Florida high court may rule if doctors can sue over late pay

A physician group claims that insurers did not follow state laws, and now they're seeking damages as third-party beneficiaries to the patient-HMO contract.

By Mike Norbut — Posted Sept. 26, 2005

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In a case that could have a profound effect on physician reimbursement in Florida, the state Supreme Court is expected to decide whether doctors can bring claims against insurers under the prompt-pay law.

While the court has not officially accepted the case, attorneys on both sides expect that it will. If the court rules in the physicians' favor, they say it will add teeth to a law they have been trying to strengthen for years and give doctors a chance to put more pressure on insurers to pay their claims fully and on time. If the court rules in favor of the HMOs, physicians fear they will have to deal with current delays and unexplained denials while trying to push for a legislative change.

HMOs in the case, Foundation Health et al. v. Westside EKG Associates, claim private groups do not have the right to enforce the prompt-pay law in court by filing a lawsuit. But physicians argue they are entitled to do so because the insurers breached their contracts by denying and underpaying claims.

"What they're saying is even if they [HMOs] violate the prompt-pay law, neither doctor nor member can question them in a court of law," said Jeff Liggio, a West Palm Beach, Fla., attorney representing the physicians in the case. "But very simply put, if you violate the statute, you breach the contract."

Florida's Fourth District Court of Appeal sided with the doctors in May. In that case, the court unanimously ruled that doctors could assume the role of third-party beneficiaries and sue HMOs for not complying with the prompt-pay law. But the court sent the question to the Florida Supreme Court to consider, deferring to the state's high court because the topic is "one of great public importance."

A long-standing issue

HMOs and Florida physicians have been at odds over prompt-pay issues for years. Doctors point to a history of insurers ignoring the law that requires them to pay claims in a timely fashion or notify physicians when they are going to deny a claim. In 2002, for example, the Florida Dept. of Insurance charged more than half of the state's HMOs with not following the prompt-pay law.

But the notion of a state agency imposing fines on HMOs for not complying with the laws does not solve the problem of physicians whose claims are unjustly denied, stated a friend-of-the-court brief filed on the physician's behalf by the Litigation Center of the American Medical Association/State Medical Societies, Florida Medical Assn., Florida College of Emergency Physicians, and Florida Hospital Assn.

"The imposition of penalties and fines payable to the government does not provide a monetary remedy to individual providers injured by violations of the prompt-pay statute," the brief stated.

But in this case, it's not a question of HMOs ignoring the law, said Bob Wychulis, the Florida Assn. of Health Plans' CEO. He said Westside EKG Associates, located near Fort Lauderdale, Fla., treated many out-of-network patients in nonemergency situations. The physicians were paid the contracted rate of a network doctor for care delivered in emergency situations, but otherwise, care "could have been scheduled within the network," he said.

"You're in a situation where you're both outside the intent of the law and outside the contract and emergency provisions," Wychulis said.

In a friend-of-the-court brief filed on the HMOs' behalf, the FAHP said the doctors are trying to "sidestep" the state Legislature's intent to settle disputes between physicians and insurers through administrative means. America's Health Insurance Plans, the national organization representing HMO interests, also filed a brief in the case.

If the appellate court ruling is upheld, it could have a "devastating" effect on health care in the state, leading to increased costs for patients, the FAHP said.

"The decision under review will decrease efficiency in Florida's health care system and substantially increase the amount of health care litigation -- further burdening an already beleaguered court system," the brief states.

Physicians refute the HMO's claims. Laggio said Florida law requires HMOs to follow the statute whether the care is provided within the network or out. And the brief filed by the AMA, FMA and others disputes the idea that the state did not want physicians to be able to enforce the prompt-pay law.

"The Florida Legislature did not intend the prompt-pay statute to be either a nullity or an absurdity," the brief states. If physicians can't enforce the law the Florida Legislature passed, the brief says "they are left as Voltaire said, like the proverbial blind men in a dark room looking for a black cat that isn't there."

Future class-action lawsuit possible

The case before the Florida Supreme Court traces back to 2001, when Westside EKG filed a complaint against several Florida HMOs, including Humana and Health Options, a subsidiary of BlueCross BlueShield of Florida. A trial court judge ruled in favor of the HMOs in 2003. The appellate court, however, reversed the decision.

A Humana spokesman referred questions to the FAHP for industry comment. Edward McIntyre, a Fort Lauderdale attorney who represents Health Options, said it's important to have the high court review this case so "the implications of this ruling" and "the effect it will have on the cost of health care for our subscribers" can be "explored more fully from a public policy perspective."

"This is an issue that affects the affordability of health care for all Floridians," he said.

If the Supreme Court rules in favor of the physicians, Liggio said he would work to have it certified as a class-action lawsuit, in the mold of the current federal class-action case involving more than 700,000 physicians. That case, filed in federal district court in Miami, accuses the nation's largest HMOs of routinely denying, downcoding, and bundling claims. Aetna, Cigna Healthcare, Health Net, Prudential Insurance Co. of America, and WellPoint -- including claims against WellPoint Health Networks and Anthem -- have settled. Cases against Coventry, Humana, PacifiCare Health Systems, and UnitedHealthcare are pending.

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Case at a glance

Foundation Health, a Florida Health Plan Inc.; Health Options Inc.; Vista Health Plan, f/k/a HIP Health Plan of Florida Inc.; Humana Medical Plan Inc., f/k/a PCA Family Health Plan Inc.; Humana Medical Plan Inc., f/k/a PCA Health Plans of Florida Inc.; and Health Options Connect Inc., f/k/a Principal Health Care of Florida Inc. v. Westside EKG Associates

Venue Florida Supreme Court
At issue Whether physicians, as third-party beneficiaries to a patient-HMO contract, can file lawsuits against insurers under the state's prompt-pay law.
Impact Physicians say being allowed to sue under the prompt-pay law would help them get paid in a fair and timely manner. HMOs say a ruling favoring physicians would mean more lawsuits against insurance companies, which could result in higher consumer premiums.

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