Court rules Medicare plans can be sued for nonpayment

The decision could help doctors in a similar case the Texas Medical Assn. has pending against PacifiCare.

By Amy Lynn Sorrel, AMNews staff. Oct. 8, 2007.

A recent Texas Supreme Court decision gives physicians and hospitals a remedy when health plans don't make payments under Medicare Advantage contracts, doctors and lawyers say.

The state high court on Aug. 31 ruled that a group of Texas hospitals can sue Aetna in state court for allegedly failing to reimburse them. This means the facilities won't have to go through the Medicare administrative appeals process.

The court said that under the law governing Medicare's private health plan component, the appeals system is intended to deal with coverage disputes, not payment disagreements over services provided.

"The federal administrative scheme exists, first and foremost, to protect enrollees' rights to health care, not to act as a de facto claims administrator for Medicare Advantage organizations and their delegates," the unanimous opinion states.

The case heads to a trial court, where a judge will determine Aetna's obligations to reimburse the hospitals for $13 million in back pay owed by a company with which an Aetna subsidiary contracted to administer its Medicare Advantage plan.

Although the case involves hospitals, the ruling also could have implications for a similar suit the Texas Medical Assn. and several physician groups brought against PacifiCare, said Rocky Wilcox, TMA general counsel. "This really puts the burden on insurers to take responsibility."

Aetna denies liability for the claims. "The decision does not address the merits of the hospitals' claims," said spokeswoman Cynthia B. Michener. "[It] simply allows the trial court to determine whether Aetna can be held responsible, if at all."