May 17, 2013

A California jury recently awarded a doctor $3.8 million compensatory damages after they determined that Anthem Blue Cross (“Blue Cross”) violated his right to a fair procedure after denying his application into its provider network.  The case settled before the punitive damage claim was presented to the jury.  See, Nordella v. Anthem Blue Cross, No. BC 444364 (Cal. Super. Ct. filed Dec. 15, 2010)

California law requires a fair procedure when a health insurer “possesses power so substantial that the exclusion significantly impairs the ability of an ordinary, competent physician to practice medicine or a medical specialty in a particular geographic area, thereby affecting an important, substantial economic interest.”  In this case, Blue Cross contended that Nordella lacked board certification in Blue Cross’ approved specialties.  Nordella averred that Blue Cross denied his application in retaliation for his outspoken advocacy in favor of patient care and against health insurers’ overzealous denial of coverage for services deemed “not medically necessary.”

This case highlights the importance of establishing and implementing objective standards for consideration of providers; and of memorializing the reasons supporting the decision to deny or terminate a provider’s network membership.  Although Nordella may be confined to California, Pennsylvania health insurers should take heed of its lessons. Indeed, Pennsylvania State House Representative Anthony M. DeLuca intends on re-introducing HB1965 of 2011 (“Any Willing Provider”) to “ensure that private practitioners and facilities remain ‘in network’ if they are qualified and willing to accept the terms of the contract.” Time will tell if Pennsylvania adopts the “Any Willing Provider” law, affording providers with legal remedies should insurers refuse access to their networks or terminate provider participation.

Medical providers should always understand the credentialing process that may be due and owing to them, i.e. notice, an opportunity to be heard and a fair and impartial tribunal.  Providers should also seek to obtain in writing the reason(s) for the adverse credentialing decision; the identity of the individuals responsible for the decision; and, all of the information that formed the basis of their decision.  Equipped with this information, medical providers can explore whether they have any remedy under legal or equitable principles.