Authorized Representatives – Fresh Look at an Old Rule

1.     The Authorized Representative Requirement Under ERISA

ERISA’s claims procedure regulations expressly give participants and beneficiaries the right to appoint authorized representatives to act on their behalf in connection with a claim for benefits and an appeal of an adverse benefit determination.  Furthermore, when a claimant clearly designates an authorized representative to assist with a claim and/or appeal, the plan should direct the claimant’s information and notifications to the authorized representative to act on behalf of the claimant.

2.     Plan Sponsors May Want to Establish Authorized Representative Procedures

A plan may establish reasonable procedures for determining whether an authorized representative has been designated.  Such procedures must be in the plan’s summary plan description (“SPD”) or a separate document that accompanies the SPD.

One advantage of maintaining procedures is to give participants, beneficiaries, and plans a mechanism to identify when an individual is authorized to act on a participant or beneficiary’s behalf and to understand the scope of that authorization.  This is becoming increasingly important as plans, employers, and employees work with third parties to help employees navigate their health benefits.

3.     An Authorized Representative Is Different From An Assignee

If there has been an assignment of benefits by a claimant to an assignee (e.g., a medical provider), it means that the claimant has assigned the assignee the claimant’s right to receive benefits under the plan (i.e., payments for services), and as a result the assignee can assert (e.g., through lawsuit) his/her right to payment.  In other words, the assignee can then act on behalf of himself to obtain payment under the plan, while an authorized representative can act on behalf of the claimant to obtain payment under the plan.

Unlike authorized representatives, ERISA does not expressly permit or prohibit participants and beneficiaries from assigning benefits.  Therefore, a plan can generally prohibit, or limit the scope of, an assignment of benefits through an anti-assignment clause in its plan document.

For more information regarding authorized representative appointments and assignment of benefits, see our October 11, 2016 SW Benefits Blog, “Dealing with Long-Winded Out-of-Network Provider Nuisance Letters.”