Non-participating providers’ rights to sue in a reimbursement dispute, again, depend on whether the patient they rendered services to has a Department of Mental Health Care (DMHC) or California Department of Insurance (CDI) regulated plan. California Health and Safety Code section 1371.4(b) provides that:
"A health care service plan, or its noncontracting medical providers, shall reimburse providers for emergency services and care provided to its enrollees, until the care results in stabilization of the enrollee, except as provided in subdivision (c). As long as federal or state law requires that emergency services and care be provided without first questioning the patient's ability to pay, a health care service plan shall not require a provider to obtain authorization prior to the provision of emergency services and care necessary to stabilize the enrollee's emergency medical condition."
While no California court has yet been called upon to determine the availability of a stand-alone, private right action for violation of section 1371.4(b), two California appellate decisions have held that medical providers could bring private actions for violations of the Knox-Keene Act under the Unfair Competition Law (UCL) and common law theories. In Coast Plaza Doctors Hosp. v. UHP Healthcare, (2002) 105 Cal. App. 4th 693, the court held that the Knox-Keene Act did not bar a health care provider from seeking reimbursement required by California Health and Safety Code section 1371 directly from the health care insurer for services rendered to enrollees of the health care plan “on a common law breach of contract theory or under the unfair competition law (Bus. & Prof. Code, § 17200).” Furthermore, if ERISA-governed policies are at issue, the protections and rights of emergency providers under Health and Safety Code section 1371.4 are “not subject to ordinary preemption under ERISA because it falls under the purview of ERISA's saving clause.” Coast Plaza Doctors Hosp. v. Blue Cross of California, (2009) 173 Cal. App. 4th 1179, 1189.
Both Bell and Coast Plaza contemplate causes of action under the UCL or at common law (breach of contract, implied-in-fact contract, equitable indemnity, comparative negligence, or other statutory or common law bases for liability) but did not definitively establish that there is a private cause of action under section 1371.4 to enforce violations of this law. In California Pacific Regional Medical Center v. Global Excel Management, Inc., (2013) Case No. 13-cv-00540 NC (unpublished), a federal court held that there is no private cause of action under Health and Safety Code section 1371.4. Thus, courts have conferred on private parties the right to enjoin violations of the Knox-Keene Act through the UCL or at common law but have not conferred a general power to enforce the Act under such provisions as section 1371.4. Instead, such “power has been entrusted exclusively” to the DOC and now to the DMHC, “preempting even the common law powers of the Attorney General.” California Med. Ass'n, Inc. v. Aetna U.S. Healthcare of California, Inc., (2001) 94 Cal. App. 4th 151, 161.
Thus, California law has established the following rules:
1. Non-participating providers providing emergency services to enrollees of DMHC and CDI-regulated policies have standing to directly sue health insurance companies to resolve a reimbursement disputes over services rendered.
2. Non-participating providers providing non-emergency services to enrollees of DMHC and CDI-regulated policies do not have standing to directly sue health insurance companies to resolve reimbursement disputes over services rendered.
Our next post will cover how reimbursement disputes are resolved in court after a provider or patient files suit alleging either UCL or common law causes of action against an insurer who has underpaid claims for services rendered...