PREFERRED
PROVIDER PLAN HELD CLEAR
AND UNAMBIGUOUS
VAN
NESS
V. BLUE CROSS
In Van Ness v. Blue Cross of California (01
CDOS 1635), the First Appellate District of the Court of Appeal held that
a Blue Cross of California Prudent Buyer Plan that limited benefits for
services furnished by non-preferred providers was enforceable.
In Van Ness v. Blue Cross, Blue Cross entered
into agreements with participating providers whereby those providers could
only charge a negotiated fee for various health care services furnished to
Blue Cross insureds. Blue
Cross insureds who went to a Blue Cross participating provider paid only
twenty percent of the negotiated fee for covered services while Blue Cross
would pay the remaining eighty percent.
However, if the insured went to a non-participating provider for
health care services, Blue Cross would pay only seventy percent of a
predetermined fee for covered services under a fee schedule created by
Blue Cross. The insured would
be liable to the non-participating provider for the remainder of the
actual fee charged by the non-participating provider.
The insured in Van Ness v. Blue Cross class
action unsuccessfully argued that the non-participating provider provision
in the Plan was ambiguous and unenforceable because he assumed that Blue
Cross would pay seventy percent of the usual and customary fee charged by
non-participating providers, rather than seventy percent of a fee
determined by Blue Cross under its own fee schedule.
The court noted that because the Plan had been
approved by the Insurance Commissioner, the Plan language was conclusively
presumed to be not fraudulent, not violative of any unfair trade
practices, economically sound, and readily understood and interpreted.
Because the court held that the provision was
unambiguous and enforceable, the causes of action for bad faith, fraud,
unfair business practices, and violation of the Consumer Legal Remedies
Act must fail as a matter of law.
Van Ness
v. Blue Cross was not preempted by ERISA because it was an
individual plan. Van Ness
v. Blue Cross does not address the question of whether contract
provisions that obligate plan members to pay twenty percent of a
particular fee while the plan pays only eighty percent of a lower
negotiated fee with a preferred provider, is ambiguous or violative of
federal RICO statutes.
