California draws an important distinction between reimbursement for emergency and non-emergency services provided by out-of-network providers. Emergency providers must treat first and address payment later. Non-emergency providers ordinarily can determine coverage and reimbursement before providing care. That difference changes the governing legal framework.
Emergency and non-emergency claims start from different premises
California law gives noncontracted emergency providers a direct statutory right to reasonable reimbursement because they cannot select patients or negotiate price before treating an emergency.
Non-emergency providers are differently situated. In Orthopedic Specialists of Southern California v. Public Employees’ Retirement System, 228 Cal. App. 4th 644 (2014), the Court of Appeal held that an out-of-network provider of non-emergency services was not entitled to its usual and customary rate merely because it believed the plan had underpaid. For PPO and POS claims, California Code of Regulations, title 28, section 1300.71(a)(3)(C) points instead to the amount specified in the member’s Evidence of Coverage (“EOC”).
Read Orthopedic Specialists of Southern California v. Public Employees’ Retirement System.
Pacific Bay Recovery reinforces the EOC rule
Pacific Bay Recovery, Inc. v. California Physicians’ Service, 12 Cal. App. 5th 200 (2017), involved non-emergency residential substance-abuse treatment by an out-of-network provider. The provider sought additional reimbursement based on usual, customary, and reasonable value.
The Court of Appeal rejected that theory. Because the services were non-emergency, the emergency reimbursement standard did not apply. The provider’s entitlement to payment arose from the applicable EOC unless it could establish some separate contractual or legal basis for additional payment.
The court also rejected the provider’s implied-contract theory because verification of coverage and an expectation of some payment did not establish agreement on a reimbursement rate. A plan’s confirmation that a patient has coverage is not the same thing as assent to pay a provider’s billed charges or some percentage of them.
Read Pacific Bay Recovery, Inc. v. California Physicians’ Service.
Aton Center applies the same principle to verification and authorization calls
Aton Center, Inc. v. United Healthcare Insurance Co., 93 Cal. App. 5th 1214 (2023), addressed claims based on verification-of-benefits and authorization communications for out-of-network substance-abuse treatment.
The provider argued that those communications created oral or implied contracts requiring reimbursement at higher rates. The Court of Appeal affirmed summary judgment for the insurer because the evidence did not establish mutual assent to a definite payment rate.
The decision separates three concepts that are often blurred in provider litigation:
- coverage—whether the patient’s plan includes the service;
- authorization—whether treatment is medically approved; and
- price—what the insurer agreed to pay the out-of-network provider.
Evidence of the first two does not necessarily prove the third.
Read Aton Center, Inc. v. United Healthcare Insurance Co.
The threshold issue is the source of the payment obligation
These cases produce a practical rule for non-emergency claims. Before litigating the reasonable value of services, the provider must identify why the payor owes more than the amount required by the governing plan terms.
That source may be the EOC itself or a separate enforceable agreement with the payor. But billed charges, market-value evidence, benefit verification, or treatment authorization ordinarily do not by themselves create an agreement to pay a particular rate.
By contrast, emergency reimbursement cases begin from a statutory payment obligation and often focus on the reasonable value of the services. Non-emergency cases usually require the provider first to establish the legal source and amount of the claimed payment duty.
This article is for general informational purposes only and is not legal advice.