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M&R Achieves Significant California Supreme Court Victory for Emergency Providers

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November 14, 2016

Michelman & Robinson, LLP's (M&R's) Health Care Department, led by Partner, Andrew Selesnick, has won a decisive victory for our client, Emergency Medical Associates, at the California Supreme Court. With strong support from attorneys Damaris Medina and Robin James, Mr. Selesnick successfully argued an appeal that will directly impact the reimbursement obligations placed on HMOs throughout California.

Our client provided emergency medical services to all patients who entered their emergency departments. In 2010, a risk bearing organization called La Vida, went bankrupt, leaving medical providers unpaid for the services they already provided. M&R filed an action alleging that almost every major health plan in California negligently delegated risk to La Vida and thus should take responsibility and pay for the provided services. The question before the California Supreme Court was whether emergency physicians can sue HMO's for negligently delegating payment responsibility to an Independent Physicians Association (IPA) when they knew, or should have known, that the IPA was not financially stable.

At oral argument, Mr. Selesnick emphasized the fact that emergency rooms are required by law to provide services, regardless of patients’ ability to pay, and thus there is a strong public policy interest in favor of ensuring that emergency service providers get paid for their work. On Monday, November 14, the California Supreme Court issued a ruling upholding the Court of Appeals decision, and sending a strong signal to health plans. 

"With this decision, the California Supreme Court has championed the notion that emergency service providers should get paid for their work, and that HMOs cannot simply absolve themselves of their obligations to these providers by delegating payment responsibility to third parties," said Mr. Selesnick. "This is a victory not only for doctors, but for patients as well; as a matter of public policy, we want emergency service providers to deliver excellent care to all who need it, rather than worrying about whether payors are financially distressed or insolvent. The Court is telling HMOs that it is time to hold up their end of the bargain."

From the decision:

“We believe it is unfair and morally blameworthy for a health plan to take advantage of the statutory compulsion requiring non-contracting emergency service providers to continue providing their services in such a way. Because the emergency care providers rely exclusively on health care service plans to arrange payment for services received by their enrollees, plans that transfer those responsibilities onto an IPA they know or should know will not make those payments have not only shirked their statutory obligations, but have essentially withheld from emergency care providers the fair compensation to which they are entitled. Forcing others to provide professional services for the benefit of one’s own customers, without any reasonable prospect of payment, is morally blameworthy.”

The matter is California Centinela Freeman Emergency Medical Associates et al. v. Health Net of California Inc. et al..