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What Type of Conduct Can Be Retaliatory Under California’s Law That Protects Physicians and Surgeons

Updated: Oct 13

California Business & Professions Code 2056 protects physicians and surgeons (and similar laws protect other health care providers) against retaliation when they appeal denied claims or denied pre-authorizations.


This law applies not only to insurers or health plans, but also medical groups, hospitals and any other organization. (Bus. & Prof. §2032.)


What Type Of Conduct Is Retaliatory?


Retaliatory conduct can really be almost anything and most of the conduct may actually be permitted by a contract. The conduct becomes retaliatory (and unlawful), because of the reason for which it is utilized – i.e., to harass or burden or harm the physician.


A few examples of (unlawful) retaliation by insurers and health plans are:


· Denied claims or authorizations. An insurer or health plan systematically denies claims submitted by a physician’s office such that every claim (or almost every claim) for a specific medical service or procedure is denied. The reason given is typically that the service or procedure is “not medically necessary”.


· Audits and special claims or pre-payment reviews. Insurers and health plans will place physicians on “audit” or “SCR” (Special Claims Review) – sometimes without even telling the physician – which means, in short, that the physician’s claims are reviewed by a special department before being approved or (most often) denied. This not only results in more claims denials, but it slows the payment of claims because of the time taken by the insurer or health plan for the “extra” review.


· Requiring that physicians engage in peer-to-peer approvals. This is a further step that insurers and health plans use to make it more difficult and burdensome for physicians to get prior authorizations or claims approved.


· Reducing payments or Down-coding claims. Down-coding happens with the insurer or health plan pays the physician for a lower level of service than they actually performed, which results in the insurer/health plan paying the physician less for their services.


· Removing the physician’s name from the insurer/health plan’s provider directory (even though the physician remains a contracted and participating provider). Many times physicians don’t even know this happens unless they regularly check the directories, which itself is extremely burdensome (given the number of provider networks each insurer and health plan has) and should not be necessary.


· Terminating the physician’s contract or provider status.


· Not paying for out-of-network services or procedures. PPO plans are still required to make some level of payment, albeit a lower level, for services provided by out-of-network physicians. But insurers and health plans will deny payments for services provided by out-of-network providers as a way of punishing or retaliating against the physician for not accepting lower payments (as a contracted, in-network provider).



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