Pacific Bay Recovery, Inc. v. California Physicians’ Services, Inc.

Under the Knox-Keene Health Care Services Act, an out-of-network provider who gave substance abuse treatment to PPO subscribers was entitled to be paid by the PPO only the amount shown on its explanation of benefits form, since the treatment was not an emergency medical service and the provider had no contract with the PPO.  Under the Knox-Keene Health Care Services Act (H&S 1342) and implementing regulation 28 CCR 1300.71, a preferred provider organization (PPO) health plan must pay doctors for services provided to the PPO’s subscribers either (a) the amounts provided in any contract between the provider and the PPO, or (b) for non-emergency medical services, the amount shown in the PPO’s explanation of benefits form.  (For emergency out-of-network services, the PPO must pay the reasonable and customary value of the services provided.)  Here, an out-of-network provider gave substance abuse treatment to PPO subscribers.  Held, the PPO only had to pay the amount shown on its explanation of benefits form since the treatment was not an emergency medical service and the provider had no contract with the PPO.

California Court of Appeal, Fourth District, Division 1 (Huffman, Acting P.J.); May 19, 2017 (published May 31, 2017); 2017 WL 2351115

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