The California Supreme Court breathed fresh life into a lawsuit last week, alleging that Aetna˜had terminated or threatened to terminate physicians who referred patients to out-of-network providers.
The lawsuit is centered on an Aetna Health policy that targeted the use of out-of-network benefits by its PPO plan members, according to the California Medical Association (CMA) The group alleges that the insurance company discouraged its members from going out of network even though their PPO plans included such benefits, and that Aetna Health harassed or terminated its contracted physicians for referring PPO members to out-of-network facilities. Such a policy, according to CMA, directly interfered with the doctor-patient relationship and physicians’ independent medical judgment, in violation of numerous state laws.
Initially, the suit had been dismissed due to lack of standing, but Associate Justice Kelli Evans, writing for the unanimous high court, stated that this was a mistake.
Justice Evans clarified that the lower court had confused associational standing, where a group can bring claims on behalf of its members, with organizational standing, where an organization asserts claims based on its own injuries.
In the court's view, the perceived threat to the CMA's mission extended beyond just the physician members; it affected their efforts to safeguard public health as Aetna's policy imposed unwarranted restrictions on medical referrals by network physicians.
In a statement, CMA president Donaldo Hernandez, asserted, "The practice of threatening physicians who refer patients to out-of-network providers is unlawful, and we are pleased that the court agrees that CMA has the right to challenge these practices in court."
While the CMA argued that Aetna's policy on provider referrals violated various sections of the Insurance Code, Business and Professions Code, and Health and Safety Code, Aetna defended its policy, stating that it aimed to counter referrals being made to facilities where the referring physician had financial interests. Aetna claimed that the policy was designed to encourage participating physicians to use in-network care providers.
Aetna argued that the CMA had no direct business ties with them and couldn't demonstrate how the policy caused them any injury.
Originally, CMA had filed the lawsuit with multiple medical providers and associations, including the Los Angeles County Medical Association and the Santa Clara County Medical Association. By April 2019, all plaintiffs except the CMA dropped their claims, and Aetna agreed to abandon its counterclaims to simplify the litigation process.
In November of the same year, the Los Angeles Superior Court granted Aetna's motion for summary judgment on standing grounds. An appeals court later upheld that decision, stating that the association could only seek an injunction against Aetna if it had individually suffered injury.
However, Justice Evans' ruling overturned these decisions. She found that the association had indeed shown standing as they were losing money due to Aetna's in-network provider policy. Evidence revealed that Aetna had implemented this policy by communicating with physicians in preferred provider networks, even going so far as to threaten to terminate their network participation.
Justice Evans considered it foreseeable that physicians would turn to the CMA, the state's most prominent physician association, for assistance in countering Aetna's policy. As such, the CMA had suffered financial injuries beyond the costs of preparing for and fighting the lawsuit.
A spokesperson for Aetna declined to comment on the ruling.
Justice Evans emphasized the crucial issue of the CMA's standing, which had been a significant legal concern throughout the case. She clarified that the association had not attempted to manufacture standing or insert itself into a dispute in which it had no natural stake. Instead, the association's decision to allocate resources to counter the perceived threat from Aetna's policy resulted directly from that policy, forming an uninterrupted causal chain.
Chief Justice Patricia Guerrero and Justice Martin Jenkins, both Newsom appointees, concurred with the ruling, as did Brown appointees Goodwin Liu, Leondra Kruger, and Joshua Groban, and Carol Corrigan, a Schwarzenegger appointee.