Calif.’s American Specialty Health Plans Gets Favorable Ruling in CCA Litigation

The San Diego Superior Court has granted American Specialty Health Plans of California Inc. (ASH Plans) and American Specialty Health Networks Inc. (ASH Networks) summary judgment on key claims filed by the California Chiropractic Association (CCA) in 2001.

With this ruling, and others previously issued, the Court has now granted summary judgment to ASH Plans and ASH Networks on 15 of 18 claims asserted by CCA against each of these companies. CCA’s complaint originally challenged essentially every feature of ASH Plans’ and ASH Networks’ managed care practices, contending that such activities were unfair, unlawful, and fraudulent. McDermott Will & Emery served as counsel for ASH Plans and ASH Networks.

In 2001, the CCA filed suit against ASH Plans and ASH Networks, two managed care companies, seeking injunctive relief on each of the 18 claims and millions of dollars of restitution. The Court will soon hold a short trial on CCA’s remaining claim where CCA argues that ASH Plans and ASH Networks failed to pay a small group of claims that the companies believe were untimely submitted. ASH Plans and ASH Networks reportedly expect that matter to be resolved expeditiously.

“We are very pleased and gratified to have been thoroughly vindicated on every substantive claim CCA filed against us,” remarked George DeVries, president and CEO of both ASH Plans and ASH Networks. “We have always known that we’re running a first-rate organization, that we fairly compensate our chiropractors, and that we offer state-of-the-art clinical review services, where utilization decisions are made by licensed peers relying on the best available medical evidence and their experienced clinical judgment.”

The Court’s decision noted that CCA reportedly failed to produce any evidence that the utilization management practices were “contrary to generally accepted professional/medical standards” or “arbitrary.” With respect to chiropractor reimbursement, when presented with evidence that included the Department of Managed Health Care’s finding that ASH Plans’ chiropractor reimbursement rates were “reasonable in relation to industry practices,” the Court determined that there was no reason that it should interfere with ASH Plans’ or ASH Networks’ provider reimbursement schedules, denying both injunctive and monetary relief on these claims.

The Court made a similar ruling on CCA’s claim that ASH Plans had improperly administered a now-discontinued contractual withhold. The Court also held that CCA failed to present any evidence that ASH Plans or ASH Networks had terminated any chiropractors without cause in the past seven years and thus that there was no basis for CCA to prevail on its claim that defendants’ chiropractor termination practices were unfair, unlawful or fraudulent.

Finally, the Court found that CCA’s claim challenging ASH Plans’ and ASH Networks’ prior decision to limit acceptance in the network to a specified number of chiropractors within a particular area could not be sustained on any grounds.

“Our victory in this matter is quite significant for the entire managed care industry. CCA did not argue that ASH Plans and ASH Networks had breached their provider agreements, rather, CCA argued that the contractual terms accepted by ASH Plans and ASH Networks were ‘unfair’ and should be rewritten by the trial court, substituting CCA’s judgment on proper reimbursement rates and utilization management procedures for that of ASH Plans and ASH Networks,” said lead attorney Elizabeth Mann. “If this approach had been successful, no managed care organization could safely rely on its contracts to guide its business decisions. We are very glad that rationality has prevailed.”