California Med. Ass’n, Inc. v. Aetna U.S. Healthcare of Cal., Inc.

California Med. Ass’n, Inc. v. Aetna U.S. Healthcare
of Cal., Inc.,
No. D036140 (Cal. Ct. App. Dec. 5, 2001)

The California Court of Appeal upheld the dismissal of the California Medical Association’s
(CMA’s) claim that certain health plans licensed by the state violated state
insurance regulations that require health plans to reimburse physicians for
uncontested claims in a timely manner.

The defendant health plans had entered into contracts with enrollees whereby
they were obligated to pay for services rendered by physicians to those enrollees.
Similarly, they entered into agreements with Intermediaries to fulfill management
duties, including contracting with physicians to perform health care services
for enrollees, processing claims and making payments to physicians who provided
services. The health plans paid the Intermediaries, but the financially unstable
Intermediaries did not relay payment to the physicians.

CMA alleged that, under state law, the ultimate responsibility for payment
for physician services rests with the health plans. The court disagreed, holding
that there was nothing in the legislative history to indicate that the statute
was intended to require health plans to pay treating physicians where they were
not contractually obligated to do so, or that health plans were to be guarantors
of Intermediaries’ contractual obligations. The court also rejected CMA’s claim
that the health plans violated the state’s health care service plan quality
assurance program by failing to ensure the solvency of its Intermediaries. According
to the court, the program was directed at protecting patients, not physicians.
The court also rejected CMA’s claim that the defendant health plans had engaged
in unfair business practices.