Appellate Court Upholds Noncontracting Physicians’ Right to Fair Payment
[Posted 03/02/06]

In a significant victory for physicians, the Second District Court of Appeal in Los Angeles recently ruled that noncontracting physicians who provide emergency services to health plan enrollees have the right to balance-bill patients for the reasonable value of their services if a health plan or IPA fails to reimburse them appropriately.

In this case, Prospect Health Source Medical Group v. Northridge 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.

CMA filed a brief with both the trial and appellate courts in this case, explaining that nowhere in California law are noncontracting physicians required to accept health plans’ discounted payment as payment in full for services provided to its enrollees. CMA stressed that the Knox-Keene Act’s ban on balance billing applies only to contracted physicians and that the law specifically allows balance billing by noncontracting physicians.

The appellate court also ruled that health plans and IPAs have the right to contest in court the reasonableness of a physician’s billed charges, just as physicians have the right to take legal action against health plans that do not fairly reimburse them for emergency services provided to plan enrollees.

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