Introduction

The case of Da Silva Plastic and Reconstructive Surgery, P.C. v. UnitedHealthcare Insurance Company of New York, Inc. (2025 N.Y. Slip Op. 424) adjudicated by the Supreme Court of New York, Second Department on January 29, 2025, addresses significant issues surrounding the assignment of benefits in health insurance contracts. The plaintiff, Da Silva Plastic and Reconstructive Surgery, a medical provider, sought to recover damages from UnitedHealthcare (UHC) for unpaid claims related to services provided to members of the Empire Plan, a health insurance program administered by UHC.

Central to the dispute were 38 claims submitted by the plaintiff for medical services rendered. The plaintiff maintained its status as an out-of-network provider, contending that the patients assigned their rights to reimbursement to the plaintiff as per their agreements with the Empire Plan. UHC contested these assignments, leading to the motion to dismiss the plaintiff's complaints based on the provisions of CPLR 3211(a).

Summary of the Judgment

The Supreme Court of New York, Second Department, upon review, modified the lower court’s order that had previously dismissed the plaintiff's complaint. Specifically, the court denied the dismissal of the claim related to the patient identified as "EC," indicating that UHC failed to prove that contractual provisions prohibited the assignment of benefits in this instance. However, for the remaining 37 claims, the court upheld the dismissal, agreeing that the Empire Plan's terms explicitly barred assignments to nonparticipating providers like Da Silva. The court also upheld the dismissal of additional causes of action, including breach of implied contract, unjust enrichment, and violations of the Prompt Pay Law, asserting that the plaintiff's allegations did not meet the necessary legal thresholds.

Analysis

Precedents Cited

The judgment extensively references several key precedents that shaped the court’s decision:

• Neurological Surgery, P.C. v. Group Health Inc. (224 A.D.3d 697, 698): This case established that contractual provisions governing benefit assignments must be explicitly stated to prevent their assignment to third parties.
• Brettler v. Allianz Life Ins. Co. of N. Am. (40 N.Y.3d 450, 454): Reinforced the principle that insurance plan documents that prohibit benefit assignments to nonparticipating providers are enforceable.
• KIRELL v. VYTRA HEALTH PLANS LONG ISLAND, INC. (29 A.D.3d 638, 638): Supported the validity of anti-assignment clauses in health insurance contracts.
• Cole v. Metropolitan Life Ins. Co. (273 A.D.2d 832, 833): Highlighted the importance of upholding express agreement terms over implied contracts.
• Angstadt v. Empire Healthchoice Hmo, Inc. (2017 WL 10844692): Demonstrated that plaintiffs must allege a waiver of anti-assignment clauses to override them.
• American Med. Assn. v. United Healthcare Corp. (2001 WL 863561): Affirmed the necessity of explicit contractual language to allow benefit assignments.

Additionally, the judgment referenced cases related to the Prompt Pay Law, such as Maimonides Med. Ctr. v. First United Am. Life Ins. Co. (116 A.D.3d 207, 219), which clarified the statutory timelines for claim disputes.

Legal Reasoning

The court's legal reasoning centered on the enforceability of anti-assignment clauses within the Empire Plan's contracts. For the majority of the claims, UHC successfully demonstrated that the plans explicitly barred the assignment of benefits to nonparticipating providers like Da Silva. The court emphasized that when an express agreement governs the terms of a contract, claims based on implied contracts are untenable, as supported by precedents like Clark-Fitzpatrick, Inc. v. Long Island Railroad Co. (70 N.Y.2d 382).

In the case of the patient "EC," the court found that UHC did not provide sufficient evidence to prove that the contractual provisions prohibited the assignment of benefits. Consequently, the dismissal of EC's related claim was overturned, allowing Da Silva to pursue compensation for services rendered to EC.

Regarding the additional causes of action:

• Implied Contract: The court held that the existence of express contractual terms negated the possibility of forming an implied contract.
• Unjust Enrichment: It was determined that since the medical services were provided at the request of the Empire Plan members, there was no undue enrichment on UHC's part.
• Prompt Pay Law Violations: The plaintiff failed to allege timely payment or dispute within the statutory periods required under Insurance Law § 3224-a.

Impact

This judgment reinforces the stringent enforcement of anti-assignment clauses within health insurance contracts, particularly emphasizing their supremacy over implied contractual claims. For medical providers, the case underscores the necessity of verifying their in-network status and understanding the limitations imposed by insurance plan agreements on benefit assignments.

Furthermore, the partial affirmation in favor of the plaintiff regarding the "EC" claim suggests that exceptions may arise where contractual prohibitions are not clearly established or enforceable, potentially allowing out-of-network providers to seek compensation under specific circumstances.

The decision also serves as a precedent for the dismissal of claims based on unjust enrichment and implied contracts when express terms are present, guiding future litigation strategies for both plaintiffs and defendants in the healthcare sector.

Complex Concepts Simplified

Assignment of Benefits

An assignment of benefits (AOB) involves a policyholder transferring their right to receive insurance benefits directly to a service provider, such as a medical practitioner. This allows the provider to file claims and receive payments from the insurer directly.

Anti-Assignment Clause

An anti-assignment clause is a provision in a contract that prohibits the transfer of benefits or obligations to another party without explicit permission. In health insurance, such clauses prevent policyholders from assigning their benefits to nonparticipating providers.

CPLR 3211(a)

CPLR 3211(a) refers to the New York Civil Practice Law and Rules, particularly the rules governing motions to dismiss. Subsections (1) and (7) allow for dismissal on grounds such as failure to state a cause of action or other procedural deficiencies.

Prompt Pay Law

The Prompt Pay Law, codified under Insurance Law § 3224-a, mandates timely payment of insurance claims and outlines procedures for disputing claims. It ensures that insurers process and respond to claims within specified timeframes.

Conclusion

The Da Silva v. UnitedHealthcare Insurance Co. judgment reaffirms the enforceability of anti-assignment clauses in health insurance contracts, emphasizing the primacy of express contractual terms over implied agreements. While the court upheld dismissals for the majority of the claims based on clear anti-assignment provisions, the partial reversal for the "EC" claim highlights potential avenues for medical providers in cases where contractual restrictions are ambiguous or not adequately supported.

This decision serves as a critical reminder for healthcare providers to meticulously assess their network status and the contractual terms of insurance plans they engage with. For insurers, it underscores the importance of maintaining clear and enforceable contract provisions to manage benefit assignments effectively.

Overall, the judgment provides valuable jurisprudential guidance on contractual disputes in the healthcare insurance domain, balancing the interests of providers and insurers while safeguarding the contractual stipulations governing benefit assignments.