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California court resurrects Aetna retaliation lawsuit

The California Medical Association's lawsuit alleges Aetna had fired or threatened to fire doctors who referred patients to out-of-network physicians.

Reporter: Alan Goforth


A long-contested California lawsuit about whether insurers can punish physicians who refer patients to out-of-network providers is on again.


The California Supreme Court recently resurrected California Medical Association v. Aetna after a judge and a state appeals court killed it on the grounds that the association had no standing to sue Aetna. Although the high state court declared that the CMA could sue on its own behalf, the justices noted that their ruling said nothing about the merits of the case.


The justices agreed with the CMA’s arguments that the trade group devoted substantial resources to dealing with the insurer’s policy and thus had standing to sue for injunctive relief under the state’s unfair competition law. The court held that organizational standing doesn’t depend on whether the group has members who are injured by the alleged practices and would also benefit from the requested relief.


The physician group alleges that Aetna illegally retaliated against physicians who sent patients to certain out-of-network clinics. Such claims are more likely than others to be denied, and they result in unexpected medical bills, which have led to the passage of state and federal laws that target surprise billing.


The ruling appears to mean that the CMA’s lawsuit will head back to Superior Court in Los Angeles County. The case, which was filed in 2012, alleges that Aetna harmed patient care by harassing and terminating contract physicians who referred patients to out-of-network ambulatory surgery centers. Aetna responded by saying that “its policy, rather than interfering in medical judgments, was designed simply to encourage participating physicians, consistent with their judgment, to use in-network care providers, such as ambulatory surgery centers, and was adopted in part in response to physicians referring patients to facilities in which they had financial interests.”



CMA President Donaldo Hernandez welcomed the court’s decision. “The practice of threatening physicians who refer patients to out-of-network providers is unlawful,” he said, “and we are pleased that the court agrees that CMA has the right to challenge these practices in court.”


Although the outcome of the California case won’t have a direct national impact, state rulings can influence the thinking of judges elsewhere.

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