U.S. Supreme Court Sides with Physicians in Arbitration Dispute with Health Insurer

AMA and MSNJ support the contractual rights of physicians

WASHINGTON – June 11, 2013 – The American Medical Association (AMA) and the Medical Society of New Jersey (MSNJ) heralded yesterday’s decision by the U.S. Supreme Court allowing individual physicians to come together as a group to fight the unfair business practices of large health insurance companies.

“This important ruling allows thousands of physicians to use class arbitration against a health insurer that has underpaid them for more than a decade,” said AMA President Jeremy A. Lazarus, M.D.  “Without this broad-scale arbitration, physicians would have no practical means of challenging a health insurer's unfair payment practices.”

“It is a sad commentary that it took a decade for Dr. Sutter and other New Jersey physicians to exercise the dispute mechanism allowed by their contracts,” said MSNJ General Counsel Melina Martinson. “A timely class-arbitration would have allowed them to have their payment disputes resolved more expeditiously and cost-effectively. The decision is welcome news to physicians in New Jersey and all who are concerned with the reducing the cost of medicine in this country.”

The decision in Sutter v. Oxford Health Plans concludes a dispute dating back to September 2003 when New Jersey pediatrician John Sutter, M.D., alleged that Oxford Health Plans had systematically bundled, down coded and delayed payments for his services and those of 20,000 other physicians in its network. Oxford Health Plans had challenged legal decisions supporting class arbitration of the dispute and appealed the case to the U.S. Supreme Court.

The Litigation Center of the AMA and State Medical Societies and the Medical Society of New Jersey (MSNJ) filed a friend-of-the-court brief urging the high court not to limit physicians’ ability to fight insurer disputes as a group.  The AMA-led brief noted that health insurers like Oxford know that arbitrating disputes with individual physicians works to their advantage by allowing contract violations and underpayments to persist and leaving physicians with no effective means to challenge unfair business practices.

The high court’s ruling in favor of physicians gives a boost to the medical profession’s efforts to address unfair corporate policies of large health insurers that are bad for patients and physicians.

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Media Contact:
Robert J. Mills
AMA Media Relations
(312) 464-5970

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About the American Medical Association (AMA) Since 1847 the American Medical Association has had one mission: to promote the art and science of medicine and the betterment of public health. Today, the core strategy used to carry out this mission is our concerted effort to help doctors help patients. We do this by uniting physicians nationwide to work on the most important professional and public health issues. In 2011 our strategic plan focuses on five areas that encompass the central elements in health system reform: Access to care Quality of care Cost of health care Prevention and wellness Payment models Vist the AMA's 2011 strategic plan at: http://www.ama-assn.org/ama/pub/about-ama/strategic-issues.page These topics represent the major areas of emphasis in which the AMA carries out its mission in the current environment. Our proposed actions are not only directed at solving reform issues at the policy level, but also at helping physicians adapt to—and adopt—changes in a productive way. To learn more about how the AMA is moving medicine forward, read our flyer at: http://www.ama-assn.org/resources/doc/about-ama/moving-medicine-forward.pdf.