CMA urges CA Supreme Court to review ruling that could destabilize the health care marketplace

July 12, 2022

The California Medical Association (CMA) recently submitted an amicus curiae letter with the California Supreme Court in support of a petition for review of an appellate court decision that if allowed to stand would create a significant gap in managed care regulation that ultimately could destabilize the health care marketplace.

In this case, County of Santa Clara v. Doctors Medical Center of Modesto, et al., an appeals court ruled that Santa Clara County—through Valley Health Plan its county-based Knox-Keene licensed health plan—is immune from common law reimbursement claims under public entity immunity in the Government Code.

While Santa Clara County is required to reimburse emergency services at the “usual, customary and reasonable” (UCR) amount under the California Health & Safety Code, the appeals court determined Santa Clara County is vested with discretion to determine the UCR amount.  

The appellate court’s opinion insulates Valley Health Plan from civil liability for violating the Knox-Keene Act’s requirement for reasonable reimbursement for emergency care.

The ruling unjustifiably eliminates any accountability or responsibility of county health plans to fairly reimburse providers of emergency care. The disruption and uncertainty that will result if this ruling is allowed to stand could also impair patients’ access to care as more providers abandon the managed care market.

This ruling would disproportionately affect the neediest patients, as 95% of county-based health plan enrollment is Medi-Cal beneficiaries participating in Medi-Cal managed care. This is an underserved population that cannot afford to pay out-of-pocket for medically necessary services.

“There is no material distinction between Knox-Keene plans offered by a county, like Valley Health Plan, and those offered by commercial corporations. All licensed, full-service health plans must be subject to the same requirements under the Knox-Keene Act,” the CMA letter said. “To allow otherwise would create a patchwork of provider networks and service levels. That sort of uncertainty would threaten the financial viability of the managed care system, to the detriment of patients.”

For more information, see CMA’s letter.




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