The Tennessee Supreme Court has affirmed a Court of Appeals decision that a chiropractic patient’s assignment of benefits was not an effective assignment of his rights to insurance proceeds from a third party’s insurance company.
The case stems from a 2011 automobile accident that injured defendant Prentice Delon Hyler, who was treated by Action Chiropractic Clinic in Nashville for his injuries. According to the case summary, Hyler signed a document titled “Assignment of Rights,” to the clinic stating that the clinic would be the beneficiary of, among other things, “medical expense benefits allowable” by various insurance policies. Hyler named Erie Insurance Exchange, the insurance company for the other driver involved in the accident, as the insurance company on the assignment.
Hyler incurred $5,010 in clinic fees for his treatment and subsequently received an $8,510 settlement from Erie Insurance Exchange. Upon reaching a settlement agreement, Hyler executed a “General Release” to release Erie from any other claims related to the accident.
A settlement check was then sent to Hyler by Erie accompanied by a letter stating that Erie “does not pay medical providers or reimburse health insurance carriers directly.” The letter also stated that Hyler would be responsible for handling any balance or reimbursements out of the settlement check.
After not receiving payment from either defendant for services rendered, Action Chiropractor then sued Erie Insurance and Hyler alleging, among other things, breach of contract and non-payment of insurance benefits to recover the $5,010 payment for chiropractic services.
Erie filed a motion for a summary judgement, which the trial court in Davidson County granted. In its judgment the trial court stated that Hyler “had no vested rights against Erie to assign when he executed the Assignment of Rights” and written consent would have been required by Erie prior to any assignment of rights. The judgement also stated that no contractual privity existed between the plaintiff – Action Chiropractic – and Erie. The court said the suit was a “direct action against an insurance company, which is prohibited in the state of Tennessee.”
The Court of Appeals also affirmed the trial court’s ruling.
In an opinion authored by Tennessee Supreme Court Justice Jeffrey S. Bivins, the court agreed with the Middle Section Circuit Court for Davidson County that the assignment in the case was ineffective, noting that the policy with Erie belonged to the other individual involved in the automobile accident, not Hyler.
“If Defendant Hyler had named his own insurance policy, any payment to Defendant Hyler under that policy in fact would be for Defendant Hyler’s medical treatment…however a payment from Defendant Erie to Defendant Hyler would be for the purpose of settling a legal claim against Erie’s insured,” Bivins’ wrote.
Topics Carriers Legislation Tennessee
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