August 2001

California Chiropractors File Suit Against Managed Care

San Diego - The California Chiropractic Association has sued a major managed-care company based in San Diego, claiming its dominance of the managed-care market in California hurts both patients and doctors.

The CCA, based in Sacramento, filed the lawsuit in San Diego County Superior Court in late June. The suit alleges that American Specialty Health Plans Inc. serves most managed-care patients in California who have chiropractic coverage, employs only a small percentage of the chiropractors in the state and uses its market clout to get what it wants.

“We don’t believe the lawsuit has merit,” countered George DeVries, president and chief executive officer of American Specialty. “We'll vigorously defend the company -- and we expect to prevail.”

The lawsuit claims American Specialty’s restrictive panel cuts many doctors out of the loop. It also charges unfair business practices, including failure to authorize treatments requested by doctors on its panel; failure to return or account for more than $8 million withheld from doctors’ pay; termination of doctors without cause, and dropping doctors' pay below the cost of doing business.

The complaint seeks a court injunction to stop American Specialty from pursuing these business practices, money to pay doctors what the plaintiffs say they should have been paid and attorneys’ fees and court costs. American Specialty has 406,313 members in the four-county Sacramento area and 163 providers -- both chiropractors and acupuncturists -- at 168 local sites. There are about 12,000 licensed chiropractors in the state.

The chiropractic association tried public persuasion before going to court. It ran full-page ads in a local newspaper and elsewhere around the state last summer. The ads claimed American Specialty had lowered rates to a level where doctors earn, in some cases, about $4 per visit, while in other cases they earn nothing. The ads urged patients to contact the state Department of Managed Care to complain.

Source: Sacramento Business Journal

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