Insurers Win Big Case Involving Double Payment of Doctor Bills. (Health Care).

THE California Court of Appeal has handed down a major loss to California's doctors -- and an equally significant win to large insurers, including several based locally.

In a case largely prompted by the massive failure of Medpartners Providers Network in 1999, the panel upheld a lower court ruling that insurers do not have to pay doctors for their unpaid bills if physician management groups like Medpartners go bankrupt.

That failure, and others like its, left thousands of doctors with millions of dollars of unpaid bills, even though the groups already had been paid by insurers through managed care contracts.

But the doctors had argued that insurers should pay again if such intermediary groups failed because of stingy contracts negotiated with health insurers, such as Blue Cross of California, Health Net or Maxicare (which is, ironically, now defunct itself.)

The panel disagreed, saying it was a matter for the Legislature to take up, cheering insurers who said any other decision would have knocked the foundation out of the existing managed care payment structure.

"It's the only way the system can work," said Walter Zellman, executive director of the California Association of Health Plans. "We have already paid for those services. If the medical group then fails to pay its contract physicians that's a problem between them."

The California Medical Association doesn't see it that way, saying that the current payment structure can leave doctors holding the bag just for doing their job.

"We believe that someone should be taking care of this issue, and because of that we plan to petition for a rehearing," said CMA spokeswoman Karen Nikos.