, nothing in the RDPAA explicitly limits the use of a POA to those circumstances. As a result, there does not seem to be any legal requirement that would prevent using a POA in the manner that Plaintiffs do so here.”

Somerset Orthopedic Assocs. v. Horizon Healthcare Servs. (D. N.J. 2021)

The history of this case provides a virtual checklist of how a provider might obtain standing to sue an insurer that has incorporated an anti-assignment clause in their plan document.

In an earlier stage of the case, the providers asserted standing based on assignments from their patients. That position failed because the plan documents prohibited assignment of benefits.

Next, the providers argued they had standing through valid powers of attorney. But the court determined that providers lacked standing to assert claims through the POAs because the patients made the Plaintiff medical practices their attorneys-in-fact. The Court concluded that medical practices could not be attorneys-in-fact under the applicable statute.

In the present opinion, the providers alleged the individual physicians obtained properly executed POAs from the patients. And the court agreed. This is an important decision for health care providers who encounter patients whose insurance coverage is out of network for their practice.

The court referred to a key Third Circuit opinion on this issue:

In American Orthopedic & Sports Medicine v. Independence Blue Cross Blue Shield, 890 F.3d 445 (3d Cir. 2018), the Third Circuit recognized that there is a critical difference between an assignment and a power of attorney. Unlike an assignment, “[a] power of attorney . . . does not transfer an ownership interest in the claim, but simply confers on the agent the authority to act on behalf of the principal.” Am. Orthopedic, 890 F.3d at 454-55 (internal quotations omitted). Accordingly, an anti-assignment clause in a plan does not impact a valid power of attorney. Id. at 455.

In that case, however, the Court concluded that the plaintiffs had waived the argument so it was not addressed further. Nonetheless, the district court noted additional authority since the American Orthopedic decision was favorable to the concept.

But courts that have addressed this issue after American Orthopedic appear to acknowledge that healthcare provider may have standing to assert claims on behalf of a patient through a POA, even if the plan at issue contains an anti-assignment clause. See, e.g., Med-X Glob., LLC v. Azimuth Risk Sols., LLC, No. 17-13086, 2018 WL 4089062, at *2 n.2 (D.N.J. Aug. 27, 2018) (noting that the discussion about POAs in American Orthopedic was dicta but “we see no reason to doubt the solidity of the proposition” that a POA can confer standing); Enlighted Sols., LLC v. United Behavioral Health, No. 18-6672, 2018 WL 6381883, at *5 (D.N.J. Dec. 6, 2018) (concluding that “a valid anti-assignment clause does not preclude a medical provider who holds a valid power of attorney from asserting the participant’s claims against the ERISA plan”).

Unfortunately for the plaintiffs, however, they could not identify plan terms to support their position. It appears that an allegation that the providers should have been paid in accordance wiht usual and customary rates might have saved the day, but the court did not find any support for such a claim.

In sum, Plaintiffs fail to identify any plan terms demonstrating that Plaintiffs should have been paid their full billed amount. Moreover, although Plaintiffs allege that they should have been paid in accordance with UCR rates, Plaintiffs do not even allege in Counts One or Two that the patients at issue were billed at UCR rates.[. As a result, Counts One and Two are dismissed.

Note: This issue was previously addressed in : : Does A Grant of Power of Attorney To A Health Care Provider Confer Standing?