California Supreme Court Revives Aetna Retaliation Suit

The California Supreme Court has revived a long-standing lawsuit between the California Medical Association (CMA) and Aetna over the insurance company’s alleged retaliation against physicians who referred their patients to out-of-network providers. The trial court judge and a state appellate court both dismissed the suit, which CMA originally filed in 2012, finding that CMA had no standing to bring the case.

However, the California Supreme Court disagreed and ruled that the CMA had standing to sue on its own behalf, although it explicitly noted that it did not reach the merits of the case. The Court agreed with CMA’s argument that it contributed substantial resources to manage the Aetna policy as a physician trade group and, therefore, had standing to seek injunctive relief under California’s unfair competition law.

As a result of this ruling, the case is slated to return to Superior Court in Los Angeles County, where it began. CMA claims that Aetna illegally retaliated against physicians who referred patients to some out-of-network treatment providers. More specifically, CMA alleges that Aetna harassed and terminated contract physicians when they referred patients to out-of-network ambulatory surgery centers.

In the suit, CMA also claims Aetna denied claims related to these referrals more frequently than others, which often resulted in unexpected medical bills for patients. This practice has led to state and federal legislation addressing the issue of surprise billing by insurance companies.

In its defense, Aetna stated that it developed its policy to encourage the use of in-network care providers consistent with the medical judgment of participating physicians. The company also attributed the policy to preventing physicians from referring patients to out-of-network facilities in which the physician has a financial interest.

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