Judge Issues Preliminary Injunction Barring UnitedHealthcare from Terminating Certain Physicians From Medicare Advantage Plans

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The United States District Court for the District of Connecticut recently granted Fairfield County Medical Association’s and Hartford County Medical Association’s (collectively, the “Associations”) motion for a preliminary injunction seeking to bar UnitedHealthcare (“United”) from terminating approximately 2,200 physicians from United’s Medicare Advantage program.

In October 2013, United issued termination letters to more than 2,000 Connecticut physicians notifying them that they would be removed from United’s Medicare Advantage Network, effective February 1, 2014.  United characterized this decision as an “amendment” to each provider contract.  The amendment clauses in the physician contracts allow United broad discretion to unilaterally alter its agreements with physicians.  The Associations filed suit on behalf of their physician members, arguing that United’s action was a termination, and that United had denied the physicians’ substantive and procedural due process rights under the Medicare Act and had breached the individual contracts with each affected physician.

The court found that the Associations would suffer irreparable harm if a preliminary injunction were not granted, specifically:  (1) disruption of physician relationships with their Medicare Advantage patients; (2) loss of goodwill and reputational harm, and (3) a resulting loss of ability to compete in the market for the provision of Medicare services, particularly because United is the largest Medicare insurance issuer in Connecticut.  The court also found the Associations demonstrated a likelihood of success on the merits of their claims.  Based on these findings, the court preliminarily enjoined United from (1) terminating any of the Associations’ affected physicians from United’s Medicare Advantage network; (2) notifying Medicare Advantage customers that certain providers will be terminated; and (3) removing or failing to advertise the Associations’ affected physicians in United’s 2014 directories for the Medicare Advantage Network.  The preliminary injunction is to remain in effect until a ruling on the merits of the Associations’ claims or until further order of the court.

On December 12, 2013, the Second Circuit Court of Appeals refused to issue an interim stay of the preliminary injunction and referred United’s request for an emergency stay to a three-judge panel.  The case is Fairfield County Medical Association, et al. v. UnitedHealthcare of New England, et al, No. 3:13-cv-1621, and its resolution has potential implications nationwide as other health plans take steps to terminate physicians from their Medicare Advantage networks.  The order granting the Associations’ preliminary injunction is available here

Reporter, Jennifer S. Lewin, Atlanta, +1 404 572 3569, jlewin@kslaw.com.