Potential Remedy for Silent PPO Activity? Court Allows Damages to Georgia Physicians whose Discount Inappropriately Used

Two Georgia physicians sued Private Health Care Systems, a PPO provider network, claiming that PHCS injured them by inappropriately sharing their names and practice information with a company selling medical discount cards to the uninsured (“Capella”). The physicians claimed that their agreements with PHCS limited their participation to those PHCS plans or products whose members had insurance and PHCS misappropriated their identities for commercial gain when it made their names available to Capella for use by Capella card holders.

The lower court agreed with PHCS that the agreements allowed PHCS to license the physicians’ information and the physicians’ remedy was limited to the provisions in their PHCS participation agreements … probably a right to terminate. On appeal, the 11^th Circuit Court of Appeals reversed and held that Georgia law does not limit a party’s remedy when the party enters into a contract to provide a service for one commercial purpose and the recipient of the service uses it for another purpose. The Court of appeals cited an earlier Georgia decision in which a model entered into an agreement with a photographer for her image to be used for one purpose and the photographer sold the image to be used for another, different purpose. In noting this precedent, the Court stated that there were laws in New York, California, Florida, Massachusetts, Connecticut, Ohio and Illinois allowing claims of invasion of privacy or infringement of privacy in addition to breach of contract.

Rather than limiting the parties to the remedies in the PHCS agreements, the court recognized that these agreements must be used to determine whether the physicians had agreed to allow the use of their name and practice information broadly – as PHCS claimed, or whether restrictive terms limited its use to the plan designs chosen by the physicians.  If the physician's agreement was sufficiently specific about which products were to have been included and which excluded, they'll win. 

The Managed Care Contracting Moral of this story is that, especially in states recognizing a tort of commercial misappropriation, it is useful to negotiate and specify which products you are willing to participate in …not just by product name, but by spelling out in detail the features of those products that you are agreeing to participate in.

Rivell v. PHCS, No. 07-12387 (11^th Cir. Mar. 24, 2008)

Comments

[Tracey Dodson]

Don't forget that the patient is still penalized by using an out-of-network physician!! The physicians are giving the discounts but the patient is not reaping the benefits!!