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Termination of physician participation in provider networks

DeVore v. Heritage Provider Network (Cal. Ct.App.)

Also under Due process

Outcome:    Neutral

Issue

The issue in this case was whether a physician could be terminated from a provider network without due process.

AMA interest

The AMA believes a physician should be afforded due process if the professional conduct of the physician is reviewed and as a result of the review the reputation, professional status, or livelihood of the physician may be negatively impacted.

Case summary

A one-physician medical practice in California was a member of several provider networks, all of which were financially related. The network participation contracts provided that they could be terminated without cause.

The provider networks terminated the membership contacts during the months of May and June 2012, without giving any reasons or an opportunity to respond. After the medical practice sued the provider networks for wrongful termination, they offered to provide the practice with an “administrative fair procedure,” an offer which the medical practice declined. The provider networks moved to dismiss the lawsuit on the grounds that the medical practice had failed to exhaust the networks’ proffered administrative procedure. The trial court granted the motion to dismiss, and the medical practice appealed.

The California Court of Appeal rejected the provider networks’ argument, reversed the dismissal, and held that the wrongful termination lawsuit should have been allowed to proceed on the merits. However, the Court of Appeal also held that its decision would be unpublished. The medical practice sought a reconsideration of the decision not to publish the Court of Appeal decision, but that motion was denied.

AMA involvement

The AMA submitted a letter to the Court of Appeal, indicating that the decision allowing the wrongful termination suit to proceed on the merits was of significant importance to physicians and represented a potentially important precedent. The AMA letter urged that the motion of the medical practice to have the appeal published should be granted.

AMA letter to California Court of Appeal

Fairfield County Medical Association v. United HealthCare of New England (D. Conn.)

Also under Due process

Outcome:    Neutral

Issue

The issue in this case was whether United HealthCare of New England (United) could unilaterally amend its participation agreements to prohibit certain of its contracted physicians from serving patients covered under United’s Medicare Advantage Plan.

AMA interest

The AMA believes that, before termination from a participation contract, a physician should be given notice of the grounds for termination, have available a defined process for appeal, and be afforded an opportunity to remediate the grounds for the proposed termination.

Case summary

United notified several thousand physicians within its network that they would no longer be entitled to participate in its Medicare Advantage Plan. In response, two county medical associations in Connecticut sued to prevent the termination, claiming that United breached the physicians’ participation contracts. United challenged the district court’s jurisdiction.

The district court judge entered a preliminary injunction to prohibit the terminations. United appealed the injunction to the Second Circuit Court of Appeals.

On February 7, 2014, the Second Circuit affirmed the preliminary injunction in modified form. The modified injunction provided that those physicians who felt they were improperly terminated from the United HealthCare Medicare Advantage plans would have 30 days to file an arbitration proceeding to challenge the termination. After the 30 days, the preliminary injunction against United would expire.

On remand, the parties stipulated that the case will be voluntarily dismissed.

Litigation Center involvement

The Litigation Center filed an amicus brief in support of the county medical societies.

United States Court of Appeals for the Second Circuit brief

Foong v. Empire Blue Cross and Blue Shield, 762 N.Y.S.2d 348 (N.Y. S.Ct., App. Div. 2003)

Also under Due process

Outcome:    Very favorable

Issue

The primary issue in this case was whether, under New York law, a managed care organization could terminate one of its panel physicians without due process.

AMA interest

The AMA supports fairness in the relationship between managed care organizations and the physicians participating in their provider networks.

Case summary

Empire Blue and Dr. Foong disputed the propriety of certain of his medical practices, as well as the justification for his billings.  Dr. Foong submitted his records to the New York County Medical Society, whose Review Committee found that Dr. Foong “had demonstrated sound medical practice in each case.”  Empire Blue nevertheless terminated Dr. Foong, who then sued Empire Blue.  Empire Blue moved for dismissal of the complaint or, in the alternative, for summary judgment.

The trial court found that Dr. Foong had asserted a potentially valid claim and denied Empire Blue’s motion.  Empire Blue appealed.

The Appellate Division affirmed the trial court.  It held that, by New York statute, physicians are entitled to a due process hearing to contest a managed care plan deselection.

Litigation Center involvement

The Litigation Center, along with the Medical Society of the State of New York, filed an amicus curiae brief in support of Dr. Foong in the Appellate Division of New York Supreme Court.

New York Supreme Court Appellate Division brief.

Potvin v. Metropolitan Life Insurance Co., 997 P.2d 1153 (Cal. 2000)

Also under Due process and Economic credentialing

Outcome:    Very favorable

Issue

The issue in this case was whether a managed care organization  could properly terminate without cause a physician’s participation in its physician-provider networks without cause, notwithstanding an “at will” termination provision in the provider contract.

AMA interest

The AMA supports fairness in the relationship between managed care organizations and the physicians participating in their provider networks.

Case summary

Dr. Potvin sued MetLife, alleging a violation of statutory and common-law rights to “fair procedure,” when it terminated him without cause from participation in its physician networks.  The trial court entered summary judgment against Dr. Potvin.  However, the California Court of Appeal reversed, holding that Dr. Potvin had a right under California common law to fair procedure, notwithstanding an “at-will” termination provision in the contract.

On May 8, 2000, by a 4-3 decision, the California Supreme Court affirmed the Court of Appeal.

Litigation Center involvement

The Litigation Center paid a portion of Dr. Potvin’s legal fees.  Additionally, the Litigation Center, along with the California Medical Association, filed an amicus curiae brief with the California Supreme Court to uphold the appellate court’s ruling.