Physician Reinstated Under HMO Laws

Dr. Charles J. Carlini was a provider with the Highmark Blue Cross Blue Shield Plan (formerly Blue Cross of Western Pennsylvania) and the Keystone West Plan, a subsidiary of Highmark. Since 1980, the doctor was a member of the medical staff of St. Clair Hospital in Pittsburgh and participated in various Highmark managed care plans.

In August 1997, Highmark’s medical director informed the board-certified surgeon that he was about to be decertified from the Highmark/Keystone network by the HMO’s credentials committee. Carlini was told the decision was based on malpractice claims against him.

Carlini appealed the decision and appeared before a medical review committee of two Highmark physicians in January 1998. The doctor submitted a letter from St. Clair Hospital’s medical director supporting his retention and discussed the malpractice claims against him in detail. As a result of the hearing, the committee recommended that the earlier decision to terminate Carlini be reversed.

But in February 1998, Carlini received a letter from Highmark’s medical director upholding the earlier termination decision. The letter also stated that Carlini would be reported to the National Practitioners’ Data Bank, a requirement under federal law when a doctor is decredentialed.

Two months later, Carlini sued Highmark in equity and sought declaratory judgment. Carlini alleged breach of contract, denial of due process and unfair competition. He requested recertification and petitioned for a preliminary injunction to prevent Highmark/Keystone from reporting his name to the national data bank.

In September 1998, the chancellor ordered Carlini reinstated with Highmark and also directed Highmark to retract the notice it sent to the data bank.

Highmark/Keystone appealed. The health plan alleged the common pleas court chancellor erred when he concluded Carlini had a clear right to relief under state and federal statutes, when he treated Highmark/Keystone as “state actors,” and when he granted the equitable remedy of injunctive relief to Carlini, “because an adequate remedy of law was available.”

State and Federal Laws

Two state statutes were the source of argument in Carlini, the Professional Health Services Corporation Act and the HMO Act. Both are Pennsylvania statutes; the former applies to non-profit health service providers like Highmark, whereas the latter applies to for-profit managed care companies like Keystone. The PHSPCA mandates that due process be given in the decertification process, requiring a hearing before a contract is terminated, whereas the HMO Act does not.

While the court said “we do not view the PHSPCA and the HMO Act as being mutually exclusive,” the choice of statute was of great import to Highmark, attorney Silverman, said.

“Highmark tried to launch an argument that they weren’t responsible for the decertification, but that their subsidiary HMO, Keystone, was. If Keystone was responsible, then under the HMO Act, there would be no problem with denying Dr. Carlini due process,” said Silverman.

“The trouble for Highmark was, their fingerprints were all over the decertification of Dr. Carlini. It was Highmark’s medical director who contacted Dr. Carlini to tell him he was being decredentialed,” Silverman said.

The court refused to recognize the distinction Highmark fought for and apply only the PHSPCA rather that the HMO Act, and Silverman said this may be helpful in predicting the court’s future decisions. But the real test will be what the court decides in the case of a “true,” standalone HMO, rather than the fact pattern in Carlini, where the HMO was so closely tied to its non-profit health plan parent, Silverman said.

McGinley also pointed out that “the Pennsylvania Blue Shield Review Committee Guidelines (which apply to Highmark and require due process) … directly refer to the PHSPCA as controlling herein.”

And a federal law, the Federal Health Care Quality Improvement Act, also provided support for the chancellor’s decision, McGinley wrote. “The chancellor correctly noted that federal law delineates standards for professional review proceedings whereby physicians are entitled to due process,” said McGinley.

However, the FHCQIA is an odd law in that it can be used as a shield for hospitals who say they have followed due process in decredentialing a doctor, but it cannot be used by a doctor to claim he was denied due process, Silverman said.

“The important thing is that the court decided Highmark could not hide behind the Keystone HMO,” said Silverman. “I think the court has expressed disdain for these draconian dismissals of doctors without cause.”

Keystone’s own bylaws also supported the chancellor’s decision, said McGinley. The bylaws stated in part that “the doctor affected by the complaint shall be afforded an opportunity to be heard before the committee … and to produce evidence and witnesses at such hearing.”

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