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Health Insurance Law Update: Medical Providers Seeking Payment from Insurers Must File a Quantum Meruit Lawsuit Within Two Years of the First EOB

The most common complaint McKennon Law Group PC hears from medical providers is that insurers refuse to pay for the services provided to their insureds, even after the medical provider sought and obtained a pre-authorization from the insurer for the services provided to a patient.  After submitting a bill to the insurance company, all too often, a physician or other medical professional receives an Explanation of Benefits (“EOB”) letter indicating that either the insurer will not pay the claim at all or it will only pay a fraction of the amount billed.

After receiving the EOB, medical providers typically utilize the insurer’s voluntary appeal process in an effort to secure full payment.  That appeal process can drag on for years.  In Vishva Dev, M.D., Inc. v. Blue Shield of California Life & Health Insurance Co., 2 Cal. App. 5th 1218 (2016), the California Court of Appeal ruled that the two-year statute of limitations for a quantum meruit claims begins to run when a doctor first receives an EOB letter even when the insurer offered an appeal and then delayed that process.

In Vishva, a physician filed a complaint asserting breach of contract and quantum meruit claims seeking larger payments for emergency care rendered to three different patients.  A quantum meruit claim seeks payment of a reasonable sum of money for services rendered.  In response, Blue Shield of California Life Insurance Company and Blue Shield of California (collectively, “Blue Shield”) filed a motion for summary judgment on the quantum meruit claim, on the grounds that the lawsuit was initiated more than two years after the physician received the initial EOB for each patient.

The physician opposed the motion for summary judgment on the grounds that the filing deadline was tolled during the lengthy appeal process in which he engaged at the invitation of Blue Shield, and did not start until the final EOB was issued.  The trial court granted Blue Shield’s motion, and on appeal, that judgment was upheld on the grounds that the statute of limitations begins to run upon the first unequivocal denial of payment in writing, that is, the date of the original EOB.

The Court, citing numerous California Supreme Court rulings in homeowner’s insurance cases, also rejected the doctor’s argument that Blue Shield was estopped from raising that statute of limitation defense because the doctor reasonably relied on the appeals process to resolve any payment issues.  The Court held that Blue Shield’s decision was established with the original EOB, and the appeal process was a mere “extension of a courtesy” that did not extend the statute of limitation.  Finally, the Court advised that ruling otherwise would create a situation where an insurer may inadvertently extend the statute of limitations period by responding to a mere inquiry, which would contravene the public policy of encouraging insurers to respond to new, substantive facts.

The lesson from this ruling is clear, if you are a medical provider and intend to file a lawsuit against an insurance company seeking payment for services rendered to a patient, you must bring that lawsuit within two years of the date of the initial EOB, or you will have forfeited your ability to assert a quantum meruit claim.

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