SAN FRANCISCO, Feb. 13, 2019 — A San Francisco federal jury found in favor of King & Spalding client NorthBay Healthcare Group on Tuesday, declaring that Blue Shield had underpaid the hospital system for emergency services. NorthBay operates NorthBay Medical Center in Fairfield and NorthBay VacaValley Hospital in Vacaville.
After a six-day trial, the jury, after just two hours of deliberation, found that Blue Shield owed NorthBay 67 percent of its billed charges. While the exact amount of the damages still has to be determined, it is currently estimated that the recovery to NorthBay will be in excess of $16 million. The case was watched by many in the managed healthcare industry, as many other hospitals have filed similar lawsuits against health plans that have terminated their contracts with the hospitals. Unable to get hospitals to agree to low contract rates, a number of health plans have terminated their contracts with hospitals and have unilaterally determined how much to pay the hospitals. The only recourse for the hospitals has been to file lawsuits to recover reasonable payments.
Blue Shield had terminated its in-network contract with NorthBay in December 2016. Since then, Blue Shield had been paying NorthBay low rates for the emergency services that NorthBay had to provide to Blue Shield members. NorthBay sued Blue Shield in federal court, claiming that the health insurer had reimbursed it at unreasonably low rates. A contract between the hospital and insurer would mean that the hospital’s doctors would be considered “in-network” by patients with Blue Shield health insurance. The matter was before Judge William H. Orrick in the U.S. District Court for the Northern District of California.
King & Spalding Healthcare partner Daron Tooch and associate David Tassa, who are both based in Los Angeles, represented NorthBay in this matter.