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Westside EKG Associates v. Foundation Health5/4/2005
Westside EKG Associates (Westside) sued seven health maintenance organizations (HMOs), claiming violations of the Health Maintenance Association Act (Act), chapter 641, Florida Statutes, for the improper processing of providers' claims for medical services rendered to HMO subscribers. Westside claims HMOs failed to comply with the "prompt pay" provisions of the Act, primarily found in section 641.3155. Westside seeks damages for breach of HMO subscriber contracts and a declaratory judgment, based on its charge that HMOs have a practice of failing to pay claims within the time mandated by the Act. HMOs contend that subscribers and providers have no legal remedy other than to pursue administrative relief.
The trial court entered judgment on the pleadings in favor of HMOs, concluding that the supreme court's opinion in Villazon v. Prudential Healthcare Plan, Inc., 843 So. 2d 842 (Fla. 2003), has foreclosed all private causes of action arising out of HMO violations of, or failure to comply with, the Act. We reverse.
We do not deem Villazon applicable to an action founded on a theory of breach of contract. In Villazon, a deceased patient/subscriber's estate was seeking to hold a HMO vicariously liable for medical malpractice by its member physicians. The supreme court, in holding the action was not preempted by federal law, also recognized that the Act does not provide a private right of action for damages. Id. at 852. After ruling on the federal preemption claims, the supreme court stated that the Act does not provide for a private right of action for damages for violation of the Act's requirements. The court did, however, acknowledge the plaintiff's underlying right to bring a common law negligence claim based upon the same allegations. Id.
Westside's claims are essentially founded on its assertions that providers are third party beneficiaries of HMO-subscriber contracts and that it is entitled to enforce applicable provisions of the Act by virtue of the common law principle that contracts governed by regulatory statutes are deemed to incorporate relevant portions of such statutes in their terms.
It is an accepted principle of law that when parties contract upon a matter which is the subject of statutory regulation, the parties are presumed to have entered into their agreement with reference to such statute, which becomes a part of the contract, unless the contract discloses a contrary intention. Northbrook Prop. & Cas. Ins. Co. v. R & J Crane Serv., Inc., 765 So. 2d 836 (Fla. 4th DCA 2000); Grant v. State Farm Fire and Cas. Co., 638 So. 2d 936 (Fla. 1994); P.C. Lissenden Co. v. Bd. of Cty. Comm'rs of Palm Beach, 116 So. 2d 632 (Fla. 1960); Citizens Ins. Co. v. Barnes, 124 So. 722 (Fla. 1929).
The Act requires that health maintenance organizations pay or deny a claim no later than 120 days after receipt. § 641.3155(2),(4), Fla. Stat. Failure to do so results in an uncontestable obligation that the health maintenance organization pay the claim to the health care provider. Id. See § 641.3155(4). See also § 641.185(e).
The Act provides that contracts with members be applied as if their terms are in full compliance with the Act. § 641.3105, Fla. Stat. (2000). The Act contains several provisions for the protection of HMO subscribers, covers many requirements concerning HMO contracts, contains certain provisions limiting the enforcement of the contract requirements, and integrates an administrative procedure for resolving disputes.
We recognize that section 641.185(2), after detailing certain subscribers' rights in section 641.185(1), states that the section "shall not be construed as creating a civil cause of action by any
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