Legal Question in Insurance Law in California

Bankrupt Health Plans

Who is legally responsible for health claims when medical groups file bankruptcy? For example: An HMO plans pays medical groups to managed their patients and pay claims. The medical group files bankruptcy and refused to process the providers claims. Who is ultimately financially responsible for the claims? Do providers have any legal rights to pursue reimbursement? If so, from whom and how?


Asked on 7/31/98, 11:29 pm

1 Answer from Attorneys
Steven Murray Steven W. Murray, APC

Re: Bankrupt Health Plans

The HMO was and always is responsible. The medical

group is only the HMO's agent. The medical group

bankruptcy should not affect paying for your health

services because you pay the HMO and it disburses the

funds to the actual providers.

The providers have rights to collect for their

services. Who is resposible for payment depends on

the terms of their contracts with the HMO and on

the terms of your HMO plan. It may be that you

are responsible (did you have to sign anything

from the provider in order to get treatment?), but that would be secondary to the

HMO's duty to pay and to have seen to it that their

manager handled everything properly. Moreover, the

bankruptcy of the medical group-manager would not

affect its liability insurance coverage if it converted

monies held in trust for your treatment.

Steven Murray

Steven W. Murray, APC

16055 Ventura Blvd., Ste. 900


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Answered on 3/18/99, 2:11 pm


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