Tuesday, April 17, 2018
Page 3
Court of Appeal:
Hospitals Can’t Collect $11.2 Million From Blue Shield
Opinion Says PPOs, Unlike HMOs, Have No Statutory Obligation to Make Direct Payment to Providers of Emergency Services
By a MetNews Staff Writer
Blue Shield has no statutory obligation to pay a hospital, with which it has no contract, for emergency services to its insureds, the Fourth District Court of Appeal has held.
The decision comes in a case in which actions by four hospitals—two in San Bernardino County, one in San Diego County, and one in Shasta County—were coordinated and assigned to San Bernardino Superior Court Judge Janet M. Frangie. Her grant of summary judgment to Blue Shield of California and its subsidiary, Blue Shield of California Life & Health Insurance Company, was affirmed Friday in an opinion by Justice Douglas P. Miller of Div. Two.
Shasta Regional Medical Center in Redding claims that Blue Shield owes it at least $9 million, with more than $11.2 million claimed collectively among the hospitals.
HMOs, PPOs
Miller pointed out that the Legislature has decided to treat health maintenance organizations (“HMOs”) differently from preferred provider organizations (“PPOs”).
HMOs—such as Kaiser Permanente—are local networks of health care providers, regulated by the Department of Managed Healthcare. For coverage to apply, those enrolled in an HMO plan must see a primary care physician, and specialists to whom the patient is referred by that physician, within the network.
Under PPO plans, which are more expensive, the patient may choose any doctor he or she wishes.
The hospitals sought to rely on the California’s Knox-Keene Act of 1975—California Health & Safety Code §1340 et seq.—in arguing that the defendants are obliged to pay the “reasonable and customary value” of emergency care provided to their enrollees.
“However, the Health & Safety Code only governs health care service plans,” Miller pointed out.
Blue Shield’s subsidiary, which he denominated “Blue Life,” “is not a health care service plan, it is an insurance company licensed under California’s Insurance Code and regulated by the Department of Insurance.”
The Insurance Code, he noted, “does not contain a counterpart to Health & Safety Code §1371.4” which requires payments by HMOs to hospitals.
Insurance Code Provision
The hospitals pointed to a portion of Insurance Code §1317 which provides:
“Emergency services and care shall be rendered without first questioning the patient or any other person as to his or her ability to pay therefor. However, the patient or his or her legally responsible relative or guardian shall execute an agreement to pay therefor or otherwise supply insurance or credit information promptly after the services are rendered.”
If hospitals cannot collect directly from insurers, the plaintiffs argued, the requirement that insurance information be supplied would be rendered superfluous.
Miller responded:
“Contrary to the Hospitals’ position, the insurance portion of the statute would not be rendered superfluous because hospitals can collect directly from HMOs….If, after receiving emergency medical care, a patient presents PPO insurance information, then the hospital would presumably seek a second means of securing payment, such as a payment contract or credit information.
“In sum, we are not persuaded that the statute creates a direct remedy for the Hospitals against Blue Life. The statute creates an obligation for the patient to provide payment information. There is nothing in the statute obligating an insurance company to directly pay a hospital for its services.”
Content of Policies
Insurance Code §1317.2a(d) does create liability for emergency care, if the policy covers such care, Miller said. But this does not necessarily mandate direct liability to the hospitals, he reasoned, because the statute “does not provide to whom the PPO is liable.”
The contracts between the patients the hospitals treated and Blue Life were not introduced into evidence, he noted, so that it is not known if emergency care is covered.
If a trial court had in evidence of the content of policies, Miller said, “then the court would need to determine what liability is set forth in the contracts, i.e., to whom Blue Life is liable by the terms of the contracts.”
The hospitals contended that an obligation of direct payments to them should be declared as a matter of public policy because it makes no sense for the hospitals to have to sue the patients, who would then seek indemnity from the insurer. But without knowledge of what the policies provide, Miller wrote, there is no need to engage in an “academic public policy discussion.”
The case is Alvarado Hospital, LLC v. Blue Shield of California, E066218.
Greg K. Hafif, Michael G. Dawson, and Troy A. Schell of the Law Offices of Herbert Hafif represented the hospitals and Gregory N. Pimstone, Joanna S. McCallum and John T. Fogarty of Manatt, Phelps & Phillips acted for Blue Shield.
Copyright 2018, Metropolitan News Company