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What Is an Assignment of Benefits Form?

  • Insurance 101

By Jarrod Heil

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W hether it’s a water leak, electrical issue, natural disaster or something else that affects your home, things can and probably will go wrong with your home from time to time. But that’s why you have homeowners insurance in the first place.

Florida policyholders who must file a home insurance claim will likely come across the term assignment of benefits (AOB) at some point. It’s extremely important that you know what this form entails, how to revoke the contract and whether it’s the right decision for you.

An assignment of benefits (AOB) form is a legally binding contractual document that transfers the rights and benefits of an insurance claim from the policyholder to a third-party vendor, such as a contractor. An AOB gives the third-party vendor all the rights in a claim, including the authority to file a claim, collect the insurance claim payouts and make repair decisions — all without the input or consent of the policyholder who owns the home.

It’s extremely important to note that you don’t have to sign an AOB to navigate the claims process or for the contractor to begin work on your property. It’s a red flag if the third-party vendor is pressuring you into signing an AOB. If they are, you may want to part ways and find a new contractor.

AOBs were put in place to take the stress off the policyholder, allowing them to focus on their daily life rather than negotiating an insurance claim, finding and vetting contractors, scheduling the work to be completed and overseeing all aspects of the claim.

But they’ve also become a hotbed for scammers and fraudsters who have taken advantage of these legally binding contracts to inflate repair prices, tussle with your insurer and, even worse, get away with a less-than-par job — all without the policyholder holding any legal right.

As the policyholder, you lose any legal right to control your claim the second you sign the AOB over to the contractors or third-party vendor. At that point, the contractor or third-party vendor takes over and makes every decision in the process without your input. And whatever vendor you sign the AOB over to is now the sole authority on the claim. So even if they do a horrid job, you can’t change contractors.

While signing an AOB may be right for some projects, it’s best to use your best judgment — and take some tips from this article — to determine whether signing an AOB will benefit or hinder you. Because once you sign, it can be extremely difficult to nullify the contract.

Can You Revoke an Assignment of Benefits?

In April of 2019, Florida legislature passed an assignment of benefits reform bill that aimed to protect insurance policyholders by allowing them to revoke an assignment of benefits agreement after it has been signed if their situation meets one of three unique scenarios.

The bill aimed to prevent contractors and repair companies from taking advantage of abusive AOB contracts by requiring them to “contain a provision that allows the assignor to rescind the assignment agreement without a penalty or fee by submitting a written notice of rescission signed by the assignor to the assignee:

  • within 14 days after the execution of the agreement;
  • at least 30 days after the date work on the property is scheduled to commence if the assignee has not substantially performed;
  • or at least 30 days after the execution of the agreement if the agreement does not contain a commencement date and the assignee has not begun substantial work on the property.”

How Long Is an Assignment of Benefits Good For?

Once signed, an assignment of benefits claim form locks you into the agreement with the third-party vendor for the duration of the claim it was signed for. So if it takes the vendor six months to file the claim, do all the repairs, submit the proper paperwork to your insurer and collect the claim payout, the AOB is good for six months.

The good thing is that once the repairs have been completed on your home and the claim has been closed out by your insurer , you’re no longer contractually obligated to stick with that third-party vendor for any damages that occur or claims that must be filed in the future.

Should I Sign an Assignment of Benefits?

An assignment of benefits contract is meant for rather large projects and repairs. While the decision to sign an AOB is solely up to the discretion of the policyholder, it’s good practice to never sign an AOB claims form. You especially shouldn’t sign one if you’re comfortable navigating the home insurance claims process yourself.

How to Avoid an Assignment of Benefits (AOB) Scam

If you do decide signing an AOB is right for you, there are a few things you can do to help protect yourself from AOB scammers and fraudsters:

  • Go with a different contractor if the current contractor is trying to pressure you into signing an AOB right off the bat.
  • Get estimates from multiple contractors and have them write down which repairs need to be done.
  • Ask for company references and check out online reviews left for the contractors.
  • Get everything in writing, including a cost estimate for labor and materials, what work needs to be done, how long they estimate the repairs to take and any work guarantees.
  • Read the contractor’s contract in full and don’t sign if there are any concerns or blank spaces left on the contract.
  • Consult your claims adjuster or insurer to ensure you understand all the language in the documentation you receive.

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I hereby authorize benefits to be assigned to Thomas Johnson Surgery Center, LLC, (“Provider”), for healthcare services provided to me by Provider. I hereby certify that the insurance information that I have provided the Provider is true and accurate as of the date of service and that I am responsible for keeping it updated at all times. I am fully aware that having health insurance does not absolve me of my responsibility to ensure that my medical bill is paid in full. I also understand that my insurance may not pay 100% of the amount of the medical claim and I am responsible for payment of any and all amounts not paid by my insurance company within 90 days, including for any services which my insurance company has determined not to be covered by my policy.

I hereby authorize Provider to submit claims on my behalf to the insurance company listed on the copy of the current insurance card I have provided the Provider. I assign exclusive and irrevocable right to any cause of action that exists in my favor against any insurance company or other person or entity in an amount of recovery not to exceed the extent of my bill for services provided by Provider, including exclusive and irrevocable right to receive payment for such services, make demands in my name for payments and prosecute and receive penalties, interest, court costs and other legally compensable amounts owed by an insurance company or other person or entity. I further authorize Provider to request and receive, on my behalf, from any insurance company or health care plan, any and all information and documents pertaining to my policy/plan, including a copy of the same and any information or supporting documentation concerning the handling, calculation, processing or payment of claims as such documents are required by law or regulation to be presented to me. In addition, I agree to cooperate and provide information as needed and appear as needed to assist in the prosecution of such claims for benefits upon request by Provider.

I hereby irrevocably designate, authorize and appoint Provider as my true and lawful attorney-in-fact. This power of attorney is hereby provided for the limited purpose of receiving all payments due under my policy/medical care plan on account of medical services and care rendered or to be rendered by Provider. This power of attorney shall automatically terminate, without formal action being taken, as soon as Provider has received payment in full and remedies under applicable regulatory guidelines for all medical care services provided to me. I hereby confirm and ratify all actions taken by my attorney-in-fact pursuant to the authority granted herein.

I hereby instruct and direct my insurance company to pay Provider directly for medical services and care provided by Provider, and to provide to Provider any and all relevant information and documentation in connection with such payments and claims for payment. I understand that I have the right and authority to direct where payment for services rendered is sent. If my current policy prohibits direct payment to the provider of service, I instruct that the insurer make out the check to me and mail payment directly to Provider at 197 Thomas Johnson Drive, Frederick, MD 21702, for the professional or medical expense benefits otherwise payable to me under my current insurance policy as payment towards the total charges for the professional services rendered by Provider. Upon receipt of said check, I authorize Provider to endorse such checks for deposit only, and to deposit and apply all the proceeds toward payment on my account.

I agree and understand that any funds I receive from my insurance company in connection with medical services and care rendered by Provider will be immediately signed over and sent directly to Provider. This is a direct assignment of my rights and benefits under my medical policy/plan. This payment will not exceed my indebtedness to Provider, and I agree to pay, in a timely manner, any balance of professional service charges over and above the payments made to Provider pursuant to this assignment of benefits.

I authorize the release of any information pertinent to my case to any insurance company, adjuster, or attorney involved in this case. I authorize Provider to be my personal representative, which allows Provider to: (1) submit any and all appeals if and when my insurance company denies me benefits to which I am entitled, (2) submit any and all requests for benefit information from my insurance company, and (3) initiate formal complaints to any state or federal agency that has jurisdiction over my benefits. I fully understand and agree that I am responsible for full payment of the medical debt if my insurance company has refused to pay 100% of Provider’s billed charges within ninety (90) days of any and all appeals or request for information. Should the account be referred to an attorney or outside agency for collection, I agree to pay reasonable attorney’s fees and collection expenses. All delinquent accounts bear interest at the legal rate. I also agree that any fines levied against my insurance company will be paid to Provider for acting as my personal representative.

Proceed to  Patient Financial Responsibility Policy

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Insurance claims , medical revenue recovery, what should an assignment of benefits form include.

An assignment of benefits form (AOB) is a crucial document in the healthcare world. It is an agreement by which a patient transfers the rights or benefits under their insurance policy to a third-party – in this case, the medical professional who provides services. This way, the medical provider can file a claim and collect insurance payments. In the context of personal injury protection coverage, an AOB is a critical step in the reimbursement process.

Personal injury protection coverage , or PIP, is designed to cover medical expenses and lost wages incurred after an auto accident, regardless of who is at fault. In New Jersey, drivers are required to carry PIP. Now, let’s say there’s an accident: the driver sees a medical provider for treatment, and the provider bills the patient’s carrier. There is nothing that requires that the insurance carrier to pay the provider. 

This is why an assignment of benefits form is so important. It essentially removes the patient from the equation and puts the medical provider in their place as far as the insurance policy is concerned. This enables the provider to be paid directly. If you see PIP patients and want to be paid directly by the insurer (and avoid claim denials or complex legal situations later) you must get an AOB.

The AOB authorization creates a legal relationship between the provider and the insurance carrier. What should it include?

  • Correct Business Entity

Fill out your business name correctly: it seems simple, but this can be a stumbling block to reimbursement. If your business name is Dr. Smith’s Chiropractic Care Center, you cannot substitute Dr. Smith’s, Smith’s Chiropractic, etc.  It must be Dr. Smith’s Chiropractic Care Center. If you have a FEIN number, use the name that is listed on your Health Care Financing Administration (HCFA) form.

  • “Irrevocable” 

It is important that you include this term to indicate that the patient cannot later revoke the assignment of benefits. This tells the court that the AOB is the only document determining standing , or the ability to bring a lawsuit on related matters.

Another key term: the court sees benefits as payments. It does not necessarily give you the right to bring a lawsuit. Include language such as, “assigns the rights and benefits, including the right to bring suit…” 

  • Benefit of Not Being Billed At This Time for Services

Essentially, this means that a provider gives up the right to collect payments at the time of service in exchange for the right to bring suit against the insurance company if they are not paid in full. Likewise, the patient gives up the right to bring suit, but they do not have to pay now. The wording will look like this: “In exchange for patient assigning the rights and benefits under their PIP insurance, Dr. Smith’s Chiropractic Care Center will allow patients to receive services without collecting payments at this time.”

  • Patient Signature 

Yes, it’s basic, but make sure the assignment of benefits form is signed and dated by the patient! This renders the AOB , for all intents and purposes, null and void. It is not an executed contract. You would have to start the entire process again, which means waiting longer to be reimbursed for the claim. 

  • Power of Attorney Clause

Including a power of attorney clause, which supports not only “the right of collecting payment” but also the provider’s ability to take legal action on behalf of the patients, is vital. At Callagy Law, we always argue this is inherent within the no-fault statute; however, there are carriers to argue against the right to arbitration when the language is not in the AOB.

As medical providers, it is critical that you receive proper – and timely – reimbursement for services rendered. The assignment of benefits form is one of the most important pieces in this puzzle. It is essential for an attorney to prepare, or at least review, your AOB and other admission paperwork to ensure that you are able to collect pursuant to your patients’ insurance benefits in whatever ways needed. 

Callagy Law can not only review these documents, but also ensure you are pursuing all recoverable bills to which you are eligible. If you have any questions, would like us to review your AOB form, or have issues collecting payment from insurance companies, please contact the Callagy Law team today .

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