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Doctor’s Lawsuit Victory Holds Lesson for Insurers

MANAGED CARE May 2013. © MediMedia USA
Plan Watch

Doctor’s Lawsuit Victory Holds Lesson for Insurers

Anthem’s experience exposes vulnerabilities regarding the maintenance of physician networks

Frank Diamond

Health plans need ironclad cases against doctors they exclude from their networks or it could cost them. A jury in Los Angeles last month awarded $3.8 million in compensatory damages to Jeffrey Nordella, MD, a primary care physician whose application to join the Anthem Blue Cross provider network was denied in 2010.

California’s superior court agrees with Nordella that he was turned away because he had been a strong advocate for patients over the years. In denying Nordella’s request, Anthem nullified Nordella’s right to “fair procedure” and did so with malice, oppression, and fraud, a jury found.

Health plans get in trouble if they don’t follow their own procedures, or if the reason they claim for their action is not documented in the record, or if they are simply wrong on the facts, says Alice Gosfield.

Anthem spokesman Darrel Ng says, “Dr. Nordella and Anthem Blue Cross have agreed to confidentially resolve any and all disputes between them.” That agreement — reached after the verdict on the compensatory damages and before a scheduled hearing on the punitive damages — covers all claims and it is safe to assume, according to a source close to the case, that Nordella has gotten at least the $3.8 million.

Perhaps the most surprising aspect of this case is that it even got to a jury, according to Alice G. Gosfield, a health care lawyer and member of the Managed Care Editorial Advisory Board. Most never reach trial, and certainly don’t result in such large settlements.

Surprising aspect

Gosfield cites a Los Angeles Times article (http://tinyurl.com/ruling-story) in noting that Anthem claimed to have 137 primary care physicians in its network who worked within 10 miles of Nordella in Porter Ranch, Calif., but could name only seven. That kind of lapse might have bolstered Nordella’s argument that Anthem was not acting in the best interests of its members by excluding PCPs in an era where there’s a growing shortage and need for such providers.

Anthem also lost points because at the time Nordella was denied entry into the insurer’s provider network, he’d also been the medical director of Porter Ranch Quality Care, an urgent care unit. “Anthem had said it needed more urgent care physicians in that area, while they were turning him away,” says Gosfield.

Gosfield says that health plans get in trouble if they don’t follow their own procedures, or if the reason they claim for their action is not documented in the record, or if they are simply wrong on the facts.

Theresa Barta, Nordella’s lawyer, agrees with Gosfield and tells Managed Care that insurers and health plans “should have well defined guidelines that govern their decisions regarding admitting and denying physicians into their provider networks, and most importantly, those guidelines should be made available to applying physicians and followed without exception.”

Gosfield warns that “we might see more cases go further on these issues as we see more narrow networks. Unless the plans tighten up their acts in terms of having clear standards, applying them uniformly and documenting their decision making effectively, they will be vulnerable to these kinds of actions.”