STATUTORY
RIGHT TO SUE HEALTH PLANS
IN CALIFORNIA
Beginning in
2001, patients in California may sue their health plans under Civil Code
section 3428 for:
1)
failing to exercise a duty of ordinary care to provide for
2)
medically necessary health care services
3)
recommended by any health care provider and
4)
allowed under the terms of their plans,
5)
which result in a denial, delay, or modification of the services
recommended or furnished,
6)
causing substantial harm to the patient.
Substantial
harm is defined as loss of life or bodily function, or significant
financial loss.
Health plans
are not protected from this statute under the Medical Injury Compensation
and Reform Act applicable to physicians.
Health plans may not seek indemnity from any health care providers
for violations of this statute. This statute does not apply to employers with
self-funded employee benefit plans. Patients
may not waive this right to sue.
Patients with
individual or state governmental health plans have always had the right to
sue their health plans for breach of the implied duty of good faith and
fair dealing. Patients with
health care coverage through employee benefit plans cannot sue for bad
faith because their coverage is regulated through a federal law known as
ERISA.
This
statute is an attempt to provide a similar right to sue for patients
covered under employee benefits plans.
It is unclear whether ERISA will continue to preempt lawsuits under
this statute since the statute “relates to” an employee benefit plan.
