I like Justice Croskey's opinion. It's pretty darn comprehensive, and it smartly addresses a complicated issue. I feel like I understand this stuff a lot better as a result of having read it, and I'm persuaded that the Court of Appeal correctly analyzes the relevant policy considerations. It really does justice.
That said, I tend to think that I might have even gone further than the Court of Appeal did. Despite the fact it wasn't necessary to do so in order to resolve this appeal.
Emergency physicians are in a tough situation. They're (rightly) required by statute to provide services to people in emergency need, regardless of ability to pay. In turn, HMOs are rightly required to reimburse these physicians for the emergency services they perform on behalf of their enrollees. Even if the HMO doesn't have a contract with these physicians. Makes total sense.
Sometimes HMOs pay intermediaries -- called independent practice associations (or IPAs) -- to perform their health care obligations to enrollees. Fair enough. California law allows that, and that seems just fine to me. If the HMO wants to delegate its duties to someone else, that's its call.
But what happens when the HMO delegates its duty -- including its duty to reimburse emergency physicians -- to an IPA, and then the IPA goes belly up? Who gets stiffed: the HMO or the physician?
The Court of Appeal holds that the HMO gets stuck with the bill if the HMO knew or should have known that the IPA was in financial distress. So reverses the trial court's grant of a demurrer. That decision seems right.
As far as it goes.
But I don't know why the HMO shouldn't be stuck with the bill regardless of whether the HMO knew that the IPA was financially unstable. It was the HMO's decision to delegate. The emergency physician had no say in the matter. The HMO could have investigated the IPA. The physician couldn't. The HMO got paid by its enrollees. The physician, by contrast, fronts the services. As between these two entities, I don't see any reason why the physician -- who had utterly no say in the matter (much less benefited therefrom) -- should be stuck with the consequences of the HMO's unilateral decision to delegate its responsibilities to an IPA.
If I'm a contractor building a house and one of my subcontractors fails to complete its tasks and goes belly up, I'm on the hook, not the owner of the house. If I delegate to a colleague my obligation to teach a class and he flakes, it's my bad, not the students'. When you delegate, it's your responsibility to see that things go right. And your obligation to pay if they don't. I don't see any reason for a different result here.
I'm okay with California law permitting an HMO to delegate its tasks to an IPA. But I don't think that immunizes the HMO if the IPA fails. Surely it wouldn't mean, for example, that the patients who paid the HMO suddenly weren't entitled to the health care coverage for which they paid, right? If the IPA's failure doesn't immunize the HMO (which got paid) from delivering services to its enrollees, I don't see why the same thing shouldn't be true for the emergency physicians who delivered such services. The HMO suffers the consequences of its decisions. Not someone who had nothing to do with 'em. Regardless of whether the HMO "knew" that the IPA was financially unsound.
I surely don't claim to be an expert in this area. But I nonetheless have a sense of which party should be justly stuck with the bill.