Breaking News
Home / Medicine & the Law / Pa. physician reinstated under HMO laws

Pa. physician reinstated under HMO laws

By Renee H. Martin, R.N., M.S.N.

Recently, the Pennsylvania Commonwealth Court rendered a decision that explicitly recognized that a physician may have due process rights when that physician’s HMO removes him or her from its HMO provider panel. In Carlini v. Highmark Blue Cross Blue Shield, a Pittsburgh physician was denied his due process rights when the credentials committee of the HMO for which he was an approved provider removed him from its provider panel.

Facts of Carlini

Dr. Charles J. Carlini was a board-certified physician and surgeon specializing in obstetrics and gynecology and a provider with the Highmark Blue Cross Blue Shield Plan and the Keystone Health Plan West, a Highmark subsidiary. Dr. Carlini was a member of the medical staff of St. Clair Hospital in Pittsburgh and a participant in various Highmark managed care plans. Dr. Carlini had been licensed to practice in Pennsylvania since 1972 and had never been disciplined by The Pennsylvania State Board of Medicine.

In 1997, Dr. Carlini filed a recredentialing application for continued participation in the Keystone provider network. Subsequently, Highmark’s medical director notified Dr. Carlini by letter that Highmark’s Credentials Committee had denied his recredentialing application to the Keystone Health Plan Network. (Notably, this Credentials Committee functioned in accordance with Highmark’s bylaws). The medical director informed Dr. Carlini that he was being decertified from the Keystone network due to malpractice claims filed against him. This decision meant that Dr. Carlini could continue to treat Higmark and Select Blue patients as a non-network provider. The medical director also informed Dr. Carlini of his appeal option and provided him with directions for arranging the hearing.

Dr. Carlini appealed the decision and appeared before the medical review committee of two Highmark physicians. In his defense, Dr. Carlini submitted to the committee a letter from St. Clair Hospital’s medical director supporting his retention and discussed the malpractice claims against him in considerable detail. As a result of the hearing, the medical review committee recommended that the decision to terminate Dr. Carlini’s participation in the Keystone network be reversed.

However, several months later, Dr. Carlini received a letter from Highmark’s medical director stating that Keystone’s Credentials Committee, upon reconsideration, was upholding the earlier termination decision. Additionally, the letter stated that the decision was to be reported to the National Practitioner Data Bank.

Thereafter, Dr. Carlini filed an equity action against Highmark/Keystone and alleged, among other things, claims for breach of contract and denial of his due process rights. Dr. Carlini also requested recertification into the Keystone provider panel, and petitioned the court to grant a preliminary injunction to prevent Highmark/Keystone from reporting his name to the National Practitioner Data Bank.

Dr. Carlini, in filing his action, used Pennsylvania’s Professional Health Services Corporation Act to support his argument. This statute applies to non-profit health care service providers such as Highmark. The Professional Health Corporation Services Act provides, in part, that disputes or controversies relating to the professional health services rendered by health service doctors be “considered and determined only by health service doctors as selected in a manner prescribed in the bylaws of the professional health service corporation.” Dr. Carlini also argued that because Highmark was a professional health services corporation created by the laws of the state of Pennsylvania, Highmark was a creature of the state, and functioned as a state actor. As a state actor, Dr. Carlini argued, Highmark was required to afford doctors due process when decredentialing them.

The Equity Court’s Decision and Highmark/Keystone’s Appeal

The equity court decided in favor of Dr. Carlini, ordered Highmark to reinstate him, and directed Highmark to retract the notice it sent to the National Practitioner Data Bank. The court determined that under The Professional Health Corporation Services Act, that governed his decertification, Dr. Carlini’s due process rights were violated. The court stated that even though Dr. Carlini was granted notice and a hearing, by disregarding the recommendations of the impartial medical review panel, Highmark/Keystone acted as state actors and as “prosecutor, adjudicator, and sentencer”, and thereby violated Dr. Carlini’s statutory rights as well as his rights to due process.

Highmark/Keystone appealed this decision to the Commonwealth Court. In the appeal, Highmark alleged that the equity court erred in deciding that Dr. Carlini had a clear right to relief under this state statute, and that Highmark/Keystone were not state actors. Higmark/Keystone also argued that the Professional Health Corporation Services Act was not applicable to Dr. Carlini’s case. Instead, Highmark/Keystone argued that it was Keystone, Highmark’s HMO subsidiary, that rendered Dr. Carlini’s decertification decision. Highmark/Keystone argued that as a for-profit HMO, the Professional Health Corporation Services Act did not govern the actions of Keystone, rather, Keystone’s actions were governed by Pennsylvania’s Health Maintenance Organization Act. The Health Maintenance Organization Act contains no provision that grants a physician a right to hearing before a contract is terminated. Therefore, there was no duty imposed upon Keystone to grant Dr. Carlini due process rights.

The Commonwealth Court’s Decision

The Commonwealth Court affirmed the lower court decision. First, the court refused to recognize Highmark/Keystone’s statutory distinction and to apply only the Health Maintenance Organization Act. The court noted that the two statutes were not mutually exclusive and that Highmark’s own bylaws expressly referred to the Professional Health Corporation Services Act, and that the bylaws stated that the Professional Health Corporation Services Act was controlling in such proceedings. Although the court was not unanimous in determining that Highmark/Keystone were state actors, the court was unanimously persuaded that Dr.Carlilni’s due process rights were violated “in light of the fact that the Credentials Committee upheld Dr. Carlini’s decertification” which created a “real possibility that the Medical Review Committee’s recommendation was not given bona fide and genuine consideration.”


Carlini is significant in that it is the first Pennsylvania judicial decision in which a court has determined that due process rights may apply to a physician when that physician is de-selected from an HMO provider panel. One should be mindful, however, that the facts of Carlini were unique in that Keystone, a for-profit HMO, was so closely tied with Highmark, its non-profit parent. The Carlini court was likely persuaded in applying the Professional Health Corporation Services Act and to find for Dr. Carlini because Highmark was so clearly involved in the decertification decision as evidenced by fact that it was Highmark’s medical director who contacted Dr. Carlini about the decredentialing decisions. The next real test regarding what due process rights should be afforded a physician when he or she is de-selected from an HMO panel will occur when a Pennsylvania court is confronted with this due process rights question in the context of a “stand alone” HMO.

Renee H. Martin, R.N., M.S.N., is an associate in the law firm of Reed Smith LLP in the Health Care Group of the firm’s Philadelphia Office.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.