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Medical Providers Assignment for Third-Party Liability Insurance Proceeds is Unenforceable

Medical Providers Assignment for Third-Party Liability Insurance Proceeds is Unenforceable

Action Chiropractic Clinic v. Prentice Delon Hyler,
2014 Tenn. App. LEXIS 73 (Tenn. Ct. App.  Feb. 12, 2014)

 

On October 24, 2011, William Burnette crashed his vehicle into Prentice Hyler. Burnette was insured by Erie Insurance Exchange. Hyler was injured in the accident and received medical treatment from Action Chiropractic Clinic. In exchange for the medical treatment, Hyler executed an assignment of rights to Action Chiropractic for medical expenses allowable and payable to Hyler from any “…auto insurance or any other party involved.” Erie/Burnette settled with Hyler for $8,510 and Hyler executed a release of all claims. Action Chiropractic then sent the assignment to Erie and demanded that Erie reimburse Action Chiropractic for $5,010 in outstanding medical bills. Erie refused and Action Chiropractic sued.

The Court, in affirming the dismissal of Action Chiropractic’s case, holds that the assignment between Hyler and Action Chiropractic could not be enforceable against Erie under Tennessee Code Annotated § 56-7-120 since Hyler was not within the category of individuals covered under Erie’s insurance policy. Moreover, while Hyler had a common law right to assign his “rights” to Action Chiropractic, Erie was not obligated to honor the assignment because Hyler did not have any “rights” under the Erie insurance policy that could be assigned to action and subsequently enforced.

 

Sean W. Martin, is a shareholder in the Chattanooga, Tennessee office of Carr Allison.  Sean can be reached at swmartin@carrallison.com or (423) 648-9834. 

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