Appellate Court Rules Physicians
Can Sue HMOs for Fair Payment
[Posted 08/04/05]

The Second District Court of Appeal in Los Angeles last week ruled that physicians are allowed to take legal action against health plans that refuse to fairly reimburse them for emergency services provided to plan enrollees. The decision overturned a trial court decision that barred noncontracting physicians from suing health plans for the reasonable value of the emergency services they provide.

CMA filed a brief in the case, Bell v. Blue Cross, demanding that the appeals court reverse the lower court ruling. CMA’s brief argued that the trial court’s ruling would allow health plans to systematically underpay California’s safety-net providers, and deprive their enrollees of the benefit of the health insurance premiums they had paid.

Blue Cross claimed 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 claimed 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 CMA’s brief. “HMOs are not free of judicial scrutiny and cannot absolve themselves of this responsibility.”

Click here for a copy of the appellate court ruling.

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