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Appeals court allows California surgery center to seek $1M+ in unpaid claims

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The U.S. Ninth Circuit Appeals Court allowed Los Angeles-based Beverly Oaks Physicians Surgery Center to seek unpaid claims from Blue Cross and Blue Shield of Illinois, reversing a decision from a district court, according to a Dec. 17 court filing.

The surgery center performed out-of-network procedures on 14 patients who had employer-sponsored health insurance plans administered by BCBS. Each patient signed a form granting the center the right to collect benefits. The center sought preapproval and was told by BCBS it would typically pay between 50-100 percent of the claim.

After performing the procedures, the center submitted a claim to collect Employee Retirement Income Security Act benefits. Blue Cross either denied every claim or paid a small reimbursement amount citing its anti-assignment of benefits provision. BCBS did not mention its anti-assignment of benefits provision in pre-approval conversations. The surgery center sought $1.4 million but BCBS paid out only $140,000.

BCBS claimed the claims could be denied because its anti-assignment provision was valid and enforceable. The district court agreed and dismissed the complaint. The surgery center appealed.

Judge Jennifer Choe-Groves wrote in her opinion that the surgery center had a right to its claims because BCBS did not bring up the provision in preapproval conversations.

“If [Blue Cross] representatives would have stated in any of these telephone communications that [Blue Cross] intended to rely upon an anti-assignment clause as a basis to bar payment, [Beverly Oaks] would not have performed surgery center facility services for the ERISA Plan in question, or any of its members or their dependents," Judge Choe-Groves wrote in her opinion. "These misrepresentations continued over time throughout the administrative review process. Beverly Oaks pleaded that the anti-assignment provisions at issue were ambiguous. It pleaded that the representations Blue Cross made about the plan were interpretations of the plan and not amendments or modifications. That was sufficient."

Read the full judgment here.

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