Physicians who receive termination notices from insurers should learn about their rights from a recent case brought by the Fairfield County Medical Association.[1]  On February 7, 2014, the Second Circuit Court of Appeals upheld the District Court’s injunction[2] enjoining United Healthcare (“United”) from: 1) terminating affected physicians in its Medicare Advantage program; 2) notifying customers that the affected physicians would be terminated from the network; and 3) compelling United to reinstate, advertise, and market the affected physicians in its 2014 Medicare Advantage Network directories.[3]

The District Court for the District of Connecticut classified its preliminary injunction as one in “aid of arbitration,” since the United provider contracts clearly required physicians to submit disputes to binding arbitration.  Those arbitrations are pending.


The Fairfield County Medical Association commenced this litigation on behalf of the affected physicians.   Throughout October 2013, United notified 2,200 physicians that their Medicare Advantage provider contracts would expire on February 1, 2014.  United’s abrupt unilateral termination of these contracts risked causing significant disruption to patient care and the affected physician practices, and the physicians fought back.

The primary issue focused on whether United’s actions constituted an “amendment” to physician contracts or a “termination” of those contracts.  Under the provider contracts, United had broad discretion to amend contract terms upon 90 days written notice, but terminations without cause triggered a longer timeline for resolution.  United claimed it simply “amended” the provider contracts at issue, while the affected physicians asserted that United unilaterally and unlawfully terminated their contracts.

Medicare Advantage provider contract terminations are governed by 42 C.F.R. § 422.202(d), and they provide several due process guarantees for providers facing termination.  Before terminating a physician from a Medicare Advantage plan, an insurer must provide:

  1. Written notice;
  2. If relevant, standards and profiling data used to evaluate the physician and the numbers and mix of physicians needed by the insurer;
  3. Notice to the affected physician of her right to appeal and the process and timing for requesting a hearing.[4]

Notably, 42 C.F.R. § 422.202(d)(4), requires a Medicare Advantage insurer to provide a minimum of 60 days written notice before terminating a physician contract without cause.  However, the United Medicare Advantage contracts at issue required United to send written notice by certified mail to a terminated physician at least 90 days prior to the anniversary date of a physician’s agreement.  Deadline calculation using the contract anniversary date provided more time in most cases for physicians to adjust than United’s October notices provided.

For other insurance plans, New York physicians receive protection under Public Health Law § 4406(2)(a).  That section is similar to 42 C.F.R. § 422.202(d), in that it requires insurers to first provide written notice to the terminated physician, which must include an explanation of the reasons for the proposed termination.  Physicians also have a right under this statute to challenge the determination decision at a hearing before a panel that includes clinical peers.


The lesson learned from the Fairfield County case is that despite insurers’ efforts to shrink their networks, federal courts will not credit strained arguments that mass terminations constitute “amendments” to provider contracts.  Further, the courts will enforce the conflict resolution provisions contained within the plain language of provider contracts.  In most cases, provider contracts contain provisions creating administrative hearing procedures, in addition to requirements to submit unresolved disputes to binding arbitration.  Providers should routinely review their provider contracts with insurers in order to understand the prescribed remedies if they receive a termination notice.

Both federal[5] and New York State Law[6] protect physicians from insurer termination based solely because a physician has advocated on behalf of a patient, appealed an adverse coverage decision, or has filed a complaint against a health care plan.  Insurers may resort to pretextual “without cause” termination clauses if possible, so physicians are well advised to seek counsel to review the underlying events leading up to a termination.  Courts have entertained physician lawsuits against insurers alleging breach of an implied duty of good faith and fair dealing as well as for unjust enrichment.[7]

Insurers will continue to shrink provider networks, and physicians have means to protect themselves and preserve their patient base.  The moment a physician receives a termination notice from an insurer, she should immediately engage counsel to evaluate options to protect her income source.

[1] Fairfield Ct. Med. Ass’n v. United Healthcare of New Eng, No. 3:13-cv-1621 (SRU)(D.Conn. Dec. 5, 2013).

[2] Fairfield Ct. Med. Ass’n v. United Healthcare of New Eng., No. 13-408 (2d Cir. Feb. 7, 2014).

[3] Fairfield Ct. Med. Ass’n v. United Healthcare of New Eng, No. 3:13-cv-1621 (SRU)(D.Conn. Dec. 5, 2013).

[4] 42 C.F.R. § 422.202(d)(1)(i-ii).

[5] See, e.g. 42 U.S.C. §§1395 et. seq.

[6] N.Y. Public Health Law § 4406-d (5).

[7] See, e.g. Kamhi v. EmblemHealth, Inc., 37 Misc.3d 171 (Sup.Ct. Kings, March 21, 2012).