CMA and DMHC Tell Court that Physicians Must Be Allowed to Sue HMOs for Fair Payment
[Posted 04/07/05]

In an appeal of a physician-unfriendly trial court ruling, CMA last week filed a brief arguing that physicians must be allowed to take legal action against health plans that refuse to fairly reimburse them for emergency services provided to plan enrollees. The trial court in this case, Bell v. Blue Cross, ruled that noncontracting physicians cannot sue health plans for the reasonable value of emergency services provided to plan enrollees. The trial court’s ruling, if allowed to stand, allows health plans to systematically underpay California’s safety-net providers and unnecessarily involves patients in billing disputes between their physicians and their health plans.

Blue Cross claims that the Knox-Keene Act does not require that health plans make patients financially “whole” in emergency cases, and therefore the plan has no responsibility to reimburse physicians for the reasonable value of emergency medical services provided to its enrollees. Blue Cross also claims that neither patients nor physicians have a right of action in such cases and that only the Department of Managed Health Care (DMHC) has the authority to enforce the provisions of the Knox Keene Act.

“The law leaves no room for debate that plans must pay reasonably for emergency services provided to their enrollees by noncontracting physicians,” wrote CMA legal counsel Astrid Meghrigian in the brief that was filed last week with the with the Second District Court of Appeal in Los Angeles. “HMOs are not free of judicial scrutiny and cannot not absolve themselves of this responsibility.”

DMHC also filed a brief in this case, demanding that the appeals court overturn the lower court’s ruling. “The fundamental flaw in the trial court’s ruling is that it allows a health plan to unilaterally determine the level of reimbursement for noncontracted emergency providers without further recourse,” wrote DMHC attorneys in the brief. “If providers are precluded from bringing private causes of action to challenge health plans’ reimbursement determinations, health plans may receive an unjust windfall and patients may suffer an economic hardship” when providers bill patients to recover the difference between the health plan’s payment and the provider’s billed charges.

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