Recent Appellate Decision Reinforces Missouri’s Public Policy
Disfavoring Assignment of Personal Injury Claims
Missouri courts have long recognized that a claim for personal injuries cannot be assigned, either in whole or in part, in order to “prevent the trafficking of lawsuits for pain and suffering”. Freeman v. Berberich, 60 S.W.2d 393, 401 (Mo. 1933); Ford Motor Credit Co. v. Allstate Ins. Co., 2 S.W.3d 810, 813 (Mo. App. 1999). This public policy directive was revisited by a recent Western District decision in Dr. David Eisenmenger, D.C., et al. v. National Indemnity Company, WD87011 (October 1, 2024).
The lawsuit involved a claim for uninsured motorist benefits made by a group of party bus passengers who were injured when their bus was struck by a vehicle, which left the scene of the accident, and its phantom driver was never identified. Opinion,p. 1. Several of the injured passengers sought chiropractic treatment from the plaintiff providers. Id. atp. 2. In exchange for receiving care and treatment, the patients entered into an agreement with the providers assigning their rights to the proceeds of any policy of insurance. Id. The assignment provided in relevant part:
In consideration of the Provider/s . . . waiving prepayment of the fees for their services, the patient/undersigned hereby assigns to the Provider/s . . . the patient/undersigned’s right to make a claim for benefits and payments to which the undersigned is entitled under any policy of insurance. The assignment is limited to the exact amount of all reasonable charges for necessary treatment delivered to the undersigned or anyone whom the patient/undersigned is responsible and is covered under such policy.
The patient/undersigned understands that the assignment empowers the Provider/s . . . to prosecute/litigate a claim in the undersigned’s name or in the name of the mentioned Provider/s and Provider/s may compromise, settle, [or] commence an action or otherwise resolve such claim as in Provider’s discretion it deems fit.[1]
Id.
Providers sought reimbursement for the costs of treatment rendered to the patients from the insurer of the party bus which, not surprisingly, denied coverage. Id. Providers then brought a declaratory judgment action against the insurer for breach of contract under the assignments. Id at pp. 2-3. In response, the insurer moved for judgment on the pleadings asserting that the assignment violated Missouri law because its broad language encompassed personal injury claims of the
patients. Id. at p. 3. The trial court ultimately held that the “assignments are void under Missouri law prohibiting the assignment of a personal injury claim – either in whole or in part”. Id.
On appeal, providers argued that the trial court erred because the assignments in question were not void as assignments of personal injury claims, but rather were assignments of contract claims against the patients’ first-party insurance company for medical expenses they incurred as a result of the accident. Id. at p. 4. The appellate court began its analysis of whether the assignments were void on public policy grounds by looking at the language of the assignment clause focusing on two key paragraphs of the assignment language. Id. at p. 5. The first paragraph gave provider the “right to make claim for benefits and payments to which [Patients are] entitled under any policy of insurance[,]” while the second paragraph empowered providers “to prosecute/litigate a claim in [Patient’s] name or in the name of . . . Provider/s [who] may compromise, settle, or commence an action or otherwise resolve such claims as in Providers’ discretion it deems fit.” Id. at pp. 5-6.
In striking down the assignment clause as a violation of Missouri public policy, the appellate court rejected providers’ arguments that their first-party medical claims against the insurance company were completely different from the patients’ tort claims, and were expressly limited to the exact amount of the reasonable charges for necessary treatment provided to their patients. [citation] The appellate court further emphasized that the assignments were not limited to first-party medical insurance payments and did not exclude payments from personal injury claims, but rather encompassed any policy of insurance potentially recoverable by the providers’ patients, including any policies held by the at-fault driver in the accident that injured providers’ patients. Id. at pp. 7-8.
Also fatal to providers’ claims, the appellate court found dispositive the fact that the second paragraph of the assignment clause was so broad as to empower providers to bring suit in a patient’s name, control the resolution of the lawsuit, and collect the resulting insurance proceeds, including proceeds directly tied to the patients’ personal injuries. Id. Finally, since the assignment agreement did not contain a severability clause, the portions found to be against Missouri public policy rendered the entire agreement unenforceable. Id.
In its decision, the Western District did point out the one exception to Missouri’s public policy prohibiting the assignment of personal injury claims by referencing the State’s medical lien statutes contained in RSMo. §§ 430.225-430.250. Id. at p. 6, fn. 4 These statutes permit hospitals and healthcare providers to share up to 50% of the net proceeds of a patient’s personal injury claim, which includes benefits from an insurance carrier. Parea v. Progressive Northwestern Ins. Co., 678 S.W.3d 167, 176 (Mo. App. 2023). Id.
The Western District’s full opinion can be found here: https://www.courts.mo.gov/file.jsp?id=213037
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Written By: Matthew J. Eddy
Phone: (314) 436-8355
Email: meddy@lashlybaer.com
The attorneys at Lashly & Baer, P.C. routinely advise healthcare providers on patient fee/billing issues, perfecting medical liens, and other healthcare regulatory matters. Please consult with your Lashly & Baer Healthcare Advisory attorney for more information or to answer any specific questions.
[1] The assignment agreement did not include a severability clause and also stated,
The patient/undersigned understands this assignment does not relieve the undersigned from responsibility and liability for payment of such reasonable charges until such charges are recovered from an insurance company. If there is no recovery or partial recovery of payment for such charges the undersigned remains liable for the amount not paid.
Opinion at p. 2.