California Supreme Court Sides With Patients

In the case of Prospect Medical Group, Inc. v. Northridge Emergency Medical Group, et al., 2009 WL 36855 the California Supreme Court held that when a patient has medical insurance through a Health Maitenance Organization (HMO) and receives emergency care from a provider who does not have a contract with the HMO, the provider may not bill the patient directly for the portion of the bill that the HMO does not pay.

The practice of billing the patient for the balance of the bill after accepting payment from the patient's health insurer is known as "balance billing." The California Supreme Court held that a provider may not balance bill a patient who has a Preferred Provider Organization (PPO) that contracts with a provider in the case of Parnell v. Adventist Health System West (2005) 35 Cal.4th 595. Parnell relied heavily on the fact that the PPO had a contract with the provider in which the provider agreed to accept payment from the PPO as "payment in full." This left open the question of whether a provider could balance bill when there was no contract with the insurer.

The Prospect Medical Group decision cites the facts that emergency providers are statutorily required to provide care without regard to whether a patient can pay for the care and that HMO's are statutorily required to pay reasonable rates for the emergency care of their customers. The Court directed the providers to address billing disputes directly with the HMO's instead of involving the injured patients.

Parnell and Prospect Medical Group should keep people who have purchased health insurance from drowning in debt after serious injuries -- at least for the foreseeable future. The Legislature will probably address these issues in the coming years.