• A
  • |
  • A
  • Text size

Managed Care Payments

Adventist Health System v. Blue Cross and Blue Shield of Florida, 934 So. 2d 602 (Fla. App. 2006)

Also under Emergency services, Payment issues for physicians

Outcome:     Very favorable

Issue

The issue in this case was whether Florida’s Emergency Services Statute (ESS) could be enforced by a non-government entity.

AMA interest

The AMA supports prompt and fair payment for physicians’ services.

Case summary

The ESS provides that if emergency medical services are provided to an HMO subscriber, the HMO is to pay for those services at the market rate.  Adventist Health System, which owned a chain of hospitals in Florida, sued Blue Cross and Blue Shield of Florida (Florida Blue) under the ESS, claiming it had been underpaid for emergency services.  The trial court ruled in favor of Florida Blue, without considering whether Florida Blue had violated the ESS payment requirements.  It held that the ESS cannot be a basis for a lawsuit by a non-government entity, and that, even if it could, Adventist had not exhausted the administrative review process.  Adventist appealed.

The District Court of Appeal reversed the trial court, finding that the ESS implied a private right of action.  It further held that Adventist was not required to exhaust its administrative remedies.

Litigation Center involvement

The Litigation Center filed an amicus curiae brief to support Adventist’s interpretation of the ESS -- in favor of an implied private right of action.

Fifth District Court of Appeals brief

American Medical Association v. Aetna Health, Inc. (D.N.J.; 11th Cir.)

Also under Payment issues (for physicians) and Usual, customary, and reasonable payments

Issue

The issue in this class action lawsuit is whether Aetna systematically understated its calculation of “usual, customary and reasonable” (UCR) payments for out-of-network medical services.

AMA interest
The AMA supports fair policies and practices regarding payment for physician services.


Case summary

The American Medical Association, several state medical societies, and two individual physicians sued Aetna Health and its various subsidiaries.  The complaint alleged that Aetna systematically miscalculated the "usual, customary and reasonable" (UCR) amounts paid to out-of-network physicians.  The miscalculations arose out of Aetna's use of two databases maintained by Ingenix, a subsidiary of United HealthCare.  The complaint asserted violations of ERISA, RICO, and the Sherman Antitrust Act.  The Judicial Panel on Multidistrict Litigation consolidated the various cases against Aetna that claim damages on account of its use of the Ingenix databases. 

On December 7, 2012, the provider and subscriber plaintiff classes (not including the association plaintiffs, as they are not a part of either class), presented a settlement agreement to the court, which would settle the class claim. The agreement included a provision under which Aetna could terminate the settlement if a threshold number of plaintiffs rejected the settlement by opting out of the lawsuit.

On March 13, 2014, Aetna advised the court that more than the threshold number of plaintiffs had opted out. Consequently, Aetna unilaterally terminated the settlement. The case is therefore proceeding on the merits.

The medical associations hope to settle their injunctive claim against Aetna.

AMA involvement

The AMA is a named plaintiff in the case.

American Medical Association v. Connecticut General Life Insurance

477 Fed.Appx. 543 (11th Cir. 2010)

Also under Payment issues (for physicians) and Usual, customary, and reasonable payments

Outcome:     Very unfavorable

Issue
The issue in this class action lawsuit was whether CIGNA systematically understated its calculation of “usual, customary and reasonable” (UCR) payments for out-of-network medical services.

AMA interest
The AMA supports fair policies and practices regarding payment for physician services.

Case summary

The American Medical Association, several state medical societies, and two individual physicians sued CIGNA and its various subsidiaries.  The case was consolidated with a parallel class action brought by patients.  The consolidated complaint alleged that CIGNA systematically miscalculated the "usual, customary and reasonable" (UCR) amounts paid to out-of-network physicians or received by patients.  The miscalculations arose out of CIGNA's use of two databases maintained by Ingenix, a subsidiary of United HealthCare.  The complaint asserted violations of ERISA, RICO, and the Sherman Antitrust Act.

After the suit was filed, CIGNA obtained an order from the United States District Court for the Southern District of Florida requiring the AMA and the various state medical societies to show cause why they should not be held in contempt for proceeding with the New Jersey litigation.  CIGNA argued that the New Jersey claims were released pursuant to a settlement agreement entered into in 2003 as part of In re Managed Care Litigation; MDL No. 1334, which was litigated in the Southern District of Florida.  This was notwithstanding that the claims asserted in the New Jersey litigation arose subsequent to the signing of the earlier settlement agreement, the AMA was not a party to the settlement with CIGNA, and the AMA was not even a party in the In re Managed Care Litigation.  The enjoined parties appealed this order to the United States Court of Appeals for the Eleventh Circuit, but the Eleventh Circuit denied the appeal, holding that the proper way to challenge the injunction was through an appeal of an order of contempt. 

The New Jersey court dismissed, without prejudice, all claims that the Florida court had ordered dismissed. Also, on September 23, 2011, the New Jersey court found that the plaintiff physicians and medical societies had failed to allege a proper cause of action, and it dismissed their claims.  The court held that the physicians had failed to allege an assignment of all benefits under their patients’ insurance policies with CIGNA, rather than merely an assignment of CIGNA’s payments.

On January 12, 2012, the physician plaintiffs and the medical societies sued CIGNA in the United States District Court for the Northern District of Georgia.  The complaint asserted many of the claims that were dismissed by the New Jersey judge. 

On January 10, 2013, the Florida court ordered the medical societies to dismiss the majority of their outstanding claims, and on February 4, 2013 the case was dismissed.  Notwithstanding the dismissal, the AMA is seeking to settle its injunctive claim against CIGNA.

AMA involvement

The AMA was a named plaintiff in the case.

American Medical Association v. United HealthCare (S.D.N.Y.), 588 F.Supp.2d 432

Also under Payment issues (for physicians) and Usual, customary, and reasonable payments

Outcome:     Very favorable

Issue

The issue in this class action lawsuit was whether United HealthCare (UHC) had been systematically understating its calculation of "usual, customary, and reasonable" charges when paying physicians or reimbursing patients for out-of-network medical services.

AMA interest

The AMA supports fair policies and practices regarding payment for physician services.

Case summary

Most reimbursement health insurance policies provide that out of network insurance benefits are to be based on whichever of the following amounts is lowest: (i) the physician’s actual charge; (ii) the physician’s usual charge; or (iii) the "reasonable and customary charge" for the services. The "reasonable and customary charge" is defined as "the usual charge of other doctors or other providers of similar training or experience in the same or similar geographic area for the same or similar service or supply."  This payment scheme is commonly called "usual, customary and reasonable" or UCR.  The insurance company determines the reasonable and customary portion of the UCR charge, supposedly based on information available to it but not to the general public.

This suit alleged that UHC’s subsidiary, Ingenix Corp., had developed a database to determine UCR and frequently used unreliable or insufficient data to make that determination.  The plaintiffs asserted that the reasonable and customary charges for certain procedures were substantially higher than UHC had allowed.

The AMA, the Medical Society of the State of New York, the Missouri State Medical Association, individual physicians and subscribers/beneficiaries, and several unions of New York State employees were named plaintiffs. The suit alleged that the plaintiffs were representatives of a large class of physicians, subscribers, and beneficiaries.

Based primarily on the information provided by the plaintiffs in this lawsuit, the New York Attorney General undertook a broad investigation into the use by insurers of defective databases when determining "usual, customary and reasonable" payments made to out of network healthcare providers.  Following that investigation, the Attorney General publicly reported that UHC had been fraudulently underpaying New York consumers through its use of the flawed Ingenix database.  The United States Senate Committee on Commerce, Science and Transportation subsequently released its own report, which similarly concluded that major health insurers had been underpaying out-of-network benefits, based on the Ingenix database.

To resolve the consumer fraud claim of the Attorney General UHC announced that it would discontinue its defective database.  As part of its settlement with the Attorney General, UHC also paid $50 million to a not-for-profit corporation, which was then to develop a replacement database, using more transparent methodologies.  Several other large health insurance companies, which had also been using the defective Ingenix database to determine UCR payments, made their own settlements with the Attorney General and made their own contributions to the development of the replacement database.  As a result, close to $100 million in insurance company funds was paid for that purpose. 

Pursuant to its settlements with the insurance companies, the New York Attorney General appointed the trustees of a new not-for-profit corporation, known as FAIR Health, to develop and manage the replacement database.  He also designated a coalition of universities in New York State to assist in that effort.  The data and methodology in the new database was to be accessible to the general public.  Hence, the new database was to be more transparent than the old one, and it was to be free from conflicts of interest.

One day after it settled with the New York Attorney General, United signed a settlement agreement with several of the plaintiffs in the American Medical Association lawsuit, including the three medical societies.  Under the settlement, United paid $350 million to resolve the claims against it. 

The aggregate payment to physicians came to approximately $200 million.

AMA involvement

The AMA was the lead plaintiff in the case.

American Medical Association v. WellPoint (C.D. Cal., 11th Cir.)

Also under Payment issues (for physicians) and Usual, customary, and reasonable payments

Issue

The issue in this class action lawsuit is whether WellPoint systematically understated its calculation of “usual, customary, and reasonable” (UCR) payments for out-of-network services.

AMA interest

The AMA supports fair policies and practices regarding payment for physician services.

Case summary

The American Medical Association, several state medical societies, and a number of individual physicians sued WellPoint, Inc.  The complaint alleged that WellPoint systematically miscalculated UCR payments to out-of-network physicians.  The miscalculations arose out of WellPoint's use of the databases maintained by Ingenix, a subsidiary of United HealthCare.  The complaint asserted violations of ERISA, RICO, and the Sherman Antitrust Act.

The Judicial Panel on Multidistrict Litigation consolidated the AMA case with various other cases against WellPoint that claim damages on account of its use of the Ingenix databases to calculate UCR payments.  WellPoint moved to dismiss the consolidated complaint.  The court granted that motion in part and denied it in part.

In the meantime, the United States District Court for the Southern District of Florida enjoined the AMA, various state medical societies, and the named physician plaintiffs from proceeding with the California litigation with WellPoint.  The Florida court found that the claims were released pursuant to a settlement agreement entered into in 2006 as part of In re Managed Care Litigation; MDL No. 1334, which had been litigated in the Southern District of Florida.  This is notwithstanding that the claims asserted in the California litigation arose subsequent to the signing of the earlier settlement agreement, the AMA was not a party to the settlement with WellPoint, and the AMA was not even a party in the In re Managed Care Litigation.  The enjoined parties appealed the order to the United States Court of Appeals for the Eleventh Circuit, but the Eleventh Circuit denied the appeal, holding that the proper way to challenge the injunction was through an appeal of an order of contempt.

The Central District of California dismissed most of the counts on various technical bases, including most of the medical association claims.

The plaintiffs have moved for class certification.  Discovery on that motion is to be completed by April 3, 2014.

AMA involvement

The AMA is a named plaintiff in the case.

American Society of Anesthesiologists/Wisconsin Blue Cross Litigation

Also under Payment issues (for physicians)

Outcome:     Very favorable

Issue
The issue in this case was whether an insurance company had improperly "bundled" and "downcoded" bills for medical services provided by anesthesiologists, which resulted in underpayments to those anesthesiologists.

AMA interest
The AMA supports fair payment to physicians for their medical services.

Case summary
A number of Wisconsin anesthesiologists complained of improper "bundling" (i.e., packaging of medical services for payment purposes) and "downcoding" by Wisconsin Blue Cross/Blue Shield, contrary to standard Current Procedural Technology ("CPT") coding guidelines for classification of physicians’ services. The Litigation Center supported the Wisconsin anesthesiologists in their efforts to secure just payments from Wisconsin Blue.

When the anesthesiologists informed Wisconsin Blue that the AMA was supporting them, Wisconsin Blue initiated settlement discussions. The case settled in the anesthesiologists’ favor.

Litigation Center involvement
The AMA provided general consultation and referral to expert witnesses, as well as publicly declaring support for the physicians.

Batas v. Prudential Ins. (N.Y. S.Ct., App. Div. 2001)

Under Health plan coverage and Payment issues (for patients)

Outcome:     Very favorable

Issue
The issue in this case was whether a health insurer’s promise in its policy to provide medical benefits consistent with prevailing medical opinion legally obliged it to do so, rather than relying on guidelines published by a third party.

AMA interest
The AMA supports the full and appropriate provision of health care services.

Case summary
The class action complaint charged that Prudential Insurance, through its PruCare policy, had promised to provide insurance benefits for medical care that were consistent with “prevailing [medical] opinion.”  Rather than providing such benefits, however, PruCare relied on guidelines created by Milliman & Robertson (M & R).  The M&R guidelines allegedly were not based on proper clinical standards and did not reflect the generally accepted standard of care in the medical community.  By relying on these and other guidelines not supported by good medical practice, the insurer denied needed treatment as not “medically necessary.” 

The complaint alleged a variety of legal theories, including breach of contract, breach of fiduciary duty, fraud, and improper interference with contractual relationships.  It also alleged a violation of the New York consumer fraud statutes.

The trial court upheld the principal claims of the complaint against Prudential Insurance’s motion to dismiss.  Prudential Insurance appealed that ruling.  The Appellate Division held that the complaint alleged a valid claim, affirming the trial court.

Litigation Center involvement
The Litigation Center submitted an amicus curiae  brief in the Appellate Division to support the trial court decision.

California Medical Association v. Aetna U.S. Healthcare

2002 Cal. LEXIS 2290 (Cal. Mar. 27, 2002 (Decision without published decision))

Also under Payment issues (for physicians)

 

Outcome:     Very unfavorable

 

Issue
The issue in this case was whether,r under a California statute, HMOs were required to pay physicians who had rendered services to the HMO’s patients, after the bankruptcy of the Independent Practice Associations ("IPAs") with which those physicians had been under contract.

AMA interest
The AMA supports fair and prompt compensation of physicians for the services they render.

Case summary
In California, HMOs are licensed and regulated under the Knox-Keene Health Care Service Plan Act of 1975. California HMOs commonly contract with unlicensed and unregulated IPAs, which, in turn, contract with individual physicians. The HMOs reimburse the IPAs through capitated payments (i.e., set payments per patient); however, the IPAs usually pay the physicians on a fee for service basis. The contracts between the physicians and the IPAs typically state that the physicians must "look solely" to the intermediaries for payment. There is no direct contractual relationship (legally, "privity") between the HMOs and the individual physicians.

Several of the large IPAs with offices in California (and in other states, particularly Texas) went bankrupt. When this occurred, many physicians, who had already rendered services to the HMOs’ patients, had only an unsecured claim in bankruptcy court for the money that the IPAs owed them. Unsecured creditors are generally the lowest priority of potential claimants in a bankruptcy case. Therefore, the physicians received little or nothing for their services from the bankrupt IPAs. They thus asked the HMOs to pay them for their services to the HMOs’ patients.

In response to these requests, the HMOs contended that they had no privity with the physicians. Under the common law of contracts, any money the HMOs owed was to the bankruptcy estate. Thus, the HMOs argued, the physicians, who had contracted with the defunct IPAs, bore the risk of their insolvency.

Section 1371 of the Knox-Keene Act, a prompt payment law, states that a managed care plan must pay uncontested claims within 30 or 45 working days (depending on the circumstances) of the plan’s receipt of the claim. The last sentence of this section states as follows:

"The obligation of the plan to comply with this section shall not be deemed to be waived when the plan requires its medical groups, independent practice associations, or other contracting entities to pay claims for covered services."

The California Medical Association (CMA) solicited California physicians with claims against bankrupt IPAs to assign those claims to it. As a result, CMA accumulated tens of millions of dollars of such claims. CMA sued several of the large California managed care organizations for recovery of this money. CMA contended that the HMOs, exercising their market power, had insisted that physicians contract with the IPAs, rather than the HMOs. At the same time, the HMOs knew that their capitation payments to the IPAs were so small that the IPAs stood a substantial risk of insolvency. The principal CMA legal theory was that Knox-Keene Act §1371 repealed the common law requirement of contractual privity and mandated that the managed care organizations pay CMA as the physicians’ assignee.

The trial judge dismissed the CMA lawsuit based on the pleadings, and the Court of Appeal affirmed the dismissal. CMA asked the California Supreme Court to hear the case on a discretionary basis. However, on March 27, 2002, the California Supreme Court, with one justice dissenting, declined to hear the case.

Litigation Center involvement
The Litigation Center filed a letter brief with the California Supreme Court, supporting the CMA request. The letter brief emphasized the importance of the case, both within California and the entire United States.

California Supreme Court brief.PDF File

 

Doe v. Blue Cross/Blue Shield of Maryland, Inc., 173 F.Supp.2d 398(D. Md. 2001)

Also under Health plan coverage and Payment issues (for patients)

Outcome:  Very Unfavorable

Issue

The issue in this case was whether a health insurance company’s internal guidelines for the determination of “medical necessity” of mental health benefits by a managed care organization were consistent with the insurance policy provisions.

AMA interest

The AMA supports the full and appropriate provision of health care services, including mental/behavioral health care services, and in connection with that, the AMA supports third party payors’ approval of payment for those services, when medically necessary.

Case summary

The plaintiffs, beneficiaries under standard Blue Cross/Blue Shield of Maryland, Inc. (“Maryland Blue”) health insurance policies, sought mental health or substance abuse benefits pursuant to the policy terms.  Maryland Blue denied these claims, contending that the treatment sought was not medically necessary.  The lawsuit alleged that Maryland Blue applied a different definition, in practice, for medical necessity than that set forth in its policies.

The court determined that the plaintiffs lacked standing to maintain their lawsuit, and dismissed the case in its entirety.

Litigation Center involvement

The Litigation Center contributed to the plaintiff’s legal expenses.

 

Foundation Health v. Westside EKG Associates, 944 So.2d. 188 (Fla. 2006)

Also under Payment issues (for physicians) and Prompt payment laws

Outcome:     Very favorable

Issue
The issue in this case was whether the Florida HMO prompt payment law, Fla. Stat. § 641.3155, could be enforced through a private (i.e., non-governmental) right of action.

AMA interest
The AMA supports fair policies and practices regarding payment for physician services.

Case summary
The plaintiff group of physicians, Westside EKG Associates, was outside the network of the defendant HMOs. Although the health insurance contracts between the HMOs and Westside’s patients did not refer to the HMO prompt payment law, Westside maintained that, by implication, the prompt payment law was incorporated into those contracts. Westside further contended that it was a third party beneficiary of those contracts.

The trial court entered judgment on the pleadings in favor of the HMOs. On appeal, the Florida District Court of Appeal reversed, ruling in favor of Westside. The District Court of Appeal certified the case to the Florida Supreme Court as an issue "of great public importance."

The Florida Supreme Court affirmed the District Court of Appeal, holding that the physicians could sue the HMOs for violation of the prompt payment law as third-party beneficiaries of the contract between the HMOs and their subscribers.

Litigation Center involvement
The Litigation Center, joined by the Florida Medical Association, the Florida Hospital Association, and the Florida College of Emergency Physicians, filed an amicus curiae brief in support of the physicians.

Florida Supreme Court brief.PDF File

HCA Health Services of Georgia v. Employers Health Insurance, 240 F.3d 982 (11th Cir. 2001)

Also under Payment issues (for physicians)

Outcome:    Very favorable

Issue
The issue here was whether a payor had obtained an unwarranted discount on hospital fees.

AMA interest
The AMA supports the full and appropriate provision of healthcare services, and in connection with that, the AMA supports third party payors’ approval of payment for those services.

Case summary
HCA, a hospital, had promised a third party that it would charge a discounted (by 25%) fee upon rendering specified medical services. The third party then assigned the discount right to a fourth party, which (unbeknownst to the patient and HCA) reassigned the discount right to the 25% discounted fee to, yet another party,  Employers Health Insurance (EHI).

The trial court found that EHI had secured an unwarranted discount on the fees charged by HCA, pursuant to a "silent PPO" scheme. EHI unsuccessfully argued that it was entitled to reduce initially by 25% HCA’s bill for its treatment of a patient and then pay HCA 80% (the rate for out-of-network providers) of the bill that already been discounted by 25%. (The patient had assigned to HCA his right to recover 80% of his out-of-network surgery costs). EHI appealed.

The Court of Appeals affirmed, finding that EHI’s claimed discounts were unauthorized and therefore invalid.

Litigation Center involvement
The Litigation Center filed an amicus brief to support HCA and the lower court’s ruling.

Harrison v. Aetna U.S. Healthcare (N.D. Ga., S.D. Fla.)

Also under Payment issues (for physicians)

Outcome:    Favorable

Issue
The issue in this case was whether insurance companies were liable to physicians under a Georgia statute that assessed interest on late payments of claims for their professional services.

AMA interest
The AMA supports fair policies and practices regarding payment for physician services.

Case summary
Harrison v. Aetna, as originally filed, sought to enforce the Georgia prompt payment law. However, it was subsumed into the Multidistrict Litigation known as In Re Managed Care Litigation—Provider Track Cases, pending in the United States District Court for the Southern District of Florida and, in such re-configuration, embraced a host of additional issues.

The original class action lawsuit was filed in Georgia state court and included the AMA, the Medical Association of Georgia, and three physicians as plaintiffs. The suit sought monetary damages under Georgia law on account of late payments of physician claims. The Georgia prompt payment statute provides that insurance companies must pay interest on "clean claims" from physicians, which are unpaid after 15 working days of their receipt. The suit contended that Aetna routinely failed to pay claims within that time frame. Shortly after the suit was filed, the Georgia Insurance Commissioner fined Aetna for violations of the prompt payment law.

Aetna removed the suit to federal court in Georgia, contending that the suit involved an interpretation of the federal ERISA statute and thus invoked federal question jurisdiction. The plaintiffs subsequently filed an amended complaint, adding a count under ERISA.

The Federal Judicial Panel on Multidistrict Litigation ("MDL") ordered this case and its companion cases transferred to Judge Federico Moreno in the United States District Court for the Southern District of Florida. Once transferred, it was consolidated with other lawsuits against managed care entities. The consolidated litigation was designated In Re Managed Care Litigation—Provider Track Cases and encompassed a broad range of allegations, most notably a charge that the principal managed care organizations in the United States conspired to defraud physicians and other health care providers, in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO). Although the AMA was a plaintiff in the Managed Care MDL proceedings, it was not named as a plaintiff in the consolidated MDL/RICO complaint.  Ultimately, the In re Managed Care Litigation suit settled on terms favorable to the plaintiff physicians.

AMA involvement
In addition to its participation as a named plaintiff in the original Harrison v. Aetna case, the AMA assisted the plaintiffs with substantial technical advice on coding and other payment issues.

Health Net of Connecticut v. Freedom of Information Commission

Also under Freedom of Information Act

Outcome:     Very favorable

Issue

The issue in this case was whether managed care organizations (MCOs) were required to disclose their records under the Connecticut Freedom of Information Act (“FOIA”).

AMA Interest

The AMA believes that managed care organizations have a disclosure obligation under FOIA.

Case Summary

The Connecticut Freedom of Information Commission ruled that several large MCOs, who helped to administer the Connecticut Medicaid program, were required to disclose information under the Connecticut FOIA relating to payment for physician services and prescription drug formulary policies and expenditures.  The disclosure would help to assure transparency in and efficient administration of the Medicaid program.  It would also help to determine whether physician payments were sufficient to secure adequate coverage for specialized medical care.

The trial court ruled that the MCOs were required to disclose their records under the Connecticut FOIA.  Although the MCOs initially indicated that they would appeal to the Connecticut Supreme Court, they later dropped their appeal.

Litigation Center Involvement

If the case had been appealed to the Connecticut Supreme Court, the Litigation Center and the Connecticut State Medical Society would have filed an amicus brief to argue that the MCOs have a disclosure obligation.

 

Kaiser v. CIGNA (S.D. Fla.)

Also under Payment issues (for physicians)

Outcome:    Favorable

Issue
The issue here was whether insurer CIGNA improperly reduced its payments to provider physicians.

Case summary
This class action lawsuit, originally filed in a Madison County, Illinois state court, alleged that, through the use of ClaimCheck Software, CIGNA improperly "bundled" and "downcoded" Current Procedural Terminology (CPT) procedures in order to reduce its payments to provider physicians. To justify such actions, CIGNA contended that the AMA sanctions the use of its edits.

The standard managed care agreement between CIGNA and the physicians on its PPO program panel provides that the physicians will be reimbursed for "Covered Services" at "the lesser of Physician’s usual and customary charge for the service provided or CIGNA’s … maximum fee schedule in effect at the time of the service, less applicable Copayments." The contract does not explicitly define what is meant by a physician’s "services." CIGNA, of course, drafted this form contract.

The case was certified as a nationwide class action. CIGNA moved to dismiss or stay the majority of the claims, contending that they were subject to arbitration agreements. CIGNA also filed a class action lawsuit in the United States District Court for the Northern District of Illinois to compel arbitration under the Federal Arbitration Act. In light of the parallel proceedings in state court, however, the federal district court declined to exercise jurisdiction. CIGNA appealed that decision, but the Seventh Circuit affirmed the ruling, with a slight, technical modification.

The plaintiffs filed their third amended complaint in the Madison County court. They expanded their claims to include violations of the federal ERISA and RICO statutes. CIGNA, on the basis of the federal statutory claims, removed the suit to the United States District Court for the Southern District of Illinois. On the same day, CIGNA and the plaintiffs signed a voluminous settlement agreement, which, subject to the court’s approval, would resolve all claims alleged in the federal district court, conditionally certified the plaintiff class and conditionally approved the proposed settlement. The order allowed class members an opportunity to opt out of the lawsuit. The settlement agreement could be finalized only if no more than 7.5% of the class members opted out of the lawsuit and if the agreement passed a fairness hearing to be held by the court.

The settlement provided for numerous forms of injunctive relief in favor of the plaintiff class. Much of the monetary relief would be contingent upon the class members’ submitting documentary proof of underpayments extending back to 1996. It also provided that CIGNA would pay the fees of the plaintiffs’ attorneys, who were to petition the court for their fees, costs, and expenses, in an amount not to exceed $36 million, and CIGNA, per its agreement, would not oppose such objection.

On Dec. 12, 2002, Judge Moreno, presiding judge in the Florida Managed Care Provider Track MDL (see case description of Harrison v. Aetna U.S. Healthcare), enjoined implementation of the settlement agreement. His order was directed toward "CIGNA, its attorneys … and any party acting in concert with CIGNA." In deference to this injunction, neither CIGNA nor the Kaiser plaintiffs attempted to implement the settlement. CIGNA and the plaintiffs both appealed the injunction to the Eleventh Circuit.

Pursuant to the rules on Multidistrict Litigation, this case was designated a potential "tag-along action." On Feb. 24, 2003, the Judicial Panel on Multidistrict Litigation transferred this case to Judge Moreno, for consolidation with the rest of the Managed Care Provider Track MDL.

Litigation Center involvement
To assist the plaintiffs at the class certification hearing, the AMA’s CPT Department submitted an affidavit, explaining to the court that the AMA interpreted CIGNA’s software edits differently from the way that CIGNA represented that those edits should be interpreted. The AMA, through the course of this case, also provided substantial technical support on coding issues. The Illinois State Medical Society also provided technical advice.

Kansas City Urology v. Blue Cross Blue Shield of Kansas City (Mo. Ct. App.)

Also under Antitrust, Arbitration, and Payment issues (for physicians)

Outcome:     Very unfavorable

Issue

The issue in this case was whether insurance companies can compel arbitration of physicians' claims that the insurers violated Missouri antitrust laws by conspiring to pay reduced fees to physicians and physician groups with whom they had entered into provider agreements.

AMA interest

Although the AMA supports arbitration clauses in certain contexts, it believes that the arbitration provisions at issue in this case are inapplicable and unenforceable. Among other things, the parties did not agree to arbitrate the antitrust dispute at issue.

Case summary

The plaintiff physician groups initiated a class action lawsuit against insurance companies alleging an antitrust conspiracy for their reducing payments to the physicians on their provider panels.

The insurance companies moved to compel arbitration, based on arbitration clauses in their provider agreements with plaintiffs. The trial court found the arbitration clauses unenforceable and denied the motions to compel arbitration. It found that the requested arbitration would effectively immunize the insurance companies from the type of claims brought by plaintiffs and prevent the enforcement of plaintiffs' antitrust claims. Defendants appealed.

Litigation Center involvement

The Litigation Center along with the Missouri State Medical Association filed a motion in the Missouri Court of Appeals to submit an amicus curiae brief to support the plaintiffs. The brief argued that the arbitration clauses are unconscionable because they were created and imposed on a take-it-or-leave-it basis, and contain impermissible limitation of damages provisions. The Court of Appeals denied leave to file the amicus brief.

Luks v. Empire HealthChoice (N.Y. Supreme Ct.) (settled in 2004)

Also under Payment issues (for physicians)

Outcome:    Favorable

Issue
The issue here was whether orthopedic surgeons were entitled to insurer reimbursement for performing multiple procedures when those procedures were performed through a single incision.

AMA interest
The AMA supports fair policies and practices regarding payment for physician services.

Case summary
This class action filed by orthopedic surgeons against a health insurance group alleged that the defendants utilized a reimbursement policy that wrongly denied physicians full compensation for medically necessary multiple procedures performed through a single incision and instead reimbursed only for one procedure. Plaintiffs alleged violations of state business and insurance law statutes, breach of contract, an implied covenant of good faith and fair dealing, unjust enrichment and fraud.

The parties ultimately settled the case, with the insurer agreeing to revise its policy so that reimbursement would be provided for all procedures performed through a single incision.

Litigation Center involvement
The Litigation Center provided the physician-plaintiffs with technical assistance through the submission of an affidavit by the AMA attesting to generally accepted medical payment practices and Current Procedural Terminology guidelines, under which the defining criteria for physician reimbursement should be the number of appropriate procedures performed and not the number of incisions made to perform such procedures.

McDonough v. Horizon Blue Cross and Blue Shield of New Jersey (D. N.J.)

Also under Payment issues for physicians

Issue

The issue in this case is whether, as part of a settlement of a class action lawsuit, health care plan subscribers could rescind their assignments of benefits to physicians without the physicians’ receiving compensation for that rescission.

AMA interest

The AMA supports fair policies and practices regarding payment for physician services.

AMA involvement

The AMA, along with the Medical Society of New Jersey, brought the problem with the wording of the settlement to the attention of the lawyers for Horizon. Horizon has promised to amend the settlement agreement accordingly.  A fairness hearing on the amended settlement was heard on June 23, 2014.

In Re Managed Care Litigation - Provider Track Cases (S.D. Fla.)

Also under Payment issues (for physicians)

Outcome:    Favorable

Issue
The issue in this case was whether various health insurance/managed care companies had conspired to defraud physicians through their payment practices.

AMA interest
The AMA supports fair and prompt payment to physicians for their services.

Case summary
These consolidated class actions, initiated by several individual physicians and medical societies, alleged that several of the principal managed care organizations in the United States conspired to defraud physicians and other health care providers, in violation of the Racketeer Influenced and Corrupt Organizations (RICO) Act. Most of the defendants settled.

The settlements, among other things, required the defendants to disclose their coding edits (i.e., changes made to the Current Procedural Terminology (CPT) codes), adopt certain CPT conventions, clarify the criteria under which medical procedures will be deemed "medically necessary," fund a charitable foundation, and reimburse up to several hundred million dollars to the class of plaintiff physicians.

Three of the defendants, however, were granted summary judgments. In essence, the court ruled that parallel actions by separate business enterprises, even if those actions may have been illegal, were not, by themselves, sufficient evidence of a RICO conspiracy.

AMA involvement
In addition to its participation as a named plaintiff in one of the original cases brought prior to the multidistrict consolidation, the AMA assisted the plaintiffs with substantial technical advice on coding and other payment issues. The AMA also helped to educate physicians about the settlements and to work with individual physicians and groups recovering past claims as part of these settlements.

Medical Association of Georgia v. Blue Cross & Blue Shield of Georgia, Inc.

536 S.E.2d 184 (Ga. App. 2000)

Also under Payment issues (for physicians) and Usual, customary, and reasonable payments

Outcome:    Very favorable

Issues

The issues in this case were whether Georgia Blue was required to provide its panel physicians with its fee schedule and the method by which that fee schedule was calculated.

AMA interest

The AMA supports fair policies and practices regarding payment for physician services.

Case summary

The Medical Association of Georgia ("MAG") and four of its members sued for a declaration that Georgia Blue had breached its provider contracts in a number of respects. The trial court ruled against the claims of the plaintiffs. The Georgia Court of Appeals, however, held that unless the provider contract with the physicians were to specify otherwise, a health insurance company must provide its doctors with its fee schedule and "the precise methodology that is used for determining payments." The appellate court remanded the case to the trial court, with instructions to order Georgia Blue to follow its ruling. The Georgia Supreme Court denied requests from both sides to review the appellate court’s decision.

Following remand, the trial court ordered Georgia Blue to provide the information ordered by the Court of Appeals. Georgia Blue subsequently certified to the court that it had complied with the trial court’s and Court of Appeals’ orders.

MAG later asked the trial court to hold Georgia Blue in contempt of court, because although Georgia Blue had disclosed its fee schedule, it had not disclosed the various edits in its payment software which could significantly alter the payments made to physicians. On this basis, MAG argued that Georgia Blue had not disclosed "the precise methodology … used for determining payments," as the Georgia Court of Appeals had required.

The court denied MAG’s contempt motion. It indicated that Georgia Blue’s practice of bundling fees was a matter separate from its failure to disclose its fee schedule. MAG appealed from that order, but withdrew that appeal after determining that Georgia Blue was disclosing its payment edits.

Based on the Court of Appeals ruling the Georgia Insurance Commissioner passed a regulation requiring all health insurance companies doing business in Georgia to disclose their fee schedules to their panel physicians. The Georgia Legislature then enacted a law to the same effect.

Litigation Center involvement

The AMA asked the trial court for leave to join the case as an additional plaintiff, but that request was denied. In addition, the Litigation Center contributed substantially to MAG’s legal expenses.

Merkle v. Aetna Health, 940 So.2d 1190 (Fla. Dist. Ct. App., 4th Dist. 2006)

Also under Payment issues (for physicians) and Usual, customary, and reasonable payments

Outcome:    Very favorable

Issue
The issue in this case was whether an out-of-network physician could sue HMOs to recover the full value of his fees for emergency services provided under statutory mandate to the HMOs’ beneficiaries.

AMA interest
The AMA supports fair payments to physicians for their medical services.

Case summary
Dr. Merkle, an orthopedic surgeon, sued four HMOs in the Circuit Court for Palm Beach County, Florida, alleging that he was outside the HMOs’ networks but regularly provided emergency medical services for their beneficiaries. For these services, the HMOs paid him at Medicare reimbursement rates, "plus a small premium." The HMOs’ payments systematically fell below his usual charges, and they also fell substantially below the usual and customary charges for such services in Palm Beach County.

The Florida Emergency Services Statute specifically required Dr. Merkle to provide his emergency services to HMO patients, even though he was out-of-network, yet the law prohibited him from balance billing the patients. However, Florida law also required the HMOs to reimburse him for his services at the lesser of (a) his charges, (b) the usual and customary charges for similar services in Palm Beach County, or (c) whatever charge the HMOs and he agreed upon within 60 days of the submittal of his claim. Since he had not come to an agreement with the HMOs, their payments fell below the legally designated standards.

The HMOs argued that the Emergency Services Statute was not intended to allow physicians or other providers of emergency medical services to bring a lawsuit against them to recover fees. Rather, they argued, the providers were constrained to follow a complex administrative procedure of the HMOs and the Florida Agency for Health Care Administration, as their exclusive remedy. The trial court accepted this argument and entered judgment for the HMOs. Dr. Merkle was not permitted to file an amended complaint, and he appealed.

The Florida District Court of Appeal reversed the trial court and found for Dr. Merkle, holding that the Florida Emergency Services Statute implied a private right of action and he was thus entitled to bring a lawsuit for its violation.

Litigation Center involvement
An amicus brief, submitted by the Litigation Center, the Florida Medical Association, two specialty medical societies, and the Florida Hospital Association, argued that the Florida legislature intended to allow providers of emergency medical services to sue the HMOs for the fair value of their fees.

Fourth District Court of Appeals brief.PDF File

Michigan State Medical Society v. Blue Cross and Blue Shield of Michigan, 2006 Mich. App. Lexis 3776 (Mich. Ct. App. Dec. 21, 2006) (unpublished opinion)

Also under Payment issues (for physicians)

Outcome:    Very unfavorable

Issue
The issue in this case was whether an insurance company serving as a third party administrator could obligate physicians included in its preferred provider listing to charge reduced fees even though the self-funded employer-insurer had no obligation to reimburse the participating physicians, and the administrator made no direct payment to physicians.

AMA interest
The AMA supports fair policies and practices regarding payment for physician services.

Case summary
Michigan physicians participating in Blue Cross Blue Shield of Michigan’s (BCBSM's) PPO network were bound by a Blue Preferred Plan Program Professional Provider Agreement (the "Trust Network Agreement"), which obligated physicians to charge reduced fees for certain "Covered Services" provided to patients enrolled in one of BCBSM's PPO products. These "Covered Services," however, included only those health care services "cited in Certificate," which Section 1.03 of the Trust Network Agreement defined as services listed in "Certificates/Riders/Benefit Plan Descriptions issued by BCBSM or under its sponsorship."

In 2003, the United Auto Workers Union ("UAW") and the three domestic automakers, General Motors, Ford, and DaimlerChrysler (collectively, the "Automakers"), decided, in their collective bargaining agreements, to establish new employee health care plans (the "New Health Plans") to replace their existing health plans. To form these new plans, the Automakers entered into agreements with BCBSM (the "Administrative Service Agreements") for it to provide administrative services, such as claims processing, record keeping, and enrollment tracking, while the Automakers would be responsible for the funding and underwriting.

As for the insureds, the New Health Plans operated in some ways like traditional PPOs. Patients were free to select their physician and were given incentives to choose a physician from BCBSM's established network. But unlike traditional PPOs, the insureds were required to pay the entire fee for office visits rather than a co-payment, and the UAW and the Automakers had no obligation to reimburse the participating physicians. Nonetheless, the insureds were promised the same reduced rate given to patients enrolled in BCBSM's PPO products. In addition, according to the New Health Plans, physicians bound by the Trust Network Agreement were obligated to charge the reduced rate, even though they did not benefit from having portions of their fees directly paid by BCBSM, as they did with patients enrolled in BCBSM-insured PPO products.

On July 21, 2004, BCBSM met with the Michigan State Medical Society (MSMS) representatives to discuss the ramifications of this new program. BCBSM stated that that the Trust Network Agreements entitled it to fix office visit fees at the reduced rate, since the Benefit Plan Descriptions issued by the Automakers were sponsored by BCBSM and included a discounted office visit fees as a "Covered Benefit." MSMS, on the other hand, asserted that the office visits were not covered by the Trust Network Agreements, and BCBSM's role in the New Health plan was not that of a sponsor, but rather one of a contractor hired to provide administrative duties alone. Therefore, the physicians had no contractual relationship with the insured.

On July 27, 2004, BCBSM released a letter declaring that any physician who refused to reduce their fee to enrollees of the New Health Plans, in accordance with the terms of those plans, would have their Trust Network Agreement terminated. According to the letter, any such physician would become an out-of-network provider for any patient enrolled in any of BCBSM's PPO products.

MSMS and the Michigan Osteopathic Association (MOA) sued for declaratory and injunctive relief on September 9, 2004, in order to prevent BCBSM from terminating any physicians for refusing to apply the terms of the Trust Network Agreement to New Health Plan members. MSMS and MOA also sought the court's declaration that physicians in BCBSM's PPO network were not obligated to limit their fees in accordance with the terms of the Network Trust Agreement and that BCBSM was not a "sponsor" of the New Health Plans. An amended complaint was filed on November 22, 2004.

On Jan. 24, 2006, without the litigants’ request, the judge entered summary judgment for BCBSM. She ruled, among other things, that BCBSM was entitled to amend the Trust Network Agreement unilaterally on 60 days notice to its panel members. MSMS and MOA appealed that decision.

On Dec. 21, 2006, the Michigan Court of Appeals affirmed, holding that BCBSM had acted within its discretion under the Trust Network Agreement.

Litigation Center involvement
The Litigation Center filed an amicus curiae brief, subsequently joined by the American Osteopathic Association, to support the MSMS and MOA position on the appeal.

Michigan Court of Appeals brief.PDF File

Pennsylvania Orthopaedic Society v. Independence Blue Cross, 885 A.2d 542 (Pa. Super. Ct. 2005)

Also under Payment issues (for physicians)

Outcome:    Very unfavorable

Issue
The issue in this case was whether the parties’ proposed settlement was a reasonable compromise of all issues released under the settlement agreement, or whether it was a "sweetheart deal," which allowed the plaintiff orthopedic surgeons (and, more importantly, their attorneys) and Independence Blue Cross (IBC) to profit at the expense of the larger class.

AMA interest
The AMA supports fair policies and practices regarding payment for physician services.

Case summary
The Pennsylvania Orthopaedic Society and several orthopedic surgeons sued IBC, alleging systematic underpayment of claims for medical services. After about three years of litigation, the parties decided to settle. Rather than simply settling the claims of the orthopedic surgeons who brought the lawsuit, the parties expanded the case to a class action, to cover any physicians who might potentially have claims against IBC.

The medical societies of Pennsylvania and New Jersey as well as the Pennsylvania Psychiatric Society attempted to intervene in the lawsuit to oppose the proposed settlement. Although the judge allowed the Pennsylvania Orthopaedic Society to appear as a party in the lawsuit, he would not allow these other medical societies to do so.

The trial court entered a 136 page order, which approved the settlement agreement. It also invalidated the vast majority of the approximately 13,000 elections by physicians to "opt out" of the plaintiff class and ordered that new notices be sent to those physicians who had opted out, attempting to bring these physicians back into the plaintiff class. The order found that the opt outs had been procured through misrepresentations in communications sent by certain state medical societies (and by counsel to one of these societies) to their members. The trial court enjoined "medical societies/associations" from communicating in any manner with class members about the settlement unless such further communications were first approved by the trial court.

The "gag order" expired coincident with the expiration of the new opt out period. Although approximately 11% of the plaintiff class opted out a second time before the deadline, IBC elected to proceed with the previously approved settlement, which the trial court finally approved.

The Superior Court affirmed the approval of the settlement. It found that there were no grounds for enjoining the AMA. However, it also found that the AMA had not been bound under the gag order.
The Pennsylvania Supreme Court denied an appeal.

Litigation Center involvement
The AMA asked for leave to file a brief as amicus curiae so that it could advise the court about certain deficiencies in the settlement agreement, but the court refused to allow it to do so.

The AMA and the state medical societies most directly impacted by the settlement believed that the trial court’s "gag order" significantly infringed on their rights of free expression and association, guaranteed by, among other laws, the First Amendment to the United States Constitution. Various appeals were filed, including an appeal by the AMA.

Pennsylvania Superior Court principal brief.PDF File

Pennsylvania Superior Court reply brief.PDF File

Prospect Medical Group v. Northridge Emergency Medical Group, 198 P.3d 86, 87 Cal. Rptr. 3d 299 (2009)

Also under Balanced billing and Payment issues (for physicians)

Outcome:     Very unfavorable

Issues

The principal issues in this case were whether, under California law, (a) out-of-network physicians who provided emergency services could "balance bill" patients (i.e., bill patients for the remaining balance after an insurer/managed care organization had paid a portion of the fee charged) who subscribed to managed care plans and (b) the Medicare rate for physician services (and the services of other health care providers) should be deemed "reasonable" compensation for those services.

AMA interest

The AMA believes that physicians should be fairly paid for their services, particularly when those services are rendered under emergency situations and under the force of legal compulsion.

Case summary

Northridge Emergency Medical Group and a co-defendant, Saint John’s Emergency Medicine Specialists, Inc. ("the physicians"), rendered emergency room medical services to a number of patients covered by a managed care plan. The physicians did not participate in the plan, and they submitted bills for their services to Prospect Medical Group, a managed care organization.  Prospect, in turn, paid the physicians the Medicare payment rates for the services rendered. In most instances, this was less than the amount the physicians had billed.

The physicians then billed the patients for the difference between the Prospect payments and the amount of their usual charges. The patients forwarded their bills to Prospect. On receiving the balance bills, Prospect sued the physicians.

The suit sought a declaratory judgment to prohibit the physicians from balance billing their patients. It relied on Cal. Health & Saf. Code §1379, which provides that, in certain instances, physicians may not balance bill their patients.  However, it was unclear whether the statute should apply to emergency medical services.

The physicians moved to dismiss the complaint, which motion the trial judge granted. Prospect appealed to the California Court of Appeal, which ruled in favor of the physicians as to both issues. Prospect then appealed to the California Supreme Court.

The California Supreme Court reversed the trial court and the Court of Appeal, holding against the physicians. It found that, when read as a whole, Cal. Health & Saf. Code § 1379 impliedly prohibited balance billing, even for emergency services.

Litigation Center involvement

The California Medical Association (CMA) filed an amicus brief supporting the emergency physicians, which the Litigation Center joined. The Litigation Center also contributed to CMA’s subsidy of the Northridge physicians’ litigation expenses.

California Supreme Court brief.PDF File

Spetman v. Harris Health Plan, Inc., No. 352-173216-98 (Tex. Ct. App.)

Also under Payment issues (for physicians)

Outcome:    Very favorable

Issue
This case concerned Harris Health Plan’s contractual provisions containing withhold and penalty clauses applicable to physicians’ patient treatment.

AMA interest
The AMA opposes lay interference in the practice of medicine and financial incentives that unduly intrude on physicians' objectivity in treating their patients.

Case summary
Physicians who had contracted with Harris Health Plan brought a class action against Harris, challenging certain provisions intended to establish financial incentives to physicians with respect to the medical care decisions they made in treating patients. The trial court preliminarily enjoined Harris from enforcing the withhold and penalty provisions of its contracts with the plaintiff physicians, because those provisions violated the Texas Insurance Code.

The case was settled. As part of the settlement, financial incentives were restricted and withhold clauses have been removed from physician contracts. In addition, approximately $4 million was refunded to the physicians.

Litigation Center involvement
The Litigation Center joined the amicus brief of the Texas Medical Association in support of the physicians seeking affirmance of the trial court’s injunction.

Sutter v. Oxford Health Plans, 133 S.Ct. 2064 (2013)

Also under Arbitration and Payment Issues (for physicians)

Outcome:    Very favorable

Issue

The issue in this case was whether an arbitrator could authorize a class arbitration without a specific provision in the arbitration agreement that allowed such action.

AMA interest

The AMA supports lawsuits that seek redress from insurers who engage in inappropriate or inaccurate downcoding and/or recoding practices.

Case summary

Dr. John Sutter signed a participation contract with Oxford Health Plans.  This contract required as follows:

“No civil action concerning any dispute arising under this Agreement shall be instituted before any court, and all such disputes shall be submitted to final and binding arbitration … pursuant to the Rules of the American Arbitration Association.”

Dr. Sutter filed an arbitration claim, alleging that Oxford had systematically bundled, downcoded, and delayed payments for his services and the services of approximately 20,000 other physicians in its network.  He requested that the claim be tried on a class basis.  After considering the scope of the arbitration clause, the arbitrator inferred an intent within that clause to allow class arbitration, and he ordered that the arbitration proceed as a class action.

Oxford then sued in the United States District Court of New Jersey to have the class arbitration award vacated, and the case bounced back and forth between the District Court and the Third Circuit Court of Appeals.  On April 3, 2012, the Third Circuit found that the arbitrator had interpreted the arbitration clause reasonably and was entitled to some deference in making that interpretation.  It affirmed the District Court order denying Oxford’s motion to vacate the arbitration award.  Oxford appealed to the United States Supreme Court.  

On June 10, 2013, the Supreme Court unanimously affirmed the Third Circuit ruling in favor of Dr. Sutter.  As a result of the Supreme Court ruling, the arbitration, which was filed in 2002, was then allowed to proceed with merit. 

Litigation Center involvement

The Litigation Center, along with the Medical Society of New Jersey, filed an amicus brief in support of Dr. Sutter.

United States Supreme Court brief

Washington State Medical Association v. Kreidler, 2013 Wash. App. LEXIS 1221 (Wash. Ct.App. 2013)

Also under Emergency services, Payment issues for physicians

Outcome:   Very unfavorable

Issue

The issue in this case was whether the Washington State Insurance Commissioner should interpret a Washington statute to require that insurance companies pay for out-of-network emergency services according to billed charges, as opposed to in-network charges.

AMA interest

The AMA supports prompt and fair payment for emergency services.

Case summary

RCW 48.43.093 is part of the Washington State Insurance Code.  The relevant provisions are as follows:

“(a) A health carrier shall cover emergency services necessary to screen and stabilize a covered person if a prudent layperson acting reasonably would have believed that an emergency medical condition existed.

(c) Coverage of emergency services may be subject to applicable copayments, coinsurance, and deductibles, and a health carrier may impose reasonable differential cost-sharing arrangements for emergency services rendered by nonparticipating providers, if such differential between cost-sharing amounts applied to emergency services rendered by participating provider versus nonparticipating provider does not exceed fifty dollars.”

The Washington State Medical Association (WSMA) helped to craft this law when it was enacted in 1997.

When the statute was enacted and for many years thereafter the Washington Insurance Commissioner interpreted it to require health insurers to pay for out-of-network emergency services, except for those copayments and deductibles that would apply to in-network services, plus a maximum $50 differential.  However, the Insurance Commissioner subsequently reconsidered his interpretation and decided that health insurance companies need only pay for out-of-network emergency services at the rates paid to in-network services.  The patients would then be liable for any shortfall.  Those physicians who provided the emergency services would also suffer a shortfall, if the patients required the proceeds of their insurance policies to make the payments.

WSMA and the Washington Chapter of the American College of Emergency Physicians (Washington ACEP) sued the Washington Insurance Commissioner, Mike Kreidler, seeking a writ of mandamus and a declaratory judgment, which would compel the Insurance Commissioner to require health insurance companies to pay the entire out-of-network billed charge, except for copayments and deductible that would apply to in-network services and a maximum $50 differential.

The Superior Court entered summary judgment against the plaintiffs.  It held that it lacked jurisdiction, as “a health carrier … is a necessary party for adjudication of relief.”

WSMA and Washington ACEP appealed to the Washington State Court of Appeals, but the Court of Appeals affirmed the lower court ruling, holding that the case could not be properly adjudicated. A health insurance company which had underpaid benefits for emergency services (according to WSMA’s interpretation of RCW 48.43.093) was a necessary party for the declaratory judgment claim, and the case failed to meet the criteria needed for a mandamus action.

Litigation Center involvement 

The Litigation Center contributed toward WSMA’s legal expenses.