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The judges upheld the dismissal of Health Net of New Jersey’s suit to recover $5 million in insurance payments to Wayne Surgical Center, plus treble damages — protecting physician-owned operations from lawsuits that could put them out of business.
Nearly two dozen physicians who had ownership interests in the center had sued Health Net for unlawful termination of their contracts after they began treating out-of-network patients referred by company physicians.
The appeals court denied Health Net’s claim that the trial court applied an “erroneous knowledge” standard to some of the allegations and erred by holding that insurance claims by a provider who waives co-insurance payments do not misrepresent the provider’s charges.
A lower court ruled that the referrals of a patient to an ambulatory surgical center in which the referring physician owned an interest — pretty much a common practice throughout the state — violated New Jersey’s anti-self-referral law, commonly known as the Codey Act.
However, the higher court said it had absolutely no evidence that the doctors involved had deliberately steered patients toward the facility or that any decisions were made for any reason other than for the patients’ welfare.
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