In a case of first impression, Coast Plaza Doctors Hospital secured the first appellate court published decision, Coast Plaza Doctors Hospital v. UHP Health care, 2003 DJDAR 859 (January 22, 2003), which allows a hospital to sue a health care service plan or HMO directly for reimbursement for emergency and medically necessary services provided to the plan¡¯s enrollees, even if that hospital has no contract with the plan or HMO. In its complaint, Coast Plaza Doctors Hospital sued UHP Health care for failing to reimburse Coast Plaza Doctors Hospital for the medical treatment provided to hundreds of its enrollees. UHP challenged the adequacy of the complaint asserting the claims were based on the Knox-Keene Health Care Service Plan Act of 1975 (Health & Saf. Code § 1340, et seq.) and that the Legislature had conferred exclusive authority to enforce the Knox-Keene Act to the Department of Managed Health Care. The Superior Court agreed and ruled that the Superior Court lacked jurisdiction to hear the case.

The Court of Appeal disagreed. On appeal the issue was whether a health care provider has the right to seek reimbursement directly from the health care insurer for services rendered to the enrollees of the health care service plan. In reaching its decision, the Court of Appeal concluded that the Knox-Keene Act did not apply to the circumstances of the case and that it ¡°does not bar the provider from seeking direct compensation on a common law breach of contract theory or under the Unfair Competition Law (Bus. & Prof. Code § 17200).§

The Coast Plaza decision is significant for both contracting and non-contracting hospitals and providers. The right to reimbursement for contracting providers frequently arises when the provider must provide emergency or out-of-area treatment to patients who are insured by a plan which does not have a contract with the provider. The Coast Plaza decision makes it clear that all providers can sue the plan directly for reimbursement for these non-contracted services under common law theories and the Unfair Competition Law.

Thomas L. Vincent, Paul A. Bokota and Daniel L. Rasmussen of Payne & Fears LLP represented Coast Plaza Doctors Hospital.