Courts split on arbitrating pay disputes

A Missouri ruling allows doctors to take insurers to court, while a Tennessee decision puts physicians in arbitration. Both are expected to be appealed.

By Amy Lynn Sorrel, AMNews staff. Jan. 22, 2007.

Physicians won one round and lost another fighting the nation's health plans over payment practices.

A Kansas City, Mo., trial court in December 2006 ruled that nearly 2,500 doctors are not locked into arbitrating their individual claims with Blue Cross and Blue Shield of Kansas City, Humana and United Healthcare.

The decision paves the way for the doctors to move ahead with their class-action lawsuit alleging that the insurers had conspired to hold down reimbursement rates in the area.

The doctors' case "creates a factual perfect storm that makes these contracts unconscionable and against public policy," Judge Charles E. Atwell said in his opinion. "To enforce these arbitration agreements would be tantamount to granting immunity to these defendants regarding any kind of claim touching upon conspiracy or relief as part of a class action."

The fees the health plans pay in the Kansas City area are 30% less than what doctors in surrounding cities get for the same services, according to the physicians' antitrust lawsuit.

"When physicians enter into a contract with a payer that contains an arbitration clause, they do not contract for an insurance company to engage in anticompetitive behavior," said Diane Breneman, the doctors' attorney.

Family physician William D. Soper, MD, said the court's decision gives doctors some recourse in negotiating with insurers, instead of being forced to accept their terms.

Arbitrating their separate claims "would be virtually impossible for individual doctors to do because it would be so onerous to pay for," said Dr. Soper, president of Mid America Medical Affiliates, a physician legal advocacy group in Kansas City that is assisting the doctors in their case.