Business Law

California Medical Association v. Aetna Health of California Inc. (2021)

California Medical Association v. Aetna Health of California Inc. (2021) __ Cal.App.5th__ [2021 WL 1660614]

CMA lacks standing to seek injunction against health plan that inhibits in-network physicians from referring patients to out-of-network physicians.

The California Medical Association (CMA) is a nonprofit, professional organization that advocates on behalf of its physician members, including Aetna in-network physicians. CMA sued Aetna under the Unfair Competition Law (UCL) (Bus. & Prof. Code, § 17200), seeking to enjoin it from inhibiting in-network physicians from referring their patients to out-of-network providers. The CMA alleged that Aetna’s policy unlawfully interfered with its members’ ability to exercise independent medical judgment and violated various California statutes.  

Aetna moved for summary judgment, contending CMA lacked standing to bring a nonclass representative UCL action because it was not directly harmed by Aetna’s policy. CMA argued it had standing because it had diverted substantial resources to investigate Aetna’s policy and to assist its member physicians who had been harmed. The trial court granted Aetna’s motion, ruling that CMA had failed to show a direct injury, or loss of money or property, as a UCL claim requires.

The Court of Appeal affirmed, holding that an organization must show it directly suffered economic loss to have standing under the UCL. In 2004, Proposition 64 amended the UCL to require that plaintiffs show they “suffered injury in fact and [have] lost money or property as a result of the unfair competition.” (Bus. & Prof. Code, § 17204.) The court held that the amended UCL required the CMA to show that it—not just its members—lost money or property in order to seek injunctive relief. The court then rejected CMA’s argument that its diversion of resources was a sufficient injury to confer UCL standing.  Because CMA’s purpose is to advocate on behalf of its members, the time it spent on Aetna’s policy was typical of the work CMA already does. Additionally, CMA had brought a representative action on behalf of its members, rather than an action seeking redress for its own harm. Accordingly, CMA lacked standing because it failed to show that it personally suffered any direct economic loss.

The bulletin describing this appellate decision was originally prepared for the California Society for Healthcare Attorneys (CSHA) by H. Thomas Watson and Peder K. Batalden, Horvitz & Levy LLP, and is republished with permission.

For more information regarding this bulletin, please contact H. Thomas Watson, Horvitz & Levy LLP, at 818-995-0800 or htwatson@horvitzlevy.com.

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John Whittaker
King & Spalding
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Covered California
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LA Care
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