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


An assignment is a transfer, but a transfer is not necessarily an assignment. If the transfer is less than absolute, it is not an assignment; the obligee must have intended, at the time of the transfer, to dispossess himself of an identified interest, or some part thereof, and to vest indefeasible title in the transferee. The intention of the assignor is the controlling consideration. The intent to transfer a present ownership of the subject matter of the assignment to the assignee must be manifested by some word, written or oral, or by some act inconsistent with the assignor's remaining as owner. This has sometimes been called a present appropriation. The assignor must not retain any control over the fund or property assigned, any authority to collect, or any form of revocation. Under this definition, the appointment of an agent or the grant of a power of attorney cannot qualify as an assignment. Both are revocable, and the latter expires at the grantor's death.



A health care facility incurred expenses treating an insured patient covered by a health insurance policy. The insurance company refused to reimburse the health care facility for the expenses incurred. The health care facility filed a case for summary judgment to recover the amount of the medical bills, which was granted by the trial court against the insured. The health care facility pursued its action against the insurance company on the basis that the insured had assigned its rights to the insurance company. Documents presented showed the insured authorizing the insurance company to make payments on the insured's behalf. The Trial Court dismissed the case and ruled that the insurance company was not an assignee but a mere third party contract beneficiary. The case was elevated on appeal to the Supreme Court of Virginia. 


Does authority to make payments on one’s behalf amount to an assignment of rights?




The Court held that a mere communication to the holder of the fund (the obligor), containing no words of present assignment and merely authorizing and directing him to pay to a third party, may properly bear the interpretation that it is a mere power of attorney to the obligor himself, empowering him to effectuate a transfer by his own subsequent act. With this interpretation, the communication to the obligor is not an assignment; and, like most other powers of attorney, it is revocable by its creator and it is terminated by its creator's death.

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