Aetna’s threatening to fire doctors who referred patients to out-of-network facilities does not violate California’s unfair competition law, as the industry group advocating on its physicians’ behalf was not directly harmed by the insurer’s policy, an appellate court ruled on Wednesday.
The 2nd Appellate District’s ruling comes after a nine-year court battle between state physicians and the Hartford, Conn.-based insurer.
The California Medical Association—which represents nearly 50,000 members across the state’s healthcare industry—alleged that Aetna urged its member clinicians to use in-network providers to the “fullest extent possible” and mailed physicians letters saying that out-of-network referrals could be considered “non-compliance with your physician agreement.” Aetna also threatened to mark participating providers as out-of-network on its online search tool if they continued to send patients to facilities outside the payer’s member group, according to the complaint.
The California Medical Association said it spent up to 250 hours investigating Aetna’s referral policy, which constituted the lost money or property needed to sue under the state’s unfair claims law. But by using staff time to address member complaints, California’s three-justice panel ruled that the industry group was just doing its job.
“CMA was founded to advocate on behalf of its physician members,” they wrote. “The staff time spent here in response to Aetna’s termination and threats to terminate physicians was typical of the support CMA provides its members in furtherance of CMA’s mission.”
Because Aetna’s out-of-network referral policy did not directly harm the California Medical Association, justices upheld the insurer’s request to appeal the suit. Aetna will be awarded the costs of its appeal. The California Medical Association declined to comment on the case, and the insurer did not respond to an interview request.