California Lawsuit Blames Managed Care Network Inadequacy for Patient's Permanent Injury

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An attorney for the patient said this is the first lawsuit that alleges actual harm over inadequate networks, not just lack of access. California has had its share of growing pains through ACA expansion and its simultaneous expansion of managed care in its Medicaid program.

A California patient who injured his hand days after becoming covered under the Affordable Care Act (ACA) has sued his managed care plan and one of its contractors. The suit charges that the insurer “failed to establish adequate provider networks,” according to an attorney for the patient, causing delays that left him with a permanent injury.

Attorney Robert Gianelli told The American Journal of Managed Care that the lawsuit appears to be the first of its kind against a California managed care network based on actual harm, rather than patients’ general ability to gain access to care. “Health Net and other California plans rushed to get part of the ACA market share, but they were not prepared,” said Gianelli, an attorney for the patient, sports videographer Terry LaRue. “They did not have the delivery systems in place.”

The complaint, filed December 9, 2014, states as follows: LaRue’s coverage under Health Net became effective May 1, 2014. He injured his hand while on assignment May 5, 2014, in Colorado. The injury would require surgery, but the surgeon in Colorado would not accept LaRue’s health coverage, so he returned home to seek care. The complaint details numerous attempts by LaRue and his primary care physician to schedule an appointment with an appropriate hand surgeon through Accountable, Health Net’s contracted medical group. LaRue did not have surgery on his hand until June 19, 2014, seven weeks after the injury. At that point, the fracture had “significant callus formation,” and had to be rebroken to be repaired.


In a statement Gianelli alleges, “Due to the lengthy delay in receiving treatment, Mr. LaRue suffered a permanent and significant impairment of his left hand, including not being able to hold or pick up anything involving the left thumb, constant pain, swelling and weakness.” The suit claims that LaRue is unable to work as a professional action sports videographer and seeks unspecified compensatory and punitive damages.

A Health Net spokesman, Brad Kieffer, did not address the complaint directly. He responded, “Health Net strives to provide members with access to quality care and help them navigate the health care system.”

It is unclear whether issues with access to specialists are directly tied to influx of patients to the ACA. A spokesperson for the California Department of Managed Health Care (DMHC), which has regulatory authority over the insurer, said that so far in 2014, there have been 55 complaints from Health Net enrollees related to accessing a specialist. However, these complaints did not come from enrollees covered by ACA exchange plans.

LaRue’s complaint states that Health Net contracted with Accountable for its ACA plans after the DMHC had issued a cease-and-desist order in July 2012 that concerned Health Net’s use of Accountable for services that included the contractor’s use of non-physicians to make “medical necessity” determinations. Accountable’s relationship with Health Net for the new ACA plans, the suit alleges, included making referrals to specialists while being paid a capitated rate for patients.

California has had its share of growing pains through the ACA rollout and its simultaneous expansion of managed care into its Medicaid program. In September 2014, a group of healthcare advocates sued over a backlog of Medi-Cal applications, which sought coverage for those seeking care through Medicaid expansion. Those applications, however, were just a component of the group of newly insured seeking care through Covered California, the term for the state’s ACA exchange. At its peak, the advocates claimed, the backlog was as high as 900,000, and had fallen to 350,000 at the time of the lawsuit.

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