May an HMO be found negligent in the delegation of its statutory duty to reimburse non-contracting emergency physicians?
Emergency room physicians have a legal duty to treat a patient regardless of patient's inability to pay the physician's bill. Where patient is enrolled in an HMO (Health Maintenance Organization care service plan), even where the emergency physician is not under contract to the HMO, the obligation to pay for the physician's services still rests with the HMO. But HMO's are statutorily allowed to delegate this responsibility to IPA's (independent practice associations). Where this delegation has occurred, and the emergency physician providing treatment neither contracted with the patient's HMO nor was a member of the delegated IPA, is the physician entitled to payment from the HMO when the IPA fails to pay?
The answer to this complex question is equally complex, and is found in Centinela Freeman Emergency Medical Associates v. Health Net of California, Inc. (filed 4/2/14) B238867a. It may seem surprising that the answer is more a matter of tort law than contract law. And much like the inquires found in the venerable tort law authority in Rowland v. Christian (1968) 69 Cal.2d 108, public policy considerations play a large role. As the discussion below indicates, central to the answer is the policy that the HMO patient (the consumer) not be vulnerable to such billings in violation of their HMO contractual entitlement. In resolving a split of appellate authority, that answer found in Centinella is the HMO has a duty not to delegate its obligation to reimburse emergency physicians to an IPA it knows, or has reason to know, will be unable to pay. On the facts alleged in this case, the Court of Appeal, Second Appellate District, Division Three, found a sufficient basis for the physicians to seek payment from the HMO on the claim of negligent delegation. The trial court's sustaining of the HMO's demurrer without leave was reversed, and the matter was remanded.
In the trial court, the HMO had succeeded in arguing that no duty arose for it to protect the financial interests of the third party physician-plaintiffs under Biakanja v. Irving (1958) 49 Cal.2d 647. The trial court agreed that Biakanja barred relief in that it requires an intent to harm a plaintiff specifically, which was not alleged here. The appellate court disagreed with this interpretation of Biakanja, discussing the split of authority on the issue. The proper interpretation, ruled the court, is that the duty of the HMO is owed to the plaintiff or to a class of which plaintiff is a member.