UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

GERALDINE K. RICHTER,

Plaintiff-Appellant,

v.

CAPP CARE, INC.,

No. 94-2660

Defendant-Appellee.

AMERICAN ASSOCIATION OF PREFERRED

PROVIDER ORGANIZATIONS,

Amicus Curiae.

Appeal from the United States District Court

for the Eastern District of Virginia, at Alexandria.

Claude M. Hilton, District Judge.

(CA-94-614-A)

Argued: December 6, 1995

Decided: February 26, 1996

Before HALL, MICHAEL, and MOTZ, Circuit Judges.

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Affirmed by unpublished per curiam opinion.

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COUNSEL

ARGUED: Timothy Dean Barto, RICHTER, MILLER & FINN,

Washington, D.C., for Appellant. John Mark Murdock, EPSTEIN,

BECKER & GREEN, P.C., Washington, D.C., for Appellee. ON

BRIEF: Douglas L. Elden, Robbin C. Elden, DOUGLAS L. ELDEN

& ASSOCIATES, Chicago, Illinois, for Amicus Curiae.
Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

Plaintiff/Appellant, Geraldine K. Richter, M.D., is a physician and

orthopedic surgeon engaged in the private practice of medicine and

orthopedic surgery in Northern Virginia. Defendant/Appellee, Capp

Care, Inc., is a managed health care company (i.e., a preferred provider organization or "PPO"). Dr. Richter sued Capp Care, claiming

that Capp Care violated the Any Willing Provider Law, Va. Code

Ann. § 38.2-3407, by refusing to accept her as a preferred provider in

Capp Care's new Northern Virginia PPO.

Virginia's Any Willing Provider Law provides in pertinent part

that:

A. One or more insurers may offer or administer a health

benefit program under which the insurer or insurers may

offer preferred provider policies or contracts that limit the

numbers and types of providers of health care services eligible for payment as preferred providers.

B. Any such insurer shall establish terms and conditions

that shall be met by a hospital [or] physician. . . in order

to qualify for payment as a preferred provider under the policies or contracts. These terms and conditions shall not discriminate unreasonably against or among such health care

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providers. No hospital [or] physician . . . willing to meet the

terms and conditions offered to it or him shall be excluded.

. . .

Va. Code Ann. § 38.2-3407.1

After a bench trial the district court entered judgment in favor of

Capp Care. See Richter v. Capp Care, Inc., 868 F. Supp. 163 (E.D.

Va. 1994). The court held that Capp Care was not subject to the provisions of section 38.2-3407 because Capp Care is not as insurer.

Also, the court held that even if Capp Care was subject to the provisions of section 38.2-3407, Capp Care did not violate that section

when it denied Dr. Richter's application to become a preferred provider. Dr. Richter now appeals.

I.

By its terms, section 38.2-3407 applies only to"[o]ne or more

insurers . . . ." While Capp Care is not an insurance company, and

Capp Care does not issue insurance policies, all of the stock of Capp

Care is owned by six insurance companies. Also, Capp Care administers health benefit programs of various insurance company payors

(including four of its insurance company shareholders) and third party

insurer-payors (i.e., employers) throughout the United States. Moreover, the standard form of contract between Capp Care and an individual payor (including an insurance company payor) expressly

appoints Capp Care as the payor's "Agent and Attorney-in-Fact" to

establish, manage and maintain the preferred provider organization

and network. Accordingly, Dr. Richter argues that Capp Care is sub-

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1 The following definitions are pertinent:

"Insurer" means an insurance company.

"Insurance company" means any company engaged in the business of making contracts of insurance.

Id. § 38.2-100. Preferred provider policies or contracts are defined as "insurance policies or contracts that specify how services are to be covered." Id. § 38.2-3407E.

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ject to the provisions of section 38.2-3407, and Capp Care, of course,

disagrees.2

We need not and do not reach this issue, however, because we conclude that Capp Care's decision to deny Dr. Richter's application did

not amount to unreasonable discrimination in violation of section

38.2-3407. We therefore affirm the district court's decision on that

limited ground.

II.

A.

The following facts are taken from the trial record.

In 1991 Dr. Richter received a public reprimand from the Virginia

Board of Medicine after entering into a consent order. The reprimand

was in lieu of concluding formal administrative hearings in which Dr.

Richter was accused of obtaining (by fraud) and possessing Schedule

IV controlled substances, Ativan and Halcion.

The consent order provided that Dr. Richter agreed with the recommendations of a team of doctors that evaluated her medical condition.

The recommendations specified that she should receive individual

therapy, develop better methods with the help of a psychologist for

dealing with stress in her life, and "[if] people still felt that alcohol

and drugs were an ongoing factor in her life, than[sic] she should

agree to submit to" drug testing. At trial Dr. Richter testified that she

did not seek any counseling or therapy after the issuance of the reprimand because she "didn't need it."

In 1993 Capp Care contracted with various health care providers

in Northern Virginia in order to establish and operate a new PPO network in Northern Virginia. Capp Care entered into an agreement with

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2 The American Association of Preferred Provider Organizations has

filed an amicus curiae brief in support of Capp Care's position, asserting

that "the extension of section 38.2-3407 to non-insurer PPOs is contrary

to public policy advocating the use of managed care organizations to provide high quality health care at reasonable costs."

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Northern Virginia Provider Services, Inc. ("NVPSI"), whereby all

NVPSI participating physicians would be offered the opportunity to

join Capp Care's Northern Virginia PPO network and to qualify for

payments as preferred providers. Under the agreement NVPSI agreed

to provide its members with information concerning Capp Care's

Northern Virginia PPO network, a copy of Capp Care's standard form

of Provider Agreement (with Amendments thereto), and a copy of a

release authorizing NVPSI to provide Capp Care with certain information for credentialing purposes.

The agreement between Capp Care and NVPSI also provided that:

CAPP CARE agrees to accept a copy of the credentialing

application and related data (including periodic updates in

connection with recredentialing) submitted to NVPSI by

each NVPSI physician in lieu of requiring the physician to

submit a new credentialing application (or separate updates

in connection with recredentialing). CAPP CARE reserves

the right to request additional information in addition to the

information set forth in the physician's NVPSI application

and reserves the right to make all final decisions as to

whether a physician participates in the network. Any request

by CAPP CARE for additional information in connection

with initial credentialing or recredentialing NVPSI members

must be made to NVPSI and CAPP CARE must demonstrate that such additional information is reasonably necessary for its credentialing decisions.

Dr. Richter is a member of NVPSI. In contemplation of the formal

signing of the Capp Care/NVPSI agreement, NVPSI sent its members

a "Contract Overview" outlining the steps its members needed to take

in order to become a preferred provider in Capp Care's Northern Virginia PPO network.

The Contract Overview explained that Capp Care would enter into

individual contracts with those members of NVPSI who wished to

become preferred providers. The Contract Overview further explained

(1) that "NVPSI physicians who elect to participate in this arrangement will be notified by Capp Care of their effective date following

submission of a signed Provider Agreement and Capp Care's review

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of credentialing information," (2) that "[a]ll NVPSI physicians are eligible to participate with Capp Care as preferred providers, subject to

review of physician credentials by Capp Care," and (3) that "Capp

Care has agreed to rely on NVPSI's physician information in connection with initial credentialing in lieu of submission of a Capp Care

physician application."

Dr. Richter signed the Provider Agreement and authorized NVPSI

to release her credentialing information. Evidently, the credentialing

information did not include information concerning Dr. Richter's

public reprimand because the reprimand did not fall into any category

of information about which Dr. Richter was required to inform

NVPSI or about which NVPSI was required to inform Capp Care.

Using publicly available information, however, Capp Care learned of

Dr. Richter's reprimand and rejected her application to become a preferred provider.3

This was not the first time that Dr. Richter had failed to gain acceptance in a PPO in the aftermath of her public reprimand. Since 1991

she had been rejected by PPOs or HMO networks on several occasions, and her membership in two PPOs had been terminated. Nevertheless, after making several attempts to have Capp Care reconsider

its decision, Dr. Richter filed her complaint alleging that Capp Care

violated Virginia's Any Willing Provider Law, Va. Code Ann. § 38.2-

3407.

B.

The district court rejected Dr. Richter's claim. The court found that

Dr. Richter "was informed, in writing, that as one of the terms and

conditions for membership she would have to be credentialed by

Capp Care. She similarly was advised that acceptance of her application was contingent upon such credentialing by Capp Care." Richter,

868 F. Supp. at 165. The district court further found that "Capp Care

rejects the applications of all physicians who have been disciplined by

state medical boards for conduct of the type for which plaintiff was

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3 Specifically, Capp Care learned of the disciplinary action against Dr.

Richter through a book entitled 9479 Questionable Doctors and newspaper articles received from a clipping service.

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reprimanded" and that Capp Care will reconsider such applications

"where the physician provides documentation he or she has undergone treatment for the conditions which caused the conduct." Id.

The district court then found that "Capp Care rejected plaintiff's

application because of her reported disciplinary action by the Virginia

Board of Medicine" and that "Capp Care's use, in the credentialing

process, of information about plaintiff's disciplinary action is consistent with credentialing practices throughout the medical community."

Id. The court also found that the publicly available information upon

which Capp Care relied in rejecting Dr. Richter's application "provided reliable reports of plaintiff's reprimand and the findings of the

Virginia Board of Medicine in the `Consent Order.'" Id.

Based on the foregoing, the district court concluded that "Capp

Care communicated to plaintiff, through NVPSI, the fact that credentialing by Capp Care was a term and condition of acceptance" and

that "Capp Care's credentialing policy to deny the applications of

physicians who have been disciplined for professional misconduct,

did not discriminate unreasonably against plaintiff." Id. at 167. The

court emphasized that Dr. Richter had failed to show that "Capp Care

accepted the applications of other similarly situated physicians who

were disciplined by the Virginia Board of Medicine or that Capp

Care's consideration, in its credentialing, of her reprimand by the Virginia Board of Medicine for professional misconduct is an unreasonable criterion." Id. The district court therefore entered judgment in

favor of Capp Care.

On appeal Dr. Richter challenges these factual findings and legal

conclusions. She claims that "credentialing" by Capp Care was not a

term and condition for membership in Capp Care's Northern Virginia

PPO and that Capp Care agreed not to examine any credentialing

information other than that provided by NVPSI. In addition, Dr. Richter claims that the public information relied upon by Capp Care was

not reliable, that as a fully licensed physician she was prepared to

comply with all terms and conditions for membership in Capp Care's

Northern Virginia PPO, and that Capp Care had accepted physicians

in the past who had been disciplined for matters related to substance

abuse. Thus, Dr. Richter believes that the terms and conditions under

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which Capp Care rejected her application unreasonably discriminated

against her in violation of section 38.2-3407.

III.

We review the district court's findings of fact under the "clearly

erroneous" standard, Fed. R. Civ. P. 52(a), and we review de novo the

district court's conclusions of law. E.g., Salve Regina v. Russell, 499

U.S. 225, 231 (1991). Findings of fact are clearly erroneous only

when the reviewing court, after having considered all of the evidence,

is "left with the definite and firm conviction that a mistake has been

committed." United States v. Gypsum Co., 333 U.S. 364, 395 (1948).

No such mistake has been made here.

A.

The trial record shows that Dr. Richter was on notice that credentialing was a term and condition for her acceptance as a preferred provider in Capp Care's Northern Virginia PPO. In particular, the

Provider Agreement expressly stated that Capp Care"reserves the

right to make all final decisions as to whether a physician participates

in the network." Likewise, the Contract Overview provided to Dr.

Richter stated that credentialing was a term and condition that had to

be met before Capp Care would accept a preferred provider application. Accordingly, we agree with the district court that "Capp Care

communicated to plaintiff, through NVPSI, the fact that credentialing

by Capp Care was a term and condition of acceptance."

Faced with this evidence, Dr. Richter argues that in making its credentialing decisions Capp Care agreed not to examine any information other than that provided by NVPSI. Therefore, according to Dr.

Richter, Capp Care could not examine publicly available information

when making its credentialing decision. We cannot accept Dr. Richter's argument.

While it is true that Capp Care agreed that it would rely upon a

physician's NVPSI application in connection with initial credentialing

and that any request for additional information in connection with credentialing would be made to NVPSI, nowhere did Capp Care waive

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the right to look at relevant information -- especially publicly available information. Indeed, when read in context, both the Provider

Agreement and Contract Overview make clear that Capp Care merely

agreed that it would look to NVPSI to obtain credentialing information and that Capp Care would not request additional credentialing

information directly from a physician. Capp Care did not, however,

agree to base its credentialing decisions exclusively upon information

provided by NVPSI or to refrain from examining information readily

available to any member of the public.

Furthermore, it is reasonable (and obvious) to assume that Capp

Care would examine publicly available information bearing on the fitness of an applicant to practice medicine. And, of course, Dr. Richter

knew that her reprimand was public information and that other PPOs

had rejected her application to become a preferred provider as a consequence of her reprimand. It therefore should not have come as any

surprise to Dr. Richter that Capp Care would take her public reprimand into account in making its credentialing decision. Accordingly,

we will not disturb the district court's decision on this ground.

B.

Dr. Richter also argues that it was improper for Capp Care to rely

upon newspaper articles describing the disciplinary action against her

because there were conflicts between the reports in different newspapers and that Capp Care should have followed up with an independent

investigation of its own. There is no dispute that Dr. Richter was publicly reprimanded by the Virginia Board of Medicine. Therefore, so

long as Capp Care did not discriminate unreasonably against Dr.

Richter when it rejected her application based on that reprimand, it is

of no consequence whether there were actual conflicts in the newspaper clippings or whether it would have been better if Capp Care had

conducted its own investigation.

Dr. Richter contends, however, that discrimination occurred here

because she continues to be fully licensed to practice medicine in Virginia, and thus Capp Care was obligated to accept her application.

That argument makes little sense. In effect, it would eviscerate Virginia's Any Willing Provider Law by precluding a PPO from setting

any term or condition for acceptance other than one ensuring that a

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preferred provider is licensed to practice medicine. Virginia certainly

intended -- and section 38.2-3407 makes clear-- that a PPO may

demand that their preferred providers meet standards above merely

being licensed to practice medicine.

Here, the trial record shows that the Virginia Board of Medicine

publicly reprimanded Dr. Richter after she was accused of obtaining

(by fraud) and possessing Schedule IV controlled substances. The

public reprimand was part of a consent order to which Dr. Richter

agreed in lieu of concluding the formal administrative hearings instituted against her. True, Dr. Richter did not lose her medical license

as a result of the reprimand, but this does not mean that Capp Care

violated Virginia's Any Willing Provider Law when it rejected her

application based on that reprimand.

Similarly, the fact that Capp Care had accepted applications from

other physicians who had been disciplined for matters related to substance abuse does not mean that Capp Care discriminated unreasonably when it refused to accept Dr. Richter's application. Dr. Richter

testified at trial that she has not received any counseling or therapy

since the issuance of the reprimand because she"didn't need it." Yet,

as the district court found, "Capp Care rejects the applications of all

physicians who have been disciplined by state medical boards for

conduct of the type for which plaintiff was reprimanded," but Capp

Care will reconsider such applications "where the physician provides

documentation he or she has undergone treatment for the conditions

which caused the conduct." Richter, 868 F. Supp. at 165. Dr. Richter

has not demonstrated to us that these factual findings are clearly erroneous. We, therefore, agree with the district court that Capp Care's

decision to reject Dr. Richter's application did not violate Virginia's

Any Willing Provider Law.

IV.

Based on the foregoing, the judgment of the district court is

affirmed.

AFFIRMED

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