American Journal of Law & Medicine

Prompt payment: Florida Supreme Court allows private right of action based on HMO Act.

Prompt Payment: Florida Supreme Court Allows Private Right of Action Based on HMO Act--Foundation Health v. Westside EKG Associates (1)--The Supreme Court of Florida held that a medical service provider may bring an action as a third party beneficiary to a contract between a health maintenance organization ("HMO") and its subscribers based on allegations that the HMO failed to comply with the "prompt pay provisions" of Florida's Health Maintenance Organization Act (the "HMO Act"). (2)

Plaintiff Westside EKG Associates ("Westside") filed a complaint in Florida's Seventeenth Judicial Circuit against seven HMOs asserting, inter alia, an action for breach of contract as a third party beneficiary. (3) Westside alleged that its physicians provided HMO subscribers with medical services under HMO policies, that Westside was a third party beneficiary to those contracts, and that the HMOs breached those contracts by repeatedly failing to comply with the "prompt pay provisions" of the HMO Act. (4) Westside claimed it was not paid for its services as a direct and proximate cause of the HMOs' breach. (5) The HMOs countered, however, that medical service providers such as Westside could not rely on the HMO Act for a private right of action. (6)

At the time Westside brought its suit in 2001, the HMO Act provided that HMOs must pay, contest, or deny claims submitted by medical service providers within thirty-five days of receipt of the claim. (7) Interest accrued at a rate of 10% per annum on claims not paid or denied within thirty-five days, beginning the thirty-sixth day after the claim was submitted. (8) If the claim had not been paid or denied after one hundred and twenty days, an uncontestable obligation on the HMO arose to pay the claim to the provider. …

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