ERISA Claim Dismissed

October 29, 2002 ( - A claim by an assigned hospital to receive payment for treating a patient whose lifetime maximum benefits had been exhausted was dismissed by the US District Court for Eastern Louisiana.

In Transitional Hospitals Corp of La. Inc. v Advantage Health Plan Inc. the court dismissed the hospital’s claim against the plan and preferred provider organization (PPO), Advantage Health, under ERISA, as reported by Washington-based legal publisher BNA.

A participant with Plumbers and Steamfitters Local 60 Welfare Plan and the plan’s PPO was transferred to Transitional Hospitals Corp of Louisiana by Advantage, in March of 1998.

The hospital treated the patient, only to find out after services were rendered that the patient had exhausted her lifetime maximum medical benefits before she was ever admitted.   Thus, when the hospital sought payment for its services, Advantage refused.  

Advantage was sued by the hospital, claiming it was the patient’s assignee and was entitled to benefits under ERISA.   Additionally, the hospital claimed breach of contract by Advantage as an independent third-party non-ERISA entity, citing numerous state laws.  

In a summary decision, the court found that no ERISA benefits were available to the patient and thus to the hospital either.   The hospital “had no greater rights than what [the patient] could assign.”

However, the state law claims were not dismissed by the court.   Under ERISA, such claims would be preempted; in this case they were not because the separate claims were brought by the hospital as a third-party provider, not as the patient’s assignee.