Title: Prospect Medical v. Northridge Emergency

State: california

Issuer: California Supreme Court

Document:

1
Filed 1/8/09 
 
 
 
IN THE SUPREME COURT OF CALIFORNIA 
 
 
 
PROSPECT MEDICAL GROUP, INC., 
) 
et al., 
 
) 
 
 
) 
 
Plaintiffs and Appellants, 
) 
 
 
) 
S142209 
 
v. 
) 
 
 
) 
Ct.App. 2/3  B172737 
NORTHRIDGE EMERGENCY 
) 
MEDICAL GROUP et al., 
) 
Los Angeles County 
 
) 
Super. Ct. No. BC300850 
 
Defendants and Respondents. ) 
  
___________________________________ ) 
  
 
) 
  
PROSPECT HEALTH SOURCE 
) 
 
MEDICAL GROUP, 
) 
  
 
) 
Ct.App. 2/3  B172817 
 
Plaintiff and Appellant, 
) 
 
 
) 
Los Angeles County 
 
v. 
) 
Super. Ct. No. SC076909 
 
) 
 
SAINT JOHN’S EMERGENCY 
) 
  
MEDICINE SPECIALISTS, INC., et al., 
) 
  
 
) 
  
 
Defendants and Respondents. ) 
  
___________________________________ ) 
 
A health maintenance organization (HMO) commonly manages medical 
care in California.  In the typical model, familiar to many, doctors contract to 
provide medical care to enrolled HMO members.  Members generally use the 
services of one of the contracting doctors.  When they do, and except for 
copayments the members must make when services are rendered, the HMO (or its 
 
2
delegate) pays the doctor under the existing contract.  In this way, the parties agree 
upon, and know in advance, what their obligations and rights are and who must 
pay, and how much, for medical care. 
The typical payment model sometimes breaks down, however, in the case 
of emergency care.  In an emergency, an HMO member goes to the nearest 
hospital emergency room for treatment.  The emergency room doctors at that 
hospital may or may not have previously contracted with the HMO to provide care 
to its members.  In that situation, the doctors are statutorily required to provide 
emergency care without regard to the patient’s ability to pay.  Additionally, when 
the patient is a member of an HMO, the HMO is statutorily required to pay for the 
emergency care.1  For HMO members, it is always clear in advance who has to 
provide emergency services — any emergency room doctor to whom the member 
goes in an emergency — and who has to pay for those services — the HMO.  The 
conflict arises when there is no advance agreement between the emergency room 
doctors and the HMO regarding the amount of the required payment. 
Thus, the potential inherently exists for disputes between the emergency 
room doctors and the HMO regarding how much the HMO owes the doctors for 
emergency services.  When no preexisting contract exists, the doctors sometimes 
submit a bill to the HMO that they consider reasonable for the services rendered 
but that the HMO considers unreasonably high; conversely, the HMO sometimes 
makes a payment that it considers reasonable for the services rendered but that the 
                                              
1  
For ease of discussion, we will sometimes refer rather loosely to those 
required to provide emergency services without regard to the patient’s ability to 
pay as emergency room doctors, while recognizing that the category is broader 
than just doctors (Health & Saf. Code, § 1345, subd. (i)), and to the entities 
required to reimburse those emergency room doctors for services rendered to their 
subscribers as HMO’s, while recognizing that the entities are more technically 
described as “health care service plan[s]” and include the plans’ delegates (Health 
& Saf. Code, § 1371.4, subd. (e)). 
 
3
doctors consider unreasonably low.  The resolution of such disputes can create 
difficult problems. 
But the question of how to resolve disputes between the doctors and the 
HMO over the amount due for emergency care is not before us in this case.  The 
issue here is narrow, although quite important for emergency room doctors, 
HMO’s, and their members:  When the HMO submits a payment lower than the 
amount billed, can the emergency room doctors directly bill the patient for the 
difference between the bill submitted and the payment received — i.e., engage in 
the practice called “balance billing”? 
Interpreting the applicable statutory scheme as a whole — primarily the 
Knox-Keene Health Care Service Plan Act of 1975, Health and Safety Code 
section 1340 et seq. (Knox-Keene Act)2 — we conclude that billing disputes over 
emergency medical care must be resolved solely between the emergency room 
doctors, who are entitled to a reasonable payment for their services, and the HMO, 
which is obligated to make that payment.  A patient who is a member of an HMO 
may not be injected into the dispute.  Emergency room doctors may not bill the 
patient for the disputed amount. 
I.  FACTUAL AND PROCEDURAL BACKGROUND 
Because neither party petitioned the Court of Appeal for a rehearing, we 
take our facts largely from that court’s opinion.  (Richmond v. Shasta Community 
Services Dist. (2004) 32 Cal.4th 409, 415; see Cal. Rules of Court, rule 
8.500(c)(2).) 
                                              
2  
All further statutory references are to the Health and Safety Code unless 
otherwise indicated. 
 
4
Plaintiffs and appellants, Prospect Medical Group, Inc., et alia (collectively 
Prospect), are individual practice associations.3  Prospect manages patient care by 
executing written contracts with health care service plans.4  It provides for medical 
care to persons who are members of a health care service plan and who select a 
Prospect physician.  Prospect also provides billing services to the health care 
service plans contracted with Prospect.  As such, it is a “delegate” of those health 
care service plans and is statutorily obligated to pay for emergency services 
provided to patients who have subscribed to those health care service plans.  
(§ 1371.4, subds. (b) & (e).) 
Defendants and respondents, Northridge Emergency Medical Group and 
Saint John’s Emergency Medicine Specialists, Inc. (collectively Emergency 
Physicians), have exclusive licenses at two California hospitals to provide 
emergency room physician care.  Emergency Physicians are health care providers 
and are statutorily required to provide emergency care without regard to an 
individual’s insurance or ability to pay.  (§ 1317, subd. (d); see also 42 U.S.C. 
§ 1395dd.) 
When patients who are members of a health care service plan schedule 
medical services in advance, they generally go to physicians with whom the health 
care service plan or its delegate, like Prospect, has an express preexisting contract.  
On occasion, when these same patients need emergency medical care, they may be 
                                              
3  
Section 1373, subdivision (h)(6), defines an individual practice association 
by reference to title 42 United States Code section 300e-1(5), which provides as 
relevant:  “The term ‘individual practice association’ means a . . . legal entity 
which has entered into a services arrangement (or arrangements) with persons who 
are licensed to practice medicine . . . .” 
4  
As pertinent here, section 1345, subdivision (f)(1), defines a health care 
service plan as “[a]ny person who undertakes to arrange for the provision of health 
care services to subscribers or enrollees, or to pay for or to reimburse any part of 
the cost for those services, in return for a prepaid or periodic charge paid by or on 
behalf of the subscribers or enrollees.” 
 
5
taken to a hospital where the doctors staffing the emergency room do not have a 
preexisting contract with the health care plan or its delegate.  In this case, after 
Emergency Physicians provided emergency medical services to patients who were 
members of health care service plans that contracted with Prospect, they submitted 
reimbursement claims to Prospect.  Sometimes Prospect paid Emergency 
Physicians less than the amount billed.  In those cases, Prospect paid what it 
alleged was reasonable for the services rendered.  Emergency Physicians then 
billed the patients directly for the differences between the bills they submitted and 
what Prospect paid.  The parties refer to this practice as “balance billing.” 
After billing disputes arose between Prospect and Emergency Physicians, 
Prospect filed two related actions against Emergency Physicians seeking, among 
other things, a judicial determination that (1) Emergency Physicians were entitled 
only to “reasonable” compensation for emergency medical care, which Prospect 
claimed was equivalent to the Medicare rate; and (2) the practice of balance billing 
is unlawful.  In one of the actions, Prospect alleged that Saint John’s Emergency 
Medicine Specialists, Inc., “routinely bills Prospect’s patients, threatens to turn 
over Prospect’s patients to an outside collection agency, and threatens to take legal 
measures against Prospect’s patients.”  The trial court sustained Emergency 
Physicians’ demurrers without leave to amend and entered judgments accordingly.  
Prospect appealed both judgments, and the Court of Appeal consolidated the 
appeals. 
The Court of Appeal concluded that balance billing is not statutorily 
prohibited.  Second, it concluded that Prospect is not entitled to a judicial 
declaration imposing the Medicare rate as the reasonable rate.  Third, it concluded 
the trial court abused its discretion by denying leave to amend the complaint to 
permit Prospect to allege that Emergency Physicians charged more than a 
reasonable rate for a specific medical procedure.  We granted Prospect’s petition 
 
6
for review, which raised the sole question whether Emergency Physicians may 
engage in balance billing. 
II.  DISCUSSION 
The Knox-Keene Act governs this case.  “The Knox-Keene Act is a 
comprehensive system of licensing and regulation under the jurisdiction of the 
Department of Managed Health Care.”  (Bell v. Blue Cross of California (2005) 
131 Cal.App.4th 211, 215 (Bell).)  In addition, one statute not part of the act is 
pertinent here.  Section 1317 requires emergency care providers to provide 
emergency services without first questioning the patient’s ability to pay.  (Bell, 
supra, 131 Cal.App.4th at pp. 215-216 & fn. 4.)  Federal law is similar.  (42 
U.S.C. § 1395dd; see Bell, supra, at p. 215, fn. 4.) 
Today, by statute, when emergency room doctors provide emergency 
services, HMO’s are required to reimburse those doctors for the services rendered 
to their subscribers or enrollees.  As Bell explained, the Knox-Keene Act “compels 
for-profit health care service plans to reimburse emergency health care providers 
for emergency services to the plans’ enrollees. . . .  [S]ection 1371.4 provides that 
a for-profit ‘health care service plan shall reimburse providers for emergency 
services and care provided to its enrollees, until the care results in stabilization of 
the enrollee, except as provided in subdivision (c).  As long as federal or state law 
requires that emergency services and care be provided without first questioning 
the patient’s ability to pay, a health care service plan shall not require a provider to 
obtain authorization prior to the provision of emergency services and care 
necessary to stabilize the enrollee’s emergency medical condition.’  (§ 1371.4, 
subd. (b); see § 1371.4, subd. (f).)  ‘Payment for emergency services and care may 
be denied only if the health care service plan reasonably determines that the 
emergency services and care were never performed . . . .’  (§ 1371.4, subd. (c); see 
§ 1371.4, subd. (f); and see Cal. Code Regs., tit. 28, § 1300.71, subd. (a).)”  (Bell, 
 
7
supra, 131 Cal.App.4th at p. 215.)  “Subdivision (b) of section 1371.4 was enacted 
in 1994 to impose a mandatory duty upon health care plans to reimburse 
noncontracting providers for emergency medical services.  [Citations.]”  (Id. at p. 
216.) 
The combination of circumstances that (1) in an emergency a patient might 
go to emergency room doctors who have no preexisting contractual relationship 
with the HMO, (2) the doctors are required to render emergency care without 
asking whether the patient can pay for it, and (3) the HMO is required to pay the 
doctors for those services, creates the problem underlying the issue before us.  By 
the very nature of things, disputes may arise regarding how much the emergency 
room doctors may charge and how much the HMO must pay for emergency 
services. 
Regulations of the Department of Managed Health Care provide that the 
HMO must pay “the reasonable and customary value for the health care services 
rendered based upon statistically credible information that is updated at least 
annually and takes into consideration:  (i) the provider’s training, qualifications, 
and length of time in practice; (ii) the nature of the services provided; (iii) the fees 
usually charged by the provider; (iv) prevailing provider rates charged in the 
general geographic area in which the services were rendered; (v) other aspects of 
the economics of the medical provider’s practice that are relevant; and (vi) any 
unusual circumstances in the case . . . .”  (Cal. Code Regs., tit. 28, § 1300.71, 
subd. (a)(3)(B); see Bell, supra, 131 Cal.App.4th at p. 216.)  Thus, the HMO has a 
“duty to pay a reasonable and customary amount for the services rendered.”  (Bell, 
supra, at p. 220.)  But how this amount is determined can create obvious 
difficulties.  In a given case, a reasonable amount might be the bill the doctor 
submits, or the amount the HMO chooses to pay, or some amount in between.  In 
Bell, supra, 131 Cal.App.4th 211, the Court of Appeal interpreted the Knox-Keene 
 
8
Act to permit, when disputes arise, emergency room doctors to sue the HMO 
directly for the reasonable value of their services. 
Prospect argues that section 1379, part of the Knox-Keene Act, prohibits 
balance billing.  That section, enacted in 1975 and never amended, provides: 
“(a)  Every contract between a plan and a provider of health care services 
shall be in writing, and shall set forth that in the event the plan fails to pay for 
health care services as set forth in the subscriber contract, the subscriber or 
enrollee shall not be liable to the provider for any sums owed by the plan. 
“(b)  In the event that the contract has not been reduced to writing as 
required by this chapter or that the contract fails to contain the required 
prohibition, the contracting provider shall not collect or attempt to collect from the 
subscriber or enrollee sums owed by the plan. 
“(c)  No contracting provider, or agent, trustee or assignee thereof, may 
maintain any action at law against a subscriber or enrollee to collect sums owed by 
the plan.” 
Although no express contractual relationship exists between Prospect and 
Emergency Physicians, Prospect argues that the combination of statutes requiring 
emergency room doctors to render, and HMO’s to pay for, emergency services 
creates an implied contract between emergency room doctors and HMO’s that has 
not been reduced to writing under section 1379, subdivision (b).  The Court of 
Appeal disagreed.  Interpreting section 1379 as a whole (but not in the context of 
the Knox-Keene Act as a whole), it held that this section does not cover the 
situation here.  It found “that the language of subdivision (b) of section 1379 refers 
to and includes within its scope only voluntarily negotiated contracts between 
providers of health care services, like Emergency Physicians, and health care 
service plans or their delegates, like Prospect, based upon traditional contractual 
principles such as a meeting of the minds.  Subdivision (b) does not include within 
 
9
its scope the implied contract as Prospect asserts.”  Accordingly, it “conclude[d] 
that section 1379, subdivision (b), was not intended to, and does not, prohibit the 
balance billing practices alleged in this case.” 
Reading the language of section 1379 in isolation, it does not readily apply 
to the precise situation here.  No doubt the Legislature did not contemplate the 
situation of this case in 1975, when it enacted section 1379, for this situation did 
not exist in 1975.  Section 1371.4, which obligates HMO’s to pay for emergency 
services to its subscribers, was enacted in 1994, long after the Legislature enacted 
section 1379.  But we must not view section 1379 in isolation.  “We do not 
examine [statutory] language in isolation, but in the context of the statutory 
framework as a whole in order to determine its scope and purpose and to 
harmonize the various parts of the enactment.”  (Coalition of Concerned Citizens, 
Inc. v. City of Los Angeles (2004) 34 Cal.4th 733, 737.) 
We have already seen that in 1975, the Legislature banned balance billing 
when an HMO is contractually obligated to pay the bill (§ 1379); that since 1994, 
HMO’s have been obligated to pay for emergency care (§ 1371.4); and that the 
Knox-Keene Act permits emergency room doctors to sue HMO’s directly over 
billing disputes (Bell, supra, 131 Cal.App.4th 211).  These provisions strongly 
suggest that doctors may not bill patients directly when a dispute arises between 
doctors and the HMO’s.  Other provisions point in the same direction.  Section 
1317, subdivision (d), which requires emergency room doctors to render 
emergency care without questioning a patient’s ability to pay, also provides that 
“the patient or his or her legally responsible relative or guardian shall execute an 
agreement to pay [for the services] or otherwise supply insurance or credit 
information promptly after the services are rendered.”  (Italics added.)  This 
provision implies that once patients who are members of an HMO provide 
insurance information, they have satisfied their obligation towards the doctors.  
 
10
Section 1342, subdivision (d), expresses a legislative intent to “[help] to ensure the 
best possible health care for the public at the lowest possible cost by transferring 
the financial risk of health care from patients to providers.” 
Additionally, the Legislature contemplated there may be disputes over the 
amounts owed to noncontracting providers such as emergency room doctors, and 
therefore the Knox-Keene Act requires that each HMO “shall ensure that a dispute 
resolution mechanism is accessible to noncontracting providers for the purpose of 
resolving billing and claims disputes.”  (§ 1367, subd. (h)(2); see also § 1371.38, 
subd. (a) [directing the Dept. of Managed Health Care to adopt regulations 
ensuring that each HMO adopt a dispute resolution mechanism that is “fair, fast, 
and cost-effective for contracting and noncontracting providers”].)  Finally, the 
Legislature has acted to protect the interests of noncontracting providers in 
reimbursement disputes by prohibiting HMO’s from engaging in unfair payment 
patterns involving unjust payment reductions, claim denials, and other unfair 
practices as defined, and by authorizing monetary and other penalties against 
HMO’s that engage in these patterns.  (§ 1371.37; see also § 1371.39 [authorizing 
providers to report HMO’s that engage in unfair payment patterns to the Dept. of 
Managed Health Care].) 
The only reasonable interpretation of a statutory scheme that (1) intends to 
transfer the financial risk of health care from patients to providers; (2) requires 
emergency care patients to agree to pay for the services or to supply insurance 
information; (3) requires HMO’s to pay doctors for emergency services rendered 
to their subscribers; (4) prohibits balance billing when the HMO, and not the 
patient, is contractually required to pay; (5) requires adoption of mechanisms to 
resolve billing disputes between emergency room doctors and HMO’s; and (6) 
permits emergency room doctors to sue HMO’s directly to resolve billing disputes, 
is that emergency room doctors may not bill patients directly for amounts in 
 
11
dispute.  Emergency room doctors must resolve their differences with HMO’s and 
not inject patients into the dispute.  Interpreting the statutory scheme as a whole, 
we conclude that the doctors may not bill a patient for emergency services that the 
HMO is obligated to pay.  Balance billing is not permitted.5 
Any doubt about the meaning of the Knox-Keene Act in this regard is 
easily resolved when legislative policy is considered.  If statutory language 
permits more than one reasonable interpretation, courts may consider extrinsic 
aids, including the purpose of the statute, the evils to be remedied, and public 
policy.  (Torres v. Parkhouse Tire Service, Inc. (2001) 26 Cal.4th 995, 1003.)  We 
perceive a clear legislative policy not to place patients in the middle of billing 
disputes between doctors and HMO’s.  Indeed, the Department of Managed Health 
Care argued in Bell, and the Court of Appeal concluded, that doctors may directly 
sue HMO’s to resolve billing disputes in order to avoid the necessity of balance 
billing.  The Bell court quoted the department’s argument:  “ ‘If providers are 
precluded from bringing private causes of action to challenge health plans’ 
reimbursement determinations, health plans may receive an unjust windfall and 
patients may suffer an economic hardship when providers resort to balance billing 
activities to collect the difference between the health plan’s payment and the 
provider’s billed charges.  If collection actions are pursued, unsuspecting enrollees 
can be forced to reimburse the full amount of a provider’s billed charges even 
though those charges are in excess of the reasonable and customary value of the 
services rendered.  [¶]  The prompt and appropriate reimbursement of emergency 
providers ensures the continued financial viability of California’s health care 
                                              
5  
Our holding is limited to the precise situation before us — billing the 
patient for emergency services when the doctors have recourse against the 
patient’s HMO.  We express no opinion regarding the situation when no such 
recourse is available; for example, if the HMO is unable to pay or disputes 
coverage. 
 
12
delivery system. . . .  [D]enying emergency providers judicial recourse to 
challenge the fairness of a health plan’s reimbursement determination[] allows a 
health plan to systematically underpay California’s safety-net providers and 
unnecessarily involve[s] the patient[s] in billing disputes between the provider and 
their health plan[s].’ ”  (Bell, supra, 131 Cal.App.4th at p. 218, italics added.) 
Because emergency room doctors prevailed in Bell, supra, 131 Cal.App.4th 
211, and won the right to resolve their disputes directly with HMO’s, no reason 
exists to permit balance billing.  Thus, the Department of Managed Health Care, 
which supported doctors’ rights to sue the HMO’s directly in Bell, has appeared in 
this case as amicus curiae supporting patients’ rights to be free of balance billing. 
When a dispute exists between doctors and an HMO, the bill the doctors 
submit may or may not be the reasonable payment to which they are entitled.  The 
Bell court made clear that an HMO does not have “unfettered discretion to 
determine unilaterally the amount it will reimburse a noncontracting 
provider . . . .”  (Bell, supra, 131 Cal.App.4th at p. 220.)  But the converse is also 
true; emergency room doctors do not have unfettered discretion to charge 
whatever they choose for emergency services.  Emergency room doctors and 
HMO’s must resolve their disputes among themselves.  Interjecting patients into 
the dispute by charging them for the amount in dispute has only an in terrorem 
effect.  As Prospect notes, although emergency room doctors “are entitled to 
‘reasonable’ compensation for the services rendered, they cannot lawfully seek 
unreasonable payment from anyone.”  But a patient will have little basis by which 
to determine whether a bill is reasonable and, because the HMO is obligated to 
pay the bill, no legitimate reason exists for the patient to have to do so.  Billing the 
patient, and potentially attempting to collect from the patient, will put unjustifiable 
pressure on the patient, who will often complain to the HMO, which complaints 
 
13
will in turn pressure the HMO to make the payment even if it is unreasonable.  
Such a billing practice is not a legitimate way to resolve disputes with an HMO. 
Relying in part on dicta in Ochs v. PacifiCare of California (2004) 115 
Cal.App.4th 782, Emergency Physicians argue that they may collect from the 
patient, who may then collect from the HMO.  The Ochs court held that it did not 
have to decide the issue presented in this case, but it went on to “observe, 
however, that section 1379 appears only to limit ‘balance billing’ of insured 
patients by physicians who have contracted with the patients’ plans.  [The 
provider] may have a remedy against the individual patients, and those patients a 
remedy against PacifiCare.”  (Id. at p. 796.)  But this is not what the statutory 
scheme provides.  Section 1371.4, subdivision (b), does not say that patients must 
pay the emergency room doctors and then turn to their HMO’s for reimbursement.  
Rather it states that the “health care service plan shall reimburse providers for 
emergency services and care provided to its enrollees . . . .”  This language does 
not authorize the roundabout route of the doctor collecting from the patient, who 
must then collect from the HMO.  Rather, it mandates that the HMO pay the 
doctor directly.  It does not involve the patient in the payment process at all. 
Emergency Physicians and their supporting amici curiae argue that 
emergency room doctors are entitled to a reasonable fee for their services, and that 
HMO’s must be held accountable and forced to pay a reasonable amount for those 
services.  An amicus curiae brief supporting Emergency Physicians adds 
arguments that the California Constitution “requires that emergency physicians 
receive adequate compensation to cover their losses for serving the indigent,” and 
that “California’s emergency departments are already operating at capacity and 
risk jeopardizing quality of care.”  These arguments do not address the issue 
before us.  Emergency room doctors are entitled to reasonable payments for 
emergency services rendered to HMO patients.  All we are holding is that this 
 
14
entitlement does not further entitle the doctors to bill patients for any amount in 
dispute. 
Emergency Physicians argue that two recent bills that the Legislature 
passed but the Governor vetoed show that the Legislature believes that balance 
billing is currently permitted.  (Sen. Bill No. 981 (2007-2008 Reg. Sess.); Assem. 
Bill No. 2220 (2007-2008 Reg. Sess.).)  We find no significance in these bills.  
They were legislative attempts to address broader concerns and, perhaps, clarify 
what is currently unclear.  The Governor’s veto messages state that he opposes 
balance billing but found the bills objectionable in other respects.  This area of the 
law might benefit from comprehensive legislation.  Failed attempts to provide 
some such legislation do not help us interpret the existing statutory scheme. 
In support of its conclusion that emergency room doctors may engage in 
balance billing, the Court of Appeal cited a regulation that became operative 
sometime before 1978 and requires health care service plans to advise their 
subscribers that “in the event the health plan fails to pay a noncontracting 
provider, the member may be liable to the noncontracting provider for the cost of 
the services.”  (Cal. Code Regs., tit. 28, § 1300.63.1, subd. (c)(15).)  This 
regulation, the Court of Appeal believed, shows that the Department of Managed 
Health Care “recognizes balance billing.”  (As noted, that department argues 
against permitting balance billing in this case.)  In our view, the regulation does 
not support the conclusion that balance billing is permissible in the situation here.  
It was promulgated long before the statute obligating HMO’s to pay for 
emergency services was enacted in 1994 and governs a different situation.  HMO 
members are not required to go to doctors who have contracted with their HMO.  
In a nonemergency situation, members may, if they choose, seek professional 
services from anyone.  If they obtain services from a noncontracting provider, the 
HMO might not be obligated to pay all or even part of that provider’s bill, 
 
15
depending on the exact terms of the health care plan.  If the HMO is not obligated 
to pay the noncontracting provider, obviously, the member would be liable to pay 
for the services.  This circumstance does not change the fact that under the Knox-
Keene Act, HMO members are not liable to pay for emergency care. 
The Court of Appeal also relied on the fact that the Department of Managed 
Health Care had, in the past, proposed but never adopted a regulation that would 
prohibit balance billing.  While this matter was pending before this court, the 
Department of Managed Health Care did adopt a regulation that defines balance 
billing as an unfair billing pattern.  (Cal. Code Regs., tit. 28, § 1300.71.39.)  The 
parties dispute the meaning and validity of this regulation and whether we should 
give it deference.  We need not get into such matters.  Although we have given 
some deference to contemporaneous interpretations of a statute by an administrative 
agency charged with its administration, especially when the interpretation is in the 
form of a regulation adopted in accordance with the Administrative Procedure Act 
(e.g., Sara M. v. Superior Court (2005) 36 Cal.4th 998, 1011-1014), here the 
regulation — adopted during the pendency of this litigation — is not 
contemporaneous with the statutory scheme.  It is doubtful that we owe the 
regulation any deference.  (See Dyna-Med, Inc. v. Fair Employment & Housing 
Com. (1987) 43 Cal.3d 1379, 1389 [not deferring to a noncontemporaneous 
interpretation]; Jones v. Tracy School Dist. (1980) 27 Cal.3d 99, 107 [not deferring 
to an interpretation by an agency after the agency had become an amicus curiae in 
the case].)  We base our holding on our interpretation of the relevant statutory 
scheme and not on the previous absence or current presence of any regulation. 
The parties discuss the larger problem of adequate compensation for 
emergency room doctors.  But this larger issue is not before us.  Like the Bell 
court, “we reject the parties’ suggestion that we can solve the societal and 
economic problems defined by their rhetoric, and emphasize that our decision is 
 
16
limited to the precise issue before us . . . .”  (Bell, supra, 131 Cal.App.4th at p. 
222.) 
III.  CONCLUSION 
We reverse the judgment of the Court of Appeal and remand the matter for 
further proceedings consistent with this opinion. 
 
CHIN, J. 
WE CONCUR: 
 
GEORGE, C.J. 
KENNARD, J. 
BAXTER, J. 
MORENO, J. 
CORRIGAN, J. 
MCDONALD, J.* 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
_____________________________ 
* Associate Justice of the Court of Appeal, Fourth Appellate District, Division 
One, assigned by the Chief Justice pursuant to article VI, section 6 of the 
California Constitution. 
 
 
See next page for addresses and telephone numbers for counsel who argued in Supreme Court. 
 
Name of Opinion Prospect Medical Group, Inc. v. Northridge Emergency Medical Group 
__________________________________________________________________________________ 
 
Unpublished Opinion 
Original Appeal 
Original Proceeding 
Review Granted XXX 136 Cal.App.4th 1155 
Rehearing Granted 
__________________________________________________________________________________ 
 
Opinion No. S142209 
Date Filed: January 8, 2009 
__________________________________________________________________________________ 
 
Court: Superior 
County: Los Angeles 
Judge: Gerald Rosenberg 
__________________________________________________________________________________ 
 
Attorneys for Appellant: 
 
Bird, Marella, Boxer, Wolpert, Nessim, Drooks & Lincenberg, Thomas R. Freeman; Miller & Holguin, 
Stephan, Oringer, Richman, Theodora & Miller, Theodora Oringher Miller & Richman, Harry W. R. 
Chamberlain II, Kenneth E. Johnson, Robert M. Dato and Stacey L. Zill for Plaintiffs and Appellants. 
 
Epstein Becker & Green, William A. Helvestine, Michael T. Horan and Carri L. Becker for California 
Association of Health Plans as Amicus Curiae on behalf of Plaintiffs and Appellants. 
 
Fulbright & Jaworski, Buchalter, Nemer, Fields & Younger, Buchalter Nemer and Carol K. Lucas for 
California Association of Physicians Groups as Amicus Curiae on behalf of Plaintiffs and Appellants. 
 
Amy L. Dobberteen, Debra L. Denton, Michael D. McClelland and Drew Brereton for Department of 
Managed Health Care as Amicus Curiae on behalf of Plaintiffs and Appellants. 
__________________________________________________________________________________ 
 
Attorneys for Respondent: 
 
Howard Rice Nemerovski Canady Falk & Rabkin, Jerome B. Falk, Jr., Ethan P. Schulman, Steven L. 
Mayer, Jonas M. Nahoum; Law Offices of Andrew H. Selesnick, Alleguez & Selesnick and Andrew H. 
Selesnick for Defendants and Respondents. 
 
Catherine I. Hanson for California Medical Association as Amicus Curiae on behalf of Defendants and 
Respondents. 
 
Astrid G. Meghrigian for American College of Emergency Physicians, California Chapter of the American 
College of Emergency Physicians and California Chapter, American Academy of Emergency Medicine as 
Amici Curiae on behalf of Defendants and Respondents. 
 
Physicians’ Advocates and Charles Bond for American Medical Association as Amicus Curiae on behalf of 
Defendants and Respondents. 
 
Hooper, Lundy & Bookman, Lloyd A. Bookman, Suzanne S. Chou and Felicia Y Sze for California 
Hospital Association as Amicus Curiae on behalf of Defendants and Respondents. 
 
 
 
 
 
 
Counsel who argued in Supreme Court (not intended for publication with opinion): 
 
Thomas R. Freeman 
Bird, Marella, Boxer, Wolpert, Nessim, Drooks & Lincenberg 
1875 Century Park East, 23rd Floor 
Los Angeles, CA  90067-2561 
(310) 201-2100 
 
Michael D. McClelland 
980 Ninth Street, Suite 500 
Sacramento, CA  95814 
(916) 323-0435 
 
Jerome B. Falk, Jr. 
Howard Rice Nemerovski Canady Falk & Rabkin 
Three Embarcadero Center, 7th Floor 
San Francisco, CA  94111-4024 
(415) 434-1600