Tenth Circuit Upholds BC/BS's Anti-Assignment Provisions

Extract

In St. Francis Regional Medical Center v. Blue Cross & Blue Shield of Kansas (49 F.3d 1460 (1995)), the United States Court of Appeals for the Tenth Circuit upheld Blue Cross/Blue Shield of Kansas's anti-assignment requirement, on the grounds that the Employee Retirement Income Security Act (ERISA) preempted a hospital's claim against Blue Cross. The court also held that public policy supported anti-assignment requirements in health plans not covered under ERISA.

When drafting ERISA, Congress did not explicitly address assignability of health care benefits. According to the court of appeals, congressional silence constituted an intent to allow the parties to negotiate freely the assignment of health care benefits. Examining non-ERISA health plans, the court adopted a balancing test to determine the validity of anti-assignment clauses; it found that anti-assignment requirements promote freedom of contract and may include medical costs.