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The Assignment of Benefits and the Question of "Justiciability"
By: Diane B. Kadlec, Esq.

FOR THE DEFENSE

THE ASSIGNMENT OF BENEFITS AND THE QUESTION OF “JUSTICIABILITY”

By: Diane B. Kadlec, Esq.
Bruno, Gerbino & Soriano, LLP
Melville, New York


When an individual who has sustained injury in a motor vehicle accident seeks medical attention, the provider submits a series of forms, such as, the Application for No-Fault Benefits, NF-2, and an Assignment of Benefits, for the individual’s review and signature. At this time, the injured party becomes known as the “Eligible Injured Person” and his/her rights, responsibilities and benefits are dictated by 11 NYCRR Part 65 (Regulation 68). With the execution of these documents, the medical treatment(s) and/or service(s) begin.

As the reader is aware, “the company will pay first-party benefits to reimburse for basic economic loss sustained by the eligible injured person on account of personal injuries caused by an accident arising out of the use or operation of a motor vehicle or a motorcycle during the policy period and within the United States of America, its territories or possessions, or Canada.” 11 NYCRR 65-1.1 As such, the eligible injured person would be responsible for the payment of any bills which would be fully reimbursed by the carrier. The purpose of the Assignment of Benefits is to transfer the statutorily created contractual relations that exist between the carrier and the eligible injured person to the carrier and the provider of medical services and/or treatments. (See Corbin, Arthur Linton, Corbin On Contracts Sec.861-879 (Interim Edition 1959) Thus payment is made directly to the provider, leaving the eligible injured person free to concentrate on his/her convalescence. The focus of this article is the Assignment of Benefits and the potential that it has for providing the Court the grounds to dismiss the action based upon the Court’s lack of subject matter jurisdiction to hear the case because the plaintiff lacks the standing to bring the action.

Once timely notice of a motor vehicle accident has been given to the carrier, in order to claim no-fault benefits, the provider must show that it mailed its proof of claim to the carrier and that the bill was not paid or denied within thirty (30) days. At this point, the unpaid claim is sent to counsel to initiate a suit for the unpaid bill, for statutory interest and for attorneys’ fees. A Summons and Complaint is prepared on behalf of the presumed plaintiff and the supporting papers are attached and made a part thereof: a copy of the unpaid bill (a Health Insurance Claim Form, a Verification of the Treating Physician Form, NF-3, or a computer-generated bill specific to the provider), the Assignment of Benefits, a copy of the Denial of Claim Form, NF-10,( if received from the carrier and forwarded by the provider), and any supporting documents specific to the services and/or treatments rendered, such as prescriptions for medical supplies, letters of medical necessity, Initial Examination Reports, treatment or progress notes, etc.


The term “presumed plaintiff” is used since it is often difficult to determine who the medical provider really is. Practice reveals that the Health Insurance Claim Form or Verification Form of the Treating Physician may list the name of a doctor or facility, while the letterhead on the Initial Evaluation Report and any subsequent reports may provide two names of a provider and his/her facility or perhaps two names of two facilities, and the treatment or progress notes may have one name or any combination of the above. This also holds true for the Assignment of Benefits. Since many providers share office space with other providers or have created elaborate business enterprises, it appears that the documents flowing from these facilities attempt to cover “all the bases”. This practice often creates confusion as the carrier attempts to distill the information contained in the submitted supporting documentation into a coherent picture of treatment commensurate with the extent of the injuries allegedly sustained.

What is critically important to the practitioner is that the name of the provider on the Assignment of Benefits be the same name as the plaintiff in the suit. There, arguably, should be a common thread drawn between the provider that leads directly and inextricably to the plaintiff in the action. If not then the demise of the action may well be on the horizon. This office has been successful in its motion practice it seeking summary judgment when it can be shown that the provider noted on the Assignment of Benefits, the party with the contractual right to receive payment, is not one and the same as the plaintiff in the action. See: Alba Medical Supply as assignee of Stanford Bailey v. Trumbull Insurance Company, (N.Y. Civ. Ct., N: New York County, Index No. 021820CV03) wherein Judge Peter Moulton held, “Defendant has shown that plaintiff has no standing to maintain this action. Specifically, defendant has shown that the assignment of benefits document states that an entity other than defendant [sic] provided the equipment for which plaintiff seeks reimbursement. There is not evidence that Alba Medical Supply is related to Alba International Trading, Inc. Plaintiff failed to answer defendant’s cross-motion papers and bring forth any evidence that Alba Medical Supply is related to Alba International Trading Inc. Plaintiff offers not legal argument that these two entities should be treated as the same. Therefore this action must be dismissed. Standing is a pre-requisite to this Court’s subject matter jurisdiction and may be raised at any time. (See: City of New York v. State of New York, 86 N.Y.2d 286, 292; Community Board 7 v. Schaffer, 84 NY2d 148, 154-155.)”

There was another instance where the signatory to the Assignment of Benefits added “Bro” following his signature. There was no indication that this individual was the natural or legal guardian of the assignor/eligible injured person. There was no mention of this individual in any of the reports or records submitted together with the bills. His name did not appear in the Caption of the Complaint or within the context of the Complaint. In response to the motion to Dismiss for lack of standing, plaintiff discontinued the action with prejudice.

The Courts have jurisdiction to hear controversies brought by parties of interest. In the event, that the plaintiff does not withstand the scrutiny of the Bench to defend its involvement in a controversy then the Courts does not have the subject matter jurisdiction to hear the case and it must be dismissed. “Standing” is an element of the larger question of “justiciability” (See: Society of Plastics Indus.v. County of Suffolk, 77 NY2d 761, 769; Matter of Dairylea Coop. V. Walkely, 38 NY2d 6, 9). The various tests that have been devised to determine standing are designed to ensure that the party seeking relief has a sufficiently cognizable stake in the outcome so as to “cast [] the dispute ‘in a form traditionally capable of judicial resolution’” (Society of Plastics Indus. V. County of Suffolk, supra. At 772-772, quoting Schlesinger v Reservists to Stop War, 418 US 208, 220-221; see Schieffelin v Komfort, 212 NY 520, 530. Community Board 7 v. Schaffer, 84 NY2d 148, 154, 615 NYS2d 644, 639 NE2d 1 (1994). This approach is known as the “legal interest” test. See: Dairylea Cooperative v. Commisioner of the Department of Agriculture and Markets, 38 NY2d 6, 377 NYS2d 451, 339 NE2d 865 (1975).


Although seemingly a straight forward matter of office procedure, the failure to foresee the judicial ramifications of billing practices may result in the dismissal of the action even if the bill was not paid within thirty days. This is a severe measure that can be brought to the Court’s attention at anytime. Therefore, it behooves both parties to be aware when reviewing their respective files.


Editors Note: Diane B. Kadlec is a graduate of Drake University Law School and an associate with Bruno, Gerbino & Soriano, LLP, located in Melville, New York.

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