Court Rules in Favor of Noncontracting Physicians
[Posted 01/08/04]

In a significant victory for physicians, a Los Angeles trial court ruled that noncontracting physicians who provide emergency services to health plan enrollees are not prohibited from balance billing those patients if an HMO fails to reimburse them for the entire amount billed.

In this case, Prospect Health Service Medical Group v. St. Johns Emergency Medical Group, the plaintiff (a capitated IPA) argued that when a physician bills and is paid by an HMO or its contracting intermediary, an “implied contract” has been created whereby the physician is prohibited from balance billing the patient under the Knox-Keene Act.

In her decision, Judge Linda Lefkowitz ruled that noncontracting physicians are not precluded from balance billing patients and that an opinion published by the Department of Managed Health Care to that effect wrongly relied on unpublished, distinguishable cases, which have no precedential value.

Judge Lefkowitz also rejected the plaintiff’s request to set Medicare rates as the defined “reasonable” rate for emergency medical services.

Click here to download a copy of the court’s opinion in this case. For more information, see CMA ON-CALL document #0130, “Noncontracting Physicians/Implied Contracts.” ON-CALL documents are available free to CMA members at CMA’s members-only website. Nonmembers can purchase ON-CALL documents for $2 per page at the CMA Bookstore.

Contact: CMA’s legal information line, 415/882-5144 or legalinfo@cmanet.org.