Court to Managed Care Plans: No More No-Cause Boots

Article excerpt

Managed care plans cannot arbitrarily dismiss physicians from their provider networks, even when the agreedupon contract permits no-cause terminations, the California Supreme Court has ruled. "If participation in managed care arrangements is a practical necessity for physicians generally and if only a handful of health care entities have a virtual monopoly on managed care, removing individual physicians from preferred provider networks controlled by these entities could significantly impair those physicians' practice of medicine," the court reasoned.

The case in question arose in 1992, after ob/gyn Louis E. Potvin was booted from MetLife's provider network. Under the terms of his contract, either party could terminate the relationship without cause with 30 days' written notice. The physician argued that he should have been given reasonable notice and an opportunity to be heard before his removal.

Two years after he signed on, MetLife notified Potvin that he was being terminated. When he pressed the insurer for an explanation, MetLife cited his malpractice history The doctor had practiced medicine for more than 35 years, was a past president of the Orange County Medical Association, and held full staff privileges at Mission Regional Hospital (where he had served as chairman of the obstetrics and gynecology department for nine years). But he'd been sued for malpractice four times. Three of the cases were dropped, but the fourth was settled for $713,000. All predated his 1990 contract with MetLife. Under the insurer's selection and retention standard, however, physicians with more than two suits or aggregate payouts exceeding $50,000 were excluded from its network. …