A group of California physicians has sued one of the state's largest HMOs, alleging the insurer didn't have a valid contract with them and that they were substantially underpaid.
Health Source Medical Group, a Los Angeles-based IPA with about 300 multispeciality physicians, sued Health Net on April 7 in Los Angeles Superior Court. Health Net is a subsidiary of Woodland Hills, Calif.-based Foundation Health Systems and has about 2.2 million enrollees in California.
The suit alleges that Health Net circumvented the Knox-Keene Act, a California law outlining how physicians and HMOs may work together. The suit further alleges that because Health Net circumvented the law, the physicians are owed $3 million for services rendered since 1998.
Health Net officials could not comment on the specifics of the lawsuit because attorneys are still reviewing it, says Brad Kieffer, Health Net spokesman. "We think that it's regrettable that Health Source has chosen to resolve its differences through the courts instead of trying to resolve its differences with us," he says.
In 1995, the IPA ended its contract with Health Net, eliminating any legal way to do business, says Health Source attorney Glenn Solomon, with Hooper, Lundy and Bookman in Los Angeles. However, Health Net improperly obtained services for its enrollees through a contract with MedPartners, the suit alleges.
"Health Net engaged in this conduct . . . to obtain services from healthcare providers at rates that Health Net knows or should have known are inadequate to cover the basic expenses of providing adequate healthcare to patients," the suit states.
The suit also asserts that the HMO must pay the fee-for-service rates.
While the suit isn't seeking class-action status, under California law other providers are eligible for reimbursement for improperly obtained services.