Opinion ID: 39520
Heading Depth: 2
Heading Rank: 1

Heading: Whether Harris Obtained a Valid Assignment

Text: The district court held that Harris never obtained a valid assignment for the twins’ services based on its narrow interpretation of both the hospital’s “General Conditions of Treatment” form executed by Crosson and the language of the company’s Summary Plan Description (“SPD”). Like the district court, we interpret the assignment form in accordance with Texas contract law principles and the SPD under ERISA principles. An assignment is “a manifestation to another person by the owner of a right indicating his intention to transfer, without further action or manifestation of intention, his right to such other person or third person.” Wolters Village Mgmt. Co. v. Merchants & Planters Nat’l Bank of Sherman, 223 F.2d 793, 798 (5th Cir. 1955) (internal citations and marks omitted); accord RESTATEMENT (SECOND) OF CONTRACTS § 324 (1981) (“It is essential to an assignment of a right that the obligee manifest an intention to transfer the right to another person without further action or manifestation of intention by the obligee. The manifestation may be made to the other or to a third person on his behalf and, except as provided by statute or by contract, may be made either orally or by writing.”). Once a valid assignment is made, “the assignor’s right to performance by the obligor is extinguished in whole or in part and 5 the assignee acquires a right to such performance.” RESTATEMENT (SECOND) OF CONTRACTS § 317(1) (1981); see also FDIC V. McFarland, 243 F.3d 876, 887 n.42 (5th Cir. 2001) (“[I]t is generally true that ‘an assignee takes all of the rights of the assignor, no greater and no less[.]”) (quoting In re New Haven Projects Ltd. Liability Co. v. City of New Haven, 225 F.3d 283, 290 n.4 (2d Cir. 2000)). To decide whether Harris became an assignee, we must “examine and consider the entire writing and give effect to all provisions such that none are rendered meaningless.” Gonzalez v. Denning, 394 F.3d 388, 392 (5th Cir. 2004) (internal citations and quotation marks omitted). Contractual terms receive their ordinary and plain meaning unless the contract indicates the parties intended to give the terms a technical meaning. Id. Where a contract is written so that it can be given “a definite or certain legal meaning,” it is not ambiguous. Id. However, where a contract is subject to two or more reasonable interpretations, it is ambiguous and extrinsic evidence may be considered. Id. In addition, ERISA requires that the SPD be “written in a manner calculated to be understood by the average plan participant, and . . . be sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the plan.” 29 U.S.C. § 1022; see also Hansen v. Continental Ins. Co., 940 F.2d 971, 981 (5th Cir. 1991) (“[T]he very purpose of having a summary plan description of the policy is to enable the average participant in the plan to 6 understand readily the general features of the policy, precisely so that the average participant need not become expert in each and every one of the requirements, provisos, conditions, and qualifications of the policy and its legal terminology.” (emphasis in original)). Hansen also requires that any ambiguities in the SPD must be resolved in the employee’s favor, and the SPD must be read as a whole. 237 F.3d at 512. Two documents are pertinent to the assignment at issue. The first is the “General Conditions of Treatment” document that Crosson signed upon entering the hospital, several portions of which are relevant. Paragraph 5 provides: 5. FINANCIAL AGREEMENT AND ASSIGNMENT OF BENEFITS: In consideration for the services to be rendered to me, I hereby promise to pay for those services in accordance with the rates and terms now in effect at the Hospital, to the extent I am legally responsible for such payment. I hereby assign to the Hospital and any practitioner providing care and treatment to me, any and all benefits and all interest and rights (including causes of action and the right to enforce payment) for services rendered under any insurance policies or any reimbursement or prepaid health care plan . . . . (emphasis added). At the bottom of the page, the capitalized statement, “THIS IS A LEGAL CONSENT AND ASSIGNMENT OF BENEFITS FORM,” is just above where Crosson signed. Immediately below her signature, she wrote “self” on the line identifying her “relationship to patient or legal representative.” Paragraph 1 of the form, labeled “CONSENT TO TREATMENT,” states (inter alia): “If I am to receive obstetrical care, this consent is given for any child(ren) born to me during this 7 hospitalization . . . .” Juxtaposing this paragraph’s reference to children with the language of paragraph 5 and Crosson’s identification of herself as the patient, the district court concluded that the hospital’s document effected an assignment to Harris of only the benefits due for treatment of Crosson herself, not those due for the twins’ care. We disagree with the district court’s analysis. Taken in its entirety, the form signaled Crosson’s intent to assign the twins’ claims. First, Crosson expressly consented, through paragraph 1 of the form, to medical treatment for the newborns as well as herself. Second, she consented, in paragraph 4, to Harris’s release of all necessary financial and medical records to her newborns’ physician and, in broad terms, to any entity processing her health plan claim. Third, she assigned to Harris, in paragraph 5, “any and all benefits and all interest and rights for services rendered under any insurance policies or prepaid health care plan.” Fourth, in executing the “Legal Consent and Assignment of Benefits Form,” Crosson signed alternatively as “Patient or Legal Representative.” “Legal Representative” was defined in the form’s concluding section to include the “parent” of a minor patient. That Crosson designated herself as the “patient” was accurate upon her admission to Harris, because the children had not been born. The designation is, under the circumstances of her admission and the entirety of the form, no more limiting than Paragraph 5’s assignment “to the Hospital and any practitioner 8 providing care and treatment to me” of “any and all benefits,” etc. (emphasis added). In this grammatically ambiguous way, Crosson also acknowledges in paragraph 5 her personal responsibility to pay for “the services rendered to me” (emphasis added). Under Sales Support’s reasoning, however, the latter personal reference would relieve Crosson of all liability to pay for the twins’ care. Construing this form as a whole to be an insufficient assignment of benefits for the twins thus leads to absurdity. The SPD furnishes an additional basis for Harris’s claim, as it characterizes the Plan’s payment obligations under the subtitle, “Assignments to Providers”: All Eligible Expenses reimbursable under the Health Care Coverages of the Plan will be paid to the covered Employee except that: (1) assignments of benefits to Hospitals, Physicians, or other providers of service will be honored, [or] (2) the Plan may pay benefits directly to providers of service unless the Covered Person requests otherwise, in writing, within the time limits for filing proof of loss . . . Benefits due to any PPO provider will be considered “assigned” to such provider and will be paid directly to such provider, whether or not a written assignment of benefits was executed. (emphasis added). As a PPO provider, Harris contends that this provision of the Plan constitutes a valid assignment and confers standing to sue. This language is straightforward: Assignments are honored and recognized, with or without a writing. The Plan document covers all participants in the Plan; the fact that Harris also had a standard written assignment form for incoming patients does not diminish the Plan’s coverage one way or the other — Harris 9 was merely attempting to ensure that it received a valid assignment from any patient admitted for treatment. Appellees cannot use Harris’s admission form as a means to circumvent the Plan’s obligations under the plain language of its governing documents.4 Allowing a contrary result would undermine the relationship agreed to between the Plan and any PPO provider with which the Plan has an existing, “preferred” business relationship. Appellees respond that if the Plan itself effects an assignment to PPO providers, there would be no need further to add that assignees will be paid directly. Harris’s interpretation, they aver, creates an unnecessary redundancy in violation of the maxims of contract interpretation. Why Sales Support would trumpet its self-imposed obligation to pay PPO providers directly, irrespective of an assignment, is perplexing. Had it actually paid Harris directly for the services it rendered to the twins, there would have been no need for a lawsuit. In any event, applying the rule that SPDs be interpreted from the perspective of a layperson, the reference to direct payment of assignees reasonably explains to Plan members the effect 4 Sales Support invokes Letourneau Lifelike Orthotics & Prosthetics, Inc. v. Wal-Mart Stores, Inc., 298 F.3d 348, 352 (5th Cir. 2002), for the proposition that a plan can bar assignments in some situations. This may be true, but it does not apply to Sales Support’s own plan, which explicitly permits assignments. Moreover, in Letourneau, neither party contested the fact that the plan beneficiary’s hospital entrance form constituted a valid assignment of her rights under ERISA to the plan provider despite an anti-assignment clause in the plan documents; the dispute was over that plan’s coverage of the services rendered. Because the services rendered in that case were not covered by the plan in the first place, the provider lacked standing. See id. at 352-53. 10 of an assignment. A layperson would thus be informed that, where possible, benefits would be paid directly to the PPO provider, rather than through the customer. Cf. Hermann Hosp. v. MEBA Med. & Benefits Plan (“Hermann II”), 959 F.2d 569, 573 (5th Cir. 1992)(determining that “the authorization language [within the plan summary at issue] represents nothing more than cautious and prudent ‘belt and suspenders’ drafting”). The language also protects the Plan from a claim made by a participant after the Plan has already reimbursed the PPO provider. That the benefits are “considered ‘assigned’” is a colloquial explanation of a legal term to the beneficiary; this language in no way detracts from the Plan’s responsibility to pay the PPO provider as if by express assignment from the beneficiary. Both Appellant and Appellees try to draw support from Dallas County Hospital District v. Associates’ Health and Welfare Plan, 293 F.3d 282 (5th Cir. 2002). In Dallas County, this court held that a plan’s broadly worded anti-assignment clause did not prevent an assignment where a separate, more specific clause in the plan allowed assignment to a PPO provider. Id. at 288-89. The result stemmed from a careful analysis of the relevant plan provisions; the case does not require a decision for either party in the instant case. To the contrary, here, after employing the same analysis used in Dallas County and other precedents, we conclude that the Plan itself implied an assignment of the benefits of the Crosson twins to Harris, and the form signed by Crosson upon 11 her admission to Harris did nothing to alter this assignment. For all these reasons, Harris is an assignee of the twins’ benefit claims and has standing under ERISA. This interpretation of the relevant documents comports with the rationale supporting the assignability of benefits under ERISA-covered plans: To deny standing to health care providers as assignees of beneficiaries of ERISA plans might undermine Congress’ goal of enhancing employees’ health and welfare benefit coverage. Many providers seek assignments of benefits to avoid billing the beneficiary directly and upsetting his finances and to reduce the risk of non-payment. If their status as assignees does not entitle them to federal standing against the plan, providers would either have to rely on the beneficiary to maintain an ERISA suit, or they would have to sue the beneficiary. Either alternative, indirect and uncertain as they are, would discourage providers from becoming assignees and possibly from helping beneficiaries who were unable to pay them “up-front.” The providers are better situated and financed to pursue an action for benefits owed for their services. Allowing assignees of beneficiaries to sue under § 1132(a) comports with the principle of subrogation generally applied in the law. Hermann Hosp. v. MEBA Med. & Benefits Plan (“Hermann I”), 845 F.2d 1286, 1289 n.12 (5th Cir. 1988).