A federal judge in Alexandria, Va., has dismissed a lawsuit charging Aetna Life Insurance Co. with illegally excluding a Columbia/HCA Healthcare Corp. hospital from its PPO network in northern Virginia.
The case is another victory for managed-care plans and their opposition to so-called any-willing-provider laws, which they say limit their ability to include only the most cost-efficient providers in their insurance networks (See related story, p. 20).
In the Virginia case, U.S. District Judge James Cacheris ruled late last month that Aetna didn't violate Virginia's any-willing-provider law because it negotiated in good faith with 135-bed HCA Reston (Va.) Hospital Center despite later excluding the hospital from its managed-care plan.
The 1987 state law bars PPOs from excluding any provider that meets their participation requirements.
The hospital sued Aetna in 1992 after the insurer dropped it as a participating PPO hospital in favor of contracting with the three-hospital Inova Health System in Springfield, Va. The hospital said Aetna violated the state law because it met the insurer's participation requirements.
In March, Judge Cacheris sided with the hospital, ruling that Aetna excluded the hospital without giving it an opportunity to negotiate the terms and conditions of becoming a PPO hospital. He then ordered the two sides to attempt to negotiate a new contract and return to court with the results.
After three months of negotiations, the hospital submitted its plan to become a PPO hospital but was rejected.
The insurer said the hospital didn't meet its criteria for becoming a member of the PPO's network. The criteria included providing primary, secondary and tertiary care; meeting Aetna's geographic market requirements; demonstrating a past history of serving patients enrolled in the PPO; and meeting the network's charge requirements.
Aetna then filed a motion with Judge Cacheris, asking him to dismiss the case. The insurer said Aetna negotiated in good faith, but permitting the hospital into the PPO would disrupt the network's structure. In an eight-page opinion, Judge Cacheris agreed.
"Aetna's decision works to the overall benefit of its PPO participants by maximizing choice of healthcare providers while preserving low-cost medical services," he said.
The decision is the latest in a string of court victories for managed-care plans fending off charges that they've illegally excluded hospitals from their delivery networks.
In May, Stuart Circle Hospital in Richmond, Va., dropped a similar suit against Aetna (May 23, p. 30). And in April, the 9th U.S. Circuit Court of Appeals in San Francisco upheld the dismissal of an antitrust lawsuit filed by Eastmoreland Hospital in Portland, Ore. The hospital accused Blue Cross and Blue Shield of Oregon and the Seattle-based Sisters of Providence hospital system of conspiring to exclude Eastmoreland from four managed-care plans.