Insurance — health insurance — fraud

In this action alleging that the defendant Health Net had unlawfully refused to renew the plaintiff-doctors' contracts to provide health care services as part of its insurance network, the panel affirms the trial court's grant of summary judgment in favor of the plaintiffs and the third-party defendants on Health Net's claims against them under the Insurance Fraud Prevention Act, N.J.S.A. 17:33A-1 to -30, for the reasons expressed below. The panel adds that, in referring their patients to an ambulatory surgical center in which they had a financial interest, the physicians did not "knowingly" submit false claims to Health Net in violation of the IFPA since an advisory opinion issued by the Executive Committee of the New Jersey State Board of Medical Examiners, which was inconsistent with the plain language of the Cody Law, N.J.S.A. 45:9-22.5, which prohibits such referrals, gave the physicians a reasonable basis to believe that the referrals were lawful. Nor did the physicians violate the IFPA because they failed to disclose that they waived collection of co-insurance due to their facility as that practice is not unlawful. Nor did the trial court apply an erroneous knowledge standard to the IFPA claims in finding that Health Net failed to establish that the plaintiffs submitted claims knowing that they were false and misleading.

Case Law Alert - 1st Qtr 2010