## Facts

- William Green was covered under a group health insurance policy issued by Prudential; his wife, Joan Green, was a covered dependent who received nursing services from Kelly Health Care, Inc.
- Green signed two provider-drafted documents addressing payment for Kelly’s services.
- A “Payment Agreement for Contracted Services” stated nursing services “may be paid directly” to Kelly by Prudential and that Green remained fully responsible for any amounts not paid by Prudential within a specified period; the parties stipulated there was no evidence this document was delivered to Prudential.
- An “Authorization of Benefits to Kelly Health Care” stated Green authorized payment directly to Kelly of nursing service benefits, “if any, otherwise payable to me”; it was not delivered to Prudential until months after services began.
- Kelly billed Prudential and demanded direct payment; Prudential refused to pay Kelly directly.
- Kelly sued both Prudential and Green; the trial court entered default judgment against Green and granted summary judgment to Prudential, concluding the documents were an authorization rather than an assignment and that Kelly was not a third-party beneficiary.
- Kelly appealed the judgment in favor of Prudential.

## Issues

1. Whether the documents signed by the insured constituted an assignment of benefits under the health policy, permitting the provider to sue the insurer in its own name.
2. Whether, absent an assignment, the provider could sue the insurer as an intended third-party beneficiary of the health insurance contract.

## Decision

- The Supreme Court of Virginia affirmed summary judgment for Prudential.
- The court held the writings did not effect an assignment of the insured’s rights; they were, at most, a revocable authorization or direction for payment.
- The court held the provider was not an intended third-party beneficiary of the insurance contract; any benefit to the provider was incidental.
- Because no assignment occurred, the statutory rule permitting suit by an assignee of a non-negotiable chose in action did not apply.

## Legal Principles

- An assignee may sue on a non-negotiable chose in action only if there is an actual assignment; a statute authorizing suit by an assignee is inapplicable where the transfer is not an assignment.
- An assignment requires clear intent to transfer an identified interest and to divest the transferor of that interest; a transfer that is less than absolute does not qualify.
- A revocable power or authorization to receive or collect proceeds is not an assignment of contractual rights.
- Language authorizing an insurer to pay a provider directly, especially when benefits remain “otherwise payable” to the insured and the insured retains responsibility for unpaid charges, indicates authorization rather than assignment.
- A third party may enforce a contract only when the contracting parties clearly intended to confer a direct, enforceable benefit; incidental beneficiaries lack standing to sue.

## Conclusion

The court held that an insured’s direct-payment authorization to a health-care provider did not transfer the insured’s contractual rights to policy benefits, and the provider also lacked third-party-beneficiary status; therefore, the provider could not sue the insurer directly for payment.


Kelly Health Care, Inc. v. Prudential Ins. Co. of Am., 226 Va. 376, 309 S.E.2d 305 (Va. 1983)