Prospect Med. Group v. Northridge Emergency
| Decision Date | 17 February 2006 |
| Docket Number | No. B172817.,No. B172737.,B172737.,B172817. |
| Citation | 39 Cal.Rptr.3d 456,136 Cal.App.4th 1155 |
| Court | California Court of Appeals Court of Appeals |
| Parties | PROSPECT MEDICAL GROUP, INC., et al., Plaintiffs and Appellants, v. NORTHRIDGE EMERGENCY MEDICAL GROUP et al., Defendants and Respondents. Prospect Health Source Medical Group, Plaintiff and Appellant, v. Saint John's Emergency Medicine Specialists, Inc., et al., Defendants and Respondents. |
Miller & Holguin, Kenneth E. Johnson, Los Angeles, and Stacey L. Zill, for Plaintiffs and Appellants.
Fulbright & Jaworski, Carol K. Lucas; Buchalter, Nemer, Fields & Younger, Carol K. Lucas; and Buchalter Nemer for California Association of Physicians Groups, Los Angeles, as Amicus Curiae on behalf of Plaintiffs and Appellants.
Law Offices of Andrew H. Selesnick and Andrew H. Selesnick, Encino, for Defendants and Respondents.
Catherine I. Hanson and Astrid G. Meghrigian for California Medical Association, San Francisco, as Amicus Curiae on behalf of Defendants and Respondents.
Plaintiffs and appellants, Prospect Medical Group, Inc., Prospect Health Source Medical Group, Primary Medical Group, Inc., doing business as Sierra Medical Group (collectively Prospect), appeal a judgment in favor of defendants and respondents, Northridge Emergency Medical Group and Saint John's Emergency Medicine Specialist, Inc. (collectively Emergency Physicians), following an order sustaining separate demurrers without leave to amend. We reverse in part, affirm in part and remand.
This case concerns the business/financial relationship of emergency room physicians and health care service plans and delegates of health care service plans. In some cases, emergency room physician groups have contracts with health care service plans (or their delegates) to provide medical services to patients who are subscribers of the plans. In other emergency situations, health care service plans subscribers are not able to procure the services of contracted emergency physicians (i.e., physicians who have contracts with the subscriber's health care service plan or its delegate).1 In these cases, the subscribers may procure the services of non-contracted emergency room physicians, who must treat all patients in emergency situations without regard to ability to pay, pursuant to state and federal law. (Health & Saf.Code, § 1317, subds. (a) & (d);2 42 U.S.C. § 1395dd.) After treatment, the health care service plan (or its delegate) must reimburse the non-contracted emergency room physicians for their services. (§ 1371.4, subds.(b) & (e).) At times, this reimbursement is less than the amount billed by the physicians.
The first issue in this case is whether section 1379 prohibits non-contracted emergency room physicians from "balance billing" individual patient/subscribers for the balance of the physician's fee not paid by the health care service plan or its delegate. We hold that section 1379 does not prohibit balance billing by non-contracted emergency room physicians.
The second issue is whether the emergency room physicians must accept the Medicare rate as full reimbursement from a health care service plan or its delegate. We hold that the physicians are not required to accept that amount as payment in full.
The third issue is whether the health care service plan (or its delegate) may litigate the reasonableness of the amount charged by emergency room physicians. We hold that a health care service plan (or its delegate) has standing to litigate the reasonableness of the amount of reimbursement sought by emergency room physicians.
As this is an appeal from a judgment following the sustaining of a demurrer, we accept as true properly pleaded material factual allegations (Roman v. County of Los Angeles (2000) 85 Cal.App.4th 316, 321-322, 102 Cal.Rptr.2d 13; Gervase v. Superior Court (1995) 31 Cal.App.4th 1218, 1224, 37 Cal.Rptr.2d 875), as well as facts that may be implied or inferred from those expressly alleged. (Lazar v. Hertz Corp. (1999) 69 Cal.App.4th 1494, 1501, 82 Cal. Rptr.2d 368.)
In Roman v. County of Los Angeles, supra, 85 Cal.App.4th 316, 102 Cal.Rptr.2d 13, the court set forth the appropriate standard of review: . . . (Id. at pp.-321-322, 102 Cal.Rptr.2d 13.)
Prospect is an independent physician association (IPA),3 which manages patient care by executing written contracts with health care service plans.4 Prospect provides for medical care to individuals (i.e., the patient/subscribers of health care service plans), who select a Prospect physician. Prospect also provides billing services to the health care service plans contracted with Prospect.
Pursuant to section 1371.4, subdivision (e), Prospect is a "delegate" of the health care service plans. As such, it is statutorily obligated to pay for emergency services provided to patient/subscribers of the health care service plans contracted with Prospect. (§ 1371.4, subds. (b) & (e).)
Emergency Physicians have exclusive licenses at two California hospitals to provide emergency room physician care. Emergency Physicians are statutorily required to provide emergency room care without regard to an individual's insurance or ability to pay. (§ 1317, subd. (d); see also 42 U.S.C. § 1395dd(a).)
Pursuant to section 1345, subdivision (i), it appears that both Prospect and Emergency Physicians are "providers" of health care services.5 The language in the statute governing the issue of balance billing, section 1379, subdivision (a), refers to "a provider of health care services." For purposes of this opinion, when we refer to a provider of health care services, we are referring to Emergency Physicians, not Prospect.
When patient/subscribers of health care service plans schedule medical services in advance, the services may be provided by physicians with whom the health care service plan or its delegate, like Prospect, has a pre-existing contractual relationship. On occasion, as in this case, when patient/subscribers of health care service plans need emergency medical care, they may be taken to a hospital where the physicians staffing the emergency room department do not have a pre-existing contractual relationship with the health care service plan or its delegate, like Prospect.
In this case, after Emergency Physicians provided emergency medical services to the patient/subscribers, Emergency Physicians submitted reimbursement claims to Prospect. In some cases, Prospect paid to Emergency Physicians less than the amounts shown on the invoices. In these cases, Prospect paid to Emergency Physicians an amount reflecting what Prospect believed was the "reasonable" amount for the emergency room medical services. Emergency Physicians then billed the patient/subscribers directly for the difference. The parties refer to this practice as "balance billing."
The parties, however, have not indicated to this court whether a physician seeking a co-payment or deductible amount from a patient constitutes balance billing. For purposes of this opinion, we look to the operative statute, section 1379, for guidance. Given an appropriate contractual relationship between a provider of health care services and a health care service plan, or its delegate, section 1379 bars providers of health care services from seeking to collect from a patient "sums owed by the plan." (§ 1379, subds. (a) & (b).) We therefore assume for purposes of this opinion that the practice of balance billing involves billing a patient only for "sums owed by the plan." In contrast, a physician seeking to collect a sum owed by a patient, such as a co-payment obligation, would not constitute the practice of balance billing.
Prospect filed two lawsuits,6 seeking declaratory relief that Emergency Physicians were entitled only to "reasonable" compensation for the medical services rendered to the patient/subscribers. Prospect identified specific emergency room physician services provided by Emergency Physicians between September 2002 and July 2003 for which Emergency Physicians allegedly charged an unreasonable rate. Prospect alleged that reasonable compensation for the services provided by Emergency Physicians was equivalent to 100 percent of the Medicare rate.
Prospect further alleged that section 1379, subdivision (b), prohibited Emergency Physicians from balance billing patient/subscribers for amounts not paid by Prospect. Prospect alleged that based upon Emergency Physicians statutory obligation to treat the patients without regard to insurance or ability to pay, and Prospects' corresponding statutory obligation to reimburse Emergency Physicians for the emergency care provided, Prospect and Emergency Physicians had an implied contractual relationship (in law or fact), which was within the scope of section 1379, subdivision (b), thus barring Emergency Physicians from balance billing the patient/subscribers for sums owed by the plan.
Prospect alleged that the practice of balance billing constituted an unfair, unlawful, or fraudulent business practice within the meaning of Business and Professions Code section 17200. Prospect sought disgorgement, restitution, attorney fees and costs, as well as injunctive...
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In the Absence of Agreement: California Courts Define Pricing for Non-contracted Medical Services
...28 Cal. Code Regs. § 1300.71(a)(3)(B). For the history of the regulations, see Prospect Med. Grp. v. Northridge Emergency Med. Grp., 136 Cal. App. 4th 1155 (2006), rev'd on other grounds, 45 Cal.4th 497 (2009).23. See, e.g., Children'sHosp. Cent. Cal. v. Blue Cross of Cal. 226 Cal. App. 4th......