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Rivell v. PHCS: Network Provider Contracts’ Unintentional Limits on Network Rentals and Provider Marketing

Posted in Payer/Insurance Reform

On August 13, 2012, in Rivell v. Private Health Care Systems Inc., the U.S. District Court for the Southern District of Georgia dismissed the plaintiffs’ claims arising from the rental of a health care provider network by a preferred provider organization (“PPO”) to a discount medical plan (“DMP”) as time barred for two plaintiffs and for lack of standing for a third plaintiff.  However, the case still invites provider networks and health plans to review their network provider agreements carefully for unintentional limits on the rental of their provider networks to and marketing of their network providers by third parties.

In this case, a PPO gave a DMP access to its provider network.  The DMP provided its subscribers with access to the network by marketing the PPO network providers’ contact information through a member services call center and through a directory available on the company’s website.  Two physicians, who participated in the PPO network, discovered that the DMP was marketing their names and brought a number of claims against the PPO and the DMP, including misappropriation of identity.

The physicians based the misappropriation of identity claim on their contract with the PPO.  These contracts permitted the PPO and certain “companies” to “use Physician’s name, office address, telephone number, specialty and factual description of the practice in directories and other promotional materials.”  The contracts defined “companies” as “insurance companies, employers, benefit plans, and other payors that offer third-party payments.”  The plaintiffs argued that the term “companies” did not include a DMP, which, as described by the court, “only offers access to discounted healthcare services, it does not provide health insurance to its subscribers nor does it provide third-party payments to providers.”

Because the court dismissed the plaintiffs’ claims on procedural grounds, it did not address the merits of the misappropriation of identity claim.  Nevertheless, the case serves as a reminder for provider networks and health plans that are considering providing a third party with access to their network.  Both networks and plans should review not only the substantive terms of their network provider agreements but also each defined term to ensure that they have not unintentionally limited the categories of companies that may access the network, including marketing that access.