California Physicians' Service v. Aoki Diabetes Research Institute

— A health care provider, Aoki Diabetes Research Institute (ADRI), sued a health care service plan for breach of contract, seeking reimbursement for medical services provided to the plan’s members. The health plan, California Physicians’ Service, doing business as Blue Shield (Blue Shield), asserts that its contract with the provider is unenforceable because ADRI is illegally organized as a nonprofit corporation instead of a professional medical corporation or partnership. Blue Shield also claims that medical providers like ADRI cannot dispute a health plan’s coverage determinations. The trial court rejected Blue Shield’s claims in a bench trial. The court also collaterally estopped Blue Shield from asserting that ADRI’s services are experimental, and thus not covered, because a prior administrative proceeding held to the contrary. The court entered judgment for ADRI and Blue Shield appealed. We affirm the judgment.

I. BACKGROUND

In the United States, health care services are provided predominantly by managed care organizations (MCO’s). (Rush Prudential HMO, Inc. v. Moran (2002) 536 U.S. 355, 369 [ 153 L.Ed.2d 375 , 122 S.Ct. 2151 ]; Croskey et al., Cal. Practice Guide:…