Allegiance Benefit Plan Management, Inc. doesn’t have standing in its lawsuit against ReliaStar Life Insurance Company on behalf of a local school board, the Middle District of Florida Fort Myers Division ruled.
The court first determined that Allegiance proved the school board suffered an injury since ReliaStar has yet to repay the worker.
At the same time, instead of dismissing the complaint altogether, it gave Allegiance leave to change its complaint to show standing. It hasn’t done so yet. Because Florida law dictates if an assignment is actually valid in diversity actions, the court relied on Florida law that the details of the insurance contract dictate if a policy is assignable.
U.S. District Judge Sheri Polster Chappell
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“Here, the insurance contract has an anti-assignment clause that prohibits the school board’s assignment to allegiance,” U.S. District Judge Sheri Polster Chappell wrote.
Still, Allegiance claimed that the anti-assignment doesn’t block its role with the school board because the assignment happened “post-loss," referencing the post-loss exception that Florida has, which says that property insurance policies can’t confine post-loss assignments. But the court deemed that the post-loss exception doesn’t work here since the school board had an excess risk "stop-loss" insurance policy, not a property insurance policy.
The court found that Allegiance doesn’t have standing to file a lawsuit against ReliaStar as the school board’s assignee.
Before ReliaStar had a “stop-loss” insurance policy with the District School Board of Collier County, Allegiance had an administrative services agreement with it. The issue now is a reimbursement claim that Allegiance filed for the school board that ReliaStar denied. The school board later allocated its right to reimbursement under an assignment of benefits agreement.
Allegiance in return used that role to sue ReliaStar for breach of contract and declaratory judgment, hoping to establish standing as an assignee. ReliaStar responded with a motion to dismiss for leave to amend and for lack of standing, arguing that the policy it had with the board doesn’t allow the assignment of benefits.