Managed Care Contract Litigation

By June 22, 2010 Healthcare

PLAN’S FAILURE TO PAY CONTRACT RATES ON MANAGED CARE NETWORK CONTRACTS

Four Adventist Health/West hospitals sued Kaiser Permanente, Kaiser Foundation Health Plan, and Multiplan Inc. for damages resulting from the way in which Kaiser adjudicated and paid claims for Kaiser senior enrollees receiving services at these hospitals through the Multiplan network of providers. After extensive discovery and multi-part mediation, attorney Karen Taillon successfully settled the case on behalf of all hospitals by confidential agreement with Kaiser, and subsequently with Multiplan.

HOSPITAL/PHYSICIAN RISK POOL LITIGATION

A hospital sued PacifiCare (Plan/payor) and Monarch Health Care (medical group) primarily seeking a declaration from the court that the hospital’s managed care contracts had not been amended to limit the medical group’s obligation to pay deficits resulting from hospital commercial and Medicare risk pool agreements. The hospital also sought damages for breach of those contracts. The case was filed in the Orange County Superior Court as a Complex Case. In litigation, Cummins & White obtained a summary adjudication in the hospital’s favor determining that an undertaking entered into between the PacifiCare (relating to its acquisition of FHP) and the California Department of Managed Healthcare (formerly the DOC) did not automatically amend the “Risk Pool” agreements. Consequently, the case was successfully settled through confidential mediation immediately prior to trial, resulting in a multi-million dollar payment to South Coast.

INSURER/TPA’S REFUSAL TO PAY CLAIMS

AMN was an employer whose employees accessed inpatient services of the hospital through a self-insured plan administered by Great West Health Plan which held a contract with the hospital. When AMN retroactively terminated an employee who had received hundreds of thousands of dollars in care, Great West stopped payment on funds paid to the hospital for those services. Attorney Karen Taillon of Cummins & White filed an action against the Plan, the employer, and the employee. At the defendants’ request, Cummins & White stayed the action pending negotiations and were able to satisfactorily resolve the case within a few short months with payment to the Hospital through confidential settlement agreement.

HOSPITAL’S CLAIMS FOR UNDERPAYMENT ON HOSPITAL SERVICE CONTRACT

Our client, who managed contracting care for a hospital system, sued to collect underpayments for hospital services rendered to Medi-Cal/Health Families enrollees under a Hospital Services Agreement with payor Molina Healthcare of California, a Knox Keene Plan. Molina disputed that the contract with Sharp Health Systems for the Medi-Cal lives had been assigned to Molina during the sale of Sharp’s business, and disputed that a 2004 rate schedule amendment applied. With limited discovery, the matter was heard in binding arbitration, and resulted in a final award to our client finding that the contract was assigned, the 2004 amendment applied, and awarding the client damages plus costs of arbitration. The award was entered as a judgment and has been paid.

PHYSICIAN’S BREACH OF CONTRACT

A staff physician contracted with a hospital to provide physician services at the hospital’s facilities. Part of the agreement required the physician to pay the hospital a monthly rate for using Hospital’s facilities when the technical portion of the cost of the services was not reimbursable (generally from commercial payors). After several issues with the physician arose, the physician’s agreement was terminated by the hospital and when the physician refused to pay the remaining contractual facility fees, Cummins & White took the matter to binding arbitration and obtained an award for the full amount due, including interest, which has since been paid in full.