Court Ruled Against BCBS PPO Hospital for Faulty ERISA Assignment, Even With A PPO Contract

Share Article Offers Webinars To Examine The New Federal Court Decision on March 02, 2012 Against A PPO Hospital for a Faulty ERISA Assignment, As A BCBS PPO Contract Is Not an ERISA Assignment. However, The Court Denied The Plan’s Anti-Assignment Argument.

“This is how a PPO in-network hospital lost everything for avoiding or ignoring ERISA,” said Dr. Zhou. offers new Executive Webinars to examine the new federal court decision on March 02, 2012 against a PPO hospital for a faulty ERISA assignment, as a BCBS PPO contract is not an ERISA assignment. This Court decision is a global managed care legal GPS for all PPO hospitals and providers for their false hope and belief that a PPO provider will automatically obtain an ERISA assignment or ERISA rights as the plaintiff PPO hospital asserted in this case, and that hospital’s longstanding traditional assignment is good for ERISA appeals and litigations. However, the Court denied the plan’s anti-assignment argument, which protects all PPO or non-PPO hospitals and providers with valid ERISA assignments.

The new Executive Webinars will provide in-depth evaluation of this new in-of-network litigation, and discuss practical solutions through proactive ERISA compliant assignments and appeals in accordance with applicable federal ERISA and PPACA laws for all healthcare providers.

“Most hospitals and providers are legally allergic to the federal ERISA law governing most commercial health claims, and have tried to avoid ERISA by joining a PPO or HMO network. This Court decision is a wake up call for all providers,” says Dr. Jin Zhou, President of, a national expert on PPACA and ERISA appeals and compliance.

The court case info: MEDICAL UNIVERSITY HOSPITAL AUTHORITY/MEDICAL CENTER v. OCEANA RESORTS. Case #: 2:11-cv-1522, United States District Court, D. South Carolina, Charleston Division, March 2, 2012.

According to the Court document, the plaintiff PPO hospital argued that a PPO provider doesn’t need an ERISA assignment or otherwise has automatically obtained an ERISA Assignment from PPO contracting or participation:

“First, MUSC argues that the Plan implicitly assigned benefits to all network providers based on the payment structure laid out in the Plan, and therefore, MUSC did not even need the Consent Form to obtain derivative standing. Under the terms of the Plan, a participant need only pay the deductible to a network provider from whom he or she obtains medical services. The network provider is then required to file its claim for those services with the TPA. The Plan states that the network provider will receive the scheduled amount as payment in full for the medical services. The terms of the Plan indicate that generally some party other than the participant will reimburse the Plan for the claims. Defendants agree that MUSC is a network or preferred provider.”

The Court rejected plaintiff’s PPO ERISA Assignment argument and stated that ERISA assignment has to come from a patient, not Plan or PPO network:

“MUSC did not claim that it had standing as a third-party beneficiary of the Plan; nor could it have successfully pursued this argument. The only Circuit to squarely address this issue held that "ERISA does not countenance third-party beneficiary claims," and found, therefore, that a hospital could not have independent standing without an enforceable assignment from the participant. Dallas Cnty. Hosp. Dist. v. Assoc.'s Health & Welfare Plan, 293 F.3d 282, 289 (5th Cir. 2002). Thus, without a valid assignment from a beneficiary or a participant, MUSC could not have obtained derivative or direct standing.”

The Court also ruled for the self-insured ERISA plan because the plaintiff’s alleged ERISA assignment only covers an insurance policy not self-insured ERISA plan:

“Additionally, the Consent Form, which was prepared by MUSC, does not cover assignments to self-funded employee benefits plans. The Consent Form assigns benefits due under "any insurance policy." The assignment provides examples of types of coverage which would be assigned, all of which are types of insurance. Section 1144(b)(2)(B) of ERISA forbids states from deeming an employee benefits plan "to be an insurance company or other insurer . . . or to be engaged in the business of insurance." See also Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 372 (2002) ("ERISA's `deemer' clause provides an exception to its saving clause that prohibits States from regulating self-funded plans as insurers."). The Fourth Circuit, therefore, has held that "[t]hird-party administrator[s], [are] not . . . insured[s]." Sheppard & Enoch Pratt Hosp., 32 F.3d at 123 n.1; but see Wheeler, 62 F.3d at 638 (discussing self-funded "ERISA health insurance plan" and applying principles of insurance law).”

However, the Court rejected ERISA plan’s anti-assignment argument:

“Because it is possible for a medical provider to acquire derivative standing through an assignment of benefits by a plan participant, MUSC's Complaint states a plausible claim for relief, and therefore, defendants' motion to dismiss is denied”.

Due to the lack of or faulty ERISA Assignment, the Court finally ruled for the self-insured ERISA plan:

“For the foregoing reasons, the court DENIES defendants' motion to dismiss, but GRANTS their motion for summary judgment.”

“This is how a PPO in-network hospital lost everything for avoiding or ignoring ERISA,” said Dr. Zhou.

To find out more about PPACA Claims and Appeals Compliance Services from

Located in a Chicago suburb in Illinois, offers free webinars, basic and advanced educational seminars and on-site claims specialist certification programs for doctors, hospitals and commercial companies, as well as numerous pending national ERISA class action litigation support. Dr. Jin Zhou is regarded as the industry “Godfather of ERISA claims” for healthcare providers.

For any questions, please contact Dr. Jin Zhou, president of, at 630-808-7237.

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