California Supreme Court will hear CMA lawsuit against Aetna regarding the right of membership organizations to pursue unfair practices lawsuits

July 30, 2021
Area(s) of Interest: Advocacy 

The California Supreme Court has granted the California Medical Association’s (CMA) petition for review in a lawsuit against Aetna surrounding the insurance company’s practice of denying patients’ rights to out-of-network benefits and threatening physicians who refer patients to out-of-network providers. 

The decision is a major legal victory for CMA, and for patients throughout California. The California Supreme Court receives over 1,000 civil petitions for review annually but only grants around 2-3% of those requests.

In July 2012, CMA, along with the Los Angeles County Medical Association and a coalition of other health care organizations and providers, filed a lawsuit against Aetna to protect patients’ rights to quality health care and to prevent insurers from interfering with patient choice. The lawsuit alleges a systematic practice by Aetna of harassing and terminating contracted physicians from the Aetna network when they refer patients to out-of-network ambulatory surgery centers.

In April 2019, after nearly seven years of protracted litigation, all plaintiffs except CMA agreed to dismiss their claims and Aetna agreed to abandon its counterclaims, so that the lawsuit could be streamlined for CMA to proceed as the sole plaintiff. In November 2019, however, the Los Angeles Superior Court ruled that CMA did not have legal standing to pursue its claims against Aetna on behalf of itself and its physician members.

The court appears to have erroneously concluded that CMA’s expenditures of its own resources didn’t count as injury to the organization because CMA “was founded to advocate on behalf of its physician members,” and that CMA staff time spent fighting these abuses “was typical of the support CMA provides its members in furtherance of CMA’s mission.” That conclusion is erroneous.

California’s Unfair Competition Law (UCL) confers standing on any person or organization that “has suffered injury in fact and has lost money or property as a result of the unfair competition.”

Aetna’s practices at issue in this case both harmed CMA and its members and frustrated the other more expansive purposes of the organization, as CMA was forced to expend resources and money in order to protect its members from Aetna's unfair practices. That is all that is required to establish standing under the UCL.

If the appellate court’s decision is allowed to stand, it would effectively preclude any membership organization from ever seeking relief under the UCL and undercut a central plank of private enforcement of one of the state’s most important consumer-protection laws.

CMA’s petition was supported by a broad coalition, including the American Medical Association, United Farm Workers of America, International Brotherhood of Teamsters Joint Council 7, California Labor Federation, Service Employees International Union California State Council, California Society of Anesthesiologists, La Cooperative Campesina de California, La Casa del Diabetico Gualan and California Rural Legal Assistance Foundation.


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